In what is easily the best environmental action in a generation, this week, the Obama Administration announced new CAFE (Corporate Average Fuel Economy) standards for cars and light trucks (think minivans and sport utility vehicles). By 2025, these vehicles will be required to average 54.5 miles per gallon (MPG).
The National Highway Traffic Safety Administration regulates CAFE standards and the U.S. Environmental Protection Agency measures vehicle fuel efficiency. An agreement in support of acceptable standards was made between the government, automakers and their unions, and environmental organizations.
The stage for these historic fuel economy standards was set by an energy law enacted in 2007 under President George W. Bush. Additionally, the 2009 federal bailouts of General Motors and Chrysler were tied to better fuel efficiency.
Fuel-efficient cars and trucks were the U.S. auto industry’s saving grace. It makes good sense on multiple levels to continue these efforts. For one, 570,000 new jobs can be created by 2030. Not to mention saving consumers more than $1.7 trillion at the gas pump and reducing U.S. oil consumption by 12 billion barrels. This also translates to strengthening national security by lessening the country’s dependence on foreign oil.
What about fighting man-made global warming? The new standards will cut greenhouse gas emissions from cars and light trucks in half by 2025. This reduces emissions by 6 billion metric tons, which is more than the total amount of carbon dioxide emitted by the United States in 2010. We thank President Obama for his leadership on combating climate change, pollution prevention and national security.
Starting in 2017, the standards will be phased in over the course of eight years. New fuel-saving technology is projected to increase the cost of new car or light truck by $3,000 on average. This means consumers will pay a little more when they buy the vehicle, about $50 more a month over a five-year loan, but they’ll more than make up for it at the pump with expected gas savings per vehicle between $7,000 - $8,000. And that is good for the environment and our wallets.
Undeniably, the vehicle fuel-efficiency standards represent an unbeatable combination of protecting the environment and strengthening the economy. They’re also the nation's single largest effort to combat climate-altering greenhouse gases, but we can’t stop building our carbon-reduction portfolios now. Wonderful news like this should push us to continuing to find more ways to reduce our carbon footprint, as individuals and a nation. Now let’s go invest in some renewable energy projects!