The Fuel Economy Reform Act of 2007, re-introduced yesterday, would reduce U.S. gasoline consumption by nearly half a trillion gallons by 2028.
The legislation seeks to break the logjam on establishing greater vehicle fuel economy by establishing a targeted 4% increase each year in Corporate Average Fuel Economy (CAFE) standards — a rate that the National Academy of Sciences has determined is possible.
The caveat is that National Highway Traffic Safety Administration (NHTSA) can justify a deviation in that rate by proving that the increase is technologically unachievable, cannot maintain overall fleet safety, or is not cost-effective when comparing with the economic and geopolitical value of a gallon of gasoline saved. Higher CAFE Standards
If the 4 percent per year target is met for 10 years, the bill would save 1.3 million barrels of oil per day and 20 billion gallons of gasoline per year. If gasoline is just $2.50 per gallon, consumers will save $50 billion at the pump in 2018 alone. The bill provides flexibility to domestic auto makers by establishing different standards for different types of cars. Currently manufacturers have to meet broad standards over their whole fleet of cars.
The bill gives NHTSA the authority to allow companies to earn credit for improving fuel efficiency beyond the CAFE standard in one type of car, and using those credits to meet goals for other vehicle models.
To enable domestic manufacturers to develop advanced-technology vehicles, the legislation provides generous tax incentives for companies to retool parts and assembly plants. This will strengthen the U.S. auto industry by allowing them to compete with foreign hybrid, E-85 and other fuel-efficient vehicles.
The bill would lift the current 60,000-per-manufacturer cap on buyer tax credits to allow more Americans to buy ultra-efficient vehicles.
It was re-introduced by U.S. Senators Barack Obama (D-IL), Richard G. Lugar (R-IN), Joseph Biden (D-DE), Gordon Smith (R-OR), Arlen Specter (R-PA), Jeff Bingaman (D-NM) and Norm Coleman (R-MN).
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