Corporate Average Fuel Economy Standards Research Articles

Spatial competition in automobile retailing

ABSTRACT Despite a rich literature on the determinants of automobile pricing, there is relatively little formal evidence regarding the effects of spatial intrabrand competition in auto retailing. Using an extremely large sample of tax registrations in Texas (USA) for 19 of the most popular sedans, we examine how the closeness of a dealer selling the same make and model of vehicle affected the final price. We find very strong evidence that the proximity of a same-brand dealer reduces prices significantly, though we find smaller effects for the lowest priced vehicles, a result consistent with the view that such vehicles are sold essentially at cost in order to satisfy Corporate Average Fuel Economy (CAFE) standards and related fleet characteristic regulations.

The impact of the corporate average fuel economy standards on technological changes in automobile fuel efficiency

This paper empirically examines the effect of the U.S. Corporate Average Fuel Economy (CAFE) standards on the technological progress in automobile fuel efficiency. Using detailed vehicle attributes data from 1978 through 2018, we find that more stringent fuel economy standards increase the rate of technological improvements in new passenger cars, and this effect is primarily driven by the response of U.S. automakers. We do not find evidence that CAFE standards have a similar effect on the technical change in light-duty trucks. Our results also indicate that higher gasoline prices have a significant and positive effect on the improvement of fuel-saving technology in both passenger cars and light trucks. Using our empirical estimates, we project that the recent rollback of Obama-era CAFE standards would forego an approximately 2-percent increase in cars’ fuel economy over the 2021–2025 period as a result of technological progress.

Combined cycle gas turbine system optimization for extended range electric vehicles

In order to meet the Corporate Average Fuel Economy standards for passenger vehicles in 2025, car manufacturers are exploring several alternative energy converters to replace the Internal Combustion Engine, which has demonstrated limited efficiency improvement. Recent studies explored the use of a Gas Turbine as the primary vehicle driver in a hybrid powertrain; however, none evaluated the implementation of a Combined Cycle Gas Turbine, which offers higher efficiency. This study presents a methodology for the design and optimization of the most optimal combined cycle system configuration, suitable to replace the engine in a series-hybrid extended-range electric vehicle, and investigates its potential fuel savings. The two-steps methodology consists of conducting first an exergo-technological analysis using a Non-dominated Sorting Genetic Algorithm to identify the best suitable combined cycle configuration for integration in a series hybrid powertrain. Second, a series-hybrid extended range vehicle model is developed, to assess the consumption savings of the prioritized combined cycle on the Worldwide Harmonized Light Vehicle Test Cycle. The Reheat Gas Turbine combined to a Turbine Reheat Steam Rankine Cycle system is prioritized, for offering the highest efficiency and an acceptable vehicle integration complexity among the other investigated systems. Consumption results show fuel savings up to 23.6% with the prioritized system as compared to a reference extended-range electric vehicle equipped with an engine and savings up to 17% compared to other gas-turbine systems presented in the literature, depending on the battery size, the trip length, and the maximum turbine inlet temperature. Consequently, combined-cycle gas-turbine systems present a serious alternative to replacing internal combustion engines on series hybrid electrified vehicles if the cost-effectiveness of these systems was proven.

An Assessment of Corporate Average Fuel Economy Standards for Passenger Cars in South Korea

The shift in consumer preferences for large-sized cars has increased the energy intensity (EI) of passenger cars, while growth in battery electric vehicle (BEV) sales has decreased EI in recent years in South Korea. In order to lower passenger cars’ EI, the South Korean government has implemented the Corporate Average Fuel Economy (CAFE) standards with a credit system, in which the sale of one energy-efficient car (for example, a BEV) can get multiple credits. This study analyzes CAFE standards in terms of both the EI improvement sensitivity scenarios and the degree of credits for BEVs and fuel cell electric vehicles (FCEVs) by using the Global Change Assessment Model (GCAM). In this study, passenger cars include small, medium, and large sedans, sport utility vehicles (SUVs) of internal combustion engine vehicles (ICEVs), BEVs, and FCEVs. The findings of this study are as follows: First, from the policy design perspective, a proper setting of the credit system for BEVs and FCEVs is a very important variable for automakers to achieve CAFE standards. Second, from the technology promotion perspective, active promotion of fuel efficiency improvements through CAFE standards are important since Better-EI and Best-EI scenarios are found to achieve CAFE standards even when a BEV or a FCEV receives a credit of one car sale in 2030.

