Obama Orders Higher Fuel Standards for Larger Trucks

President Barack Obama on Tuesday directed federal agencies to develop higher fuel standards for medium-sized and heavy trucks, another step in his efforts to slash oil consumption and carbon emissions blamed for global warming.

Obama made the announcement in Upper Marlboro, Maryland, about 20 miles from Washington, at a distribution center for Safeway grocery stores, next to a trucking rig that had been redesigned to increase fuel economy.

"Everybody who says you can't grow the economy while bringing down pollution, it's turned out they've been wrong," Obama said.

Automakers are already working to nearly double the average fuel economy of new U.S. cars and light trucks to 54.5 miles per gallon by 2025, under rules that took effect in 2012.

The administration will now direct the Environmental Protection Agency and the U.S. Department of Transportation to develop new rules for medium- and heavy-duty vehicle fuel efficiency by March 2016, with a draft due a year before that.

EPA chief Gina McCarthy and Transportation Secretary Anthony Foxx were on hand for Obama's announcement.

The new rules will build on standards already in place for model years 2014-18 for those larger vehicles, including semi-trailers and "big rigs" as well as so-called vocational vehicles, which include delivery trucks, buses and garbage trucks, and heavy-duty pickup trucks and vans.

The White House estimates that the first phase of fuel efficiency standards for trucks will save a projected 530 million barrels of oil.

The second phase "will take us well into the next decade," Obama said. "The goal we're setting is ambitious, but these are areas where ambition has worked out really well for us so far. Don't make small plans, make big plans."

In 2010, heavy-duty vehicles represented just 4 percent of registered vehicles on the road in the United States, but they accounted for approximately 25 percent of on-road fuel use and greenhouse gas emissions in the transportation sector.

News of the new fuel standards was welcomed by some of the biggest operators of truck fleets in the United States, who have formed an informal alliance, the Heavy Duty Fuel Efficiency Leadership Group.

The new standards "will be an important milestone that should result in significant benefits to our economy, the trucking industry and the environment," said Douglas Stotlar, president and chief executive officer of Con-way Inc, the nation's third-largest freight company.

Among the other companies in the fuel efficiency group are engine-maker Cummins Inc.; transmission systems manufacturer Eaton Corp; global courier Fedex Corp; Wabash National Corp, a large semi-trailer maker; and Waste Management Inc., which operates the largest U.S. fleet of garbage and waste trucks.

Navistar International Corp, a maker of commercial trucks, praised the administration's decision to consult industry at the outset of the rule-making process and said the push for increased economy was one that truck buyers and operators supported.

"Our customers continue to look for every percent of fuel economy improvement and that makes finding new solutions an ongoing priority for us," said Denny Mooney, Navistar's group vice president for global product development.

The large combination trucks commonly known as 18-wheelers haul about 70 percent of all freight tonnage in the United States, according to White House estimates.

"The fuel costs associated with shipping goods cross-country heavily impact the price of everything from a carton of milk to a pair of shoes," said Mark Cooper, director of research with the Consumer Federation of America.

Domestic oil refiners would not necessarily suffer if the new standards reduced U.S. fuel usage outright or slowed demand in the next decade.

The three largest U.S. independent refiners - Valero Energy Corp, Philips 66 and Marathon Petroleum Corp - have increased refined product export capacity at their U.S. Gulf of Mexico plants. Export demand is surging on a lack of refining capacity in some countries.

According to the U.S. Energy Information Administration, the United States exported 3 million barrels per day of refined products in November 2013. The United States became a net exporter of refined products in 2011 for the first time in 49 years.


Development of new truck fuel standards is another sign of the administration's efforts to address climate change and convince Americans of the urgent need to take action.

By ordering federal agencies to develop new standards, Obama is able to act on his own and sidestep Congress, which remains divided on climate policy.

While in California on Friday, touring part of that state's severe drought zone, Obama warned that a warming planet is intensifying the severity of droughts and other extreme weather events.

"Unless and until we do more to combat carbon pollution that causes climate change, this trend is going to get worse," he said.

The trucking announcement also followed a climate-focused speech by U.S. Secretary of State John Kerry in Jakarta on Sunday. And on Wednesday, U.S. Energy Secretary Ernest Moniz is scheduled to make what has been termed a "major announcement" on the administration's energy strategy.

Obama also renewed his appeal for Congress to end $4 billion a year in subsidies to the oil and gas industry and urge lawmakers to establish a $2 billion "energy security trust" to support development of advanced vehicles that run on electricity, homegrown biofuels, hydrogen, and domestically produced natural gas.

The $2 billion in spending would be drawn from revenues generated by federal oil and gas development.

(By Eric Beech; Additional reporting by Steve Holland in Washington, Kristen Hays in Houston, and James Kelleher in Chicago; Editing by Paul Tait, Ros Krasny and Jonathan Oatis)