Question: The corporate average fuel economy (CAFE) standard for mileage is currently 27.5 miles per gallon of gasoline (the defender) for passenger cars. To conserve fuel and reduce air pollution, suppose the U.S. Congress sets the CAFE standard at 36 miles per gallon (the challenger) in 2014. An auto will emit on average 0.9 pounds of carbon dioxide (CO2) per mile driven at 27.5 miles per gallon, and it will emit 0.8 pounds of CO2 per mile driven at 36 miles per gallon.
a. How much fuel and carbon dioxide would be saved over the lifetime of a passenger car with the new standard? Assume a car will be driven 99,000 miles over its lifetime.
b. If CO2 costs $0.02/lb to capture and sequester, what penalty does this place on the defender? Should this penalty affect the CAFE replacement analysis?