U.S. fuel economy and greenhouse gas standards: What have they achieved and what have we learned?

Corporate Average Fuel Economy (CAFE) Standards are among the longest-running energy regulations in the United States, enduring several decades of changing political winds. First implemented in 1978, they have been adapted over time, responding to lessons learned and changing circumstances. In combination with the more recent vehicle greenhouse gas emission (GHG) standards, they have achieved enormous fuel savings and emission reductions. Until the 2018 proposed rollback, the quality of research and analysis in support of rulemakings improved dramatically with advances in analytical methods, computing power and the resources dedicated to the task. Despite the abundance of fuel economy and related data, there has been no comprehensive assessment of the standards from 1975 to the present. This paper analyzes historical data to assess the real-world impact of the standards, as well as draw lessons about energy and environmental policy design. Cumulatively, fuel economy improvements due to the standards have reduced fuel consumption by well over one and a half trillion gallons, saved consumers trillions of dollars and avoided 14 billion tons of GHG emissions. Our analysis indicates that fuel savings have exceeded the cost of improving fuel economy, traffic safety has improved and the impact on vehicle travel has been small.

Alternative-fuel-vehicle policy interactions increase U.S. greenhouse gas emissions

The transportation sector is currently the largest contributor of greenhouse gas (GHG) emissions in the United States, and light-duty vehicles produce the majority of transportation emissions. Federal standards for fleet-averaged vehicle GHG emission rates and their corresponding corporate average fuel economy standards cap GHG emissions of the US light-duty vehicle fleet. In addition, two key policies aim to encourage a future fleet transition to alternative fuel vehicle (AFV) technologies: (1) incentives that treat AFVs favorably in the federal GHG standard, and (2) state zero-emissions vehicle (ZEV) policy, which mandates AFV sales in some states. While each of these AFV policies can encourage AFV adoption, we show that net GHG emissions increase when both policies are present simultaneously. Specifically, we estimate changes in life cycle GHG emissions and gasoline consumption, relative to a pure federal fleet GHG standard (without AFV incentives or mandates), resulting from the introduction of (1) AFV incentives in federal fleet GHG policy, (2) state ZEV mandates, and (3) the combination of the two. We find that under fairly general conditions the combined AFV policies produce higher GHG emissions than either policy alone. This result is a consequence of state mandates increasing AFV sales in the presence of federal incentives that relax the fleet GHG standard when AFVs are sold. Using AFV sales projections from the Energy Information Administration and the California Air Resources Board, we estimate that the combined policies produce an increase on the order of 100 million tons of CO2 emissions cumulatively for new passenger cars sold from 2012 through 2025 relative to a pure GHG standard. AFV incentives in the GHG standard conflate policy goals by encouraging AFV adoption at the cost of higher fleet GHG emissions, and they permit even higher fleet GHG emissions when other policies, such as the ZEV mandate, increase AFV adoption.

The Macroeconomic Effects of 2017 Through 2025 Federal Fuel Economy and Greenhouse Gas Emissions Standards

AbstractIn the absence of a national carbon price, the federal Corporate Average Fuel Economy standards and the related greenhouse gas emissions (GHG) standards are the primary mechanisms through which the U.S. reduces transportation GHG emissions. In 2012, these standards were set to rise for light‐duty vehicles between 2017 and 2025, eventually achieving a target of 54.5 miles per gallon in 2025. Since 2012, conditions have changed: forecasts of future gasoline prices have dropped dramatically, consumers have demanded larger vehicles, and the cost of compliance appears to be larger than previously thought. In this article, we analyze the possible macroeconomic effects of the standards with both 2012 inputs and updated inputs to reflect these new market developments. The results reveal that the short‐term effects of the federal standards will be negative, but the long‐term effects will be positive, using both 2012 and updated inputs. The transition from annual negative employment impacts to positive impacts occurs between 2023 and 2026, depending on which set of assumptions are used. Possible revisions to the standards that freeze them at 2020 levels or decrease their stringency reduce short‐term negative impacts but also reduce long‐term positive impacts. We conclude with a discussion of policy implications as they relate to the current energy and climate policy conditions.

