By on April 3, 2010

On April 1, new federal fuel economy CAFE standards went into effect. By 2016, new cars should get 35 mpg or thereabouts. The true number remains an exercise in abstract algebra. Says Consumer Reports: “The new standards require different fuel economy averages for each manufacturer and for each type of vehicle (such as small, midsized, and large sedans or SUVs).” There are plenty of loopholes and offsets. Extra credit for cars that take E85 Ethanol, for instance. And here is another huge loophole:

“The first 200,000 fuel-cell, plug-in hybrid, or pure electric cars will count as causing zero grams of CO2 emissions,” writes Edmunds. That’s  200,000 per manufacturer. Carmakers that build more than 25,000 such vehicles in 2012 will receive an even loftier ceiling of 300,000. Once the 200,000 or 300,000 car allotment is used up, the smokestack emissions of power plants must be taken into consideration. The EPA is currently at a loss when it comes to putting a true CO2 figure on the power created to charge your car, but they are unconcerned. They expect the allotment to last for a long time.

Thanks to the EPA algebra, supposedly zero emission cars (which would immediately called illegal in the UK) can be used as a momentous offset that enables the automaker to go on and continue selling fuel oinkers. Come on: Unless all power is created by windmills or water turbines, negating the emissions of power plants is and remains a con game. Consider yourself conned.

According to Reuters, “the Obama administration said the initial rating was an incentive to produce electric vehicles, but automakers like General Motors Co, Ford Motor Co, and Chrysler had pushed for an unlimited zero rating.” Honda even suggested that fuel-cell vehicles, such as its Clarity model, should count as 16 zero-emission cars. Boys, listen to the EPA, it will be a while until the 200K or 300K allotment is used up. And push comes to shove, things can always be relegislated.

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31 Comments on “CAFE For Free...”

  • avatar

    Well , it’s a start , certainly something the feckless Bush administration should have done years ago , BUT , a credit for E85?? That’s the power of the farm lobby over common knowledge. It seems everythiing this country does has to involve a bribe or two or three before it can get started. Corn based additives in our fuel makes no sense unless you distort the math.

    • 0 avatar

      It is not a start at all, but the beginning of the end of any semblance of market driven economics. Oh well, maybe the Chairman can buy a few votes from corn farmers and that will help out a bit in oh twelve. But at this late (or is it early?) stage of the game, I don’t even think he’s interested in re-election. It’s all just his way of showing us what he really thinks of the market, and command economies.

    • 0 avatar

      and the E85 vehicles get that credit regardless whether the car ever uses E85 or not. The only thing this will achieve, that every car maker will make their cars be E85.

      Hah! and Honda wants 16 times credit? does that mean when i have one of those “zero” emission cars I should be driving all day for no reason just to do something good for the environment, like make up for my 16 neighbors with big suburbans? Maybe I get a job a cab driver to save the environment even more with my “16-times-zero” emission vehicle. Does that mean they produce electricity or fuel by driving? :-) To me a 16-times credit would mean the car inhales dirty air and spits out clean air. And when I plug it in at home it provides power to the grid (16 times of what I was driving)

      I’m all for exploring alternatives, and we really need to get away from the fuel suckers. but we need to use some science and engineering and not just fuzzy math.

    • 0 avatar

      Couple reasons E85 credit is a good idea:
      1) Without ethanol capable vehicles, a chicken or egg situation exists when it becomes truly necessary to use a fuel other than gasoline.
      2) Check the historical price of corn. Because of gains in yields, corn was roughly the same price since the 70’s until just a few years ago. Farmers needed new demand to reduce government price subsidies.

    • 0 avatar

      Farmers needed new demand to reduce government price subsidies.

      Umm…no… What economics book did you find that one in? You are confusing basic market economics with fiscal policy. In a market economy prices will stabilize given a certain level of demand and supply. If demand increases (all things being equal) prices rise (supply has just decreased); however, in order to meet increased demand, output increases follow. This, in turn, has the effect of reducing prices. Eventually a relative equilibrium manifests. Now, it may be the case that when reaching equilibrium some farmers (to use your example) go out of business, but since when do farmers get a privileged suck on the taxpayers teet?

  • avatar
    Da Coyote

    ‘….the feckless Bush administration….”

    Please, please. You’re thinking the Obamaloon crowd of crooks, tax dodgers, and science flunkouts will do better?

    There isn’t a clown in that circus that could pass one of my undergrad classes, let alone anything hard.

    Stick to cars, please.

    • 0 avatar

      I am pretty sure that Obama is smarter than you or anyone on this site. Affirmative action isn’t going to make you editor of Harvard Law Review.

