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e-Journal

  Environmental Policy Issues

Cars, Light Trucks and CAFE Standards Issues
(Released August 2003)

 

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Overview

Automobile emissions have long been regulated by the federal government, not only to reduce pollution but, even more, for purposes of energy security. Regulation began in the 1970s in response to long gas lines and fear of foreign manipulation, and has since ebbed and flowed, largely for economic and political reasons. The Congressional Research Service (CRS) Issue Brief for Congress Automobile and Light Truck Fuel Economy: The CAFE Standards (June 19, 2003) details the history and current status of this regulatory regime.

The primary means of regulation is corporate average fuel economy (CAFE) standards, which place a minimum mile-per-gallon usage on new automobiles. Originating in 1975, CAFE standards were intended to reverse a trend toward worse gas mileage, which had fallen to 12.9 miles per gallon (mpg) in 1974. The new standards mandated 18 mpg in 1978 models, rising to 27.5 by 1985.

Opponents of CAFE standards claim that they interfere with consumer choice and hurt the economy; disallow manufacturers the lead-time to change model lines; encourage drivers to hold on to older, less efficient models; and lead to smaller, less safe vehicles. CAFE proponents counter that they stimulate technological improvements that would not otherwise occur.

Some ten years after inception, CAFE standards began a period of reduction. As the oil crisis gave way to a long period of surplus, larger vehicles became increasingly popular. Responding to appeals from automobile manufacturers, the federal government decreased CAFE standards from 27.5 to 26 mpg for 1986 model passenger cars, a number that was restored to 27.5 in 1990, where it remains today.

Manufacturers, however, have been able to apply more lenient standards through the light truck exception, as explained in the CRS Report Sport Utility Vehicles, Mini-Vans, and Light Trucks: An Overview of Fuel Economy and Emissions Standards (April 17, 2003). The basic definition of a light truck--any truck or truck derivative with a gross vehicle weight rating of 8,500 pounds or less--allows plenty of room for family vehicles. Because light trucks is considered a separate category from passenger automobiles, vehicle manufacturers have been able to build and market SUVs and other large vehicles with a less stringent CAFE standard, currently 20.7 miles per gallon (mpg). Furthermore, most SUVs and pickups, and all vans, are currently permitted to emit 29% to 47% more carbon monoxide and 75% to 175% more nitrogen oxides than passenger cars.

When CAFE standards were originally introduced, the situation of light trucks was radically different from today. Mainly used for manufacturing and agriculture, they constituted a tiny portion of vehicle sales. As light truck sales increased the Department of Transportation raised CAFE standards. Congress, however, forestalled these new restrictions for models from 1996 to 2001 by prohibited funding for regulatory changes. In 1975 light trucks constituted 19.8% of new vehicle sales; by 2001 this number had mushroomed to 50.5%. In 1999, for example, SUVs were 23.1% of the new vehicle market, while mini-vans accounted for 5.8%.

In the late 1990s, CAFE standards were reexamined due to the presumed contribution of automobile emissions to global climate change. Adaptation of the Kyoto Treaty, an international agreement meant to limit carbon dioxide emissions, would have meant strong pressure to improve automobile standards. In 1997, however, when the treaty was first proposed, the United States Senate rejected it by a vote of 95-0. Then, in 2001, the Bush administration rejected further attempts to implement the Kyoto treaty. Recently, however, the administration has shown interest in another initiative designed to improve long-term automobile efficiency. In January of 2003 President Bush proposed $720 million for research and development into hydrogen fuel cells, which could greatly reduce dependence on carbon dioxide emitting fuel.

The 9/11 attacks reactivated questions about our dependence on oil from an unstable part of the world noted for violent anti-Americanism. Current attempts to increase CAFE standards are strangely reminiscent of the original motivation in 1975.

Congressional restrictions on the ability to increase CAFE were lifted for federal year 2003. As a consequence, on April 1st the National Highway Traffic Safety Administration announced higher CAFE standards for light trucks: 21.0 mpg for such vehicles in the year 2005, 21.6 mpg for 2006, and 22.2 mpg for 2007. Although manufacturers claim that such increases are not realistic, according to a July 30, 2001 study be the National Academy of Sciences, it is possible to achieve a more than 40% improvement in light truck and SUV fuel economy over a 10-15 year period. Additionally the Environmental Protection Agency has ruled that cars and light trucks must meet the same standards by 2009.

In addition, both the House and Senate have passed a number of bills, often at cross-purposes, regarding CAFE standards; numerous amendments to these bills have further confused matters. By the adjournment of the 107th Congress, however, no final version of any bill had made it through the conference committee.

Other suggested means of reducing automobile emissions, primarily a higher gasoline tax and improvements to existing vehicles, have not been acted upon. The future of SUVs, and of passenger automobiles, will undoubtedly be the subject of continued political dispute.