2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy

Fuel savings and reduced GHG emissions, plus retention of consumer choice over a variety of vehicle size and performance attributes.

As fuel use, time savings, emissions reductions, health benefits (on mortality, chronic bronchitis, emergency room visits for asthma and work loss), safety and compliance costs.

Not really—more like an assumption that enforcing CAFE standards will induce manufacturers' technical change and cause some consumers to use less fuel, i.e., small fuel-efficient transport will dominate, and will reduce emissions.

Statistical extrapolation and simulation modeling. Citation of published work. Extensive engineering analysis is used throughout analysis. But RIA admits the relation between fuel economy (and GHG emissions) and automobile footprint, though directionally clear (i.e., fuel economy tends to decrease and CO2 emissions tend to increase with increasing footprint), is theoretically vague and quantitatively uncertain.

The agencies recognize that based on economic and consumer demand factors that are external to this rule, the distribution of footprints in the future may be either smaller or larger than what is projected in this rule. However, the agencies assert there will not be significant shifts in this distribution as a direct consequence of this proposed rule. They also acknowledge that benefits from proposed rule are overstated to the extent that market forces improve fuel efficiency in the future but do not attempt to assess this possibility directly. However, they also considered alternative statistical methods (MAD vs. OLS) and considered different time roll-outs of standards in part to deal with uncertainty about outcomes. Uncertain manufacturer baseline noted but ignored.

Cites strategic advantages from lowered dependence on oil imports and external costs such as congestion and environmental pollution. The agencies admit that many technologies are readily available that allow savvy consumers to seek vehicles with improved fuel efficiency, but they argue that consumers might be 'myopic' and hence undervalue future fuel savings in their purchasing decisions due to reasons that include: lack of information necessary to estimate value of future fuel savings, uncertainty in future fuel savings when comparing upfront cost to future returns, consumers may value fuel economy less than other vehicle attributes, consumers might be averse to short-term losses associated with higher prices of energy efficient products relative to future fuel savings (aka ‘loss aversion’), and consumers might associate higher fuel economy with inexpensive, less well designed vehicles. The agencies conclude that, if these arguments are valid, there are significant gains to consumers of the government mandating additional fuel economy.

No coherent theory in a conventional sense; RIA cites desirability of savings of fuel and carbon emissions with a net balance favoring consumers and notes that technical changes are evolving anyway in the marketplace—not clear why the benefits to consumers don't give enough incentives on their own. Analysis draws from literature on why consumers don't demand available technologies that would lower fuel costs thus outlining a consistent theory for consumer myopia. Why car manufacturers cannot profit by educating consumers is not clearly discussed, thus again making their case for government intervention. Analysis also does not clearly present arguments for why private market outcomes are associated with environmental externalities, thus indirectly suggesting that this is an obvious systemic problem that does not require elaboration. They simply state that emissions contribute to greenhouse gases and the threat of climate change.

Estimates of elements, such as the rebound effect, are well documented with cross-references; some citations are dated and may even be 1990s revisions of much earlier work. Analysis, however, shows economic and environmental benefits and costs from new regulations rather than developing a theoretical model with hypotheses that are tested by past data that would provide conclusions on what are optimal fuel standards consistent with saving citizens’ fuel costs and lessening GHG. In other words, standards appear without theoretical and empirical modeling of what optimal standards would be.

There is an odd treatment of uncertainty: e.g., "The agencies considered a wide variety of reasonable statistical methods in order to better understand the range of uncertainty regarding the relationship between fuel consumption, CO2 emission rates, and footprint," but then appear to have chosen methods so as to encourage policy results deemed to be preferable. Probabilistic Uncertainty Analysis also cited. They find that the primary economic benefit resulting from the rule—the value of fuel savings—is extremely sensitive to alternative forecasts of future fuel prices.

Not really—the agencies could be focusing on market responses to tax policies and increased fuel scarcity, but do not. Some alternative standards are applied in modeling exercises and there is some recognition that market changes are occurring anyway. Not much exploration of industry change in diesel engines, gearing, direct injection, superchargers, and similar current changes. Analysis enumerates an alternative range in stringency from a set of standards that increase, on average, 2 percent annually to a set of standards that increase, on average, 7 percent annually.

Narrow since it focuses on simply changing the rate at which set of standards increase and thus is not really an alternative. There is no mention of providing tax credits, raising fuel taxes, or placing higher sales taxes on cars that would encourage consumers and producers to seek and produce more efficient cars that would incentivize the market to develop fuel efficiency changes. Rather, they focus on the command-and-control approach of CAFE that focuses on fleet average standards without specific targets for different vehicles.

Some effort at this in regarding alternative standards; notes consumer response likely when faced with different vehicle footprints, engines, and other attributes.

Focuses on changes to be expected from CAFE standards; baseline fleet is identified in the analysis for reader to carry out analysis; strictly, this regulatory package continues a history of regulation, not a baseline. EPA and NHTSA estimate the composition of the future vehicle fleet absent proposed standards to conduct comparisons. They developed a comparison fleet in three steps: (1) develop baseline fleet based on model year 2008 data and then (2) project the baseline fleet sales into MYs 2017-2025 (aka reference fleet) the agencies believe would exist in MYs 2017-2025 absent any change due to regulation in 2017-2025; and (3) account for technologies (and corresponding increases in cost and reductions in fuel consumption and CO2 emissions) that could be added to MY 2008-technology vehicles in the future, taking into account previously-promulgated standards, and assuming MY 2016 standards are extended through MY 2025. However, they acknowledge that benefits are overstated to the extent that market forces improve fuel efficiency on their own but don't directly adjust their baseline for this possibility.

Yes, TSD estimates marginal cost effects from alternative technical changes induced by CAFE standards. Incremental costs of achieving standards are estimated for the proposed rule but few alternatives considered.

Some but not all: good on vehicle costs, some attention to compliance, less good on costs to vehicle owners.

Price of vehicles, impact on fuel costs are considered. Not clear on filter through from transport to final goods via logistics.

Some analysis of 'rebound effect' and related behavioral changes. Also increased congestion, crashes, and noise caused by increased vehicle use.

Yes, in the sense of examining several technologies, using the interest rates (7 and 3), directing reader to a Monte Carlo analysis. Excludes uncertainty over baseline evolution of manufacturers' technology.

No, eschews net benefit for cost effectiveness and economic feasibility. But they estimate that fuel savings will far outweigh higher vehicle costs and that the net benefits to society will be in the range of $311 billion (7% discount rate) to $421 billion (3% discount rate) over the lifetimes of those vehicles sold in MYs 2017–2025. Also a payback period analysis is presented.

Cost-effectiveness presented for small range of alternatives chosen.

Considers the effects on small business, admin/compliance costs, and market responses. Little to no discussion of how changes in fuel costs or vehicle prices might affect parties that provide goods and services related to those products (auto dealers, service stations, insurance companies, etc.).

Beneficiaries identified include consumers of vehicles and citizen health, but the analysis does not assess incidence on different groups of individuals or locations.