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Carmakers Balk at New Fuel Bill

May 7, 2007

WASHINGTON — A key Senate committee chairman recently unveiled a revised fuel economy proposal that automakers described as "unattainable,” reported The Detroit News.

The bill would force car companies to dramatically raise fuel-economy standards to a fleetwide average of 28.5 miles per gallon by 2015 and 35 mpg by 2020, with 4 percent increases annually every year after that.

The draft bill, sponsored by U.S. Sen. Daniel Inouye, D-Hawaii, chair of the Senate Commerce, Science and Transportation Committee, and Alaska's Ted Stevens, the committee's ranking Republican, faces amendments and a vote in committee on whether to send it to the full Senate. It would be the first vote on fuel economy since Democrats took control of Congress.

"Basically, it is unattainable up until 2020 and unattainable afterward," said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, the trade group that represents General Motors Corp., Ford Motor Co., DaimlerChrysler AG, Toyota Motor Corp. and other automakers. "We think this is still going to be a big burden on Americans who need work vehicles."

By the end of the day Friday, automakers privately said the proposal was about as bad as they could have imagined.

U.S. Sen. Carl Levin, D-Detroit, who has been actively lobbying colleagues in recent days, criticized the draft for being too complicated and including some issues that had not been proposed earlier.

"For instance, it includes a requirement to increase CAFE standards by 4 percent per year after 2020," Levin said in a statement. "More progress can be made in reducing oil consumption and greenhouse gas emissions if we focus our resources on leap-ahead technologies instead of forcing companies to make incremental improvements to meet an arbitrary standard."

In 1975, Congress ordered automakers to raise passenger car fuel economy from an average of 13 mpg to 27.5 mpg. That standard has remained unchanged as automakers have vigorously lobbied against increases.

The proposal comes amid growing concern in Congress about the impact of vehicle tailpipe emissions on climate change. U.S. automobiles account for about 20 percent of U.S. greenhouse gas emissions and about 5 percent worldwide.

The proposed bill would also, for the first time, regulate the fuel economy of medium and heavy-duty trucks, requiring a 4 percent annual improvement beginning in 2011.

It would authorize the National Highway Traffic Safety Administration to set fuel economy standards, as automakers prefer, and do it based on size, as NHTSA has already done for light trucks.

The bill also has "off ramps" that give NHTSA discretion to lower fuel economy mandates if the agency determines they are not cost effective or feasible in a given model year.

NHTSA would also have to issue new safety rules to improve the compatibility of vehicle bumper heights to better protect passengers when different sized vehicles collide.

One big issue is whether NHTSA would be under pressure not to use the off-ramps for domestic automakers, whose fleets are heavily skewed toward less fuel-efficient trucks, if Toyota and Honda Motor Co. meet the requirements.

Automakers also aren't happy that after the 2009 model year they would lose the fuel economy credit — currently 0.8 mpg — for building flexible-fuel vehicles that run on E85, a fuel made of 85 percent ethanol. But they would be able to use CAFE credits earned for five years and also would be able to buy and sell credits among manufacturers.

Automakers can use "credits" to meet fuel economy mandates, even though their vehicles are less efficient than required and there is no requirement that consumers actually use alternative fuels.

The credit trading system would amount to a "wealth transfer" between automakers and have no impact on improving the environment, Bergquist said.

Experts have said it might require GM, Ford and Chrysler to pay hundreds of millions of dollars to Toyota and Honda in order to comply with the law.

The bill also would require a new labeling program to advertise the vehicles that have best-in-class fuel economy and the lowest greenhouse gas emissions.

Joan Claybrook, an environmental advocate who heads Public Citizen, said the bill "does not go far enough. Automakers could easily hit 40 miles per gallon," she said. "With the polar bears and penguins in deep trouble, this is the year Congress will finally do something."

The Bush administration endorsed raising fuel economy standards by an average of 4 percent annually beginning in September 2009 for passenger cars and September 2011 for light trucks in order to reduce gasoline usage by 5 percent annually in 2017, or 8.5 billion gallons annually.

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