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White House finalizing rules to cut car emissions

written by Reuters staff

Friday March 12, 2010 06:04

WASHINGTON, March 11 (Reuters) - The White House is finalizing rules on the first United States greenhouse gas emission standard for automobiles, which would raise average fuel economy 42 percent by 2016 in a bid to slash oil imports and fight climate change.

The Environmental Protection Agency and the Transportation Department sent the final rules this week to the White House's Office of Management and Budget, according to a notice posted on the O.M.B. website.

The higher mileage requirements will reduce United States greenhouse gas emissions by 900 million metric tons and save 1.8 billion barrels of oil over the life of vehicles built during the 2012 to 2016 model years, according to the E.P.A.

The projected savings over the life of the plan amounts to about four months of current fuel consumption in the United States, the biggest petroleum consumer, with demand at close to 19 million barrels per day.

The rules would aid the Obama administration's efforts to cut greenhouse gas emissions, especially if Congress fails to pass legislation to fight global warming.

The vehicle emissions standards will be phased in starting with the 2012 model year, raising fuel economy to an average 35.5 miles per gallon by the time the 2016 models are ready – up 42 percent from the current 25 miles per gallon.

Lower gasoline consumption in the United States could make more crude supplies available in the world market, which in turn could put downward pressure on oil prices.

Phil Flynn, an analyst with PFGBest Research in Chicago, said the new standards will definitely lower United States oil demand, but that could be offset with higher fuel use in other countries.

"We can save it here, but are these cars going to be marketable in China, where all the demand growth is going to come from?" he asked.

The rules follow an E.P.A. finding that greenhouse gas emissions from new vehicles contribute to air pollution, a danger to public health.

The E.P.A. has come under attack from many United States lawmakers and industries for working independently on regulations that would slash greenhouse gas emissions from power plants, oil refineries and factories. Legislation is pending in Congress to stop the E.P.A. from issuing broader emissions-cutting regulations.

Many accuse the E.P.A. of trying to get around Congress, where legislation that would cap and then slowly reduce United States emissions blamed for global warming has been bogged down. As lawmakers deal with a massive healthcare bill and financial reform, it becomes more unlikely Congress will be able to approve a final climate change bill this year.

But automakers support the separate vehicle regulations because it would create the first national standard for controlling car and truck emissions, instead of having state-by-state regulation.

Many new vehicles, especially hybrid vehicles, already meet or exceed the planned standards.

The government must notify automakers by March 31 of the higher fuel efficiency for the 2012 model years.

To meet the new standard, the sticker price on a car or truck would rise by an average $1,300 in 2016 compared to current vehicle costs, the E.P.A. said. However, a driver would save about $2,800 over the life of a vehicle through fuel costs.