Vehicle energy consumption estimation using large scale simulations and machine learning methods

Vehicle energy consumption and powertrain operations for future vehicle powertrain technologies are predicted through full-vehicle simulations using Autonomie, a simulation tool developed at Argonne National Laboratory. Over 1 million vehicles, with different powertrain types (conventional and numerous electrified powertrains) and component technologies (advanced engines, batteries, electrical machines, light weighting) are simulated for outputs including vehicle fuel economy and cost. Despite the ability of Autonomie to predict fuel economy given various combination of vehicle inputs, the full-vehicle simulation is very time-consuming. It takes approximately 84 h to simulate for 33,060 vehicles even using distributed computing on a cluster of 128 worker nodes. Moreover, Autonomie is unable to populate a continuous output space through simulation since it only yields outputs with discrete values instead of an input-output relation.This paper proposes a novel large-scale learning and prediction process (LSLPP) via machine learning approaches to answer the need for a continuous space of vehicle fuel economy and a more efficient simulation process. By learning in a supervised fashion to discover structures in data, the machine learning approaches seek to train a model that can explain the data with which we can perform prediction over unseen data. As such, we are able to accomplish analytic continuation on the current discrete space of simulation results. In addition, we present a random-sampling-based numerosity reduction algorithm incorporated in LSLPP that reduces simulation runs and improves efficiency of data procurement. We analytically derive a theoretical bound in order to guarantee the effectiveness of our algorithm. We also compare random sampling to stratified sampling and suggest sampling strategies. A user-friendly tool is developed to support the process. Our experimental results confirm that the proposed LSLPP is able to greatly accelerate prediction and analysis of vehicle fuel economy. The output of this study is used by the US government to evaluate the impact of its R&D funding on energy security and CO2 emission as well as for the setting of Corporate Average Fuel Economy (CAFE) standards.

A Lifecycle Analysis of the Corporate Average Fuel Economy Standards in Japan

This study estimated the corporate average fuel economy (CAFE) and CAFE targets of Japan’s domestic automobile manufacturers and evaluated whether manufactures have achieved these estimated CAFE targets. Furthermore, an analysis framework was proposed for estimating what impact the introduction of the CAFE standards in Japan will have on motor vehicle-derived lifecycle CO2 emissions. As a result, the following was found: (1) Automobile manufacturers can maximize their sales under the constraints of the CAFE standards, but vehicle sales plans based on sales maximization will lower their CAFE standard scores. (2) Economically optimal automobile manufacturer behavior—striving to achieve CAFE standards while maximizing sales—will increase the manufacturers’ overall carbon footprint and actually worsen the environment.

The effect of CAFE standards on vehicle sales projections: A Total Cost of Ownership approach

We conduct a Total Cost of Ownership analysis to estimate the impacts that the 2017–2025 Corporate Average Fuel Economy (CAFE) standards will have on sales of light duty vehicles (cars and light trucks). Vehicle sales are an important macroeconomic indicator that can impact both the economic outlook of the automobile industry as well as the efficacy of the CAFE standards. Our analysis focuses on the relative impacts of three determinants of the net premium consumers' face when deciding whether to purchase a new vehicle, namely: 1) consumers' valuation of fuel savings, 2) fuel price variation over time, and 3) gross price premium of the vehicle due to the Federal Standards. We find that uncertainty about consumers’ valuation of fuel savings leads to greater variation in estimated vehicle sales impacts than uncertainty about the gross price premium or fuel prices. Specifically, the estimated sales impacts for model year 2025 range from −7% to +3% and −4% to +5% for cars and light trucks, respectively, when we vary assumptions about valuation of fuel savings. The range of estimates is −6% to −2% and −2% to 0.5% for cars and light trucks, respectively, when we vary the gross price premium and −4% to +1% and −1% to +3% for cars and light trucks, respectively, when we vary fuel prices for model year 2025. These percentages are computed relative to a baseline scenario where CAFE standards remain fixed at 2016 levels. Our findings highlight the importance of more carefully examining the uncertainty introduced through consumer valuation of fuel economy in the mid-term reviews of the CAFE standards.

