WASHINGTON, D.C. – After several days of negotiations, the centerpiece of the energy bill that will be moving through the House is taking shape: a proposal to sharply boost vehicle fuel economy standards, according to http://online.WSJ.com.

After discussions today between House Energy and Commerce Chairman John Dingell (D–Mich.) and Speaker Nancy Pelosi (D–Calif.), the major components are beginning to fall into place. Both House lawmakers are now working toward a plan that would raise fuel-economy standards to 35 miles a gallon by 2020, the level initially approved by the Senate last summer.

The emerging deal will ensure automakers have some added flexibility to meet the higher target, and will specifically provide for separate treatment for cars and light trucks, so long as the overall fleet average reaches 35 mpg. The lawmakers are moving toward a plan to extend the so-called flex-fuel credit, which encourages companies to make cars that burn ethanol and clean-burning biofuels. The credit ensures that autos capable of burning a high amount of biofuel count for more than regular vehicles, when auto makers calculate compliance with the fuel-economy standards.

Under the emerging legislation, the credit would be made somewhat more generous than current law and would extend it through 2014. The credit is currently set to expire at the end of 2008. After 2014, the credit would begin to phase out and would be eliminated entirely by 2020, under the legislation being negotiated by Dingell and Pelosi.

The final wrangling is over what role the Environmental Protection Agency and the Department of Transportation will have in regulating the new fuel-economy standards, according to http://online.WSJ.com. Dingell was pushing for language that would prevent EPA from regulating tailpipe emissions in a way that could, in effect, regulate fuel-economy — a power that rests with the Transportation Department. The EPA is devising rules to regulate tailpipe emissions following a Supreme Court ruling earlier this year that the agency could regulate carbon dioxide under the federal Clean Air Act.

The proposed increase in fuel economy standards would be about 40 percent higher than current levels.

Originally posted on Fleet Financials