Members of the United States Senate have reached a deal on the fuel economy standards which will be established in the energy bill currently under consideration in Congress. The bill will raise the Corporate Average Fuel Economy standards set by the federal government – CAFE is the acronym by which they’re known – and which all automakers must meet to 35 miles per gallon by 2020.
Rather than setting a minimum standard for individual vehicles, the CAFE law requires that all of the vehicles sold by the automaker in a given year have an average fuel economy which meets the standards. The current standard of 27.5 mpg was established in 1989.
35 miles per gallon has been the magic number under consideration in the Senate. Automakers long ago gave up on the idea that they could convince the government to leave well enough alone and let the market dictate what the public should buy. Politics being what it is, the Congress wants to make that decision. So, automakers put a lot of effort into achieving a 30 mpg CAFE standard for trucks and postponing its application to 2025. The Senators from Michigan have led that effort. The agreement reached behind closed doors by various Senators does not give trucks a break. On the other hand, environmentalists wanted to tack on a proposal which would have increased the standards 4% a year every year after 2020. The deal drops that idea, too.
According to reports, the deal has the agreement of more than 60 of the 100 Senators. Though it only takes 51 Senators to enact a bill into law, the rules of the house require 60 votes to cut of debate on a bill. If more than 50 Senators support a bill, but less than 60 support it, then those opposing the bill can simply keep debate going endlessly. Because cutting off debate, called “cloture,” requires more votes than actually enacting the bill into law, the Senate process often requires more compromises than does passing legislation in the House of Representatives.
It is not clear, however, when the new version of the bill will reach the debate stage, particularly because it is only a part of a bigger energy bill with many other provisions.
Meantime, the Committee of the United States House of Representatives which has jurisdiction over CAFE legislation announced yesterday that it has been unable to reach agreement on new CAFE standards. The committee chairman, who is from Michigan, indicated that the committee will defer consideration of CAFE standards, as well as a number of other energy issues.
Though raising CAFE standards has been seen as politically expedient by politicians of both parties, which have largely differed over issues of how much they should be raised, raising the standards has been sharply criticized by some safety advocates. The safety concern is that raising the standards will mean lighter, smaller cars – which are, according to virtually all statistics, less safe in a major collision than bigger, heavier cars and trucks. Political groups have also challenged the standards as an interference with consumer choice through the marketplace, pointing to the increased popularity of hybrid vehicles as showing that the automobile industry responds to the demands of the market.
Auto manufacturers, however, seem to be rather unconcerned about having a 35 mpg by 2020 standard set by the government, provided it doesn’t have annual 4% increases. Though 4% might not seem like much, it compounds. In other words, it’s not 4% of 35 each year. It’s 35 the first year, 36.4 the second, 37.85 the third, 39.35 the fourth, and almost 41 mpg within five years. And it would keep on compounding upward, until nothing more than a Segway could meet the standards. But automakers seem likely to meet the 35 mpg limit with ease by 2020.
The upcoming Mercedes-Benz hybrid is said to get 47 miles per gallon and the hybrid version of the Cadillac Escalade, due for fall introduction, improves fuel economy by 25% over the non-hybrid version. The pendency of this legislation may also explain why GM has been announcing that it could not have electric car technology to market before 2015 at the same time it has been letting contracts for production development of an electric drivetrain by 2010.