Federal fuel economy standards are costly, inefficient and harm the environment

New vehicles sold in the U.S. must comply with increasingly stringent Corporate Average Fuel Economy (CAFE) standards. Originally intended to reduce reliance on oil imports, the new standards focus mainly on reducing emissions of greenhouse gases. But even the federal government’s own studies show that CAFE standards are an extremely costly and inefficient means of achieving these objectives. In a review now under way, the Trump administration has an opportunity to reduce these costs by leaving the standards unchanged after 2021.
 
In 2012, the National Highway Transportation and Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) issued new CAFE standards for vehicles manufactured in the years 2017-2025. Under these rules, the minimum fleet wide average fuel economy for passenger cars would rise from 39.6 mpg this year to 55.3 mpg in 2025. For light trucks, minimum fuel economy would rise from 29.1 mpg this year to 39.3 mpg in 2025. 
 

Final rules were only set for model years 2017-21, with subsequent rules to be established after a mid-term evaluation. In that evaluation, EPA and NHTSA found that between 2016 and 2028 the standards would reduce total carbon dioxide emissions by up to 748 million metric tons.

In its regulatory impact assessment of the new CAFE standards, NHTSA estimated the annualized cost of implementation at between $5.4 billion and $7.6 billion. Even at that low end — $5.4 billion per year — the CAFE standards represent an implicit cost of $87 per ton of carbon dioxide (CO2) reduced. That is higher than most estimates of the cost that carbon dioxide imposes on society – and more than twice the EPA’s own estimate (since withdrawn by President Trump).

Read more at The Hill