Impact of the new Corporate Average Fuel Economy Standards
Importance of Fuel Economy
There are four important things which are influenced by fuel economy. They are
Protect the Environment
Conserve resources for future generations
Reduce Oil Imports
Save Money
These four points are very important. The first point is protecting the environment. Driving cars pollutes the environment by releasing chemicals which are injurious to people and environment. The CAFE addresses on this issue because the more efficient cars pollute less. By the second and third point, we can understand that if fuel economy increases, fuel consumption will be decreased which in turn results in importing less oil. This can bring many positive effects. The fourth point has the same level of importance as of the other three. By improving fuel economy, we can definitely save money.
Historical Standards of Fuel Economy
CAFE policy has been introduced for the past three decades and the new legislation has improved the standards drastically. The efficacy of the CAFE standards has been controversial. The fuel economy was introduced in 1978 for passenger vehicles. The second category of light trucks was introduced in the next year. The Gross vehicle weight rating was distinguished from heavy duty vehicles by 6000 pounds or less. It was increased to 8500 pounds in 1980 and remained constant till 2007. Some of the particular trucks like Ford Excursion and Hummer were free from fuel economy regulations. Separate standards were recognized for two wheel drive and four wheel drive light trucks from 1979 to 1991.
During this period, the car manufacturers were permitted to choose between the combined standards or separate standards to be applied to entire light trucks which were sold in that year. Fine of 5 per one-tenth mile per gallon was imposed on those who failed to meet the standards according to the CAF standards. During 1980, due to the establishing of the fuel economy law, the vehicle competence increased steadily. Passenger vehicle mileage doubled from 13.5 to 27.5 mpg and the light trucks rose from 11.6 to 19.5 mpg. The National Academy of Sciences reported that trucks and cars would meet a 37 mpg and fleet-wide standard within ten to fifteen years exclusive of sacrificing safety or performance. In 2000, after congress lifted the freeze on fuel economy, President Bush increased a pair of minimal light trucks. He raised the standards from 22.2 miles per gallon to 24 miles per gallon, merely 2 annual increase in between 2008 and 2011 which was finalized in 2006. After four years debate in 2005, congress failed to increase vehicle efficiency standards by enacting comprehensive energy legislation. In 2007, President Bush set the target to increase vehicle efficiency to 4 annually.
Background and Analysis
Reducing U.S dependence on imported oil would be really complex without raising the price increase on gasoline or confining consumer preference in passenger vehicles. Many people argue that the impact upon the automotive industry or the economy would be unacceptable. In 1982, gasoline consumption fell to 6.5 million barrels per day and on average, up to 8.4 mdb in 1999 and during 2002 summer it has been peaking 9.0 mbd.
Increasing CAFE is inefficient and slow means of attaining reductions in fuel consumption because of the excess time needed for the vehicle fleet to turn over. It is argued that there is standard risk interfering with the economic well-being of the automotive industry and jeopardize the consumer choice. There are opponents who criticize rising of CAFE because by downsizing vehicle weight and size, the safety concerns arise. Proponents argue that increase in the CAFE standards will introduce technological improvements that consumers value and which do not compromise features. To raise the CAFE standards on passenger cars, highly controversial attempts have taken place in 1990s. The Omnibus energy legislation was very controversial in 1991 that it added senates inability to introduce the bill for debate.
CAF Standards
There have been significant changes in globalization of the industry, motor vehicle technology, production capacity, mix and characteristics of vehicle sales and other factors since CAFE standards were established 25 years ago. The reformed CAFE standards came in to existence with effect from 2011. In this, a program has been implemented for light trucks. During 2008-2010, manufacturers have the option to act in accordance either with the unreformed CAFE standards or with the reformed CAFE rules. Below the reformed CAFE, the CAFE level is based on the target levels fixed according to the vehicle size. The targets are allocated based on the vehicles Footprint. Footprint is the product of the average track width and wheelbase. Compliance is calculated and determined using category targets and the manufacturers actual production levels. There is a mathematical equation based on which the target values are determined.
