Under Obama’s energy plan, cars would be cleaner but costlier
The president called for tougher fuel-efficiency standards Monday and may let states regulate vehicle emissions of greenhouse gases.
Boston and Los Angeles
President Obama’s first big push for US energy independence – centered on tougher fuel-efficiency standards – is likely to impose new costs on an already reeling auto industry, consumers, and probably taxpayers.Skip to next paragraph
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But his moves on Monday, which come amid a growing consensus that America needs to radically revamp the way it uses energy, may have an upside, too. For one, they may help Detroit drive faster down an inevitable road toward efficiency. The resulting retooling of factories, too, may have some stimulative effect on a struggling economy.
But the moves will also take an economic toll, analysts say, as consumers face higher prices for cars and as taxpayers may be asked to spend additional dollars to transform an ailing but important US industry.
Mr. Obama called for prompt implementation of federal fuel-economy standards enacted under President Bush, so that improvements kick in with the 2011 model year. Carmaker fleets are slated to rise to an average fuel economy of 35 miles per gallon by 2020. [Editor's note: The original version contained an unclear statement regarding President Obama’s position on federal fuel-economy standards. The story has been corrected to more accurately reflect his position.]
In an important reversal of Bush administration policy, he also said his administration will reconsider a waiver request by California and 13 other states to set their own standards on emissions – including greenhouse gases.
The president put the moves in a global context by pledging to work with other nations to secure the benefits that energy efficiency can bring to economies and the environment, as well as realize the advantages of reducing oil revenues to dictators and terrorists.
“The train has left the station. The debate isn’t really whether this [push for clean energy] is going to happen or not,” says Rebecca Lindland, an auto industry analyst at IHS Global Insight in Lexington, Mass. “The problem is … the financial burden that it will put on consumers. It will make vehicles more expensive.”
Obama himself cited concern that the auto industry, already in a precarious state, not be harmed by moves on behalf of energy security and the environment.
For all their avowals of interest in helping the environment, potential car buyers may not have several thousand dollars extra to spend on a more efficient vehicle, Ms. Lindland says. If sales aren’t strong, this transformation of Detroit might hobble the industry instead of saving it.
Left unsaid by Obama, for now, was anything about the size and nature of more federal help for carmakers. Two of the three big Detroit-based carmakers, General Motors and Chrysler, recently received an emergency credit line of $17.4 billion to avoid bankruptcy. So far Ford has not sought federal aid.