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White House, Congress press for improved CAFE standards

Posted by Thomas Nephew on February 2nd, 2009

The Corporate Average Fuel Economy (CAFE) program, enacted in 1975, requires the National Highway Traffic Safety Administration (NHTSA) to set fuel economy standards for cars and light trucks.  But while NHTSA is supposed to issue standards that are the “maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year,” the actual, observed effects of CAFE standards have been disappointing.

CAFE FAIL
The graph to the right, by Greg Maring of Cambridge Systematics, is based on data from the  July 2006 EPA report “Light-Duty Automotive Technology and Fuel Economy Trends: 1975 through 2006″; those data indicate that improvements in the fuel economy of fleetwide, sales-averaged new light duty vehicles (cars and light trucks) essentially ended by the mid-1980s.  As the near vertical part of the yellow line in the graph shows, innovation from the mid-1980s through 2006 steadily improved the average horsepower of newly sold cars and trucks, while average fuel economy remained roughly constant (to be generous).

Last April, NHTSA proposed new CAFE standards for cars and light trucks covering model years 2011-2015 (PDF, 417 pages).  Although the agency proposed to make the standards somewhat more stringent (31.8 mpg by 2015), the proposal was roundly criticized (among other things) for overstating costs, and understating benefits including those resulting from curbs on automotive greenhouse gas emissions.  Another widespread critique was that the standards were based on the output of a predictive model without disclosing to the public either how the model functions or what critical inputs to the model are — in essence, eliminating the possibility of meaningful public comment on the proposal.  NHTSA said that it would issue final standards in November 2008 but failed to do so.

Obama and Markey crack the whip
A week ago, President Obama  directed NHTSA to issue standards for model year 2011 only, after consultation with the Environmental Protection Agency, and to do so by April 2009. Both the directive to consult with the EPA and other instructions to take into account a recent Supreme Court ruling (about carbon dioxide being a Clean Air Act pollutant) are strong indications of Obama’s intent to see higher CAFE standards than those NHTSA has proposed to date — in keeping with his campaign pledge to achieve 4 percent improvements each year in office.

On the same day, Representative Ed Markey — the new chair of the House Energy and Commerce committee’s Subcommittee on Energy and Environment — sent new Secretary of Transportation Ray Lahood a detailed, three page letter stating that the CAFE regulations for 2011-2015 models proposed last year suffer from a “systemic overestimation of the costs of implementing fuel efficient technologies and a systemic underestimation of its benefits.”

After congratulating Secretary Lahood on his recent confirmation, Markey’s letter begins:

…I am writing to express my strong support for President Obama’s decision to direct you to move quickly in finalizing higher fuel economy standards. As you undertake this task, I would like to bring your attention to certain problems with the methodology used by the previous Administration. I am concerned that the draft regulations may be based on flawed science and an undue reliance on unverified auto industry claims. For this reason, if these assumptions are used to promulgate regulations -both for model year 2011 and the model years beyond -American consumers, national security and the environment will be shortchanged by fuel economy standards that are lower than a true assessment of available technology and an analysis of the costs and benefits would allow.

The rest of the letter serves as a short history of how NHTSA was able to bureaucratically stonewall fuel economy and climate change progress under the Bush administration.

First, Markey cites unrealistically low projected gasoline prices ($2.51/gallon in 2030!) ; assuming more realistic projected gas prices (the so-called “EIA high price gas scenario”) would have made a 35mpg fleetwide fuel economy  by 2015 cost-effective.  He also notes NHTSA’s undue reliance on auto industry estimates of technologies’ costs and benefits — and pointed out that when car manufacturers were begging for federal aid in December, they projected substantially higher fuel economy averages than those provided to NHTSA:

In the fall 2008 draft, estimates provided to NHTSA by Ford indicated that its 2012 fuel economy average in the absence of a new standard would be 28 mpg and that by 2015 it would reach 29.9 mpg. Yet when it was attempting to convince Congress to provide it with billions of dollars in bailout funds, Ford claimed in its December 2, 2008 Congressional submission that its fleet would reach 29.1 mpg in 2012 and 31.4 mpg by 2015. General Motors told NHTSA that by 2012, its cars would achieve a fuel economy average of 30.9 mpg and its light trucks would achieve 22.9 mpg. It then told Congress on December 2, 2008 that by 2012, its cars would achieve a fuel economy average of 37.3 mpg and its light trucks would reach 27.5 mpg. Clearly, more must be done to assess these contradictory claims.

Re carbon emission benefits, Markey noted that the current CAFE standard proposal ignores the Supreme Court’s finding that carbon dioxide is a Clean Air Act pollutant subject to EPA regulation, and that

…NHTSA revised the benefit projected to result from a lower emitting automobile fleet from $7/ton of carbon dioxide in the NPRM to $2/ton in the fall 2008 draft, although climate experts at EPA and elsewhere recommend that higher values than both these numbers be used. I urge you to consult these experts as you move to finalize these standards.

For that matter, Secretary Lahood’s boss demands it.

What’s at stake
Pressure like this may be part of what a GM manager in South America called “problems the U.S. automaker is facing in its home market.” The company’s brazen announcement that it was investing $1 billion in South America using bailout money may be GM’s way of returning fire against the new activism at both ends of Pennsylvania Avenue.

It’s important that consumers, labor, Obama supporters, and informed citizens stand firm in the face of automaker threats and intransigence. If NHTSA doesn’t correct the evident deficiencies in its proposed standards, that could be a harmful precedent to CAFE standards for the model years 2012 and beyond — including greenhouse gas standards issued by the Environmental Protection Agency under the Clean Air Act.

And at a time when it looks like we’re on an irreversible course for worldwide dustbowls by the year 3000, that’s something we can not allow shortsighted capitalism — or the regulatory agencies it has captured — to do to us.

=====
UPDATE, 2/5: See also the Washington Post’s 2/4 article Congress in the Driver’s Seat: Its Clout Waning, the Auto Industry Is Losing Its Ability to Steer Policy (Kimberly Kindy, Kendra Marr):

Until very recently, the relationship between automakers and policymakers went something like this: The industry asserted its position, and leaders in Washington largely acquiesced. […] Automakers and their supporters are now pointing their efforts toward a national standard for fuel economy and emissions. They have begun talks with the Obama administration, members of Congress and state leaders in an effort to reach a consensus, although they acknowledge that they’re not entirely sure what approach to take in the new administration. Industry officials said they are asking the EPA, in addition to reviewing California’s right to adopt its own standards, to look at the cost of mass-producing vehicles that would meet them. And they are asking Congress to pass laws that will spur consumers to buy such vehicles.”

 

One Response to “White House, Congress press for improved CAFE standards”

  1. Energy 2.0 » Blog Archive » CAFE oh, yay? Says:

    […] here’s some coverage of events leading up to the announcement, and some interesting graphs of DOT and EIA fleet fuel economy; this is real-world MPG, and is […]

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