#jsDisabledContent { display:none; } My Account | Register | Help

# Corporate Average Fuel Economy

Article Id: WHEBN0000440246
Reproduction Date:

 Title: Corporate Average Fuel Economy Author: World Heritage Encyclopedia Language: English Subject: Collection: Publisher: World Heritage Encyclopedia Publication Date:

### Corporate Average Fuel Economy

The Corporate Average Fuel Economy (CAFE) are regulations in the United States, first enacted by the U.S. Congress in 1975,[1] in the wake of the Arab Oil Embargo and were intended to improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) produced for sale in the United States. The Energy Policy and Conservation Act (EPCA), as amended by the 2007 Energy Independence and Security Act (EISA), requires that the U.S. Department of Transportation (DOT) establish standards separately for passenger automobiles (passenger cars) and nonpassenger automobiles (light trucks) at the maximum feasible levels in each model year, and requires that DOT enforce compliance with the standards. DOT has delegated these responsibilities to the National Highway Traffic Safety Administration (NHTSA). Through EPCA and EISA, U.S. law (49 U.S. Code § 32919) also requires that "a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards".

#### Out-year and alternative fuel standard changes

In the years 2021 to 2030 the standards requires MPG to be the "maximum feasible" fuel economy. The law allows NHTSA to issue additional requirements for cars and trucks based on the "footprint" model or other mathematical standard. Additionally each manufacturer must meet a minimum standard of the higher of either 27.5 mpg for passenger automobiles or 92% of the projected average for all manufacturers. National Highway Traffic Safety Administration (NHTSA) is directed based on National Academy of Sciences studies to set medium and heavy-duty truck MPG standards to the "maximum feasible". Additionally the law phases out the mpg credit previously granted to E85 flexible-fuel vehicle manufacturers and adds in one for biodiesel, and it adds a requirement that NHTSA publish replacement tire fuel efficiency ratings. The bill also adds support for initial state and local infrastructure for plug-in electric vehicles.

#### Implementating regulations

On April 22, 2008 NHTSA responded to the Energy Independence and Security Act of 2007 with proposed new fuel economy standards for cars and trucks effective model year 2011.[36] The new rules also introduce the "footprint" model for cars as well as trucks, where if a manufacturer makes more large cars and trucks they will be allowed to meet a lower standard for fuel economy. This means that an overall fuel efficiency for a particular manufacturer nor the fleet as a whole cannot be predicted with certainty since it will depend on the actual product mix manufactured. However, if the product mix is as NHTSA predicts, car fuel economy would increase from a current standard of 27.5 mpg-US (8.6 L/100 km; 33.0 mpg-imp) to 31.0 mpg-US (7.6 L/100 km; 37.2 mpg-imp) in 2011. The new regulations are designed to be "optimized" with respect to a certain set of assumptions which include: gas prices in 2016 will be $2.25 a U.S. gallon (59.4¢/L), all new car purchasers will pay 7% interest rates on their vehicles purchases, and only care about fuel costs for the first 5 years of a vehicle's life, and that the value of global warming is$7 per ton CO2. This corresponds to a global warming value of \$4.31 savings a year per car under the new regulations. Further, the new regulations assume that no advanced hybrids (Toyota Prius), plug-in hybrids and extended range electric vehicles (Chevrolet Volt), electric cars (Th!nk City), nor alternative fuel vehicles (Honda Civic GX) will be used to achieve these fuel economies. The proposal again explained that U.S. law (49 U.S. Code § 32919) requires that "a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards", and explained that laws or regulations applicable to motor vehicle greenhouse gas emissions are related to fuel economy standards.

In mid-October 2008, DOT completed and released a final environmental impact statement in anticipation of issuing standards for model years 2011-2015.[37] Based on its consideration of the public comments and other available information, including information on the financial condition of the automotive industry, the agency adjusted its analysis and the standards and prepared a final rule and Final Regulatory Impact Analysis (FRIA) for MYs 2011-2015.[38] On November 14, 2008, the Office of Management and Budget concluded review of the rule and FRIA.[39] However, issuance of the final rule was held in abeyance. On January 7, 2009, the Department of Transportation announced that the final rule would not be issued, writing: "The Bush Administration will not finalize its rulemaking on Corporate Fuel Economy Standards. The recent financial difficulties of the automobile industry will require the next administration to conduct a thorough review of matters affecting the industry, including how to effectively implement the Energy Independence and Security Act of 2007 (EISA). The National Highway Traffic Safety Administration has done significant work that will position the next Transportation Secretary to finalize a rule before the April 1, 2009 deadline."

