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The Corporate Average Fuel Economy (CAFE) regulations in the United States, first enacted by Congress in 1975,^[1] are federal regulations intended to improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) sold in the US in the wake of the 1973 Arab Oil Embargo. Historically, it is the sales-weighted average fuel economy, expressed in miles per gallon (mpg), of a manufacturer's fleet of current model year passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 pounds (3,856 kg) or less, manufactured for sale in the United States. This system would have changed with the introduction of "Footprint" regulations for light trucks binding in 2011, except that the 9th Circuit Court of Appeals has returned that rule to NHTSA for reconsideration for among other things being "arbitrary and capricious". Light trucks that exceed 8,500 lb gross vehicle weight rating (GVWR) do not have to comply with CAFE standards; SUVs and passenger vans are exempt up to 10,000 lb. In 1999, over half a million vehicles exceeded the GVWR and the CAFE standard did not apply to them.^[2] In 2011, the standard will change to include many larger vehicles. The United States has the lowest standard of fuel economy of any nation in the world, including China. The European Union and Japan have fuel economy standards almost twice as high as the United States. ^[3]

The National Highway Traffic Safety Administration (NHTSA) regulates CAFE standards and Environmental Protection Agency (EPA) measures vehicle fuel efficiency. Congress specifies that CAFE standards must be set at the "maximum feasible level" given consideration for 1) technological feasibility; 2) economic practicality; 3) effect of other standards on fuel economy; and 4) need of the nation to conserve energy. Historically EPA has encouraged consumers to buy more fuel efficient vehicles while NHTSA expresses concerns that smaller more fuel efficient vehicles may lead to increased traffic fatalities. If the average fuel economy of a manufacturer's annual fleet of car and/or truck production falls below the defined standard, the manufacturer must pay a penalty, currently $5.50 per 0.1 mpg under the standard, multiplied by the manufacturer's total production for the U.S. domestic market, a fine which not all car makers avoid. Historically, fuel efficiency is associated with lower traffic safety, intertwining the issues of fuel economy, road-traffic safety, air pollution, global warming and greenhouse gases, although this relationship is falling increasingly into dispute. ^[4].

Contents 1 Impact 2 Calculation 3 Current standards 4 Future 5 Active debate 5.1 Effect on traffic safety 5.2 Increased oil and automobile usage 5.3 Economic arguments 5.4 Consumers' point of view 5.5 SUVs and minivans created due to original mandate 5.6 Calculations of MPG overestimated 5.7 Other arguments in favor 6 See also 7 References 8 External links

The National Academies of Science wrote a report regarding the effect of the CAFE standard.^[5] The report concludes, among other things, that the CAFE standard was effective at increasing fuel economy, especially when fuel prices were low in the time between the late 1980s and the mid 2000s. One cost of this was an increase in fatalities, estimated in the same report to be 1,300 to 2,600 increased fatalities in 1993^{[citation needed]}}.

A plot of average overall vehicle fuel economy (CAFE) for new model year passenger cars, the required by law CAFE standard target fuel economy value (CAFE standard) for new model year passenger cars, and fuel prices, adjusted for inflation, shows that there has been little variation over the past 20 years. Within this period, there are three distinct periods of fuel economy change. (1) from 1979-1982 the fuel economy rose as the price of fuel rose dramatically (2) from 1984-1986 the fuel economy rose as the CAFE standard rose (3) from 1986-1988 the fuel economy rose even as the price of fuel fell and the CAFE standard is relaxed due to pressure from US automakers ^[6] before returning to 1986 levels in 1990. These are following by an extended period during which neither the passenger car CAFE standard, the observed average passenger car fuel economy, nor the price of gasoline changed much at all, and finally a period where prices rose dramatically and fuel economy was relatively unchanged.

