Issue Report: Vehicle fuel economy standards

Are vehicle fuel economy standards a good strategy in fighting global warming?

Fuel economy standards are regulations on the efficiency of vehicle engines. It is typically measured by the distance a vehicle can travel on a gallon of gasoline (kilometers per gallon or miles per gallon). This debate generally surrounds whether it is a good idea to regulate or raise the regulations on fuel economy. In 2007, the United States, for instance, saw a major debate surrounding raising its Corporate Average Fuel Economy Standards (CAFE), and whether to raise them from 27.5 mpg in 2007 to 35 mpg by the year 2020. The US Congress voted in favor of increasing CAFE standards, but not without substantial debate and continuing resistance from many groups. A similar debate exists in other places around the world as well. The debate centers on some of the following questions. Do vehicle fuel economy standards help reduce emissions and fight global warming? Or, do consumers react to fuel economy standards by driving more, offsetting any cuts in emissions? What is the history of fuel economy standards in this regard? Have they helped reduce emissions in Europe and Japan, for example? Are the markets a superior way to reduce emissions? Can high gasoline prices sufficiently incentivize automakers to make more fuel-efficient vehicles? Is fuel efficiency an important ingredient for auto-makers to stay competitive? How much gas money is saved by increasing fuel economy? Does this make up for any higher manufacturing costs? Will fuel economy standards help improve the energy independence of a nation? Are fuel economy standards safe, or does it force the creation of smaller, more vulnerable vehicles? How do fuel economy standards compare with the other approaches to reducing emissions, such as a carbon tax? Should fuel economy standards be prioritized as a solution?

Emissions: Do fuel economy standards help reduce emissions, combat global warming?

Fuel economy standards reduce emissions, fight global warming

The most basic function of fuel economy standards is that they help the average car burn less gasoline, so emit less C02 into the atmosphere. The net effect is a reduction in greenhouse gas emissions into the atmosphere, which lowers the net human contribution to global warming.

Higher fuel economy standards do not increase driving

"Repealing CAFE Standards Would Be…Stupid". Think Youth. 23 Sept. 2008

“Some have argued that to raise CAFE standards means that people will only drive more. The argument is as stupid is one that says to make our money easier to carry means we will spend more. People aren’t moving their job because their car will get more gas to the gallon.”

Ian Parry. "Should Automobile Fuel Economy Standards Be Increased?". Resources for the Future. 17 Sept. 2007

“Critics of CAFE standards sometimes point to the perverse effect of higher fuel economy on lowering fuel costs per mile and increasing the incentive to drive, which can increase highway congestion, accidents, and pollution. However, according to a recent study by Kenneth Small and Kurt Van Dender, less than 10 percent of the fuel savings from better fuel economy are offset by increased driving; most likely, the costs of this “rebound effect” are probably fairly modest.”

CAFE standards have strong history of reducing US emissions

The Union of Concerned Scientists said in 2008 about CAFE standards, “No energy legislation has ever done more for America’s security by saving oil and curbing global warming pollution.

Markets efficiently reduce emissions; fuel standards are unnecessary

Jerry Taylor and Peter Van Doren. "Don't Raise CAFE Standards". CATO. 2 Aug. 2007 -

“Congress has no business dictating automotive fuel efficiency. That’s a job for consumers, not vote-hustling politicians. There are no problems for CAFE standards to solve. Hence, they shouldn’t be tightened; they should be repealed.”

Gas prices pressure fuel efficiency; standards are unnecessary

Gattuso, James L. ; Jeffreys, Kent "The Mounting Dangers of the CAFE Mileage Standards". Heritage Foundation. 13 Oct. 1988

“Although CAFE was first proposed to foster more fuel efficient cars, the average fuel ef ficiency.of cars driven in the U.S. actually began to increase even before standards were enacted. The reason was simple. With gasoline prices rising from 36 cents per gallon in 1972 to 53 cents per gallon in 1974, consumers began to demand more efficient automobiles.”

Fuel economy standards increase driving so do not decrease emissions

Jerry Taylor and Peter Van Doren. "Don't Raise CAFE Standards". CATO. 2 Aug. 2007

“Increasing CAFE standards will not decrease the amount of pollution coming from the U.S. auto fleet. That’s because we regulate emissions per mile traveled, not per gallon of gasoline burned. Improvements in fuel efficiency reduce the cost of driving and thus increase vehicle miles traveled.”

Fuel economy standards do not directly reduce emissions

Environment: What are the other environmental pros and cons?

Fuel economy standards reduce emissions, improve air quality.

By reducing emissions, it is important to consider how fuel economy standards will improve air quality and public health, particularly in metropolitan areas.

Fuel economy standards only shift environmental impacts

A 1992 National Research Council (NRC) report concluded, “Improvements in vehicle fuel economy will have indirect environmental impacts. For example, replacing the cast iron and steel components of vehicles with lighter weight materials (e.g., aluminum, plastics, or composites) may reduce fuel consumption but would generate a different set of environmental impacts, as well as result in different kinds of indirect energy consumption.”

Car-makers adjust to fuel economy costs by lowering other standards

Jerry Taylor and Peter Van Doren. "Don't Raise CAFE Standards". CATO. 2 Aug. 2007

“automakers have an incentive to offset the costs associated with improving fuel efficiency by spending less complying with federal pollution standards with which they currently over-comply.”

