Years 2009 – 2013 (New Fuel Economy Standard)

Years 2009 - 2013 (New Fuel Economy Standard)
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When automakers like Ford and GM announced this year that they would eliminate several car models and focus on production of pickups and SUVs, they pointed to consumer preferences as driving their decision. But a study co-authored by Koichiro Ito, an assistant professor at the University of Chicago Harris School of Public Policy, finds policy may also be playing a substantial role.
U.S. fuel economy standards are ‘attribute-based.’ This means levels are set based on a specific vehicle characteristic—in this case, its footprint, the rectangle formed by the four points where a vehicle’s tires touch the ground. The attribute-based footprint standard is used to sort vehicles into bins with different compliance targets, with larger vehicles facing more modest requirements. What impact does this have?
The study by Ito and his co-authors evaluates a similar attribute-based regulation—weight-based fuel economy standards in Japan. The policy’s bins are shown in the chart. When plotting the weight density of the cars on the market, Ito and his co-authors find that the automakers increase car weight just enough to be able to reach the next weight category with a lower fuel economy target. So, the policy did indeed incentivize automakers to increase the weight of their vehicles.

READ MORE: FORBES – Study Shows Size-Based Standards Incentivize Automakers to Super-Size Cars

Areas of Focus: Transportation
Definition
Transportation
Mobility is central to economic activity. Yet, a lack of fuel diversity and continued demand growth have made the transportation industry a major contributor to global pollution and carbon emissions....
Fuel Economy Standards
Definition
Fuel Economy Standards
Fuel economy standards are the United States’ cornerstone transportation policy aimed at reducing both oil consumption and greenhouse gas emissions. EPIC research is exploring whether these standards are structured optimally...