Market News

 May 20, 2009
Obama moves to curb car emissions

 US President Barack Obama has announced tough targets for new fuel-efficient vehicles in order to cut pollution and lower dependence on oil imports.

Describing the move as "historic", Mr Obama said the country's first-ever national standards would reduce vehicle emissions by about a third by 2016.

The plan aims to replace overlapping rules on emissions and efficiency set by federal agencies and states.

US carmakers and environmental groups have expressed support for the move.

Under the proposed standards, manufacturers would be required to begin improving fuel efficiency by 5% a year from 2012.

By 2016, they would have to reach an average of 39 miles per US gallon for passenger cars, and 30 miles per gallon for light lorries.

The new targets would increase the average fuel efficiency of all US cars and light lorries to 35.5 miles per gallon, about 10 miles per gallon more than the current standard.

Announcing the plan at the White House, Mr Obama said the status quo was "no longer acceptable" and led to dependence on oil exporting countries and climate change.

The new standards are expected to raise the price of new vehicles by about $1,300 (£839) per vehicle by 2016.

But the president said this would be offset by lower fuel cost within three years.

The US is the biggest car market with more than 250 million cars and light lorries on the road.

The proposed nationwide standard for exhaust emissions is expected to cut the amount of carbon dioxide produced by new passenger vehicles by 34%.


The Safe Climate Campaign, an environmental group, welcomed the plan saying it was "major signal" that the US was serious about curbing greenhouse gas emissions.

Carmakers are also hailing a single nationwide standard, after years of court battles to stop California and other states setting their own tough pollution controls.

"GM and the auto industry benefit by having more consistency and certainty to guide our product plans," GM Chief Executive Fritz Henderson said in a statement.

Mr Obama predicted that the lawsuits would be dropped as a result of the proposed regulation.

The president said: "As a result of this agreement we will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years."

He said this amounted to removing 177 million cars from the roads by 2016.

In that period, the savings in oil will amount to last year's combined US imports from Saudi Arabia, Venezuela, Libya and Nigeria, Mr Obama added.

BBC environment correspondent Richard Black says the plan should act as an incentive for US carmakers to increase fuel efficiency towards European and Asian levels.

The proposed regulation needs the approval of the Environmental Protection Agency and the transportation department.