    • 0 avatar
      Telegraph Road

      Obamaloon science flunkouts? Indeed, I doubt any of them could pass any of your undergrad science classes (especially “biology”) at Oral Roberts University, Liberty, or Bob Jones, assuming that’s where you go.

    • 0 avatar

      I am pretty sure that Obama is smarter than you or anyone on this site. Affirmative action isn’t going to make you editor of Harvard Law Review

      I wouldn’t bet any money on either of those statements. Especially the first.

  • avatar

    Yet again, another administration fails at basic economics. You would think, with our record budget deficit, that we would consider modest increases in gas taxes. That way the free market, rather than a government bureaucracy, could use the invisible hand to drive individuals toward more fuel efficient options. If the last administration had been serious about our national security, and our dependence on foreign oil, they would have done this already.

    More crony capitalism, more speeches from politicians attempting to explain how doing more of the same is truly revolutionary and different. More rules when instead a simple change in the federal gas tax would have been better for consumers than cost increasing mandates for manufacturers that will ultimately be passed on to consumers. Then again, using the forces of the free market to drive change would be too simple, and it wouldn’t provide as much work for government bureaucrats, or more work for Washington lobbyists. In our upside down political world, complicated changes to CAFE regulations, which we pretend are free, are thought of as good public policy.

  • avatar

    Let the cost of gas rise by whatever means, a tax that drops as other factors causing gas price to rise increase perhaps, and maybe the horde of hick hillbillys hereabouts who monotonously drive endlessly with their poorly or unmuffled NOISY vehicles would be financially forced to either decrease their amount of driving for fun… just to spread their all-pervasive NOISE that degrades the environment for all who desire a life/world not constantly filled with a tidal wave of decibels filling every nook and cranny of life, including private homes whose walls, no matter how well-insulated, are breached by the constant flood of intrusive unwanted NOISE!!!!!!

    Additionally, if the future leads to smaller vehicles and smaller engines perhaps regulations will prohibit the altering of exhaust systems to maximize the decibel output for whatever reason.

    The frivolous mental satisfaction obtained by the base mentality hillbilly redneck crowd when they fill the world with NOISE that permeates all may need a new source that will not be as all-pervasive, allowing those with two or more braincells to rub together to exist within their homes without the constant unrelenting ear-jarring intrusion.

    Of course, noisy uncivil to-hell-with-everyone-else hillbilly and car meeting tree at high velocity is best, removing said redneck hick from replicating further and permanently removing an anti-social irritant from the planet is likely the best method but there appears to be some truth to the adage of some Creator being watching over drunks, fools, and hick hillbilly trash who impact the planet far out of proportion to their numbers and to the noise sources available to the average human.

    Maybe increased energy costs and attempts to extend energy supplies will lead to a slower-paced society more amenable to quality life as the non-hick non-trashy better-educated crowd TENDS to interpret what that life is and a reduction in the constant noise irritants that have made solitude such a rare commodity.

    Of course, there remains the trash in the house with a dozen LOUD non-stop barking dogs whose yelps fill your yard relentlessly when you try to use your own yard AND whose non-stop barking passes through your shanty walls and ensures that not a minute passes without the barking barrage caressing your ears…. endlessly. Without stop.

    But napalm may work in that case.

    • 0 avatar

      In my opinion, the most offensive noise emitted from passing vehicles comes not in the form of redneck fartcans (not really sure if I’ve ever seen a hillbilly with a riced out anything. You sure about that?) , but rather from the over-amplified window rattling bass rich “music” preferred by “urban youths”.

      I’ll take a few loud pickups passing by the house over a roadside recital of Tupac’s greatest hits any night.

  • avatar

    I know Bertel said we could let it fly, but is the left/right stuff really that interesting?

    I understand the concept of the ZEV incentives, but 200k-300k seem far too high, and Honda’s 16x multiplier is ridiculous, even if fuel cell tech is a non-starter. Loopholes are what allowed the SUV/truck craze to fester, and greenwashing CAFE with more of the same isn’t what we need.

    I’d rather there was a bright line established between consumer and commercial vehicles, and have meaningful CAFE standards applied to all vehicles. If a company ships some hybrids that make up for their guzzlers, fine by me as long as they make the goals.

    • 0 avatar

      Actually I’m very disappointed in Herr Schmitt. I read somewhere that today would be Asian day, and was expecting photos of cute girls with black hair in mini skirts. Instead, I have to write about economics and politics. Thanks, Bertel…

    • 0 avatar

      My deepest apologies. I’ll make it up for you later. Currently, the cute, skinny, blackhaired Asian girls are all in the other room, drinking tea and playing cards until the clothes dryer goes bzzzzzt.

  • avatar

    Boys, listen to the EPA, it will be a while until the 200K or 300K allotment is used up. And push comes to shove, things can always be relegislated.

