Obama Demands Higher Efficiency for Power Plants, Heavy Trucks
June 26, 2013 1:59 PM
President also calls for increases on federal spending for CNG vehicles, vehicle research, and EV tax credits
At a speech at
in the nation's capitol, President Barack Obama's (D) message to automakers was simple -- "told you so."
I. Obama Crows Over Fuel Economy Victories
The fuel standards that we put in place just a few years ago didn’t cripple automakers. The American auto industry retooled, and today, our automakers are selling the best cars in the world at a faster rate than they have in five years — with more hybrid, more plug-in, more fuel-efficient cars.
The old rules may say we can’t protect our environment and promote economic growth at the same time, but in America, we’ve always used new technologies — we’ve used science; we’ve used research and development and discovery to make the old rules obsolete.
The Obama administration is celebrating a win in which it convinced automakers to adhere to signficant increases to the
CAFE (Corporate Average Fuel Economy) standard
Under President George W. Bush (R) and the 2007 Congress, the CAFE standard -- which covers light trucks and sedans -- was
scheduled to hit 35 mpg by 2020
. President Obama first succeeded in
bumping that target to 34.1 mpg by 2016
after initially asking for
35.5 mpg by 2016
Following that success, the President's team pushed for a much higher standard for 2025 --
as high as 62 mpg
. Automakers said
that increase would "kill" the auto industry
, but eventually begrudgingly
caved to a target of 54.5 mpg
The result is a mixed bag -- customers will save thousands of dollars at the pump over the lifetime of their vehicles (the exact amount is dependent on the price of fuel), but will pay $2,059 USD more for a new truck and $1,726 USD more for a new car on average (critics contend
the true price increase will be at least twice that
). And automakers have to swallow an estimated $200B USD in costs for developing advanced fuel efficiency technologies.
In his speech, the President also plugged General Motors Comp. (
a bailout recipient
-- for making a climate change pledge. The President remarked, "More than 500 businesses, including giants like GM and Nike, issued a Climate Declaration, calling action on climate change 'one of the great economic opportunities of the 21st century.'"
the Chevy Volt
plug-in electric vehicle that
both President Obama
and former President George HW Bush
are big fans of.
II. More Regulation Ahead?
Emboldened by the concessions that he has already won from the industry, the President proposed more regulation in his speech -- including a fresh round of CAFE targets for
heavy duty trucks
. The heavy-duty truck segment (which includes semis, garbage trucks, buses and three-quarter-ton pickups) was first regulated under President Bush's Energy Act of 2007, which calls for a 20 percent increase in average fuel economy by 2018.
The standard refresh would go into effect by 2018, and force that vehicle segment -- which typically features inherently poor fuel economy -- to continue more yearly bumps in efficiency. Despite the gains since 2007, heavy-duty vehicles are still the second largest source of emissions in the transportation sector, according to the White House.
President Obama was new fuel economy targets for heavy duty trucks.
[Image Source: Jason Mick/DailyTech]
Other automotive highlights of the speech included a reiteration of the President's call to
bump the electric vehicle tax credit to $10,000 USD
, a demand for
more federal advanced vehicle research funding
, and a push to give new tax credits
compressed natural gas (CNG) vehicles
The President also called for regulations to limit the amount of carbon power plants can emit -- regulations that could force coal and oil burning plants to purchase expensive carbon capture and storage systems.
The speech compared these changes to the introduction of the federally forced introduction of the catalytic converter in 1970 (via the 1970 expansion of the
Clean Air Act
to cover automobiles), which critics complained would damage the industry. He remarked:
At the time when we passed the Clean Air Act to try to get rid of some of this smog, some of the same doomsayers were saying new pollution standards will decimate the auto industry. Guess what — it didn’t happen. Our air got cleaner.
The President threatened the oil industry that he
wouldn't approve the Keystone oil pipeline
unless it cooperated with emissions improvements, remarking that the pipeline would be approved "only if this project does not significantly exacerbate the problem of carbon pollution."
The President wants stricter emissions standards for power plants. [Image Source: Reuters]
At least some of the President's demands are unlikely to be fulfilled given the Republican control of the House. Thus far Republicans in Congress have fought efforts to bump tax credits for EVs/plug-ins and efforts to increase vehicle research funding.
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"We are going to continue to work with them to make sure they understand the reality of the Internet. A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis
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