Institute for Policy Integrity

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Comments on the Reconsideration of the Mid-Term CAFE Standards

October 10, 2017

In August, Environmental Protection Agency and National Highway Traffic Safety Administration announced their intentions to reconsider greenhouse gas and fuel economy standards for light-duty vehicles for model years 2022-2025. Those standards, finalized in 2012, were found at the time to be massively benefit-cost justified, with $326-$451 billion in net benefits. These benefits included cost savings for consumers, as well as avoided climate damages. At the same time, the agencies estimated that if national employment rates returned to normal levels, the standards would have “small, if any, effect on aggregate employment.” The agencies now question whether those previously established standards are “appropriate,” based on factors such as “the impact of the standards on the automobile industry,” “the impact of the standards on reduction of emissions, oil conservation, energy security, and fuel savings by consumers,” and consumers’ preferences and behaviors.

Our comments show that the employment effects from the standards are likely to be small, and we provide details on the short comings and biases of industry analyses that purport to show large employment effects. In contrast, the comments explain that the standards will help reduce numerous externalities, resulting in large welfare gains for consumers and the creation of valuable environmental benefits.

Filed under Climate Change and Energy Policy, Public Comments, Jobs and Regulation