    Re-legislating works – but starving The Regulators of budget funding may be a better tactic. An appropriations bill that has no funding for these ass-clown grade economy killers is an effective fix and/or negotiating tactic.

    Or just pass a law stating CO2 cannot be regulated by the EPA. Congress used a similar legislative lead-pipe-to-the-head tactic toward Regulators when the FDA tried to ban Saccarine…

  • avatar

    Any government regulation is an exercise in drawing lines. I am not a fan of the CAFE rules but the alternatives aren’t nice either. Euro engine size requirements and other taxes also distort the marketplace.

    A heavy emphasis on hybrids could really benefit Toyota. Puts even more pressure to make sure the volt is a success. I saw an interesting stat that the hybrid market basically only exists in the US and Japan. That being said, I much prefer hybrids to diesels. The argument about plug-in just shifting the pollution, well, that might be true for CO2 but there are smog benefits as well.

    The e85 rules seem to be a nice way to transition as any modern car can easily shift over to e85. Perhaps that can save Porsche. I don’t see e85 as a long term solution. Moving heavy trucks towards natural gas (Pickens plan) seems optimal as well. That is really needed in cities as well. More NG fueled vehicles means less pollution.

    Seems like a pretty typical US solution…a hodgepodge of rules to get to more efficient engines. I remember doing the math a few years ago, but it was something like if we could get every SUV in american to get 3 MPG better that would be same amount of oil saved as China’s total imports. I am sure that number is no longer valid but it give you an idea of the scale.

    Getting people to drive a little less (maybe 1200 miles less a year, or 4 miles less a day), slightly better MPG from the fleet, moderate substitution of natural gas and e85, could reduce us fuel consumption by 20-25%. Moderate increases in gas tax and taxing oil imports (from outside Canada/Mexico) would also help.

    Being editor of HRL is an elected position, not one based on grade points. I have no doubt that Obama is smarter than 99% of the people reading this. I also have no doubt that GWB was smarter than 95%. We don’t elect President based on their IQ.

  • avatar

    I hope this means good diesels will make it to the USA.

  • avatar

    And Canada adopted those same rules on Thursday, April Fools Day, just because we don’t have the elected brains to work out something better, and cutting and pasting is extremely easy.

    The CBC (national broadcaster) announced this momentous ruling by showing a clip of cars belching steam on a cold winter day and talking about emissions being reduced by 25 percent in the sunny far off days of 2016.

    Not a soul at any media broadcast outlet seems to realize that the really nasty stuff has been reduced by 99 % since the 1970s, and that this reduction applies to CO2, as in reduced fuel consumption.

    Why should we expect out broadcasters to keep up with anything technical, eh? Far too much work.

    • 0 avatar
      Dr Strangelove

      What could possibly be gained by making a similar but ever so tantalizingly different set of rules for Canada? Persuade manufacturers not to bother with selling and, by extension, manufacturing in Canada? Really no point in that.

  • avatar

    could TTAC make a report on explaingin theCAFE rules and what it means for cars we will be getting etc.? It appears on the media you either have right or left wing nuts explaining CAFE and they only focus on one aspect. A whole-CAFE article could help clarifying some things.

    Some question that come to mind:
    – How does diesel fuel accounted for? Diesel has 13% more energy and CO2 per volume unit. Meaning, a 40 mpg diesel is worse than a 35 mpg gasoline car.
    – How do those zero-emission vehicles matter on the long run? I mean, those 200,000 is not per year, it is in total, which could be 10 years or so. Let’s say Toyota sells 2 million vehicles a year, 20,000 of those are zero-emission. does that really help them a lot? Maybe in reality by get by having 34 mpg instead of 35.5 on average. not a big difference. (and Toyota for sure is not the company that has to worry the most about meting those goals)
    – what does it mean for each vehicle category? I mean, what mpg is needed for each category? 40 mpg for cars, 29 for trucks, or what?
    – what exactly are the loopholes and what effect will they have on the overall fuel consumption?

    E85: regardless of if E85 is good for the economy or environment. I think it is ridiculous to give an E85 vehicle a credit since it most likely fuels up regular gasoline anyway. That credit only should be granted if it is disabled from using E 10 or so.

    CAFE might be flawed, but better than nothing (what was the former policy)

  • avatar

    Lame , just lame. I wonder if CAFE has any regs on “economy switches”? If I was a manufacturer I’d include a ‘vaginized mode’ (that meet CAFE regs) and a ‘power mode’ (that gives people the performance they want when they want it). I’m sure the current powers that be wouldn’t mind. They’re all about freedom of choice ya know…

  • avatar
    Telegraph Road

    CAFE may be flawed, but a carbon tax is preferable. Yet neither party has the courage to support more taxes at the pump. Understandably after all, as one anti-tax crackpot in Texas recently swan-dived his plane into an IRS building, and here in Michigan we have Hutarees and McVeighs plotting the worst.

