One of the best new opportunities to reduce greenhouse gas emissions might be to tweak a bureaucratic regulation we’ve had around for close to four decades.
Changing vehicle fuel efficiency standards — if done properly — could not only reduce emissions from cars and trucks, but also set the nation on a path that textbook economics suggests is the most efficient: by placing a nearly economywide price on carbon pollution.
The United States has to figure out how to meet the lower emissions targets that nations committed themselves to under the climate change accord reached in Paris in December. In the United States, the centerpiece of climate policy is the Clean Power Plan put forth by the Environmental Protection Agency. It sets limits on carbon pollution from power plants. If this plan survives a court challenge, the nation will take a major step toward reducing greenhouse gas emissions.
But even this won’t be enough to reach the levels promised in Paris. So where can other cuts — ideally, not too expensive and not requiring new laws — come from?
Using corporate average fuel economy (CAFE) standards might seem counterintuitive. They are widely regarded as costly and inefficient because they rely on mandates for achieving emissions reductions, rather than letting market forces find the least expensive ones. But a big advantage is that CAFE standards have been required by law since the 1970s and so do not require new legislation.
CAFE standards were last updated in 2011 and are now up for review by the E.P.A. These standards have grown more stringent over time but are still lax compared with those of other nations. America’s vehicles get, on average, 21.6 miles per gallon; in Britain, where fuel taxes are also much higher, vehicles average 35.6.
Besides their relative laxity, CAFE standards have loopholes — for example, based on vehicle size — that limit their effectiveness at increasing fuel efficiency and reducing emissions. Such loopholes are made worse by the decline in gasoline prices that is leading to greater purchases of trucks and S.U.V.s, instead of more efficient cars. The result is that some observers say that we need to think “outside the box” during this CAFE review period.