April 22, 2008 / 10:03 PM / 11 years ago

UPDATE 1-US DOT wants autos to average nearly 32 mpg by 2015

(adds details of rule, environmental, consumer comment)

By John Crawley

WASHINGTON, April 22 (Reuters) - The Bush administration proposed a blueprint on Tuesday for moving the auto industry toward sharply higher mileage standards as a way to reduce U.S. oil consumption and cut greenhouse gasses.

With crude at just under $120 per barrel and gasoline prices at another record high this week, the Transportation Department unveiled a plan to require the new fleet on U.S. roads to average nearly 32 miles per gallon by 2015.

“This proposal is historically ambitious, yet achievable,” Transportation Secretary Mary Peters said in a statement.

Peters estimated the proposal would save 55 billion gallons of fuel and cut tailpipe emissions by 521 million metric tons.

The energy bill signed by President George W. Bush in December requires that the fleets of individual automakers average 35 mpg by 2020, a 40 percent increase over today’s standard. Some vehicles will do better, others worse.

The 400-page plan proposed on Tuesday by the Transportation Department’s National Highway Traffic Safety Administration (NHTSA) sets annual mileage goals for the first five years of the 2020 plan — 2011-2015.

The proposal is slightly more aggressive than was envisioned by framers of the energy law, especially in the first few years. Yearly targets after 2015 would be set by the next presidential administration.

Between 2011-15, new cars would have to get 35.7 mpg while light trucks, including sport utilities, pickups, and vans would need to reach 28.6 mpg.

AUTOMAKERS QUIET

Major automakers had little reaction to Tuesday’s proposal beyond what they have said previously — that the 2020 standard would be tough but doable.

Most major manufacturers would not make the grade for cars by 2015, based on current product plans for future vehicles. However, those that build a lot of light trucks — General Motors Corp (GM.N), Ford Motor Co (F.N) and privately held Chrysler — would either satisfy or come close to meeting the standard for those vehicles.

Critics have called this an important break for struggling American manufacturers. Another break designed to help U.S. industry would allow automakers to trade credits, which would be earned for exceeding mileage goals. The credits could be applied as efficiency gains to help poorer performing vehicles meet their mileage targets.

Another loophole in the energy law prompting criticism allows automakers to assume certain fuel economy gains for building “flex-fuel” vehicles that run on gasoline or alternative sources like corn-based ethanol. However, ethanol availability is very limited.

NHTSA estimated it would cost manufacturers about $16 billion to meet the 2015 standard for cars and $31 billion for light trucks.

SAVINGS ASSUMPTION

The government estimates that expected price increases for consumers would be offset by savings from driving more fuel efficient vehicles. However, NHTSA assumed a price per gallon range of $2.26 to $2.51 for the years 2016-2030. Gas prices began this week at a record of $3.51 a gallon, according to the Energy Department.

Reaction from environmental and consumer groups was mixed. Several credited the administration for taking relatively aggressive steps in the early years of the proposal but were unhappy with the drop off at the end.

Combined car and light truck targets would rise from an estimated 25 miles per gallon now, to 27.8 mpg in 2011; 29.2 mpg in 2012; 30.5 mpg in 2013; 31 mpg in 2014 and 31.6 mpg in 2015. To reach the 35 mpg standard by 2020, the annual gains would have to increase by 2.1 percent beginning in 2016.

The Union of Concerned Scientists said the weaker targets in the final two years could undermine efforts to reach the 35 mpg target.

“Congress enacted higher fuel economy standards because people are feeling pain at the pump,” said Eli Hopson of the UCS Clean Vehicles program. “This rule shows initial promise, but doesn’t do enough.”

Tuesday’s proposal could be changed following a 60-day comment period. Additionally, the administration is in a court fight with California over its plans to impose its own auto emissions goals that would require even better fuel efficiency. A California victory in that case could force national changes in efficiency targets. (Reporting by John Crawley; editing by Carol Bishopric)

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