April 1, 2010 / 3:03 PM / 7 years ago

U.S., Canada crack down on vehicle emissions

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<p>Traffic lines a highway to Dallas in advance of Hurricane Rita in north Houston September 22, 2005.Carlos Barria</p>

WASHINGTON/OTTAWA (Reuters) - The United States finalized on Thursday its first greenhouse gas emissions rules on automobiles and boosted fuel efficiency standards, moves Canada is jointly imposing on its industry.

The rules are part of President Barack Obama's goal to cut emissions of gases blamed for warming the planet by about 17 percent by 2020, under 2005 levels.

Obama wants Congress to pass a long-delayed climate bill, but to push it along, he has also set in motion steps for the Environmental Protection Agency to begin regulating the emissions from cars and large polluters like power plants.

"By working together with industry and capitalizing on our capacity for innovation, we've developed a clean cars program that is a win for automakers and drivers, a win for innovators and entrepreneurs, and a win for our planet," said Lisa Jackson, the administrator of the EPA, which finalized the rules with the Department of Transportation.

The rules, which the agencies had laid out since last year, require that cars and trucks get on average 35.5 miles per gallon (15 kilometers per liter) by 2016. The current limit is just under 25 miles per gallon. The EPA also ruled that average vehicle emissions will be limited to 250 grams of carbon dioxide per mile by 2016, down about 15 percent from 2012.

Canada's government also finalized fuel efficiency rules on Thursday. Canadian Environment Minister Jim Prentice said Canada and the United States "will effectively share common standards" for limiting vehicle greenhouse gas emissions.

The two countries are working together on proposed standards for tractor-trailer trucks, which should be released in the next few months, Prentice said.

The North American auto industry is highly interlinked, and Canada has said its strategy for emissions also hinges on U.S. policy because of the two nations' integrated economies.

Patchwork Regulation Avoided

The U.S. vehicle emissions standards, which will be phased in starting with the 2012 model year, will reduce the country's greenhouse gas emissions by 900 million metric tons, the EPA said.

The program will add about $52 billion in vehicle costs, but benefits should hit $240 billion, the EPA said. The savings would come in lower fuel bills and in reduced health care costs as soot and other particulate emissions fall.

The U.S. rule will save 1.8 billion barrels of oil and 960 million metric tons of carbon emissions over the life of vehicles, equivalent to taking 58 million cars off the road for a year, the EPA said.

Oil refiners have joined other industries and lawmakers in challenging EPA's authority under the Clean Air Act to impose emissions rules on big business.

"Such misguided and flawed policy has the potential for devastating consequences to American consumers, businesses, jobs, and the economy," said Charles Drevna, the president of the National Petrochemical and Refiners Association.

But automakers support the separate vehicle regulations because it would create the first national standard for controlling car and truck emissions, superseding state plans that would have created a patchwork of regulations.

Consumers Get What They Want

One auto dealer called the rule a victory for consumers and U.S. automakers.

"Every day customers walk into my stores asking for the same thing -- cars that go farther on a dollar. For the most part that was not an American car. Now domestic cars will become more competitive," said Adam Lee, president of Lee Auto Malls, a string of dealerships selling both foreign and domestic cars.

Many new vehicles, especially hybrid cars, already meet or exceed the planned standards. Car companies are considering a range of ways to meet the new standards including more efficient combustion engines, new fuels and batteries.

The rules are expected to add an average of $950 to the cost of new vehicles, the EPA said Thursday, down about $350 from earlier projections. That said, a driver would save about $3,000 over the life of a vehicle when the rules are fully implemented.

Plug-in electric cars will initially get a "zero" emissions rating as an incentive, a U.S. government official told Reuters.

Now that the rules are in place, the EPA will look to limit emissions from stationary sources like power plants and factories. But the EPA's Jackson said no polluters would be regulated before 2011, in part to give Congress time to pass climate and energy legislation.

"It's entirely consistent with allowing Congress, especially the Senate, time to work on a bill, we are trying to be very mindful of where they are going as we work on regulations," Jackson said.

Reporting by Timothy Gardner, Tom Doggett, John Crawley, Christopher Doering in Washington, David Ljunggren in Ottawa and John McCrank in Toronto; Graphic by Jasmin Melvin; editing by Marguerita Choy

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