Simple economics alone would predict that, in the long run, an increase in gasoline prices would lead to an increase in the average fuel economy of the US passenger car fleet, and that a fall in gasoline prices would be associated with a fall in the average fuel economy of the entire US fleet ^[7]. There is some evidence that this happened with an increase in market share of lower fuel economy light trucks and SUVs and decline in passenger car sales, as a percentage of total fleet sales, as car buying trends changed during the 1990s^[8], the impact of which is not reflected in this chart. In the case of passenger cars, US average fuel economy did not fall as economic theory would predict (see graph), suggesting that CAFE standards maintained the higher fuel economy of the passenger car fleet during the long period from the end of the 1979 energy crisis to the rise of gasoline prices in the early 2000s. Most recently, fuel economy as increased about one mpg from 2006 to 2007, however this increase is due primarily to increased fuel efficiency of imported cars.^[9]

It is important to note that the CAFE and CAFE standard shown here only regard new model passenger car fuel economy and target fuel economy rather than the overall US fuel economy average (which tends to be dominated by used vehicles manufactured in previous years), new model light truck CAFE standards, light truck CAFE averages, or aggregate data.^{[10] [11]}

For the purposes of CAFE, a manufacturer's car output is divided into a domestic fleet (vehicles with more than 75% U.S., Canadian or—after the passage of NAFTA—Mexican content) and a foreign fleet (everything else). Each of these fleets must separately meet the requirements. The two-fleet requirement was developed by the United Automobile Workers (UAW) as a means to ensure job creation in the US. The UAW successfully lobbied Congress to write this provision into the enabling legislation. The UAW continues to advocate this position.^[12] The two fleet rule for light trucks was removed in 1996.

Fuel economy calculation for alternative fuel vehicles multiplies the actual fuel used by a "Fuel Content" Factor of 0.15^[13] as an incentive to develop alternative fuel vehicles.^[14] Dual-fuel vehicles, such as E85 capable models, are taken as the average of this alternative fuel rating and its gasoline rate. Thus a 15 mpg dual-fuel E85 capable vehicle would be rated as 40 mpg for CAFE purposes, in spite of the fact that less than 1% of the fuel used in E85 capable vehicles is actually E85. ^[5]

Manufacturers are also allowed to earn CAFE "credits" in any year they exceed CAFE requirements, which they may use to offset deficiencies in other years. CAFE credits can be applied to the three years previous or three years subsequent to the year in which they are earned. The reason for this requirement is so that manufacturers are not penalized for occasionally (due to market conditions, for example) failing the targets, but only for persistent failure to meet them.

Fleet fuel economy is calculated using a harmonic mean, which results in slightly different values than simple averaging.^[2]

Cars and light trucks are considered separately for CAFE and are held to different standards. As of early 2004, the average for cars must exceed 27.5 mpg and the light truck average must exceed 20.7 mpg. Trucks under 8500 lb must average 22.5 mpg in 2008, 23.1 mpg in 2009, and 23.5 mpg in 2010. After this, new rules set varying targets based on truck size "footprint".

Overall fuel economy for both cars and light trucks in the U.S. market reached its highest level in 1987, when manufacturers managed 26.2 mpg (8.98 L/100 km). The average in 2004 was 24.6 mpg.^[15] In that time, vehicles increased in size from an average of 3,220 pounds to 4,066 lb (1,461 kg to 1,844 kg), in part due to an increase in truck ownership during that time from 28% to 53%.

A number of manufacturers choose to pay CAFE penalties rather than attempt to comply with the regulations. As of model year 2002, BMW, DaimlerChrysler (import fleet only), Ferrari, Lotus and Porsche failed the automobile CAFE requirement, while BMW and Volkswagen failed to meet the light truck requirement.

The CAFE rules for trucks were officially amended at the end of March, 2006. However, the 9th Circuit Court of Appeals has overturned the rules, returning them to NHTSA, stating that the rules must be made stricter. These changes would have segmented truck fleets by vehicle size and class as of 2011. All SUVs and passenger vans up to 10,000 pounds GVWR^[16] would have had to comply with CAFE standards regardless of size, but pickup trucks and cargo vans over 8500 pounds gross vehicle weight rating (GVWR) would remain exempt.

