Congress Passes Epic CAFE Bill

December 18, 2007
With a resounding 314-100 majority, the House of Representatives has passed sweeping changes to the Corporate Average Fuel Economy (CAFE) standards that govern auto fuel economy.With approval already having come from the Senate, the bill heads to the White House tomorrow, where the Associated Press reports that the President will sign it into law.

The epic bill calls for fleet average fuel economy among passenger cars, small trucks and SUVs to rise to 35 miles per gallon by 2022. It has been 32 years since the CAFE standards for cars have changed; light-truck standards were recently raised by the Bush Administration.

The bill puts a large burden on the auto industry to change its offerings and to build more fuel-efficient vehicles, but it also lays out changes to other environmental standards that might also save fuel. The bill mandates an increase in the use of ethanol to 36 billion gallons by 2022, a figure six times higher than today. And, the AP adds, energy efficiency standards for lighting, appliances, and federal buildings would be tightened.

Detroit’s automakers have already chimed in on the new fuel-economy regulations.

In a statement, GM CEO Rick Wagoner said, “GM commends the Congress and President for passage of an energy bill. The new fuel economy standards within the bill set a tough, national target that GM will strive to meet. We will focus our engineering and technical resources to attain these standards and we remain hard at work applying the innovation and developing the advanced technologies that will power tomorrow's cars and trucks.”

Bob Nardelli, CEO of Chrysler LLC, said something strikingly similar: “We commend the Congress for passing an energy bill today and we fully support it being signed into law. Chrysler is committed to meeting the fuel economy standards of the bill – and doing our part to reduce greenhouse gas emissions and our country’s reliance on foreign oil. We continue to devote significant resources to develop quality, fuel efficient products that our customers expect. This year alone, we offer six vehicles that get 28 miles per gallon or better, and more are on the way.”

Automakers had little choice but to go along with the legislation. With the price of oil from the Middle East hovering near $90 per barrel and the U.S. dollar taking a beating on global markets, the fuel economy standards had become linked to national security.

While Detroit’s responses sounded canned, environmental groups clearly cheered the passage of the bill, a historic defeat for the auto industry’s powerful Washington lobby. Carl Pope, Sierra Club Executive Director, said the bill and CAFE changes signaled a new direction: "This bill is a clean break with the failed energy policies of the past and puts us on the path toward a cleaner, greener energy future.”

Phyllis Cuttino, director of the Pew Charitable Trusts Campaign for Fuel Efficiency, added that the bill resolves a longstanding debate in the U.S. about fuel economy and tied it to national security, a wedge issue that’s become effective with more Republicans, 95 of whom joined Democrats in voting for the bill in the House today. "Americans demanded action on energy security and global warming and Congress responded,” Cuttino said. “This new fuel efficiency standard shows how powerful these issues have become -- and they're not going away."

The final bill was not as severe as recent versions have been. House leader Nancy Pelosi (D-Calif.) and Senate Majority leader Harry Reid (D-Nev.) had tried to insert provisions that would revoke tax breaks for oil companies totaling more than $13 billion but those were blocked from the final bill.

While Democratic leadership in Washington suggested the changes to meet new CAFE standards could save drivers $700 to $1000 a year in fuel costs, automakers have long challenged the cost savings notion, pointing out that the technology required to meet the new regulations could easily exceed $1000 per car.

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