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# Corporate average fuel economy

The Corporate Average Fuel Economy (CAFE) standards are regulations in the United States, first enacted by the United States Congress in 1975,[1] after the 1973–74 Arab Oil Embargo, to improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) produced for sale in the United States.

CAFE neither directly offers incentives for customers to choose fuel efficient vehicles nor directly affects fuel prices. Rather, it attempts to accomplish the goals indirectly, by making it more expensive for automakers to build inefficient vehicles by introducing penalties.[2]

The original CAFE standards sought to drive automotive innovation to curtail fuel consumption, and now the aim is to create domestic jobs and cut global warming.[3][4] Stringent CAFE standards together with government incentives for fuel efficient vehicles in the United States should accelerate the demand for electric vehicles.[5]

CAFE standards are administered by the Secretary of Transportation, currently Elaine Chao, via the National Highway Traffic Safety Administration.

## Overview

The Energy Policy and Conservation Act (EPCA), as amended by the 2007 Energy Independence and Security Act (EISA), requires that the U.S. Department of Transportation (DOT) establish standards separately for passenger automobiles (passenger cars) and nonpassenger automobiles (light trucks) at the maximum feasible levels in each model year, and requires that DOT enforce compliance with the standards. DOT has delegated the responsibilities to the National Highway Traffic Safety Administration (NHTSA). Through EPCA and EISA, U.S. law (49 U.S. Code § 32919) also preempts state or local laws: "a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards."

#### Out-year and alternative fuel standard changes

In the years 2021 to 2030, the standards requires MPG to be the "maximum feasible" fuel economy. The law allows NHTSA to issue additional requirements for cars and trucks based on the footprint model or other mathematical standard. Additionally, each manufacturer must meet a minimum standard of the higher of either 27.5 mpg for passenger automobiles or 92% of the projected average for all manufacturers. National Highway Traffic Safety Administration (NHTSA) is directed based on National Academy of Sciences studies to set medium and heavy-duty truck MPG standards to the "maximum feasible". Additionally, the law phases out the mpg credit previously granted to E85 flexible-fuel vehicle manufacturers and adds in one for biodiesel, and it adds a requirement that NHTSA publish replacement tire fuel efficiency ratings. The bill also adds support for initial state and local infrastructure for plug-in electric vehicles.

#### Implementating regulations

On April 22, 2008 NHTSA responded to the Energy Independence and Security Act of 2007 with proposed new fuel economy standards for cars and trucks effective model year 2011.[36]

## Active debate

There continues to be an active debate on the safety, costs, and impact on consumers of the CAFE standard.

### Effect on traffic safety

NHTSA has expressed concerns that automotive manufacturers would increase mileage by reducing vehicle weight, which might lead to weight disparities in the vehicle population and increased danger for occupants of lighter vehicles. According to the Insurance Institute for Highway Safety (IIHS) in May 2020, "the smallest late-model cars remain the most dangerous, according to the most recent driver death rates."[61]

A National Research Council report found that the standards implemented in the 1970s and 1980s "probably resulted in an additional 1,300 to 2,600 traffic fatalities in 1993."[2] A Harvard Center for Risk Analysis study found that CAFE standards led to "2,200 to 3,900 additional fatalities to motorists per year."[62] The Insurance Institute for Highway Safety's 2007 data show a correlation of about 250–500 fatalities per year per MPG.[63]

In a 2007 analysis, IIHS found that 50 percent of fatalities in small four-door vehicles were single-vehicle crashes, compared to 83 percent in very large SUVs. The Mini Cooper had a driver fatality rate of 68 per million vehicle-years (multi-vehicle, single-vehicle, & rollover) compared to 115 for the Ford Excursion, which has a high proportion of fatalities from vehicle rollover. The Toyota Matrix was even lower at 44, while the rollover-prone Chevrolet S-10 Blazer 2 door was 232. The Nissan 350Z sports car (193) and the mechanically similar Nissan Altima sedan (79) show that driving style can't be isolated from engineering in these results. The analysis' conclusions include findings that death rates generally are higher in lighter vehicles, but cars almost always have lower death rates than SUVs or pickup trucks of comparable weight.[63]

Against this evidence, proponents of higher CAFE standards argue that it is the footprint model of CAFE for trucks that encourages production of larger trucks with concomitant increases in vehicle weight disparities.[citation needed] A 2005 IIHS plot shows that in collisions between SUVs weighing 3,500 lb (1,600 kg) and cars, the car driver is more than 4 times more likely to be killed, and if the SUV weighs over 5,000 lb (2,300 kg) the car driver is 9 times more likely to be killed, with 16 percent of deaths occurring in car-to-car crashes and 18 percent in car-to-truck crashes.[64] Recent studies find about 75 percent of two-vehicle fatalities involve a truck, and about half these fatalities involve a side-impact crash. Risk to the driver of the other vehicle is almost 10 times higher when the vehicle is a one-ton pickup compared to an imported car.

