The report, issued last month, garnered a fair amount of media coverage from its assertion that the amount of federal incentives available to buyers or producers of electric vehicles would come to about $7.5 billion over the next seven years. This amount includes, among other things, tax credits to vehicle purchasers, grants to battery and component manufacturers, grants to establish demonstration and education projects, and direct loans to vehicle manufacturers and suppliers.

Missing the long view

What the CBO — and most of the reporters who covered the analysis — missed, however, is the fact that these incentives are designed to drive long-term benefits, not short-term sales bumps. The role of these incentives is to nurture a market so that technology costs can come down in time, building a successful, self-sustaining industry over the long term.

Many technologies have failed in this so-called “valley of death,” the stage in which not enough capital is available for the technology to reach economies of scale. By helping bridge that gap, incentives will give the technology an opportunity to grow over the long term, helping pave the way for a future where vehicles running on electricity are as common as those running on gasoline.

So let’s be clear: While your neighbor who bought a plug-in vehicle may have done so because of a $7,500 tax credit, making vehicles more affordable today isn’t the end goal. It’s a means to build a self-sustaining industry that can create clean, affordable vehicles — without incentives — tomorrow.

Incentives vs. standards

The CBO does correctly point out that the incentives could have long-term oil and emissions reduction benefits if they drive a market that prompts future regulators to set stronger efficiency or vehicle emissions standards down the line.  They also correctly point out that because of the structure of today’s vehicle standards, a near-term bump in sales resulting from the incentives won’t meaningfully reduce oil consumption or emissions. This is hardly a “gotcha,” though, as the purpose of tax credits isn’t to directly save oil or cut emissions. Those objectives, as the CBO well knows, are covered by vehicle standards.

Poor reporting

As the CBO analysis demonstrates, ignoring key policy objectives allows one to arrive quite quickly at erroneous conclusions. And sadly, this isn’t the first time the CBO missed the mark in assessing vehicle policies.

To be fair though, the media did an equally poor job covering this report. By and large, the story told by the media was a singular tale about squandered money, despite the fact that we’re still in the nascent stages of a budding market. There was little mention of the role that incentives are intended to play; or that building an industry is a marathon and not a sprint; or that investments are made to reap rewards over the long term; or that high-return investments, even when risky, can in fact be a wise decision.

Finally, while $7.5 billion is not chump change, it’s worth putting those funds into perspective. That amount of money, which CBO projects would be spent over seven years, is less than we currently spend on gasoline in this country in a single week. That’s right, a week. From where I stand, spending money to help foster an industry that could, over the long term, make us far less-reliant on oil is an investment well worth making.

In 2007, when fuel economy standards were revamped by Congress (and vehicle greenhouse gas standards were first implemented), a key design change was made. Instead of operating on a simple averaging scheme where all cars sold by a manufacturer had to meet one average and all trucks had to meet another, an attribute-based system was developed that allowed companies focused on larger vehicles to be held to weaker standards than companies focused on smaller vehicles. The “attribute” in question is the vehicle’s footprint — the wheelbase multiplied by the average track width or, effectively, the area between the vehicle’s four tires.

Targets

Under this attribute-based system, each vehicle is assigned a “target” mpg (or gram-per-mile level in the case of greenhouse gas standards) based on its size. This target, in short, is what the vehicle should achieve in order to pull its own weight in meeting the company’s standard. As noted above, larger vehicles have weaker targets, and smaller vehicles have more stringent targets. A company’s corporate requirement (known as its CAFE requirement) is simply the sales-weighted average of its products’ targets.

Importantly, companies DON’T have to make all of their cars and trucks reach any single number.  If they want to sell only compact cars, they can, and their CAFE requirement would be more like 60 mpg in 2025. If they want to sell only big SUVs, they can, and their CAFE requirement would only be about 30 mpg in 2025.

Let’s take a look at the figure below. This shows the target fuel economies for passenger cars in 2012, 2016, 2021, and 2025. As you can see, a couple things are apparent: (a) larger cars are held to weaker targets, and (b) over time the targets collectively become more stringent. It’s important to note however, that these targets are just that: targets. Companies can produce models that fall above or below the target levels, as long as the (sales-weighted) average of their products doesn’t fall below the average of those products’ targets. If that’s a mouthful, let’s look at a quick example.

