EPA Study Said to Support Keeping 2025 U.S. Fuel Economy Targets

July 18, 2016 01:29 PM
 
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Automakers are on track to meet 2025 fuel economy targets, according to a report said to have been prepared by U.S. regulators that will be a blow to manufacturers who want the government to ease standards.

It will cost less than expected to hit fuel economy targets of 54.5 miles per gallon for the average car by 2025, according to a 13-page executive summary of a draft technical assessment expected to be released soon by the U.S. Environmental Protection Agency.

Bloomberg News obtained a copy of the document in advance of its release by a group following the debate around the standards. The EPA declined to comment on the report in advance of the release.

The projections, part of a technical report produced by the EPA, the National Highway Transportation Safety Administration and the California Air Resources Board, lays the foundation for a deep government "midterm review" of the standards, which are set to become progressively tougher by 2025 and will be especially challenging for the big pickups on which Detroit automakers depend.

Technical Report

The document estimates that consumers will pay at least $894 for new technologies required to meet the targets, such as 10-speed transmissions -- close to the government’s $1,070-per-vehicle projection four years ago.

Although President Barack Obama’s successor will have significant discretion over the requirements, the technical document will provide a hint into the EPA’s thinking about how achievable the standards are and suggests regulators could adopt a stay-the-course approach during next year’s evaluation.

Regulators are set to make decisions next year on the final fuel economy and carbon dioxide emission requirements for 2022-2025. The targets require tailpipe carbon dioxide emissions to fall 35 percent to 163 grams per mile by 2025.

The standards are among the most concrete steps the U.S. has taken to slash greenhouse gas emissions tied to climate change, as pledged in Paris last December. To limit the growth in global temperatures during this century to 2 degrees Celsius, regulators are also levying stiff penalties against Volkswagen AG and other automakers that manipulate test results.

The 2017 review, which Obama accepted in 2011 to win automaker support for the ambitious targets, could have a major impact on how the industry allocates its research and development budgets in coming years. In 2015, automakers spent $109.5 billion on R&D, second only to the computing and health-care industries, according to PricewaterhouseCoopers LLP.

The executive summary projects that the 2022-2025 standards will be met mostly with improved conventional gasoline engines and “modest levels” of hybrid sales and “very low levels” of full electric sales.

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