President Obama Embraces National Approach to Regulating Fuel-Economy and CO2
Emissions

President Barack Obama announced plans to set new fuel-economy standards for
model year 2012–2016 cars and trucks, and simultaneously reduce carbon dioxide
(CO2) emissions through a national standard rather than a patchwork of state
rules. The two issues are related since CO2 is released in direct proportion to
the amount of carbon-based fuel that is burned. At this time, there is no other
practical way to capture CO2 emissions beyond increasing vehicle fuel
efficiency.

Several years ago, SEMA joined with the automakers, dealerships and other
aftermarket organizations in calling for a national approach to regulating CO2
emissions. Under the new federal plan, the National Highway Traffic Safety
Administration (NHTSA) will set Corporate Average Fuel Economy (CAFE) standards
for model year 2012–2016 vehicles that nearly match CO2 emissions standards
adopted by California and 13 other states. The U.S. Environmental Protection
Agency (EPA) will also establish corresponding CO2 emissions standards using its
authority under the Clean Air Act.

The average CAFE rating will be 35.5 mpg in 2016, four years sooner than
originally scheduled, based on a combined 39-mpg rating for passenger cars and
30 mpg for light trucks. The EPA plans to set a CO2 emissions standard of 250
grams per mile for vehicles sold in 2016—roughly the equivalent of 35.5 mpg. The
automakers participated in formulating the proposal and support the initiative.

The NHTSA will use an attribute-based system which sets CAFE standards for
individual fleets of vehicles based on size, taking into account the differences
between cars and light trucks (SUVs, pickups and vans). Individual car companies
will have flexibility on how to achieve the rules, whether placing more emphasis
on hybrids or reducing vehicle size and weight. Nevertheless, a standard based
on each vehicle's footprint should force automakers to increase the efficiency
of every vehicle rather than downsizing some vehicles in order to offset the
sale of bigger cars. The CAFE standards will also encourage car companies to
sell more hybrids, electric cars and advanced gasoline engines.

The federal program should resolve an ongoing dispute between California and the
federal government over jurisdiction. In 2007, the Bush administration blocked
California from being allowed to implement its CO2 program. California has
agreed to revise its regulations and defer to the national standard.
Nevertheless, the state will retain the right to establish tougher CO2 standards
in 2017 and beyond if deemed necessary, subject to waiver approval by the EPA.

SEMA is currently reviewing the program for any potential impact on the
specialty-equipment market. The program is not expected to be finalized until
late 2010. For additional information, contact Stuart Gosswein at:
stuartg@....