Corporate Average Fuel Economy Regulation  (CAFE)

Who sets the standard, how is it enforced, and where is it heading?

Corporate Average Fuel Economy or CAFE is a US federal regulation enacted into law by congress in 1975.  This regulation is intended to improve the average fuel economy of cars and light trucks.  The National Highway Traffic Safety Administration (NHTSA) regulates CAFE standards and the Environmental Protection Agency (EPA) measures vehicle fuel efficiency and regulated emissions.

The EPA requires automobile manufacturers to meet government limits with their CAFE rating.  CAFE is determined using a specific formula that calculates the average fuel economy of a manufacturer's vehicle mix by model year.  Fines are imposed on car manufacturers (OEMs) that fail to meet the standards. This is why OEMs are constantly looking at ways to meet CAFE requirements through hardware changes and lubricant innovations. The CAFE standards push OEMs to optimize engine designs for efficiency, which in turn impacts with emissions compliance.

When Congress enacted the CAFE regulation it specified that the standards be set at the maximum feasible level.  The determination of maximum feasability is made with consideration for technological feasibility, economic practicability, effect of other standards on fuel economy and the need of the nation to conserve energy. Established by Congress in 1975, CAFE standards have been modified until they reached the current level of 27.5 mpg for passenger cars and 22.5 mpg for light duty trucks.

How did CAFE evolve? 

The creation of the CAFE standard is an interesting story that can be found at:  http://www.nhtsa.dot.gov/cars/rules/cafe/overview.htm

How are CAFE standards enforced?

Manufacturers receive certification by providing fuel economy test data to the EPA, or the EPA will obtain a vehicle and test it in its Office of Transportation & Air Quality Facility in Ann Arbor , Michigan . The EPA will typically test about 30% of vehicle lines. The entire test procedure is specified in Title 40 of the Code of Federal Regulations. The penalty for failing to meet CAFE standards recently increased from $5.00 to $5.50 per tenth of a mile per gallon under the target value, multiplied by the total volume of those vehicles manufactured for a given model year.