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Thursday, June 19, 2008

EPA DRAFT SAYS 38 MPG

WASHINGTON, DC -- The Environmental Protection Agency (EPA) says in a
draft regulation that automakers could improve fuel efficiency
standards to as high as a fleet-wide average of 38.3 miles per gallon
by 2020.

Meeting that standard could cost carmakers as much as $30 billion a
year, as stated in the 252-page draft of the EPA proposition. The EPA
sent similar versions of its proposal to other agencies, including the
Transportation Department, on Tuesday for final review amid a flurry
of meetings with the White House to finalize the draft.

The proposal comes on top of another unveiled in April by the National
Highway Traffic Safety Administration (NHTSA) that would raise fuel
efficiency standards to a fleet-wide average of 31.6 mpg through 2015.
The NHTSA plan is seen as the first step on the way to a congressional
mandate of 35 mpg by 2020, a 40 percent increase over current
requirements.

The EPA proposal, which will be unveiled Monday, lays out a broad
number of areas in which the agency could limit greenhouse gases,
including autos, ships, aircraft, nonroad vehicles such as farm and
construction equipment, along with solid waste incinerators. The EPA
will seek public comment before issuing a more formal proposal that
could come before year's end. A final regulation isn't expected before
the Bush Administration leaves office.

Carmakers haven't seen the proposal and declined to comment.

"When it is released, we'll review it and act appropriately," said
Charles Territo, a spokesman for the Alliance of Automobile
Manufacturers, the trade group that represents Detroit's Big Three,
Toyota and six other automakers.

However, automakers fear that with the new proposal they could be
subjected to two sets of federal rules: One from NHTSA, which sets
requirements for fuel economy or miles per gallon. And the other from
the EPA, which has the authority to set limits on tailpipe emissions,
which can be equated to mpg, under the Clean Air Act.

According to the EPA draft, the agency is considering "establishing
standards for the 2020 or 2025 time frame, and even longer. The
establishment of a long-term road map could help ensure that the
billions of dollars in technology research and development are focused
on long-term needs."The proposal argues that automakers could meet a
new tailpipe emissions limit of 232 grams of carbon dioxide per mile,
which equates to 38.3 mpg by 2020. The EPA said about 40 percent of
the new vehicle fleet in 2020 would be using diesel engines and full
hybrid systems (including plug-in electric hybrid vehicles). The
agency assumes that plug-ins are "a viable technology beginning in 2012."

The EPA estimates that the cost per vehicle would be $1,927 or more
than $30 billion annually based on average yearly sales. It said the
payback for consumers in terms of savings from better fuel economy
would be from 3.4 to 7.4 years assuming $3.50-a-gallon gas. It
predicts an eventual net societal benefit of $2 trillion, based on the
benefits of reduced greenhouse gas emissions.

The White House declined to comment on the EPA draft.

The proposal is certain to give fuel to environmental advocates who
think automakers can do more than Congress mandated in December.
Lawmakers ordered a 40 percent increase in fuel economy to an industry
fleet-wide average of 35 mpg by 2020.

David Bookbinder, chief climate counsel for the Sierra Club, said the
auto section of the EPA draft, if it remains, could lend support to
California and 13 other states' efforts to impose their own tailpipe
efficiency standards.
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