Katerina Swanson
The Corporate Average Fuel Economy (CAFE) standards regulate how far vehicles must travel on a gallon of fuel. The National Highway Traffic Safety Administration (NHTSA) sets CAFE standards for passenger cars and light trucks, and separately sets fuel consumption standards for medium- and heavy-duty trucks and engines. The CAFE standards in a given model year define the CAFE levels that manufacturers' fleets are required to meet in that year. The CAFE standards aim to save consumers money, reduce emissions, and reduce the country's dependence on oil.
| Characteristics | Values |
|---|---|
| What is it? | Corporate Average Fuel Economy (CAFE) standards regulate how far vehicles must travel on a gallon of fuel. |
| Who does it apply to? | Passenger cars and light trucks (collectively, light-duty vehicles) |
| Who regulates it? | National Highway Traffic Safety Administration (NHTSA), part of the U.S. Department of Transportation |
| What are the targets? | An industry-wide fleet average of approximately 49 mpg for passenger cars and light trucks in model year 2026. Fuel economy will increase by 8% annually for model years 2024-2025 and 10% annually for model year 2026. |
| What are the benefits? | Save consumers nearly $23 billion in fuel costs through 2050, avoid the consumption of about 70 billion gallons of gasoline through 2050, prevent more than 710 million metric tons of carbon dioxide emissions by 2050, reduce air pollution, and reduce the country's dependence on oil. |
| Historical context | The 1975 Energy Policy and Conservation Act directed the U.S. Secretary of Transportation to establish CAFE standards for new passenger cars. CAFE was first used on model year 1978 cars and 1979 trucks following the 1973-74 oil embargo, which had drastically raised gas prices. |
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What You'll Learn
The Corporate Average Fuel Economy (CAFE)
The CAFE standards in a given model year define the CAFE levels that manufacturers' fleets are required to meet. These levels depend on the characteristics and mix of vehicles produced by each manufacturer. If a manufacturer's fleet fails to meet the average fuel economy requirement, they must either apply sufficient CAFE credits to cover the shortfall or pay a penalty.
CAFE standards are regulated by the DOT's NHTSA, which sets and enforces the standards. The Environmental Protection Agency (EPA) calculates average fuel economy levels for manufacturers and sets related GHG standards. NHTSA establishes CAFE standards under the Energy Policy and Conservation Act (EPCA) of 1975, as amended by the Energy Independence and Security Act (EISA) of 2007. The EPA establishes GHG emissions standards under the Clean Air Act.
In 2012, NHTSA established final passenger car and light truck CAFE standards for model years 2017-2021. The agency projected that these standards would require a combined fleet-wide fuel economy of 40.3-41.0 mpg in model year 2021. In 2022, the U.S. Department of Transportation's NHTSA announced new fuel economy standards for model years 2024-2026. These standards require an industry-wide fleet average of approximately 49 mpg for passenger cars and light trucks in model year 2026. The new standards will increase fuel efficiency by 8% annually for model years 2024-2025 and 10% for model year 2026.
The agency projects that the final standards will save consumers nearly $23 billion in fuel costs and avoid the consumption of about 70 billion gallons of gasoline through 2050. The standards will also prevent more than 710 million metric tons of carbon dioxide emissions by 2050, reduce air pollution, and reduce the country's dependence on oil.
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The National Highway Traffic Safety Administration (NHTSA)
NHTSA's mission is to save lives, prevent injuries, and reduce the economic costs of road traffic crashes through education, research, safety standards, and enforcement. It licenses vehicle manufacturers and importers, allows or blocks the import of vehicles and safety-regulated vehicle parts, administers the vehicle identification number (VIN) system, and develops crash test dummies and protocols.
NHTSA sets Corporate Average Fuel Economy (CAFE) standards, which regulate how far vehicles must travel on a gallon of fuel. CAFE standards apply to passenger cars and light trucks (collectively, light-duty vehicles), and NHTSA also sets separate fuel consumption standards for medium- and heavy-duty trucks and engines. NHTSA's CAFE standards are intended to save consumers money, reduce emissions, and decrease the country's dependence on oil. For example, the agency projects that the final standards will save consumers nearly $23 billion in fuel costs and avoid the consumption of about 70 billion gallons of gasoline through 2050.
In addition, NHTSA regulates the fuel-economy window stickers on new vehicles. In 2022, NHTSA announced new, landmark fuel economy standards for model years 2024-2026, which will increase fuel efficiency by 8% annually for model years 2024-2025 and 10% annually for model year 2026. These standards are expected to save American families money, reduce emissions, and improve public health. NHTSA also created the New Car Assessment Program (NCAP) in 1979 to encourage manufacturers to build safer vehicles and consumers to buy them.
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Fuel economy and emissions standards
Fuel economy standards regulate how far vehicles must travel on a gallon of fuel. The National Highway Traffic Safety Administration (NHTSA), part of the U.S. Department of Transportation, sets Corporate Average Fuel Economy (CAFE) standards for passenger cars and light trucks (collectively, light-duty vehicles). NHTSA also sets fuel consumption standards for medium- and heavy-duty trucks and engines separately.
The CAFE achieved by a fleet of vehicles in a given model year is the production-weighted harmonic mean fuel economy, expressed in miles per US gallon (mpg). The CAFE standards in a given model year define the CAFE levels that manufacturers' fleets are required to meet in that year, with specific levels depending on the characteristics and mix of vehicles produced by each manufacturer. If a manufacturer's average fuel economy falls below the requirement, they must either apply sufficient CAFE credits to cover the shortfall or pay a penalty.
