At the end of last summer, the Obama Administration finalized its historic “54.5 MPG by 2025 “ fuel-efficiency standards. These new fuel efficiency standards require that the U.S. auto fleet (cars and light-duty trucks) average 54.5 miles per gallon by 2025. If successful, these standards would nearly double today’s average fuel efficiency. Luckily, a new report by Jack Gillis and Mark Cooper of the Consumer Federation of America suggests that this goal is not out of reach.
Released just this April, the report presents the results from a series of surveys about American consumers and summarizes numerous government and auto-industry actions, suggesting that 54.5 mpg by 2025 is not only desirable, but also feasible. Government action has served as a catalyst to this trend since 2007, when Congress passed legislation that re-started the fuel-economy standards program. In 2008, the legislation was followed by a tightening of fuel-efficiency standards, sending clear signals to automakers.
Sensing the beginning of a long-term, government-regulated trend, automakers began selling a variety of hybrid and electric vehicles and improving fuel-efficiency standards across all models. In the last five years alone, the number of vehicles getting more than 30 mpg has quadrupled (from 1.3% of all existing models to 9.3%). Although there has always been consumer demand for more fuel efficient cars, introduction of new government standards served as a much-needed catalyst for automakers.
Luckily, American consumers also support increased fuel-efficiency standards. In a nationwide survey of 1001 representative American adults, a large majority (85%) said they support the new fuel efficiency standards. Furthermore, the support came from both sides of the aisle.
To spur government demand for fuel-efficient cars in the government automobile fleet, Dan Tangherlini, the acting Administrator of the General Services Administration, announced that he will now offer hybrids at the same price as standard sedans. Tangherlini said he is able to remove the extra charge that use to be associated hybrid vehicles because hybrids will ultimately save the administration money through decreased fuel costs. Tangherlini is looking to replace 10,000 cars in the federal fleet with new hybrid vehicles.
This combination of demand, supply, and government standards lays a solid foundation for the 54.5 mpg by 2025 plan. While these favorable trends in the auto-industry continue, we should analyze this trend in other energy industries. Why isn’t demand for solar where it needs to be? How can government emission standards catalyze more wind deployment? How can we achieve this perfect balance of supply, demand, and regulation elsewhere?