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The origins of CAFE, Corporate Average Fuel Economy
Yesterday, my friend Mike sent me this copy of an article from Green Car Advisor about the US Senate discussion on bail-out funds linked to a 50 mpg efficiency standard by 2020. Yes… Fifty, five zero miles per gallon or about 5 L/100 km!
The positioning around the proposed solutions to the problems of the big three in Detroit is linked very closely to the emerging efficiency mandate of the next White House administration.
Any new auto efficiency regulations will fall under CAFE, the de facto measure of vehicle emission standards. CAFE looks at the sales-weighted, average fuel efficiency of each manufacturer. The balanced approach of CAFE has worked well, because it allows for the sale of vehicles requiring larger engines like work trucks and minivans.
With new emphasis on efficiency at the policy level, it might be helpful to understand a bit about CAFE and how new regulations in the U.S. will impact Canadian drivers.
Back in the late 60s and early 70s, concerns about pollution and air quality continued to increase across the United States. In 1970, the Environmental Protection Agency (E.P.A.) was formed. The E.P.A. is a federal agency with the power to uniformly regulate air quality in all fifty states. In 1975, the Energy Policy and Conservation Act placed a difficult task on the Agency’s desk: directing carmakers to attach labels to the vehicles they sell showing fuel economy, estimated annual fuel costs and the range fuel economy achieved by comparable vehicles. These mileage ratings are one of the E.P.A.’s main responsibilities.
OK, so a massive federal agency with a sweeping liberal mandate in the early 70s MUST have been the result of a tree hugging, hippie president, right? Nope. It was Richard Nixon. Turns out tricky Dick was simply responding to the millions of voters from coast to coast demanding environmental air quality action. In 1975, following the Arab oil crisis, CAFE standards were introduced by Congress as a way to improve fuel economy and decrease American dependence on foreign oil.
Following the CAFE legislation, the automobile industry improved its overall efficiency from 13 miles per U.S. gallon to 22 mpg in 1985. That was a whopping 70% increase in just ten years.
Currently, new CAFE policy requires a 40% improvement in fuel efficiency by 2020 from the present 23 mpg average to 35 mpg. However this may be increased in the coming weeks. I would think that with the materials, technology and exploding demand for efficiency of today that the auto industry will go beyond a 40% improvement well before 2020. Diesel engines, for example (this is a TDI blog, after all!), can represent a 30% step-function improvement in efficiency overnight. The new Jetta TDI has already returned high 50 mpg figures in this Guinness record ride.
Why all of this attention on the U.S. market and CAFE legislation you ask? Well, it boils down to this: as you have seen, the EPA controls air quality in the US on a national level. With CAFE, the EPA sets standards for the nation. In Canada there is no EPA style agency. The responsibility for air quality regulation falls to the provinces.
Because automobile companies have treated North America as a single market, Canadians, by default, have been following the lead of the EPA. The efficiency and emission standards of the cars we have been driving for the past 30 years have been set by the EPA, and this is not likely to change anytime soon. In other words, we kind of hang out at the same CAFE as Americans 
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