Back in 1975, the United States was reeling from the aftershocks of the Arab oil embargo, gas prices had skyrocketed, and Congress, for the first time in its history, had ordered automakers to start producing more fuel-efficient cars. At the time, the average vehicle on the road was getting 13 miles per gallon; by 1987, thanks partly to Congress's rules, fuel efficiency had jumped up to 22 mpg.
And yet, as President Obama noted last week when he unveiled aggressive new standards for fuel economy and vehicle emissions, "all too little has been done" since that time. Today, the United States spends hundreds of billions of dollars a year on oil imports, and the average vehicle, according to the EPA, gets only about 21 mpg, slightly less than in 1987.
Calling that unacceptable, Obama proposed what is essentially a single national rule requiring both a rapid increase in the fuel efficiency of cars sold in the country and a dramatic decrease in the greenhouse gases they emit. By 2016, the proposed rule says, the entire American car and light truck fleet must be nearly 40 percent more fuel efficient than it is today. That means standards for cars and light-duty trucks will have to jump from the current laboratory average of 25 mpg to 35.5 mpg. (When cars are driven on the road, the actual miles per gallon drop by about 25 percent.)
Many top auto executives were on hand for the event, so the new proposal has the industry's formal backing. But it didn't come easily or quickly. The agreement, which still has to go through the official rule-making process, is really the product of months of negotiations among White House staff, automakers, state officials, environmentalists, and other groups, largely orchestrated by the administration's climate czar, Carol Browner. And it reflects not just the goals on energy policy but also a number of complicated subplots that have demanded the administration's attention: the decline of Detroit's auto industry, the ongoing need for bailouts, and, of particular importance, the government's legal obligations to respond to a long-simmering request by California to impose stricter emissions limits on vehicles.
Only a few years ago, of course, most automakers would have aggressively opposed calls for government-mandated increases in fuel economy. At the time, they still had significant clout in Washington; they called the shots. But that's changed as the economy has unraveled and their fortunes have declined. "They are simply not as politically potent," says David Gerard, executive director of Carnegie Mellon's Center for the Study and Improvement of Regulation.
On top of that, automakers this year had begun to fear that California's request to impose tougher vehicle emissions standards would finally be approved by the Environmental Protection Agency. "They thought they were going to lose in California, and if they lost in California, they're in big trouble," says Gerard, who noted that more than a dozen other states had endorsed California's proposal, which turned out to be very similar to the national standard Obama announced.
Had those 13 or so states actually adopted tougher standards, automakers probably would have needed to build different cars for different states. Faced with that nasty prospect and grappling with tough economic conditions internally, automakers instead decided to negotiate. "What's so important is that this establishes a national standard that lets us view the nation as one," rather than as a "patchwork of regulations," says Sue Cischke, Ford's vice president of sustainability.
And yet for all the lofty rhetoric and warm smiles, there are still messy questions. How difficult will it be for automakers to fulfill this pledge? And how will consumers respond?Ford, Cischke says, will be looking for efficiency gains "across the whole vehicle line." One focus, she says, is improving the efficiency of the internal combustion engine. The company is hoping to outfit 90 percent of its U.S. vehicles by 2013 with its new EcoBoost engines, which the company says get 20 percent better fuel economy than regular engines.
There's also likely to be an aggressive push to develop hybrids, much to the administration's liking. A new study this week by JP Morgan predicts 20 percent of the vehicles sold in the United States in 2020 will be hybrids.