Updated October 19, 2023
Light-Duty Vehicles, Air Pollution, and Climate Change
On August 5, 2021, President Biden signed Executive
technological feasibility, the cost of compliance, and
Order 14037, “Strengthening American Leadership in
industry lead time, among other items. EPA has since
Clean Cars and Trucks” (86 Federal Register 43583). The
promulgated standards for emissions of nonmethane
order required, among other items, executive agencies to
organic gases (NMOG), NOx, PM, carbon monoxide (CO),
revisit and amend the federal standards that regulate air
and formaldehyde (an air toxic).
pollution emissions, greenhouse gas (GHG) emissions, and
fuel economy of new passenger cars and light trucks. These
NHTSA’s CAFE Standards
standards include the Motor Vehicle Emission and Fuel
The Energy Policy and Conservation Act of 1975 (EPCA;
Standards promulgated by the U.S. Environmental
P.L. 94-163) established CAFE standards for passenger cars
Protection Agency (EPA), the Corporate Average Fuel
beginning in model year (MY) 1978 and for light trucks
Economy (CAFE) Standards promulgated by the National
beginning in MY1979. The standards are designed
Highway Traffic Safety Administration (NHTSA), and the
primarily to conserve petroleum. They require each auto
Light-Duty Vehicle GHG Emissions Standards
manufacturer to meet a target for the sales-weighted fuel
promulgated by EPA. The order also included a nonbinding
economy of its entire fleet of vehicles sold in the United
electrification goal that “50 percent of all new passenger
States in each model year. Under EPCA, CAFE standards
cars and light trucks sold in 2030 be zero-emissions
and new vehicle fuel economy rose steadily through the late
vehicles, including battery electric, plug-in hybrid electric,
1970s and early 1980s. After 1985, Congress did not revise
or fuel cell electric vehicles.” EPA published its proposal—
the legislated standard for passenger cars for several
the “Multi-Pollutant Emissions Standards for Model Years
decades, and it remained at 27.5 miles per gallon (mpg)
2027 and Later Light-Duty and Medium-Duty Vehicles”—
until 2011. The light truck standard was increased to 20.7
on May 5, 2023 (88 Federal Register 29184). NHTSA
mpg in 1996, where it remained until 2005. In 2007,
published its proposal—the “Corporate Average Fuel
Congress enacted the Energy Independence and Security
Economy Standards for Passenger Cars and Light Trucks
Act (P.L. 110-140), mandating a phase-in of higher CAFE
for Model Years 2027– 2032”—on August 17, 2023 (88
standards reaching 35 mpg by 2020. This was the last
Federal Register 56128).
legislation passed by Congress to set fuel economy goals.
Emissions from Light-Duty Vehicles
EPA’s GHG Standards
The light-duty vehicle (LDV) and medium-duty vehicle
In the 2007 decision Massachusetts v. EPA, the Supreme
(MDV) sectors (defined at 40 C.F.R. §86 and 49 C.F.R.
Court held that EPA has the authority to regulate GHGs
§523) generally include passenger cars, light trucks, and
from new motor vehicles as “air pollutants” under CAA
most sport utility vehicles; as well as class 2b and class 3
Section 202. In the 5-4 decision, the Court’s majority
trucks such as large pickups and vans. EPA reports that
concluded that EPA must decide whether GHG emissions
these vehicles contribute to air pollution, such as “ozone,
from new motor vehicles contribute to air pollution that
particulate matter, and air toxics, which are linked with
may reasonably be anticipated to endanger public health or
premature death and other serious health impacts, including
welfare or provide a reasonable explanation why it cannot
respiratory illness, cardiovascular problems, and cancer.”
or will not make that decision. In December 2009, EPA
The agency estimates that LDVs and MDVs currently
promulgated findings that GHGs endanger both public
account for approximately 11% of the United States’ annual
health and welfare and that GHG emissions from new
anthropogenic emissions of nitrogen oxides (NOx), 8% of
motor vehicles contribute to that endangerment (74 Federal
volatile organic compounds (VOC), and 1% of fine
Register 66495). With these findings, the CAA required
particulate matter (PM2.5). Further, according to EPA’s
EPA to establish standards.
Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990–2021 (published April 2023), LDVs emitted over 1
Current Standards
billion metric tons of GHGs in 2021, or 17% of the United
Air Pollution Standards
States’ annual anthropogenic emissions of GHGs.
The most recent air pollution standards for LDVs are
Agency Authorities
referred to as Tier 3 (79 Federal Register 23414). Tier 3
EPA’s Air Pollution Standards
standards were finalized in March 2014, to be phased-in
between 2017 and 2025, and closely align with California’s
Section 202 of the Clean Air Act Amendments of 1970
Low-Emission Vehicle (LEV) III program. Manufacturers
(CAA; P.L. 91-604, as amended) requires EPA to establish
must meet fleet-average tailpipe emissions standards for
standards for emissions of air pollutants from new motor
vehicles which, in the Administrator’s judgment, cause or
NMOG + NOx, PM, CO, and formaldehyde in a given
model year across several different test cycles. Tier 3 also
contribute to air pollution which may reasonably be
includes standards for low-sulfur fuel, evaporative
anticipated to endanger public health or welfare. Standards
emissions, and on-board diagnostics, as well as compliance
under Section 202 must also consider issues such as
https://crsreports.congress.gov