A technology-forcing approach to reduce nitrogen pollution

Nitrogen pollution has exceeded safe levels outlined in the planetary boundaries literature. As agricultural production continues to intensify, pollution abatement will require acute increases in nitrogen-use efficiency. Policies that rely on the voluntary adoption of farm-level management practices have rarely led to significant reductions in nitrogen pollution and are unlikely to achieve the required efficiency improvements. Enhanced-efficiency fertilizers offer a promising opportunity, but have modest adoption rates and receive limited research support. Here we propose a policy to increase farmer adoption modelled on the Corporate Average Fuel Economy standards used to increase the fuel efficiency of vehicles in the United States. This programme would require the fertilizer industry to increase the proportion of enhanced-efficiency fertilizers in traditional fertilizer over time, providing incentives for companies to improve both their products and their understanding of where their products are most effective. Using the US corn sector as a case study, we estimate that such a policy could generate net economic benefits of US$5–8 billion by 2030. Nitrogen pollution is an intensifying, globally important problem driven by industrial agriculture. The authors propose applying the Corporate Average Fuel Economy logic to promote adoption of enhanced-efficiency fertilizers by farmers.

Robustness and Real Options for Vehicle Design and Investment Decisions Under Gas Price and Regulatory Uncertainties

Manufacturers must decide when to invest and launch a new vehicle segment or how to redesign vehicles existing segment under market uncertainties. We present an optimization framework for redesigning or investing in future vehicles using real options to address uncertainty in gas price and regulatory standards like the U.S. Corporate Average Fuel Economy (CAFE) standard. In a specific study involving a product of gasoline, hybrid electric, and electric vehicles (EV), we examine the relationship between gas price and CAFE uncertainties to support decisions by manufacturers on product mix and by policy makers on proposing standards. A real options model is used for the time delay on investment, redesign, and pricing, integrated with a robust design formulation to optimize expected net present value (ENPV) and net present value (NPV) robustness. Results for nine different scenarios suggest that policy makers should consider gas price when setting CAFE standards; and manufacturers should consider the trade-off between ENPV and robust NPVs. Results also suggest that change of product mix rather than vehicle redesign better addresses CAFE standards inflation.

Prospects for meeting the corporate average fuel economy standards in the U.S.

Efforts to improve vehicle transportation efficiency and curb associated environmental emissions had led to the Corporate Average Fuel Economy (CAFE) standards introduced in 1975 for passenger cars and light trucks. The National Highway Traffic Safety Administration has phased in new standards that require an average combined fleet-wide fuel economy of 48.7–49.7 miles per gallon by 2025. The new legislation has the potential to reduce overall U.S. emissions by close to 6% should the 2025 goals be attained. The goal of this study was to assess the potential for CAFE to achieve the desired average fleet fuel economy goals set forth in the U.S., and evaluate its past effectiveness at reducing actual on-road fuel consumption and associated emissions and environmental impacts. The possibility of the 2017–2025 CAFE standards to be more or less successful than the 2011–2016 standards at meeting fuel economy goals were evaluated together with strategies that auto manufacturers would most likely use to meet the 2017–2025 CAFE standards. The study analyzed transportation efficiency trends, new vehicle sales data, fines paid to date by vehicle manufacturers, and their future projection models. Results demonstrate the effectiveness of the CAFE policy in controlling vehicle fleet efficiency in the U.S. However, the possibility of automakers adapting to presented changes quickly to meet the increasingly strict CAFE standards is unlikely, and cumulative annual fines paid by the industry may reach the order of $700 million by 2025 should current trends continue.

The EPA, NHTSA, and the Multiple Streams drive climate policy outcome

ABSTRACTAlthough United States environmental policy is frequently being decided in administrative agencies, it is unclear what factors influence policy outcomes. Some limited scholarship has explored whether the Multiple Streams Framework (MSF) used for congressional policymaking can be used to explain rulemaking outcomes. This research explores the validity of the MSF via a case study of the controversial 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards Rule (CAFE Standards Rule) jointly published by the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA). This research relies on original interviews with 30 agency staff and stakeholders to conclude that the model is helpful in understanding why these agencies produced the policy they did. However, the results here illustrate the importance of understanding the role and impact of the political stream on outcomes earlier in the process than ou...

