EPA Reports Show Automakers Still Ahead on Fuel Economy

December 16, 2015 | 12:39 pm
Dave Cooke
Senior Vehicles Analyst

The EPA released two reports today detailing automakers’ compliance with global warming emissions standards and the technology improvements being deployed to meet these standards. Despite much public consternation from manufacturers about the difficulty in meeting these standards, manufacturers are more than one year ahead of schedule.

To date, these standards have saved consumers $27 billion in fuel, and we’ve avoided more than 100 million metric tons of global warming emissions. These standards are making a real impact, and it’s thanks to smart regulatory design that this program continues to provide consumers with ever-more fuel-efficient vehicle choices.

To date, fuel economy and emissions standards have saved over 200 million barrels of oil, resulting in $27 billion saved at the bump and a reduction in emissions equivalent to shutting down more than 27 coal-fired power plants.

To date, fuel economy and emissions standards have saved over 200 million barrels of oil, resulting in $27 billion saved at the bump and a reduction in emissions equivalent to shutting down more than 27 coal-fired power plants.

Flexible standards are working

I’ve noted previously that these fuel economy standards are based on vehicle size and type—that means that no matter what kind of vehicle you’re interested in, the choices each year are going to get better and better fuel economy. And we continue to see this borne out in the data:  the average car and truck’s fuel economy have each jumped up 10 percent in the past five years.

At this point, I almost feel like a broken record: this is at least the fourth time I’ve written about manufacturers’ scorecards (e.g., here, here, here), and it’s hard to see any problems. Automakers have actually been getting further and further ahead of schedule over time, and the market is soaring, with vehicle sales nearing record levels.

But what about low gas prices?

A lot of noise has been made about the ripple effects of low gas prices on manufacturers’ ability to meet standards, but the data is showing this to be specious posturing. While there has been a recent increase in the sales of SUVs and trucks, the standards are designed specifically to weather any such changes; if anything, this market shift is actually helping manufacturers comply with the regulations. Ten percent of vehicles sold today already meet standards for 2020 and beyond, and the majority of them are trucks and SUVs.

There are many reasons why consumers have been moving towards crossover vehicles in recent years, and the latest batch of small crossovers have been in development for years, not suddenly deployed due to a drop in gas prices. Regulators designed the standards to be based on the size of the vehicles sold so that manufacturers’ targets were based on precisely what consumers were buying. If consumers are buying more SUVs, the fuel economy target will be lower; conversely, if the public falls in love with economy cars, the target will be higher. Regardless of what the market looks like, vehicles will continue to become more efficient over time.

It is commonly thought that low gas prices are depressing demand for some of the most efficient vehicles like hybrids and electric vehicles (although my colleague’s post illustrates why that may be overblown in the case of electric cars), but recent research suggests that this effect is much less now than in years past because consumers are more aware of the impacts of high gas prices. The latest survey data continues to show that consumers are looking to buy a more efficient car even when gas prices are low, with fuel economy ranking most important to new car buyers in multiple studies. That makes maintaining strong regulations ever more critical, providing consumers with a growing range of efficient options.

Don’t more trucks mean more emissions?

There are some concerns about overall fleet fuel economy—because we are selling more trucks and SUVs than in previous years, the average fuel economy did not improve between 2013 and 2014, even though cars and trucks individually got more efficient. But what this fact really means is that without regulations in place, fuel economy would be moving backwards, just like it did in the 1990s and early 2000s. The regulations are actually preventing even more emissions than originally projected. Additionally, any slowdown in fleet fuel economy improvement related to a shift in the sales mix will be temporary, since all vehicles will continue to improve.

To date, in spite of a growing shift away from cars, these standards have helped saved consumers $27 billion at the pump and will continue to provide savings for vehicle owners regardless of what the gas price may be. These standards are working to provide efficient options in every vehicle size so that no matter what type of vehicle you’re interested in, next year’s model will be even more efficient. And in addition to savings at the pump, they’re providing crucial savings for our environment, important news in light of what happened earlier this week in Paris.

The EPA challenged manufacturers to improve fuel economy and vehicle emissions, and manufacturers have continued to show that they are up to the task. With 10 percent of vehicles already meeting standards for 2020 and beyond, automakers are demonstrating today that they can meet standards for years to come.