The US Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) announced that it will soon propose robust new fuel economy standards. The new standards would increase fuel efficiency 8% annually for model years 2024-2026 and increase the estimated fleetwide average by 12 miles per gallon for model year 2026, relative to model year 2021.

NHTSA’s proposal comes as the automobile industry is retooling future models in response to market demand for cleaner, more fuel-efficient vehicles. Nearly all auto manufacturers have announced new electric vehicle models, and five manufacturers have voluntarily agreed with California to achieve stricter greenhouse gas requirements.

More robust fuel economy standards will encourage the industry to continue improving the fuel economy of cars powered by internal combustion engines as the transportation sector transitions to electrification, NHTSA said.

The proposal considers a range of regulatory alternatives and is significantly different from the conclusion that NHTSA reached in the 2020 final rule. Contrary to the 2020 final rule, NHTSA’s proposal would achieve a fleet average almost nine miles per gallon higher than the 2020 rule by 2026, and would slash greenhouse gases by 1.8 billion tons over the next three decades. NHTSA estimates that total benefits from the new proposed standards will exceed program costs by $132 billion.

NHTSA will also begin work, under a new Presidential Executive Order, to develop fuel economy standards for passenger cars and light duty trucks for model years 2027-2030. In addition, the agency will develop medium and heavy-duty fuel efficiency standards beginning as early as model year 2027.