The United States has two sets of parallel standards: (1) the corporate average fuel economy (CAFE) standards adopted by the National Highway Traffic Safety Administration (NHTSA), an agency within the Department of Transportation (DOT) and (2) greenhouse gas emission standards adopted by the US Environmental Protection Agency (EPA). The first CAFE standards were adopted in the 1970s, in response to the Arab oil embargo. The first GHG emission standards became effective in model year 2012.
The following are some of the important regulatory developments in the history of regulation of fuel economy and GHG emissions from light-duty vehicles:
- The Energy Policy Conservation Act of 1975 established the first CAFE standards for light-duty vehicles. Separate sets of standards were adopted for cars and for light trucks. For cars, the standards aimed to double the fleet average fuel economy from 13.6 miles per gallon (mpg) in 1974 to 27.5 mpg by 1985. Vehicle manufacturers almost met this target, reaching 27.0 mpg by 1985. While the CAFE program remained in force for a number of years, its fuel economy target for cars stagnated at 27.5 mpg through 2010. More details on this program are provided in the CAFE Fuel Economy article.
- In 2007, the stage was set for more progressive fuel economy and GHG emission regulations. The Energy Independence and Security Act (EISA) of 2007 mandated a 40% increase in fuel economy by 2020. Tougher fuel economy standards were to be set starting with MY 2011, until the standards achieve a combined average fuel economy of 35 mpg for MY 2020. In a parallel development, also in 2007, the US Supreme Court ruled  that CO2 is a pollutant under the Clean Air Act (CAA) and, as such, must be regulated by the EPA.
- In April 2010, NHTSA and EPA finalized new, harmonized CAFE and GHG emission rules for MY 2012-2016 light-duty vehicles. These rules have been designed to result in an average CAFE fuel economy of 34.1 mpg (6.9 L/100 km) and CO2 emissions of 250 g/mile in MY 2016 vehicles.
- In August 2012, EPA and NHTSA issued a joint final rulemaking to extend the harmonized GHG and fuel economy standards to MY 2017-2025 vehicles. The EPA GHG standards are projected to require, on average, 163 g/mile of CO2 in MY 2025. The CAFE standards would require a fuel economy between 48.7 and 49.7 mpg (before CAFE credits and flexibilities) in MY 2025.
At the time of the introduction of CAFE standards, the CAFE test results provided a reasonable representation of vehicles’ fuel efficiency in real world driving. This is no longer the case—under current driving conditions, CAFE figures overestimate the real world fuel economy and different test methods are used for the determination of CAFE compliance and for the EPA on-road fuel economy ratings that are used for consumer information.
Under the CAFE program, manufacturers could pay fines in lieu of meeting fuel economy standards. In contrast, under the Clean Air Act manufacturers must comply with the CO2 emission standards and cannot pay noncompliance fines. In the MY 2012-2016 rule, the EPA has established a Temporary Lead-time Allowance Alternative Standards (TLAAS) program that provided additional lead time for meeting the standards for manufacturers with limited product lines who have traditionally paid CAFE fines to the NHTSA.
The pertinent regulatory documents and supporting information can be found in the US EPA climate change website .
The 2012-2016 standards  are based on CO2 emissions-footprint curves, where each vehicle has a different CO2 emissions compliance target depending on its “footprint” value, related to the size of the vehicle—an approach first introduced in the reformed CAFE (2008-2011) standards for light trucks. Generally, the larger the vehicle footprint, the higher the corresponding vehicle CO2 emissions target. As a result, each manufacturer will have its own fleet-wide standard which reflects the vehicles it chooses it produce. Table 1 shows the projected fleet-wide CO2 emission and fuel economy requirements. The EPA CO2-equivalent fuel economy figures are different from the CAFE figures because the EPA allows additional CO2 credits for air conditioning improvements.
|Vehicle Category & Standard||Model Year|
|Passenger cars||CO2, g/mi||263||256||247||236||225|
|CO2 equiv. mpg||33.8||34.7||36.0||37.7||39.5|
|Light trucks||CO2, g/mi||346||337||326||312||298|
|CO2 equiv. mpg||25.7||26.4||27.3||28.5||29.8|
|Combined Cars & Trucks||CO2, g/mi||295||286||276||263||250|
|CO2 equiv. mpg||30.1||31.1||32.2||33.8||35.5|
The standards are applicable to the fleet of passenger cars, light-duty trucks, and medium-duty passenger vehicles (MDPV) with GVWR ≤ 10,000 lbs sold by a manufacturer within the United States. CO2 emissions are tested over the EPA 2-cycle test (FTP-75 + HWFET).
