The New CAFE Standards: Are They Enough on Their Own?
AbstractNew 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.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-13-14.
Date of creation: 01 May 2013
Date of revision:
CAFE; vehicle regulation; energy efficiency; environmental policy;
Find related papers by JEL classification:
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-07-20 (Agricultural Economics)
- NEP-ALL-2013-07-20 (All new papers)
- NEP-ENE-2013-07-20 (Energy Economics)
- NEP-ENV-2013-07-20 (Environmental Economics)
- NEP-PKE-2013-07-20 (Post Keynesian Economics)
- NEP-REG-2013-07-20 (Regulation)
- NEP-RES-2013-07-20 (Resource Economics)
- NEP-TRE-2013-07-20 (Transport Economics)
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