CAFE’s final form gives credit to sellers of natural gas-powered vehicles

Article by Anita Panait, on August 30, 2012

The final version of the proposed corporate average fuel economy, or CAFE, rule now includes additional credits for carmakers selling compressed natural gas-powered vehicles in the United States. The inclusion of the incentives for sellers of compressed natural gas-powered vehicles in the CAFE rule is a very big lift for Honda Motor Co., which complained last year that the draft fuel economy rule was unfair to non-US carmakers.

Honda, the only carmaker that’s selling compressed natural gas-powered vehicles in the US, will be able use the credits to meet fuel economy standard. In an e-mail to Bloomberg, Edward Cohen, Honda vice president of government and industry relations, praised the revision of the proposed CAFE rule, saying that the provision of incentive credits for natural gas vehicles makes “a great deal of sense” under the regulation.

Cohen noted that a dedicated natural gas vehicle cuts CO2 emissions by 25 percent and petroleum consumption by 100 percent. The inclusion of the incentives for compressed natural gas vehicles is just one of the few revisions made to the CAFE rule for 2017 to 2025. Proposed in November 2011, President Barack Obama’s administration released the final form of the CAFE rule Tuesday. 

The rule may cost the auto industry up to $136 billion to comply with, but it may save consumers up to $451 billion in fuel costs, according to regulators from the U.S. Environmental Protection Agency and National Highway Traffic Safety Administration.

The CAFE rule demands that carmakers should double the average fuel economy of passenger vehicles sold in the US by 2025, via gradual hikes in the rates that auto companies have to meet as they improve mileage and cut greenhouse gas emissions. Honda signed on to the rule’s framework after complaining that the plan, which provides extra credits for hybrid pickup trucks made by US carmakers, “communicates favoritism and an unfair playing field to all market participants.”

Topics: united states

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