Vehicle Lifetime and Scrappage Behavior: Trends in the U.S. Used Car Market

Using national data on vehicles in operation, we examine long-run changes in scrappage patterns in passenger cars and light trucks in the United States between 1969 and 2014. We find that the average lifetime for passenger cars has increased from 12.2 to 15.6 years between 1970s and the 2000s. Our central estimate of the elasticity of scrappage with respect to vehicle prices is -0.4, which is substantially different than values adopted in simulation models. These estimates imply that many policies aimed at reducing gasoline consumption, including Corporate Average Fuel Economy standards and gasoline taxes may produce changes in the used vehicle market that are different than prior studies suggest. We also note that consumer scrappage behavior seems to respond more strongly to changes in vehicle price than changes in gasoline price than standard theory would predict.

Evaluating New Policy Instruments of the Corporate Average Fuel Economy Standards: Footprint, Credit Transferring, and Credit Trading

The reformed U.S. Corporate Average Fuel Economy (CAFE) standards have not only tightened the efficiency levels to be achieved by automakers, but also made substantial changes to the regulatory design and structure by introducing three new policy instruments (footprint-based targeting, intra-firm transferring of fuel economy credits across vehicle categories, and inter-firm trading of credits). While there are a number of economics studies on tightening CAFE standards, little attention has been paid to the design aspects. This paper uses policy simulation to evaluate the new policy instruments. First, I model and estimate vehicle purchase and utilization decisions by American households. Based on estimation results, I simulate the effects of four counterfactual CAFE policies with or without the three instruments. Simulation results suggest (1) footprint-based targeting has little impact at the aggregate market level, while at the individual automaker level it favors firms selling relatively large vehicles; (2) allowing intra-firm credit transferring (but not inter-firm credit trading) cuts aggregate gasoline consumption by 0.1–0.3%; and that (3) inter-firm credit trading significantly lowers the aggregate compliance costs (by $110–$140 million), and thus achieves the highest social welfare among the simulated policies.

Emerging Technologies for Higher Fuel Economy Automobile Standards

Transportation systems contribute significantly to air pollution and ∼15% globally and ∼25% in the United States to emissions climate-changing gases. In the United States, the Corporate Average Fuel Economy (CAFE) standards for motor vehicles were significantly raised in 2012 for the first time in almost three decades. The standards now call for an average across manufacturers of 54.5 miles per gallon (mpg) for new passenger cars by 2025, or 163 grams per mile (g/mi) of greenhouse gas (GHG) emissions, and of 47 mpg (196 g/mi) by 2021. The light truck standards, which include minivans and sport utility vehicles, call for fuel economy levels of 31 mpg (287 g/mi) in 2021 and of 40 mpg (222 g/mi) in 2025. Given approximately equal expected splits between car and light truck sales, these estimates imply combined car and light truck fleet averages of ∼40 to 41 mpg (217 to 222 g/mi) in 2021 and 50 mpg (178 g/mi) in 2025. However, because automakers have strategies to reduce GHGs in parallel with fuel economy, the actual in-use fuel economy of the fleet is expected to be somewhat lower. In this review, several automobile technology advances are described and assessed for providing relatively cost-effective solutions to meet CAFE standards for fuel economy and GHG reductions through 2025. The key points this review makes are that (a) loopholes in the current regulations will allow automakers to meet CAFE program goals with relatively minor incremental improvements to current technologies through 2025 and that (b) going beyond the current program, past 2025 to higher fuel economy levels and lower GHG emissions approaching 100 g/mi, is likely to involve heavier use of newer technologies especially including drivetrain electrification.

