AUTOS:

OMB reviews new fuel-economy labels crafted with green cars in mind

With General Motors Co. and Nissan Motor Co. scheduled to release the first mass-market electric cars and plug-in hybrids late this year, U.S. EPA is moving to propose rules meant to better summarize the vehicles' energy demands on fuel-economy labels.

The agency sent a draft proposal yesterday to the White House Office of Management and Budget that would "require new metrics to effectively convey information to consumers" about plug-in hybrids and electric cars. Review by OMB's Office of Information and Regulatory Affairs (OIRA) is the last stop before EPA proceeds with its proposed labeling program.

EPA plans to finalize its plan for window stickers by year's end, according to a database that tracks rulemaking.

The labeling effort won't affect the corporate average fuel economy (CAFE) standards, which were updated by EPA and the Department of Transportation earlier this year (Greenwire, April 1).

Fuel economy labels, last revised in 2006, have traditionally listed how many miles a car will travel on a single gallon of gasoline. But because plug-in hybrids and electrics are powered by electricity -- whose price varies from one utility to another and by time of day -- the stickers will no longer let consumers directly compare one vehicle to another.

Some experts have suggested that EPA could measure the fuel efficiency for electric vehicles in kilowatt-hours per 100 miles but that makes it more difficult to compare the cars against their gasoline-fueled counterparts. And while consumers are used to paying for gas by the gallon, most would be unfamiliar with measuring their energy consumption in kilowatt-hours.

The EPA rule has apparently drawn the attention of OIRA Administrator Cass Sunstein, who has often referenced the power that fuel-economy labels have in driving consumer decisions. Because the rule was not deemed "major," meaning that its economic impact would be less than $100 million, the office is not required by executive order to review it.

In a recent memo directing agencies how to address disclosure and simplification in their regulations, Sunstein cited fuel economy labels as a prime example of the value of summaries. And in a 2008 book on behavioral economics and regulation, titled "Nudge," Sunstein said fuel-economy stickers should be designed to make consumers realize the full cost of their actions.

The most recent changes to the fuel-economy labels moved in that direction, he wrote, but "they might be even more powerful if they computed a five-year figure for money spent on fuel. Imagine the sticker on a Hummer!"

The lack of a standard method for presenting the efficiency of hybrid and electric cars has made marketing a little more difficult for companies like GM, which boasted last year that its Chevrolet Volt would get the equivalent of 230 miles per gallon (Greenwire, Aug. 11, 2009.).

GM has recently backtracked. EPA's preliminary formula has not gotten final approval, said Micky Bly, the company's executive director for global electrical systems, during a recent press conference at a factory that builds batteries for the Volt.

"We just don't know right now" what the number will be, Bly said, according to a report in USA Today.

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