Automakers, regulators urge work on U.S. fuel rules review

TRAVERSE CITY, Mich. (Reuters) - A U.S. Environmental Protection Agency official and major auto industry lobbyists urged the government and automakers on Tuesday to consider innovative ideas to head off conflict over 2025 model-year fuel efficiency standards for U.S. automakers.

Christopher Grundler, director of the EPA’s Office of Transportation and Air Quality, told an automotive conference that regulators should consider allowing automakers to get regulatory credits for vehicles that can operate in a more fuel-efficient mode or for selling electric vehicles to high-mileage ride-sharing fleets.

“Having this conversation about both the nearer term and longer term at the same time makes a lot of business and technical sense,” Grundler said, adding that knowing where the emissions rules are going through 2030 could provide stability to automakers.

Grundler had a leading role in crafting the Obama administration rule requiring automakers to roughly double new- vehicle fuel efficiency - and cut greenhouse gas emissions - in stages between 2012 and 2025.

In March, President Donald Trump ordered a review of U.S. vehicle fuel-efficiency standards from 2022 to 2025 put in place under former President Barack Obama, saying they were too tough on the auto industry. The review must be finalized by April 2018.

In 2011, officials said the rules would save motorists $1.7 trillion in fuel costs over the life of the vehicles but cost the auto industry about $200 billion over 13 years.

The U.S. Transportation Department said last week it may revise fuel-efficiency requirements starting with the 2021 model year, a year earlier than previously disclosed, and was studying the impact of freezing standards through 2025. The White House has held meetings with automakers to discuss the 2025 review.

Under current rules, fleetwide average fuel economy is expected to be around 41 miles per gallon in 2021, compared with an average of nearly 50 miles per gallon in 2025.

California opposes weakening the rules and threatened to pursue tougher standards unilaterally. Other states have also pledged court fights. Automakers want a national standard that will allow them to plan investments in new vehicles and technology.

Mitch Bainwol, chief executive of the Alliance of Automobile Manufacturers, a trade group representing General Motors Co , Volkswagen AG and others, said the only issue was how much requirements should rise.

“We all want to get to a compromise deal,” Bainwol said. “We’re not talking about a monumental shift in regulatory policy or outcomes.”

Annette Hebert, a senior official with the California Air Resource Board, said her agency did not plan to relax its 2025 standards. California wants to hold talks with automakers on standards that reach beyond 2025.

“We need to have a sense of urgency about this,” said John Bozzella, president of Global Automakers, a trade group representing foreign automakers including Toyota Motor Corp and Hyundai Motor Co at the forum.