Automobiles, Air Pollution, and Climate Change

Updated June 14, 2024

Automobiles, Air Pollution, and Climate Change

On August 5, 2021, President Biden signed Executive

Order 14037, “Strengthening American Leadership in

Clean Cars and Trucks” (86 FR 43583). The order required,

among other items, executive agencies to revisit and amend

the federal standards that regulate air pollution emissions,

greenhouse gas (GHG) emissions, and fuel economy of new

passenger cars and light trucks. These standards include the

Motor Vehicle Emission and Fuel Standards promulgated

by the U.S. Environmental Protection Agency (EPA), the

Light-Duty Vehicle GHG Emissions Standards

promulgated by EPA, and the Corporate Average Fuel

Economy (CAFE) Standards promulgated by the National

Highway Traffic Safety Administration (NHTSA). The

order also included a nonbinding electrification goal that

“50 percent of all new passenger cars and light trucks sold

in 2030 be zero-emissions vehicles, including battery

electric, plug-in hybrid electric, or fuel cell electric

vehicles.” EPA published its final rule—“Multi-Pollutant

Emissions Standards for Model Years 2027 and Later

Light-Duty and Medium-Duty Vehicles”—on April 18,

2024 (89 FR 27842). NHTSA announced its final rule—the

“Corporate Average Fuel Economy Standards for Passenger

Cars and Light Trucks for Model Years 2027 and Beyond

and Fuel Efficiency Standards for Heavy-Duty Pickup

Trucks and Vans for Model Years 2030 and Beyond”—on

June 7, 2024 (pre-publication).

Emissions from Automobiles

The light-duty vehicle (LDV) and medium-duty vehicle

(MDV) sectors (defined at 40 C.F.R. §86 and 49 C.F.R.

§523) generally include passenger cars, light trucks, and

most sport utility vehicles; as well as class 2b and class 3

trucks such as large pickups and vans. EPA reports that

these vehicles contribute to air pollution, such as “ozone,

particulate matter, and air toxics, which are linked with

premature death and other serious health impacts, including

respiratory illness, cardiovascular problems, and cancer.”

The agency estimates that LDVs and MDVs currently

account for approximately 11% of the United States’ annual

anthropogenic emissions of nitrogen oxides (NOx), 8% of

volatile organic compounds (VOC), and 1% of fine

particulate matter (PM2.5). Further, according to EPA’s

Inventory of U.S. Greenhouse Gas Emissions and Sinks:

1990–2022 (published April 2024), LDVs emitted over 1

billion metric tons of GHGs in 2022, or about 16% of the

United States’ annual anthropogenic emissions of GHGs.

Agency Authorities

EPA’s Air Pollution Standards

Section 202 of the Clean Air Act Amendments of 1970

(CAA; P.L. 91-604, as amended) requires EPA to establish

standards for emissions of air pollutants from new motor

vehicles which, in the Administrator’s judgment, cause or

contribute to air pollution which may reasonably be

anticipated to endanger public health or welfare (42 U.S.C.

§7521). Standards under Section 202 must also consider

issues such as technological feasibility, the cost of

compliance, and industry lead time, among other items.

EPA has since promulgated standards for emissions of

nonmethane organic gases (NMOG), NOx, PM, carbon

monoxide (CO), and formaldehyde (an air toxic).

EPA’s GHG Standards

In the 2007 decision Massachusetts v. EPA, the Supreme

Court held that EPA has the authority to regulate GHGs

from new motor vehicles as “air pollutants” under CAA

Section 202. In the 5-4 decision, the Court’s majority

concluded that EPA must decide whether GHG emissions

from new motor vehicles contribute to air pollution that

may reasonably be anticipated to endanger public health or

welfare or provide a reasonable explanation why it cannot

or will not make that decision. In December 2009, EPA

promulgated findings that GHGs endanger both public

health and welfare and that GHG emissions from new

motor vehicles contribute to that endangerment (74 FR

66495). With these findings, the CAA required EPA to

establish standards.

NHTSA’s CAFE Standards

The Energy Policy and Conservation Act of 1975 (EPCA;

P.L. 94-163) established CAFE standards for passenger cars

beginning in model year (MY) 1978 and for light trucks

beginning in MY1979 (49 U.S.C. Chapter 329). The

standards are designed primarily to conserve petroleum.

They require each auto manufacturer to meet a target for the

sales-weighted fuel economy of its entire fleet of vehicles

sold in the United States in each model year. Under EPCA,

CAFE standards and new vehicle fuel economy rose

steadily through the late 1970s and early 1980s. After 1985,

Congress did not revise the legislated standard for

passenger cars for several decades, and it remained at 27.5

miles per gallon (mpg) until 2011. The light truck standard

was increased to 20.7 mpg in 1996, where it remained until

2005. In 2007, Congress enacted the Energy Independence

and Security Act (P.L. 110-140), mandating a phase-in of

higher CAFE standards reaching 35 mpg by 2020. This was

the last legislation on CAFE passed by Congress.

Prior Standards

Air Pollution Standards

EPA’s prior air pollution standards for LDVs (Tier 3, 79 FR

23414) were finalized in March 2014, to be phased-in

between 2017 and 2025, and closely align with California’s

Low-Emission Vehicle (LEV) III program. Manufacturers

must meet fleet-average tailpipe emissions standards for

NMOG + NOx, PM, CO, and formaldehyde in a given

model year across several different test cycles. Tier 3 also

includes standards for low-sulfur fuel, evaporative

emissions, and on-board diagnostics, as well as compliance

flexibilities such as an emissions averaging, banking, and

trading program.

