EPA seeks to roll back fuel economy standards
The U.S. Environmental Protection Agency (EPA) announced plans to revise greenhouse gas (GHG) emissions standards for cars and light trucks for model years 2022-2025. Effectively, this would mean a reduction in the current planned fuel economy standards for vehicle models of those years, set by the Obama administration in 2012.
EPA Administrator Scott Pruitt faulted the previous administration's process, stating, "Obama’s EPA cut the Midterm Evaluation process short with politically charged expediency, made assumptions about the standards that didn’t comport with reality, and set the standards too high."
The Alliance of Automobile Manufacturers praised the announcement. According to the industry trade group in a statement, "Consumer research shows that the monthly payment is the top concern when car-shopping. So, to ensure ongoing fuel-economy improvement, the wisest course of action is to keep new vehicles affordable so more consumers can replace an older car with a new vehicle that uses much less fuel—and offers more safety features."
A statement from the House Subcommittee on Energy Chairman Fred Upton (R-MI), House Subcommittee on Environment Chairman John Shimkus (R-IL), and House Subcommittee on Digital Commerce and Consumer Protection Chairman Bob Latta (R-OH), said "While today’s announcement is far from a final rulemaking and actual changes to the standards, EPA’s determination reflects current realities and better mirrors what the car-buying public wants. If automakers cannot produce the cars people want to buy at prices they can afford, that will quickly have an adverse impact on the auto industry, its workers, and even the environment as older, less-efficient cars will remain on our roadways. That is why we need reasonable and achievable improvements in fuel economy, and this determination is a step in the right direction."
Other groups were quick to denounce the EPA's plans. It potentially sets up a struggle between the EPA and the State of California and 12 other states regarding a state's ability to set its own standards. A possible outcome of such a battle could be separate sets of standards for automakers that are much further apart, one that follows the more relaxed federal guidelines and a second set following a much more stringent set by California, in particular.
California Air Resources Board Chair Mary D. Nichols said, “This is a politically motivated effort to weaken clean-vehicle standards with no documentation, evidence, or law to back up that decision. This is not a technical assessment; it is a move to demolish the nation’s clean-car program. EPA’s action, if implemented, will worsen people’s health with degraded air quality and undermine regulatory certainty for automakers."
A reduction of emissions has the potential to negatively impact the U.S. development of cleaner technologies, especially electric vehicles (EVs). Without the requirement to meet higher standards, automakers may not feel the need to spend more to develop these vehicles. Such a reduction in investment would be harmful to suppliers and developers of technologies, such as EV batteries—a market that is expected to be worth $95 billion by 2025.
More will be known about the specific impacts on the industry once numbers are released.