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New auto mileage standards leave room for interpretation

President Obama’s announcement on fuel standards capped weeks of negotiations between federal officials, automakers, environmental groups, and the state of California. President Obama’s announcement on fuel standards capped weeks of negotiations between federal officials, automakers, environmental groups, and the state of California. (Andrew Harrer/Bloomberg New)
By Bill Vlasic
New York Times / July 30, 2011

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DETROIT - President Obama announced new automobile fuel-efficiency standards yesterday that require an average 54.5 miles per gallon by 2025. But even if the auto industry manages to meet the new standards, it is unlikely car buyers will see many fuel-economy stickers boasting such high mileage.

Instead, the average new vehicle in 2025 will probably be closer to 43 miles per gallon, based on the typical 20 percent discount applied by federal officials when rating a car or truck in real world driving conditions.

That’s one example of how new corporate average fuel economy rules, known as CAFE, will require considerable interpretation for the industry and consumers alike.

Administration officials said yesterday that the new fuel rules also contain an intricate set of “credits’’ for auto companies to achieve the new target of 54.5 miles per gallon for their fleets in 14 years.

The system of credits has been devised to encourage new technology and better penetration of current fuel-saving equipment into the market.

The president’s announcement capped weeks of intensive negotiations involving federal officials, carmakers, environmental groups, and California regulators, who agreed to follow the new federal guidelines rather than impose their own, more stringent standards.

The new rules would extend and broaden the existing CAFE rules, which require new cars and trucks to achieve an average of 34 miles per gallon by 2016.

Under the new program, automakers need to increase the efficiency of cars by 5 percent annually from 2017 to 2025. Light trucks will have to become 3.5 percent more efficient for the first four years of the program, and then 5 percent annually for the remainder of the cycle.

Automakers received a key concession that allows for a midterm review of the standards in 2021.

The president acknowledged that reaching the 54.5 standard would require improvements in existing engines and hybrid systems, as well as breakthroughs in other areas, like batteries and advanced alternative fuel technology.

The Obama administration estimated the overall program would save consumers $1.7 trillion in fuel costs by the year 2025, and reduce oil consumption by 2.2 million barrels a day.

Calculations released by federal officials early in the negotiations estimated that a 56.2 miles per gallon standard would add up to $2,500 to the cost of a typical car.