Obama Administration Finalizes Fuel Economy Standards
New standards will lead to a near doubling in fuel efficiency by 2025
The White House's recent announcement of finalized Corporate Average Fuel Economy (CAFE) standards represents historic progress on vehicle efficiency that will have clear benefits to the environment, energy security, and consumers' pocketbooks. The new efficiency standards for cars and light-duty vehicles will reach the equivalent of 54.5 mpg by 2025, and are estimated to reduce oil consumption by 12 billion barrels and represent about $1.7 trillion in consumer savings. The new standards are supported by the major automakers, which have already begun to shift their vehicle strategies to provide the American consumer with more innovative, fuel-efficient, and cleaner cars and trucks.
The fuel economy rules are an important step in the effort to address climate change, which represents a significant risk to the environment and to investors. In the United States nearly 30 percent of greenhouse gas emissions (GHGs) are attributed to transportation, with about two-thirds coming from passenger vehicles (passenger cars and light-duty trucks)1.Since 1990, emissions from the transportation sector have grown at a much higher rate than any other economic sector2. Over 90% of a vehicle's contribution to climate change through greenhouse gas production is related to fuel consumption3.
For these reasons, Calvert has been a long-time supporter of increased fuel economy standards, which until 2010 had remained unchanged for decades. Calvert has been a leading investor voice calling for increased standards that we believe will continue to help make American automakers more competitive, while representing a major step in U.S. policy efforts to mitigate climate change. Calvert has made the case in public testimony to EPA (most recently in support of California's Advanced Clean Cars Program), in meetings with Obama Administration officials, in dialogue with the auto industry, and through the media. We will continue to support greater vehicle efficiency, in addition to the move towards lower-carbon fuels and other environmental objectives, in our on-going engagements with leading automakers and in public policy settings.
Calvert Investment Management, Inc., 4550 Montgomery Avenue, Bethesda, MD 20814
1. NHTSA. EPA/NHTSA Fact Sheet on Rulemaking, http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE_2014-18_Trucks_FactSheet-v1.pdf.
2. Environmental Protection Agency. Greenhouse Gas Emissions from the U.S. Transportation Sector, http://www.epa.gov/otaq/climate/420r06003.pdf.
3. ACEEE. Automobiles and the Environment: http://www.greenercars.org/guide_environment.htm