Proposed CAFE changes could lead to bigger, not smaller, vehicles, study says
Proposed changes to corporate average fuel economy standards may cause vehicles to get bigger instead of smaller by the 2014 model year, a study by the University of Michigan says.
Researchers said “a loophole” exists in the new formula for calculating miles per gallon. Should automakers choose to use act upon that incentive, it would be more difficult to achieve the policy’s goal of reducing fuel consumption.
Steven Skerlos, an associate professor in the U-M Department of Mechanical Engineering, said he believes automakers will indeed try to take advantage of the unintended consequence of the new policy.
“For just about all the scenarios, the car got bigger,” Skerlos said. “What you can model in a computer is different from reality, but based on this research we expect it to happen.”
The study, released last week, used simulations to mimic real-life choices automakers must make in redesigning vehicles to meet changing standards.
In July, the Obama administration said it plans to increase the U.S. fuel-economy standard for cars and light trucks to 54.5 mpg in the 2025 model year from 35.5 mpg in 2016. The U.S. EPA and the Department of Transportation estimate the changes will help reduce the nation’s dependence on oil by an estimated 12 billion barrels between 2011 and 2016, as well as reduce oil consumption by 2.2 million barrels per day by 2025.
For years, U.S. automakers criticized traditional CAFE standards, saying the standards unfairly rewarded production of slimmer, lighter vehicles that could put their truck- and SUV-oriented markets at a disadvantage against Asian competitors.
In response, the new formula for determining miles per gallon became one that measures a vehicle’s “footprint,” calculated by multiplying wheelbase by track width so larger vehicles had lower fuel economy targets. The loophole in the proposed new CAFE standards: The footprint formula favoring larger vehicles is retained.
Crystal ball for vehicles
The U-M study used more than 450 vehicle makes and models to figure how automakers could modify vehicle dimensions, implement fuel-saving technology features and trade off acceleration performance and fuel economy.
“It’s cheaper to make large vehicles, and meeting fuel-economy standards costs [manufacturers] money in implementing and looking at what consumers will purchase,” said Katie Whitefoot, another researcher involved with the study.
Not only would the trade-offs automakers consider in redesigning a vehicle undermine the CAFE policy as it stands, they would increase pollution as well, according to the study.
“The adjustment to the CAFE standards tries to achieve high fuel economy while not compromising vehicle size,” Skerlos said in a statement. “The idea here is these things intersect and you have an equivalent of three to 10 coal-fired power plants hidden in that trade-off.”
Over their lifetimes, larger vehicles would generate between three and 10 1,000-megawatt coal-fired power plants’ worth of excess carbon emissions, the study said. By comparison, a 1,000-megawatt plant could provide power for more than half a million people.
Said Whitefoot, “We still see that fuel economy standards overall reduce pollution, but they don’t as much as they could have because this incentive exists.”
Traffic safety risks
Whitefoot and Skerlos also noted higher traffic safety risks associated with larger vehicles, suggesting regulators create a policy that addresses fuel-economy goals and safety.
In addition, the pair suggested reducing the value of meeting targets based on vehicle footprint and allowing for modifications to the standards if fuel-economy goals will not be met.
Policymakers are developing CAFE regulations for vehicles produced from 2017 to 2025 and plan to finalize those regulations by July 2012.
U-M PRESS RELEASE: CAFE standards create profit incentive for larger vehicles
ANN ARBOR, Mich.—The current Corporate Average Fuel Economy standards create a financial incentive for auto companies to make bigger vehicles that are allowed to meet lower targets, according to a new University of Michigan study.
Over their lifetimes, these larger vehicles would generate between three and ten 1,000-megawatt coal-fired power plants' worth of excess carbon emissions. A 1,000-megawatt plant could provide power for more than half a million people.
"This study illustrates that there may be a substantial financial incentive to produce larger vehicles, and that it can undermine the goals of the policy," said Kate Whitefoot, who conducted the research as a U-M design science doctoral student and is now a senior program officer at the National Academy of Engineering.
"The results show that the policy can be adjusted to reduce these unintended incentives by making it harder to lower the fuel economy targets by producing larger vehicles."
The study is published online in Energy Policy.
The loophole is the formula for setting mile-per-gallon targets. The standards, which actually depend on the sizes of vehicles automakers produce, are expected to require that firms boost average fuel economy to 35.5 mpg by 2016 and 54.5 mpg by 2025. Those oft-cited numbers are averages. In reality, each car company must meet a different standard each year determined by the literal "footprints" of the vehicles it makes. A vehicle's footprint is its track width times its wheelbase.
According to the study, the sales-weighted average vehicle size in 2014 could increase by 1 to 16 square feet, undermining fuel economy improvements between 1 and 4 mpg. That means the industry as a whole would not achieve that year's fuel economy goal.
"We know it's a broad range, but we looked at a large range of possible consumer preferences for vehicle attributes and the answer is probably somewhere in the middle," said Steven Skerlos, an associate professor in the U-M Department of Mechanical Engineering.
"Will cars get bigger? Very possibly. Will that lead to more pollution? Yes. And there wasn't an emphasis in the rulemaking process that this could happen."
The impetus for the footprint-based formula back in 2006 was to prevent an influx of smaller vehicles, though not necessarily to do the opposite. Critics worried that the previous one-size-fits-all standard unfairly and perhaps dangerously rewarded production of slimmer, lighter vehicles that could put the domestic industry at a disadvantage and drivers at greater risk. The researchers believe the correction overshot its target.
They found that light trucks would grow even more than cars, which could yet lead to traffic safety concerns. They call on the National Highway Traffic Safety Administration to revise the formula.
This study was more than just an economic analysis. Whitefoot built a first-of-its-kind model that considered supply and demand but also incorporated engineering tradeoffs that carmakers consider as well as a wide range of possible consumer preferences.
They conducted simulations with 473 different vehicles. In the simulations, auto firms could adjust the size of their vehicles, add fuel-saving technologies, balance acceleration performance with fuel economy, and adjust vehicle prices. The result, Skerlos says, is an exciting new framework where economists, environmentalists, engineers and policymakers can work together.
"Sustainability is about tradeoffs," Skerlos said. "On the one hand, there's a concern about vehicle size largely driven by safety and the effect on domestic automakers. The adjustment to the CAFE standard tries to achieve high fuel economy while not compromising vehicle size, and the idea here is these things intersect and you have an equivalent of three to 10 coal-fired power plants hidden in that tradeoff."
The research is funded by the Michigan Memorial Phoenix Energy Institute and the National Science Foundation. The paper is titled "Design Incentives to Increase Vehicle Size Created from the U.S. Footprint-Based Fuel Economy Standards."