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November 19, 2011
Investors Support Administration's New Fuel Efficiency Standards
    by Robert Kropp

Ceres says that 54.5 mpg by 2025 will add jobs to the economy, increase auto industry competitiveness, and reduce greenhouse gas emissions.

Companies and investors alike seek regulatory certainty, and earlier this week the Environmental Protection Agency (EPA) and the Department of Transportation (DOT) provided it to American car manufacturers when they announced new fuel economy standards. By 2025, standards for cars, SUVs, and light trucks will be 54.5 mpg, almost double the current standard of 27.3 mpg.

Not only do the standards provide regulatory certainty for manufacturers. Implementing them will reduce oil consumption by 2.2 million barrels per day by 2025, and decrease greenhouse gas (GHG) emissions by 6 billion metric tons. EPA estimates that fuel efficiency technologies will add about $2,000 to the sticker price of a car, but drivers will realize savings of as much as $6,600.

Along with the Administration's decision to withdraw support for the controversial Keystone XL pipeline, and its announcement that EPA will issue pollution standards for new power plants early next year, the new standards suggest that regulators will no longer wait for Congressional action on climate change.

Sustainable investors were quick to applaud the decision on the new fuel standards. Mindy Lubber, President of Ceres, said, "America needs to move forward now on advanced clean energy solutions that help our economy and consumers, create jobs, cut pollution and help our transportation sector become more globally competitive. The Obama Administration is doing that with these new standards today."

In a report issued this summer, Ceres estimated that the new fuel standards will create approximately 484,000 jobs for the US economy, 43,000 of which will be in the auto industry.

Higher fuel economy standards will also increase the profits of US car manufacturers, Ceres found.

Rebecca Henson of Calvert Investments said, "These proposed standards will drive the competitiveness of the US auto industry, which is an important slice of our portfolios. Stricter environmental standards like these will spark innovation and improve the competitive positioning of US automakers."


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