Back in August, the Trump administration officially proposed scaling back Obama-Era emissions standards that would require automakers to achieve an average fuel economy of 46.8 miles per gallon by 2026. Instead, Trump wants automakers to hit just 37 mpg. The problem is, the proposal has so many errors that it’s left economists scratching their heads.
The legal foundation for the proposed rollback is that the Obama-era standards, also known as the CAFE standards, are somehow unsafe and scaling back average fuel economy requirements for automakers will actually reduce the number of traffic fatalities.
The proposal argues that CAFE standards raise the average price of a new car, dissuading drivers from buying the newer, safer and more fuel efficient cars and instead driving their older cars which have fewer safety features.
The Trump administration’s new standards, cleverly referred to as SAFE standards, claims to reduce traffic fatalities by as much as 1,000 deaths a year, according to the language of the proposal. The justification for that argument is incredibly shaky however, as the Atlantic reports.
Here’s more from the Atlantic:
It’s not clear that these claims are true. The government is not actually sure how many lives safe will save. The fine print of the proposal says that “newer, safer cars” will prevent 30 deaths every year at most—a far cry from the claimed 1,000. But an EPA memo included in the proposal warns that safe will increase traffic fatalities, leading to 17 more deaths every year.
Not only is the language of the proposal conflicting with itself, but one of the key foundations for the argument that the SAFE standards will actually be safer is based on a model that offers a different rationality.
The model, referred to as the “scrappage model,” is a small-scale simulation of the U.S. economy. It’s meant to calculate how many people scrap their older cars based on the price of new cars under the current CAFE standards, and then under Trump’s proposed SAFE standards. While the concept of the model should provide valid insight, it has a glitch, according to the Atlantic:
Its most ruinous problem is the case of the “phantom miles.” At a crucial moment in the scrappage model’s analysis, it mysteriously deletes roughly 700 billion miles of nationwide driving from its simulation of the Trump rollback. It does so due to a nonsensical assumption that owners of old cars—cars built between 1977 and today—will drive much, much less under the rollback than they would under the Obama-era rules.
Basically, the argument is that people will drive less due to worse fuel efficiency if the standards are scaled back should only apply to cars sold after 2020, since that’s when the proposal would go into effect. Instead, the model applies its assumptions to all cars already on the road, even though the new standards would have no effect on anything sold before 2020.
This makes for a huge miscalculation at the heart of the proposal, and invalidates about half of the cited fatalities claimed to be avoided under SAFE standards.
Economists also took issue with the scrappage model’s determination that more people will buy more cars under the CAFE standards, where cars are more expensive. This violates the fundamental economic rule of supply and demand, where higher prices would almost always actually result in fewer sales.
It also goes against the proposal’s argument for rolling back CAFE because of the increasing price cars—the argument being it leads to more old, unsafe cars on the road—if the model projects people will buy expensive cars regardless.
The scrappage model’s findings are so fundamentally flawed that it forced Honda to back out of supporting scaling back CAFE standards, now reversing its position and complaining to the Trump administration that the model was “premature and ill-advised,” and that it doesn’t seem to “distinguish significant data from background noise.”
Worse still is that a senior official in the agency’s Office of Transportation and Air Quality submitted these same issues with the model in June 2018 and was seemingly ignored, the Atlantic reports.
The other critical flaw with the proposal highlighted by economists via the Atlantic is something known as the “rebound effect,” which essentially argues that as cars get more efficient, people drive them more, resulting in higher chances of crashes and fatalities. The proposal uses this as an argument against the CAFE standards, and it does have some precedent—but the proposal doubles the rebound effect from NHTSA’s previous projections, suspiciously benefiting the argument for the SAFE standards with no cited justification.
Some of the math in the proposal is also seemingly inaccurate. The proposal claims that increased new car prices under CAFE standards will lead to 600,000 fewer car sales over 10 years, but confuses the annual rate of change with a quarterly rate. When corrected, decreased sales are only projected to be 120,000 over the same period.
Essentially, the proposal in its current form can not justify its claim that it will significantly reduce traffic fatalities, can not justify its claim that CAFE standards will have an irreversible impact on new car sales, can not justify its claim that CAFE standards will force automakers to incur unsustainable costs, and is fundamentally wrong about certain basic concepts of economics, at least according to the dozen or so economists cited by the Atlantic (some of which whose research was also cited by the proposal).
Since the proposal’s lacking justification fails to adequately back up its legal significance, the Trump administration would have to correct its math and reevaluate its economic models—and likely find new justifications for its safety and industry impact claims—to make it through court and successfully replace the Obama-era CAFE standards.
Of course, scaling back CAFE standards would also have a horrible impact on the environment by increasing carbon-dioxide emissions by possibly nine percent in the coming decades, which the Trump administration isn’t concerned about, as well as likely increase how much the average driver has to spend on gasoline, saving automakers a little while costing the average person more.