America’s vehicles are on the road to becoming cleaner.

Last week, President Obama directed his administration to set new fuel efficiency and greenhouse gas (GHG) emissions standards for medium- and heavy-duty vehicles, including large pick-up trucks, school buses, and tractors. Improving fuel efficiency standards from these vehicles—which make up 20 percent of U.S. transport emissions—can not only rein in emissions, it can help consumers save money at the gas pump.

New standards can further reduce carbon pollution

The transportation sector is responsible for about 28 percent of U.S. emissions, making it the country’s second-largest emissions source (power plants are the first). Tackling emissions from transportation is therefore a key part of the administration’s plan to reduce emissions 17 percent below 2005 levels by 2020.Heavy-duty vehicles are major players in the U.S. transport sector. Although they only account for about 4 percent of registered vehicles on the road, they contribute one-fifth of transport sector emissions.

WRI analysis shows that the administration has the opportunity to make significant emissions-reductions cuts across the transport sector—cuts that could bring the country closer to its short-term and long-term emissions-reduction goals. For example, our analysis shows that applying ambitious standards throughout U.S. transportation systems—including highway vehicles, off-highway vehicles, and aircraft—could reduce transportation sector emissions by 2 percent in 2020 and 15 percent in 2030 compared to business-as-usual. Ambitious standards for medium- and heavy-duty vehicles could contribute significantly to these reductions, so they’re an important piece of steering the United States onto a lower-carbon pathway.

Building on existing transport emissions-reduction plans

This latest directive from President Obama builds on the administration’s previous actions on fuel efficiency. The administration already set GHG emissions and fuel efficiency standards for cars and light trucks through model year 2025. As a result of these rules, new light-duty vehicles sold in 2025 will emit half the GHG emissions of vehicles sold in 2010 and go nearly twice as far on one gallon of fuel. And in 2011, after coordinating with truck and engine manufacturers and other stakeholders, the administration finalized the first-ever standards for medium- and heavy-duty vehicles for model years 2014 through 2018. The new standards—which will be issued by the Department of Transportation (DOT) and Environmental Protection Agency (EPA) in March 2016—will tighten these heavy-duty vehicle standards beyond 2018.

Existing and forthcoming efficiency standards can significantly reduce fuel consumption and GHG emissions. Already, current light-duty vehicle regulations are expected to reduce U.S. GHG emissions by nearly 3 billion metric tons over the lifetime of cars built between 2012 and 2025. EPA and DOT estimate that existing heavy-duty standards will save around 530 million barrels of oil over the lifetime of truck model years 2014 to 2018, reducing CO2 emissions by about 270 million metric tons—equivalent to the annual emissions of 76 coal-fired power plants. Tighter post-2018 standards for heavy-duty trucks could deliver even greater reductions.

Carbon losses, economic gains

Fuel efficiency standards don’t just reduce GHG emissions, they also allow families and businesses to spend less money at the pump. EPA and DOT estimate that light-duty vehicle standards will save consumers more than $1.7 trillion in fuel costs over the lifetime of vehicles sold from model years 2012 through 2025. Existing medium- and heavy-duty standards will save an estimated $50 billion in fuel costs, a total net benefit of $42 billion after factoring in the costs of new technology.

These savings can create ripple effects across the economy. The Union of Concerned Scientists estimates that fuel and cost savings from widespread deployment of more efficient trucks could lead to a $4 billion increase in annual gross domestic product by 2020 and a $10 billion increase by 2030. Plus, greater fuel efficiency means that businesses spend less money transporting their products by truck, potentially leading to lower prices of consumer goods. A recent report by the Consumer Federation of America found that doubling the 2010 average fuel economy of medium- and heavy-duty trucks could result in net savings of more than $250 per year per household. As President Obama said in his speech last Tuesday, “It’s not just a win-win, it’s a win-win-win.”

New fuel standards should be ambitious

Post-2018 fuel efficiency standards can help drive the United States toward a low-carbon economy, but only if those standards are ambitious. For example, the country’s current heavy-duty vehicle standards cover tractors but not trailers, which impact the overall fuel efficiency of tractor-trailer combinations. Integrating trailers into the next phase of standards could reduce each tractor-trailer’s fuel use by 7-10 percent. WRI analysis shows that more rigorous standards that include trailers could reduce GHG emissions from medium- and heavy-duty vehicles by as much as 26 percent below business-as-usual levels in 2030.

But most importantly, new fuel efficiency standards must be complemented by other ambitious climate action strategies. While reducing emissions from transport—and across all sectors of the economy—is necessary to meet the 17 percent goal, preventing the worsening impacts of climate change requires much greater emissions reductions over the long-term.

This post was originally published on WRI Insights. The original version can be found here.