If only reducing greenhouse gas emissions was as simple as implementing more stringent automobile fuel efficiency standards.  

President Barack Obama will announce today that automakers must meet average U.S. fuel-economy standards of 35.5 miles per gallon by 2016, four years sooner than previously planned, a senior administration official said.

Environmentalists have high hopes for the policy:

Obama’s action is the “biggest single step to curb global warming,” Dan Becker, director of the environmental group Safe Climate Campaign, said in an interview.

But as Megan AcArdle points out the effects of the new fuel economy standards are predictable:

  • It will raise the prices of cars, and make them less safe
  • It will reduce our carbon emissions, but not by as much as advertised, because more fuel efficient cars make driving cheaper, so people will do more of it.  This “rebound” effect robs about 25% of gains, and also means more congestion, and more wear-and-tear on roads
  • This will either help the Big Three compete, or seal their doom as the Japanese manufacturers continue to eat into their market share.  If I had to bet, I’d wager this means big ongoing subsidies for our favorite three public charities.
  • If you want to cut down on the pollution from driving, this is about the worst possible way to do it. 

Geoffrey Styles, however,  views the new plan more positively:

All in all, I regard the new CAFE standard as a positive development, although it doesn’t stand on its own. The specifics of how it will be enforced will ultimately determine its success in altering the car-buying habits of Americans. At the same time, it’s worth noting that future increments of fuel economy beyond 35.5 mpg will cost much more and save many fewer actual gallons, because of diminishing returns. The same European car industry that has demonstrated that our new standard can be met has estimated that the cost of going from their present level of 160 g/km to the EU’s 120 g/km standard–equivalent to 46 mpg–would likely increase vehicle sticker prices by approximately $4,900 per car. When translated into dollars per barrel of oil saved or per ton of CO2 avoided, that looks prohibitively high. The implication is that yesterday’s move on CAFE should be our last tweak to fuel economy standards until technology has changed dramatically.

Still, whatever way you look at it, the price of CAFE is going up.