CAFE Standards versus Public Opinion

CAFE Standards versus Public Opinion

Calls for stricter environmental mandates contradict the broad public consensus on global warming.

According to a 2018 report by the Yale Program on Climate Change Communication, seven out of ten Americans believe global warming is happening and six out of ten say they are at least “somewhat worried”. Other polls differ in their specifics, but the trend is clear, the majority of Americans consider global warming a threat, and they are concerned about it.

Americans are, of course, empowered to act on their beliefs in their daily lives. As consumers, Americans can, and frequently do, purchase solar panels, energy efficient appliances, and fuel-efficient cars without any government mandate to do so.

Yet, the environmental lobby continually demands ever-more stringent regulations that would deny consumers the ability to make these decisions for themselves – the contradiction.

They often claim that more restrictive regulations will not pose a financial burden because the more fuel efficient or zero emission alternatives are viable and price competitive. Some even claim that the energy savings from these new mandates will actually save consumers money over the long-term.

If the energy savings are so great, why do cost- and environmentally-conscious consumers need government bureaucrats to force them to purchase products that will save them money and reduce the global warming problem?

Either the polls are wrong, and Americans do not care about global warming, or the technological solutions don’t live up to their expectations. All evidence points to the second explanation.

Take fuel economy regulations as an example. These regulations, known as the Corporate Average Fuel Economy (CAFE) standards, were implemented in 1975 following the 1973-74 Arab Oil Embargo. The standard sets an average fuel economy that a manufacturer’s fleet of cars must meet.

Under the current regulations, the CAFE standards will incrementally increase over time. If fully implemented, the average standard will eventually rise to 54.5 miles per gallon by 2025.

Due to current technological constraints, electric vehicles must become a much larger share of total cars sold by 2025 in order to meet the 54.5 miles per gallon standard, perhaps as high as 30 percent. Yet, electric vehicles are only around one percent of total new cars sold today despite billions in manufacturing support, consumer subsidies of up to $10,000 per vehicle, state and local tax credits for consumers to install charging stations, and preferential treatment of electric cars (Hawaii allows electric vehicles to park cost-free at meters).

Even this one percent of sales is an overstatement of consumer demand; despite all of these subsidies, manufacturers still lose money on every electric car they sell. It stands to reason that consumers would purchase even fewer electric cars if the prices reflected the full production costs.

Consumers have not embraced electric cars because, for most people, they are an inferior product. Wealthy families may be able to afford the over $41,000 average starting price for a car with one-half the driving distance of the average gas-powered car, but electric cars are an impractical luxury most families cannot afford.

Charging an electric vehicle battery takes between five and ten hours (one hour at best using fast charging technology). This further reduces the value of an electric vehicle because it is unsuitable for driving long distances where the car would need to be recharged in the middle of the trip.

There are also many unknowns about electric vehicles. Like the battery in your smartphone, will the lifespan of an electric vehicle battery degrade over time? Are there disposal issues for these batteries made from lead acid, lithium-ion, or nickel-hydride?

Considering these issues, it is reasonable for families not to purchase electric vehicles even if they are concerned about global warming. Forcing them to do so through government mandates will make them worse off.

In recognition of these problems, the Environmental Protection Agency has proposed freezing the scheduled CAFE increases at the 2020 standard of 37 miles per gallon. Such a freeze is a step in the right direction, but more needs to be done.

A vast majority of Americans are worried about global warming and they will beat a path to the door of the manufacturers who create affordable, low emission, high functioning, vehicles. Government mandates, like CAFE standards, disregard consumer’s revealed desires and, in their stead, impose the will of government mandarins. The better policy would incentivize innovation without ignoring the needs of millions of families.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.