Heuristic method for automakers' technological strategy making towards fuel economy regulations based on genetic algorithm: A China's case under corporate average fuel consumption regulation

The vehicle fuel economy standards have been implemented worldwide. However, it is quite difficult for the automakers to secure an optimal portfolio of fuel-efficient technologies which complies with these strengthened standards and minimizes the overall cost at the same time. In this paper, a genetic-algorithm-based heuristic method is proposed for technological strategy planning. In particular, a case study of the Corporate Average Fuel Economy standards in China is presented. Moreover, the mathematical model is constructed with the considerations of the technology cost, effect of reducing fuel consumption and technology physical weight. Problem complexity is analyzed and proven NP-hard. Moreover, a comparison analysis of performance is carried out between the elaborated genetic algorithm and the greedy algorithm that is currently used by most automakers to determine the technological strategies in China. The results imply that genetic algorithm outperforms the common method because it provides more economical and reasonable strategies. In addition, the incremental cost under the greedy algorithm is 16.4% higher than that under genetic algorithm. Due to the counteractive effect under the weight-based standards in China, the mass reduction technologies should be given lower priorities compared with current strategies. To satisfy the standards by 2020, automakers should implement more conventional engine and transmission technologies instead of the hybrid electric vehicle technologies. It is recommended that automakers should develop heuristic algorithms to make strategic decisions more reasonably.

Will Corporate Average Fuel Economy (CAFE) Standard help? Modeling CAFE's impact on market share of electric vehicles

The purpose of Corporate Average Fuel Economy (CAFE) Standards is to enhance the fuel efficiency of passenger vehicles in the United States. Although these standards had been set constant for years, the National Highway Traffic Safety Administration (NHTSA) set increasing CAFE standards in 2011 based on vehicle's footprint, requiring vehicle manufacturers to improve the fuel economy of the vehicles they produce. This resulting improvement in vehicle fuel economy is likely to influence consumers’ decisions regarding new vehicle purchases, while the stringent CAFE standards are also likely to affect manufacturers’ production costs and benefits. In addition, the government provides various incentives to support the adoption of alternative fuel vehicles (AFVs), including electric vehicles (EVs), which in turn will likewise influences consumers’ decisions regarding purchasing a new vehicle. An agent-based model is developed in this paper to estimate the potential future market shares of EVs considering the existing inherent uncertainties under different policy scenarios, including the footprint-based CAFE regulation. The results show that, if implemented effectively in conjunction with the available government incentives, the CAFE regulation can accelerate EV market penetration and help the U.S. to move away from conventional vehicles, thus reducing fossil fuel dependency.

Comparison of Gasoline Direct-Injection (GDI) and Port Fuel Injection (PFI) Vehicle Emissions: Emission Certification Standards, Cold-Start, Secondary Organic Aerosol Formation Potential, and Potential Climate Impacts.

Recent increases in the Corporate Average Fuel Economy standards have led to widespread adoption of vehicles equipped with gasoline direct-injection (GDI) engines. Changes in engine technologies can alter emissions. To quantify these effects, we measured gas- and particle-phase emissions from 82 light-duty gasoline vehicles recruited from the California in-use fleet tested on a chassis dynamometer using the cold-start unified cycle. The fleet included 15 GDI vehicles, including 8 GDIs certified to the most-stringent emissions standard, superultra-low-emission vehicles (SULEV). We quantified the effects of engine technology, emission certification standards, and cold-start on emissions. For vehicles certified to the same emissions standard, there is no statistical difference of regulated gas-phase pollutant emissions between PFIs and GDIs. However, GDIs had, on average, a factor of 2 higher particulate matter (PM) mass emissions than PFIs due to higher elemental carbon (EC) emissions. SULEV certified GDIs have a factor of 2 lower PM mass emissions than GDIs certified as ultralow-emission vehicles (3.0 ± 1.1 versus 6.3 ± 1.1 mg/mi), suggesting improvements in engine design and calibration. Comprehensive organic speciation revealed no statistically significant differences in the composition of the volatile organic compounds emissions between PFI and GDIs, including benzene, toluene, ethylbenzene, and xylenes (BTEX). Therefore, the secondary organic aerosol and ozone formation potential of the exhaust does not depend on engine technology. Cold-start contributes a larger fraction of the total unified cycle emissions for vehicles meeting more-stringent emission standards. Organic gas emissions were the most sensitive to cold-start compared to the other pollutants tested here. There were no statistically significant differences in the effects of cold-start on GDIs and PFIs. For our test fleet, the measured 14.5% decrease in CO2 emissions from GDIs was much greater than the potential climate forcing associated with higher black carbon emissions. Thus, switching from PFI to GDI vehicles will likely lead to a reduction in net global warming.