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August 30, 2012
Fuel Efficiency Standards Finalized
    by Robert Kropp

The new fuel efficiency standards of 54.5 miles per gallon will nearly double the current standards, and could increase profitability while creating hundreds of thousands of new jobs.

The Obama administration finalized new fuel efficiency standards for cars and light-duty trucks on Tuesday, mandating an average of 54.5 miles per gallon by 2025. The new standards build upon standards of 35.5 mpg by 2016, enacted previously by the Department of Transportation (DOT) and the Environmental Protection Agency (EPA).

The new standards are expected to reduce oil consumption by more than two million barrels a day by 2025. They will also cut greenhouse gas (GHG) emissions from cars and light trucks in half by 2025, reducing emissions by six billion metric tons over the life of the program.

Not surprisingly, the Presidential campaign of Republican candidate Mitt Romney lashed out at the new standards. A campaign spokesperson said, "Governor Romney opposes the extreme standards that President Obama has imposed, which will limit the choices available to American families."

However, as Deborah Solomon of Bloomberg wrote, "Who knows what a President Romney would do once in office, but if he's looking to sway voters he should reconsider his opposition to the fuel-economy standards before November. It's a matter of economics, not environmentalism."

Of course, it is a matter of environmental protection as well, and sustainable investors were quick to applaud the finalization of the standards.

Mindy Lubber, President of Ceres, wrote in Forbes, "A shift toward efficiency and advanced technology is driving job creation, investment and innovation across the country."

"The confluence of policy, consumer demand and automaker investment will boost employment and the economy as a whole," Lubber continued, citing a a target="_blank" href="">2011 report from Ceres. The report 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.

And in Capitol Weekly, Bill Green of VantagePoint Capital Partners wrote, "By requiring carmakers to hit an average of 54.5 miles per gallon by 2025, the proposed standard would provide exactly the kind of long-term policy certainty that capital loves. As a long-time investor in innovative car technologies and companies like Tesla, I can attest to the fact that a standard would unlock investment and innovation, create jobs, and spur economic growth, in the automotive sector and beyond."


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