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Bad math from the critics of CAFE reform

Critics are using some howlingly bad math to poke holes in Bush’s proposed reforms to the CAFE standards.

The CAFE standards have been enormously effective in raising fuel efficiency by requiring automakers to meet certain averages across their entire fleets. Bush has proposed dropping the fleet-wide standards, and instead requiring automakers to raise efficiency for each vehicle type within its fleet.

Economist Dean Baker doesn’t like it:

Thus, each car maker would have to gradually and steadily improve the mileage of each type of car, instead of improving the fuel efficiency of their entire fleet. According to EPA estimates, the 2006 Toyota Prius gets 55 miles per gallon (mpg), and the 2007 Ford Explorer gets 16 mpg. Under the new standards, both cars must improve their mileage. Which means that if, a few years from now, the Prius is still at 55 mpg and the Ford Explorer is at 20 mpg, Toyota will be penalized, while Ford will be a model corporate citizen….But what good does relative fuel efficiency do us? If a huge SUV is slightly more fuel efficient, so what?

I’ll tell you what: under typical driving conditions, raising the fuel efficiency of a Ford Explorer from 16 to 20 mpg saves as much gas as raising the fuel efficiency of a Prius from 55 to 175 mpg. (Here’s a spreadsheet with the math, if you want to play with the numbers yourself.) From an engineering standpoint, which do you suppose is easier to build: a 20-mpg SUV or a 175-mpg hybrid?

And this analysis doesn’t even take into account the fact that many more people drive SUVs than drive hybrids. In short, raising the efficiency of gas guzzlers has a vastly greater environmental benefit than raising the efficiency of already-efficient cars. Baker surely know this.

Of course, the devil is the details with this sort of thing. The real loophole would be allowing automakers to shift cars between vehicle types to escape stricter standards.

Which is why we still favor a regime of tradeable fuel economy credits. An environmental policy nerd can dream, can’t he?

(Via Kevin Drum.)

Update: A commenter suggests that current CAFE standards at least indirectly push automakers to bias their fleet to more fuel-efficient cars. On the contrary, CAFE sets up some perverse incentives for automakers that can actually allow them to pollute more heavily by selling hybrids. Because CAFE looks at fleetwide averages rather than at individual vehicle classes, automakers can use the sale of hybrids to balance the sale of gas guzzlers. And, as we’ve already noted, a gas guzzler is much more bad than a hybrid is good.

To demonstrate this, I updated the spreadsheet with three hypothetical fleets. All three consist of 5,000 cars, and all three have an average fuel economy of 29 mpg. Superficially, these fleets look identical. The difference comes from the mix of vehicle classes in each fleet.

Fleet 1 provides a baseline. An equal number of cars are sold in each vehicle class.

Fleet 2 shows what happens when the automakers sell hybrids more heavily, which also also allows them to sell additional gas guzzlers without dropping their fleetwide average fuel economy. The net result? A 6% increase in the amount of gasoline used.

Fleet 3 has the same mix of vehicles as Fleet 1. But in Fleet 3, the fuel economy of the hybrids increases, allowing for a corresponding drop in the fuel economy of the gas guzzlers. Here the results are even more dramatic: a whopping 22% increase in gasoline used.

This is a toy example, but it does demonstrate the flaws in the current design of CAFE. Theoretically, requiring vehicle class-specific efficiency improvements could make a lot of sense. Please note, however, that this is not an endorsement of the Bush proposal. Nor is it a criticism. I’m not familiar with the particulars of the bill, and thus will remain judiciously silent. (Tradeable fuel economy credits! Woo-hoo! Sorry.)

Update 2: The “toy example” of different fleet models is so different from how CAFE actually works that I no longer think it’s particularly useful. (The math around the hypothetical Prius and Explorer, on the other hand, is perfectly valid, so far as I know.) So the points in this post still stand, but the spreadsheet model of the fleets is not particularly relevant to the current set of CAFE laws.

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