The Environmental Protection Agency (EPA) and the National Highway Transport Safety Administration (NHTSA) have released new rules for a corporate average fuel economy (CAFE) standard that will increase fuel economy to the equivalent of 54.5 miles per gallon and reduce vehicle greenhouse gas emissions to 163 grams of carbon dioxide per mile by 2025. The EPA is establishing national GHG emissions standards under the Clean Air Act, and the NHTSA is establishing Corporate Average Fuel Economy (CAFE) standards under the Energy Policy and Conservation Act. Both programs will give flexibility to manufacturers to achieve compliance, including the use of a credit trading system and incentives for producing zero emission, plug-in hybrid, and compressed natural gas vehicles.
“[The fuel standards will] strengthen our nation’s energy security, it’s good for middle-class families and it will help create an economy built to last” Obama stated. Transportation secretary, Ray LaHood, said the standards would save Americans $1.7 trillion in fuel costs, resulting in an average savings of more than $8,000 a vehicle by 2025. A coalition of 13 auto manufacturers have come out in support of the rules, along with the United Auto Workers Union, who said the rules would expand the auto market, and environmental groups, who lauded the projected reductions in greenhouse gas emissions and oil imports.
Are these rules the most efficient or cheapest way to increase fuel economy? What are the unintended side-effects, positive or negative, of mandating higher fuel economy standards?