Under the new final light truck CAFE standard 2008-2011, fuel economy standards would have been restructured so that they are based on a measure of vehicle size called "footprint," the product of multiplying a vehicle's wheelbase by its track width. A target level of fuel economy would have been established for each increment in footprint using a continuous mathematical formula. Smaller footprint light trucks had higher fuel economy targets and larger trucks lower targets. Manufacturers who made more large trucks would have been allowed to meet a lower overall CAFE target, manufacturers who make more small trucks would have needed to meet a higher standard. Unlike previous CAFE standards there was no requirement for a manufacturer or the industry as a whole to meet any particular overall actual MPG target, since that will depend on the mix of sizes of trucks manufactured and ultimately purchased by consumers. Some critics pointed out that this might have had the unintended consequence of pushing manufacturers to make ever-larger vehicles to avoid strict economy standards.^[17] However, the equation used to calculate the fuel economy target had a built in mechanism that provides an incentive to reduce vehicle size to about 52 square feet (the approximate midpoint of the current light truck fleet.)

The Ninth Circuit Court of Appeals found these new Light Truck rules to be arbitrary and capricious; contrary to the Environmental Pollution Control Act; incorrectly set a value of zero dollars to the global warming damage caused by truck emissions; failed to set a "backstop" to prevent trucks from emitting more CO2 than in previous years; failed to set standards for vehicles in the 8,500 to 10,000 lb range; that the environmental impact assessment was inadequate, and that the rules may have had significant negative impact on the environment. The court directed NHTSA to prepare a new standard as quickly as possible and to fully evaluate that new standard's impact on the environment.^[18]

There are a large number of technologies that manufacturers can apply to improve fuel efficiency short of implementing hybrid or plug-in hybrid technologies. Applied aggressively, at a cost of several thousand dollars per vehicle, the National Trasportation Board of the National Academy of Sciences estimates that these technologies can almost double MPG.^{[19] [20]}

Some technologies, such as four valves per cylinder, are already widely applied in cars but not trucks. Manufacturers dispute how effective these technologies are, their retail price, and how willing customers are to pay for these improvements. Payback on these improvements is highly dependent on gas prices.^[21]

CAFE standards may receive their first overhaul in over 20 years, in June 2007 the Senate passed a new standard requiring 35 mpg for cars, SUVs, and light trucks by 2020. Before this standard becomes law it must be passed in the House of Representatives. As of August 2007, the House has failed to reach a consensus on CAFE standards, the House energy bill is not likely to contain any fuel economy provision. The final result will be determined largely by negotiations when the House and Senate bills are reconciled in conference. Politicians are facing increased public pressure to raise CAFE standards as a recent July 2007 poll in 7 states revealed 84-90% in favor of legislating mandatory increases. ^[22]

CAFE advocates claim that most of the gains in fuel economy over the past 30 years can be attributed to the standard itself^[23], while others point to largely economic force for fuel economy gains, where higher fuel prices drove customers to seek more fuel efficient vehicles^[24]. CAFE standards have come under attack by some conservative think tanks, along with safety experts, car and truck manufacturers, some consumer and environment groups, and organized labor.^[25]

