This week reports surfaced that President Donald Trump’s administration would soon roll back the Corporate Average Fuel Economy (CAFE) and vehicle emission standards set by his predecessor—which, in particular, locked in a controversial 54 mpg fuel efficiency standard for new light-duty vehicles by 2025. It’s an expected move, but one that could take years to unravel even if Trump’s Environmental Protection Agency goes ahead with the plan.
If successful, it would also effectively dismantle what’s considered the hallmark of former President Barack Obama’s initiative to tackle the threat of global warming, and it’s one automakers were fine with a short time ago.
“We all want to get more fuel-efficient autos on our roads, and a single, national program with a strong midterm review helps us get closer to that shared goal,” the Alliance of Automobile Manufacturers, the trade association representing 13 automakers, said in a statement at the time the standards were confirmed.
That last part—a “strong” midterm review—is key. In January, during the waning days of Obama’s presidency, the former president’s EPA sped up the process by several years, and went ahead and issued a final determination on the standards. The move locked in automakers to the 2025 goal and forced the Trump administration to engage in a lengthy administrative process to unwind the determination.
That brings us to today. The automakers’ effort to curry favor with Trump, which began in earnest virtually from the moment he won the election, seems to have paid off.
Last month, the alliance sent a letter to Trump’s EPA administrator, Scott Pruitt, requesting that he withdraw the determination and resume the midterm review. And now as early as this week, Trump is expected to announce some form of a rollback of the regulations alongside Pruitt and U.S. Transportation Secretary Elaine Chao. The rub? Not only would it unwind a significant measure to combat global warming, it will, as The New York Times plainly put it: “also have a major effect on the United States auto industry.”
Here’s what it means for your next car, and the business of making cars.
CAFE, enacted by the U.S. Congress in 1975, had the express purpose of reducing energy consumption by regulating the fuel efficiency of cars and light trucks. The standards have been tweaked over time, and the most recent iteration was passed by the Obama administration to mandate the 54 mpg target by 2025 that’s now in question. Interested in some light reading? The target is laid out in a whopper of a document that was issued in 2012 and spreads across hundreds of pages.
CAFE’s new mileage standard may sound substantial, but it’s based on an unadjusted figure that’s based on an average between city and highway totals, whereas window sticker fuel economy is based on several tests. That’s why, as Jalopnik noted back in 2012, the 54.5 mpg standard will translate to a real world figure that’s something closer to 40 mpg.
Nonetheless, it’s important. The now-contested vehicle fuel and emission standards were a signature piece of Obama’s plan to fight global warming. As Jody Freeman, a Harvard Law School professor and counselor to Obama’s climate change plans in 2009-2010, put it in a New York Times op-ed this week: “They are the most important action the United States has taken to address climate change and reduce the nation’s dependence on oil.”
Why Are Automakers Requesting This Now?
During the presidential campaign, Trump cast himself as one of the most pro-business, pro-American jobs, anti-regulatory candidates in the field, and he’s showing he wasn’t kidding through his choice of a climate change-skeptic in Oklahoma’s former attorney general Scott Pruitt to run the EPA.
Since the EPA issued its determination jointly with the U.S. transportation department (which also has a set of standards), it left an opening for Trump to take this route. And less regulations for fuel efficiency standards gives automakers the clear to focus solely on producing vehicles that consumers want. And right now, that’s not small, compact cars.
Still, environmentalists and researchers counter by saying automakers are quite capable of reaching the 2025 standards, even if more consumers are digging crossovers and gas-guzzlers.
Carol Lee Rawn, transportation program director for Ceres, an advocacy group that promotes sustainable practices for businesses, said the consumer shift toward larger cars in recent years, in fact, gives “all the more reason to be keeping, or even tightening, the standards, as opposed to weakening them.”
“I think it’s really important to understand that the automakers can meet the standards regardless of what sized cars consumers buy,” said Rawn told Jalopnik.
Rawn’s group released a report that analyzed four potential gas-price scenarios and found the large U.S. automakers would remain profitable under all of them; even if gas prices fell to $1.80 per gallon, Rawn said, costs to comply with the fuel standards would be offset by the shift to large trucks and SUVs and away from small cars. That assumes gas prices will remain low for years to come.
“The strong standards also act as an insurance policy for automakers in the event that prices spike,” Rawn said. “And we’ve seen this movie before.”
Can The Auto Industry Even Hit These Targets?
If you ask automakers, they’d probably say no. In a letter sent last month to Pruitt to request the revocation of the final determination, the Auto Alliance trade group said the standards require an exorbitant cost to achieve the goals.
“Even under EPA’s optimistic estimates, the automotive industry will have to spend a staggering $200 billion between 2012 and 2025 to comply, making these standards many times more expensive than the clean Power Plan,” the letter stated.
But in announcing the final determination in January, former EPA Administrator Gina McCarthy cited eight years of research into the standards and said automakers are well-equipped to meet the goals.