Running the numbers

To illustrate that point, let’s say, for example, that I decide to produce three cars. Two of those cars have a footprint of 55 square feet; one has a footprint of 45 square feet. As shown in the figure below, the 2012 targets for those vehicles are 28.4 mpg and 33.4 mpg, respectively. Thus, the average target based on the sales mix of those models comes out to 29.9 mpg. That is the “standard” (as opposed to target) that applies to my company.

Now, let’s say I surpass the target in Model A by six-tenths of an MPG. And let’s say I fall short of Model B’s target by 1.4 mpg. Will I still be compliant with the law? As shown in the table below, the sales-weighted average of my actual fuel economy comes out to 29.9 mpg, so yes I am compliant.

It perhaps goes without saying that this is a gross oversimplification. In reality, a different set of curves exists for passenger cars and light trucks (minivans, SUVs, and most pickups). And manufacturers have multiple flexibilities in meeting their standard, including banking credits from the past, borrowing credits from the future, trading credits between their car and truck fleets, applying for extra-credits for the use of certain technologies, etc. But the following general principles remain:

1. Models with larger footprints will be held to weaker targets than models with smaller footprints.
2. Manufacturers that produce a greater share of large vehicles will be held to weaker standards than manufacturers that produce a greater share of small vehicles.

What this means is no company’s standard will be the same. Ford’s will differ from GM’s which will differ from Honda’s which will differ from Nissan’s, and so on.  Produce a lot of big trucks? Weaker standard. Produce a lot of small cars? Stronger standard.

What this WON’T mean is the (patently false) notion that if your vehicle doesn’t meet 54.5 mpg, it can’t be sold. In fact, the 54.5 mpg number cited in the media merely refers to the anticipated fleet average equivalent-mpg of all vehicles sold in 2025 based on an assumption about the size mix of those vehicles.

The bottom line

The bottom line is that from now through 2025 we will continue to see the same range of cars and trucks, large and small alike, serving our broad array of mobility needs. While some models will always be more efficient than others, over time the fuel economy of these vehicles will — as a whole — progressively improve. That’s an attribute I can support.

Questions? Comments? Anything about the attribute-based system that I didn’t touch on? Please weigh in…

Why standards?

Whether we’re talking about safety standards, clean air standards, or fuel economy standards, regulations (also known as rules) provide automakers with clear targets that enable them to set their engineers loose. The results are all around us: seatbelts, airbags, electronic stability control, near-zero-emission gasoline-powered vehicles, hybrid-electric powertrains, and the list goes on. With the clarity of standards, automakers time and again have risen to the occasion with products that help answer the social and economic challenges presented by our transportation needs.

Why now?

It turns out we’re at a particularly exciting time in the automotive world right now, for a new set of vehicle greenhouse gas and fuel economy standards is about to be implemented that will nearly double the average new vehicle mpg by 2025, and lay the groundwork for a future vehicle fleet that’s even less reliant on oil. The implications, and stakes, couldn’t be higher. With three-to-four dollar (or more) a gallon gasoline and unprecedented climate challenges, these standards will serve a critical role in helping improve our economy, our environment, and our nation’s energy independence.

Admittedly, the regulations covering vehicle greenhouse gas and fuel economy aren’t nearly as concise as the old honesty adage. Inevitably, policy — that is, government policy — is complex in order to deal with the complexities of the real world. Which, of course, makes understanding the rules difficult.

Over the years I’ve found that despite hundreds of articles being written on the topic, a lot of confusion persists about the way the standards work. This naturally leads to questions about how the standards will affect the vehicles we choose to drive. In the coming weeks and months I’ll add to this “Anatomy of a Rule” mini-series, touching on — in bite-sized portions — various elements of the new rule: design elements, technical details, potential pitfalls, impacts on automakers, and so on. So hop on in and join the conversation. The road awaits…

First, a little background for those who don’t follow this stuff regularly. The Highway Trust Fund is a pool of money used to fund highway and mass transit projects. Receipts that credit the fund come from a variety of sources, though presently about 60 percent of the receipts come from gasoline tax. The concern, and a fair one, is how we will continue to fund our highway and mass transit projects as our vehicles get more efficient and use less gasoline.

