Executive Summary

Americans should be able to buy a family vehicle that meets all their needs -- a vehicle that is safe, comfortable, extremely fuel efficient and a responsible choice for our environment and the public's health. The good news is that the technology exists today to make this possible. The federal government and the world's automakers can achieve this goal, and provide great benefits to every American who buys gasoline, drives a car, and breathes the air.

Recommendations

Our recommendations are clear and achievable. In sum, we urge Congress and the Bush administration to do the following:

• Immediately close the "SUV Loophole" in the nation's corporate average fuel economy (CAFE) standards that allows pickup trucks, minivans, and sport-utility vehicles (collectively, "light trucks") to average only 20.7 miles-per-gallon (mpg), while the nation's cars are required to average 27.5 mpg. Instead, all passenger vehicles should be covered by the same standard, starting at an average of 27.5 mpg.
  
  
• Increase overall fuel economy of new passenger vehicles to 40 mpg by 2012. Using a single overall fuel economy standard will give the auto makers the greatest flexibility in meeting the new standards, and provide the greatest consumer choice.
  
  
• Pass the CLEAR Act, a bill that would provide tax incentives to consumers who buy fuel-efficient hybrid vehicles and other advanced technology or alternative-fuel vehicles.
  
  
• Focus the nation's research and development activities on enhancing the efficiency of gasoline engines, rather than health-harming diesel engines.

Decades of inaction on federal fuel economy standards, combined with the huge influx into the national fleet of SUVs and minivans, have dropped the average fuel economy of cars and light trucks to their lowest point in almost 20 years. As a result of this decrease (and the steady increase in overall driving), American drivers spent $186 billion on fuel last year and will spend an estimated $260 billion in 2020.

The environmental and public health consequences of this trend are enormous. Our tailpipes pump out hundreds of millions of tons of toxic emissions and smog and global warming-causing gases. Highway vehicles emit roughly 30 percent of the nation's smog-forming gases, and approximately 20 percent of our heat-trapping gases. In fact, vehicles are the fastest growing source of the pollution linked to global warming and climate change. In congested cities like New York, they emit more than half the soot particles that can trigger asthma attacks and cancer.

Increasing fuel economy standards to 40 mpg would dramatically reduce pollution and reduce pressure to drill for oil in environmentally sensitive areas. Emissions of heat-trapping carbon dioxide would be reduced by more than one billion tons per year and emissions of smog-forming nitrogen oxides and hydrocarbons would be reduced by more than 500,000 tons per year by the time the full fleet of vehicles on the road has benefited from higher standards. Oil savings would amount to more than 50 billion barrels over the next 50 years, more than 15 times the likely yield if drilling were allowed in the Arctic National Wildlife Refuge.

The Benefits of Raising Fuel Economy

In the pages that follow, NRDC summarizes why we should reduce emissions by significantly raising the fuel economy of our vehicle fleet. Congress and the administration will soon consider several measures to increase fuel economy, and the National Academy of Sciences will shortly present a report that addresses the issue. We hope that our recommendations and supporting facts add to the debate that will undoubtedly follow.

NRDC's key findings are:

Consumers and the Economy
Raising CAFE standards can save Americans money. At the dealership, efficient vehicles will cost more, but increasing standards to 40 mpg would save car owners from $3,000 to more than $5,000 at the gas pump over the life of an efficiency-enhanced vehicle. In addition, focusing America's engineering and manufacturing prowess on raising fuel economy will provide jobs and aid the economy. Higher fuel economy standards will result in a net increase of over 100,000 motor vehicle-related jobs and a $5.7 billion boost in GDP by 2020.

Consumers and Choice
Contrary to what Detroit and the Bush administration would have us believe, Americans do care about fuel efficiency. Nearly half of the people surveyed in a June Gallup poll said rising gas prices posed a hardship for them, and 85 percent supported the government mandating more energy-efficient vehicles. Furthermore, raising fuel economy standards won't limit the choices of vehicles that are available to consumers. In fact, technological advances continue to make efficient vehicles bigger and more diverse than ever before.

Diesel
Diesel-fueled cars and SUVs should not be used to increase fuel economy. Today's diesel vehicles continue to emit unacceptable levels of cancer-causing soot particles and smog-forming gases. In addition, the promise of "green" diesel technology remains extremely uncertain. America should not look to Europe for leadership: diesel fuel is popular there not because of any environmental benefits, but because tax breaks make it cheaper than gasoline. Instead we should look to Asia, where nations are moving to phase out this dirty fuel.

Safety
All vehicles should be designed to be as safe as possible, no matter what their size. Although automakers claim that heavy, gas-guzzling SUVs are the safest vehicles on the road, evidence shows this isn't necessarily the case. Detroit doesn't have a good record of telling the truth when it comes to safety, having lobbied against seatbelts, airbags, and rollover prevention standards. Fortunately, fuel-efficient vehicles will not force consumers to sacrifice safety for fuel efficiency. If done properly, higher CAFE standards can improve safety by taking the mass out of the heaviest vehicles. In addition, today's smaller cars are often safer than larger ones, and the technology exists to make smaller cars even safer.

In summary, taking immediate and significant steps to improve the efficiency of gasoline engines is the best choice for America and Americans. Failing to do so will needlessly harm the health and lighten the wallets of everyone who breathes and everyone who drives. Therefore we urge Congress and the Bush administration to take responsible action to raise fuel efficiency.

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