N2O & CH4 Standards. In addition to the fleet-average CO2 emission targets, the rule also includes emission caps for tailpipe nitrous oxide and methane emissions (FTP-75):
- N2O: 0.010 g/mile
- CH4: 0.030 g/mile
The above standards have been set above the respective emission levels from current technology vehicles. They are intended to prevent the possibility of increased N2O and CH4 emissions in future vehicles.
N2O emission measurement, however, is not mandatory through the 2016 model year —manufacturers may use N2O compliance statements with a default emission value of 0.010 g/mile.
In lieu of complying with the N2O and CH4 cap standards, manufacturers may choose to comply with a CO2-equivalent standard, where the N2O and CH4 emissions are added to the CO2 emissions using a CO2 equivalence factor of 298 for N2O and of 25 for CH4.
Flexibilities. The regulation also include a system of averaging, banking, and trading (ABT) of credits, based on a manufacturer’s fleet average CO2 performance. Credit trading is allowed among all vehicles a manufacturer produces, both cars and light trucks, as well as between companies.
Further program flexibilities include:
- Air Conditioning Improvement Credits: Manufacturers can generate CO2-equivalent credits for improvements in air conditioning (A/C) systems, such as for reduced refrigerant leakage through better components and through the use of alternative refrigerants with lower global warming potential.
- Advanced Technology Credits: A temporary incentive program to encourage the early commercialization of advanced GHG/fuel economy control technologies, such as electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles. Manufacturers who produce advanced technology vehicles will be able to assign a 0 g/mi CO2 emission value to the first 200,000 vehicles sold in model years 2012-2016, or 300,000 vehicles for manufacturers that sell 25,000 vehicles or more in model year 2012.
- Off-Cycle Innovative Technology Credits: Emission credits for new and innovative technologies that reduce vehicle CO2 emissions, when the emission benefits are not captured over the regulatory test cycle.
- Early Credits: A program allowing manufacturers to generate early credits in model years 2009-2011.
- Flex-fuel and Alternative Fuel Vehicle Credits: Flex-Fuel Vehicles (FFV) receive credits during model years 2012 to 2015, in line with the 2007 EISA provisions.
Model year 2017-2025 standards  have a similar structure to the 2012-2016 standards—they are based on CO2 emissions-footprint curves, where each vehicle has a different CO2 emission and fuel economy standards. The standards are also applicable to the same vehicle categories and use the same emission and fuel consumption testing procedures.
Table 2 shows the projected fleet-wide CO2 emission and fuel economy compliance levels. The CAFE figures shown in the table are average estimated “achieved” levels that account for manufacturers flexibilities, such as credits or penalty payments. The estimated “required” CAFE compliance levels—not reflecting flexibilities—increase from 35.4-35.1 mpg in MY 2017 to 49.7-48.7 mpg in MY 2025 for the combined cars & trucks category.
|Vehicle Category & Standard||Model Year|
|Passenger cars||CO2, g/mi||212||202||191||182||172||164||157||150||143|
|CO2 equiv. mpg||41.9||44.0||46.5||48.8||51.7||54.2||56.6||59.3||62.2|
|Light trucks||CO2, g/mi||295||285||277||269||249||237||225||214||203|
|CO2 equiv. mpg||30.1||31.2||32.1||33.0||35.7||37.5||39.5||41.5||43.8|
|Combined Cars & Trucks||CO2, g/mi||243||232||222||213||199||190||180||171||163|
|CO2 equiv. mpg||36.6||38.3||40.0||41.7||44.7||46.8||49.4||52.0||54.5|
|* Estimated average achieved compliance levels, reflecting all flexibilities, credits and penalty payments.|
The NHTSA CAFE standards in the 2017-2025 rule represent final standards for MY 2017-2021 and “augural standards”—representing the agency’s best estimate of the future standards—for MY 2022-2025. EPA and NHTSA will conduct a mid-term evaluation of the MY 2022-2025 standards, involving a complete rulemaking process with public notice and comment followed by final agency action by both agencies. NHTSA must set final standards for MY 2022-2025 in a separate, future rulemaking due to a statutory requirement that NHTSA set CAFE standards for not more than 5 model years at a time.
The range of technologies available for automakers to meet the 2017-2025 standards includes advanced gasoline engines and transmissions, vehicle weight reduction, lower tire rolling resistance, improvements in aerodynamics, diesel engines, more efficient accessories, and improvements in air conditioning systems. Some increased electrification of the fleet is also expected through the expanded use of stop/start systems, hybrid vehicles, plugin hybrid electric vehicles, and electric vehicles.
N2O & CH4 Standards. The standards maintain the CH4 and N2O emission caps introduced for MY 2011-2016, as well as the flexibility for the manufacturers to use CO2 credits on a CO2-equivalent basis to comply with the CH4 / N2O requirements. N2O emission testing becomes mandatory in MY 2017. However, the continued use of compliance statements is allowed in MY 2017–2018 in cases where manufacturers are not conducting new emissions testing for a test group, but rather carrying over certification data from a previous year.
