How to reinvent the wheel: Getting more out of EPA greenhouse gas standards
New analysis shows that relying on a vehicle’s lifetime miles traveled, rather than a class average, would reduce the costs of achieving greenhouse gas standards.
When it comes to lifetime miles, not all vehicles are the same. A small sport utility vehicle typically has fewer lifetime miles than a pickup truck, but fuel economy and greenhouse gas standards treat them the same. According to the US Environmental Protect Agency (EPA), similar makes and models have similar lifetime miles—an assumption that provides disproportionate incentives for manufacturers to reduce emissions from vehicles that aren’t driven much.
In a new issue brief, RFF Senior Fellow Joshua Linn quantifies the distortions that these assumptions produce. The research finds that EPA assumptions create inefficient incentives and increase compliance costs of standards by up to $1 billion USD per year.
“The Trump administration has dramatically weakened federal fuel economy and greenhouse gas standards for cars and light trucks,” Linn said. “As politicians and advocacy groups respond with ambitious new policy proposals to reduce emissions from passenger vehicles, there is significant opportunity in making our existing federal standards more accurate.”
Topline Findings
- Fuel economy and greenhouse gas standards generally do not consider the differences in lifetime miles between makes and models, treating them as the same vehicle in terms of lifetime miles traveled.
- Actual real-world driving differs by 10–15% across typical models of the same size class.
- Not accounting for these differences in lifetime miles raises the cost of implementing federal standards. Accounting for variations among different car models would reduce costs of achieving the standards by up to 30%—roughly $1 billion USD per year.
- Because of these differences, marginal incentives to reduce emissions are roughly 10–15% higher or lower than what is economically efficient.
“The higher the miles traveled, the greater the emissions reduction caused by a given drop in the emissions rate,” Linn writes. “A manufacturer should earn more credits when it reduces the emissions rate of a vehicle with high lifetime miles compared to one with low lifetime miles. However, the EPA crediting system does not allocate credits this way.”
To learn more about these findings, read the issue brief, “Reducing the Costs of Federal Fuel Economy and Greenhouse Gas Standards by Accurately Estimating Lifetime Vehicle Miles Traveled” by RFF Senior Fellow Joshua Linn.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
Unless otherwise stated, the views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.
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