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Monday, February 22, 2010

Automobile and Light Truck Fuel Economy: The CAFE Standards

Brent D. Yacobucci
Specialist in Energy and Environmental Policy

Robert Bamberger
Specialist in Energy Policy

On May 19, 2009, President Obama announced a plan to integrate CAFE standards administered by the National Highway Traffic Safety Administration (NHTSA) with automotive greenhouse gas emissions standards to be issued by the Environmental Protection Agency (EPA). On September 15, 2009, EPA and NHTSA issued proposed rules. The Administration has stated that the proposal would require an increase in fuel economy standards to as much as 35.5 miles per gallon (mpg) by model year (MY) 2016, four years ahead of the deadline set in the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140). The Administration estimates that the total cost of complying with EISA and the new proposal will add $1,100 to the cost of an average MY2016 vehicle (compared to MY2011), although this additional purchase cost is expected to be paid back through lifetime fuel savings. The objective of the new greenhouse gas standards would be to reach reduction levels similar to those adopted by the state of California, although some specifics of the requirement would be different. However, while the rulemaking process will be combined, in their joint proposal, EPA and NHTSA recognize that some parts of the GHG program will not translate to the CAFE program, and vice versa. Therefore, EPA and NHTSA expect that the achieved fuel economy will be somewhat lower than 35.5 mpg as automakers will use credits from changes in air conditioner refrigerants and other greenhouse gas reductions to comply with the program, but which have no bearing on fuel economy. 

On March 27, 2009, NHTSA released a final rule establishing fuel economy standards for MY2011 passenger cars and light trucks. EISA restructured the automotive fuel economy program to establish a corporate average fuel economy (CAFE) standard of 35 mpg by MY2020 for the combined passenger automobile and light truck fleet. However, to meet the combined standard, automakers will continue the practice of calculating the CAFE of their car and light truck fleets separately. A Notice of Proposed Rulemaking (NPRM), issued in March 2008, covered MY2011-2015. To provide opportunity to conduct additional analysis to support the setting of standards for the later model years, the Obama Administration, on January 26, 2009, directed NHTSA to finalize a rule solely for MY2011. NHTSA expects that MY2011 rule will result in fuel economy for MY2011 passenger cars and light trucks at 30.2 mpg and 24.1 mpg, respectively. The combined fuel economy for both fleets is expected to be 27.3 mpg, somewhat lower than the 27.8 mpg originally proposed. The standards are "attribute" based; every new vehicle will have its own target, based on its size. 

Date of Report: January 29, 2010
Number of Pages: 13
Order Number: R40166
Price: $29.95

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