August-Sept 2011 National Policy Update

Thursday, August 11, 2011

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Although talk about the budget deficit and debt ceiling has recently dominated the scene in Washington, there have also been high profile efforts to clean up our transportation sector. The Obama Administration and many of the key OEMs have reportedly agreed to fuel efficiency and emissions standards that will lead to a fleet-wide average of 54.5 MPG in 2025, which will equate to a real world average that is closer to 40 MPG. Details are still being worked out by the United States Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA), but it looks as though passenger cars will have to ramp up more quickly than light trucks. This initial agreement is, no doubt, just the beginning of what is sure to be a long and heated political debate over technical potential, cost-effectiveness and consumer demands.
With new standards for light-, medium- and heavy-duty vehicles on the way, industry and some lawmakers are eager to develop complementary programs that will provide incentives for this sector. In addition to the many bills we mentioned in the last newsletter, notable additions over the past few months have included the Battery Innovation Act introduced by Senator Stabenow and a bill reintroduced by Senators Kohl and Blunt that would promote energy efficient trucks. The Advanced Vehicle Technology Act, which would provide investments in light-, medium-, and heavy-duty vehicles, also continues to move along.
Though the introduction of these bills is encouraging for our sector, several potential roadblocks remain in Washington. Big, expensive bills are not popular, and neither are policies that favor one specific technology. The NAT GAS Act has continued to draw criticism, and the long standing credits for ethanol may disappear. Existing sources of funding at the Department of Energy and other agencies are, like everything else, on the chopping block. The next several months should be interesting.