The media coverage on this story widely – and incorrectly – stated that CBO was claiming a $57 billion loss in revenue due to the upcoming 2017-2025 vehicle standards. It turns out that the number is off by a factor of, oh, 10 to 20. By UCS calculations, the loss in federal gas tax revenue for the years in question is about $2.5 billion (or $6 billion if you also include state taxes, though CBO’s numbers do not). Don’t get me wrong, this is one of many reasons to revisit how we fund our highways, to be sure, but hardly the “sky is falling” scenario painted by CBO.

So how did CBO arrive at their numbers? Here’s the short version of their logic and math. Note the bolded years below.

1. CBO recently conducted an (unrelated) economic outlook examining fiscal years 2012-2022.
2. CBO pulled an (accurate) statistic from EPA’s and NHTSA’s recent proposed vehicle standards rulemaking about the efficacy of the standards. Specifically, that thanks to the standards, which will be phased in between 2017 and 2025, gasoline consumption in cars and light trucks will be down by about 25 percent come 2040, when the efficient vehicles are on the road in significant numbers.
3. Accounting for a separate policy on renewable fuels, CBO estimated that the 25 percent reduction noted above is closer to 21 percent for actual gasoline.
4. The numbers from CBO’s economic outlook were evidently handy, so “for illustration,” CBO “examined how the fund would be affected if gasoline tax revenues fell in the near term (for any reason) by 21 percent.”

CBO’s analysis isn’t so much inaccurate as it is irrelevant.

They took a reduction in consumption we’ll see in 2040, from standards that don’t even begin to take place until 2017, and applied them to a set of statistics covering 2012-2022. Unless those future 2040 vehicles are Back to the Future-type DeLoreans heading back in time to 2012, CBO’s analysis is, to put it kindly, beside the point.

Moreover, CBO even knows that it won’t be this big. Buried in a footnote more than halfway through the document, it claims, “The new CAFE standards would not take effect until 2017, so they would reduce gasoline tax revenues between 2012 and 2022 by less than 1 percent, CBO estimates.”

This would all be amusing if it didn’t have such serious implications, as this type of analysis could and likely will be used by those seeking to undermine the vehicle standards. The truth is, these standards will substantially reduce gasoline consumption and pollution – that’s, well, kind of the point. The 2017-2025 standards will save more than 1.5 million barrels of oil per day in 2030 alone. Even after paying for the cost of the fuel-saving technology, drivers will still net more than $50 billion in savings in that year alone.

We do need to find new ways to get the money we need to fix bridges, repair potholes, and keep our highways safe, but using shoddy math to pin fictitious budget shortfalls on smart vehicle policies isn’t the way to go about it.

Consumers are getting some (slight) relief at the pump these days, as gasoline prices fell 1.8% in the last three weeks to a national average of $3.87. And, for the first time in two-and-a-half years, the national average this week is lower than it was a year ago at this time. By contrast, a mere two months ago, the national average was 40 cents above its year-ago mark.

Though this temporary respite at the pump is welcome news for drivers, a closer examination of gas prices highlights a growing trend that is unlikely to abate anytime in the foreseeable future: pump price volatility.

We at UCS have noted for years that fuel-efficient vehicles insulate consumers from volatility in gasoline prices, and that continues to hold true. But what’s the story at the end of the spectrum? How much does it cost to fuel cars that are fully insulated from gasoline price volatility – because they use no gasoline at all?

As of last week, we have the answers. In a new UCS report on electric vehicles (EVs),  my colleagues Don Anair and Amine Mahmassani found that EVs are, in fact, an excellent choice for cutting fuel costs. The State of Charge report examined the utility rates in 50 major U.S. cities, and showed that EV owners can save $750 to $1,200 each year compared to operating a compact gasoline vehicle that gets 27 mpg, fueled with gasoline at $3.50 per gallon.

It’s true that EVs have a higher sticker price than today’s conventional vehicles, but the fuel cost-savings can go a long way toward defraying the higher up-front cost of electric cars. And, of course, fueling on electricity doesn’t just save money. It also can save more than 6,000 gallons of gasoline over the vehicle’s life (compared to the average new compact vehicle.)

