30 July 2011

President Obama reached an agreement with thirteen major automakers to increase fuel economy to 54.5 mpg (4.32 l/100 km) for cars and light-duty trucks by model year 2025. The President was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo—which together account for over 90% of all vehicles sold in the United States—as well as the United Auto Workers (UAW), and the State of California, who were integral to developing the agreement.

The development of this next round of light-duty fuel efficiency legislation—that follows the program for MY 2012-2016 vehicles which will raise fuel efficiency to 35.5 mpg—was initiated by the Notice of Intent (NOI) published in October 2010. The agreed MY 2025 fuel efficiency target of 54.5 mpg, equivalent to 163 g/mile CO2, is based on the third regulatory scenario suggested by the NOI (5% stringency increase per annum) with some relaxation of the targets for light-duty trucks.

The Environmental Protection Agency (EPA) and the Department of Transportation (DOT) have worked closely with auto manufacturers, the state of California, environmental groups, and other stakeholders for several months to ensure these standards are achievable, cost-effective and preserve consumer choice, said the White House announcement. The program would increase the stringency of standards for passenger cars by an average of 5% each year. The stringency of standards for light-duty trucks would increase an average of 3.5% annually for the first five model years and an average of 5% annually for the last four model years of the program.

The above fuel economy and CO2 figures represent the regulatory testing results. Real-world CO2 is typically 25% higher and real-world fuel economy is typically 20% lower (i.e., the 54.5 mpg target would correspond to real world fuel economy of about 44 mpg (5.35 l/100 km)).

EPA and NHTSA are developing a joint proposed rulemaking, which will include full details on the proposed program and supporting analyses, including the costs and benefits of the proposal and its effects on the economy, auto manufacturers, and consumers. The agencies plan to issue a Notice of Proposed Rulemaking by the end of September 2011. California plans on adopting its proposed rule in the same time frame as the federal proposal. Given the long time frame at issue in setting standards for MY 2022-2025 light-duty vehicles, EPA and NHTSA intend to propose a mid-term evaluation.

To help achieving the standards for the 2017-2025 program, the agencies are considering a number of incentive programs to encourage early adoption and introduction into the marketplace of advanced technologies that represent “game changing” performance improvements, including:

  • Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cells vehicles;
  • Incentives for advanced technology packages for large pickups, such as hybridization and other performance-based strategies;
  • Credits for technologies with potential to achieve real-world CO2 reductions and fuel economy improvements that are not captured by the standards test procedures.

In addition, EPA plans to propose provisions for credits for improvements in air conditioning (A/C) systems; treatment of compressed natural gas (CNG); and continued credit banking and trading, including a one-time carry-forward of unused MY 2010-2016 credits through MY 2021.

Source: The White House