Landmark New Vehicle Standards Set a Strong Path to the Future

This post is the first of a two-part series on the new joint EPA-NHTSA vehicle standards. It will give an overview of the new standards. The second part dives deeper into details on how the new standards will be met.

As the Pew Center for Global Climate Change has transformed into the Center for Climate and Energy Solutions (C2ES), the transportation sector is undergoing some major transformations itself.

The eagerly anticipated model years 2017-2025 vehicle standards for greenhouse gases and fuel economy have been officially proposed and inked into the best of formal Federal prose – an extensively detailed 893-page behemoth of a report to be exact. The new vehicle standards would nearly double the efficiency of the nation’s passenger vehicle fleet. And based on its contents, these proposed standards appear to be a tremendous victory for most, creating benefits for the economy, national security, public health, vehicle buyers, and the global climate.

It’s been a long time coming. Together with last year’s rulemakings on 2012-2016 light duty standards and 2014-2018 heavy duty standards, vehicle standards haven’t seen an overhaul of this magnitude since, well, the creation of such standards in the 1970s.

The impetus for a near doubling in vehicle efficiency standards largely stems from the landmark Supreme Court decision in Massachusetts v. EPA, which gave the EPA a mandate to regulate greenhouse gas emissions. Yet EPA did not have the authority to set Corporate Average Fuel Economy (CAFE) standards – that resides within the National Highway Traffic Safety Administration (NHTSA) under the US DOT, which agreed to raise standards under the Bush administration with bipartisan support back in 2007. So instead of creating two separate standards, NHTSA and EPA worked together to ensure that greenhouse gas regulations on vehicles coordinated with CAFE standards.

The 2017-2025 proposed standards build upon the previous standard, which set requirements for the next five years through model year 2016, and would now send a signal to auto manufacturers for the next 14 years. They bump the overall efficiency of any manufacturer’s light-duty fleet from the current 2011 27.3 mpg fleet-wide average to the 49.6 mpg standard as measured by NHTSA. Ordinary passenger vehicles would have to average 56.2 mpg (up from 30.2 mpg) while light trucks, such as SUVs and minivans, would have to average 40 mpg (up from 24.1 mpg), leading to an average of 49.6 mpg.

The 49.6 mpg CAFE standard translates into the EPA metric of 163 grams of carbon dioxide per mile or 54.5 mpg, which can incorporate efficiency gains from more efficient air conditioning as well as other technologies.

That’s a near doubling of efficiency by 2025, meaning that Americans will be able to visit the gas station half as much to travel the same distance. A separate rule finalized on August 9 creates standards for heavy-duty vehicles for the first time in history from 2014-2018 while ensuring that affected firms remain competitive.

What’s more, the new standards have broad support: 12 automakers (including the Big Three), the endorsement of more than 110 members of Congress, and over 80 percent of consumers. While one popular misconception claims that the standards would stifle job creation, the United Auto Workers co-authored a study that showed 150,000 jobs would be created. Make no mistake – CAFE standards promote American prosperity and enterprise.

Indeed, the benefits come from more angles than one. According to EPA analyses, across the lifetime of the vehicles produced, the light-vehicle standards till 2025 would save the nation more than 5.8 billion barrels of oil; mitigate nearly 3 billion metric tons of CO2 of GHG emissions; and create net benefits of around $500 billion produced from 2011-2025. To give some idea of what those numbers mean, a Natural Resources Defense Council and the Union of Concerned Scientists report shows that the new light-vehicle standards would cut U.S. oil consumption by as much as 1.5 million barrels per day, which is equivalent to daily U.S. imports from Saudi Arabia and Iraq in 2010, and reduce carbon pollution by 280 million metric tons by 2030, which is equivalent to emissions from 72 coal-fired power plants per year.

Drivers will see many of these net benefits in fuel savings according to EPA analyses. To accommodate the new standards, the 2025 new car buyer will see the price tag of the car increase by $2,000. Luckily, he’ll save about $5,200 to $6,600 on fuel costs over the lifetime of the vehicle – and that’s assuming gas prices remain at 2011 levels (pretty unlikely). Moreover, according to EPA assumptions, if he purchases a car with a 5-year loan as is typical for new car buyers, the average driver would save $12/month – this is more than enough to offset the increase in monthly payments in order to pay for the higher cost of the car.

So what’s up ahead? These are ambitious standards that will challenge automakers and drive new technology into the marketplace. We’ll cover this to greater depth in the second part of our two-part series, but crucially, vehicle standards encourage innovation without picking a single technology so automakers will have to compete for business in the high-efficiency vehicle space. Of these innovative new cars, plug-in electric vehicles are an exciting wild card if they can overcome initial challenges, as their oil use is either extremely small or even zero in the case of pure battery electric vehicles. In hopes of spurring the market for these and other advanced vehicles, the EPA’s greenhouse gas standards include additional incentives for automakers to sell more of these vehicles.

The challenges of meeting the huge boost in standards go hand-in-hand with the need to examine transportation reauthorization in a new way – with the gas tax already insufficient to support the nation’s roads, increased efficiency will only further erode receipts. Moreover, the nation may have to overcome information gaps and cultural hurdles for new vehicle technologies to become accepted.

In the coming months, look for the proposed standards to become finalized, as EPA is now accepting comments on the 2016-2025 standards. In a time of regulatory uncertainty and political deadlock, business and government have proved to be a pragmatic, productive team in crafting long-lasting vehicle standards.

Charles Zhu is a Solutions Fellow at C2ES.