Historically, the NHTSA has expressed concerns that automotive manufacturers will increase mileage by reducing vehicle weight, which might lead to weight disparities in the vehicle population and, increased danger for occupants of lighter vehicles. However, vehicle safety ratings now available to consumers by the NHTSA itself^[26] and by the Insurance Institute for Highway Safety ^[27] might discourage automakers from taking such safety shortcuts today. A National Research Council report found that the standards implemented in the 1970s and 1980s "probably resulted in an additional 1,300 to 2,600 traffic fatalities in 1993.^[5] A Harvard Center for Risk Analysis study found that CAFE standards led to "2,200 to 3,900 additional fatalities to motorists per year.^[28] Insurance Institute of Highway Safety data 2007 shows a correlation of about 250-500 fatalities per year per MPG. ^[29] Proponents of higher CAFE standards argue that it is the "Footprint" model of CAFE for trucks that encourages production of larger trucks increasing weight disparities and point out that some small cars (Mini Cooper, Toyota Matrix) are four times safer than some SUVs (Chevy Blazer 2dr),^[29] arguing that it is the quality of the engineering design that matters most, not the mass of the vehicle. In a 1999 based on 1995 IIHS report, USA Today said that most deaths (56%) occurring in small cars were due to single vehicle crashes, not due to being hit by larger cars. The percentage of deaths attributed to those in small cars being hit by larger cars was 1%.^[30] In comparison in a 2005 article IIHS says that a large pickup truck or SUV striking a car is about 2.5X more likely to kill the car driver, with 16% of deaths occurring in car-to-car crashes, 18% in car-to-truck ^[31] and in 2006 tests found that some of the smallest cars have good crash safety, while others do not: it depends on the engineering design.^[32] In 2007 analysis IIHS found that 50% of fatalities in small 4-door vehicles were single vehicle crashes compared to 83% in very large SUVs. The Mini Cooper had a fatality rate of 68 per million vehicle-years, compared to 115 for the Ford Excursion.^[29] More recent studies find that about 75% of two-vehicle fatalities involve a truck, and about half these fatalities involve a side-impact crash. Risk to the driver of the other vehicle is almost 10X higher when the vehicle is a 1-ton pickup compared to an imported car. And a 2003 Transportation Research Board study show greater safety disparities among vehicles of differing price, country of origin, and quality than among vehicles of different size and weight.^[33] These more recent studies tend to discount the importance of vehicle weight to traffic safety, concentrating instead on the quality of engineering design.^[34]

Critics point out that as fuel efficiency rises, people drive their cars more, which offsets some of the gains that might be had in carbon dioxide emissions from the higher standards. While driving more results from the increased economic benefit to consumers of higher efficiency vehicles, the National Academies Report (Page 19) ^[5]estimates this "rebound effect" as reducing the gains from increased fuel economy by only 10-20%. The Heritage Foundation says that oil imports have not decreased as a result of the program and have instead greatly increased (from 35% of oil used to 52%) since the standards were first implemented in the 1970s.^[30]

Some argue that because higher-efficiency vehicles are more expensive, auto buyers may choose to keep their older, heavier, less efficient vehicles for longer before making a new purchase.^[25]

Some standard proponents argue that associated costs, such as increased deaths, will be more than offset by savings on a global scale, because increased CAFE standards reduce reliance on increasingly expensive and unreliable sources of imported petroleum^[35] and lower the probability of catastrophic global climate change by reducing US emissions of carbon dioxide.

In 2007-5-6 (Show #1118) edition of Autoline Detroit, Bob Lutz asserted that the CAFE standard was a failure and said it was like trying to fight obesity by requiring tailors to make only small-sized clothes.^[36] Proponents of higher gas mileage counter that NHTSA prevents importation of three dozen such small-sized vehicles from Europe. ^[37] Proponents also argue that automobile-purchasing decisions that may have global effects should not be left entirely up to individuals operating in a free market.^[38]

Automakers have said that small, fuel-efficient vehicles cost the auto industry billions of dollars. They cost almost as much to design and market but cannot be sold for as much as larger vehicles such as SUVs; consumers expect small cars to be inexpensive.^[30]

