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

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  • McConnell, Virginia

    () (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.

Suggested Citation

  • McConnell, Virginia, 2013. "The New CAFE Standards: Are They Enough on Their Own?," Discussion Papers dp-13-14, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-13-14
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-13-14.pdf
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    References listed on IDEAS

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    5. Gillingham, Kenneth & Palmer, Karen, 2013. "Bridging the Energy Efficiency Gap: Insights for Policy from Economic Theory and Empirical Analysis," Discussion Papers dp-13-02, Resources For the Future.
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    Cited by:

    1. O'Rear, Eric G. & Sarica, Kemal & Tyner, Wallace E., 2015. "Analysis of impacts of alternative policies aimed at increasing US energy independence and reducing GHG emissions," Transport Policy, Elsevier, vol. 37(C), pages 121-133.
    2. West, Jeremy & Hoekstra, Mark & Meer, Jonathan & Puller, Steven L., 2017. "Vehicle miles (not) traveled: Fuel economy requirements, vehicle characteristics, and household driving," Journal of Public Economics, Elsevier, vol. 145(C), pages 65-81.
    3. repec:eee:enepol:v:109:y:2017:i:c:p:279-287 is not listed on IDEAS

    More about this item

    Keywords

    CAFE; vehicle regulation; energy efficiency; environmental policy;

    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 and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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