The Pros and Cons of CAFÉ Standards: Do CAFÉ Standards Compromise
Vehicle Safety as Conservative Think Tanks Claim? How Does the Rebound Effect Fit
In? Fed Rule vs. State Rules
In 2009 Obama announced a new upgrade to CAFÉ standards to
increase vehicle mileage. He stated that the goal was a 5% annual average
increase in miles per gallon (MPG) without compromising safety. The Competitive
Enterprise Institute, headed by Trump transition team member Myron Ebell, has
argued for years now that lowering the standards by making vehicles lighter,
likely the most important component to MPG increases, has compromised safety. Is
this actually true? Other conservative think tanks such as the Heartland
Institute have made the same arguments as have some safety experts.
Every vehicle is given a safety rating based on actual crash
tests. Vehicle weight is very often a factor in safety and fatalities but not
the only factor. Engineering design is a factor as well as are vehicle size, types
of materials used, smaller engines, more complete combustion and recombustion, and
even country of origin. Aside from car company tests there are agencies like
National Highway Traffic Safety Administration (NHTSA) and the Insurance
Institute for Highway Safety (IIHS) which give safety ratings and do
meta-analysis to compare vehicles. Studies by the National Research Council in
1993 and the Harvard Center for Risk Analysis both concluded that CAFÉ
standards did indeed contribute to more highway fatalities, thousands per year
in the first study and hundreds per year per mpg in the 2nd study.
The IIHS found in a 2007 analysis that some SUVs with low safety ratings have
higher fatality rates than some small cars with high safety ratings. In crashes
involving cars and SUVs the weight of the SUV directly correlates to higher
fatalities among car occupants – the heavier the SUV the more deaths. There was
no mention of whether the weight variance of the small cars affected fatality
rates. Another study showed that 75% of traffic fatalities involved a truck.
Those last two data sets suggest that lowering the weight of trucks and SUVs
might have more of an impact on reducing fatalities than making small cars
heavier or keeping them the same weight. Thus, the argument is whether lighter
cars are the main problem or the lesser problem as that data suggest, the
bigger problem perhaps being the bigger differences
in weight. That data also suggest that the earlier studies may have
overestimated the effect of the CAFÉ standards on safety since lighter cars with
better gas mileage are increasingly sought by consumers anyway for the cost
savings and environmental benefits. A 2003 study by the Transportation Research
Board suggested that engineering design was a more important factor than vehicle
weight in determining safety. The bottom line is that while vehicle weight does
affect safety, it may not be the main factor and since consumers want and
expect vehicles with higher fuel economy, the relative amount of lighter
vehicles on the roads are likely to continue to increase at similar rates
regardless of whether CAFÉ standards are continued or frozen as the Trump
proposal calls for beginning in 2021.
Other arguments against CAFÉ standards are touted by vehicle
manufacturers who say that the changes add significant costs to production and
that consumers are less willing to pay higher prices for smaller cars costlier
to produce. If they pay more they want bigger vehicles. That may be less and
less true as time goes on, though bigger vehicles for bigger families and
trucks for transporting stuff will continue to be sought. However, it is
interesting that the big car makers spend much more on advertising for their
bigger and more gas guzzling models, which suggests that they have higher
profit margins on those vehicles.
Fuel economy standards were first enacted in the U.S. in 1975
in response to oil embargos and began to be implemented in 1978 increasing
about 1-2mpg per year. With some very minor ups and downs fuel economy
standards were essentially frozen from 1985 until 2011 when they went from 27.5
to 30.2 for passenger cars. That is 26 years of R&D into increasing fuel
economy while it was held steady. Current research involves automated vehicle
safety technologies, similar to those used in automated driverless vehicles.
Such technologies should be able to help reduce injuries and fatalities.
It has recently been announced (first in 2016) that the
transportation sector has overtaken the power generation sector in greenhouse
gas emissions. CAFÉ standards as a form of efficiency have always been touted
as a very good and very feasible way of reducing pollution and greenhouse gas
emissions. 60% of transportation sector emissions are from cars and light
trucks.
