U.S. Finalizes Fuel Efficiency Targets

Fuel economy averages for U.S. light vehicles produced during the 2017-2025 model years will nearly double to 54.5 mpg under two phases of regulations set by the Environmental Protection Agency and National Highway Traffic Safety Administration.

Average real-world fuel economy is expected to be roughly 40 mpg by 2025 because of temporary incentives, alternative-fuel credits, loopholes for big trucks and differences in the way the two agencies calculate average fuel economy.

The 54.5 mpg target is the fuel economy equivalent of EPA's new carbon dioxide emission standard. It requires an industry fleet average of no more than 163 grams/mile of CO₂ in the 2025 model year.

NHTSA, which sets annual targets for corporate average fuel economy, is limited by statute from doing so for no more than five model years at a time. Because the agency last set CAFE standards for 2012-2016, its new regulation covers the 2017-2021 model years. The standard mandates a CAFE range of 40.3 mpg to 41.0 mpg by MY2021.

The agencies say they will jointly evaluate progress before NHTSA finalizes a CAFE standard for the 2022-2025 model years. Based on its current best estimate, NHTSA says those standards would set a CAFE range of 48.7 mpg-49.7 mpg by MY2025.

NHTSA and EPA say the gap between that range and the 54.5 mpg target they seek would be filled by expected improvements in air-conditioning systems that give carmakers credits with which to achieve EPA's 163 g/mi CO₂ emission limit for 2025.

The two agencies estimate the new rules announced on Monday will cut greenhouse gas emissions about 50%, eliminate 6 million tons of carbon dioxide exhaust and save 4 billion barrels of oil over the lifetimes of vehicles made during model years 2017-2025.

EPA and NHTSA predict the technologies required to meet the standards will boost new-vehicle prices an average $1,800 in 2025 but reduce fuel costs an average $5,700-$7,400 over the life of the vehicle.