PDF _ IB90122 - Automobile and Light Truck Fuel Economy: The CAFE Standards
20-Jan-2006; Robert Bamberger; 16 p.

Update: May 24, 2006

Most Recent Developments:

The Energy Policy Act of 2005 (EPACT, P.L. 109-58), enacted on August 8, 2005, (1) authorizes $3.5 million annually during FY2006-FY2010 for the National Highway Traffic Safety Administration (NHTSA) to carry out fuel economy rulemakings; (2) requires a study to explore the feasibility and effects of a significant reduction in fuel consumption by 2014; and (3) requires that the adjustment factor used to estimate in-use fuel economy be revised to better reflect current vehicle attributes and driver habits. On January 10, 2006, NHTSA issued a proposed rulemaking to measure the effect of factors such as higher speed limits, faster acceleration, differences in the ratio between city and highway driving, and use of air conditioning on in-use fuel economy. The in-use fuel economy stickers posted to the windows of new cars would reflect the results of these tests beginning in FY2008. This would affect only the estimation of in-use fuel economy. It would not affect the CAFÉ calculation for purposes of determining manufacturers’ compliance with the CAFÉ standard.

On August 23, 2005, NHTSA released a notice of proposed rulemaking for light duty trucks beginning with MY2008. The agency proposes a restructuring of the CAFE program for sport utility vehicles that would establish higher standards based upon vehicle size. The agency proposes two different tracks that manufacturers can follow for model years 2008- 2010 — meeting an “Unreformed” or “Reformed” CAFE standard. In MY2011, all manufacturers would be required to meet the reformed standard.

Gasoline prices hovered around $2.30/gallon in mid-January 2006, significantly lower than the $3/gallon prices observed after Hurricane Rita, but still roughly $.50/gallon higher than at the beginning of 2005. Some policymakers believe there is more to be done on this issue, the passage of EPACT notwithstanding. Senator Obama, in a speech on September 15, 2005, proposed that automakers agree to boost fuel economy in return for the federal government’s absorbing a portion of the industry’s retiree health costs during 2006-2010. The industry would agree, in turn, to invest 50% of the subsidy in support of increased hybrid vehicle production. The program, which would raise passenger car CAFE to 40.4 mpg and light trucks to 32.6 mpg by the end of 2020, would cost an estimated $760 million. In the House, Representative Sherwood Boehlert has introduced legislation (H.R. 3762) that would establish a CAFE requirement on passenger automobiles of 33 mpg by MY2015. It would also establish a fuel economy credit trading program. Cosponsors of the bill come from both parties. Prospects for additional legislation bearing on CAFE during the Second Session of the 109th Congress are unclear.

Previous releases:

/NLE/CRSreports/05sep/IB90122.pdf

/NLE/CRSreports/05jul/IB90122.pdf

/NLE/CRSreports/05jun/IB90122.pdf

/NLE/CRSreports/05Apr/IB90122.pdf

/NLE/CRSreports/05jan/IB90122.pdf

/NLE/CRSreports/04sep/IB90122.pdf

/NLE/CRSreports/03Jul/IB90122.pdf

/NLE/CRSreports/03Jul/IB90122.pdf

/NLE/CRSreports/03May/IB90122.pdf

/NLE/CRSreports/03Apr/IB90122.pdf

/NLE/CRSreports/03Feb/IB90122.pdf

/NLE/CRSreports/03Jan/IB90122.pdf

/NLE/CRSreports/02Dec/IB90122.pdf

http://NCSEonline.org/NLE/CRSreports/Transportation/IB90122.pdf
http://NCSEonline.org/NLE/CRSreports/Air/air-10.pdf
http://NCSEonline.org/NLE/CRSreports/Air/air-10.cfm

Abstract: The Energy Policy and Conservation Act of 1975 (P.L. 94-163, EPCA) established new car fuel economy standards for passenger automobiles and light-duty trucks. The current corporate average fuel economy standard (CAFE) is 27.5 miles per gallon (mpg) for passenger automobiles. Light truck standards, set for many years at 20.7 mpg, are required to reach 22.2 for model year (MY) 2007. It was the first increase in CAFE since MY1996. The light-duty truck category includes sport utility vehicles (SUV). The standards are determined by the National Highway Traffic Safety Administration (NHTSA) within the Department of Transportation.

On August 23, 2005, NHTSA released a notice of proposed rulemaking for light duty trucks beginning with MY2008. The agency proposes a restructuring of the CAFE program for SUVs that would establish higher standards based upon vehicle size. The agency proposes two different tracks that manufacturers can follow for model years 2008-2010 — meeting an “Unreformed” or “Reformed” CAFE standard. In MY2011, all manufacturers will be required to meet the reformed standard. The unreformed light-duty truck standards for Model years2008-2010 would be a fleetwide average of 22.5, 23.1, and 23.5 mpg for model years 2008, 2009, and 2010, respectively. Manufacturers opting for the reformed standard would be required to meet a range of standards depending upon vehicle size — ranging from 20.4 to 26.8 mpg for MY2008, 20.8 to 27.8 for MY2009, and 21.3 to 28.4 in MY2010. The reformed CAFE standards would apply to all manufacturers in MY2011.

Among new approaches to boost CAFE, Senator Obama, in a speech on September 15, 2005, proposed that automakers agree to boost fuel economy in return for the federal government’s absorbing a portion of the industry’s retiree health costs during 2006-2010. The industry would agree, in turn, to invest 50% of the subsidy in support of increased hybrid production. The program, which would raise passenger car CAFE to 40.4 mpg and light trucks to 32.6 mpg by the end of 2020, would cost an estimated $670 million.

A bill introduced in the House (H.R. 3762) would establish a CAFE requirement on passenger automobiles of 33 mpg by MY2015. It would also establish a fuel economy credit trading program. Co-sponsors of the bill come from both parties. However, action on CAFE legislation before the close of the first session appears unlikely.

The Energy Policy Act of 2005 (P.L. 109-58), enacted on August 8, 2005, (1) authorizes $3.5 million annually during FY2006-FY2010 for the NHTSA to carry out fuel economy rulemakings; (2) requires a study to explore the feasibility and effects of a significant reduction in fuel consumption by 2014; and (3) requires that the adjustment factor applied to estimate consumer in-use fuel economy be revised. On January 10, 2006, NHTSA issued a proposed rulemaking to measure the effect of factors such as higher speed limits, faster acceleration, differences in the ratio between city and highway driving, and use of air conditioning on in-use fuel economy. The in-use fuel economy stickers posted to the windows of new cars would reflect the results of these tests beginning in FY2008. This would affect only the estimation of in-use fuel economy. It would not affect the CAFE calculation for purposes of determining manufacturers’ compliance with the CAFE standard.

 [read report]

Topics: Transportation, Energy, Legislative

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