Another argument against relaxing fuel efficiency standards
is that it would mean we would import more oil from OPEC which keeps us
dependent on those players and adds to trade deficits. Thus, increasing fuel
economy can increase U.S. energy independence. Yet another argument is that
such standards would decrease particulate pollution and other pollution like
VOCs and oxides that contribute to ground-level ozone and smog. That is
probably the main reason why the state of California has long sought higher
CAFÉ standards than the U.S. as a whole. However, the new Trump administration
proposal seeks to compel California to accept the national standards that would
effectively increase such emissions from where they are now. Apparently, the
Clean Air Act gives states the ability to set their own fuel economy standards
subject to EPA approval. It appears that EPA head Andrew Wheeler and company are
not willing to continue that approval, which is an odd departure from an EPA that
has sought to give states more freedom enact regulations without interference
from the federal government. The Scientific American article referenced below
points out that despite California’s more stringent standards they have the
poorest air quality in the nation. This has much to do with the weather
inversions that cause the urban smog to remain in the close to the ground.
Competitive Enterprise Institute’s Myron Ebell argues that
not freezing CAFÉ standards affects consumer choice by making the cost of new
cars higher. Of course, any added cost will be more than offset and recouped
quickly by savings in fuel costs. He rightly points out that CAFÉ standards
were originally designed to increase U.S. oil independence and that the shale
revolution has really helped with that goal. He also notes that Obama invoked a
2007 Supreme Court decision to repurpose CAFÉ standards as a way to decrease
greenhouse gases. Ebell makes another interesting argument: that higher sticker
prices for cars (presumably due to the need to increase MPG) is causing more
people to keep their older cars on the road, cars that are less safe and less
efficient. That is a difficult claim to evaluate. I tend to doubt that adding
$1000-$2000 to a $20,000 to $50,000 vehicle is having a large effect on buyers.
However, those costs may increase to $3000 more per vehicle if the ratcheting
up to 2025 is continued as planned. That could have a bigger effect on
consumers. Oddly, the title of Ebell’s op-ed says the new Trump CAFÉ freeze
would lower gas prices but there is no mention of gas prices in the article at
all. It can be argued that continually ratcheting up the fule economy will
continue to increase vehicle costs and that is perhaps a good argument for
freezing or reducing future increases as the new Trump EPA plan does. He also
notes that rising vehicle costs also price lower income people out of the new
car buyer market – even though they would save on fuel costs the higher purchase
costs are prohibitive.
Apparently, there are around 15 states with CAFÉ standards
similar to those in California. Many of those states are among the 17 states
that have recently sued the EPA to keep their own standards. In June, Colorado
became the 14th state to enact such standards.
Obama’s EPA finalized an evaluation in Jan. 2017 that found
that implementing the standards through 2025 was feasible and the benefits
would outweigh costs. The Trump EPA under Pruitt began to rewrite the standards
and current head Andrew Wheeler and Secretary of Transportation Elaine Chao recently
announced the proposed new rules.
Rebound Effect – Real but Limited
Of course, with lower fuel costs people are likely to drive
more. This is known as the rebound effect – when something becomes more
efficient it usually becomes cheaper so that in cases where cost would curb use
there would be more use. In driving, the degree of the effect probably has to
do with how much driving one does regardless of cost, necessary driving and
leisure driving. Only leisure driving would increase and only to an extent. In
terms of driving the rebound effect has been dubbed the “Prius effect.” The Trump
administration argument for freezing CAFÉ standards noted that the lower fuel
costs would lead to more driving and thus more accidents. That is likely true
to a certain small extent. Skeptics of the strength of the rebound effect note
that most people are not looking to drive more and the effect is negligible,
say Ted Nordhaus and Alex Trembath of the Breakthrough Institute, a moderate
environmental think tank. They also argue that increased engine efficiency has
been directed toward selling bigger vehicles that are more efficient rather
than smaller ones, while the increasing CAFÉ standards favor the smaller vehicles.
They note that one could make the argument that decreasing the weight of
vehicles overall or of heavier vehicles can reduce injuries and fatalities just
as much or more than increasing the weight of lighter vehicles – as the
evidence indicated above about varying vehicle weights on accident fatalities suggests.
Another thing they note is that vehicle safety per miles driven has been increasing
steadily through time. This is due to better technology, more comprehensive
safety regulations, and stricter drunk driving enforcement. Alex Trembath
argues that while CAFÉ standards were effectively frozen (1985-2011) vehicles
got bigger and more powerful. Thus the rebound effect of frozen CAFÉ standards
was toward driving bigger and more powerful vehicles, since higher efficiency technologies
can make those vehicles meet the standards if they don’t rise.
