New Vehicle Emissions Rules to Save Corporate Fleets Billions

New Vehicle Emissions Rules to Save Corporate Fleets Billions

Image CC licensedl by Flickr user Rishabh Mishra (possible248)

The nation's first federal rules regulating greenhouse gas emissions from light-duty vehicles stand to save the country's corporate fleets billions of dollars from improved fuel economy.

The U.S. Environmental Protection Agency and Department of Transportation finalized new standards Thursday that require model year (MY) 2012-2016 passenger cars and light-duty trucks to achieve a combined fuel economy average of 35.5 miles per gallon, along with emissions levels of 250 grams of carbon dioxide per mile.

"The new greenhouse gas standard for vehicles is a home run for corporate fleets," said Jason Mathers, a project manager at the Environmental Defense Fund working to educate corporate fleets on greenhouse gas management.

"For them, fuel is second only to depreciation as the top cost," Mathers told GreenBiz.com Thursday via email. "The average company vehicle today burns over $2,500 a year at the pump. The new rules stand to cut that by $800 for each vehicle -- at today's prices -- while also cutting three tons of carbon pollution each year."

The potential savings are huge, Mathers said, when you factor in the more than three million cars and trucks comprising the nation's corporate fleets.

"As companies typically turn over their passenger vehicle stock every three to four years," Mathers said, "corporate fleets will be among the first to adopt these new, cleaner cars."

The new fuel saving vehicles and technologies that will enter the market as a result of the new standards will find in fleet managers a receptive audience, according to Karen Healey, director of product management at PHH Arval.

"For years now, many fleet managers have been looking for more fuel-efficient vehicles to offer their drivers, and have been disappointed by the options available to them," Healey said in an email.

The EPA had earlier estimated the new rules would add about $1,000 on average to the cost of new vehicles, but Healey is eager to see what the final price tag will be. The EPA said Thursday the average driver would save about $3,000 over the lifetime of a new vehicle, but corporate fleet vehicles are subject to different driving conditions.

"We are encouraged by reports that the additional costs for the vehicle will be outweighed by the fuel savings, but are anxious to learn the details and how they would impact fleet vehicles, which typically drive more miles, and are replaced more quickly than the average consumer vehicle," Healey said.

Chelsea Mathis, environmental consultant at Donlen, believes the new regulations provide an intriguing opportunity for fleets to reduce fuel expenditures and emissions even more following the efficiency improvements made in recent years.

"It is anticipated that increases in overall vehicle efficiency from MY2005 to MY2010 is on the order of 8 percent," Mathis said via email. "For a typical 500-unit fleet driving 20,000 miles a year, this translates to an annual savings of about $100,000 based on a fuel price of $2.75 per gallon."

Those who have moved to smaller vehicle classes and replaced older vehicles with more efficient models, Mathis noted, have cut fuel expenditures and emissions by another 10 percent.

"Given the opportunity to decrease fuel spend and emissions, we anticipate corporate fleets to take advantage of the increased fuel efficiency and replace older vehicles, in some cases even accelerating vehicle replacements," she said.

The finalization of the new rules caps a contentious battle that pitted states against automakers and the EPA. It marks the first step by the federal government to regulate greenhouse gas emissions blamed by most scientists for climate change. Light-duty vehicles produce nearly 60 percent of transportation-related emissions in the U.S.

The rules were inspired by those proposed by California, which sought permission under the Clean Air Act to set stricter air quality standards. The EPA had approved more than 50 similar requests but the Bush-era EPA turned down California, in addition to more than a dozen other states that wished to implement the rules.

Automakers were fiercely opposed to allowing California to devise a separate standard, arguing the patchwork of rules would be costly and onerous. They're now behind the final standard because of the uniformity it offers.

"When our engineers struggle with changing or conflicting laws, it derails efforts to introduce new technologies with long-term research and development timeframes," Dave McCurdy, president and CEO of the Alliance of Auto Manufacturers, said in a statement. "The national program announced today makes sense for consumers, for government policymakers and for automakers."

Image CC licensedl by Flickr user Rishabh Mishra (possible248).