There is no more government "standard" to fight over. The "standard" is replaced by the average fuel efficiency of cars sold in the US each year. That adjusts automatically, and it is always reasonable. The new rule in more detail.

Why rebate all the money? Right now, if the standard is tightened, car companies start losing money, so they fight it. But this incentive is what's called a "revenue neutral feeBate," so there car companies cannot lose on average.

Why per ton? A heavy truck that gets 22 mpg must actually have a very efficient engine, and consequently should not have incentives placed on it to make its engine yet more efficient. Similarly a very small car that get 22 mpg, has a lot of room for improvement and incentives can have a big effect.

But don't we want cars to be lighter Yes, but this needs a separate incentive that is tougher to design. It must account for safety. We're working on it, but here we focus on the easy one.

Which cars are subsidized? The fee increases the more a car has below average mpg (per ton), so a car that is just 1 mpg below average will pay a fee much smaller than the rebate. Only cars that get roughly 4 mpg below average will be hurt. All others will get a subsidy. Every car company can easily make care good enough to get into the subsidy zone. When they make less efficient cars, its because they choose to and because they make money on them.

Is this going to work? Definitely. It's the low mpg cars that eat most the gas. Raising a car from 15 mpg to 25 mpg saves as much gas than raising one from 30 mpg to 150 mpg. The incentive will put pressure on every below-average car, even those that get some subsidy—they could get even more if they improved. As the worst cars improve, the average mpg goes up. There will always be cars below average.

Why not put incentives on the high-mpg cars. It would make sense to continue the standard into the above-average reason somewhat, but the most efficient cars are bought by people who have paid extra to get that efficiency. Keeping the fee threshold at the national average, works almost as well and it protects the proposal against criticisms of "going to far."

Exactly what fee is proposed? (1) Calculate the cars fuel consumption per hundred miles, fc = 100/mpg. (2) Calculate US average fuel consumption, FC. (3) the fee should be about $1000 x (fc - FC). If average US mpg were 25 mpg, the FC = 4. A car getting 20 mpg would have fc = 5, so it would pay a fee of $1000 (5 - 4), or $1000.

Will consumers pay more for low-mileage cars? Yes, but they already do. A car getting 20 instead of 25 mpg, uses an extra 1000 gallons of gasoline over 100,000 miles. At just $2/gallon, this is $2000. The incentive will cause car makers to improve mileage by enough to save the cost of the fee in most cases, but this will vary.

So what is the bottom line cost to the average consumer? (1) On average, these fees will cost car makers nothing because all fees are rebated. (2) On average the cost of improving mileage should be a bit less than the cost savings from better mileage. (This is based on a study published by the National Academy of Sciences.) (3) On average, consumers should see no net cost or savings, but this depends on the future price of gas and exactly how the cost of improvements turns out.

How can we get something for nothing? We are getting a reduction in gasoline use and oil imports. Economics says that if the markets are working perfectly, it would cost us to make this change. But things are not perfect. Some people mistakenly buy too little efficiency and some buy too much. This program tends to correct the purchase of those who buy too little, so that saves money. It's not a perfect program, so sometimes it will increase cost, but even then there is a benefit--less CO2 and less oil dependence. If we put a dollar value on these benefits, there is no doubt that this program will save money.

Hybrids run on gas but are super efficient because their engines run at the perfect speed or not at all. Batteries do the trick.