New CAFE standards to clean the environment, save money, reduce fossil fuel dependency
Today the Obama Administration took the long-awaited step of raising the Corporate Average Fuel Economy (CAFE) standard for cars and light-duty trucks to the equivalent of 54.5 miles/gallon by the model year 2025. Cue the cries of righteous indignation from a certain sector of American politics, while we all get a chance to breath cleaner air and have less worries about the impending crunch in fuel supplies over the coming years.
The CAFE standards were first enacted in the wake of the 1973 Arab Oil Embargo to improve the overall fuel economy of America's vehicle fleet, to make the country less susceptible to oil price shocks. The CAFE standards also have an environmental effect, because less fuel burned means less pollution. Finally, it will make the American Economy more efficient because we, collectively, will spend less on fuel, leaving more money in the economy for other purposes.
The NHTSA press release cites a savings of more than $1.7 trillion dollars in fuel costs, or an average fuel savings of more than $8,000 by 2025 per vehicle over its lifetime. The Administration also cites a dramatic reduction in reliance on foreign oil to the tune of 12 billion barrels of oil a year, or 2 million barrels a day, by 2025. This amounts to half of the oil America currently imports from OPEC each day. As for cutting greenhouse gas emissions from cars and light trucks, the Administration cites an emissions reduction of 6 billion metric tons, or more than the total amount of carbon dioxide emitted by the United States in 2010.
The new standards were developed in collaboration with automakers. The July 2011 announcement of the proposed new rules was supported by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, and Volvo, as well as the United Auto Workers, California and other key stakeholders.
An example of automaker support is Ford Motors' efforts to increase fuel economy. At a "Power of Choice" presentation last December, a Ford spokesperson said that Ford Motors recognizes that governments around the world, not just the U.S., are raising environmental and fuel economy standards. Ford does not want to be pushed by this trend, but instead wants to be ahead of the game, leading the change rather than pushed by regulators. There are concrete examples in Ford's 2012/3 lineup. One is the various vehicles with the EcoBoost turbo-charged gasoline engines, including the F-150 EcoBoost. Another is the five electrified vehicles the company is introducing this year that radically increase fuel economy numbers, which Ford is gambling will win market share from Toyota and Honda.
It's not just Ford, but all the other automakers, primarily GM, BMW, Honda, Nissan, Mitsubishi, Toyota, Volvo, that are following a similar strategy.