The Trump Administration finally released in March its long-planned rollback of federal fuel economy standards, a gift to the oil industry and its allies. However, the rollback is riddled with errors that will lead to a lengthy court battle and could be halted by a new president next January. Furthermore, long-term industry trends and international efforts to promote cleaner vehicles may make the rollback meaningless.
I detail the administration’s rule-making and the potential for more optimistic outcomes in a new opinion piece published today by the Regulatory Review at University of Pennsylvania Law School. The stakes for the climate fight, given the centrality of transportation emissions to overall greenhouse gas emissions, couldn’t be higher.
Some environmentalists have noted with schadenfreude that the auto industry is getting its just desserts now for pressing the Trump administration to weaken Obama-era fuel economy standards. While the auto industry may have originally just wanted some additional flexibility for compliance, instead they got a wholesale revocation of the program.
And this rollback means a worst-case scenario for the auto industry, with potentially years of litigation and uncertainty to come. In short, they won’t know what type of vehicles to produce for the next few years at least.
So if the auto industry didn’t want the administration to take this approach, why is it happening? The answer may involve the other industry that benefits from weakening fuel economy standards: Big Oil. As Bloomberg reported:
The Trump administration’s plan to relax fuel-economy and vehicle pollution standards could be a boon to U.S. oil producers who’ve quietly lobbied for the measure.
The proposal, released Thursday, would translate into an additional 500,000 barrels of U.S. oil demand per day by the early 2030s, about 2 to 3 percent of projected consumption, according to government calculations.
Apparently oil industry leaders have been quietly lobbying for this action, including Marathon Petroleum Co., Koch Companies Public Sector LLC, and the refiner Andeavor. In fact, on the KQED Forum show I participated on this past Friday, one of the guests supporting the rollback was from the Koch-funded think tank “Pacific Research Institute.”
So it looks like Big Oil doesn’t really care if the auto industry twists in the wind on the rollback, if it means the possibility of selling a lot more climate-destroying oil in the meantime.
The U.S. Environmental Protection Agency, under new management with the recent sacking of Scott Pruitt, will apparently be moving ahead next week with a proposed rollback of national fuel economy standards post 2020. The agency will also try for the first time in history to revoke a previously granted waiver to California to allow the state to set more aggressive standards and require automakers to produce a certain number of zero-emission vehicles, per E&E [pay-wall]:
EPA is expected to propose a rule in the coming days to prevent the standards from rising past the 2020 levels established under former President Obama, who hailed those increases as a major step toward addressing rising temperatures.
Also in the crosshairs is a California waiver under the Clean Air Act that allows it and more than a dozen other states to surpass federal car rules. EPA is expected to ask for comment on rescinding the waiver, a move that many see as a signal of the administration’s intent to do just that.
The move will set off a battle royale of litigation, probably taking years to resolve and possibly relying on the swing vote of whomever fills Justice Kennedy’s seat on the U.S. Supreme Court.
If the agency is successful (and if Trump is re-elected in 2020), it will probably badly damage the electric car market in the U.S., particularly in California, where the ZEV mandate has been the critical policy tool for encouraging automakers to introduce new EV models.
All of this retrograde action sets the stage for China to eat our lunch:
China’s generous subsidies to electric vehicle makers have created a massive field of producers, and it’s only growing.
The industry is one of 10 identified for state investments three years ago as part of President Xi Jinping’s Made in China 2025 plan. A total of 487 companies currently exist, fueled by $15 billion in direct subsidies for EV sales over the last five years.
Those subsidies are still coming: In June, the National Development and Reform Commission and China Construction Bank Corp. announced an additional $47 billion fund for high-tech industries, including EVs.
While I’m happy to see international investment in EVs continue, it’s depressing to see the Trump Administration try to roll back progress on this environmentally crucial — and economically beneficial — clean transportation technology.
Yesterday, California and 17 other states sued the U.S. Environmental Protection Agency for its decision last month to halt Obama-era fuel economy standards for vehicles in model years 2022-25. KTVU News Channel 2 in the Bay Area interviewed me last night as part of their story on the lawsuit:
Scott Pruitt’s decision earlier this month to rollback Obama-era fuel economy standards has gotten a lot of media attention — rightfully so. In an interview last week with The Real News Network out of Baltimore, two other panelists and I had an opportunity to discuss the implications:
For those unable to watch the video, a transcript is available.
KTVU Channel 2 news in the Bay Area covered EPA’s proposed rollback of Obama-era fuel economy standards last night, including an interview with me about the likely legal fight and economic repercussions:
Trump’s EPA just announced its intent to roll back fuel economy standards for all light-duty vehicles (passenger vehicles and trucks) between 2022 and 2025. The original standards were finalized in 2011 under the Obama Administration and in concert with California’s independent greenhouse gas standards for tailpipe emissions, with a goal of 54.5 miles per gallon vehicles by 2025. They would have saved 540 million metric tons of carbon dioxide emissions and 1.2 billion barrels of oil over the vehicles’ lifetime, according to government estimates.
EPA’s decision to loosen these standards will likely be challenged in court, notably by states that have adopted the stricter California standards. California adopted these standards pursuant to a waiver it received from the federal government under the federal Clean Air Act, which reserved for California the authority to develop air quality standards more stringent than federal ones. The waiver provision was included in the original act in recognition of the state’s unique air quality challenges and history as a pioneer in this area of regulation.
So what happens now? There are three potential outcomes:
- The state lawsuits are successful and the proposed rollback is delayed until a new administration takes over that is more interested in protecting the environment and public health over industry profit.
- The federal rollback is finalized and the country ends up with two markets for vehicles: a clean car market in California and the dozen states that have adopted the California standards, and a dirty car market in states that don’t have these higher standards. This outcome is not good for automakers, as they’d have to develop separate, cleaner cars for the California-led market. And it might be bad for consumers in these states who may lose access to some vehicles that would otherwise have been clean enough to sell in the California-led market.
- The federal rollback is finalized and the EPA tries to revoke California’s authority to set its own tailpipe standards. Never in history has an EPA administrator tried to revoke an existing waiver, but it seems likely that EPA chief Pruitt will try. My colleague Ann Carlson described the environmental and legal stakes with such a move. If the waiver is revoked, California will have a difficult time trying to achieve its near-term climate goals.
As with everything regulatory in nature, we’ll have to wait and see how the legal process plays out. But if EPA is successful in rolling back these standards, the agency will undermine the fight against climate change, increase toxic air pollution and attendant public health impacts, cost drivers money in terms of having to buy more gasoline for the same amount of driving, and diminish U.S. automaker competitiveness with international rivals who fully embrace more fuel-efficient and zero-emission vehicles.
