The impact of attribute-based corporate average fuel economy (CAFE) standards: preliminary findings

Abstract

This report is the first rigorous analysis of the economic impacts of current legislative proposals to raise CAFE under the reformed “attribute-based” structure. Whereas historic CAFE standards set one standard for every automaker, the reformed system fundamentally alters the impact of the standards on individual companies. Under the reformed CAFE structure, which applies to light trucks starting next year and is the leading proposal under discussion in Congress, each vehicle is assigned a fuel economy target based on vehicle attributes. Light truck targets are a function of the truck’s “footprint” – that is, the area defined by the truck’s wheels. Each automaker’s truck CAFE target will be a sales-weighted average of the targets for its truck models – automakers that market larger vehicles will face a less stringent standard.