The New CAFE Standards: Are They Enough on Their Own?

Virginia McConnell

RFF Working Paper Series from Resources for the Future

Abstract: New Corporate Average Fuel Economy (CAFE) standards were recently passed in the United States with the twin goals of reducing greenhouse gas emissions and oil use. The new standards represent a dramatic change from recent policy. This paper examines the key features of the new rules, and compares them to previous CAFE standards in terms of flexibility and structure. The importance of consumer preferences and market forces on CAFE outcomes are identified. In the second part of the paper, the perspective of the consumer is explored. Consumer assessments of fuel economy savings with more fuel-efficient vehicles may be biased or incomplete, leading many to argue that there is an “energy efficiency gap” in consumer demand for vehicles. Reasons for such a gap, such as market failures, behavioral responses, and market barriers, are summarized. The implications for policy are discussed, including the role of combining CAFE with other policies.

Keywords: CAFE; vehicle regulation; energy efficiency; environmental policy (search for similar items in EconPapers)
JEL-codes: Q42 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2013-05-01
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env, nep-pke, nep-reg, nep-res and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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