CAFE Standards
Background
Corporate Average Fuel Economy (CAFE) standards have been the most important U.S. law regarding motor vehicles since the mid-1970s, when the first Arab oil embargo hit the United States’ inefficient passenger vehicle fleet. Congress intended for the legislation to reduce the amount of fuel used in the nation’s passenger automobiles, but the legislation never worked as planned.
While the rules did improve the efficiency of the U.S. car fleet, roughly doubling them from 13.5 miles per gallon (mpg) to 27 mpg from 1975 to 1985, it did not succeed in cutting fuel use, which continued to rise almost every year until 2007. This was caused largely by the “rebound effect,” in which fuel demand is not permanently displaced because over time more fuel efficient cars allowed drivers to use more fuel and travel longer distances for the same price.
In 2009, after two decades of unchanged standards, Congress and the Obama administration established a new program to double U.S. vehicle fuel efficiency again to over 54 mpg by 2025. Concurrently, the plan marked the first-ever global warming pollution standards for U.S. transportation by lowering the average carbon emissions to 163 grams per mile (g/ mile) by model year 2025.
While auto fleet efficiency has increased by roughly one-third in the ten years up until 2018, fuel use continues to rise, with demand rebounding as energy prices dramatically fell between 2014 and 2016.
Additionally, U.S.-based vehicle companies, which depend predominately on lower mileage pickup trucks and sport utility vehicles (SUVs) for most of their profits, are now arguing that they cannot make standards beyond 2020 using current technologies without losing money and perhaps sacrificing the safety of the vehicles being produced.
Read the full study here.