Economics: What are the economic pros and cons of fuel economy standards?

Fuel economy standards do not increase the cost of making cars

Felix Salmon. "GM's Weak Arguments Against Increased Fuel Economy Market Movers." Portfolio. 10 Sep. 2007

“I, for one, am far from convinced that higher CAFE standards would increase the costs of making a car. In fact, insofar as they encouraged auto makers to make smaller cars and fewer SUVs, higher CAFE standards might even decrease the costs of making a car. Remember that cheaper cars, as a rule, are actually more fuel-efficient, not less.”

Fuel economy standards reduce money spent by drivers on gas.

Fuel economy standards help reduce the amount of gasoline consumers use in traveling where they want to go. This means that they spend less on gasoline and have more money to spend on other things.

Gas savings make-up for any higher initial costs of vehicles

"Possible To Reduce Emissions By 30 Percent By 2025, Model Shows". ScienceDaily. 29 July 2008)

“For instance, the savings from buying a more fuel-efficient vehicle can offset the added cost of technology in less than a year by using technologies that are already available and manufacturing vehicles that achieve the CAFE standards and even go beyond them.”

Fuel economy standards help car companies stay competitive

Thomas Friedman. "Et Tu, Toyota?". New York Times. 3 Oct. 2007

“Michigan lawmakers year after year shielding Detroit from pressure to innovate on higher mileage standards, even though Detroit’s failure to sell more energy-efficient vehicles has clearly contributed to its brush with bankruptcy, its loss of market share to Toyota and Honda — whose fleets beat all U.S. automakers in fuel economy in 2007 — and its loss of jobs. G.M. today has 73,000 working U.A.W. members, compared with 225,000 a decade ago. Last year, Toyota overtook G.M. as the world’s biggest automaker.”

Japan/Europe show high fuel economy standards achievable

Thomas Friedman. "Et Tu, Toyota?". New York Times. 3 Oct. 2007

“Here are the facts: Thanks to the Michigan delegation, U.S. mileage standards for passenger car fleets have been frozen at 27.5 miles per gallon since 1985. Light trucks are even worse[…]Japan and Europe already have much better mileage standards for their auto fleets than the U.S. They both have many vehicles that could meet the U.S. goal for 2020 today, and they are committed to increasing their fleet standards toward 40 m.p.g. and above in the coming decade.”

Fuel economy standards foster innovation and jobs

Fuel economy standards require regulatory agencies, which can fill jobs. In addition, creating more fuel-efficient vehicles requires innovation by auto-makers, which stimulates action and jobs in the industry.

Opposition to fuel economy standards driven by special interests

Thomas Friedman. "Et Tu, Toyota?". New York Times. 3 Oct. 2007

“Michigan lawmakers year after year shielding Detroit from pressure to innovate on higher mileage standards”.

Fuel economy standards violate consumer choice

NADA chairwoman Annette Sykora said in February 2008, “The consumer will decide what works and what doesn’t. It’s that simple. You can’t wave a government wand and make consumers buy a particular type of vehicle. This is not Europe.”

Fuel economy standards increase car manufacturing costs and prices

Mike Allen. "Why the New 35-MPG Fuel Economy Standard Is a Bad Idea". Popular Mechanics. 7 Dec. 2007

“The car manufacturers are partly right: It’ll cost lots of money to change over their product mix from big cars to more fuel-efficient models, to use lighter-weight materials and to develop new technology.”

Fuel standards impair individuals needing high-powered trucks

Eric Peters. "No to New Fuel Economy Standards: Consumer Choice, Not Congress, Should Drive Detroit's Decisionmaking". National Policy Analysis. June 2007

“Of course, it’s easy to wag a finger at ‘wasteful’ pick-ups and SUVs from the halls of Congress — and the editorial pages of big city newspapers. But the fact is many people (farmers, people with trailers to pull or large families to haul, contractors, etc.) simply need these kinds of vehicles — and nothing else will do. You can’t tow 9,000 pounds with a Camry. Sometimes, miles-per-gallon is not the sole reason for buying a vehicle.”

Fuel economy standards unfairly punish car manufacturers

Dan Carney. "Why U.S. fuel-economy standards don't work". MSNBC. 4 Oct. 2007

“Recognizing that burning less fuel is beneficial for a multitude of reasons, those countries employ an array of policies designed to encourage frugality. Some countries have a higher sales tax on cars with bigger engines. The fuel itself is taxed, making its purchase sting enough that consumers are willing to sacrifice some interior space. The tax on diesel fuel is lower, encouraging sales of more fuel-efficient diesel-powered models. Friedman seeks to be seen as punishing “Detroit” rather than the little guy. And the little guy is a factor. People with lower income spend a proportionally higher amount of their money on gas, so liberals are reluctant to tax them directly.”

Fuel economy standards are a solution in search of a problem

Dr. Robert W. Crandall, Barry Felrice, Sam Kazman, and Dr. W. David Montgomery. "Fuel Economy Standards: Do they Work? Do they Kill?". Heritage Foundation. 8 Mar. 2002
  • “CAFE is a solution in search of a problem. Is the problem global warming? Is it energy security? Is it traffic congestion and air pollution? Or is it simply the envy of some people who can’t afford to buy large SUVs? I think that I can say confidently that except for, perhaps, a subset of that last problem, CAFE is not the right solution to whatever the problem advocated is.”

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