Light Cars Are Dangerous Cars

And other unintended consequences of strict fuel-economy standards.

By ROBERT E. GRADY
If something seems too good to be true, it usually is. Such is the case with President Barack Obama's proposed national fuel efficiency standards for cars and trucks and a new tailpipe standard for C02 emissions. The national press has uncritically reported that the new standards will make cars "cleaner." In fact, the rules could impose substantial costs in terms of urban air pollution and human life.
The standards are designed to reduce C02 emissions from cars, with the twin goals of addressing climate change and reducing dependence on imported energy. Carbon dioxide is, of course, ubiquitous and relatively harmless on an everyday basis. It is only its long-term buildup that scientists posit will cause temperature warming. What are not so harmless in the near term are the "criteria air pollutants" currently regulated under the Clean Air Act -- ground-level ozone (or smog), particulate matter, carbon monoxide, sulfur dioxide, nitrogen oxides and lead -- all of which have been shown by the Environmental Protection Agency's (EPA) own scientists to have an adverse effect on human health.
David Gothard
The great irony of Mr. Obama's fuel efficiency proposals is that they may worsen emissions of these harmful gases. By the White House's own calculation (which many observers believe to be quite conservative), the new rules, when combined with earlier proposed increases in Corporate Average Fuel Economy (CAFE) standards, will increase the average price of a new car by $1,300. Herein lies the problem.
In today's automobile fleet, the majority of the pollution comes from the oldest, dirtiest cars. In fact, the dirtiest 10% of the cars account for more than 50% of smog and carbon monoxide. The dirtiest one-third of the fleet accounts for more than 80% of the pollution. That is because the U.S. government has, for 39 years now under successive versions of the Clean Air Act, required automakers to meet ever-tightening standards for tailpipe emissions from new cars. When it comes to smog, carbon monoxide, nitrogen oxides and particulates that new SUV is a lot cleaner than an old, poorly-tuned compact.
The Clean Air Act's requirements have sent emissions in the right direction. According to the EPA, since 1980 annual emissions of carbon monoxide are down 52%, emissions of ozone are down 41%, and emissions of nitrogen dioxide are down 37%. (Emissions of lead are down 97% thanks to taking the lead out of gasoline in the early 1980s).
The Obama plan could slow this progress. An economic phenomenon called "price elasticity of demand" is well established when it comes to automobile purchases. In other words, if you raise the price of new cars, people will buy fewer of them or, at a minimum, put off the purchase for a year or so while they drive the old clunker for a few thousand more miles. And fewer new cars means more pollution, which can cause significant health problems. Yet environmentalists and the press have ignored this issue, so as not to inject a note of complexity or doubt into the chorus of glee that greeted the president's attack on greenhouse-gas emissions.
Last fall, however, both the press and the green community paid significant attention to a study conducted by researchers from California State University at Fullerton and Sonoma Technology Inc. The study showed that, from 2005-07, California's South Coast and San Joaquin Valley air basins experienced more than 100 days in which ozone levels exceeded the National Ambient Quality Standard. In each of those areas, more than 60% of the population was exposed to unhealthy levels of fine particulate matter.
The study concluded that if these areas had simply met the federal standard, these regions could have experienced 1,950 fewer new cases of adult-onset chronic bronchitis; 3,680 fewer premature deaths among those 30 and older; 141,370 fewer asthma attacks; almost 500,000 fewer lost days of work; and, importantly, avoided approximately $28 billion in total costs to the Southern California economy.
Clearly the health risks from fine particulates especially and also from smog are substantial. It is also true that many scientists and economists predict significant long-term costs associated with climate change. But the costs associated with excessive emissions of criteria air pollutants are immediate and observable.
The Obama fuel efficiency plan may also contribute to a significant increase in highway deaths as vehicles are required to quickly meet the new CAFE standard and will likely become lighter in weight as a result. According to a study completed in 2001 by the National Research Council (NRC), the last major increase in CAFE standards, mandated by the Energy Policy and Conservation Act of 1975, required about a 50% increase in fuel economy (to 27.5 mpg by model year 1985 from an average of 18 mpg in 1978). The NRC study concluded that the subsequent downsizing and down-weighting of vehicles, "while resulting in significant fuel savings, also resulted in a safety penalty." Specifically, the NRC estimated that in 1993 there were between 1,300 and 2,600 motor vehicle crash deaths that would not have occurred if cars were as heavy as they were in 1976.
The president now proposes a fuel economy increase of similar magnitude in an even quicker time frame -- to 39 mpg by model year 2016 from 27.5 mpg now. Given the time it takes for new technologies to be developed, tested and incorporated into new car models, it is likely that down-weighting of cars will be an important means of meeting the new standard. And one result again could be highway deaths that might otherwise not have occurred.
Well, one might argue, this would not be the case if everyone drove smaller cars. The NRC study considered this countervailing fact and included it in its estimates. But nearly half of all car crashes (more than 48% in the years studied) are one-vehicle crashes. Put another way: If your car hits a tree or a post or a bridge abutment, you are most certainly better off in a larger car.
None of this is intended to argue that Mr. Obama should not be attacking the problem of climate change. Indeed, some in Congress are proposing to cap carbon emissions and allow tons of carbon credits to be traded, which at least provides the flexibility for those who must comply to reduce emissions in whatever way they choose. Others are proposing an increase in gasoline or carbon taxes. Both of these approaches have their merits, although economic conservatives like me would point out that, in order not to damage the ailing economy, any increases in gasoline or carbon taxes should be matched by a cut of at least equal size in payroll taxes.
My point is simply this: Mr. Obama's proposed fuel efficiency and CO2 tailpipe regulations should be subjected to rigorous cost-benefit analysis, as all federal regulations should be. Those at EPA charged by statute with regulating air emissions, and those at the Office of Management and Budget charged with reviewing the implementing regulations, should carefully assess whether the benefits of the president's fuel efficiency and carbon proposals outweigh their very real costs.
Mr. Grady is managing director of the Carlyle Group in San Francisco and a former trustee of the Environmental Defense Fund. He was involved as a senior White House aide in drafting the Clean Air Act Amendments of 1990, and helped craft Gov. Arnold Schwarzenegger's Environmental Action Plan during his 2003 campaign.