New cars and trucks are more efficient than ever before, but lax regulations mean they're still much less efficient than they should be, according to the EPA's annual report on emissions and fuel economy.

One reason for this is that a glut of credits makes compliance too easy, Dave Cooke, senior vehicles analysts for the Union of Concerned Scientists (UCS), explained in a blog post. Automakers are using those credits for regulatory compliance instead of developing efficiency-boosting technology, Cooke said, noting that even existing technologies haven't been fully exploited.

Barely half of internal-combustion engines currently use direct injection, less than half have engine start-stop or hybrid systems, and an even smaller amount have cylinder deactivation, Cooke noted.

Another part of the issue is that Corporate Average Fuel Economy (CAFE) rules allows for a downward adjustment of actual fuel economy as the fleet shifts to more trucks. Since 2012, automakers' targets have been determined by vehicle "footprint," with lower targets for larger vehicles. So as automakers follow market trends and build more pickups and SUVs, their target fuel economy drops.

2022 Ford F-150

2022 Ford F-150

It's not all bad news, though. Cooke noted that even the current fuel-economy rules have delivered consistent efficiency boosts, and said the EPA can point to automakers' horde of credits when arguing that the auto industry is ready for tougher emissions standards.

The agency is currently drafting standards for 2023 to 2026, and recently suggested that it will opt for tougher standards than it originally outlined.

The push toward tighter standards keeps with what a wide range of consumer and environmental groups rallied for earlier this summer. Tougher standards are needed now to make up for Trump-era rollbacks in emissions and fuel economy rules, they argued.

These potential stricter rules still need to be negotiated, but in the meantime the Biden administration has suggested that steeper fines for failing to comply with emissions rules might be one solution to addressing the Trump rollback.