Is the drive to meet the 2025 CAFE standard running out of gas?
Americans have spoken, and the 54.5 mpg corporate average fuel economy target is off the table. But the Environmental Protection Agency might get the final say.
American vehicle consumers appear to have voted with their wallets to put the brakes on the stringent, highly publicized corporate average fuel economy (CAFE) standards that require carmakers to achieve a fleet average of 54.5 miles per gallon by 2025.
But will that vote be overturned? It may turn out that automakers looking for some relief from the 54.5 mpg U.S. federal target won’t get it after all – at least not if the Environmental Protection Agency’s Office of Transportation and Air Quality gets its way.
In April, the U.S. Environmental Protection Agency (EPA), the National Highway Traffic Safety Administration and the California Air Resources Board jointly released a draft Technical Assessment Report (TAR) that examines the 2022-2025 GHG and fuel economy standards for light-duty vehicles – cars and light trucks. The report found that car manufacturers in the U.S. are on track to meet the CAFE targets for the 2025 model year, but that regulators are abandoning the 54.5 mpg minimum because lower gasoline prices have kept demand for SUVs, crossovers and other light trucks higher than originally anticipated.
“The 54.5 mpg target was calculated based on an assumed split between cars and light trucks of 67/33%,” the report said. “Considering the consumers’ preference for larger vehicles…a more realistic split would be 52/48%, resulting in a 50.8 mpg target in 2025 (and a low-to-high range of 50.0 to 52.6 mpg).”
Even as it acknowledged this new market reality, the report still saluted the auto industry’s push to adopt “fuel economy technologies at unprecedented rates.” And the clear leader among these technologies is lightweighting by adopting plastics. Fully 64% of respondents to a recent WardsAuto survey, for example, cited lightweight structural materials as a focus area, ahead of interest in engine efficiency and transmission technologies.
Automakers agreed to the dramatic hike mandated by the CAFE requirements back in 2011 — but only after the Obama administration agreed to the so-called “midterm review” of the TAR study to ensure that the final four years of the tightened standards are achievable. As formulated in 2011, U.S. fuel efficiency standards will nearly double between 2012 and 2025 under the CAFE system, and many in the auto industry are pleased that the 54.5 mpg target appears to have been taken off the table. The Alliance of Automobile Manufacturers, a trade group for 12 carmakers and the Detroit 3, said in a statement that “excessive regulatory costs could impact both consumers and the employees who produce these vehicles.” Changing the target fuel economy figure reflects consumer demand, the alliance said. “The government is acknowledging the effect of factors like low gas prices on consumer sales, and the impact of consumer sales on those targets,” it said.
But less than one month after the TAR study was released, Chris Grundler, director of the EPA’s Office of Transportation and Air Quality, made it clear the agency intends to stick to the 54.5 mpg goal. In a speech given to the Center for Automotive Research Management Briefing Seminars in Traverse City, Mich., Grundler disputed the notion that greater sales of trucks and SUVs will make it impossible for automakers to meet fuel economy standards. “It will take a transportation transformation to address climate change,” he said. “We have to think about more than incremental improvements and making cars a little better each year.” Grundler noted that there needs to be an 80 per cent reduction in greenhouse gas emissions by 2050 in order to potentially avoid what he described as permanent global warming, and that the 54.5 mpg CAFE standard therefore needs to be maintained.
The EPA will make a final determination on the 2022 to 2025 model year regulations by April 1, 2018. According to Grundler, the agency has three choices in determining the final standard for fuel economy standards for the years 2022- 2025: Standards will remain the same, become less stringent, or become even more stringent.
Whatever the outcome, bet on the plastics industry paying very close attention.