On January 27, 2009, President Barack Obama directed the Department of Transportation to review relevant legal, technological, and scientific considerations associated with establishing more stringent fuel economy standards, and to finalize the 2011 model year standard by the end of March. This single-model year standard was issued March 27, 2009, and is about one mpg lower than the fuel economy standards previously recommended under the Bush Administration. "These standards are important steps in the nation's quest to achieve energy independence and bring more fuel efficient vehicles to American families", said Secretary LaHood. The new standards will raise the industry-wide combined average to 27.3 miles per US gallon (8.6 L/100 km; 32.8 mpg-imp) (a 2.0 mpg-US (2.4 mpg-imp) increase over the 2010 model year average), as estimated by the National Highway Traffic Safety Administration (NHTSA). It will save about 887,000,000 U.S. gallons (3.36×109 L) of fuel and reduce carbon dioxide emissions by 8.3 million metric tons. This 2011 single-year standard will use an attribute-based system, which sets fuel economy standards for individual vehicle models, based on the "footprint" model. Secretary LaHood also noted that work on the multi-year fuel economy plan for model years after 2011 is already well underway. The review will include an evaluation of fuel-saving technologies, market conditions and future product plans from the manufacturers. The effort will be coordinated with interested stakeholders and other federal agencies, including the Environmental Protection Agency.[40] The new rules were immediately challenged in court again by the Center for Biological Diversity as not addressing the inadequacies found by the previous court rulings.[41]

## Future standards

### MY 2012-2016 Obama Administration proposal

On May 19, 2009, President Barack Obama proposed a new national fuel economy program which adopts uniform federal standards to regulate both fuel economy and greenhouse gas emissions while preserving the legal authorities of DOT, EPA and California. The program covers model year 2012 to model year 2016 and ultimately requires an average fuel economy standard of 35.5 miles per US gallon (6.63 L/100 km; 42.6 mpg-imp) in 2016 (of 39 miles per gallon for cars and 30 mpg for trucks), a jump from the current average for all vehicles of 25 miles per gallon. Obama said, "The status quo is no longer acceptable."[42] The result is a projected reduction in oil consumption of approximately 1.8 billion barrels (290,000,000 m3) over the life of the program and a projected total reduction in greenhouse gas emissions of approximately 900 million metric tons; the expected consumer costs in terms of higher car prices is unknown. Ten car companies and the UAW embraced the national program because it provides certainty and predictability to 2016 and includes flexibilities that will significantly reduce the cost of compliance. Stated goals for the program included: saving consumers money over the long term in increased fuel efficiency, preserving consumer choice—the new rules do not dictate the size of cars, trucks and SUVs that manufacturers can produce; rather it requires that all sizes of vehicles become more energy efficient, reduced air pollution in the form of greenhouse gas emissions and other conventional pollutants, one national policy for all automakers, instead of three standards (a DOT standard, an EPA standard and a California standard that would apply to 13 other states), and industry desires: clarity, predictability and certainty concerning the rules while giving them flexibility on how to meet the expected outcomes and the lead time they need to innovate. The new policy will result in yearly 5% increases in efficiency from 2012 through 2016, 1.8 billion barrels (290,000,000 m3) of oil saved cumulatively over the lifetime of the program and significant reductions in greenhouse gas emissions equivalent to taking 177 million of today's cars off the road.[43]

### 2011 agreement

On July 29, 2011, President Obama announced an agreement with thirteen large automakers to increase fuel economy to 54.5 miles per gallon for cars and light-duty trucks by model year 2025. He was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, and Volvo—which together account for over 90% of all vehicles sold in the United States—as well as the United Auto Workers (UAW), and the State of California, who were all participants in the deal.[44] The agreement will result in new CAFE regulations for model year 2017-2025 vehicles which were finalized on August 28, 2012.[45] The major increases in stringency and the changes in the structure of CAFE create a need for research that incorporates the demand and supply sides of the new vehicle market in a more detailed manner than was needed with static fuel economy standards.[46]