Flexibilities. The regulation includes averaging, banking, and trading (ABT) of fleet average CO2 credits and the air conditioning improvement credits, both programs carried over from the 2012-2016 rule. The regulation also includes targeted incentives to encourage early introduction of advanced technologies, including:
- Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cells vehicles;
- Incentives for hybrid technologies for large pickups and for other technologies that achieve high fuel economy levels on large pickups;
- Incentives for natural gas vehicles;
- Credits for technologies with potential to achieve real-world greenhouse gas reductions and fuel economy improvements that are not captured by the standards test procedures.
An important change from the 2012-2016 program is the elimination of the FFV credit. For FFV vehicles MY 2012-2015, the regulatory calculation method did not account for the actual alternative fuel usage and the calculated CO2 emissions were significantly lower than would otherwise occur. This calculation—typically referred to as an FFV credit—created a strong incentive to make and sell FFV vehicles. For MY 2016-2025, the FFV credit is eliminated and CO2 emissions from the ethanol and gasoline portions of the fuel in FFV vehicles are weighted based on actual alternative fuel usage.
Fuel Economy Testing
CAFE fuel economy and GHG emission testing is performed over two EPA laboratory test cycles: FTP-75 and HWFET. The two test cycles are weighted at 55% and 45%, respectively. This procedure is sometimes referred to as the EPA 2-cycle test. CAFE and GHG emission certification is typically done based on fuel economy and emission data provided by the manufacturers. In some cases, the EPA performs the testing in its laboratory in Ann Arbor, MI.
The CAFE fuel economy figures can be significantly different from the vehicle fuel economy data published by the EPA/DOE in the Fuel Economy Guide report and on new vehicle labels. There are three sets of fuel economy figures:
- Unadjusted dynamometer values,
- NHTSA’s CAFE values, and
- EPA’s on-road values (fuel efficiency labels).
Unadjusted Values. The unadjusted fuel economy values are calculated based on CO2 emissions measured over the respective dynamometer tests, using a carbon balance equation. The CAFE fuel economy and GHG emissions are determined based on the FTP-75 and HWFET test results. Since MY 2008, fuel economy results from the supplemental FTP (SFTP) tests and a cold temperature FTP-75 are additionally included in the calculation of the EPA fuel efficiency label values.
CAFE Fuel Economy. The CAFE values—used to determine manufacturers’ compliance with the average fuel economy standards—are significantly higher than the typical fuel efficiency in real world operation or the EPA on-road values. This discrepancy reflects the fact that the EPA 2-cycle test is not representative of today’s vehicle operation patterns and technology. Furthermore, several caveats apply to the CAFE values:
- CAFE credits can be carried over to vehicles of other model years (later or earlier) under the CAFE ABT program, and penalties can be paid in lieu of meeting CAFE fuel economy standards.
- CAFE figures can include other credits and flexibilities, for example credits for alternative fuel vehicles.
- The former CAFE standards, before MY 2011, did not apply to vehicles above 8,500 lbs GVWR. Many pickup trucks and some of the largest SUVs which belong to this category were excluded from CAFE data.
EPA On-Road Values. The EPA on-road fuel economy values are provided to consumers on new vehicle labels, in the EPA/DOE Fuel Economy Guide, and in EPA’s Green Vehicle Guide. In the 1970s, after the introduction of the CAFE program, the vehicle fuel efficiency values provided to consumers were determined using the CAFE 2-cycle testing, with the unadjusted FTP-75 result representing the “city” and the HWET the “highway” fuel economy rating.
With time, the results of the 2-cycle test increasingly overestimated the real world vehicle fuel economy, due to changes in vehicle technology and the patterns of vehicle usage (speed, acceleration, air conditioning and heater usage, etc.). Fuel economy figures determined through CAFE testing are currently about 20-30% higher than the fuel efficiency in real world driving. To correct this discrepancy, the EPA had introduced “adjusted” fuel economy values for consumer information. In the 2007 and earlier MY vehicles, the 2-cycle fuel economy results were adjusted downward by a factor of 15% to make the data more representative of the real world driving conditions.
Beginning with MY 2008, the EPA has changed the on-road fuel economy test method. The fuel efficiency ratings are calculated based on results of five tests: (1) FTP-75, (2) HWFET, (3) SFTP US06, (4) SFTP SC03, and (5) cold temperature FTP-75 performed at a lab temperature of 20°F (-6.7°C). This new method is referred to as the EPA 5-cycle test. The additional cycles were previously used for emission testing, but not for fuel economy. The EPA adopted formulas to calculate the “city” and “highway” ratings that are based on the fuel economy results from all five tests.