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Automakers oppose new energy mandates

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Automakers oppose new energy mandates

David Shepardson / Detroit News Washington Bureau

Washington -- Automakers sharply opposed a new energy bill that would impose new fees on consumers purchasing some larger vehicles.

Sen. Richard Lugar, R-Ind., has introduced an energy efficiency bill that would impose sweeping changes on automakers -- as they are already grappling with a steep increase in fuel efficiency and tailpipe emissions limits.

In the face of the massive Gulf of Mexico oil spill, there is growing pressure in Congress to pass a new energy bill -- and automakers are worried that they will face severe new mandates.

Vice President Joe Biden told reporters he's confident an energy bill will pass this year. "It's going to happen," he said.

The bill would essentially set 4 percent annual increases in fuel economy requirements after the current regulatory scheme expires in the 2016 model year -- though the Transportation Department could issue a waiver if it deemed it "unachievable."

Automakers already face one of the most expensive regulatory requirements in history. The government says the 2012-2016 model year fuel efficiency increases approved in April will cost automakers $52 billion over five years.

The bill would also require fuel efficiency standards for medium- and heavy-duty trucks to increase every four years.

Among the most controversial elements would be creation of a revenue system that would give rebates to the most fuel-efficient vehicles in a class, and impose fees on the least efficient vehicles.

"The bill unnecessarily reworks a program that is clearly already working," said the Alliance of Automobile Manufacturers, the trade association representing Detroit's Big Three automakers, Toyota Motor Corp. and seven other automakers. "In addition, the 'feebate' provisions of the bill penalize consumers by imposing new taxes that will increase the cost of purchasing many new vehicles, including a number of family sedans and utility type vehicles."

Lugar says the bill is aimed at reducing oil in the transportation sector.

The bill "targets our dangerous oil addiction by maximizing fuel savings in transportation and increasing domestic production of fossil and bio-based fuels," he said. "It is time to recast the debate in Congress and match priorities with a practical alternative that can have bipartisan support."

Automakers argue that many factors must be taken into account in setting fuel economy standards, and shouldn't be set arbitrarily.

"Fuel economy standards must satisfy a number of congressionally mandated policy goals including safety, technological feasibility, cost effectiveness and impact on American jobs," the automakers said. "Year-over-year percentage increases ("at least 4 percent") are completely arbitrary and are not compatible with the careful balancing of factors that Congress requires."

The automakers note that the rules to determine whether the 4 percent increase is "technologically unachievable" make it far tougher for the government to waive the increases.

The bill "dramatically changes the criteria that the secretary must consider for 'cost effectiveness' to include: 'national security,' 'foreign policy,' 'long-run potential GDP impacts,' 'OPEC strategic behavior,' among many other factors," the automakers said. "These changes to the program are clearly designed to ensure that it will be impossible" for the Transportation Department to waive the requirements.

Automakers note the fees and rebates program have been tried in Canada and France.

"It uses taxpayer money to reward some drivers for buying vehicles big government likes, while increasing taxes on other drivers whose businesses or geography or climate may depend on heavy duty vehicles or features like four wheel drive or towing capability," the automakers said.

In France, the fees now exceed the rebates by nearly $1 billion. Canada's program began in 2007, and the country has ended the consumer rebates, or subsidies, but kept the consumer fees, or taxes.

The automakers also oppose a requirement that 90 percent of all new vehicles be capable of running on mostly ethanol -- a fuel called E85 -- or traditional fuel by the 2015 model year.

Making all vehicles flexible-fuel vehicles would add $2 billion to the cost of vehicles annually -- while doing little to make the fuel available.

"The industry is already building FFVs faster than the fueling infrastructure can keep up," automakers said, noting there are already more than 7 million FFVs on the roads.

Fewer than 2 percent of gas stations have an alternative fuel pump, and most are concentrated in the Midwest.

Lugar's bill is cosponsored by Sens. Lindsey Graham, R-S.C., and Lisa Murkowski, R-Alaska.

From The Detroit News: http://detnews.com/article/20100617/AUTO01/6170456/1148/auto01/Automakers-oppose-new-energy-mandates#ixzz0r9OH1tiE

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