New new auto fuel economy, emissions rules to be proposed by U.S Govt

(Reuters) -- The Obama administration this week will propose new fuel efficiency and emissions requirements for cars and light trucks for model years 2017 and beyond.

The plan, a centerpiece of President Barack Obama's energy agenda geared toward reducing oil imports, is under review by the White House budget office. It is due on Thursday, but could be released sooner.

Leading environmental groups have called on the administration to set a target of 60 miles per gallon by 2025, but officials have said that is unlikely.

Environmental and auto industry experts close to the process believe transportation and environmental regulators will propose a yearly average increase ranging from 3 percent to 6 percent. The 60 mpg figure would require a roughly 6 percent annual improvement.

The administration is expected to take pains not to be prescriptive, but will spell out its aims for more aggressive gains than industry is accustomed to achieving.

Oil depedence

U.S. passenger vehicles emit about 20 percent of the nation's carbon emissions and consume about 44 percent of its oil, figures show.

Environmental groups and scientists want the United States to cut oil dependence nearly 50 billion gallons annually and carbon pollution more than 500 metric tons per year by 2030.

Standards imposed last year require automakers to achieve 35.5 mpg by 2016, up 42 percent from current levels.

The Consumer Federation of America, along with leading environmental and scientific groups, wrote President Obama last week urging his administration to raise vehicle fuel efficiency requirements to 60 mpg by 2025.

60 mpg

If the 60 mpg standard were in place now, U.S. gasoline consumption would fall by roughly half to 4.5 million barrels a day this year, or 1.6 billion barrels annually, according to CFA Director of Research Mark Cooper. One barrel holds 42 gallons.

Cooper also said other countries would benefit from a higher U.S. vehicle fuel standard, as America's gasoline consumption accounts for 10 percent of global petroleum demand.

"Gasoline policy is a huge important part not only of U.S. energy policy, but of global energy policy," Cooper said.

Europe and Japan lead the world in auto fuel and emissions efficiency while the U.S. fleet, which has made some strides in recent years, still trails much of the industrialized world.

Brendan Bell, a lobbyist with the Union of Concerned Scientists, acknowledged 60 mpg was aggressive. But he said the 2017 target gives automakers plenty of time to assess the initial impact of electric models and make other adjustments.

"They have a ton of time to plan it out and develop technology," Bell said.

The rulemaking will undergo an intense period of public comment and is not expected to be finalized for some time. Rules must be in place at least 18 months before the start of a model year.

Getting greener

The Democratic-led Congress has required the U.S. fleet sharply improve efficiency, but industry would likely look to Republican majorities in the House or Senate, or both, beginning next year to slow administration efficiency goals deemed onerous.

Automotive experts and scientists say efficiency goals in coming years can be achieved with lighter vehicle construction, cleaner burning gasoline engines and better performing transmission systems.

Major automakers know they will have to do more, but they want a scale that does not dramatically hike vehicle production costs or a mandate that commits them to a specific approach.

"What we're hoping for is that the regulation recognizes some of the uncertainty that still exists and allows flexibility to implement new technologies," said Charles Territo, a spokesman for the chief manufacturing trade group, the Alliance of Automobile Manufacturers.

Many cars, particularly those made by Japanese companies, like Toyota Motor Corp and Honda Motor Co, already meet or exceed the U.S. 2016 standard although Korean-made models, such as those produced by Hyundai Motor are fast closing the gap.

A big unknown going forward is whether the public will embrace electric vehicles, which will receive a "0" emissions rating from the government during their introduction to the market. The most fuel efficient vehicles on the road today, gasoline-electric hybrids, represent only a fraction of retail sales.

General Motors Co, which is government-owned, has placed large bets on electric cars. Its Chevy Volt is due out later this year. Nissan Motor Co is also moving ahead with its electric Leaf. European automakers, like Volkswagen AG, are rolling out more efficient vehicles, like the 2011 Jetta, with changes to conventional technology.

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