President Obama on Friday announced a deal between the White House and automakers to dramatically ramp up auto fuel-economy standards--from the current goal of 35.5 miles per gallon by 2016 to 54.5 mpg by 2025--touting the agreement as a crucial step forward for the economy and the environment.
Obama called the agreement “the single most important step we’ve ever taken as a nation to reduce our dependence on foreign oil.”
As the White House continued to be embroiled in a standoff with lawmakers on raising the debt ceiling, Obama said this deal could serve as a “valuable lesson for leaders in Washington."
"You are all demonstrating what can happen when people put aside differences," he said, flanked by auto-industry executives at the Washington Convention Center. "The American people are demanding the same kind of resolve, the same kind of spirit of compromise, the same kind of problem-solving that all these folks on stage have shown."
The new standards will reduce oil consumption by 2.2 million barrels a day and cut greenhouse-gas emissions by 6 billion metric tons by 2025, according to the White House.
Obama said that the new standards will save an average family more than $8,000 in fuel costs over time. "It means filling up your car every two weeks instead of filling it up every week," he said.
Obama was joined by representatives from Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, and Volvo.
There is "nothing ... more important to the future of the American economy than the agreement that we're announcing today," he told the automakers.
This is not the first time the White House has ramped up fuel efficiency standards for cars and light duty trucks. In May 2009, President Obama invited automakers to a White House Rose Garden ceremony to announce their deal to increase average U.S. fuel-economy standards to 35.5 miles per gallon by 2016.
Though auto companies had long fought government efforts to raise the standards, they were essentially forced to agree to the 2009 deal, in part because it followed on the heels of the government bailout of General Motors.
The new deal nearly doubles the 2011 standard of 27.3 mpg, meaning automakers will have to work quickly to meet the new 54.5 mpg goal by 2025.
“We are absolutely committed to continuously improving the fuel efficiency of all of our vehicles,” Alan Mulally, president of Ford, said in a statement after attending Obama's announcement. “This agreement provides the regulatory certainty we need to design and build fuel-efficient vehicles during the next 14 years.”
Some environmentalists, who had pushed the administration to raise the current vehicle standard to 62 mpg by 2025, applauded the compromise. But others raised serious concerns over a potential escape clause that could derail the higher standards.
As part of the deal, the White House agreed to a 2018 review of the standards -- just one year after they kick in -- which would provide an opportunity to modify the 54.5 mpg goal if the new standards prove too onerous to industry.
Dan Weiss, Senior Fellow at the Center for American Progress, called the review “a loophole” for automakers.
“This review is a self-destruct button that could enable auto companies to escape the most efficient standards, dramatically reducing relief for families,” he said in a statement. “It creates a perverse disincentive for automakers to innovate and improve efficiency because the less they achieve, the stronger their argument that the 2025 standard is technologically unachievable.”
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