EVs may not be the perfect choice for every driver, but for those who are considering an EV purchase, knowing how much one can save on fueling the vehicle is an important factor to consider. Take a look at the report findings for your region. You just might be surprised at how much you can save by skipping trips to the pump…

Likely to be produced alongside the 2013 Leaf in Nissan’s Smyrna, Tennessee plant, the model provides an alternate option for shoppers seeking an EV with luxury appointments. It joins the ranks of other new and upcoming luxury electric-drive vehicles including the Tesla Roadster, Fisker Karma, BMW i-series, and Cadillac ELR.

A 24 kWh lithium-ion battery pack (the same size as the pack in the Leaf) provides juice in the LE to a 100 kW electric motor. The LE Concept’s design yields 134 horsepower and 240 pound-feet of torque, slightly more in both categories than that of the Leaf.

While concept models often never make it to showroom floors – rather, they serve to hint at powertrain options or design cues to come – in this case, most of what you see is what you’re going to get. Nissan CEO Carlos Ghosn commented at the model’s unveiling that the LE Concept is 85 percent of the way to its final production form, and will be on sale in the next 24 months. Let the waiting lists begin…

What a difference a policy makes.

Four years ago when prices spiked to $4 a gallon, a number of automakers – including the domestics – were ill-prepared to offer consumers fuel-efficient models. Compounded by an economic downturn, gas-gulping models stagnated on the lots while bankruptcy loomed in executive boardrooms. Now, with new industry-backed fuel economy and vehicle pollution standards rolling into effect, automakers and customers alike are embracing fuel-saving technology, and the industry is reaping the rewards.

It’s still early at the show, but already there’s also plenty of talk about the multiple avenues for cutting emissions and fuel consumption. A few examples:

• Start-Stop Technology. This feature allows the engine to shut off at stop lights and in congested traffic, and restart on command within a fraction of a second. It has been in hybrids for years but is just now breaking into the conventional vehicle market in the U.S. Ford Motor Company recently announced pricing of a start-stop system on its conventional Fusion model. At a mere $295, it’s expected to cut fuel use by 3-4 percent, and possibly higher for drivers who are predominantly city dwellers. Expect numerous models from most, if not all, major manufacturers to feature this technology in the coming years.
• Hybrids. Chevrolet just released its 2014 Impala, which comes in a variety of powertrain options including an “eAssist” mild-hybrid configuration similar to that seen on Buick’s LaCrosse and Regal sedans.
• Diesels. Later today, Mazda is expected to show off its Takeri Concept, which features the company’s new SKYACTIV-D design, pairing an efficient turbocharged 2.2-liter diesel engine with a 6-speed automatic transmission and other conventional technology improvements. The concept is also expected to feature a stop-start system for saving fuel in gridlock, and regenerative brakes for capturing additional energy. The latter two elements makes one recheck the definition of a hybrid, though it’s important to keep in mind that concept vehicles are often loaded with features that don’t make the cut. The big story here is Mazda’s new diesel design, and that some, if not all, of these elements may make it to the company’s Mazda6 sedan in the coming years.

Anything at the show you’re interested in having us take a closer look at? Feel free to drop us a comment…

It’s doubly painful because the billions of taxpayer dollars funneling to the biggest oil companies could be spent making us less dependent on the stuff in the first place. As the Union of Concerned Scientists has detailed in its national oil savings plan, we can cut our projected oil consumption in half in 20 years, if we pursue a robust portfolio including:

• building more efficient vehicles that use less oil
• building advanced technology vehicles that use little or no oil
• developing and using renewable, environmentally friendly advanced biofuels
• increasing mass transit options that allow us to choose when and where we use our cars and trucks

These efforts would have very positive effects on our economy, reducing our fuel expenditures and building a diverse clean technology industry—to say nothing of improving our energy security. But as the saying goes, it takes money to make money, and right now these areas could benefit from some support. If only there was a source of a few billion dollars lying around.

In the strange world that is Washington, this no-brainer measure fell short today in a vote on Capitol Hill. If there’s some comfort to be had, it’s that a majority of Senators actually voted to end these subsidies. They simply didn’t have enough to reach the 60 votes required.

