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EPA, NHTSA Finalize GHG and Fuel Economy Rule for 2017-2025 Light-Duty Vehicles

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On August 28, 2012, the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) released a final rule to further reduce greenhouse gas emissions and improve fuel economy for light-duty vehicles for Model Years (MY) 2017-2025.  The rule, proposed on December 1, 2011, increases average fuel economy requirements for cars and light-duty trucks to 54.5 miles per gallon by 2025.  There were no major changes made from the proposed to final rule. The rule will take effect sixty days after it is published in the Federal Register. 

NHTSA’s proposed corporate average fuel economy (CAFE) standards would require an average fleet-wide basis of 49.6 mpg by 2025, while EPA’s proposed standards would require lower fleet-wide emissions of carbon dioxide, equivalent to 54.5 mpg if this level were achieved solely through improvements in fuel efficiency. The combined standards under the proposed rule are projected to achieve an average fleet-wide fuel efficiency of 54.5 mpg by 2025, an increase of roughly five percent annually for passenger cars. Light trucks will have a lower target of 44 mpg, and passenger cars will have a higher goal of 62 mpg by 2025. The final rule also maintains a midterm evaluation of the standards by April of 2018, as EPA included in the proposed rule, in order to determine whether the standards set for MY 2022-2025 would continue to be appropriate based on a comprehensive review of the state of technological development and other factors.

The combined standards are projected to reduce the amount of GHG emissions by half for MY 2025 light-duty vehicles compared to MY 2010 vehicles, and EPA estimates that the standards will save four billion barrels of oil over the lifetime of MY 2017-2025 vehicles. CAFE standards are currently set at just over 27 mpg, and are scheduled to reach 35.2 mpg by 2016.

NHTSA has the authority to establish CAFE standards under the Energy Policy Conservation Act, and EPA has the authority to regulate carbon dioxide and other greenhouse gas as pollutants under Massachusetts v. Environmental Protection Agency, (549 U.S. 497 (2007)).