In the Year 2025'

President estimates new 54.5-mpg fuel-efficiency standard will save $1.7 trillion at pump

WASHINGTON -- President Obama took time out from the debt ceiling issue on Friday to announce a "historic" agreement with 13 major automakers to pursue the next phase in the administration's national vehicle program, a program intended to increase fuel economy to 54.5 miles per gallon (mpg) for cars and light-duty trucks by model year 2025. Consumers will save $1.7 trillion at the pump and $8,000 per vehicle by 2025, he claimed.

Watch the video below or click here to hear or read the transcript of the President's remarks.

Click here to read the full report, "Driving Efficiency: Cutting Costs for Families at the Pump and Slashing Dependence on Oil," which details the administration's estimated oil, gasoline, vehicle and other savings.

The President was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo--which together account for more than 90% of all vehicles sold in the United States--as well as the United Auto Workers (UAW), and the state of California, who were integral to developing this agreement.

"This agreement on fuel standards represents the single most important step we've ever taken as a nation to reduce our dependence on foreign oil," said Obama. "Most of the companies here today were part of an agreement we reached two years ago to raise the fuel efficiency of their cars over the next five years. We've set an aggressive target and the companies are stepping up to the plate. By 2025, the average fuel economy of their vehicles will nearly double to almost 55 miles per gallon."

Building on the Obama administration's agreement for model years 2012-2016 vehicles, which it claimed will raise fuel efficiency to 35.5 mpg and begin saving families money at the pump this year, the next round of standards will require performance equivalent to 54.5 mpg or 163 grams per mile of CO2 for cars and light-duty trucks by model year 2025.

Achieving the goals of this new agreement "will rely on innovative technologies and manufacturing that will spur economic growth and create high-quality domestic jobs in cutting-edge industries across America," the administration said.

It added that these programs, combined with the model year 2011 light-truck standard, "represent the first meaningful update to fuel efficiency standards in three decades" and span model years 2011 to 2025. Together, they will save American families $1.7 trillion dollars in fuel costs, and by 2025 result in an average fuel savings of more than $8,000 per vehicle.

Additionally, it said that these programs will cut the oil we consume, saving a total of 12 billion barrels of oil, and by 2025 reduce oil consumption by 2.2 million barrels a day--as much as half of the oil the United States imports from the Organization of Petroleum Exporting Countries (OPEC) every day.

A CSP Daily News Poll on Friday asked, "In a deal with the White House, automakers say they will deliver cars that offer 54.5 mpg by 2025. What do you think is more likely to occur in the next 15 years?" Of the more approximately 125 responses, nearly 71% said "neither"; almost 18% said "most cars on the road will run on electric or another alternative fuel"; and only a little more than 11% said "fuel economy will reach 54.5 mpg."

The standards also curb carbon pollution, cutting more than 6 billion metric tons of greenhouse gas (GHG) over the life of the program--more than the amount of carbon dioxide emitted by the United States last year.

The Environmental Protection Agency (EPA) and the Department of Transportation (DOT) have worked closely with auto manufacturers, the state of California, environmental groups and other stakeholders for several months to ensure these standards are achievable, cost-effective and preserve consumer choice, the administration said. The program would increase the stringency of standards for passenger cars by an average of 5% each year. The stringency of standards for pickups and other light-duty trucks would increase an average of 3.5% annually for the first five model years and an average of 5% annually for the last four model years of the program, to account for the unique challenges associated with this class of vehicles.

A national policy on fuel economy standards and greenhouse gas emissions provides regulatory certainty and flexibility that reduces the cost of compliance for auto manufacturers while addressing oil consumption and harmful air pollution. Consumers will continue to have access to a diverse fleet and can purchase the vehicle that best suits their needs.

The EPA and the National Highway Transportation System Administration (NHTSA) are developing a joint proposed rulemaking that will include full details on the proposed program and supporting analyses, including the costs and benefits of the proposal and its effects on the economy, auto manufacturers and consumers. After the proposed rules are published in The Federal Register, there will be an opportunity for public comment and public hearings. The agencies plan to issue a Notice of Proposed Rulemaking by the end of September 2011.

California plans on adopting its proposed rule in the same time frame as the federal proposal.

Given the long time frame at issue in setting standards for Model year 2022-2025 light-duty vehicles, the EPA and the NHTSA intend to propose a comprehensive mid-term evaluation. Consistent with the agencies' commitment to maintaining a single national framework for vehicle GHG and fuel-economy regulation, the agencies will conduct the mid-term evaluation in close coordination with California.

In achieving the level of standards described above for the 2017-2025 program, the agencies expect automakers' use of advanced technologies to be an important element of transforming the vehicle fleet. The agencies are considering a number of incentive programs to encourage early adoption and introduction into the marketplace of advanced technologies that represent "game-changing" performance improvements, including: Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cells vehicles; Incentives for advanced technology packages for large pickups, such as hybridization and other performance-based strategies; Credits for technologies with potential to achieve real-world CO2 reductions and fuel economy improvements that are not captured by the standards test procedures.

In addition, EPA plans to propose provisions for: Credits for improvements in air conditioning (A/C) systems, both for efficiency improvements and for use of alternative, lower global warming potential refrigerant; Treatment of compressed natural gas (CNG); Continued credit banking and trading, including a one-time carry-forward of unused model year 2010-2016 credits through model year 2021.