Obama to unveil tough fuel rules for cars

By Tom Braithwaite and Andrew Ward in Washington and Bernard Simon in Toronto
Published: May 18 2009 22:23

The Obama administration plans to set tougher fuel economy and emissions rules for car manufacturers in a move likely to please environmentalists but add to the industry’s challenges.
A senior administration official on Monday said that the new plan would bring “historic levels of fuel efficiency”, introducing the first rules designed to reduce carbon emissions from cars and accelerating by four years an existing plan for new vehicles to achieve an average of about 35 miles per gallon by 2020.

The corporate average fuel economy standard, which was first introduced in 1975 as a response to the oil embargo imposed on the US by Arab oil producers, had been due to rise from 25.3mpg today to 35mpg by 2020 but the new efficiency target would rise to 35.5mpg between 2012 and 2016.
The dual approach to mitigating environmental damage would see the US adopt a plan comparable in scope to that of California, which has been attempting to adopt stricter targets to fight pollution independent of the federal government.
Carmakers, including the big three US companies and foreign manufacturers with US operations such as Toyota, have previously lobbied against proposals to impose tighter fuel-economy standards, arguing that they would hurt an already reeling industry by imposing a higher cost of manufacturing.
But General Motors is struggling to avoid joining Chrysler in bankruptcy. Both companies have accepted billions of dollars in US government aid. The three large US carmakers, including Ford, based in and around Detroit have suffered from a sharp decline in sales.
The administration has sought to engage with the industry, however, and executives are expected among a gathering of officials when the plans are laid out in more detail on Tuesday.
One point in the new regulation’s favour from the industry side is the prospect of a uniform national standard imposed by the federal government, rather than a patchwork of state regulations with different deadlines and targets.
The return of the fuel efficiency issue to the political spotlight comes as President Barack Obama is attempting to push restrictions on carbon emissions through Congress as a means to fight global warming. It also follows his commitment to energy security made during the presidential campaign.
California has long pushed for lower limits on emissions as it battles against pollution. The state’s attempts to enforce tougher legislation of its own, however, were stymied under the Bush administration.
“I am very pleased by the reports that the Obama administration has brought together the federal government, the state of California, and the auto industry behind new national automobile emissions standards that follow California’s lead,” said Barbara Boxer, a Democratic senator from California and chair of the Senate environment committee.
“This is good news for all of us who have fought long and hard to reduce global warming pollution, create clean energy jobs and reduce our dangerous dependence on foreign oil,” she said.
A separate initiative to promote fuel efficiency, which includes the so-called “cash for clunkers” legislation, is being considered in Congress. This would pay a subsidy to owners of older, dirtier vehicles when they trade them in for more fuel-efficient models.
The administration’s auto task force, which is attempting to restructure GM and Chrysler, has also made fuel efficiency a condition for several elements of the government-backed merger between Chrysler and Fiat, the Italian automaker.