The quiet consensus on fuel efficiency

Today’s guest blog is by Eric A. Lukas, who is Sense and Sustainability’s Outreach Director for Transportation Policy and Conventional Energy Markets.  Eric recently completed a master’s degree in International Relations at Oxford University, where he was a Jarvis Doctorow Scholar.  He was previously a contributing editor to the Oil and Glory blog at Foreign Policy magazine and Managing Editor of the Columbia Political Review.

Overshadowed by the titanic battle to raise the federal debt ceiling, a landmark set of fuel efficiency standards emerged this summer from negotiations between the Obama administration and automobile and truck manufacturers. The White House announced agreements on fuel standards for cars in late July and for heavy-duty trucks and buses in early August, under which the average fuel economy would more than double by 2025 for the U.S. auto fleet and increase by 20 percent for tractor-trailers. Although fuel economy standards are nothing new in the American auto industry, the substantial increases agreed upon, and the minimal protest put up by automakers, reflect a notable paradigm shift for Detroit and growing acceptance by the auto industry of a future where more fuel-efficient and hybrid vehicles move from the margins to the mainstream.

The administration first overhauled nationwide fuel efficiency standards in 2009 by mandating average fuel economy targets of 39 miles per gallon (mpg) for cars and 30 mpg for light trucks by 2016. The July agreement with automakers builds further upon those targets by extending the program to 2025 and raising the average fuel economy target for cars and light trucks to 54.5 mpg (see graphic from the New York Times here). According to the White House fuel economy report, the new standards for 2011-2025 will save approximately 12 billion barrels of oil and cut greenhouse gas emissions by over 6 billion metric tons by 2025. The August fuel efficiency rules for heavy trucks and buses, the first ever in the U.S., are expected to see reductions of about 530 million barrels in oil consumption and 270 million metric tons in carbon emissions by the 2018 model year, 20 percent below current levels.

For decades American automakers strongly resisted tighter fuel efficiency regulations, so much so that the U.S. fuel economy standard for passenger cars remained unchanged for a quarter century after its last update in 1985. But the improved fuel efficiency targets of 2009 and 2011 have received the full support of auto executives, engine manufacturers, and trucking industry trade groups. Why the change?

A big part of the answer lies with the troubled economic climate and the 2009 federal bailouts of General Motors and Chrysler. The latter gave the administration unprecedented leverage in the 2009 fuel economy agreement, and Detroit’s past obstinacy to change has visibly subsided since. A further contributing factor may have been the accession of Detroit outsiders to the chief executive roles at Ford, G.M., and Chrysler, who have been less prone to the old institutional resistance to greener fuel standards. Moreover, the aftershock from the 2008 recession and prolonged high oil prices have sparked demand for fuel-efficient vehicles, and increased sales have helped to change executive minds. This realization that efficiency can sell, along with the ample lead times to implement the new fuel economy standard programs (six years for heavy trucks, 14 years for cars and light trucks), has eliminated a great deal of uncertainty over the commercial viability of greener automotive technology. Credits offered to automakers by the administration, a condition of the July deal, should provide a further incentive to invest in more fuel-efficient equipment.

Evidence of that increased commitment to efficiency is already visible. Last month Ford and Toyota announced a partnership to collaborate on hybrid technology for pickup trucks and sport-utility vehicles, and days later G.M. followed up with its own plans to jointly develop a line of electric and hybrid vehicles with Korean electronics giant LG Corp.

The emerging consensus on fuel efficiency could have broader economic implications. Greener cars will generate demand for additional manufactured components, a primary reason why tougher fuel standards have been enthusiastically backed by the United Auto Workers. The total number of American jobs created by the measures could be as high as 150,000, according to a 2010 joint study by the National Resources Defense Council (NRDC), the UAW, and the Center for American Progress.

Outside the auto industry, raising emissions standards still faces substantial hurdles. On September 2, President Obama shelved an E.P.A. proposal to tighten ground-level ozone emissions, in the face of an abysmal August jobs report and persistent cries from congressional Republicans to withhold “job-destroying” environmental regulations. But the fuel economy deals hold some promise that job creation and a sustainable future can go hand in hand, and that the administration, industry executives, and union leaders can work together to achieve meaningful environmental policy reform. Developing greener standards as a product of such multi-faceted compromise may deliver on key policy goals while giving corporations the certainty they need for long-term investment. In fact, NRDC climate change policy director David Doniger cites “leadership, partnership, and compromise” as the most important lessons to take away from the July and August fuel economy deals.

If sustainability measures can be marketed as competitive and job-creating, other industries may be won over as well. It may seem like a tall order, but remember, the Detroit automakers were once among the most intractable of opponents.

Image Credit: Benson Kua


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