New U.S. Fuel Economy Standards Result in Job Creation

New fuel economy standards were announced by the U.S. government on August 28, to begin ramping up in the 2017 model year. It is expected that by 2025, fuel economy for cars and light trucks will have been reduced by 90%. Two new reports estimate the job creation that will occur as a result of the new regulations. The U.S. Environmental Protection Agency released a draft regulatory analysis document which, at 377 pages, is complex and comprehensive, looking at multiple impacts. Chapter 8, which deals with employment effects of the new regulations, surveys multiple models and concludes with a highly qualified statement that “For the regulated sector, the cost effect is expected to increase employment by 600 – 3,600 workers in 2017, depending on the share of that employment that is in the auto manufacturing sector compared to the auto parts manufacturing sector.”


A second report, Gearing Up, uses a “quasi-dynamic input-output analytical model” called Dynamic Energy Efficiency Policy Evaluation Routine (DEEPER). The resulting estimates show 50,000 new direct and indirect jobs will be created in light-duty vehicle manufacturing and assembly by 2030, with real wages projected to increase faster than job growth. The report also explores the job creation potential of increasing domestic content requirements in the U.S.


Draft Regulatory Impact Analysis:Proposed Rulemaking for 2017-2025 Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards is at the EPA website at:


Gearing Up: Smart Standards Create Good Jobs Building Cleaner Cars is available at the American Council for an Energy Efficient Economy (ACEEE) website at:

(registration required, free).

A summary of the topic, New Car Rules Get it right on Energy, the Environment and the Economy, is at the Centre for Climate and Energy Solutions at:

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