March 24, 2012

CAFE 2025: a real shot in the arm, or just a babycino?

So tax me. But tax me fairly, and tax me transparently. And let me see where my tax dollars went.

From 2012, the Corporate Average Fuel Efficiency (CAFE) standard for passenger cars and light trucks is to be tightened progressively, until it reaches its goal of 160g CO2 per mile in 2025. Since most of us haven't yet learned to think in terms of g/mi, the 2025 standard is widely quoted as "54.5mpg". This is a long-overdue improvement on the 27.5mpg where CAFE has been stuck since 1990.

That looks great, but there's a veneer of make-up on the cheerful face of the automotive industry, and if you look a little more closely, you can see the wrinkles underneath.

One size does not fit all.
For starters, here is one loophole so large you can drive an SUV through it: The CAFE standard is size dependent; that is, the requirements are more lenient for larger cars than smaller ones, and more stringent for passenger cars than for light trucks. Bafflingly, "light trucks" are considered to include SUVs despite the fact that SUVs are overwhelmingly used as passenger cars. (Tell me: what is the "utility" in a BMW X5? And would it ever see any off-road use?)


2011-2025 CAFE standards in miles per gallon.
Model Year Passenger Cars Light Trucks
"footprint": 41 sq ft (3.8 m2) or smaller (e.g. 2011 Honda Fit) "footprint": 55 sq ft (5.1 m2) or bigger (e.g. Mercedes-Benz S-Class) "footprint": 41 sq ft (3.8 m2) or smaller (e.g. Nissan Juke) "footprint": 75 sq ft (7.0 m2) or bigger (e.g. Ford F-150)
CAFE EPA Window Sticker CAFE EPA Window Sticker CAFE EPA Window Sticker CAFE EPA Window Sticker
2012 36 27 28 21 30 23 22 17
2013 37 28 28.5 22 31 24 22.5 17
2014 38 28 29 22 32 24 23 18
2015 39 29 30 23 33 25 23.5 18
2016 41 31 31 24 34 26 24.5 19
2017 44 33 33 25 36 27 25 19
2018 45 34 34 26 37 28 25 19
2019 47 35 35 26 38 28 25 19
2020 49 36 36 27 39 29 25 19
2021 51 37 38 28 42 31 25 19
2022 53 38 40 30 44 33 26 20
2023 56 40 42 31 46 34 27 21
2024 58 41 44 33 48 36 28.5 22
2025 61 43 46 34 50 37 30 23


Rose-tinted numbers.
Here is another problem: The CAFE standard uses some obsolete and half-forgotten old standard that is favoured by the car industry because it yields very optimistic, that is high, MPG numbers. This is plainly greenwashing, and very annoying, and so far most of the media coverage has been complicit, quoting the 54.5mpg number without any caveats.

The nation will not reach a true average of 54.5mpg in 2025. Not even close. For instance, the smallest passenger cars are required to average 61mpg by 2025 under CAFE, but that corresponds to only 43 mpg according to the current EPA sticker, which does closely reflect real-world fuel efficiencies. That's a 42% difference, or something which would earn you a FAIL on a grade school math test.

That's the numbers for the smallest cars. For the largest "light" trucks, CAFE requires 30 mpg in 2025, which actually comes down to a real-life 23 mpg, so the rosy-tinted number is larger than the actual fuel efficiency by 30%.

That's like jeans manufacturers selling me, CelloMom, a "Size 29" pair of jeans. Dude: I know (and freely confess) that my waist does not measure 29 inches. I don't need the slim-washing. It only serves to make ordering jeans online nearly impossible, since you can never tell how much larger the real waist is on a size 29 pair of jeans. Might as well have fun and call it "Size Rose", or "Size Giraffe": it would be just as informative.

A standard with no teeth.
Last but not least, the CAFE standard is habitually ignored by many car manufacturers, who simply choose to pay the imposed penalty for non-compliance. That is to say, you and I, the people who buy those cars, pay our part of that penalty, because you can be sure that this "cost of doing business" gets passed on to the consumer.

This is the part I like least about the CAFE standard as it stands. Who knows how those car manufacturers decide to distribute the burden of non-compliance. I might buy the smallest gas sipper in their line and still get socked with a hidden tax that may or may not be smaller than what my friendly neighbour pays on his 12mpg truck. It's all convoluted in the murky pricing policies of the car maker.

