New CAFE standards to clean the environment, save money, reduce fossil fuel dependency

Today the Obama Administration took the long-awaited step of raising the Corporate Average Fuel Economy (CAFE) standard for cars and light-duty trucks to the equivalent of 54.5 miles/gallon by the model year 2025. Cue the cries of righteous indignation from a certain sector of American politics, while we all get a chance to breath cleaner air and have less worries about the impending crunch in fuel supplies over the coming years.

The CAFE standards were first enacted in the wake of the 1973 Arab Oil Embargo to improve the overall fuel economy of America's vehicle fleet, to make the country less susceptible to oil price shocks. The CAFE standards also have an environmental effect, because less fuel burned means less pollution. Finally, it will make the American Economy more efficient because we, collectively, will spend less on fuel, leaving more money in the economy for other purposes.

The NHTSA press release cites a savings of more than $1.7 trillion dollars in fuel costs, or an average fuel savings of more than $8,000 by 2025 per vehicle over its lifetime. The Administration also cites a dramatic reduction in reliance on foreign oil to the tune of 12 billion barrels of oil a year, or 2 million barrels a day, by 2025. This amounts to half of the oil America currently imports from OPEC each day. As for cutting greenhouse gas emissions from cars and light trucks, the Administration cites an emissions reduction of 6 billion metric tons, or more than the total amount of carbon dioxide emitted by the United States in 2010.

The new standards were developed in collaboration with automakers. The July 2011 announcement of the proposed new rules was supported by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, and Volvo, as well as the United Auto Workers, California and other key stakeholders.

An example of automaker support is Ford Motors' efforts to increase fuel economy. At a "Power of Choice" presentation last December, a Ford spokesperson said that Ford Motors recognizes that governments around the world, not just the U.S., are raising environmental and fuel economy standards. Ford does not want to be pushed by this trend, but instead wants to be ahead of the game, leading the change rather than pushed by regulators. There are concrete examples in Ford's 2012/3 lineup. One is the various vehicles with the EcoBoost turbo-charged gasoline engines, including the F-150 EcoBoost. Another is the five electrified vehicles the company is introducing this year that radically increase fuel economy numbers, which Ford is gambling will win market share from Toyota and Honda.

It's not just Ford, but all the other automakers, primarily GM, BMW, Honda, Nissan, Mitsubishi, Toyota, Volvo, that are following a similar strategy.

Despite the broad support for the new CAFE standards, as well as automakers action to increase vehicle fuel efficiency, many politicians are railing against these standards. (see About CAFE requirements and the associated controversy) The politicians engaging in this appear to be primarily Republican, and tied to oil industry interests. Clearly the oil industry would be concerned about the reduction in oil consumption that will come from the new standards. With the extreme oil industry profitability, those companies have the funds to make political waves, especially in todays post Citizens United landscape that removes restrictions on corporate spending on political efforts.

Frances Beinecke, President of the Natural Resources Defense Council, said "Motorists win because they will have much more fuel-efficient cars to drive, thus saving thousands of dollars at the gas pump every year. The auto industry—and its workers--win because these standards will spur the creation of thousands of new jobs as well as state-of-the-art vehicles that go nearly twice as far on the same gallon of gasoline. Everybody wins because using less gasoline will reduce our dependence on oil and lead to cleaner air. Less pollution means a healthier populace and lower medical bills. That’s great for our economy."

Phyllis Cuttino, Director of Pew’s Clean Energy Program, said "We commend the Obama administration, the auto industry, and environmental organizations for working together to bring about this historic leap in fuel efficiency. The new standard of 54.5 mpg by 2025 for cars and light trucks will effectively double fuel efficiency and provide many benefits to drivers and the country. Our nation will be more secure, our environment will be cleaner, and consumers will have more money in their pockets as a result of the new rule. The auto industry will also benefit from this action, because up to 570,000 jobs could be created, innovation will be enhanced, and more fuel-efficiency technology choices will be available to consumers."

But let's consider the facts rather than the politics.

Fact is that the U.S. has scanty resources of conventional oil reserves. This means the politicians who say we can drill our way towards national energy security on the back of domestic oil production are simply lying. Continued reliance on fossil fuels means a continued reliance on controversial or risky technologies such as hydraulic fracturing, extremely deep water drilling, or drilling in environmentally sensitive locations such as the arctic.

Fact is that the climate is getting hotter and hotter, with 2012 shaping up to be the warmest year on record. July 2012 marks the 36th consecutive July and 329th consecutive month with a global temperature above the 20th century average, according to the National Climate Data Center.

Fact is that the automakers are taking proactive steps to increase fuel economy, and are developing vehicles which don't even require fossil fuels. One gets the impression that this is just a technology problem, and that automotive engineers for the next several decades will be focusing on increasing vehicle efficiency and cleanliness as much as any other feature. An example is the 2013 Lexus RX 450h, a luxury hybrid SUV with performance features meant to satisfy the luxury market, while at the same time delivering 30 miles/gallon fuel efficiency. And there is the 2012 BMW ActiveHybrid 5, a full hybrid Series 5 coupe from BMW, with 0-60 miles/hr in under 6 seconds, and over 40 miles/gallon fuel efficiency.

On the other hand it is clear from the cries of outrage that it isn't just a technology problem, but a political one, namely the political strength to bring about this much change in the face of strong opposition.