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May 22, 2009

Will higher automotive fuel economy make us better off

The great irony of Mr. Obama's fuel efficiency proposals is that they may worsen emissions of these harmful gases. By the White House's own calculation (which many observers believe to be quite conservative), the new rules, when combined with earlier proposed increases in Corporate Average Fuel Economy (CAFE) standards, will increase the average price of a new car by $1,300. Herein lies the problem.

In today's automobile fleet, the majority of the pollution comes from the oldest, dirtiest cars. In fact, the dirtiest 10% of the cars account for more than 50% of smog and carbon monoxide. The dirtiest one-third of the fleet accounts for more than 80% of the pollution. That is because the U.S. government has, for 39 years now under successive versions of the Clean Air Act, required automakers to meet ever-tightening standards for tailpipe emissions from new cars. When it comes to smog, carbon monoxide, nitrogen oxides and particulates that new SUV is a lot cleaner than an old, poorly-tuned compact.
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The Obama fuel efficiency plan may also contribute to a significant increase in highway deaths as vehicles are required to quickly meet the new CAFE standard and will likely become lighter in weight as a result. According to a study completed in 2001 by the National Research Council (NRC), the last major increase in CAFE standards, mandated by the Energy Policy and Conservation Act of 1975, required about a 50% increase in fuel economy (to 27.5 mpg by model year 1985 from an average of 18 mpg in 1978). The NRC study concluded that the subsequent downsizing and down-weighting of vehicles, "while resulting in significant fuel savings, also resulted in a safety penalty." Specifically, the NRC estimated that in 1993 there were between 1,300 and 2,600 motor vehicle crash deaths that would not have occurred if cars were as heavy as they were in 1976.

I have some friends that feel that CAFE is as close to a climate policy as we are going to get. That is, though a far cry from a meaningful carbon tax and / or fuel tax, the best we can do and will push us in the right direction. I cannot agree. They seem to be an enemy of effective environmental policy. The criticism in the WSJ above seems a bit overdone. The stated purpose of this environmental policy is mostly carbon reduction, not generic pollution reduction. While it is true that the pollutants discussed above are overwhelmingly emitted by a minority of polluters, this is not the case with carbon dioxide. CO2 is put out by ever car as it operates, and higher efficiency engines will reduce the CO2 per mile emitted in new cars. Of course all the criticisms of inter-temporal substitution apply, more expensive new cars keeps less expensive polluters on the road. Also, by making driving cheaper per mile (through lower fuel costs) could increase the total amount of driving. So this policy stinks, but the reason offered is somewhat misleading.

Posted by OneEyedMan at May 22, 2009 7:22 AM

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