EPA/NHSTA Proposal Shows 62 mpg is the Clear Winner

Today’s proposal lays out choices for our energy, economic and environmental futures. Based on my read of the agencies’ proposal, a 62 mpg standard would save more oil, cut more pollution and spur more innovation than the weaker choices.

Most significant items from my quick read of the agencies’ proposal (“NOI”) released today are:

  1. Range of standards for 2025 will be 47 to 62 mpg. Table 1 of the NOI shows the range of scenarios the agencies’ analyzed, using 3-6% annual improvement rates in CO2 emissions. This yields 143 to 190 gram CO2/mile, and a MPG-equivalent of 47 to 62 mpg.
  2. Average cost per vehicle for 143 gram/mile and 62 mpg would be $2800 to $3500 (Table 2). The payback time is 3.1 to 4.2 years (assuming 3% discount rate, this is the amount of time that the driver needs to recover the initial cost in savings at the pump).  A recent poll we commissioned showed 83% support for a 60 mpg standard that cost $3000 with payback time of 4 years. The automakers appeared to have gotten it wrong by a factor of about three times which actually is consistent with their past history, based on my research that has been cited in Thomas Friedman’s recent book Hot, Flat, and Crowded.
  3. A 62 mpg standard would save 85% more oil and 73% more carbon pollution than a 47 mpg standard (see Table 3). More oil saved means more money back in pocketbooks of consumers and less money sent overseas to OPEC and other countries.  We estimate in 2030 drivers would save $100 billion, even after considering the extra cost of the technology.
  4. The 6% standard is the only level that requires electric vehicles (Table 4).  Innovation is the key to competitiveness. The 3%, 4%, and 5% standards do not require any plug in hybrids or battery electric vehicles, thus ensuring the U.S. auto industry will lag behind the Germans, Japanese and most critically the Chinese in this critical market.

The choice is clear: if we want to kick the oil habit and return the US auto industry to global leadership, 62 mpg is the winner.