$10,000 alt-technology tax credit.
There was a $7,500 tax credit for the purchase of electric vehicles in 2011; there is now a proposal to raise that tax credit to $10,000 and to extend it to any vehicle running on alternative technologies such as hydrogen fuel and compressed natural gas - anything but oil.

I think it's great that the White House is supporting the development of alternative technologies for transportation. But this approach is too black and white: the distinction between reward (i.e. the tax credit) and punishment (at the pump) is too sharp.

So tax me.
As a consumer, I don't mind being taxed. Really. Cars are cheap in the US, anyway. But I want to be taxed by the government, not by the company that makes my car.

But tax me fairly.
The scientific consensus is that global warming is occurring, and that it is tied to human activity. Aside from that, whatever your own opinion of global climate change may be, CO2 emissions is a one-number handle for how fast each of us is using up the planet's finite fossil fuel reserves. You can argue about how much there's left, but it's certain that it will run out at some point. Make no mistake: this resource is not renewable on a timescale less than millions of years.

Since this is really all about keeping CO2 emissions down, then, as the consumer, I want to see an arrangement based on those CO2 emissions. Let the consumer who buys an EV and can prove that the electricity powering that EV comes from wind or solar (truly zero emission), have that $10,000 tax break.

And let the person who really wants an Escalade with high CO2 emission have that choice, but impose a vehicle sales tax on him so that in effect he is supporting the purchase of the low-emission vehicle.

And tax me transparently.
Let all vehicles get taxed (or supported) at a level determined by their total CO2 emission, counted well to wheel (or coal-mine to wheel, or wind to wheel, as the case may be). I want to see a clear delineation of the vehicle tax (or tax break) for a given level of CO2 emission, so that I know exactly what is due to me (or how much I pay extra) as a consequence of my emission choice.

If I manage to buy a car the size of a Ford Expedition but with the gasoline consumption of a Chevy Volt, I want to be taxed at the same level as the Volt. What really counts is the CO2 emissions, not the size of the car.

And show me what happened with my tax dollars.
You can set this up so that it's revenue-neutral (where is the $10,000 per car tax credit to come from when the nation is $16tn in the hole?).

But you could be bolder and set it up so that there is a net revenue, that you can use to build a high-speed rail network and other public transportation alternatives, hedges against the time when oil runs out, as it will sometime, whether or not we close our eyes to that certainty.

We need to start building the 22nd century equivalent of the interstate highway system. Yes, Detroit as we know it may find its demise unless it retools itself; isn't that called progress? For instance, in 2012 would you want to be working for a company that manufactures typewriters? Or card punchers? Or magnetic tape? There are plenty of better opportunities in the 21st century communications industry.

My choice is preserved - indeed, broadened.
I like freedom of choice, and I like being able to see clearly the consequences of each choice. A progressive and transparent taxation on car sales is what's needed to put firm and steady downward pressure to CO2 emissions, even more than gas prices, which after all may fall as well as rise.

It would make it more likely that I can buy "sub-compact" city cars like the Toyota Aygo or the VW Up! As a consumer, I want my choice to broaden: I want to still be able to buy that Escalade, or that Expedition, if my purse and my environmental conscience so allow. But if I am gentle on our environment, and frugal with our finite resources, I want to be rewarded for my choice.

It is a myth that cars with seriously lower emissions have to be hugely more expensive. If you stay with the same model you drive now, but outfit it with a smaller or smarter engine, you can still enjoy the space and safety features you're used to, but at a much higher fuel efficiency. Car manufacturers have been selling cars like that to everybody except Americans. A car with a smaller engine is cheaper, and the price difference might easily be enough to offset a new car sales tax.

In Europe, the average emission in 2010 was 140g/km, or the equivalent of the CAFE standard in 2018, and the European Energy Agency (EEA) is tightening the target average for 2015 to 130g/km, roughly corresponding to the CAFE standard of 2022. So CAFE is 7 - 8 years behind on the EEA requirement.

Here's the reality: Global car manufacturers have met the CAFE requirement for 2013 years ago: those gas sipper versions of your car have already been designed, built, sold and driven around for years. Time to get them stateside.

For we need to start now. If you wait till the price of gas becomes acutely painful, it will already be too late.


1 comment:

  1. I imagine the greatest obstacle confronting our nation currently would be the U.S. Tax code. Its unfair, whatever edge of the argument you land on. To hold the level of assistance states present, even while lacking the federal income of yesterday, quite a few states took inventive actions to gain back tax income. It's not a joke: http://www.tax-defense-network-tax-laws.com/tax-defense-network-top-10-silly-tax-laws


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