Mon, Dec 03, 2007 page10

• Congress ups fuel-economy standard

  ONBOARD The Alliance of Automobile Manufacturers said it supported the passage of landmark legislation that will require US automobiles to average 35mpg by 2020

  • BLOOMBERG
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  The US Congress agreed to raise fuel-economy standards by 40 percent for cars and light trucks by 2020 in a move described by lawmakers as a historic step toward cutting US oil consumption and curbing global warming.

  The new rules would require the US to set mileage standards for each type of vehicle to meet a national average of 35 miles per gallon (14.9 kilometers per liter). In exchange for a higher benchmark than automakers had wanted, the industry would continue to get credit for making vehicles that run on alternate fuels such as gasoline blended with ethanol.

  "This landmark energy legislation will offer the automobile industry the certainty it needs, while offering flexibility to automakers and ensuring we keep American manufacturing jobs and continued domestic production of smaller vehicles," House Speaker Nancy Pelosi said in a statement.

  The deal ends nearly six months of opposition by the industry and marks the first overhaul of fuel-economy rules in three decades.

  Automakers argued that complying with a 40 percent increase would cost them billions of dollars that would be passed on to consumers. Environmental groups waged a multimillion-dollar campaign against the industry and urged lawmakers to act.

  The proposal is part of a larger energy bill scheduled to be voted on in both houses of Congress this month and will include new goals for renewable sources of energy.

  Pelosi held out for a tougher fuel-economy position against the industry, which was backed by Democratic Representative John Dingell, chairman of the House Energy and Commerce Committee.

  Dingell, on a conference call on Saturday, said he will strongly support the bill.

  "We have a pretty good compromise here, but not everyone is satisfied with everything," he said.

  "This tough, national fuel-economy bill will be good for both consumers and energy security," said Dave McCurdy, president of the Alliance of Automobile Manufacturers, which represents General Motors Corp, Toyota Motor Corp and seven other US and overseas-based automakers. "We support its passage."

  GM chief executive officer Rick Wagoner said the rules pose "a significant technical and economic challenge to the industry."

  The Detroit automaker will attempt to reach the goals "with an array of engineering, research and development resources. We will continue our aggressive pursuit of advance technologies that will deliver more products with more energy solutions to our customers," Wagoner said.

  Under the measure, the need for each automaker to meet a fleet mileage standard for cars and light trucks would be eliminated. Instead, the National Highway Traffic Safety Administration (NHTSA) would set rules for each type of vehicle in an automaker's fleet based on size, weight and other characteristics.

  The current standard is 27.5mpg for passenger cars and 22.2mpg for light trucks.

  Automakers would continue to get mileage credit for making vehicles that run on alternate fuels such as E85, a blend of 85 percent ethanol and gasoline. The credit would be phased out starting in 2014 and be eliminated by 2020.

  Some automakers including Nissan Motor Co wanted to eliminate the distinction between domestic and foreign-made fleets. The legislation is likely to preserve the distinction, which was a key demand of the United Auto Workers union.

  The negotiations followed a surge in the price of gasoline past US$3 a gallon and a push by a coalition of states, environmental groups and consumers for lawmakers to cut oil imports and help curb pollution.

  Congress established the so-called CAFE standards in 1975 in response to the 1973-1974 Arab oil embargo that caused shortages at US gasoline stations. New car-fleet economy, set at 12.9mpg in 1974 according to the Congressional Research Service, was ordered to reach 18mpg by 1978. Light trucks were required to achieve 17.2mpg by 1979.

  NHTSA set truck standards for subsequent years and imposed fines for noncompliance. Attempts by legislators to raise mileage goals from the early 1990s through last year were defeated.
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