I’m not opposed to the oil industry turning a hefty profit for its shareholders. But I am opposed to Washington lawmakers deciding that my taxes are better spent sitting in Big Oil’s coffers than in developing the future I deserve. If you agree with me, help get the message out. Only by voicing your opposition to these subsidies and support for real solutions will a change occur.

If you are a fan, or you recently watched Moneyball, you probably know that baseball is a game of statistics — ERA (earned run average), slugging percentage, batting average, etc. So, it was in this tradition that I spent an afternoon this past weekend, with a Cubs spring training game on in the background, digging into data to help me understand which car and truck classes offer consumers real choices for fuel-efficient vehicles, and which don’t.

The Average-to-Best Gap

To figure this out, I took a look at how 2011 vehicle classes, and the models in those classes, shaped up in terms of fuel economy. It turns out that some classes offer marquee players — standout models that far exceed the class average — while other classes don’t. The table below is a breakdown of the stats, including average and best fuel economies in each major vehicle class, along with the gap between the average and best (or, for the sake of simplicity, “ABG”). These data come from the latest edition of the EPA’s annual publication, Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends which, once again, delivers fascinating information on the latest shifts in the automotive industry.

So how do the classes compare? Take the midsize sedan category, for example. The sales-weighted model year 2011 average for that class was 27.2 mpg. But far more efficient options existed in showrooms. The most efficient model in that class reached 49.3 mpg, a full 22 mpg above the average. This is a very good ABG. Clearly, fuel-sipping technology exists and is being offered to shoppers in the midsize sedan class who want a fuel efficient model.

Now, compare that to the minivan category, whose average for the year was 21.3 mpg. And the best minivan? A measly 23.2 mpg — an ABG of not even 2 mpg better than the average. In other words, if you’re in the market for a particularly efficient minivan in 2011, well, sorry. Or, as Cubs fans would say, there’s always next year.

Next Year Is Here

Fortunately, for fuel-efficient vehicles, next year is here. 2012 is the first year of new fuel economy and emissions standards that are being phased in between now and 2016, and a proposal for even stronger standards out to 2025 is expected to be finalized this summer. These standards will bring fuel-saving technology to all major vehicle segments and ultimately bring up the overall fleet average. So to the little league team-toting minivan moms and dads, take heart. Things will get better soon.

As to the Cubs, we’ll take it one game at a time.

Average and Best Fuel Economies in Each Major Vehicle Class, Model Year 2011

As I will be stating today, the proposed standards are “a keystone to cutting our reliance on oil, reducing global warming pollution, and putting money back into the pockets of American consumers.” But don’t just take my word for it. Bob King, President of the United Auto Workers (UAW) said earlier this week at the Detroit hearing, “The proposed rules are sensible, achievable and needed…They are good for the auto industry and its leaders, good for the broader environment and good for our national security.”

As always, there’s still some room for improvement. Certain provisions of the proposal, if exploited by automakers, would reduce the program’s anticipated benefits. UCS is sharing our perspective with the agencies, and look forward to them addressing these issues and finalizing strong standards this July.

My hearing testimony is pasted below. To add your voice to the chorus of support, take action today.

Agencies Should Finalize Strong Vehicle Standards, Addressing Provisions

That Could Erode Program Benefits

Statement of Jim Kliesch

Research Director, Union of Concerned Scientists Clean Vehicles Program

January 19, 2012

Docket ID Nos. EPA-HQ-OAR-2010-0799 & NHTSA-2010-0131

My name is Jim Kliesch and I am here today on behalf of the Union of Concerned Scientists and our more than 350,000 supporters. UCS is the leading science-based nonprofit organization working for a healthy environment and a safer world. UCS strongly supports the proposed model year 2017-2025 vehicle greenhouse gas and fuel economy standards, and applauds the work of the U.S. Environmental Protection Agency (EPA), the National Highway Traffic Safety Administration (NHTSA), and the California Air Resources Board (CARB) for their respective roles in the development of the proposed standards. Throughout the regulatory process, the agencies have been transparent, relied heavily on independent technical analysis, and sought ongoing input from the public and other stakeholders. UCS urges the agencies to finalize strong vehicle standards, with attention paid to susceptible provisions in the proposal that, if exploited by automakers, would reduce the program’s anticipated benefits.

