May 13, 2016

Actually, CAFE is working as planned

Riley Kimball

In a recent article at Forbes, Sam Ori paints a picture of harm to the environment by way of failed federal policy. Ori makes his case on an increase in the market share of trucks reducing the emissions improvements promised by the Corporate Average Fuel Economy (CAFE) standards, and on the notion that this corresponds with more energy used to travel the same distance. However, his analysis fails to detect the nuances in the data that show that net energy use has not increased with any dubious surges in truck volumes, and he fundamentally misunderstands CAFE’s targets.

In the image below, Ori purports to compare the unadjusted CAFE performance with the NHTSA projected fleet fuel economy, and he notes that the actual CAFE performance fails to meet projections. His data comes from that published by the University of Michigan Transportation Research Institute.

However, the researchers behind this data, Brandon Schoettle and Michael Sivak, published a summary of these results in 2013 making the crucial point that “NHTSA estimates that the actual CAFE performance levels achieved (without credits) will be lower than the final target values published in the standards” (p. 1). More specifically, their “calculations do not take into account the various credits and adjustments available to manufacturers when determining final CAFE performance values. Consequently, these values cannot be directly used for assessing compliance with final CAFE standards because the results may underestimate the final CAFE values” (pp. 3-4). In essence, Ori is failing to distinguish between nominal target levels of fuel economy, and projected levels that take into account manufacturers’ use of various flexibility and credit mechanisms.

Based on the data from Schoettle & Sivak, the “Actual Unadjusted CAFE Performance” actually exceeded the projected fuel economy levels for 2012, 2013, and 2014. The researchers find in their earlier paper that “achieved CAFE performance has exceeded these anticipated levels for the 2012 and 2013 model years—the two years that the current standard has been in effect” and that “future achieved CAFE performance is expected to continue meeting or exceeding the projected performance levels (and desired GHG reductions) contained in the latest CAFE standards” (p.  7). This is readily apparent by comparing the figure below with Ori’s figure, and directly contradicts the (mis)interpretation of data that underpins Ori’s entire argument. Comparing the red series from Ori’s figure above with the blue series from Schoettle & Sivak’s plot below, it is clear that actual CAFE performance in 2012-14 actually exceeded the previously projected CAFE levels.