Roll Back CAFE Fuel Economy Goals? There’s No Good Reason

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The federal EPA and National Highway Traffic Safety Administration have reopened evaluation of the 2025 CAFE goals, fuel efficiency targets established during the Obama Administration, and a likely outcome is a rollback. But there seems little reason to do so.

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As things now stand, the industry is being asked to achieve a fleet-wide CAFE, or “corporate average fuel economy,” of 54.5 mpg for new light passenger vehicles sold in 2025 and beyond.

That’s up from a 34.1 mpg CAFE target in 2016 and is based on 2012 estimates of how sales of cars versus trucks and large vs small vehicles would stack up in 2025.

Although they’ve exceeded annual CAFE goals in each of the last four years, automakers claim that the 2025 target is nearly impossible to hit.

That’s in part because of the costs they say they’ll incur to implement the necessary technology improvements – costs that would be passed on to consumers and would make new cars much less affordable.

Car makers also argue that low fuel prices have caused a big shift in consumer tastes; that the sales mix assumptions made in 2012 are no longer valid. And it is true that the clear preference these days is for heavier pickups and SUVs over lighter and more-efficient sedans.

Gas prices play a big role – but so do automaker marketing campaigns that push the large trucks and SUV that provide the biggest profit margins.

Shifting consumer tastes and falling sedan sales shouldn’t be a reason for altering CAFE.  Gasoline prices are volatile and historically have trended ever-upward. Those outdated 2012 assumptions well may be valid again one day.

The fact is, the rules as written already give the industry a huge amount of wiggle room.

That’s because the 54.5 mpg number we all hear about is a goal, not a hard-and-fast requirement. And it is a goal based on actual model mix.

Simply put, if consumers are buying more trucks than cars, the CAFE goal automatically shifts to account for trucks’ inherently lower efficiency. The magic number drops.

How far it drops depends on what percentage of the sales are trucks versus cars.

David Cooke, a senior Clean Vehicles Program analyst for the Union of Concerned Scientists, crunched the numbers earlier this year and determined that if consumers bought nothing but full-size pickups in 2025, the CAFE target for those manufacturers would be 35 mpg, not 54.5 mpg.

CAFE and ‘Window Sticker’ Fuel Economy Don’t Match

There’s another wrinkle: miles-per-gallon for CAFE purposes is not the same as mpg in real-world driving.

That’s because the CAFE numbers are derived from two tests that were implemented in 1979 and don’t reflect today’s driving patterns –  but can’t be changed unless our dysfunctional Congress can agree to do so.

The EPA, however, has been able over the years to modernize, adjust and add additional tests – such as driving with the air conditioner running and driving at highway speeds. Those newer tests, five of them, are used to calculate the window-sticker fuel economy numbers consumers rely on and car makers love to cite in their advertising.

Meantime, there is no use for the outdated CAFE measurement system except to generate the CAFE goals.

The reason this disparity exists is our sound-bite based political system.

If CAFE numbers were adjusted to match EPA window-sticker numbers, they’d go down.

People would ask why – sometimes in headlines on stories written by reporters who don’t specialize in this stuff and are too busy, or too disinterested, to try to find out what CAFE fuel efficiency really measures.

And then politicians –and automakers – would be blamed for allowing fuel efficiency to fall, even though that wouldn’t be the case.

The CAFE-measured 54.5 mpg goal is based on a target of 49.6 mpg as measured in the outdated fuel economy tests that’s then adjusted upward for “off-cycle” credits for things the automakers can use to improve efficiency – such as active grille shutters – that can’t be measured on the EPA’s dynamometer.

In reality, a CAFE goal of 54.5 mpg translates to about 40 mpg for window-sticker purposes.

Still, whether starting from a CAFE-target of 34.1 mpg and aiming for 54.5, or starting with a window-sticker 25 mpg and aiming for 40, the percentage of increase is about the same. Car makers still will have to stretch to achieve it. And the cost of vehicles will continue to rise as efficiency-improving, emissions-reducing technologies are applied.

But the estimated costs of those technologies are lower now than when the rules were first promulgated back in 2012, and some efficiency-boosting technologies, such as turbocharging gas engines, have been widely adopted already.

“The evidence shows that even greater fuel savings and emissions reductions [than now required] could be achieved,” said Don Anair,  deputy director and head of research for the UCS’ Clean Vehicles Program.

It appears that the real reasons to consider altering CAFE now may be:

  • To give automakers a break even though they’ve already shown that they are meeting annual goals with their newly designed vehicles – setting lower 2025 goals established a lower starting point for whatever annual goals are set for beyond 2025.
  • To undo something largely because it was an Obama-era achievement and those achievements are anathema to the present administration.
  • To further diminish the EPA’s ability to regulate industry, which seems to be a principal goal of a president who picked a vocal climate-change denier and friend of the fossil fuel industry to head the agency.

If the shift to trucks and SUVs continues, both the final target and the technology hill that the industry must scale will automatically get lower. If the shift doesn’t continue, rolling back  the goal would be a hard-to correct mistake.

[Biden EPA proposes undoing Trump roll-back with a 52 mpg CAFE target.]