Fuel economy back on US agenda

Concern about global warming is changing the dynamics of a longstanding debate on Capitol Hill: whether to tighten America's standards for automotive fuel economy.

One bipartisan bill, which cleared a Senate committee Tuesday, seeks to boost average car mileage by about 10 miles per gallon during the 10 years between 2011 and 2020, a so-called "10 in 10" proposal.

Although no one sees it as a one-step fix for the nation's energy challenges, such a move would have major effects – but only if provisions that give US automakers an out are eliminated, say environmentalists.

The measure, which would be the first legislation in nearly two decades to raise fuel-economy standards, would impose costs on consumers and manufacturers, especially Detroit's Big Three. But greenhouse-gas emissions would fall, as would demand for imported oil, assuming the law succeeded in improving fuel economy by 4 percent a year.

"These really are significant levels of reduction – but only if we can get them locked into place," says Paul Bledsoe, a spokesman for the National Commission on Energy Policy, a bipartisan group of 20 energy experts.

If fuel economy improved 4 percent a year from 2007 to 2030 – about 1 mile per gallon per year – America's oil consumption would drop by 5.6 million barrels per day. Currently the US uses about 20 million barrels per day and, without any major efficiency gains, will be using 28 million by 2030.

New mileage rules face sharp debate in Congress, and the measure is expected to undergo many alterations if it is to clear just the full Senate. Lawmakers have been divided over the issue for years.

But in recent months two shifts have occurred: Democrats have regained control of Congress, and bipartisan consensus has grown on the need to take action to curb the carbon emissions that contribute to global warming. Even automobile manufacturers voice support, with caveats, for boosting fuel economy.

"We are looking forward to doing our part to address these issues" of fuel economy, says Wade Newton of the Alliance of Automobile Manufacturers in Washington. "We really want to be able to support a bill like that [in the Senate], but we do feel that's too ambitious." The alliance includes domestic automakers, as well as others including Toyota and Volkswagen.

Congress has discarded scads of fuel-economy bills over the years. This time could be different, some observers say.
"I would argue this is the best chance we've had for a real impact on fuel economy in 30 years," says David Friedman of the Union of Concerned Scientists.
"I'm very optimistic," adds David Doniger, policy director of the Natural Resources Defense Council's climate center. "The move in the Senate is a step in the right direction. The likelihood of something finally happening has gone up."
A key player is Rep. John Dingell (D) of Michigan, chairman of the House Energy and Commerce Committee, who has blocked many such bills in the past.
"We've had bills about CAFE standards before," says Ann Korin, chairwoman of the Set America Free Coalition, an energy-independence group in Washington, D.C. "The question is: Has anyone changed Mr. Dingle's mind? If not, it's just talk."

Critics say the bill is not ambitious enough, citing in particular provisions that give automakers a way out of the higher standard. A battle over the tradeoffs between financial costs and energy or environmental benefits will define the debate in Congress in the weeks ahead.

Since 1990, Corporate Average Fuel Economy standards, known as CAFE standards, have stood at 27.5 miles per gallon for cars sold in the US. That means each automaker must achieve that fleetwide average or pay a fine on every car it sells. A more recent law covers fuel economy for light trucks, to push their average from about 22 m.p.g. today to 24 m.p.g. by 2011.

The bill would wrap passenger vehicles together, targeting a fleetwide average for both cars and light trucks of 35 m.p.g. by 2020, up from about 25 m.p.g. today.

Some outside experts say the CAFE system is flawed, but many also say it has a track record of achieving results.

With loopholes plugged, the 10-in-10 measure could slash oil use by about 1.3 million barrels per day by 2020 and about 2.5 mbd in 2030, compared with a business-as-usual scenario, estimates Mr. Friedman. "That's not an insignificant cut," he says, noting that oil imports from Saudi Arabia were about 1.5 mbd last year.

But reducing reliance on oil overall and on oil imports in particular will not be attained by a single fuel-economy step, says Ms. Korin. While the 10-in-10 bill contemplates a 40 percent increase in CAFE standards by 2019, even a bigger boost would leave the US heavily dependent on foreign oil, her group estimates.

Such gains would not only cut oil imports but also the carbon-dioxide emissions that scientists consider to be a major contributor to global warming.

But improving auto mileage carries financial costs.

On average, compliance with the Senate bill might add $2,500 to $3,000 to the cost of a new light truck and perhaps half as much to a passenger car, says K. Gopal Duleep of Energy and Environmental Analysis, a consulting firm in Arlington, Va.

Some analysts put the cost even higher, but in any case these costs would be offset – partially or fully – by gas-pump savings to consumers over the life of the vehicle. At $3 per gallon, Mr. Duleep says, "there's good payback" during vehicle use that typically reaches 5,000 gallons.