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In his State of the Union address, President Bush asked for authority to reform the fuel economy program for passenger cars. Analysts are skeptical.
By Roland Jones Business news editor
msnbc.com
updated 2/1/2007 7:19:23 AM ET 2007-02-01T12:19:23

For a leader often vilified for his position on the environment, President Bush’s new plan to reform fuel economy standards for cars smacks of a president gone “green.”

In his State of the Union address to Congress last week, Bush asked for authority to reform the fuel economy program for passenger cars. The proposal is part of a broader plan to curb gasoline consumption by 20 percent over the next decade, using a combination of improved mileage and greater dependence on alternative fuels like ethanol.

The plan certainly sounds green, but not everyone is convinced. Many environmentalists are skeptical that Congress will enact the legislation needed to raise corporate average fuel economy standards.

The so-called CAFE standards for passenger cars have remained unchanged for two decades at 27.5 miles per gallon. The Bush administration recently revamped the rules for light trucks, creating a sliding mileage scale that is based on a vehicle’s size.

Now Bush wants to assign a similar measure to passenger cars. Instead of requiring companies to meet an average standard, fuel economy targets would be assigned model by model depending on aspects like size and weight.

The secretary of transportation would ultimately decide on fuel economy standards, Bush said, but to meet the new goal fuel economy standards for cars and light trucks would have to be raised by an estimated 4 percent annually, beginning for passenger cars with the 2010 model year and for light trucks with the 2012 model year.

Bush’s ambitious targets for improving mileage is welcome, said John DeCicco, senior fellow for automotive strategies at Environmental Defense, a not-for-profit group that focuses on environmental problems.

“We certainly praise him elevating the discussion about this issue,” DeCicco said. “Our view is that, on the face of it, this target is a very good first step, but further action will be necessary from the White House and Congress, and they’ll have to work together to make this work. It’s not clear how vigorously both sides will pursue that goal.”

DeCicco says that without legislation to limit the use of fuels like gasoline with high carbon content, he is skeptical the Bush plan will be implemented. Twenty years ago, similar legislation under President George H.W. Bush called for a 10 percent reduction in U.S. oil dependency by 2000 and a 30 percent reduction by 2010. Those levels were not met, he said.

“There have been lots of alternative fuel promises and promotions over the years, and in its totality all this activity has not made a measurable dent in U.S. oil consumption,” he said. “So while the proposal put forward in the president’s speech was good, having piecemeal targets without an overall policy is failing the country and has been for 20 years. If these policies don’t result in a binding law, then they’ll remain rhetoric.”

Curbing gas consumption by 20 percent over the next decade would mean a fuel economy standard of 34 miles per gallon by 2017 and could be the “the breakthrough we have been waiting for on fuel economy” said David Friedman, research director for the Union of Concerned Scientists, a not-for-profit advocacy organization.

If Bush’s fuel economy goal is enacted into law it would save 550,000 barrels of oil per day by 2017, according to the organization’s research — more than we currently import from Iraq — and cut carbon dioxide emissions by 95 million metric tons in that same year, or the equivalent to taking 14 million of today’s cars and trucks off the road.

But lost time could limit those potential advances. With Bush set to leave office in early 2009, Congress and the President don’t have long to come to an agreement, DeCicco notes.

“If he holds this out there as a goal but leaves the decision-making about policy until after the end of his term, it will be too late,” he said. “A two-year delay on a 10-year program will set it behind quite a lot. Auto factories have to be retooled, and the fuel industry has to make the investments to make the fuel available. So there is uncertainty here. And there is a real need to act fast to make this binding public policy.”

The Bush plan also could meet resistance in Congress. Automakers have a powerful ally in House Energy and Commerce Committee Chairman John Dingell, D-Mich. He has opposed raising fuel economy standards because of concerns about potential job losses and the negative economic consequences for automakers.

“I have not seen the President’s proposal, but it sounds similar to one he made last year that did not fly,” Dingell said in a statement issued last week. “I do not want to prejudge it, however, as it may serve as a fine starting point upon which we can build.”

The Big Three have generally supported the President’s plan, although they have added that fuel economy reforms should be “equitable” and not compromise safety, performance, or limit consumer choice.”

One Bush proposal that domestic automakers might welcome calls for increased use of ethanol to 35 billion gallons by 2017 — nearly five times the current target.

Last June, GM, Ford and DaimlerChrysler announced plans to double their production of “flexible fuel” vehicles, which run on ethanol blends of 15 percent gas and 85 percent ethanol, by 2010. The Big Three have produced more than 5 million of these vehicles to date and say they could build about 2 million each year by 2010.

There’s just one obstacle: Industry officials have said they are constrained by a lack of fueling stations that offer ethanol. At present, less than 1 percent of the nation’s 170,000 gasoline stations offer E85 and most of them are located in the Midwest.

The Associated Press contributed to this report.

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