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supplier issues

Energy and Fuels

Description:  In December 2007, Congress passed clean energy legislation, including changes to the Corporate Average Fuel Economy (CAFE) standard.  President George W. Bush signed this bill into law on December 19, 2007.

MEMA supported this legislation which bases new fuel efficiency standards in a way that is economically feasible, open to technology options, and offers sufficient timelines for compliance.  MEMA believes that federal law grants sole authority to the National Highway Traffic Safety Administration (NHTSA) to set a uniform, national fuel economy standard.  MEMA supports financial incentives to encourage the purchase and manufacture of new types of fuel-efficient vehicles as a positive step, but such incentives must be technologically neutral.

Status:  The Energy Independence and Security Act of 2007 increases separate average fuel economy standards for cars and light trucks beginning with model year 2011, reaching a 35-mile per gallon average by model year 2020.  It also calls for fuel economy standards for work trucks as well as medium- and heavy-duty vehicles. 

In addition to the mandates on fuel efficiency, the law includes a number of provisions supported by the supplier community, including:

• A loan guarantee program to encourage the purchase of new tooling and equipment and the domestic manufacture of more energy efficient components used in advanced technology vehicles;
• A research and development program focused on new lightweight materials to determine how vehicular weight can be reduced to make vehicles more fuel efficient without compromising safety;
• A consumer education program on the fuel savings that would be achieved through the purchase of vehicles equipped with specific thermal management technologies, including energy efficient air conditioning systems and glass; and
• A loan guarantee program for the construction of facilities to manufacture advanced vehicle batteries and battery systems that are developed and produced in the United States.

Impact on Industry:  No estimates have been completed regarding the potential total cost to comply with the increased CAFE requirement.  The incentive language included in the 2007 energy bill recognizes the important role that suppliers play in research and development of the advanced technologies that will be necessary to meet a 35-mile per gallon fuel economy standard.  Loan guarantees and grants will help to defray the potential costs to develop the technologies necessary for advanced vehicles. 

2008 Anticipated Action: MEMA will monitor actions by the federal agencies to implement the energy bill and will identify and support federal funding opportunities for the supplier industry to continue to develop and manufacture components and systems to improve fuel economy. 

MEMA Staff Contact:          
Catherine Boland
Director, Government Relations
Phone: 202-312-9241
Email: cboland@mema.org