Federal CAFÉ Standards vs. State Standards
About 14 states now have standards close to those of California,
which are even stricter than the national standards, This represents over 40%
of new cars and trucks being manufactured. Myron Ebell at CEI touts the relaxing
of the standards as a victory against government overreach, both of the feds
and in this case against the ability of a state like California to influence
the policies of other states. He says California has been “pursuing an anti-car
agenda for decades.” He says that without noting the direct impact of fuel-burning
vehicles on California urban smog. He advocates, “kicking California bullies
out of the fuel economy playground” to expand consumer choice. Of course, this
does not address the other 13 or 14 states with similar standards. He argues that
the original CAFÉ standards did not foresee states having their own standards and
this is a good argument although there has been considerable debate in legal
circles since the Clean Air Act does gives states some rights to regulate their
own air quality and in states like California it is definitely an air quality
issue. Of course, in most instances conservative views of environmental regulation
refer to the states to set standards, now presumably especially if those standards
are less stringent than federal standards. This is not the case here. He does
complain, perhaps justifiably, that California has had too much influence on
the federal standards, citing specific cases. It is thus debatable whether
California has had undue influence through its “fuel economy zealotry.” California
also promotes other low emissions technologies such as natural gas vehicles
(NGVs), electric vehicles (EVs), high quality and functioning catalytic
converters, and other technologies that increase fuel economy and reduce
emissions. While Ebell and Co. do make some valid arguments they also seem to
want to punish left-leaning states like California (without mentioning smog at
all) as part of what Ebell calls the “climate -industrial complex.” This issue
is one of several involving the Trump administration being at odds with
California and several other states: fuel economy standards, sanctuary cities,
and net neutrality, are three I can think of although they are very separate
issues.
The Big Picture: Recap of Pros and Cons of Current CAFÉ Standards
Trajectory
Pros:
1)
Saves consumers substantial $ on fuel
2)
Reduces particulate and smog-producing
pollutants – vital in cities and certain regions
3)
Reduces greenhouse gas emissions from its
largest domestic source
4)
Increases U.S. energy independence
5)
Can help states meet their own emissions
standards – a real benefit in high pollution areas
Cons:
1)
Likely reduces safety – by how much is questionable
2)
Increases costs for automakers – higher costs
for consumers more than recouped by fuel savings
3)
Could make some repairs more expensive for
consumers – through higher materials and replacement costs.
4)
Rebound Effect – people will tend to drive more
if fuel cost is cheaper due to better mileage, although only a portion of the saved
fuel will be burned due to rebound
5)
Higher cost of new cars causing people to keep
less safe, less efficient cars longer (questionable how big this effect really
is) and price lower income people out of new car market
My own opinion is that there is some basis for freezing or
reducing the future increases of the Obama EPA rule but that there is little to
no basis for restricting states rights to set their own standards, particularly
high smog states like California.
References:
Americans' love affair with cars threatens climate goals – by Maxine
Joselow, E&E News reporter Climatewire: Wednesday, September 5, 2018
Using Trump’s Bad-Faith CAFÉ Standards Proposal to Better Understand
Efficiency Rebound – by Ted Nordhaus and Alex Trembath, in Green Tech Media,
Sept. 11, 2018
How to Reap the Benefits of Fuel Efficiency Standards – by Alex
Trembath, in BreakThrough Newsletter, Sept. 19. 2018
Relaxing Vehicle Efficiency Standards Is a Truly Dangerous Idea – by Rob
Jackson, in Scientific American, July 1, 2018
Wikipedia Entry – Corporate average fuel economy
Colorado Becomes 14th State to Adopt Stronger Vehicle
Emissions Standards – by Mark Hand, in Think Progress, June 19, 2018
More Realistic Fuel Economy Rule Would Cut Traffic Fatalities and Lower
Gas Prices – by Myron Ebell, op-ed in Arizona Daily Star, Aug. 15, 2018
CEI: Proposed Changes to CAFÉ Standards Are Good News for Consumers –
by Myron Ebell, Sam Kazman, and Marlo Lewis, in Competitive Enterprise Institute,
Aug. 2, 2018
Will Trump Auto Rule End California’s Regulation of Fuel Economy – by
Marlo Lewis Jr., in Competitive Enterprise Institute, Aug. 1, 2018
