Improving the effectiveness and equity of fuel economy regulations with sales adjustment factors

Larger vehicles, such as sports utility vehicles, consume more energy than cars. Their increasing popularity runs contrary to the goal of fuel economy regulations to reduce fossil fuel consumption and greenhouse gas emissions and can be explained by consumer preference and lower regulation stringency, which is due to footprint, truck classification, and the omission of heterogenous lifetime vehicle distance traveled among vehicle classes. This study shows that, for both the US and China, large vehicles travel more, last longer, and are owned by higher income consumers. This means large vehicles and their high-income owners use more fuel and emit more pollutants than represented by current policy and thus raises both policy effectiveness and energy equity concerns. We propose and estimate Sales Adjustment Factors that weigh fuel economy standards based on vehicle lifetime usage and demonstrate the resultant significant improvements in the effectiveness and equity of fuel economy regulations.