Proponents of higher CAFE standards also argue that the quality of the engineering design is the prime determinant of vehicular safety, not the vehicle's mass.[citation needed] In 2006, IIHS found that some of the smallest cars have good crash safety, and others do not.[65] A 2003 Transportation Research Board study show greater safety disparities among vehicles of differing price, country of origin, and quality than among vehicles of different size and weight.[14]:17–21 A 2006 study discounts the importance of vehicle mass to traffic safety, pointing instead to the quality of engineering design as the primary factor.[66]

### Economic arguments

A key argument is that economic forces are responsible for fuel economy gains, and that higher fuel prices already drove customers to seek more fuel-efficient vehicles.[67]

The law of supply and demand predicts an increase in gasoline prices would lead in the long run to an increase in the average fuel economy of the U.S. passenger car fleet, and that a drop in gasoline prices would be associated with a reduction in the average fuel economy of the entire U.S. fleet.[19]

Rather than mandating fuel economy increases, Charles Krauthammer advocated using a significant increase in gasoline taxes that would be revenue-neutral for the government.[68] CAFE advocates assert that most of the gains in fuel economy over the past 30 years can be attributed to the standard itself.[citation needed]

The Heartland Institute contends that future CAFE standards are unattainable without major sacrifices in consumer choice and safety, noting they are a "phenomenally expensive way to attempt to reduce greenhouse gas emissions," with car's meeting the 2025 fleet average 54.5 mpg is likely to raise the cost of new cars by between $3,000 and$5,000 per car, while killing thousands of people a year due to lighter vehicles.[69][2]

In 2007, CAFE standards were under attack by thinktanks, safety experts, car and truck manufacturers, some consumer and environment groups, and organized labor.[70]

Economic research in 2015 concludes that firms are shown to be more incentivized toward innovations on fuel economy while the expenses of other safety considerations are undetermined.[71]

According to the Transportation Research Board, the weakening of 2022-2025 CAFE standards would make it much harder for the U.S. to avoid a two-degree-Celsius global warming scenario as per the Paris Agreement, meaning substantial more effort would have to be made between 2025 and 2050 if the SAFE standard is administrated to halt the original CAFE regulations.[72]

A study has found that the adoption of CAFE standards, if supported together by government incentives, would accelerate the Electric Vehicle Market.[5] The U.S. could be less dependent on fossil fuels from the shift to EV market adoption.[citation needed]

### Automaker viewpoints

In the May 6, 2007 edition of Autoline Detroit, GM Vice Chairman Bob Lutz, an automobile designer/executive of BMW and Big Three fame, asserted that the CAFE standard was a failure and said it was like trying to fight obesity by requiring tailors to make only small-sized clothes.[73][c]

In late 2007, Lutz called hybrid gasoline-electric vehicles the "ideal solution".[74]

Automakers have said that small, fuel-efficient vehicles cost the auto industry billions of dollars. They cost almost as much to design and market but cannot be sold for as much as larger vehicles such as SUVs, because consumers expect small cars to be inexpensive.[75]

Former GM Chairman Rick Wagoner admitted in 2008 not knowing which fuel efficiency technologies consumers really want, he said "we are moving fast with technologies like E‑85 (ethanol), all-electric, fuel cells, and a wide range of hybrid offers".[76][77]

Ethanol fuel being studied by GM and other manufacturers, has a "gasoline gallon equivalency" (GGE) value of 1.5, i.e. to replace the energy of 1 volume of gasoline, 1.5 times the volume of ethanol is needed.[78][79] To overcome this fact, Congress enacted The Alternative Motor Fuels Act (AMFA) in 1988 to gain CAFE credits for the manufacture of flexible-fuel vehicles.[80][81] The formula using an example is: alternative fuel vehicle that achieves 15 mpg fuel economy while operating on alcohol would have a CAFE calculated as follows:[81] Fuel Economy = (1/(0.15 AMFA factor)) x (15mpg) = 100 miles per gallon, providing a very healthy economic incentive for manufacturers of ethanol vehicles.[81]

NHTSA's public records show in 2005 that automakers publicly expressed doubts as to the economic practicality and feasibility of increased light truck CAFE standards.[21]

Toyota has invested heavily in developing the complex Hybrid Synergy Drive system, which allows the company to meet CAFE targets.[82]

Volkswagen embraced the rising CAFE standards and tailored its US product line with a fleet of economical, popular, inexpensive diesel vehicles, beginning in 2009.[83] In 2014 Volkswagen registered an impressive CAFE of 34 mpg‑US (6.9 L/100 km; 41 mpg‑imp).[84] The company even received green car subsidies and tax exemptions in the US.[85] This result was achieved by installing a defeat device in the electronic control unit of each vehicle, in what is now known as the 2015 Volkswagen emissions scandal.[83]

The CAFE penalty had increased only 10% since 1983, the year it was first implemented, while cumulative inflation has exceeded 150%.[114][118] Thus, the CAFE penalty in 2019 is actually less than 40% of what it was in 1983. NHTSA officials stated that in addition to the authority the Federal Civil Penalties Inflation Adjustment Act of 1990 under the EPCA, the NHTSA has the authority to raise CAFE penalties to $100 per mpg shortfall.[114] However, the NHTSA currently does not exercise this authority. In fact, in 2015 Congress required federal agencies to adjust civil penalties for inflation (Public Law 114-74) and NHTSA under Heidi King unlawfully delayed its implementation.[119] ## See also ## References 1. ^ "CAFE Overview: "What is the origin of CAFE?"". NHTSA. Retrieved May 27, 2007. 2. Board On Energy; Environmental Systems (2002). "Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards (2002)". The National Academies. 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1. ^ Frozen by Public Law 104-50
2. ^ Funding restored for CAFE rulemaking by Public Law 107-87
3. ^ This was said before the footprint-based standards were implemented.
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