Today, Secretary of Transportation Ray LaHood and EPA Administrator Lisa Jackson announced a final rule for Corporate Average Fuel Efficiency (CAFE) standards.  One week after a federal court reject

ed EPA’s Cross-State Air Pollution Rule, the joint CAFE rule leaves most of the proposed version unchanged.

The 54.5 miles-per-gallon requirement for combined efficiency by 2025 remains and the burdens are mostly unchanged.

Breakdown

Proposed Rule:

• Costs: $141 Billion
• Paperwork Burden: 5,133 hours

 

Final Rule:

• Costs: $156 Billion
• Paperwork Burden: 5,667 hours

 

Net Change: (+) $15 billion in costs and 534 more hours

 

Analysis

The unofficial version of the rule weighs in at 1,994 pages; at $156 billion in lifetime costs, this is the costliest regulation the Forum has tracked.  However, the paperwork burden is minimal, with only 33 respondents and a combined 5,667 hours.  As the Forum commented in February, light-duty trucks face perhaps the steepest efficiency curve.  During the initial analysis, EPA estimated that “potentially severe economic consequences” could result from higher standards.

EPA estimated the following costs:

• Technology: $121 billion;
• Maintenance: $5.3 billion;
• Congestion: $19 billion;
• Accident: $8.9 billion, and
• Noise: $355 million

The agencies did conduct a “probabilistic uncertainty analysis” to provide a range of possible costs and benefits.  They concluded, “Over all nine model years, the higher CAFE standards will produce a net impact ranging from a net cost of $69.3 billion to a net benefit of $774.7 billion.”

On the consumer side, despite fuel savings, there will be increased vehicle costs.  By 2025, EPA estimates the average cost per vehicle will increase by $2,236, for a cumulative price hit of $154.2 billion.

On benefits, EPA estimates the new standards will reduce CO₂emissions by 1.8 billion metric tons, and save 170 billion gallons of fuel. In addition to fuel cost savings, EPA projected $49.3 billion in CO₂ benefits, and $7.1 billion in reduced particulate matter benefits.

In sum, these final CAFE standards represent a bold, but costly, step by the administration to reduce fuel consumption.  Light-duty truck manufacturers face a steep technological hill and there is no guarantee that consumers will warm to a radically different vehicle fleet by 2025.  With $156 billion in lifetime costs, the administration has a narrow margin for regulatory failure.