Accelerated Retirement of Fuel-Inefficient Vehicles through Incentives for the Purchase of Fuel-Efficient Vehicles

White Paper


Therese Langer


Sharp fluctuations in gasoline prices and tight household budgets are causing many consumers to rethink their vehicle preferences, while automakers are paying more attention to the fuel economy of their offerings than they have in decades. After twenty years of stagnation, federal Corporate Average Fuel Economy (CAFE) standards have been set once again on an upward trajectory, thanks to the Energy Security and Independence Act of 2007, which requires that average new car and light truck fuel economy will increase by at least 40 percent, to 35 miles per gallon or more, by 2020. The new standards offer limited near-term relief, however. It takes 15 years for half of the vehicle stock to turn over, and 30 percent of vehicles of a given model year remain on the road after 20 years. Thus the benefit of increases in fuel economy standards will not be fully realized for many years. To quicken the pace of motor vehicle fuel savings, measures should be implemented to accelerate the retirement of the most inefficient vehicles in operation today.