Corporate Average Fuel Economy (CAFE) Standards strive to achieve reduced greenhouse gas emissions through a reduction in the amount of fuel new vehicles burn. Manufacturers are given a fuel economy rating (measured in miles per gallon) that their fleet as a whole must average in a given model year.
Congress passed a law in 1973 directing the EPA to set CAFE standards, making these standards a tool exclusively wielded by the federal government. The average CAFE rating will be 35.5 mpg in 2016 based on a combined 39 mpg rating for passenger cars and 30 mpg for light trucks. The automakers support and participated in formulating the rules, since they provide a reasonable national approach to regulating CO2 emissions rather than a patchwork of state rules. Automakers will likely rely on more fuel-efficient tires, turbochargers, low-friction lubricants, six-speed automatic transmissions and similar technological means to achieve the standards.
While the new CAFE and CO2 standards for 2016 are reasonable, the federal government announced plans to put in place stronger rules for 2017 and beyond. In May, EPA was directed to also reduce emissions of conventional pollutants, such as nitrogen oxides. Drastically increased CAFE potentially limits consumer choice if manufacturers are forced to make smaller, less powerful and less useful cars and light duty vehicles in order to meet government fuel economy demands. Market-based solutions that allow the consumer to participate in and respond to national energy policies must be employed.