Obama tightens fuel-economy standards

President Obama took a short break from the chaos of the debt-ceiling negotiations Friday to unveil a major compromise agreement to boost federal fuel economy standards.

The agreement was negotiated in a slew of closed-door meetings with the country’s major automakers. Obama held up the agreement as a model of compromise, arguing that lawmakers on Capitol Hill could learn something from the successful negotiations on the standards.

“You are all demonstrating what can happen when people put aside differences,” Obama said, addressing about a dozen executives from major automakers that endorsed the agreement.

“The American people are demanding the same kind of resolve, the same kind of spirit of problem solving that everybody on this stage has shown.”

Obama outlined a plan to ratchet up fuel efficiency and cut harmful carbon pollution for model year 2017-2025 cars and light-duty trucks. The plan sets a fleet-wide average standard of 54.5 miles per gallon by 2025.

The final standard represents a retreat from an earlier proposal floated by the administration, which called for a 56.2 mpg standard. Both standards fall short of the 60 mpg goal environmental groups have been pushing for months.

But Obama nonetheless touted the compromise as “the single most important step we’ve ever taken as a nation to reduce our dependence on foreign oil.”

Obama stood on stage at the Walter E. Washington Convention Center in Washington with top executives from the country’s largest automakers. After months of behind-the-scenes negotiations, 13 automakers — including GM, Toyota, Ford and Chrysler — endorsed the standards.

The new standards, which were developed by the Environmental Protection Agency and the Department of Transportation, will wean the country off its dependence on oil and result in huge savings for consumers, Obama said.

“Prices will keep going up unless we do something about our own dependence on oil,” he said. ”That’s the reality.”

The White House says the standards will save an average of $8,000 per vehicle and reduce oil consumption by 2.2 million barrels a day by 2025. In addition, the standards will cut greenhouse gas emissions by 6 billion metric tons by 2025.

The agreement includes incentives and credits for advanced vehicles and technologies that reduce emissions.

The administration also agreed to conduct a midterm review of the standards intended to evaluate the success of the program. The automakers pushed for the review during the negotiations on the standards.

The standards build on model year 2012 to 2016 fuel economy rules that require cars and light-duty trucks to average 35.5 mpg by 2016.

Obama’s announcement received quick praise from Democrats.

“This is a groundbreaking moment in our energy history that will finally help shatter the bonds of our dependence on Middle East oil,” said Rep. Edward Markey (D-Mass.), the ranking Democrat on the House Natural Resources Committee, in a statement.

Republicans lauded the standards but offered some reservations.

“I understand why the auto makers are agreeing to this new standard, and I hope it works,” House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said in a statement.

“I do have a number of questions about what this is going to mean, especially looking so far into the future.”

Environmental and clean-energy advocates also applauded the new standards. But they raised concerns about specific provisions in the compromise agreement that were included to win the support of the country’s automakers.

Center for American Progress Senior Fellow Dan Weiss, while praising the standards, took issue with the provision allowing for the midterm review.

“This review is a self-destruct button that could enable auto companies to escape the most efficient standards, dramatically reducing relief for families,” he said in a statement. “It creates a perverse disincentive for automakers to innovate and improve efficiency because the less they achieve, the stronger their argument that the 2025 standard is technologically unachievable.”

The Union of Concerned Scientists warned of potential loopholes.

“This agreement is an important step forward, but there are still parts of the plan that need to be resolved,” Union of Concerned Scientists Clean Vehicles Program Director Michelle Robinson said in a statement. “If they aren’t implemented correctly, they could turn into loopholes. If automakers can meet the standards with accounting tricks instead of using better technology, the program’s overall benefits would be eroded.”