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Automobiles, Air Pollution, and Climate Change

CAFE and GHG Standards: Rulemakings

EPA’s prior set of GHG emissions standards (86 FR

74434), promulgated in December 2021, extends through

MY2026, culminating in a projected industry fleet-wide

GHG compliance target of 161 grams/mile (g/mi).

NHTSA’s prior set of fuel economy standards (87 FR

25710) also extends through MY2026, culminating in a

projected industry fleet-wide fuel economy target of 49

mpg.

CAFE and GHG Standards: Attributes

The agencies’ fuel economy and GHG standards apply to

the new fleet of passenger cars and light trucks sold by a

manufacturer within the United States during a given model

year. Starting with the standards finalized in 2010, the

agencies have used the concept of a vehicle’s “footprint”

(i.e., the measured area enclosed by the four tires) to set

differing targets for different-sized vehicles, all of which

increase in stringency year after year. Generally, the larger

the vehicle footprint, the lower the corresponding fuel

economy target and the higher the CO2-equivalent

emissions target. This concept differs from the original

CAFE standards, which grouped domestic passenger cars,

imported passenger cars, and light trucks into three broad

categories. The newer, “attribute-based standards” enable

manufacturers to produce a range of vehicle sizes rather

than designing a lighter and smaller vehicle fleet overall to

meet categorical targets.

Manufacturers must report vehicle characteristics sold each

model year. These data allow EPA and NHTSA to calculate

each manufacturer’s CAFE and GHG targets under the

standards given the specific pattern of sales. The agencies

then compare the calculated targets against the vehicles’

fuel economy and emissions results from EPA-approved

test cycles to determine compliance. To facilitate

compliance, the agencies provide manufacturers various

flexibilities. A manufacturer’s fleet-wide performance (as

measured on the test cycles) can be adjusted through the use

of alternative fuel vehicles, air conditioning efficiency

improvements, and “off-cycle” technologies (e.g., active

aerodynamics, thermal controls, and idle reduction).

Further, manufacturers can generate credits for overcompliance with the standards in a given year. They can

bank, borrow, and transfer these credits within their own

fleets or trade them with other manufacturers to achieve

compliance.

NHTSA’s 2024 Final Rule

NHTSA’s 2024 final rule includes new fuel economy

standards for passenger cars and light trucks, which would

increase, on average, at a rate of 2% per year during MYs

2027–2031 for passenger cars, and 2% per year during MYs

2029–2031 for light trucks. The agency projects that the

proposed standards would require an industry fleet-wide

average for passenger cars and light trucks of roughly 50.4

mpg in MY2031. NHTSA projects that the proposed

standards would reduce U.S. gasoline consumption by a

total of 70 billion gallons through 2050 and would reduce

average fuel outlays by over $600 per vehicle over the

lifetimes of the LDVs under compliance.

EPA’s 2024 Final Rule

to a fleet average of 15 milligrams (mg)/mi by MY2032,

representing a 50% reduction from the Tier 3 standards.

The MDV standards would see a 58% and 70% reduction

compared to Tier 3, for class 2b and 3 vehicles,

respectively. EPA also finalized a PM standard of 0.5

mg/mi for both LDVs and MDVs.

GHG Standards. EPA’s 2024 final rule for LDV GHG

standards increases in stringency each year from MY2027

to MY2032. The agency projects the standards would result

in an industry-wide average target of 85 g/mi of CO2 in

MY2032, representing about a 50% reduction relative to the

MY2026 standards. Additional components of the standards

include, among other items, narrowing the difference in

stringency between passenger cars and light trucks, phasing

out the off-cycle credit programs, and rescinding

regulations that would consider upstream power sector

emissions tied to electric vehicle use, which were to start in

MY2027. The MDV standards are projected to result in an

average target of 274 g/mile of CO2 by MY2032,

representing a 44% reduction compared to MY2026.

EPA states the final standards are projected “to accelerate

the transition to clean vehicle technologies,” estimating that

from MYs 2030-2032, manufacturers may choose to

produce battery electric vehicles for about 30% to 56% of

new LDV sales and about 20% to 32% of new MDV sales.

Manufacturers also are expected to use other vehicle

technologies, including hybrid electric and less emitting

internal combustion engines.

EPA estimates that the total benefits of the 2024 final rule

exceed the total costs, with the annualized value of

monetized net benefits to society estimated to be $99 billion

through the year 2055. This includes $46 billion in reduced

annual fuel costs, and nearly $16 billion in reduced annual

maintenance and repair costs for drivers. Further, EPA

projects cumulative CO2 reductions of approximately 7.2

billion metric tons and cumulative air pollution reductions

of 8,700 U.S. tons of PM, 36,000 U.S. tons of NOx, and

150,000 U.S. tons of NMOG, providing $13 billion in

annual health benefits through 2055. In addition, EPA

estimates consumers will save an average of $6,000 over

the lifetime of a new vehicle from reduced fuel and

maintenance costs, once the standards are fully phased in.

EPA contends that its rule builds upon announcements by

automakers that collectively signal a rapidly growing shift

away from internal combustion engine technologies and

toward zero-emission technologies, including

electrification. For support, the agency points to actions

taken by Congress, such as P.L. 117-58 (the Infrastructure

Investment and Jobs Act) and P.L. 117-169 (commonly

referred to as the Inflation Reduction Act), which provide

investment to accelerate the development of and market for

zero-emission technology. Others, including some

Members of Congress, have expressed concerns over the

rule’s implicit mandate for vehicle electrification, increased

industry costs, reduced consumer choice, and dependence

on foreign markets for critical minerals.

Richard K. Lattanzio, Specialist in Environmental Policy

Air Pollution Standards. EPA’s 2024 final rule for LDVs

(Tier 4) includes NMOG + NOx standards that phase-down

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IF12433

Automobiles, Air Pollution, and Climate Change

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