The Department of Transportation (DOT) recently released final tailpipe pollution standards that will require average fuel efficiency of new cars and light trucks to reach 49 miles per gallon in less than four years.
The new standards largely reverse a Trump-era rollback of the Obama-era standards. The new rule requires the nation's automakers to increase light duty fuel efficiency fleetwide by 8 percent starting in late 2023, another 8 percent the year after and 10 percent for model year 2026. (EPA shares responsibility with DOT for overseeing the standards and issued its own companion rule in December.)
DOT also said that it will more than double penalties for automakers that fail to meet fuel efficiency standards for 2019 and later models.
New vehicles sold in the United States will have to average at least 40 miles per gallon of gasoline in 2026. DOT projects that the new rules will raise the price of a new vehicle in the 2029 model year by $1,087.00. The agency said that under the new standards, vehicle owners would save approximately $1,400 in gasoline costs during the lifetime of a 2029 model year vehicle.
The mileage standards are similar to those established in an agreement between California and Ford and several foreign carmakers in 2019 as the Trump Administration sought to roll back Obama-era standards and revoke California's long-standing ability to set stricter pollution limits than the federal government.
The DOT fuel economy rule that was recently released for the first time ever included state zero emission vehicle (ZEV) programs in the baseline analysis for strengthening fuel economy standards. In essence, this underscores expectations that California's forthcoming updates to its ZEV sales mandate will reduce the estimated compliance costs for OEMs for the next round of vehicle requirements.
The California Air Resources Board is expected to release a revised proposal to significantly strengthen ZEV sales requirements for model years 2026-2035.
In its comments to EPA and DOT on this rulemaking, NATSO wrote: All fuels and technologies should be treated equally within the context of establishing performance specifications. Once those specifications are set, however, policy should harness the market's ingenuity to identify the optimal means of satisfying them. If the goal is to reduce GHG emissions and improve fuel economy, [the Agencies] should not establish unbalanced regulatory incentives that skew the market towards a particular technology. Instead, [the Agencies] should provide a level playing field upon which all technologies can compete fairly for market share. In particular, the Associations urge EPA to fully account for the environmental benefits of renewable natural gas ("RNG") and high octane fuels. These technologies have the potential to provide compliance flexibility for automakers and expanded choice for consumers while also delivering increased environmental benefits.
As with EPA's companion rule finalized in December, DOT's recent rule undersells the greenhouse gas benefits associated with liquid fuels (particularly higher octane fuels used in conjunction with higher compression engines).
EPA and DOT plan to draft and adopt another round of vehicle standards that will cover 2027 and beyond. Analysts think those standards will be so aggressive that automakers will have to build electric vehicles to meet them.
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