New CAFE Standards by Lauren DiRenzo

Green house gases and global warming have definitely become buzz words among American society. In the wake of this new political, economic, and physical climate, President Obama has implement new CAFE standards which require emissions standards on new cars be extremely stringent. CAFE standards are the Corporate Average Fuel emissions that the federal government sets forth and the automobile industry must abide to. If Obama’s upgraded CAFE standards are adopted as expected, the required fleet car average for fuel efficiency would be 35.5 miles per gallon by 2016. Currently, the CAFE standard is 27.5 mpg for cars and 24 mpg for light trucks. Obama’s new national CAFE standards would begin with 2012 model cars. The Environmental news source reports that President Obama is determined to make the CAFE standards the “highest auto fuel efficiency standards ever attempted in the United States.” Aside from the obvious benefit to the environment, the development of new greener technologies should eventually begin to stimulate job growth within the diseased auto industry as production capability and demand increase.
While this seems like a positive policy for both the environment as well the economy, it actually becomes a perverse incentive in that these new, stricter standards make new cars that are much more expensive; therefore, driving up the value and subsequent cost of used or older cars. So while this new standards is seemingly productive both environmentally and economically it could actually end up exacerbating both air quality and climate change problems escalating throughout the world. Since these emission standards are not retroactive and therefore do not affect the cars manufactured before the new CAFE standards were implemented, there is a demand for cars with poorer emission standards. If people choose cost over the well being of the environment, then there will be more old and used cars on the road with lower emission standards and a subsequent drop in overall air quality. Also, even if people are willing to pay the initial higher cost of owning a new vehicle, because of the new, higher emission standards, that new car is actually cheaper to operate, making it cheaper to drive more. Better fuel efficiency also allows for more vehicle operation which once again promotes a perverse incentive which only further deteriorates our ambient air quality.
From an economic perspective, these new CAFE standards represent a perverse incentive that could potentially actually lower air quality subsequently exacerbating the global warming problem. Also adding to the problem, the American automakers have no leeway for argument, considering their lowly financial state and total dependence on taxpayer dollars. These standards represent a very complex issue in that they represent a much cleaner, brighter future environmentally and economically for our country as far as transportation policy is concerned, yet they promote the use of cheaper cars with lower emissions standards. Even if Americans choose to own a new car at the higher cost, the new CAFE standards make it cheaper to operate, therefore furthering the overall air quality problem. A viable solution will not be found until Americans start placing the environment over the cost of owning and operating a motorized vehicles. There is no policy nor standard that can influence the way Americans act as consumers within this capitalistic economy, therefore making what should be a positive incentive, a potentially harmful one.

Lauren DiRenzo-11/16/09