Corporate Average Fuel Economy (CAFE) Standards

[Page 677]In 1975, in response to an energy crisis in the United States, Congress enacted the Energy Policy and Conservation Act, which included the Corporate Average Fuel Economy (CAFE) Standards. Initially, CAFE standards were part of an effort to reduce U.S. dependence on foreign oil. Today, these standards are part of the debate surrounding global climate change, as vehicles are one of the major emitters of greenhouse gases.

The initial CAFE standards required automobile manufacturers to meet certain miles-per-gallon standards for their fleet of vehicles. A manufacturer’s CAFE was the average fuel economy of the manufacturer’s fleet of vehicles for that model year weighted by the production volume of each model of car. Passenger cars and light trucks/sport-utility vehicles were calculated separately. Failure to meet the ...