U.S. finalizes big jump in auto fuel efficiency

WASHINGTON Tue Aug 28, 2012 4:19pm EDT

1 of 2. Morning commuter traffic moves slowly on the Washington Beltway, I-495, in Silver Spring, Maryland March 22, 2012. Picture taken March 22, 2012.

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WASHINGTON (Reuters) - Fuel efficiency of U.S. cars and light trucks will nearly double by 2025 under a standard finalized by the Obama administration on Tuesday.

American vehicles will get 54.5 miles to the gallon in the new standard that aims to save consumers at the fuel pump, while cutting dependency on foreign oil imports and greenhouse gas emissions.

The rule, strongly opposed by Republicans and some car makers, builds on the standard for vehicles for model years 2011-2016, which requires automakers to raise average fuel efficiency to 35.5 mpg.

The standards finalized on Tuesday cover vehicles with model years 2017 to 2025. The rules are the result of more than a year of negotiations between the administration, automakers and environmental groups.

"These fuel standards represent the single most important step we've ever taken to reduce our dependence on foreign oil," President Barack Obama said in a statement.

The new fuel efficiency standards will save consumers $1.7 trillion in gasoline costs and reduce U.S. oil consumption by 12 billion barrels over the period, according to the White House.

Obama's challenger in the presidential race, Mitt Romney, sharply criticized the rule on Tuesday.

"Governor Romney opposes the extreme standards that President Obama has imposed, which will limit the choices available to American families," spokeswoman Andrea Saul said.

INDUSTRY SUPPORT

The U.S. Environmental Protection Agency and the National Highway Safety Administration will conduct a mid-term evaluation of the standards to determine if they are effective and whether they need adjustment.

Obama initially proposed the standard last July, with the support of automakers including Ford Motor Co, General Motors Co, Chrysler, BMW and Honda Motor Co Ltd, as well as the United Auto Workers union.

The standard is based on one set by California, which played an "integral" role in developing the national program, the White House said.

Automakers and labor were largely supportive of the announcement, saying it brings greater regulatory certainty.

"The standards will ... provide certainty for manufacturers in planning their investments and creating jobs in the auto industry as they add more fuel-saving technology to their vehicles," said Bob King, president of the UAW.

GM said it will work to produce cars that meet the standards but said the mid-term review will ensure that the administration-set goals are "realistic."

"While the requirements are aggressive, we intend to pursue them vigorously by utilizing our strong history of innovation and technology development," GM said in a statement.

COSTS

U.S. Transportation Secretary Ray LaHood said the new standards would raise the average cost of buying a car by $1,800 by 2025 but said the fuel savings "far outweigh the increase in the cost of an automobile."

Fuel savings will be $8,000 over the life of a car, according to the administration.

But critics say those savings would not be achieved easily.

Cars will have to reach 211,000 miles before such a figure can be realized, said Michael Harrington of the National Automobile Dealers Association.

He also said the Transportation Department's estimate that the average new vehicle will cost only $1,800 more, once all the rules are in place, is too low. Harrington put the figure at $2,840, once previously announced fuel economy rulings are considered.

Republicans on the House Oversight and Government Reform Committee have been critical of the administration's tactics in developing the rule and of California's role in shaping the standards.

They released a report earlier this month that said the fuel economy standards were based on an "overly optimistic" view that Americans were willing to buy hybrid or electric cars.

ENVIRONMENTAL GAINS

The Obama administration has made fuel efficiency an environmental and energy priority since cars and trucks account for 20 percent of carbon emissions and more than 40 percent of U.S. oil consumption.

EPA Administrator Lisa Jackson said the efficiency standards will be the most effective domestic policy in place to curb greenhouse gas emissions, cutting as much as 6 billion metric tons of carbon dioxide equivalent by 2025.

The reduction would be greater than the total amount of carbon dioxide emitted by the United States in 2010, according to the EPA.

Jackson said that working with the automobile industry has been easier than working with other industries, such as utilities, which have pushed back strongly against EPA rules.

"I think one of the things great about dealing with the industry is that they are not trying to make regulations go away," she told reporters on a conference call.

"What they have asked for all along is one nationwide standard."

An environmental group welcomed the announcement. "Today's news also is a welcomed antidote to the public perception of a gridlocked Washington utterly incapable of producing a positive result for the good of our country," said Frances Beinecke, president of the Natural Resources Defense Council.

(Additional reporting by Ben Klayman and Bernie Woodall in Detroit; editing by Russ Blinch, Tim Dobbyn and Matthew Lewis)

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