Without the fuel economy standards, the W-M cap-and-trade system might be expected to yield some reduction of vehicle emissions, but probably much less than 46 MMT/yr. The standards will essentially force a cap-and-trade compliance mechanism on transportation, which will increase vehicle prices but lower carbon trading prices. The reason it make sense to impose this kind of “interference” on the market is that the higher vehicle prices will be more than offset by fuel savings. (If I recall, average vehicle prices are expected to increase by $1300, but fuel savings will make that up in 3.2 years.) So everyone comes out ahead.

Basically, the fuel economy standards are just that: “fuel economy”. Emission reduction is just an ancillary benefit.

The more fundamental question is this: Assuming that the W-M caps are based on some calculus of cost acceptability, then why should we use fuel economy standards to further lower carbon prices? Why not apply them to achieve further emission reductions (at whatever price congress has deemed “acceptable”)? Furthermore, if the new standards have a 3-year payback, why not create incentives for further fuel economy improvements, which would yield greater cost savings as well as more emission reductions?