Volkswagen responded to the July 29, 2011 agreement with the following statement: "Volkswagen does not endorse the proposal under discussion. It places an unfairly high burden on passenger cars, while allowing special compliance flexibility for heavier light trucks. Passenger cars would be required to achieve 5% annual improvements, and light trucks 3.5% annual improvements. The largest trucks carry almost no burden for the 2017-2020 timeframe, and are granted numerous ways to mathematically meet targets in the outlying years without significant real-world gains. The proposal encourages manufacturers and customers to shift toward larger, less efficient vehicles, defeating the goal of reduced greenhouse gas emissions."[47] Additionally, Volkswagen has since approached U.S. law makers about lowering their proposal to double fuel efficiency for passenger cars by 2025. Volkswagen has cited that the new plan is unfair to makers of clean diesel engines. As a result, Volkswagen is one of the only major auto manufacturers to not sign the agreement that has led to the current proposal from the Obama administration.[48]

#### Agreed standards by model year, 2011-2025

 Model Year Passenger Cars Light Trucks "footprint": 41 sq ft (3.8 m2) or smaller (e.g. 2011 Honda Fit) "footprint": 55 sq ft (5.1 m2) or bigger (e.g. Mercedes-Benz S-Class) "footprint": 41 sq ft (3.8 m2) or smaller (e.g. Chevy s10) "footprint": 75 sq ft (7.0 m2) or bigger (e.g. Ford F-150) CAFE EPA Window Sticker CAFE EPA Window Sticker CAFE EPA Window Sticker CAFE EPA Window Sticker 2012 36 27 28 21 30 23 22 17 2013 37 28 28.5 22 31 24 22.5 17 2014 38 28 29 22 32 24 23 18 2015 39 29 30 23 33 25 23.5 18 2016 41 31 31 24 34 26 24.5 19 2017 44 33 33 25 36 27 25 19 2018 45 34 34 26 37 28 25 19 2019 47 35 35 26 38 28 25 19 2020 49 36 36 27 39 29 25 19 2021 51 37 38 28 42 31 25 19 2022 53 38 40 30 44 33 26 20 2023 56 40 42 31 46 34 27 21 2024 58 41 44 33 48 36 28.5 22 2025 60 43 46 34 50 37 30 23

## Active debate

CAFE does not directly offer incentives for customers to choose fuel efficient vehicles, nor does it directly affect fuel prices. Rather, it attempts to accomplish these goals indirectly by making it more expensive for automakers to build inefficient vehicles by introducing penalties.[12] The conservative Heartland Institute contends that CAFE standards do not work economically to consumers' benefit, that smaller cars are more likely to be damaged in a collision, and that insurance premiums for them are higher than for many larger cars.[50] However, the Insurance Companies' Highway Loss Data Institute publishes data showing that larger vehicles are more expensive to insure.[51]

CAFE advocates assert most of the gains in fuel economy over the past 30 years can be attributed to the standard itself,[52] while opponents assert economic forces are responsible for fuel economy gains, where higher fuel prices drove customers to seek more fuel efficient vehicles.[53] CAFE standards have come under attack by some

• 49 U.S.C. Chapter 329 - Automobile Fuel Economy (2009) CAFE legislation on U.S. House of Representatives Downloadable U.S. Code (.txt)
• NHTSA: Corporate Average Fuel Economy
• Light Truck Rule criticism.
• Is Bigger Safer? It Ain't Necessarily So
• Federal Proposal Would Unlink Fuel Economy Requirements From Their Safety Consequences
• Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards, National Academy of Sciences
• Obama's CAFE Fuel Economy Standards to Create Fleet of Tiny, Expensive Vehicles
• August 2012 CAFE Final Rule (pdf)
• Historic 54.5 mpg Fuel Efficiency Standards finalized August 2012 by NTSA