Current rules in the United States call for the industry-wide vehicle fuel economy standard to rise to 54.5 miles per gallon by 2025. That will be a challenge, requiring “step-change improvements, not incremental ones,” according to PwC. But it’s achievable: “Experts believe that petroleum-based vehicle fuel economy can be improved by as much as 75 percent with combustion breakthroughs…, exhaust aftertreatment technologies that further reduce emissions, and the recovery of energy from waste heat.” Sources of innovation like these could lead to a lasting competitive advantage for the automaker that breaks through. Expect innovation to really ramp up in the sector.
That is, unless the fuel economy standards are rolled back. Today, I signed the Climate Reality Project’s pledge, calling to keep the standards in place. In its words: “These standards will prevent about 6 billion metric tons of greenhouse gas emissions and save over 2 million barrels of oil a day and $1.7 trillion in fuel costs by 2025.” That’s a lot of emissions.
Just yesterday, the International Energy Association released its emissions estimate for 2016 and found that global emissions have remained flat for the past three years. That’s a very encouraging sign that global efforts to keep emissions in check can be effective and don’t limit economic activity. Indeed, in the US, carbon dioxide emissions fell 3% – while the economy grew by 1.6%. Bear in mind that emissions have to decline, however, by a substantial amount if we’re really going to limit climate change. So the fuel economy standards are needed now more than ever.