Policy ForumENVIRONMENTAL ECONOMICS

Flawed analyses of U.S. auto fuel economy standards

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Science  07 Dec 2018:
Vol. 362, Issue 6419, pp. 1119-1121
DOI: 10.1126/science.aav1458

Summary

Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) emissions standards for passenger vehicles and light trucks have long been a centerpiece of the U.S. strategy to reduce energy use and GHG emissions and increase energy security. Under the authority of the Energy Independence and Security Act, the Environmental Protection Agency (EPA), and the National Highway Traffic Safety Administration (NHTSA) jointly set GHG and CAFE standards to reach 55 miles per gallon by 2025. A 2016 draft technical assessment report (TAR) affirmed by the EPA in January 2017 concluded that the 2022–2025 standards were technologically feasible and that benefits far exceeded costs. But under the current administration, those agencies are now challenging that conclusion in a 2018 Notice of Proposed Rulemaking (NPRM), which proposes freezing standards at model year (MY) 2020 levels through 2025. Its analysis finds that the costs of the previous standards now exceed benefits. With the agencies currently in the process of determining whether the rule should be finalized, we describe how the 2018 analysis has fundamental flaws and inconsistences, is at odds with basic economic theory and empirical studies, is misleading, and does not improve estimates of costs and benefits of fuel economy standards beyond those in the 2016 analysis.