CAFE Percolating Again

Blog Post | January 07, 2007 - 7:00 pm

Prospects for substantially higher vehicle fuel economy standards are looking up, thanks in part to the White House. President Bush’s State of the Union proposal to reduce gasoline consumption twenty percent by 2017 was met with skepticism by many due to its heavy reliance on unspecified “alternative” fuels. The fuel economy portion of the proposal, however, based on increasing vehicle efficiency by four percent per year, was right in line with efficiency advocates’ target of recent years: an increase in CAFÉ standards (Corporate Average Fuel Economy) of ten miles per gallon over the next ten years.

This rare convergence of views on a realistic near-term goal for fuel economy is not the end of the story, of course. Whether the increase is to be handled through legislation or regulation, whether there should be “off-ramps” allowing increases of less than four percent if cost-effective technologies are not available to do the job, and how to help domestic manufacturers simultaneously improve their financial health and meet new efficiency targets will all require difficult negotiation. What’s new is the broad agreement on what the endpoint should be for the next decade.

Bi-partisan legislation introduced this year to raise fuel economy standards includes the “Ten in Ten” bill of Senators Feinstein and Snowe, raising standards to 35 miles per gallon in 2017; a bill mandating four percent increase per year by Senators Obama and Lugar; and Representatives Platts and Markey’s bill requiring a fuel economy of 35 by 2018 and a four percent per year increase thereafter. All are roughly in line with the target set out by the President.

An important new twist to the fuel economy debate this year is its coincidence with stepped-up activity on climate change and intensive discussions of how the transportation sector should enter into legislation to reduce greenhouse gas emissions. Representative John Dingell of Michigan heads the House Energy and Commerce Committee, which has jurisdiction over both fuel economy and climate change issues. A staunch advocate for the domestic auto industry and long-time opponent of major increases in fuel economy standards, Chairman Dingell is clearly interested in folding climate measures and fuel economy increases into a package that auto manufacturers perceive as less threatening than the fuel economy proposals now on the table.

As the efficiency community is well aware, however, greenhouse gas reduction policies such as a carbon cap-and-trade program as typically conceived, give energy efficiency short shrift, and vehicle efficiency is no exception. A climate policy that shows up in the transportation sector as a ten- or twenty-cent tax on gasoline complements, but does not replace, stronger fuel economy standards.