From the vehicle energy efficiency department: today President Obama announced a new fuel efficiency standard for motor vehicles. The Corporate Average Fuel Economy or CAFE standard, developed by the Environmental Protection Agency and the Department of Transportation after input from stakeholders, sets a fleet-wide average standard of 54.5 miles per gallon by 2025. According to the White House, this standard will save consumers money – $8,000 per vehicle – while also reducing greenhouse gas emissions by 6 billion metric tons and and oil consumption by 2.2 million barrels a day by 2025.
This fuel economy standard raises the bar significantly. Existing fuel economy rules require cars and light-duty trucks to average 35.5 mpg by 2016.
Meeting today’s stepped-up fuel efficiency standards may not be easy for auto manufacturers, so it is notable that the standard has won the support of leading vehicle makers. Two compromises may have won automakers over.
First, while 54.5 mpg is significantly higher than the current CAFE standard, it is nevertheless lower than either the 60 mpg promoted by environmental groups or the 56.2 mpg initially proposed by the administration.
Second, the agreement includes incentives and credits for advanced vehicles and technologies that reduce emissions. EPA and the National Highway Traffic Safety Administration are considering incentive programs for market-changing technologies such as plug-in hybrid electric vehicles, fuel cell-based vehicles, and compressed natural gas (CNG) vehicles.
These incentive programs will follow on the heels of other federal grant programs for advanced vehicle efficiency R&D and commercialization, such as the $184 million Department of Energy research and development program announced last December.