U.S. lawmakers reach deal on CAFE standards

U.S. House and Senate lawmakers are set to work on their dueling energy bills this week, and they've already tackled one major hurdle, setting Corporate Average Fuel Economy, or CAFE, standards.

The proposed terms would require automakers to achieve a fleet average of 35 miles per gallon on their cars and light trucks by 2020, a 40 percent reduction from current standards.

"We are confident that this final product will win the support of the environmental, labor and manufacturing communities," said House Speaker Nancy Pelosi.

The newly negotiated CAFE standard, a version of which was included in the bill passed by the Senate in June, was opposed by car makers. The House passed their energy bill in August, which did not include fuel efficiency requirements (see What's next for the energy bill?).

The industry currently has to make cars that reach 27.5 miles per gallon, and 22.2 miles per gallon for light trucks.

"This landmark energy legislation will offer the automobile industry the certainty it needs, while offering flexibility to automakers and ensuring we keep American manufacturing jobs and continued domestic production of smaller vehicles," said Pelosi.

Pelosi also said the proposed final bill would include an increase in the Renewable Fuels Standard and the Renewable Electricity Standard, but did not release any details of those provisions.