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U.S. set to raise fuel-economy standard

Tue, 19 May 2009

Government regulators will get their prize of higher fuel-economy standards, and automakers will get the certainty of a national emissions standard, under new rules to be proposed Tuesday by President Barack Obama.

The fleet average fuel economy for automakers will rise to 35.5 mpg in 2016 under the president's proposal--10 mpg more than today's mandate. At the same time, the president's proposed rule will cut carbon emissions, thought to be a key factor in global warming.

For automakers, it will mean the need to move faster to cut vehicle weight and increase the use of fuel-saving powertrains such as hybrids and diesels. But those changes will add to the vehicle cost; government officials say the new rule will add $600 to the cost of building a vehicle.

The government says the new rule will save 1.8 billion barrels of oil. Based on U.S. consumption of 20.7 million barrels of oil a day in 2007, the government's estimate of savings equals 87 days of oil use.

Under rules set during the Bush administration, automakers had until 2020 to meet the 35-mpg average.

The new rule comes on top of an increase in fuel-economy standards announced in March. Under that move, automakers need to have a fleet average of 27.3 mpg for the 2011 model year--an 8 percent increase from today's standard. To meet the fleet average, cars will have to average 30.2 mpg and light trucks will have to get 24.1 mpg.

After a long history of opposing increases in fuel-economy standards, automakers say they support the new rules. One reason: The proposal will create a fuel economy and emissions standard effective in all U.S. states, including California. Currently, automakers create and certify separate powertrains for California and the states that follow its emissions rules.

California legislators say they will accept the new federal standard. And automakers say they'll drop lawsuits seeking to block a move by California to regulate carbon emissions.

The president's plan envisions gasoline costing $3.50 a gallon in 2016, which will also help push consumers toward smaller, fuel-efficient vehicles. Legislators also are moving along a plan to offer incentives of up to $4,500 to people who trade in an older vehicle for a new, more-fuel-efficient model.

By Dale Jewett