CAFE compliance by light trucks: economic impacts of clean diesel engine

With the popularity of light trucks increasing in the United States, their share of the US light vehicle market had doubled between 1980 and 1996, climbing from 20 to 40%. By 1996, annual energy consumption for light trucks had risen to 5.97×10¹⁵ Btu [5.97 quadrillion Btu, or “quad,” or 6.30×10¹⁸ joule (J)], compared to 7.94 quad (8.38×10¹⁸ J) for cars. In recent years (since 1995), the fuel economy of US - manufactured light trucks (almost 99% of which use gasoline engines) has been below the Corporate Average Fuel Economy (CAFE) standards. This paper analyzes a strategy to reduce the CAFE shortfalls by adopting the new, highly energy-efficient clean diesel engine. Research on such engines has been funded by the US Department of Energy, Office of Heavy Vehicle Technologies, under its Light Truck Clean Diesel Engine Program. A clean diesel engine market penetration trajectory is developed, representing an industry response to meet the CAFE standards. Whether the engine will be produced inside the country or imported remains uncertain, so two cases are defined. Values of exports/imports of clean diesel engines/trucks under these cases are estimated. The macroeconomic benefits are estimated by using a model of the US economy developed by Standard & Poor's Data Resources, Inc. On the basis of gains in the gross domestic product projected under the alternative cases, domestic production of the clean diesel engine is favored over importing it.