CAFE standards were first used on model year 1978 cars and 1979 trucks following the 1973-74 oil embargo, which had drastically raised gas prices. The motivation for the standard was to make the nation less dependent on foreign oil. The 1975 Energy Policy and Conservation Act directed the U.S. Secretary of Transportation to establish CAFE standards for new passenger cars. This law was updated in 2007 when Congress increased the fuel economy standards for passenger vehicles and established efficiency standards for medium- and heavy-duty vehicles.
In April 2022, the U.S. Department of Transportation's NHTSA announced new fuel economy standards for model years 2024-2026. The new standards will increase fuel efficiency 8% annually for model years 2024-2025 and 10% annually for model year 2026. They will also increase the estimated fleet-wide average by nearly 10 miles per gallon for model year 2026, relative to model year 2021. The new standards are expected to save consumers money at the pump, reduce transportation emissions, and make the country less vulnerable to global shifts in oil prices.
In addition to the CAFE standards set by NHTSA, the Environmental Protection Agency (EPA) also creates greenhouse gas emissions standards for cars and trucks, which are set in grams of emitted carbon dioxide or the CO2-equivalent of another greenhouse gas per mile.
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The Clean Air Act
In 2012, the EPA published a final rule setting greenhouse gas standards for passenger cars for Model Years 2017-2025. The National Highway Traffic Safety Administration (NHTSA) also plays a role in setting Corporate Average Fuel Economy (CAFE) standards, which regulate how far vehicles must travel on a gallon of fuel. NHTSA sets these standards for passenger cars and light trucks, collectively known as light-duty vehicles, and separately for medium- and heavy-duty trucks and engines.
The CAFE standards are fleet-level requirements, meaning individual vehicles do not have to meet their fuel economy targets. Manufacturers whose annual fleet production falls below the applicable requirement must either apply sufficient CAFE credits or pay a penalty. The agency projects that these standards will result in significant consumer savings, reduced gasoline consumption, and a decrease of over 700 million metric tons of carbon dioxide emissions by 2050.
In April 2022, the Biden administration announced new vehicle fuel economy standards for Model Years 2024-2026, aiming to increase fuel efficiency by 8% annually for 2024 and 2025, and by 10% for 2026. These standards are expected to save American families money and reduce transportation emissions, contributing to a more sustainable future.
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The cost of fuel
The Corporate Average Fuel Economy (CAFE) standards regulate how far vehicles must travel on a gallon of fuel. The National Highway Traffic Safety Administration (NHTSA), part of the U.S. Department of Transportation, sets CAFE standards for passenger cars and light trucks (collectively, light-duty vehicles).
The CAFE achieved by a fleet of vehicles in a given model year is the production-weighted harmonic mean fuel economy, expressed in miles per US gallon (mpg), of a manufacturer's fleet of current model year passenger cars or light trucks. The CAFE standards in a given model year define the CAFE levels that manufacturers' fleets are required to meet in that year. If a manufacturer's average fuel economy falls below the requirement, they must either apply sufficient CAFE credits to cover the shortfall or pay a penalty.
Additionally, the NHTSA's fuel economy standards are projected to save consumers nearly $23 billion in fuel costs and avoid the consumption of about 70 billion gallons of gasoline through 2050. This will also prevent more than 710 million metric tons of carbon dioxide emissions by 2050, reduce air pollution, and reduce the country's dependence on oil. The standards will also reduce greenhouse gas emissions, which will improve public health and provide environmental justice for communities living near heavily trafficked roadways.
While the CAFE standards have been successful in improving fuel economy and reducing costs, there have been periods of little variation. For example, from 1986 to 1988, the fuel economy rose at a significantly subdued rate and eventually levelled off as the price of fuel fell and the CAFE standard was relaxed.
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Frequently asked questions
Car fuel standards refer to the regulations and requirements that dictate the allowable types and quality of fuel used in automobiles. These standards are set by governmental or regulatory bodies and aim to ensure the efficient and environmentally responsible use of fuel in vehicles.
Car fuel standards are typically set by government agencies or departments responsible for energy policy and environmental protection. In different countries, this could include organizations like the Environmental Protection Agency (EPA) or the European Commission.
Car fuel standards are essential for several reasons. Firstly, they help to reduce air pollution and greenhouse gas emissions by setting limits on the allowable levels of pollutants in fuel. Secondly, they promote the efficient use of fuel, which can reduce a country's dependence on imported energy sources and also save consumers money. Finally, fuel standards can also encourage the development and use of alternative and renewable fuel sources, reducing the reliance on non-renewable fossil fuels.
Car fuel standards can impact consumers in several ways. Firstly, they may need to use specific types of fuel in their vehicles, which are often cleaner and more efficient. Secondly, the implementation of fuel standards can result in higher fuel costs if the production or importation of the required fuel type is more expensive. However, the improved fuel efficiency resulting from these standards may offset these costs over time.
The enforcement of car fuel standards typically involves a combination of regulatory measures and market-based incentives. Governments may impose penalties or fines on fuel suppliers or importers whose products do not meet the required standards. Additionally, they may offer tax incentives or subsidies to encourage the production and use of fuels that exceed the minimum requirements. Regular testing and monitoring of fuel quality are also conducted to ensure compliance with the established standards.
