Fuel economy regulations and innovation

I have long argued that regulations can be used to push innovation. Here is a case in point: the Administration’s recent announcement raising fuel economy standards to an average of 54.5 miles per gallon by 2025. As a story in the Washington Post notes, the new standards have the car makers’ support:

“Customers want higher fuel efficiency in their cars and trucks, and GM is going to give it to them,” said Greg Martin, General Motors’ executive director for communications. “We expect the rules to be tough, but we have a strong history of innovation, and we’ll do our best to meet them.”

The Post story goes on to note that some innovations will come from outside the auto makers themselves:

Some future changes may have less to do with the engine than what surrounds it. Alcoa’s chief sustainability officer, Kevin Anton, said that making a car body entirely out of lightweight aluminum rather than steel automatically boosts its fuel efficiency by 10 percent.

Thus, the new regulations may spur an ecosystem of innovation. That can only be good for the U.S. economy, good for companies and good for consumers.
Here is hoping that policymakers (and would-be policymakers now running for office) get the message.

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