Automakers and conservative groups do not believe consumers want higher gas mileage. Eron Shosteck, a spokesman at the Alliance of Automobile Manufacturers, claimed automakers produce more than 30 models that are rated at 30 mpg, and they are poor sellers. CAFE also does not directly offer incentives for customers to choose fuel efficient vehicles, nor does it directly affect fuel prices. Rather, it attempts to accomplish these goals indirectly by making it more expensive for automakers to build inefficient vehicles by introducing penalties, and since the US represents such a large fraction of world consumption, reducing US fuel consumption indirectly reduces worldwide gasoline prices.^[5] Charles Amann, retired from GM, said statistically the consumers do not pick the weak-performing vehicle when given a choice of engines.^[39]

The conservative Heartland Institute contends that CAFE standards do not work economically to consumers' benefit, that supposedly smaller cars are more likely to be damaged in a collision, and that insurance policies for them are higher than for many larger cars.^[25] However, the Insurance Companies' Highway Loss Data Institute publishes data showing the opposite: that larger vehicles are more expensive to insure.^[40]

USAToday also claimed that small cars also tend to depreciate faster than larger cars, so they are worth less in value to the consumer over time.^[30] However Edmonds Depreciation data shows that some small cars are among the best in holding their value: it is the quality of the vehicle design that matters, not its size.^[41] Automakers also claimed that they couldn't lobby for the repeal of CAFE standards, or consumers will learn that small cars are unsafe and not buy them or try to sue the manufacturers.^[30] However, recent history in the NHTSA public record has shown the opposite: that automakers are quite willing to publicly express opposition to CAFE increases.^[10]

The definitions for cars and trucks are not the same for fuel economy and emission standards. For example, a PT Cruiser is defined as a car for emission purposes and a truck for fuel economy purposes. ^[5] Under the current light truck fuel economy rules, the PT Cruiser will have a higher fuel economy target (28.05 mpg beginning in 2011) than it would if it were classified as a passenger car.^[42] CAFE standards signaled the end of the traditional long station wagon, but Chrysler's Lee Iacocca developed the idea of the minivan, which would fit into the separate truck category and allow automakers to comply with emissions standards. Eventually, this same idea led to the development of the SUV.^[43][44]

The states of New York, New Jersey, Pennsylvania, Connecticut and California disagreed with the NHTSA statement in the 2008-2011 Light Truck standard which claimed preemption of the state greenhouse gas regulations on the basis that fuel economy and carbon dioxide emissions are one and the same thing. The EPA^[45] claims, contrary to NHTSA, that the use of alternative fuels allows greenhouse gas emissions to be controlled somewhat independent of fuel efficiency.

The EPA laboratory measurements of MPG have consistently overestimated fuel economy. This results in a shortfall of about 15% in actual vs. measured CAFE goals. Starting with vehicles in model year 2008, the EPA is improving their estimates of MPG.^[46] This change does not affect CAFE ratings, only Consumer Guide values will change to reflect more realistic fuel efficiencies. ^[47]

The NHTSA spends a third of one percent of its budget on CAFE or 0.0004% of US gasoline expenditures.^{[48] [49]}

Other conservative groups support higher gas mileage on the basis of national security ^[50] or on the basis of stewardship of God's creations.^[51]

• Air pollution
• Battery electric vehicle
• California Air Resources Board
• Carbon dioxide
• Diesel engine
• Emission standard
• Fuel efficiency
• Fuel economy
• Global warming
• Greenhouse gas
• Hybrid electric vehicle
• National Highway Traffic Safety Administration
• Plug-in hybrid
• Road-traffic safety
• United States Environmental Protection Agency

• NHTSA: CAFE Overview
• NHTSA: Corporate Average Fuel Economy
• Light Truck Rule criticism.
• Is Bigger Safer? It Ain't Necessarily So
• Federal Proposal Would Unlink Fuel Economy Requirements From Their Safety Consequences
• Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards, National Academy of Sciences
• Evans, Leonard (2004). Traffic Safety. Science Serving Society. ISBN 0975487108. 
• Bipartisan group of House Reps calls for 35 mpg standard in final CAFE bill
• US Appeals Court Orders New Fuel Economy Standards.