T 1a (1b - 1a) e (x-c)d (1 e (x-c)d)-1
Here, in the above equation,
T - Represents fuel economy target, mpg
a - Represents maximum fuel economy target, mpg
b - Represents minimum fuel economy target, mpg
c - Represents footprint value
d - Represents parameter describing the rate at which the value of targets decrease from largest to smallest, ft2
e - Represents the constant value of 2.718
x- Represents vehicle model footprint, ft2
Parameter Values for Determination of CAFE TargetsParameterYear2008200920102011a28.5630.0729.9630.42b19.9920.8721.2021.79c49.3048.0048.4947.74d5.585.815.504.65
As per the MY 2011 regulated light truck fleet, the renewed CAFE regulation applies to medium duty passenger vehicles up to 10,000 lbs. Initially in the unreformed CAFE fleet, the larger size pick-up trucks and SUVs were excluded. But this regulation captured all these vehicles. As per the DOT, the average light truck target according to the reformed CAFE rule in MY 2011 will be 24.0 mpg. The standards of CAFE were to motivate the development of technology and increase fuel efficiency.
In May 2009, new fuel economy target was announced by the President Obama. He presented 35.5 combined mpg by 2016. The 35 mpg introduced by EISA by 2020 was overruled by this new proposal. This new policy needs NHTSA to modify their fuel economy standards between 2012 and 2016. As a response to Obamas new target, EPA and DOT jointly proposed new fuel economy standard proposal. This program specifies the emission level of 250 grams of carbon dioxide per mile. In the model year 2016, the light duty vehicle fleet would reach 35.5 miles per gallon. By 2030, both the EPA and DOT standards would reduce carbon emissions about 21 percent.
Refocusing on Fuel Economy
OPEC, Kyoto and SUVs modern developments have kept the attention on the fuel economy and CAFE standards. The increase in gasoline prices and crude oil which began in 1999 led to the relief of the loss of market share of passenger cars to sport utility vehicles which use less light-truck fuel economy standard. According to the study conducted for the Department of Transportation initiated that consumers are showing much interest in the larger vehicles due to roominess, versatility and accessibility of four wheel drive. Since the mid 1980s, the lowering of average fuel economy started with the rise of market share of these vehicles together with the lower average fuel economy. In 1998, the California Air Resource Board made choice to reclassify SUVs 8500 pounds or less for the passenger cars. In July 2000, Ford motor declared that over the five year period, it would develop the fuel economy of its SUV model line by 25 percent.
Improving Fuel Economy
There are two possible approaches to decrease consumption of gasoline.
By raising the prices of gasoline by means of gasoline or by any other means which induces some conservation.
Boost the efficiency and the technology of the automobile fleet.
Also, a mixture of these two broad approaches can be used to improve fuel economy.
Impact of CAFE on Environment and Oil Consumption
The use of fuel by light trucks and the passenger cars is one-third lower today since 1975. This improvement is due to the improvement of fuel economy by the CAFE standards and other factors like fuel prices. The increased fuel economy decreases the cost of the fuel per mile and support vehicle travel. In U.S, the major part of CO2 emissions is from vehicles. Some argue that raising the CAFE standards to decrease carbon dioxide emissions is of no use. Improvements should be made in the fuel economy so that the same vehicle should burn less fuel to travel a specified distance. To improve fuel economy, the technologies tend to add cost to new vehicles so that the consumers retain the efficient cars longer. There is a correlation between increase in miles driven, improved fuel economy and vehicle emissions. In recent years, fuel economy improved slightly but the vehicle miles have continued to increase during the oil price shocks and recessions. During this period, light-truck travel developed rapidly. But the standard of vehicle safety was a big concern. A significant decrease in gasoline consumption took place where the Kyoto agreement required the United States to attain seven percent decrease in carbon dioxide emissions. By the year 2010, according to the Department of Energy, the carbon emissions are to be 34 percent above 1990 levels. The first state to regulate carbon dioxide emissions is California.
Conclusion
CAFE was introduced with a view to control pollution, reduce American dependence on foreign oil and satisfy the needs of the consumers and provide more fuel efficient vehicles. The National Academy of Sciences concluded that CAFE has led to noticeable improvements in lessening fuel consumption, green house gas emissions and dependence on foreign oil. (National security) Chemical, Energy, Agricultural and Freight interests were prominent lobbies which opposed rising taxes on petroleum and other minerals. So Congress introduced CAFE. CAFE has met some of its principles but failed to completely achieve what it opted for. Because the economy of U.S. is the world giant, the fuel economy regulations have not only distorted U.S. citizens but the automobile industry worldwide. Due to the CAFE, automobiles weight has been reduced which has less protection at the time of accidents. In domestic automobile industry, the CAFE has increased the loss of jobs. Corporate Average Fuel Economy had an obstinate impact with each and every task it was assigned to.