Epstein Calls for Replacement of CAFE Standards
This past week, the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) unveiled their comprehensive plan to regulate the fuel efficiency of all cars and light trucks that operate in the United States. The operative measure for these calculations is known as the corporate average fuel economy (or CAFE) standard.
Congress first introduced the CAFE program in the aftermath of the Arab oil embargo that was imposed following the 1973 Yom Kippur war. The ostensible purpose was to force an increase in domestic fuel economy that would reduce the United States dependency on imported oil from the Middle East. The energy and automotive landscapes have changed much in the ensuing 38 years. Now, the dominant justification for tightening the CAFE standards is no longer to counter our dependence on Middle Eastern oil, but to secure technical innovation and control air pollution, including pollution attributable to carbon dioxide. The CAFE program fails on all three counts.
Unsurprisingly, the new tough standards reflect the increased determination of the Obama administration to use its regulatory powers to the max. The centerpiece of the program sets out fuel standards for the period from 2017 to 2025. Its stated ambition is to require each automaker to produce a fleet that will average 54.5 miles per gallon (from the current standard of 27.5 mpg), which translates to about 36 mpg on a window sticker. This is no modest target, as the program contemplates that fuel efficiency will increase, year after year, by about 5 percent for cars and 3.5 percent for light trucks. The regulators’ proposals here are so detailed that, in a burst of planning optimism, they have set exact fuel efficiency standards for each particular model, based on its “footprint” (which, roughly speaking, is the area under the vehicle’s four tires).