America’s dependence on oil puts our economy, health, environment, and national security at risk. Whether it is the threat of international terrorism, the devastating impacts of global climate change, or lost income and jobs due to oil price shocks, the damage caused by America’s heavy reliance on oil is clear. Since transportation accounts for the majority of America’s oil consumption, making our cars and light trucks cleaner and more fuel-efficient is a keystone to cutting our reliance on oil, reducing global warming pollution, and putting money back into the pockets of American consumers.

Based on UCS analysis, the 2017-2025 standards alone would reduce global warming pollution by as much as 290 million metric tons (MMT) in 2030. This is equivalent to shutting down 62 (600 megawatt) coal-fired power plants for an entire year. Cumulatively, this program will reduce U.S. greenhouse gas emissions by more than 1,700 MMT through 2030.

The proposed standards will also dramatically reduce U.S. oil consumption by as much as 1.5 million barrels per day (mbd) – roughly 23 billion gallons of gasoline annually – in 2030 alone. This is equivalent to the 2010 U.S. imports from Saudi Arabia and Iraq combined. And the oil savings of the full MY2012-2025 program could result in a total reduction in U.S. oil consumption of nearly 3.5 mbd in 2030, almost double the amount the U.S. currently imports from the entire Persian Gulf.

No other federal policy has delivered greater oil savings, energy security benefits, or greenhouse gas emission reductions to the country.

Applying clean, efficient technologies to our cars and trucks is a boon for the auto industry, the environment, and the economy alike. According to our analysis, full implementation of the proposed 2017-2025 standards would save consumers, cumulatively, $535 billion at the pump through 2030. Even after paying for the additional cost of better technology, consumers would see over $260 billion in net savings through 2030.

And while the cost of clean car technology will lead to an increase in new vehicle price, the average consumer will save money the moment they drive off the lot. Since most Americans finance the purchase of a new vehicle, the higher vehicle price is borne as a slightly higher monthly loan payment, which is more than offset by avoided monthly fuel expenses.

The standards also strengthen our economy. By spending less on oil, consumers have more money to spend on goods and services that would create U.S. jobs. A recent report from Ceres found that standards similar to those proposed by the agencies would create nearly 500,000 new jobs nationwide in 2030.

Moreover, better fuel efficiency and greenhouse gas performance will improve the competitiveness of the American auto industry. In 2008, in the face of rising gas prices and a declining economy, American automakers were woefully ill-prepared to meet consumers’ needs. These standards will ensure that manufacturers continue to innovate over the coming decade, providing consumers clean, efficient vehicles choices that will help them fight gas price spikes for years to come.

UCS applauds the agencies for proposing standards that represent historic progress for American consumers, the U.S auto industry, clean air, and U.S. energy security. That said, key provisions in the proposal could erode these benefits if automakers exploit them, and should be addressed by the agencies before the standards are finalized.

For example, the proposal’s mid-term evaluation provision must be structured to ensure that it is used to support strong standards moving forward and not as an opportunity by the industry to stall or forego regulatory obligations.

We are also very concerned that the significantly weaker standards for light trucks could give automakers an incentive to reclassify passenger vehicles as non-passenger vehicles. For example, a gap of roughly 6-10 mpg exists between car and light truck target stringencies in the footprint range seen by many crossover vehicles.  This gap is much larger than the fuel economy loss a crossover would face from adding four-wheel drive, which could enable it to qualify for the weaker standard as a “non-passenger vehicle.” Gaming of the system like this will cut down on the anticipated program benefits. Given the sizable (and growing) popularity of the crossover vehicle segment, the agencies cannot afford to dismiss this issue.

That said, the proposed 2017-2025 light-duty vehicle standards represent a historic step forward, with the potential to nearly double the fuel efficiency and halve the greenhouse gas emissions of light duty vehicles sold in model year 2025 compared to new vehicles sold today. Together with the 2012-2016 standards, this represents the most significant action ever taken by the federal government to cut America’s oil dependence and curb global warming pollution.

We thank the agencies for their diligent work in developing these proposed standards, and look forward to the finalization of strong standards through 2025 by this July, consistent with the timeline issued in the most recent Notice of Intent.

