On July 18, the Environmental Protection Agency (EPA), the National Highway Traffic Safety Administration (NHTSA) and the California Air Resources Board (CARB) stated that automotive manufacturers are on track to meet Corporate Average Fuel Economy (CAFE) standards for passenger vehicles through 2025. According to NHTSA, “automotive manufacturers are innovating and bringing new technology to market at a rapid pace, and that they will be able to meet the MY 2022 – 2025 standards … relying primarily on advanced gasoline vehicles.”

However, instead of meeting the originally calculated target of 54.5 miles per gallon (mpg) they will instead meet a lower target of 50 to 52.6 mpg.  This is because the mpg targets outlined by CAFE are adaptive – meaning that they are based on the fuel efficiency of the actual vehicle fleet.  Low oil prices have increased the number of larger, less fuel efficient vehicles on the road, reducing the overall fuel efficiency of the passenger fleet.  The original 54.5 mpg CAFE standards would have resulted in an estimated savings of $1.7 trillion in gasoline costs to U.S. consumers, as well as a reduction of GHG emissions by 6 billion tons over the lifetime of these vehicles.


CAFE Critical Piece of Reducing Transportation Emissions

In the United States, CAFE remains the major policy driver for reducing U.S. transportation emissions, which account for 27 percent of U.S. greenhouse gases and 70 percent of domestic oil consumption. In 2007, President Bush raised CAFE standards for the first time since 1990. Under the Obama administration, EPA combined mpg efficiency ratings and grams of carbon dioxide per mile under the CAFE standard. Earlier this month, the Energy Information Administration reported that domestic GHG emissions from the transportation sector had eclipsed those of the power sector.

In 2012, the Obama administration worked with the auto industry in setting an ambitious CAFE standard for each vehicle class, out to 2025. As part of CAFE, the automotive industry agreed to a mid-term evaluation of CAFE.  Monday’s draft Technical Assessment Report (TAR) is the first step as part of the administration’s mid-term evaluation of CAFE.  The TAR will be open for a 60 day public comment period, after which the TAR will be finalized, CAFE regulations for 2022 to 2025 will be finalized in 2018.

While the Administration’s positive assessment of the U.S. automotive industry’s progress in ramping up the use of energy efficiency technologies in new vehicles is good news, an overall lowering of the CAFE standard jeopardizes U.S. progress on climate mitigation. Indeed, tremendous progress above and beyond original CAFE targets will be needed to meaningfully cut transportation sector emissions and meet ambitious climate targets.


54.5 to 52.6 … Or Even 50 mpg

Manufacturers have consistently met increasing CAFE standards in all vehicle classes since the program began in the 1970s.  Despite this progress, cheap oil is throwing a monkey wrench into CAFE.  In 2015, SUV purchases broke records, and 2016 is on track to be another banner year for the gas guzzling passenger truck and SUV market.  Even with improvements to fuel economy in larger cars, only 40 percent of new light-duty trucks and SUVs are CAFE compliant, compared to 80 percent of regular cars.

Americans are also trading in fuel efficient cars for gas-guzzling trucks and SUVs at record levels in 2016, with 75 percent of those trading in an electric or hybrid opting for traditional gasoline cars. Currently, EVs make up less than 3 percent of all new vehicle purchases in the United States. Meanwhile, the administration is confident it can meet this adaptive CAFE target without significant increases in low or zero emissions technologies, with the TAR concluding that “high penetration levels of alternative fueled vehicles [such as plug-in electric vehicles, fuel cells and biofuels] will not be needed to meet the MY2025 standards.”  


Reactions Mixed

The administration and collaborating agencies praised the automotive industry’s efforts, with CARB Chair Mary D. Nichols, stating, “Costs are lower for many technologies than we originally thought, market uptake is strong, and expected consumer benefits remain high.” 

Others remained skeptical that a lowered CAFE target would make meaningful contributions to climate mitigation, with the American Council for an Energy Efficient Economy (ACEEE) stating, “Meeting U.S. obligations to dramatically lower greenhouse gas emissions over the coming decades will require rapid---and absolute---reductions in car and light truck fuel consumption whatever the mix of vehicles sold.”   

Senator Ed Markey (D-MA) stated that the CAFE standards should receive a “grade of incomplete... The United States has joined the international community in committing to doing our fair share to address global warming and these fuel economy standards are a linchpin of our domestic plan to meet the climate change challenge.” Indeed, without consideration of additional technologies, such as electric vehicles and high octane, low carbon biofuel blends, it is unlikely that higher mpg ratings will be achieved.



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