The US Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) and the US Environmental Protection Agency (EPA) released the final Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule setting corporate average fuel economy (CAFE) and CO₂ emissions standards for model years 2021-2026 passenger cars and light trucks.

These final rules follow the agencies’ actions, taken 19 September 2019, to ensure One National Program for automobile fuel economy and CO₂ emissions standards, by finalizing regulatory text related to preemption under the Energy Policy and Conservation Act and partially withdrawing a waiver previously provided to California relating to its ZEV mandate under the Clean Air Act.

The final rule increases the stringency of CAFE and CO₂ emissions standards by 1.5% each year through model year 2026, as compared with the standards issued under the Obama administration in 2012, which would have required about 5% annual increases. This is a change from the earlier Trump administration proposal issued in 2018. (Earlier post.)

Under the SAFE Rule, the projected overall industry average required fuel economy in MYs 2021-2026 is 40.4 miles per gallon, compared to 46.7 mpg projected requirement in MY 2025 under the 2012 standards. EPA’s standards are projected to require, on an average industry fleet-wide basis, 201 grams per mile (g/mi) of CO₂ in model year 2030.

Under the rule, new vehicles will continue to be required to meet the Clean Air Act’s strict criteria pollutant standards.

Both the CAFE and CO₂ standards are vehicle-footprint-based, as are the standards currently in effect. These standards will become more stringent for each model year from 2021 to 2026, relative to the MY 2020 standards. Generally, the larger the vehicle footprint, the less numerically stringent the corresponding vehicle CO₂ and miles-per-gallon (mpg) targets.

As a result of the footprint-based standards, the burden of compliance is distributed across all vehicle footprints and across all manufacturers. Each manufacturer is subject to individualized standards for passenger cars and light trucks, in each model year, based on the vehicles it produces.

The agencies project that under these final standards, required technology costs would be reduced by $86 to $126 billion over the lifetimes of vehicles through MY 2029. Additionally, purchase prices costs to US consumers for new vehicles would be $977 to $1,083 lower, on average, than they would have been if the agencies had retained the standards set forth in the 2012 final rule and originally upheld by EPA in January 2017, the agencies said.

The agencies estimate that these final standards will result in 1.9 to 2.0 additional billion barrels of fuel consumed and from 867 to 923 additional million metric tons of CO₂ emitted as compared to current estimates of what the standards set forth in 2012 would require. However, the agencies explain in hundreds of pages of detail in the final rule why they believe the overall benefits of the final standards outweigh these additional costs, and why they believe they have advanced the methodology of analysis pertaining to the rules.

NHTSA is required by Federal law to set fuel economy standards at the maximum feasible level for both passenger cars and light trucks, for every model year. If NHTSA determines that standards previously set are no longer maximum feasible, NHTSA can amend them. In determining what levels of CAFE standards would be maximum feasible, the law directs NHTSA to consider four specific factors: technological feasibility; economic practicability; the effect of other motor vehicle standards of the Government on fuel economy; and the Nation’s need to conserve energy.

In April 2018, the EPA issued the Mid-Term Evaluation Final Determination that found that the MY 2022-2025 CO₂ emissions standards are not appropriate and should be revised. For nearly two years, EPA and NHTSA worked together to analyze current automotive and fuel technologies, reviewed economic conditions and projections, and consulted with other Federal agency partners. The agencies also evaluated more than 750,000 public comments and held three public meetings.

In 2019, the California Air Resources Board (ARB) announced a voluntary framework to reduce emissions that can serve as an alternative path forward for clean vehicle standards nationwide, given the adjusted stanards finalized with the new rule. Automakers who initially agreed to the framework are Ford, Honda, BMW of North America and Volkswagen Group of America. These have since been joined by Volvo Cars.

The framework supports continued annual reductions of vehicle greenhouse gas emissions through the 2026 model year, encourages innovation to accelerate the transition to electric vehicles, and provides industry the certainty needed to make investments and create jobs. The auto companies party to the voluntary agreement will only sell cars in the United States that meet these standards.

Under the framework, gasoline and diesel cars and light trucks will get cleaner through 2026 at about the same rate as the current program.