Obama Boosts Fuel Economy Standards Despite Detroit's Woes

Walking a tightrope between keeping its environmental pledges and trying to help struggling U.S. automakers, the Obama administration announced today the first increase in fuel economy standards for cars in more than 25 years. But to the dismay of environmentalists, the new standard doesn't go as far as a proposal that the Bush administration offered in 2008 but quickly abandoned.

The move increases fuel economy standards for light vehicles in 2011 to 27.3 miles per gallon, or 8 percent over the 2010-model-year requirement. New cars will have to meet a standard of 30.2 miles per gallon. The standards will save 887 million gallons of fuel and reduce carbon emissions by 8.3 million metric tons, according to the Department of Transportation.

That's a key first step toward Congress's mandate that automakers by 2020 reach 35 miles per gallon—a 40 percent increase over the current average of 25 miles per gallon. Rep. Edward Markey, who chairs a subcommittee on energy and the environment, said in a statement that the administration's announcement represents a "historic first step."

The Bush administration had made some attempts to rule on the matter with a proposal slightly more ambitious than the one announced today. In April 2008, the government proposed to raise fuel economy standards to 27.8 miles per gallon in 2011. By 2015, it said, it would bring the U.S. average to about 31.6 miles per gallon, a 25 percent increase over current models.

In relation to the Bush administration's record on climate change and its refusal to take the steps to curb emissions that were urged by the Environmental Protection Agency, the proposal seemed ambitious. But, with an estimated price tag to the auto industry of almost $50 billion, the plan was abandoned as the auto industry began to crumble.

The Obama administration has had to carefully balance the needs of Detroit automakers, and the effects of their potential failure on the economy in Michigan and elsewhere, against its pledge to fight climate change. Obama promised during his campaign to support a 4 percent annual increase in efficiency standards, and as officials work now to hammer out a set of efficiency rules applicable through 2015, environmentalists want to make sure that the increase will materialize.

Meanwhile, the next big test will come in May, when it's thought that the administration will make a decision on whether to allow California and 13 other states to enact laws to reduce carbon emissions. Those laws would cut new-vehicle emissions by 30 percent by 2016. In one of his first moves in office, Obama issued a directive ordering the EPA to re-examine the Bush administration's rejection of the states' bid—a worrying sign for automakers.

Read "Environmental Groups Hope Obama Will Rebuild EPA After Bush Years."