Thank you.

There’s only one problem: Thirty-nine of them do.

You read that right. Thirty-nine different models on the showroom floor right now are available in a version that already meets its 2017 target fuel economy. And that’s a conservative estimate. If you account for a flexibility mechanism that allows companies to earn credit for improving their vehicles’ air conditioning systems, the number in question could sit closer to 50. (Moreover, about two dozen of those would already meet the 2020 standard.)

How is that possible? Well, most of this is rooted in a misunderstanding of how vehicle greenhouse gas and fuel economy standards work. When revamped in 2007, one of the policy’s key design changes was an “attribute-based system” that allows a company focused on large vehicles to be held to a weaker standard than a company focused on smaller vehicles.

Under the attribute-based system, each vehicle is assigned a “target” mpg (or gram-per-mile level) based on its size and vehicle class. This target reflects what the vehicle should achieve in order to pull its own weight in meeting the company average. As shown in the example below, larger vehicles have weaker targets, and smaller vehicles have more stringent targets. A company’s corporate requirement is simply the sales-weighted average of its products’ targets.

In other words, companies don’t focus on the “35.5” or “54.5” that garners the headlines. They focus on targets. And as long as the products they make meet their respective targets, they’ve got nothing to worry about.

Many models are already ahead of the game

So which models have versions that already meet the 2017 targets? High profile wheels like the Chevy Volt and the Nissan Leaf are there, of course. As are hybrids like the Toyota Prius and Ford Fusion Hybrid. And popular conventional cars like the Hyundai Elantra, Honda Civic, Chevy Cruze, and Ford Focus. Minivans like the Honda Odyssey and Toyota Sienna are also there, along with compact pickups like the Ford Ranger and Toyota Tacoma. And full-size pickups like the Chevy Silverado Hybrid and GMC Sierra Hybrid. Along with small SUVs like the Ford Escape Hybrid and GMC Terrain, and luxury sedans like the Buick LaCrosse eAssist and Infiniti M35h. The list goes on…

The point is, while the standards don’t take effect for another 5 years, the industry is already there. And not just in a handful of models. The conventional and hybrid fuel-saving, emissions-reducing technology in question is available and already being used in a range of vehicles, from the smallest cars to the biggest trucks. The upcoming standards won’t change that. They’ll just make the technology more prevalent.

(This assessment could not have been done without the painstaking work of UCS Clean Vehicles intern Jennah Bedrosian, who meticulously hunted down vehicle footprint data. Thank you Jennah!)

The reason is that the metric of fuel economy – miles traveled per gallon consumed – does not have a linear relationship with the amount of fuel consumed. Let’s look at the issue visually. The chart below plots gallons consumed over 15,000 miles of travel against a range of fuel economies. As you can plainly see, the curve is steeper in the lower-mpg range; a one-mpg improvement will offer you more fuel savings the lower you are on the spectrum.

Now let’s highlight the fuel economies in question. An increase from 14 to 16 mpg (the two red dots on the chart below) will lower consumption from approximately 1071 gallons to 937, a savings of about 134 gallons. Further up the curve, an increase from 35 to 51 mpg (the two green dots) will lower consumption from about 428 to 294 gallons, a difference of 134 gallons – roughly the same amount.

What’s the takeaway from all of this? Well, a few things. First, it’s important for people who are in the market for, say, a large SUV to realize that a seemingly-paltry few mpg can actually add up to serious oil savings. Trucks usually come in multiple options, and thus offer great opportunity to get these savings. Check out the 2wd rather than 4wd version. Or the V6 instead of the V8. As you can see, a couple mpg can mean serious savings at the pump

These charts are also hard proof that if we want to cut our nation’s oil addiction, we need find ways to increase the fuel economy of our lowest-mpg segments – generally mid-to-large SUVs and pickups. Putting fuel saving technology in our cars alone is simply not enough.

As to the vehicles on the upper end of the spectrum, it’s true, an on-road fuel economy of 55 mpg wouldn’t save you that much more fuel over an on-road fuel economy of 50. Which is all the more reason that advanced designs using electric drivetrains (such as plug-in hybrids or electric vehicles) will be critical to cutting our oil consumption and global warming pollution in the coming years. We’re just now starting to see these technologies coming to market (Chevy Volt, Nissan Leaf, Toyota Prius Plug-in, for example) and their volumes are still low. But in time, I have high hopes for the role these technologies can and should play.

