IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v57y2016icp94-105.html
   My bibliography  Save this article

A difficult road ahead: Fleet fuel economy, footprint-based CAFE compliance, and manufacturer incentives

Author

Listed:
  • Ullman, Darin F.

Abstract

Using detailed vehicle specifications, this paper analyzes the impact identifiable vehicle characteristics and technological progress has on fleet fuel economy by vehicle type and class. The results suggest manufacturers will face a difficult task complying with the new footprint-based CAFE standards if compliance is met by only changing identifiable vehicle characteristics. I find evidence that the stringent footprint-based standards create a manufacturer incentive to increase vehicle size to lower the burden of compliance. This undermines the standards' potential to create expected fuel savings and lower emissions levels.

Suggested Citation

  • Ullman, Darin F., 2016. "A difficult road ahead: Fleet fuel economy, footprint-based CAFE compliance, and manufacturer incentives," Energy Economics, Elsevier, vol. 57(C), pages 94-105.
  • Handle: RePEc:eee:eneeco:v:57:y:2016:i:c:p:94-105
    DOI: 10.1016/j.eneco.2016.04.013
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988316300925
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.eneco.2016.04.013?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Thomas Klier & Joshua Linn, 2011. "Corporate Average Fuel Economy Standards and the Market for New Vehicles," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 445-462, October.
    2. Mark R. Jacobsen, 2011. "Fuel Economy, Car Class Mix, and Safety," American Economic Review, American Economic Association, vol. 101(3), pages 105-109, May.
    3. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    4. Greene, David L, 1998. "Why CAFE worked," Energy Policy, Elsevier, vol. 26(8), pages 595-613, July.
    5. Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 941-975.
    6. Klier, Thomas & Linn, Joshua, 2016. "The effect of vehicle fuel economy standards on technology adoption," Journal of Public Economics, Elsevier, vol. 133(C), pages 41-63.
    7. Mark R. Jacobsen, 2012. "Fuel Economy and Safety: The Influences of Vehicle Class and Driver Behavior," NBER Working Papers 18012, National Bureau of Economic Research, Inc.
    8. Whitefoot, Kate S. & Skerlos, Steven J., 2012. "Design incentives to increase vehicle size created from the U.S. footprint-based fuel economy standards," Energy Policy, Elsevier, vol. 41(C), pages 402-411.
    9. Christopher R. Knittel, 2011. "Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector," American Economic Review, American Economic Association, vol. 101(7), pages 3368-3399, December.
    10. Thorpe, Steven G, 1997. "Fuel Economy Standards, New Vehicle Sales, and Average Fuel Efficiency," Journal of Regulatory Economics, Springer, vol. 11(3), pages 311-326, May.
    11. Thomas Klier & Joshua Linn, 2012. "New‐vehicle characteristics and the cost of the Corporate Average Fuel Economy standard," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 186-213, March.
    12. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
    13. Sofronis Clerides & Theodoros Zachariadis, 2006. "Are standards Effective in Improving Automobile Fuel Economy?," University of Cyprus Working Papers in Economics 6-2006, University of Cyprus Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dugan, Michael T. & Turner, Elizabeth H. & Thompson, Mark A. & Murray, Susan M., 2017. "Measuring the financial impact of environmental regulations on the trucking industry," Research in Accounting Regulation, Elsevier, vol. 29(2), pages 152-158.
    2. Wu, Jingwen & Zhang, Tong & Liao, Hua, 2024. "Fuel economy standards: Regulatory loopholes and firms’ heterogeneous responses," Journal of Environmental Economics and Management, Elsevier, vol. 123(C).
    3. Safiullah, Md & Kabir, Md. Nurul & Miah, Mohammad Dulal, 2021. "Carbon emissions and credit ratings," Energy Economics, Elsevier, vol. 100(C).
    4. Li, Yi & Wang, Zhaohua & Wang, Ke & Zhang, Bin, 2021. "Fuel economy of Chinese light-duty car manufacturers: An efficiency analysis perspective," Energy, Elsevier, vol. 220(C).
    5. Wu, Jingwen & Posen, I. Daniel & MacLean, Heather L., 2021. "Trade-offs between vehicle fuel economy and performance: Evidence from heterogeneous firms in China," Energy Policy, Elsevier, vol. 156(C).
