Fuel Economy Standards and the Mid-term Review

Published Jun 20, 2016

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In 2012 the Obama administration set fuel economy standards for new cars and trucks—standards that, four years later, remain the country’s most successful climate initiative. No other policy has delivered greater reductions in emissions and oil use—and no other policy offers as many future benefits.

Supported by automakers, unions, national security groups, and environmentalists, the standards (known as the ”National Program”) set fuel economy and global warming emission targets, based on vehicle size, for new cars and trucks sold in the United States. The standards increase in stringency every year and come in two phases: 2012-2016 and 2017-2025. As part of the second phase is a “mid-term review,” designed for regulators to examine and adjust the targets for 2022-2025, based in part on feedback from industry and the public.

To date, the standards have enjoyed enormous success, with unparalleled economic and environmental benefits that are still accruing. The 2017-2025 targets alone will save consumers roughly $50 billion by 2030 and avoid 280 million metric tons of climate pollution in the process—the equivalent of shutting down 82 coal-fired power plants for a year.

2.4 million

barrels of oil per day will be saved by federal fuel economy standards by 2030

Automakers and innovation

Despite claims that strong standards were too difficult to achieve technologically, automakers have in fact exceeded their regulatory targets, developing technologies that weren’t even anticipated or accounted for when the standards were written.

These technologies—available today—include improved compression ratios for smaller engines; more efficient downsized engines; eight- and nine-speed transmissions; innovative new materials; and hybrid-like start-stop systems at competitive prices.

650,000 jobs
will be created by federal fuel economy standards by 2030—including 50,000 in manufacturing

SUVs matter

Recent stories highlight a growing trend; more drivers are buying sport utility vehicles (SUVs) than almost ever before. This shift carries important implications for the climate, as the average SUV uses about 14 percent more fuel than a similarly-sized car.

But despite claims to the contrary, the popularity of SUVs doesn’t undermine the standards—it reinforces the urgent need to maintain their strength. The standards take into account the average vehicle sold by each manufacturer, setting targets for specific models based on their size. This ensures that all vehicles improve their efficiency, including trucks and SUVs, while giving automakers flexibility in hitting their targets, based on the vehicles they sell.

Although an increase in SUV sales does correlate to an increase in emissions, those emissions are significantly less than what they would have been were the standards not enacted.

600 million metric tons
of global warming emissions will be saved by the standards by 2040—more than virtually any other piece of climate regulation enacted to date

Gas prices won’t stay low

When the federal fuel economy standards were finalized in 2012, gasoline prices averaged nearly $4 per gallon. Four years later and prices have fallen to about $2 per gallon, reflecting the unpredictability and volatility of global oil markets.

Some groups point to low gasoline prices—and reduced demand for the most fuel-efficient vehicles—as evidence for weakening the standards.  Doing so, however, would cost drivers both now and in the future; fuel efficient cars save drivers money even in times of cheap gasoline, and doubly so when the prices spike.  That can introduce significant impacts on our economy.

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