That’s my perspective, but what do you all think?

Does this Mayweather-Pacquiao matchup of advanced vehicles mean anything? Maybe not. Both technologies are clearly still in their infancy, especially compared with the century-old internal combustion engine design. And one model of each technology is hardly a sufficient sample size to extrapolate long-term trends or market viability. Yet perhaps it is precisely because of that – each model standing alone, representing a promising future design – that we find this comparison so exciting to watch. And while arguments can be made on both sides about the merits of one technology versus another, the one stat that matters most (to boardroom execs and polar icecaps alike) is sales.

As reported in autobloggreen among others, September sales figures are in, and the Nissan Leaf once again edges the Chevy Volt. While it wasn’t a knockout, the September crown does mark six consecutive months that the pure-electric won the round.

The sales difference between the Leaf and Volt was only a few hundred units in September, though the Leaf’s cumulative sales to date are nearly twice that of the Volt. You tell me, is a TKO looming, or will the Volt bounce back? And since these two won’t be standing alone for too much longer, how will the upcoming batch of contenders – including the Ford Focus Electric, Honda Fit EV, Mitsubishi iMiEV, and Toyota Prius Plug-in Hybrid – fare in the ring? Clearly, the competition is about to heat up. Place your bets and grab a ringside seat…

Standards will save money and help the environment

Let’s start with what this does mean. There’s no question that these standards will improve both our economy and our environment. By UCS’s estimation, it’ll allow us to pump as much as 23 billion fewer gallons of gasoline into our vehicles in 2030, netting $50 billion in savings in that year alone. (And that’s even after paying for the fuel-saving technology.) Emissions-wise, the story is much the same, cutting carbon pollution by as much as 280 million metric tons in 2030. As I like to say, not chump change.

What it doesn’t mean – and why

What it doesn’t mean, however – and there continues to be a fair amount of misunderstanding on this point – is that new vehicles will have window label fuel economies averaging in the mid-50s. Let me explain.

That 54.5 mpg number is commonly referred to as a “CAFE value,” meaning it’s what the vehicles would average when evaluated under the Corporate Average Fuel Economy (CAFE) test procedure. This procedure, run in a laboratory on a dynamometer (think large treadmill), was designed decades ago to reflect the way we drove, and was subsequently ensconced into law. Yet while it did a good job capturing how we drove back then, a lot has changed in the intervening years.

Today, our vehicles are more powerful, allowing us to drive more aggressively. We also now drive at higher speeds on interstates with higher speed limits. And today we frequently drive with air conditioners running, whereas back then very few vehicles even had A/C as a standard feature.

None of these factors are captured in the CAFE test procedure, yet they all pull down our fuel economy. As a result, a sizable gap exists between a vehicle’s CAFE value and its real world mpg. How big of a gap? One good point of comparison is EPA’s on-road fuel economy estimation, which does account for A/C use, high-speed, and high-powered driving. In model year 2011, CAFE test results were, on average, 28% higher than EPA’s more sophisticated on-road estimation. (In one case, CAFE results were as much as 42 percent higher.) Fortunately for consumers, the mpg shown on new vehicle window labels is based on EPA’s numbers, and is generally reflective of our current real-world driving experience.

Tallying it up

So, back to our original question, what will these standards mean for shoppers in the showroom? The short answer is that when all of the adjustments and credits are accounted for, passenger vehicles (cars, pickups, minivans, and SUVs) are likely to average 36-37 mpg (real world) by 2025. Some models will do better than that; some models will do worse – that’s how the system is designed. By contrast, today’s new vehicles average about 22 mpg in the real world.

Of course, we remain concerned about how the program is structured, and will need to make sure the industry doesn’t abuse the system by turning the program’s flexibility mechanisms into loopholes, which would erode the above-mentioned benefits . But assuming that can, with vigilance, be done, this latest round of standards will boost our average fuel economy roughly 14 mpg in 14 years. In my book, that’s steady progress.