Obama introduces new emissions laws...

Earlier this week, President Obama introduced new automotive legislation significantly increasing the level of fuel efficiency that new cars sold in the United States will be able to have. The legislation also curbs the level of harmful, toxic emissions that these new cars will be able to release.

The requirements are relatively simple: by 2016 all new cars and light trucks in the United States will have to have an average fuel efficiency level of 35.5 MPG (6.6 L/100 km; a 2009 Honda Civic coupe), up from an average level of 25 MPG (9.4 L/100 km; a 2009 Ford Escape SUV) today. Starting in 2012, carmakers will have to improve fuel efficiency by 5% annually.

According to the administration, this new legislation would reduce carbon emissions in the United States by 30%. Though you should not expect the changes to happen overnight. First, the goals of the legislation don't have to be met until 2016, which still leaves seven more years. Secondly-- and more importantly-- it will take quite a few years for the new, fuel efficient cars and trucks to diffuse into the market. Since car owners generally like to hold onto their vehicles for a number of years, many car buyers won't purchase the new, fuel efficient vehicles until much later. Especially since the new emissions and mileage targets will make new cars about $1300 more expensive. 

According to a group at MIT, the main benefits of the legislation won't really be felt until 2030. So the massive carbon reduction from this policy that Obama talked about may not actually take place for a good while. But there is a provision in the legislation that seeks to speed up that process, known as the 'Cash for Clunkers' plan.

The plan would provide financial vouchers for car owners to scrap or trade in their old vehicles for new, fuel efficient ones, thereby quickening the pace that the fuel efficient vehicles get rolled onto the roads. The plan is being touted as environmentally friendly and a help to car buyers. It is true that it could have benefits for climate change, but we must keep in mind that building new cars (and disposing of old ones) is certainly not an environmentally friendly activity, no matter which way you cut it. Germany has also adopted such a plan, but instead of aiming for the fuel efficiency goal (Europe already has some of the highest mileage standards in the world), its goal is moreso to re-ignite its ailing auto industry.

While it is true that the 'Cash for Clunkers' plan could be effective, a number of critics are worried that the savings accrued by vehicle swappers may not be as high as everyone perceives. This is because of the Miles Per Gallon Illusion, a phenomenon I've described before, where the marginal increase in gas savings falls rapidly with higher levels of fuel efficiency. The authors of the MPG Illusion blog have researched the plan heavily and are concerned the savings may not be economically or environmentally viable. 

But regardless of the minor problems with the legislation, it is still a masterful and landmark piece of policymaking. It will certainly have serious benefits from an environmental point of view. Although the carbon emissions cut will not happen for some time, a 30% reduction is still very significant and very realistic, especially in an industry that accounts for a hefty share of the U.S.'s GHG emissions. 

Such legislation has been fought by automakers for many years. When California adopted its stringent efficiency limits a few years ago, automakers were less than excited and very quickly launched lawsuits that exist today (although they will be dropped as a result of the new legislation). A national policy similar to California's was called for, but was crushed at the powerful hands of the then 'Big Three' (GM, Ford & Chrysler). Since the 'Big Three' are all on the verge of collapse, their lobbying powers in this case were not all that powerful. 

In fact, what makes this legislation so impressive is the fact that the auto industry is actually in support of it (although I wouldn't be surprised if even more stringent rules were watered down in exchange for their support). And it probably doesn't make it all that easy for them to say no since one of the main stakeholders in GM and Chrysler is the federal government.

This will have important implications for Canada since the federal Conservative government has no serious environmental policies and has openly stated its waiting for the US to make some moves so it could join up and follow the leader. Don't be surprised to hear Canada adopting similar efficiency standards and emissions limits within the next little while.