(Bloomberg) -- U.S. regulators have underestimated the cost and difficulty of achieving their vehicle fuel-economy and greenhouse-gas targets for 2025 and are giving California too much power to shape the country’s policies on those issues, an automaker group said.
Even with the current government estimate of $1,800 a vehicle in added costs, “the payback period for alternative technologies extends beyond the timeframe most consumers consider; it is likely to remain that way,” the Alliance of Automobile Manufacturers said in a report posted on its website Monday. Members of the Washington-based lobbying group include General Motors Co., Ford Motor Co., Fiat Chrysler Automobiles NV, Toyota Motor Corp. and Volkswagen AG.
The alliance is seeking to influence the upcoming midterm evaluation by regulators of the 2011 plan by President Barack Obama’s administration to boost the fuel economy of cars and light trucks by 54% to a projected 54.5 miles (87.7 kilometers) per gallon by 2025 and cut tailpipe carbon dioxide emissions by 35%. The review is meant to consider whether changes are needed in the plan based on actual performance so far.
The U.S. Environmental Protection Agency, the National Highway Traffic Safety Administration and the California Air Resources Board are preparing for the midterm evaluation, with the three agencies set to issue a draft technical assessment report late this month or in early July.
Nick Conger, an EPA spokesman, didn’t immediately respond to a request for comment on the alliance report. In December, Christopher Grundler, the EPA director of air quality and transportation, said in a report that average fuel economy has improved by 5 mpg, or 26%, in the last 10 years, more than expected and that “it’s clear our standards are working.”
|Hybrid estimates
The automaker group said an EPA projection in 2012 that meeting the 2025 federal mileage standard would need only 5% of U.S. cars and light trucks to be hybrids is too low. A recent analysis done for automaker groups found that as many as 47% of all cars may need to be as fuel efficient as current hybrids, the alliance said.
“The actual cost of the program depends on this projected technology mix,” the alliance said.
Lower gasoline prices affect sales of hybrids and the mix of cars and light trucks, the automaker group said. Consumers may be opting for gasoline-powered vehicles because reduced fuel prices have extended how long it would take to recoup the higher costs of alternatives such as hybrids, the alliance said.
To meet the targets, automakers will have to boost fuel efficiency by almost 67% in the 13 years ending in 2025, compared to 23% in the nine years ending in 2014, the alliance said. That acceleration may not be realistic, according to the group.
|California effect
The automaker group also cited the impact of California requirements, adopted by nine other states, that by 2025 a projected 15.4% or more of new-vehicle sales be zero-emissions models, powered by batteries or fuel cells. In addition, when California issues its own assessment in November on whether the state’s CO2 targets for 2022-2025 should be maintained, it will be jumping ahead of the midterm evaluation and exerting a disproportionate impact on the national debate, according to the alliance.
Ceres, a Boston-based coalition of investors and environmentalists, said in a statement Monday that higher fuel-economy targets will protect automakers from future oil price shocks.
“U.S. automakers have been caught flat-footed before,’’ said Carol Lee Rawn, director of the Ceres transportation program.
The International Council on Clean Transportation, a nonprofit advocacy group, said this week that without higher fuel-economy targets in the U.S. and other countries, global oil demand could grow from 94 million barrels a day in 2015 to 112 million by 2030. If the U.S. and other countries maintain the targets, oil demand could level off at 101 million barrels a day by 2030, the group said.
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