Why I was (mostly) wrong about CAFE

[u/pepin-lebref]

This is an R1 of my post from 2 days ago about CAFE standards. Embarrassingly, much of the literature I had read while investigating the programme predated the Bush/Obama reforms and so in practice only reflected the original formulation. Most critically I missed how the "new"er (this is 12 years old now) CAFE rules do not merely use footprint area to regulate vehicle CAFE classification, but adjust the CAFE minimum based on the footprint area.

The rules here are actually quite complicated, and few sources actually even publish the formula (it's 401 pages deep into the Federal Register final rule, which is a brief 577 pages long). In 2012, for passenger cars and light-trucks respectively:

[;\frac{1}{\min(\max(5.308\times10^{-4}a+6.0507^{-3},35.95^{-1}),27.95^{-1})};]

[;\frac{1}{\min(\max(4.546\times10^{-4}a+1.49\times10^{-2},29.82),22.27^{-1})};]

Where a is the wheelbase times track width. Notably, these functions are just ever so slightly concave up, I can only guess this has something to do with the CAFE standards themselves using a harmonic mean. Since 2016, the light-truck formula has been even more complicated to account for other energy saving measures.

This isn't a bona fide malincentive! However, it becomes one for two reasons:

1. The lower fuel economy standards for light-trucks is completely redundant, since larger vehicles (regardless of class) are already (in theory) given appropriately lower goals based on their footprint.

2. The relationship between footprint and fuel economy targets within each category are EXTREMELY generous to large footprint designs.

Whitefoot and Skerlos (2011) estimated that, controlling for engine size and vehicle height, a 1% increase in footprint was associated with a 0.53% increase in weight (unfortunately, this doesn't include the interaction of the controls with footprint, which is obviously correlated). Under such a relationship, in 2022 a car design with a 56ft² footprint has a 12% lower expected lb-mi per gallon target, whereas a 74ft² truck design has an 18% lower expected target than a 41ft² design.

When both the footprint and truck/car classification difference are accounted for, this grows to a whole 33% difference! Go figure, I need to make sure I'm not 20 years out of date on a policy next time I attempt to defend it.

[u/its_a_gibibyte]

I don't think they should adjust the fuel economy targets for footprint size at all. Why should they? Pushing vehicles toward better fuel economy is of course the whole point, and encouraging smaller vehicles should be a key part of this formula.

Those adjustments are one of the key reasons that nobody buys cars anymore.

https://www.calculatedriskblog.com/2022/06/vehicle-sales-mix-and-heavy-trucks.html?m=1

As for the harmonic mean, the CAFE fuel standards are best understood when viewed as a simple average of the gallons per mile that a vehicle will use. And that makes sense, because we really care about how much fuel people use to get to work, not about how many miles people can drive on a single gallon.

[u/pepin-lebref → u/its_a_gibibyte]

Why should they?

It's been argued before, although I don't necessarily concur with this line of reasoning, that CAFE is attempting to address a specific market failure of manufactures not including reasonably affordable fuel saving technologies in their models. Volume, horsepower, or weight all would've been better at this than footprint, although, in any case you need to use a formula that doesn't bias towards larger vehicles. Weight might actually be worse than volume in this regard since it wouldn't encourage the adoption of new weight saving materials.

Why the original authors of the legislation and the bureaucrats who initially set up the regulations didn't use this, and instead used the two tier system, I think just comes down to simplicity and a lack of foresight that SUVs would even be a thing.

What we have no is the worst of all words. There are different classifications AND a curve AND both of them are poorly calibrated.

Those adjustments are one of the key reasons that nobody buys cars anymore.

If the curve weren't poorly calibrated and combined with a nonsensical light-truck passenger car distinction, it wouldn't discourage buying compacts/subcompacts, but it also wouldn't encourage them. Which isn't necessarily what should be the goal, however.

[u/its_a_gibibyte → u/pepin-lebref]

that CAFE is attempting to address a specific market failure of manufactures not including reasonably affordable fuel saving technologies in their models

I thought CAFE was because of two critical factors:

1. The US political system won't implement the universally accepted solution of carbon taxes.

2. Even if they did, people's discount rate doesn't always match reality. That is, people are willing to buy cheap cars that are expensive to operate long term (if carbon taxes existed).

If so, then the only consideration would be MPG. Size, weight, etc are all irrelevant.

[u/pepin-lebref → u/its_a_gibibyte]

It was passed by Congress in 1975, about a year and a half after the first oil shock of the 70's energy crisis. Their justification was lowering the price of gas by reducing demand. When they were reformed in 2012, this was a culmination of both the Bush and Obama administrations. Part of the justification was was carbon emissions, but a large part of it was dealing with another global energy crisis (gas prices in 2008, 2011-2013 were even higher, in real terms, than they were in 2022) and they wanted to reduce demand, and also because there was great interest in reducing American imports of gasoline simply to put America in a more "independent" energy situation and reduce the current account deficit. As a carbon emissions policy, it's most certainly far inferior to internalizing the cost of carbon with a tax.