“At every step in the process the analysis has shown that the greenhouse gas emissions standards for cars and light trucks remain affordable and effective through 2025, and will save American drivers billions of dollars at the pump while protecting our health and the environment,” McCarthy said in a statement.
Indeed, in the proposed final determination, the EPA said various analyses showed that automakers have shown they’re capable of meeting the goals.
“Given the rapid pace of automotive industry innovation, we believe there are, and will continue to be, emerging technologies that will be available in the MY2022-2025 time frame that could perform appreciably better at potentially lower cost than the technologies modeled in this Proposed Determination,” the proposed determination document reads.
“Such technologies are exemplified by recent advances already seen in the marketplace that we did not anticipate when the standards were finalized four years ago (e.g., expanded use of continuously variable transmissions and higher compression ratio, naturally aspirated gasoline engines (Atkinson)). Updated information also shows that the technologies we did anticipate in 2012 are costing less, and are more effective, than we anticipated at that time.”
Rawn said automakers’ $200 billion estimate is disingenuous, particularly overtures from Ford CEO Mark Fields that 1 million jobs are at risk if the mpg are upheld.
“The EPA did extensive studies on this and found that the cost’s not only feasible and cost-effective to meet these standards,” she told Jalopnik. The 1 million figure cited by Fields, she asserted, is based off a study that uses dated figures from the 1990s.
“When you look at the analysis they’re relying on they just don’t add up,” she said.
If The Rollback Happens, Will It Go Unchallenged?
That’s almost an impossible scenario to imagine. For one thing, the New York Times reported that the EPA will “begin legal proceedings to revoke a waiver for California that was allowing the state to enforce the tougher tailpipe standards for its drivers.”
That’s a huge deal. When the Clean Air Act was passed in 1963, it included a provision that allowed California to write its own standards, as it had long been issuing regulations to combat pollution. It’d be an understatement to say the state’s rules—which are followed by several other states—have played a key role in dictating how vehicle standards are crafted.
“It’s been an enormous contributor of cleaning up the air over the last 50 years,” said Therese Langer, Transportation Program Director at American Council for an Energy-Efficient Economy.
Over time, 13 states and the District of Columbia have signed onto California’s emission standards, which account for about 30 percent of all new car sales in the U.S. (The new standards were aimed at implementing a federal, uniform set to abide by.)
“There had been periods [where California] had more stringent standards than the feds,” Langer told Jalopnik, “and what would happen historically there is, the feds—belatedly—would catch up.”
That’s why Pruitt’s consideration of revoking California’s waiver is so significant. Only once has the EPA rejected a request for a waiver from the state—in 2008, when the state proposed to regulate fuel efficiency standards to reduce greenhouse gases. (When Obama came to office, the waiver was granted anyway.)
California has said it’ll fight any attempt to revoke the waiver. “We cannot fall back and give in to the climate deniers,” the state’s governor, Jerry Brown, said in a January speech. “The science is clear. The danger is real.”
How Long Would It Take To Roll Back The Standards?
Probably awhile. Brown, for instance, hired former U.S. Attorney General Eric Holder to fight any challenges to state policies. And it’s expected to launch a protracted legal fight if Pruitt’s EPA takes any action to revoke its waiver.
“He could go ahead and do it,” Langer told Jalopnik, “but no question, litigation would follow. And that would take a long time to resolve.” Environmental groups have also indicated they would file suit against the administration if any attempts to roll back the standard is launched.
The other option for Pruitt, regarding California, would be to revoke its authority altogether. That’d however require reopening the Clean Air Act, a hail mary of sorts that seems unlikely—at least to Langer.
“Reopening the Clean Air Act is not an easy thing to do, and in particular, I don’t have any reason to believe they could get past a filibuster on that,” she said.
The other obstacle for Pruitt’s EPA is the agency itself. The process that led up to the Obama administration’s final determination on the CAFE and greenhouse gas emission standards in January took years to complete. In order to reopen the rules for a midterm review, and then alter the standards, the EPA would have to produce reams of data showing the change was appropriate.
“It’s based on this multi-year process with comprehensive input by a wide variety of stakeholders, including the auto companies technical experts,” said Rawn. “It wasn’t something that they made up out of whole cloth in two weeks.”
Backing—even inching—away from the standards would be counterproductive for the auto industry, said Langer. Countries across the world will continue to outpace the U.S. with fuel and emissions standards, for example, and it’ll create yet another weird, regulatory scenario.
“The auto industry has to know that would be catastrophic,” Langer told Jalopnik. She cited uncertainty about future oil prices, for one, and said if automakers “go back to their old places,”and invest heavily in gas guzzlers that “won’t withstand that kind of cycle, they’re going to find themselves in deep trouble again.”
“But I would also say the slow but steady globalization of auto manufacturing platforms means that they cannot ignore the general trend in other parts of the world toward ever-cleaner vehicles,” she said.