The auto industry is reportedly conveying to the administration that it wants to seek a compromise with California in order to avoid two different fuel economy standards.
Credits provide flexibility, reduce compliance costs, and were intended to allow the auto industry to deal with shocks like the plunge in gasoline prices and ensuing shift to SUVs that began in 2014.
Modernized fuel-efficiency standards have been a cornerstone of energy policy since the 1970s, reducing the negative effects of petrostates on the U.S. economy.
'Fuel economy regulations are a preemptive strike against collusion and market-distorting behavior. In fact, current regulations will eliminate 12 billion barrels of oil imports between 2015 and 2040.'
The Mid-term Evaluation for fuel economy standards opens the door to including new vehicle technology, such as autonomy, in federal regulations, a development that could lead to even greater efficiency in the longer term.
An Evolved Oil Market and New Vehicle Technologies Have Major Implications for Light Duty Fuel Economy
If it can be verified that the use of autonomous vehicles will improve overall fuel economy and reduce GHG emissions, the agencies should explore ways to maximize the benefits as soon as feasible.
In a rare increase in stringency over the proposed rules, certain large trucks are required to be up to 25 percent more fuel efficient.
Fuel economy standards have a significant social benefit relative to their costs. Total industry-wide costs of meeting the MY2022-2025 GHG standards are estimated at $34 to $38 billion. Societal monetized benefits of the MY2022-2025 standards (exclusive of fuel savings to consumers) range from $40 to $41 billion.
The contradiction of proposed increases in fuel efficiency standards for large trucks is that although they will reduce oil consumption, they will also discourage the adoption of alternative vehicles that run on natural gas and make them less competitive in the trucking sector.
Even though the Obama Administration announced methane regulations that were more biting than expected on existing wells, the real story is pending regulations on existing installations, and if the next administration will uphold them.