This Ceres report focuses on the economic impacts of strengthening fuel economy and greenhouse gas (GHG) emission standards for passenger vehicles sold in the United States. The analysis finds that stronger standards—more miles and fewer emissions per gallon—would lead to greater economic and job growth, both within the auto industry and in the broader economy as a whole.
Each of the four scenarios covering the range of new standards currently under consideration for CAFE mileage and GHG emissions improvements—annual emissions reductions and fuel-economy improvements of three, four, five and six percent per year for the years 2017-25—would bring substantial economic and job benefits for the U.S. economy in 2030. This includes net jobs gains in 49 states.
The greater the improvements in fuel economy and GHG emissions, the greater the economic benefits. For example, nearly 700,000 new jobs would be created under the six percent scenario, compared to only about 350,000 jobs under the three percent scenario.
Domestic auto industry job creation would increase under all four scenarios, including 63,000 new, full-time domestic auto jobs in 2030 under the six percent scenario.
Stronger fuel economy and GHG standards would produce broad economic benefits. This includes significant consumer savings at the pump, which would shift significant consumer spending away from the oil industry and towards other parts of the economy, such as retail, food and health care.
The six percent scenario would generate an estimated $152 billion in fuel savings in 2030 compared to business as usual. Of the $152 billion saved at the pump, $59 billion would be expected to be spent in the auto industry, as drivers purchase cleaner, more efficient vehicles. The remaining $93 billion will be spent across the rest of the economy, from retail purchases, to more trips to restaurants to increased consumer spending on health care.
All of the scenarios would deliver net job gains in 49 states, with the biggest winners on a percentage basis being Indiana, Michigan, Ohio, and New York. Other states that would see the most job growth on a percentage basis include Alabama, Kentucky, Tennessee, North Carolina, Vermont, New Hampshire, Oregon and Missouri. In terms of total number of new jobs, California and New York would see the biggest gains, and other winners would include Florida, Ohio, Michigan Illinois, Pennsylvania, Texas, North Carolina, Indiana, Georgia and New Jersey. Wyoming is the only state that would lose jobs.
Effects on national and state GDP would be overwhelmingly positive. States seeing the biggest percentage GDP gains under the strongest fuel efficiency standard have large auto industry sectors. The biggest gainers would be Michigan and Indiana, followed by Kentucky, South Carolina, Tennessee, Wisconsin, Iowa, Ohio, Alabama and Oregon. Some states would see net GDP decreases under this same scenario. These are primarily oil-producing states such as Alaska, Wyoming and Louisiana, followed by Oklahoma, Texas, New Mexico, Colorado and North Dakota. However, all these states, except Wyoming, would see net job gains as money is shifted away from the oil industry to sectors of the economy that deliver more jobs per dollar spent by consumers.