Automakers have plenty of cost-effective technology options for meeting existing 2025 federal and California clean car and fuel economy standards according to a new government study.
The Draft Technical Assessment Report—published jointly by the U.S. Environmental Protection Agency, the U.S. Department of Transportation’s National Highway Traffic Safety Administration and California Air Resources Board—comes just as automakers are claiming that future standards need to be relaxed.
Weakening the standards would be a mistake. Weaker standards would deprive Americans of valuable savings at the pump, put the auto industry at financial risk and increase pollution.
Why the new report?
In 2012, the Obama Administration finalized a rule that set carbon pollution and fuel economy standards for cars, SUVs and light trucks made from 2017 to 2025. It projected that the new fleet would roughly double fuel efficiency (and cut emissions in half) by 2025. Autoworkers and most automakers supported that goal, and stood with the President at the unveiling.
Part of that agreement was a “Mid-Term Evaluation,” including a technical assessment report. The purpose is to measure progress towards meeting the standards for the second phase of the program, model years 2022 through 2025.
Key Finding on Cost and Effectiveness
The Technical Assessment Report confirms the findings from the 2012 rulemaking–that automakers can meet model year 2022 to 2025 standards primarily through continued advancements in known conventional gasoline powertrain technologies and at reasonable cost. The findings are consistent with last year’s study by the National Academy of Sciences, which concluded that the 2025 standards can be met on time and at reasonable cost.
The agencies estimate that the incremental cost for the model year 2022 to 2025 standards will be $894 to $1,245, which, on average, would be $1,070. This is slightly lower than the 2012 rule’s estimate of $1,130. For the full program (model years 2017 to 2025), the study estimates the average incremental cost is about $1,604, which, again, is under the 2012 rule estimate of $1,939.
Taken as a whole, even with lower fuel prices, the 2025 standard is still a great deal for consumers, saving drivers $3,970, on average, over the life of a vehicle. NRDC’s Roland Hwang has analyzed the costs and benefits of the program in his blog.
Key Finding on Technological Progress
Not surprisingly, the new study found a number of technologies that the 2012 analysis had not anticipated. For example, by 2025, we could see broad applications of 48 volt start-stop systems, 8+ speed and continuously variable transmissions and engines running on advanced, fuel-saving Atkinson and Miller combustion cycles. Manufacturers are also reducing weight more than originally projected, as demonstrated by the 300-pound diet on the latest Chevy Malibu.
In addition, the most common choices are likely to be more efficient gasoline engines (either turbo-charged, downsized direct injection engines or high-compression ratio naturally-aspirated engines) mated with higher speed transmissions. Automakers are also likely to add idle reducing start-stop systems and remove excess weight by shifting to greater use of lightweight, high strength materials such as aluminum and advanced steels.
Standards Are Good for Business
Under the 2025 standards, even with low fuel prices, automakers can improve their profits. Standards also protect them from fuel price volatility. New Ceres analysis by independent auto market analysts Dan Luria and Alan Baum estimates that the Detroit 3 automakers—GM, Ford and the American operations of Fiat-Chrysler—will earn $2.6 billion more in profits if 2025 fuel prices are $1.80/gallon, compared to a base case of $2.95/gallon. This is because, under the low fuel price scenario, there is more demand for crossover utility vehicles and pickup trucks, which are more profitable for the Detroit 3. The higher profit margins more than offset the cost of the new technology. In fact, this is what we are seeing today.
Clean Car and Fuel Economy Standards Work
Thanks to more stringent standards since 2011, new automobiles have reached record high levels. Reduced fuel consumption has cut carbon pollution from vehicles, avoiding approximately 100 million metric tons of carbon dioxide from entering the atmosphere already.
We’re making progress and we need to keep it up, not slip backward, as we did in the past.
When standards stagnate—as they did from the late 1980’s through 2005—fuel economy of new vehicles can drop, as the graph below shows.
Recent low gas prices have prompted consumers to buy larger vehicles, which has muted increases in the fleet average fuel economy. But without these standards, we could have seen large decreases in the fleet’s fuel economy. Strong standards have forced trucks to have better fuel efficiency, which has offset the market shift dynamic.
Today’s standards are designed to work this way. Larger vehicles have more lenient standards, due to their larger size and weight, but all vehicles must gradually improve efficiency for the benefit of consumers and the environment.
Strong Standards Make America Strong
Keeping strong standards motivates the auto industry to keep innovating to give consumers the fuel efficiency they want. Strong standards also keep US automakers competitive against foreign companies that are known for better efficiency and are eager to grab more market share.
We all know gasoline prices are driven by the volatile world oil market, and can go up again any time. Weakening standards would let automakers slip back into a dependence on the gas-guzzling vehicles that sent GM and Chrysler into bankruptcy just 6 years ago.
This new three-agency analysis shows that there are cost-effective technologies that can keep making our cars cleaner and more efficient.
We need to achieve the current standards in 2025. Beyond that, we’ll have even more work to do address our climate challenge.