Alternative Fuel Vehicle Adoption Increases Fleet Gasoline Consumption and Greenhouse Gas Emissions under United States Corporate Average Fuel Economy Policy and Greenhouse Gas Emissions Standards

The United States Corporate Average Fuel Economy (CAFE) standards and Greenhouse Gas (GHG) Emission standards are designed to reduce petroleum consumption and GHG emissions from light-duty passenger vehicles. They do so by requiring automakers to meet aggregate criteria for fleet fuel efficiency and carbon dioxide (CO₂) emission rates. Several incentives for manufacturers to sell alternative fuel vehicles (AFVs) have been introduced in recent updates of CAFE/GHG policy for vehicles sold from 2012 through 2025 to help encourage a fleet technology transition. These incentives allow automakers that sell AFVs to meet less-stringent fleet efficiency targets, resulting in increased fleet-wide gasoline consumption and emissions. We derive a closed-form expression to quantify these effects. We find that each time an AFV is sold in place of a conventional vehicle, fleet emissions increase by 0 to 60 t of CO₂ and gasoline consumption increases by 0 to 7000 gallons (26,000 L), depending on the AFV and year of sale. Using projections for vehicles sold from 2012 to 2025 from the Energy Information Administration, we estimate that the CAFE/GHG AFV incentives lead to a cumulative increase of 30 to 70 million metric tons of CO₂ and 3 to 8 billion gallons (11 to 30 billion liters) of gasoline consumed over the vehicles’ lifetimes – the largest share of which is due to legacy GHG flex-fuel vehicle credits that expire in 2016. These effects may be 30–40% larger in practice than we estimate here due to optimistic laboratory vehicle efficiency tests used in policy compliance calculations.