    6. Sen, Burak & Noori, Mehdi & Tatari, Omer, 2017. "Will Corporate Average Fuel Economy (CAFE) Standard help? Modeling CAFE's impact on market share of electric vehicles," Energy Policy, Elsevier, vol. 109(C), pages 279-287.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Klier, Thomas & Linn, Joshua, 2016. "The effect of vehicle fuel economy standards on technology adoption," Journal of Public Economics, Elsevier, vol. 133(C), pages 41-63.
    2. Wang, Yiwei & Miao, Qing, 2021. "The impact of the corporate average fuel economy standards on technological changes in automobile fuel efficiency," Resource and Energy Economics, Elsevier, vol. 63(C).
    3. Rik L. Rozendaal & Herman R. J. Vollebergh, 2021. "Policy-Induced Innovation in Clean Technologies: Evidence from the Car Market," CESifo Working Paper Series 9422, CESifo.
    4. Klier, Thomas & Linn, Joshua, 2013. "Technological Change, Vehicle Characteristics, and the Opportunity Costs of Fuel Economy Standards," RFF Working Paper Series dp-13-40, Resources for the Future.
    5. Mathias Reynaert, 2021. "Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(1), pages 454-488.
    6. Doremus, Jacqueline & Helfand, Gloria & Liu, Changzheng & Donahue, Marie & Kahan, Ari & Shelby, Michael, 2019. "Simpler is better: Predicting consumer vehicle purchases in the short run," Energy Policy, Elsevier, vol. 129(C), pages 1404-1415.
    7. Konishi, Yoshifumi & Managi, Shunsuke, 2020. "Do regulatory loopholes distort technical change? Evidence from new vehicle launches under the Japanese fuel economy regulation," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    8. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    9. Díaz Antonia & Puch Luis A., 2019. "Investment, technological progress and energy efficiency," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(2), pages 1-28, June.
    10. Takahiko Kiso, 2019. "Environmental Policy and Induced Technological Change: Evidence from Automobile Fuel Economy Regulations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 785-810, October.
    11. Puch, Luis A., 2013. "A theory of vintage capital investment and energy use," UC3M Working papers. Economics we1320, Universidad Carlos III de Madrid. Departamento de Economía.
    12. Liu, Yizao, 2017. "Safer or cheaper? Traffic safety, vehicle choices and the effect of new corporate average fuel economy standards," Resource and Energy Economics, Elsevier, vol. 49(C), pages 99-112.
    13. Matsushima, Hiroshi & Khanna, Madhu, 2022. "Estimating Medium-run Direct Rebound Effects of the Footprint-based CAFE Standard," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322420, Agricultural and Applied Economics Association.
    14. Li, Shanjun & Kahn, Matthew E. & Nickelsburg, Jerry, 2015. "Public transit bus procurement: The role of energy prices, regulation and federal subsidies," Journal of Urban Economics, Elsevier, vol. 87(C), pages 57-71.
    15. Anna Matas Prat & Josep Lluís Raymond Bara & Jorge Andrés Domínguez Moreno, 2016. "Changes in fuel economy: An analysis of the Spanish car market," Working Papers wpdea1608, Department of Applied Economics at Universitat Autonoma of Barcelona.
    16. Feng, Siyu & Lazkano, Itziar, 2022. "Innovation trends in electricity storage: What drives global innovation?," Energy Policy, Elsevier, vol. 167(C).
    17. Marz, Waldemar & Goetzke, Frank, 2022. "CAFE in the city — A spatial analysis of fuel economy standards," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).
    18. Leard, Benjamin & Linn, Joshua & Springel, Katalin, 2023. "Vehicle Attribute Tradeoffs and the Distributional Effects of US Fuel Economy and Greenhouse Gas Emissions Standards," RFF Working Paper Series 23-04, Resources for the Future.
    19. Lutsey, Nicholas, 2012. "Regulatory and technology lead-time: The case of US automobile greenhouse gas emission standards," Transport Policy, Elsevier, vol. 21(C), pages 179-190.
    20. Leard, Benjamin & Linn, Joshua & Springel, Katalin, 2020. "Have US Fuel Economy and Greenhouse Gas Emissions Standards Improved Social Welfare?," RFF Working Paper Series 20-06, Resources for the Future.

    More about this item

    Keywords

    Automotive; CAFE; Fuel economy; Policy incentives; Vehicle classes;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:57:y:2016:i:c:p:94-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.