  • avatar

    Coal burners rule! Just plug them in to a wall outlet overnight and let someone else in community far, far away worry about the fumes.

  • avatar

    1) to: akatsuki: I would be surprised in there was NOT an affirmative action plan for the Harvard Business Review. This is a guy who thought there were 57 states: . Here is a fellow congressman with a law degree who thinks Guam will tip over if too many U.S. serviceman move there:

    2) If there is a democratic consensus that the free marketplace is not working properly to guide people to fuel efficient vehicles, then some sort of government intervention is required. In Europe, Japan and other developed regions a gasoline tax is used to great effect. With a gas tax you not only affect the purchase decision, but you also coax people into an infinite variety of other decisions that will lower CO2 and lessen foreign oil imports. This will include purchasing smaller cars, combining trips, walking, riding bikes, taking mass transit, and many more. The auto manufacturers will make rational, cost effective designs to meet the heightened demand for fuel efficiency. This will most likely not include use of corn, extended range electric vehicles or other B.S. It will likley include more parallel hybrids. Note, the artificial, increased demand for E85 in causing havoc with food supplies worldwide.

    The reason simple gas taxes are not used in the U.S. include: a)the politicians do not want to face the rath of the voters by directly taxing them; CAFE allows them to use the auto companies to collect the tax for them in the form of greatly increased prices. b) politician love government bureaucracy and associated jobs. Where else could these bafoons and their friends work? They also like to use the piles of laws, exclusions, exceptions, subsidies, and so on to use as collateral for buying votes. Witness the E85 subsidy. A simple gas tax would require a one paragraph law and zero bureaucrats. You just change the current 18.4 cent per gallon tax wih say $2.50, and you would get your 35 MPG cars. You would then get all of the add-on benefits I mentioned above. Perhaps we could even allocate the additional proceeds to the 14 trillion dollar deficit (yea-right?).

    Here is some data: For a $2.20 per gallon pre tax gasoline price: In Germany the base gas tax is $3.55 and base diesel tax is $2.55, a huge incentive for Diesel use. To this add a 19% VAT. So the total gas TAX is $4.64 . The total TAX in the U.K. is $3.89 gas or Diesel. This more than explains why cars get better economy in Europe and why Diesels sell so well. The customer demand efficiency and the companies deliver. No special engineering in Europe; the engineers and the physics are the same there and here.

    3) reclusive…: There is a precedent for vehicles being configurable or having extra user inputs. An example I am familiar with is manual transmission shift indicator lights. The manufacturer must test the vehicle on the Federal Test Procedure (FTP) a.k.a. EPA cycle two ways: a) with the driver paying attention to the shift light, b) using the standard EPA specified manual transmisison shift schedule. The manufacturer must then survey actual customers to see how many pay attention to the shift light. The two MPG numbers are then weighted according to the survey results.

    • 0 avatar

      Honest, the other law students elected an unqualified person to be Harvard Law Review (not Business) editor because of his race? I guess it is true what I have read about Lawyers, that they are loving, non-aggressive, non-competitive types who would rather that an unqualified minority member hold this prestigious position instead of themselves.

      Yup, there are just 50 states. I am sure that he knows this, but could you imagine how many stupid things we would have to own up to if we were recorded around the clock? For instance someone might mistake Business Review for Law Review. W mixed up the phrase “fool me once . . . ” Clinton could not keep track of what the definition of “is” is. George HW Bush mixed up November 7th for December 7th as Pearl Harbor day when he was speaking in front of a VFW crowd. Reagan thought that trees polluted. Carter wore that God-awful sweater and clubbed a rabbit with an oar. I am lucky my students don’t record the idiotic things I say.

  • avatar

    For those of you complaining about politicians not being “brave” enough to put a tax on something the majority doesn’t want a tax on, I’m pretty sure that was our forefathers intent. Liberty isn’t so much about having freedom, but politicians being scared shitless of what would happen if they tried imposing their idea of ‘the common good’ on a majority that doesn’t want it. Call me, and all those like me, all the names you want (after all isn’t that what the internet is for: calling people names while hiding behind a computer?), but that will always be the way it is here in this GREAT (I always think so anway) country.

  • avatar


    Actually… it’s entirely possible to do this. You can have a “power mode” activated by a dashboard switch, and you will only have to test economy in “standard mode”.

    It’s likely the Prius was tested for the EPA in “standard mode” instead of “eco-mode” or “ev-mode”, both of which can make a total hash of the stated EPA numbers.

    As for the credits?


    So if I sell one electric vehicle per year for the next 300,000 years, I get a “get out of jail free” card in terms of emissions till then?


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