A Tale of Two Standards

Energy Institute Blog

Economists have long complained about Fuel Efficiency standards. Are we happy now?

The past 50 days felt like the beginning of a game of environmental policy Jenga. The new administration is starting to pull pegs from the tower of environmental and energy regulations slowly built up over the past 50 years. Whether this tower will crumble is a legal question, which I am not qualified to comment on, so I’ll stick to economics.

Maybe the most significant development is President Trump’s call for a review of the Corporate Average Fuel Economy standards, which were updated under the Obama Administration requiring the auto industry to deliver a fleet average of at least 54.5 mpg by 2025. This means that the average new car sold would achieve roughly the fuel economy of a current day Toyota Camry Hybrid. This is no doubt ambitious and US manufacturers have complained publicly about…

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