The Obama administration's new fuel economy standards will push fuel efficient vehciles, like the 2011 Chevy Volt pictured here, by mandating cars average 38 mpg, and for light trucks to average 28.3 mpg by the 2016 model year.  (Source: Car Corner)

The new standards will shift the industry towards lighter vehicles. The EPA and NHTSA estimate that this will cause 1,100 additional "weight related" vehicle deaths between 2012 and 2016, with 493 additional deaths in 2016 alone. They state that they hope this will drop to 250/year by 2020.  (Source: Wikimedia Commons)

Under the new emissions standards, ethanol-capable FlexFuel vehicles like the 2009 Chevy Malibu E85 FlexFuel edition (GM), will earn automakers credits towards fulfilling stricter fuel economy and emissions standards.  (Source: The Torque Report)
There are major positives and negatives about the proposed emissions cuts

The national government's boldest attempt to regulate car fuel economy is not without controversy.  The Environmental Protection Agency and National Highway Traffic Safety Administration are expected to finalize emissions standards plans by March 2010, but the new changes, set to take effect in 2012, are already mostly planned.  Though milder than the changes originally proposed in 2007 by the outgoing Bush administration, the plan's critics take issue at its costs, nonetheless.

The new standards will call for 34.1 miles per gallon by 2016.  It also will put in place the nation's first tailpipe regulations for carbon emissions.  The EPA lauds the plan, with EPA Administrator Lisa Jackson saying that the plan will create the equivalent of taking 42 million cars off the road -- without removing many vehicles.

The EPA estimates that between 2012 and 2016 950 million metric tons of greenhouse gas emissions will be reduced, the average vehicle owner will save $3,000, and oil consumption will be cut by 1.8 billion barrels. 

The government agencies admit that there will be costs.  They estimate that the legislation will raise car sticker prices $1,000 (still less than the fuel economy savings), will cost the auto industry $60B USD over five years ($12B USD/year), will cost 5,000 jobs in 2012 alone, and will depress industry sales by approximately 58,000 vehicles.

The new rules will force cars to average 38 mpg by 2016 and light trucks to average 28.3 mpg.  GM and Ford will have to average 37.3 mpg for their cars.  They will also have to average 26.6 mpg (GM) and 27.3 mpg (Ford) for their light trucks.  Chrysler gets the strictest light truck regulations at 28.5 mpg, but laxer car standards at 36.8 mpg.

The NHTSA and the EPA are confident in their bold experiment in market regulation, though.  They say that by 2016, the losses will be reversed and approximately 65,480 vehicles more vehicles will have been sold and 5,795 auto jobs will be created.  Basically, they believe the net effect will be slightly beneficial economically, while being respectively more beneficial, in turn, for consumers and the environment.  They acknowledge, though, that "the possibility exists that there may be permanent sales losses."

The administration also acknowledges that there will likely be a cost in human life.  Small cars generally don't fare as well in crashes, and the agency estimates 493 additional "weight-related" auto deaths in 2016 from the shift to lighter vehicles.  They estimate 1,100 extra fatalities from 2012 to 2016, but they expect the number to drop to 250 extra a year by 2020.  The net financial impact from 2012 to 2016 of these deaths is estimated to be approximately $15B USD in losses.

Automakers do have a number of ways to escape the restrictions, somewhat.  Building more efficient air conditioners (which decreases carbon emissions) will earn credits, as will the sale of E85 ethanol vehicles.  Advanced technology vehicles, flex fuel vehicles and other measures will also earn credits.  Further, small automakers, selling less than 400,000 vehicles a year will only have to meet a more relaxed standard.

The automakers will likely take issue with these exceptions, though, and have plenty to say in the upcoming 60 day review period for the plan. 

Dave McCurdy, CEO of the Alliance for Automobile Manufacturers, a coalition of Detroit's three automakers and eight others stopped short of criticizing the measure for the time being, stating, "[The current plan] provides manufacturers with a road map for meeting significant increases for model years 2012-2016. Final rules are essential to providing manufacturers with the certainty and lead time necessary to plan for the future and cost effectively add new technology."

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