CAFE Standards Essay ⋆ Environment Essay Examples ⋆ EssayEmpire

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Corporte Average Fuel Economy (CAFE) Standards are gas mileage standards applied to automobile manufacturers. The standards were developed as part of the Energy Policy and Conservation Act passed by Congress in 1975. The act was designed to conserve energy following the 1973-74 Arab oil embargo, when restricted oil imports led to long lines at gas stations and contributed to economic recession. The measure is calculated by averaging the miles per gallon (mpg) of each vehicle manufactured by a given firm for sale in the United States in a given model year. Since the standard is based on the average of a firm’s entire fleet of vehicles, some models may exceed the standard if others fall below it. There are separate standards for passenger cars and light-duty trucks, a category that includes most pickup trucks, vans, and sport utility vehicles (SUVs).

The original goal of the legislation was to double new passenger car fuel economy within 10 years to a corporate average of 27.5 mpg in 1985. The standards, which gradually increased fuel economy requirements, were designed to push technological innovation toward greater fuel efficiency. That goal was met, but the standard was then briefly lowered between 1986 and 1989. The 27.5 mpg standard was then reinstated in 1990, where it remained. Light trucks, originally defined as trucks weighing 6,000 pounds or less, and later redefined as trucks weighing up to 8,500 pounds, have a different CAFE standard.

There are no standards for vehicles that exceed 8,500 pounds. Standards for light trucks were originally set in 1979 at 15.8 mpg for two-wheeldrive vehicles and 17.2 for four-wheel-drive vehicles (the two-wheel/four wheel drive distinction was later eliminated). The National Highway Traffic Safety Administration (NHTSA), the federal government agency that has been empowered by Congress to set the CAFE standards when specific goals were not included in legislation, has raised the light truck standard in several years since its implementation.

The NHTSA has set a light truck standard of 22.2 mpg for model year 2007. The U.S. Environmental Protection Agency (EPA) monitors firms and enforces the standards for both classes of vehicles. Firms that do not meet the CAFE standard are required to pay a fine based on the amount by which their fleet fails to meet the requirements. Due to the low mileage vehicles they tend to manufacture, many European firms have been required to pay these fines, while no Asian or American firms have had to pay this civil penalty.

Conflicts and Controversy

CAFE standards have been the subject of much political debate. Most economists agree that the standards have served their purpose of increasing fuel efficiency, although some argue that alternative measures, such as increased gas taxes, would be more effective for achieving these goals. Environmental organizations support the use of CAFE standards as a means to reduce air pollution, greenhouse gas emissions, and natural resource extraction.

Yet many environmental groups, such as the Sierra Club, believe that the standards need to be increased. Environmentalists also see the existing standard as flawed given the dramatic rise in the use of pickup trucks and SUVs for traditional passenger car purposes. When the policy was enacted, the separate light truck standard was justified given the need for hauling construction and farm materials. These vehicles made up roughly 20 percent of the market at that time. Today, almost half of all new vehicles sold fall in the light truck category, most of which are used for the same purpose as conventional passenger cars. The result has been that overall vehicle fuel efficiency has actually decreased in recent years.

Automobile manufacturers oppose the legislation of higher fuel economy standards. They believe that such mandates increase production costs, raise the price that consumers will have to pay, and lower sales. Makers of SUVs are especially concerned, given that these less-fuel-efficient vehicles are more profitable than most passenger cars. The Alliance of Automobile Manufacturers, a trade organization that includes manufacturers such as Ford and General Motors, lobbies against legislated standards and advocates instead for tax incentives for consumers who purchase fuel-efficient vehicles. Some auto manufacturers have also suggested higher gas taxes as a means to encourage greater fuel conservation.

In 2002, legislation was introduced in the U.S. Senate to raise CAFE standards in order to improve fuel efficiency by almost 30 percent over a 10-year period. Environmentalists supported the bill for the effect it would have on reducing greenhouse gas emissions. The auto industry opposed it and enlisted organized labor to generate popular opposition. They argued that higher vehicle prices resulting from the new standards would dampen auto sales and result in significant job loss. A number of Democrats joined the majority of Republican senators opposing the bill and it was defeated.

Bibliography:

David Austin and Terry Dinan, “Clearing the Air: The Costs and Consequences of Higher CAFE Standards and Increased Gasoline Taxes,” Journal of Environmental Economics and Management (v.50/3, 2005);
Roger Bezdek and Robert M Wendling, “Fuel Efficiency and the Economy,” American Scientist (v.93/2, 2005);
James Dunn Jr., “The Politics of Automobility,” Brookings Review (v.17/1, 1999);
David Greene, “Why CAFE Worked,” Energy Policy (v.26/8, 1998).