---

Light-Duty Vehicles, Air Pollution, and Climate Change
flexibilities such as an emissions averaging, banking, and
EPA’s 2023 Proposal
trading program.
Air Pollution Standards. EPA’s 2023 proposal for LDVs
(Tier 4) includes NMOG + NOx standards that would
CAFE and GHG Standards: Rulemakings
phase-down to a fleet average of 12 milligrams (mg)/mi by
EPA’s current set of GHG emissions standards (86 Federal
MY2032, representing a 60% reduction from the existing
Register 74434), promulgated in December 2021, extends
Tier 3 standards. The MDV proposal would see a 66% and
through MY2026, culminating in a projected industry fleet-
76% reduction, for 2b and class 3 vehicles, respectively.
wide GHG compliance target of 161 grams/mile (g/mi).
EPA is also proposing a PM standard of 0.5 mg/mi.
NHTSA’s current set of fuel economy standards (87
GHG Standards. EPA’s 2023 proposal for LDV GHG
Federal Register 25710) also extends through MY2026,
standards would increase in stringency each year from
culminating in a projected industry fleet-wide fuel economy
MY2027 to MY2032. The agency projects the proposed
target of 49 mpg.
standards would result in an industry-wide average target
CAFE and GHG Standards: Attributes
for the light-duty fleet of 82 g/mi of CO2 in MY2032,
The agencies’ fuel economy and GHG standards apply to
representing a 56% reduction relative to the existing
MY2026 standards. Additional components of the proposal
the new fleet of passenger cars and light trucks sold by a
include, among other items, narrowing the difference in
manufacturer within the United States during a given model
stringency between passenger cars and light trucks, phasing
year. Starting with the standards finalized in 2010, the
out the off-cycle credit programs, and rescinding
agencies have used the concept of a vehicle’s “footprint”
regulations that would consider upstream power sector
(i.e., the measured area enclosed by the four tires) to set
emissions tied to electric vehicle use, which are to start in
differing targets for different-sized vehicles, all of which
MY2027.
increase in stringency year after year. Generally, the larger
the vehicle footprint, the lower the corresponding fuel
In projecting potential industry compliance, EPA estimates
economy target and the higher the CO2-equivalent
that one potential pathway to meet the proposed standards
emissions target. This concept differs from the original
would be through
CAFE standards, which grouped domestic passenger cars,
• about 67% electric vehicle penetration in MY2032
imported passenger cars, and light trucks into three broad
across the combined LDV fleet;
categories. The newer, “attribute-based standards” enable
• about 40% electric vehicle penetration by MY2032
manufacturers to produce a range of vehicle sizes rather
across the combined MDV fleet;
than designing a lighter and smaller vehicle fleet overall to
• widespread use of gasoline particulate filters to reduce
meet categorical targets.
PM emissions; and
• improvements in technology to reduce GHGs from
Manufacturers must report vehicle characteristics sold each
conventional gasoline vehicles.
model year. These data allow EPA and NHTSA to calculate
each manufacturer’s CAFE and GHG targets under the
Manufacturers could also choose to employ hybrid or plug-
standards given the specific pattern of sales. The agencies
in hybrid technologies to help meet the proposed standards.
then compare the calculated targets against the vehicles’
fuel economy and emissions results from EPA-approved
EPA estimates that the total benefits of the proposal exceed
test cycles to determine compliance. To facilitate
the total costs, with net present value of benefits in the
compliance, the agencies provide manufacturers various
range of $850 billion to $1.6 trillion. EPA calculates that
flexibilities. A manufacturer’s fleet-wide performance (as
between $63 billion and $280 billion of total benefits are
measured on the test cycles) can be adjusted through the use
attributable to reduced emissions of air pollutants; $330
of alternative fuel vehicles, air conditioning efficiency
billion to climate benefits; $450 billion to $890 billion to
improvements, and “off-cycle” technologies (e.g., active
fuel savings; and $280 billion to $580 billion to repair and
aerodynamics, thermal controls, and idle reduction).
maintenance savings, through 2055. Estimates for
Further, manufacturers can generate credits for over-
compliance costs for vehicle technology range from $180
compliance with the standards in a given year. They can
billion to $280 billion, or by about $1,200 per vehicle on
bank, borrow, and transfer these credits within their own
average in MY2032.
fleets or trade them with other manufacturers to achieve
EPA contends that its proposal builds upon announcements
compliance.
by automakers that collectively signal a rapidly growing
NHTSA’s 2023 Proposal
shift away from internal-combustion engine technologies
and toward zero-emission technologies, including
NHTSA’s 2023 proposal includes new fuel economy
electrification. Further, the agency points to P.L. 117-58
standards for passenger cars and light trucks for MY2027-
(the Infrastructure Investment and Jobs Act) and P.L. 117-
MY2031, as well as augural standards for MY2032, that
169 (commonly referred to as the Inflation Reduction Act),
would increase at a rate of 2% per year for passenger cars
which provide investment to accelerate the development of
and 4% per year for light trucks. The agency currently
and market for zero-emission technology. Incorporating
projects that the proposed standards would require an
these initiatives, EPA provides a “no action” analysis in the
industry fleet-wide average for passenger cars and light
proposal that estimates an electric vehicle penetration of
trucks of roughly 58 mpg in MY2032. NHTSA projects that
52% by MY2030 in the absence of the proposed rule.
the proposed standards would reduce U.S. gasoline
consumption by a total of 88 billion gallons and would
Richard K. Lattanzio, Specialist in Environmental Policy
reduce average fuel outlays by $1,043 per vehicle over the
IF12433
lifetimes of the LDVs under compliance.
https://crsreports.congress.gov

---

Light-Duty Vehicles, Air Pollution, and Climate Change


Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF12433 · VERSION 2 · UPDATED

---