Corporate Average Fuel Economy
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What does Corporate Average Fuel Economy (CAFE) mean?
Corporate Average Fuel Economy (CAFE) standards aim to improve the fuel economy of cars, light trucks, and SUVs sold in the United States. These standards, enacted in 1975 following an energy crisis, were designed to reduce U.S. dependence on foreign oil and have become part of climate change mitigation efforts, as vehicles are major greenhouse gas emitters.
Overseen by the National Highway Traffic Safety Administration, CAFE standards mandate that auto manufacturers meet specific miles per gallon (mpg) targets for their vehicle fleets. Failure to meet these standards results in penalties, while exceeding them earns manufacturers credits that can be used to offset past or future shortfalls.
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Why were CAFE standards created for vehicles?
The Corporate Average Fuel Economy (CAFE) standards were created to improve vehicle fuel economy in the United States. Enacted by Congress in 1975 through the Energy Policy and Conservation Act, CAFE standards responded to the 1973-74 Arab oil embargo and aimed to reduce U.S. dependence on foreign oil. These standards, overseen by the National Highway Traffic Safety Administration, mandate that auto manufacturers meet specific miles per gallon (mpg) targets for their vehicle fleets. In later years, CAFE standards have become part of the climate change mitigation debate, as vehicles are major greenhouse gas emitters.
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How do CAFE standards affect the average fuel economy of cars and trucks?
Corporate Average Fuel Economy (CAFE) standards aim to improve the fuel economy of cars and trucks sold in the United States. Enacted in 1975 in response to the energy crisis, CAFE standards require manufacturers to meet specific miles per gallon (mpg) targets for their vehicle fleets.
The initial goal was to double the fuel economy of new cars by 1985. For example, CAFE standards mandated that all new automobiles achieve an average of 27.5 mpg by 1985. As of 2013, the standard remained at 27.5 mpg for passenger cars. However, by 2016, the standard increased to 37.8 mpg for cars and 28.8 mpg for light trucks and SUVs. In 2012, a 2025 CAFE standard was announced, targeting an average of 54.5 mpg fleet-wide for cars, light trucks, and SUVs.
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Who sets and enforces CAFE standards in the United States?
In the United States, the National Highway Traffic Safety Administration (NHTSA) oversees the Corporate Average Fuel Economy (CAFE) standards, which were enacted in 1975 to improve vehicle fuel economy. These standards require automobile manufacturers to meet specific miles per gallon (mpg) for their fleets. The Environmental Protection Agency (EPA) also plays a role in regulating CAFE standards, particularly concerning overall tailpipe emissions of carbon dioxide.
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What happens if carmakers don't meet CAFE standards?
If car manufacturers fail to meet the Corporate Average Fuel Economy (CAFE) standards, which are overseen by the National Highway Traffic Safety Administration, they face a penalty. This penalty amounts to $5.50 for each one-tenth of a mile per gallon (mpg) that the manufacturer falls short of the standard, multiplied by the total number of vehicles in the manufacturer's fleet for that model year.
However, manufacturers can earn excess credits for exceeding the CAFE standards, which can be used to offset past or future shortfalls within a three-year window. Credits may also be obtained through the use of alternative fuels or emissions-reducing technologies.
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How have CAFE standards influenced car designs and fuel efficiency over the years?
The Corporate Average Fuel Economy (CAFE) standards, established in 1975, aimed to improve the fuel efficiency of vehicles in response to the energy crisis in the United States. Initially targeting a fleet average of 27.5 mpg for passenger cars by 1985, CAFE standards have evolved, influencing vehicle design and fuel efficiency over the years.
Automobile manufacturers were required to meet certain miles per gallon (mpg) standards for their fleet of vehicles. The CAFE standards have promoted the development of more fuel-efficient technologies and designs in the automotive industry. Automakers must meet the standards or face penalties.
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Corporate Average Fuel Economy (CAFE), standards designed to improve the fuel economy of cars, light trucks, and sport-utility vehicles (SUVs) sold in the United States. Enacted by the U.S. Congress in 1975 as part of the Energy Policy and Conservation Act, the CAFE standards were a response to an energy crisis in the United States and were initially part of an effort to reduce U.S. dependence on foreign oil. Those standards have since become part of the debate surrounding climate change mitigation, as vehicles are major emitters of greenhouse gases.
CAFE standards are overseen by the National Highway Traffic Safety Administration and require automobile manufacturers to meet certain miles per gallon (mpg) standards for their fleet of vehicles. In 1974 the average U.S. passenger car had an mpg of less than 13 (5.5 km/litre). The CAFE standards required all new automobiles to have an average mpg of 27.5 mpg (11.7 km/litre) by 1985. As of 2013 the 27.5 mpg standard remained unchanged for passenger cars, with light trucks and SUVs required to meet a standard of 23.5 mpg (10 km/litre). However, the average fuel economy was required to reach 37.8 mpg (16.1 km/litre) for cars and 28.8 mpg (12.2 km/litre) for light trucks and SUVs by 2016. In 2012 President Barack Obama announced a 2025 CAFE standard of an average of 54.5 mpg (23.2 km/litre) fleet-wide for cars and for light trucks and SUVs. (Additionally, the Environmental Protection Agency [EPA] added the requirement that overall tailpipe emissions of carbon dioxide decrease to 163 grams per mile [101 grams/km] by 2025.)
A manufacturer’s CAFE is the average fuel economy of the manufacturer’s fleet of vehicles for that model year weighted by the production volume of each model of car. CAFE standards for passenger cars and for light trucks and SUVs are calculated separately. A manufacturer’s fleet of passenger cars is divided into domestics and imports, as determined by the percentage of components manufactured outside the United States and Canada. The manufacturer must meet CAFE standards for both its domestic and its import fleet separately. Failure to meet the standard results in a penalty of $5.50 for each one-tenth mpg the manufacturer is below the standard multiplied by the number of vehicles in manufacturer’s fleet for that model year. If a manufacturer exceeds the CAFE standard in any year, the manufacturer is granted excess credits that may be used against past or future shortfalls (up to three years in either direction). Manufacturers may also receive credits through the use of alternative fuels (e.g., natural gas and ethanol) under the Alternative Motor Fuels Act of 1988 or the use of emissions-reducing technologies under the 2017–25 plan.
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Opponents of raising CAFE standards claimed that requiring automobile manufacturers to increase the mpg of their vehicles causes greater harm to society than benefits. The primary concern of opponents was that manufacturers would meet mpg standards by reducing the size and weight of their vehicles, which would lead to more deaths from automobile accidents. CAFE proponents, however, claimed that new lightweight materials can allow manufacturers to build higher-fuel-economy vehicles without a negative impact on safety. Opponents also argued that higher fuel economy would lead to higher prices for consumers and to more traffic congestion and automobile accidents because of an increase in driving (assuming that individuals will drive more as the costs of driving a mile will be reduced with a higher automobile mpg). Proponents of the standards held that such indictments are misguided and are actually arguments for increases in gasoline taxes and other transportation policy reforms. Finally, opponents claimed that CAFE standards are unnecessary because technology development, not regulation, drives improvements in fuel economy. Proponents of CAFE standards argued that those technologies already exist and that manufacturers simply need the financial incentive to make the use of those technologies cost-effective.