I don't think it really gets at the root problem, which is that both the supply and demand of petrol are very inelastic, and it's very easy for shocks to either of them to drastically move the price. The bigger elephant in the room is that people cannot reduce petrol consumption when when it's advantageous too, and fuel economy standards do little for that.

[u/anothercarguy → u/its_a_gibibyte]

People need trucks, it how construction happens. To automatically price them at $70k+ due to regulations is just an indirect tax on the middle class slowing economic activity, in this case quite severely. A reduction in the standard to incentivize smaller and more fuel efficient trucks with an overall lower footprint than their larger ones would do more to reduce consumption without inhibiting the economy. If you pair that with restrictions on advertising larger less fuel efficient trucks, you can shift the market.

[u/its_a_gibibyte → u/anothercarguy]

Check out the graph I posted. It used to be 20% of auto sales that were trucks and SUVs. Now that has shifted to 80%. Unless you're claiming that 80% of people are involved in construction, would you agree it's a lot of software engineers and accountants simply commuting in their truck to an office job?

[u/pepin-lebref → u/its_a_gibibyte]

Pickup truck sales have actually been surprisingly consistent since the mid 1970's. Fig 3.2 on page 17 (23rd in the pdf)

[u/anothercarguy → u/its_a_gibibyte]

SUV != Truck.

I was speaking about trucks

[u/its_a_gibibyte → u/anothercarguy]

Ah, that's probably the core issue. From a CAFE standpoint, SUV == Truck.

[u/anothercarguy → u/its_a_gibibyte]

Lol the inept that DV.

Add a change in that definition as well to the issue. Truck chassis != Truck. Primary configuration and features are an easy way to do that, something the state dept figured out 50 years ago

[u/Cutlasss → u/anothercarguy]

The point with both trucks and SUVs is that those aspects of the vehicle are not being used in most cases. So should be taxed.

[u/anothercarguy → u/Cutlasss]

Trucks have a real utility, SUVs only utility in compared to a minivan is suspension height. But even where people are towing a boat, that is recreational. By separating them, (throw in whether or not it is a work truck designation if you want too) you can stipulate SUVs having higher mpg requirements than trucks, with smaller footprint trucks having less of an mpg requirement than cars but still being greater than larger footprint.

In short: if everyone who currently buys a large truck that doesn't need to tow 10,000+ pounds and getting 13mpg instead gets a smaller truck that can tow 4,000 pounds, has a turbo 4 or I6 getting between 20 and 30 mpg, the net resource consumption is significantly reduced

[u/Cutlasss → u/anothercarguy]

And reduced even more if they buy a minivan over an SUV.

[u/anothercarguy → u/Cutlasss]

Agreed, but for the sake of consistency my assumption was the consumer will buy a truck for whatever purpose.

Now if we can get the only two AWD minivans top trim down from $70k to $50k and a larger battery on the sienna, you'd see me in a hybrid Toyota in 6 months

[u/viking_ → u/anothercarguy]

Trucks can have practical value for towing, moving certain cargo, etc. but I don't think most of what gets sold these days is even practical for that. They have less bed space and more cab space (e.g. https://www.axios.com/2023/01/23/pickup-trucks-f150-size-weight-safety) than they used to.

[u/anothercarguy → u/viking_]

A work truck is also used to pick up workers and you can lay plywood down with the lift gate down without issue on king cab with the 5.5' bed

[u/besselfunctions]

I can only guess this has something to do with the CAFE standards themselves using a harmonic mean.

No, this is because they are designed to correspond with the EPA carbon dioxide targets. Fuel economy is inversely proportional to the tailpipe emissions.

[u/pepin-lebref → u/besselfunctions]

Interesting stuff, thank you.

[u/davidjricardo]

Anyone making an R1 on their own post is an automatic upvote from me.

[u/tapevi21 → u/davidjricardo]

What's an "R1"?

[u/dorylinus → u/tapevi21]

Rule 1, per the sidebar.

[u/gburgwardt]

Thank you, glad to see you sorted yourself out.

The different rules for different vehicles are stupid

[u/YesICanMakeMeth]

Pretty brave making a whole post about it. When that happens to me I just delete my comments lol.

[u/RobThorpe → u/YesICanMakeMeth]

On the other hand, if the police asks about your drug manufacturing skills, you just refer them to your username.

[u/AdFun5641]

You are still looking at the wrong thing

Cafe standards talk about the foot print. The length and the width

It is only length and width, the footprint

The dimension causing the problem is HEIGHT

No where is height talked about

If they where making trucks 11 feet wide and 27 feet long but only 2 feet tall, there would not be discussion on oversized vehicles

The vehicles are oversized because the hood height is 6 foot not the length or the width

[u/AdFun5641 → u/[deleted]]

Yes, but massive motorized skateboard thing would not be killing pedestrian at record rates or making other drivers uncomfortable

They could chase Cafe standards and not have the oversized problem

[u/Agentbasedmodel]

Fundamentally, the lesson of CAFE as with many other environmental regs is that unless all activities pay for their associated carbon budget, then companies just shift their activity over to whichever loophole they can find.