What Everyone Should Know About the Energy Bill and CAFE Today

The House of Representatives passed the Energy Bill which will increase the Corporate Average Fuel Economy (CAFE) to 35 mpg for cars and trucks by 2020. The vote passed by 235-181.

Automakers in the past few days gave up the fight against the new standards and are now supporting it, saying it's a success for everyone (Ford statement, Toyota statement and the Auto Alliance statement). Mostly, the automakers are happy with getting a different standard set for cars and light trucks.

But Dingell's last minute push to get the NHTSA to administer the rules was rejected. The EPA will be involved in the administration of the new standards.

But there are still many issues with the new bill.

Nissan Exemption
Nissan will continue to receive an exemption for the Nissan Sentra. According to the CAFE standards, both imports and domestics are supposed to meet the current car standards of 27.5 mpg. But because of the North American Free Trade Agreement, the Sentra, which is built in Mexico, was reclassified as a domestic vehicle, pushing Nissan's imports above the line. In 2005, Nissan gained and exemption from the National Highway Traffic Safety Administration for the 2006 to 2010 model years. That exemption will be pushed into 2013 by the new bill.

The bill is creating a system which allows manufacturers to trade fuel economy credits among its own fleets. Or they can go ahead and sell credits to other manufacturers.

Senate Must Still Pass
As it stands, the renewable energy requirements may hold it up. Supporters needed 60 votes in the Senate to overcome any filibuster attempts. As of this morning, they only had 53 votes. Which means they are now expected to pull out some of those provisions and then send it back to the House.

White House Veto
In the meantime, the White House is already threatening to veto the bill. The White House opposes the 15 percent rule on renewable energy sources by 2020 for utilities and the tax hike (removal of tax breaks) on oil and natural gas companies.

"It appears Congress may intend to produce a bill the President cannot sign," top White House economic advisor Allan Hubbard said in a letter to House Speaker Nancy Pelosi.

Other Sections of the Energy Bill
The Energy Bill is also calling for a fivefold increase in renewable fuels by 2022, new efficiency standards for light bulbs (say bye-bye to incandescent bulbs), washing machines and dishwashers.