By on March 7, 2019

The Environmental Protection Agency released its annual assessment of new vehicles yesterday, and it was filled with good news. On average, fuel economy continues to improve. Cars are not getting heavier, horsepower keeps going up, and every major manufacturer managed was in compliance with greenhouse gas standards through the 2017 model year. However, the EPA also said it’s concerned that manufacturers frequently tap into stored-up regulatory credits to make this possible.

“Most large manufacturers used banked credits, along with technology improvements, to maintain compliance in model year 2017. Three large manufacturers achieved compliance based on the emission performance of their vehicles, without utilizing additional banked credits,” the agency explained.

The ability to bank credits by over-complying in a given year is seen by some environmental groups as a way for corporations to shirk their responsibility to the planet. But EPA Administrator Andrew Wheeler’s concerns regarding the system rest elsewhere. 

“Today’s report shows that while the auto industry continues to increase fuel economy, there are legitimate concerns about the ability to cost-effectively achieve the Obama administration’s standards in the near future,” Wheeler said.

Officially, the industry used fewer credits in 2017 than it did in 2016 and only exhausted about 7 percent of the total balance. But most of those are set to expire at the end of the 2021 model year. That’s significant because the EPA and National Highway Traffic Safety Administration are in the process of delivering less-stringent efficiency standards that would take effect that same year.

Over the summer, the agencies proposed capping mileage requirements around 37 mpg after 2020 — instead of setting them at roughly 47 mpg by 2025, which was the path chosen under President Obama’s administration. According to Bloomberg, the EPA’s opinion on the matter has upset several environmental groups.

“While the Trump administration is moving to gut the clean car standards, its own data shows the current standards are working,” said Luke Tonachel, director for clean vehicles and fuels at the Natural Resources Defense Council. “Automakers are innovating and improving the performance of their fleets, and tailpipe emissions continue to plummet.”

It’s true that manufacturers are investing heavily in alternative powertrains that pass the pollution buck to regional energy providers, but suggesting that they’re prepared to comply with the next decade’s efficiency requirements is little more than a guess. The University of Michigan has repeatedly reported that, while fleet-wide efficiencies continue to improve, practical sales-weighted fuel economy averages haven’t truly changed in the United States since MY 2014 — due primarily to increased consumer interest in larger vehicles, like crossovers and SUVs.

Dan Becker, director of the Center for Auto Safety’s Safe Climate Campaign, said overwhelming evidence exists that the Trump administration should be working harder to support emissions reductions and avoid a rollback at all costs. Last year, he said the automotive industry projected a 1 mpg improvement for the 2017 model year. In reality, they only managed to achieve around 0.2 mpg.

“Today’s EPA report demonstrates the chasm between what the rules were supposed to produce and what automakers delivered,” Becker told Bloomberg.

Obviously, the White House sees things as the same… but also very differently. Rather than a signal to double down on environmental legislation, it believes industry failures and consumer habits are at odds with the existing efficiency standards. The Trump administration imagines this as a pathway toward deregulation. The possibility of an industry-wide reliance on credits just creates more ammunition for their argument.

Presently, the world’s largest automakers bookend the range of corporate efficiency averages; Honda’s on top with 29.4 mpg while Fiat Chrysler sits in last place at 21.2 mpg. Both have a long way to climb before they’re complaint with 2020’s levels, though Honda could theoretically achieve the goal if it continues improving efficiency at its current pace. Still, it would be one of the only manufacturers to do so under that metric. The rest will likely become increasingly depending on credits (which will eventually end up being reset), while diving headlong into electrification.

[LanaElcova/Shutterstock]

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36 Comments on “EPA: Automakers Too Reliant on Credits for Emissions Compliance...”


  • avatar
    28-Cars-Later

    “while diving headlong into electrification”

    Kiss of death for a lot of these mid size to smaller automakers.

  • avatar
    Brett Woods

    We know the EPA’s been taken over by crackpots and psychos who fired all the Scientists. Now it’s all lies. Guess what? Vehicles get the same mpg as they have always got for the last 35 years – around 20 mpg give or take.

  • avatar
    DenverMike

    The corruption wouldn’t be so obvious if the standing 2025 standards weren’t so comically unattainable. Not surprising, CAFE fines are small enough for automakers to fork over without flinching, just $55 for every MPG under the minimum, per offending vehicle, but they still add up to billions in fines collectively, annually, and almost a billion dollars from F-series alone, by 2025.

    It’s a complete mafia style shakedown, needs to be stopped or at least frozen, and I’m sure Trump sees it for what it is.

  • avatar
    James Charles

    The best way to improve FE and reduce emissions is to levy a tax on what causes the emissions. Energy should be taxed on emissions produced, even considering emissions and pollution generated during manufacture.

    This means if a country has lax emission and environmental standards a tax is levied on their imports. For example aluminium uses massive energy to produce. In Australia 25% of electricity produced is used to process aluminium. Coal is the primary energy used for electricity production. This means an emission tax would roll into aluminium used.

    Even in the US a tax is levied on energy and emissions.

    This would remove the need for CAFE as gas would be taxed, not the vehicle.

    This would be the fairest tax that truly taxes consumption. If was applied in a fair fashion there might be no need for company tax as industry would be taxed on energy.

    So US companies might pay tax on exports to the EU because of the energy mix (eg. coal, gas) and the high energy use per capita in the US.

    But say Chinese and other high polluter exports to the US will have an emission a and environment tax.

    So, vehicle manufacturers can build a V8 Mitsubishi Mirage and not be penalised as energy usage is.

    • 0 avatar
      DenverMike

      @BAFO – Welcome back (I guess?). I’ve missed you like a rock in my shoe.

      But to tax consumers (to high hell) until they submit to small/efficient cars, then automakers simply follow what “trends,” sounds a lot like what Europe has done, and we all know what a clusterfuk that turn out to be, not just the ecological mess, legal, but mostly the health disaster including heart and blood disease, lung cancer, etc. A basic mass poisoning.

      Just ask France. No doubt it’s cost them trillions in health care. If they could go back in time, I’ll bet CAFE (up to now/2020) is sounding pretty damn good…

    • 0 avatar
      theBrandler

      This is pretty insane. You’re essentially levying a massive tax on the poor while disguising it with green speak. Hiking taxes on energy consumption hurts the poor the most because they pay the most for energy, firstly because it’s a much higher percentage of their income, but also because they can only afford to buy the hand-me-downs of societal goods. The old house with old furnace, the old clunker car that gets 20mpg, and live the farthest from work because it’s cheaper in the ‘burbs so they drive farther to boot. You’d be crushing these people. And for what? USA is the cleanest blessed country there is. For all of Europe’s nanny state tropes, we produce more, consume more, yet use less energy and produce less emissions to do it. Win win win.

      China and India are the world’s top polluters, go bother them. Leave the poor peolple in America alone, and let them have a chance to climb up the social ladder instead of beating them senseless with tax increases.

      • 0 avatar
        Jeff Waingrow

        Absolutely perfect analysis of the unfair burden placed on the poor in all the manifestations you mention. Also agree about India and China being remorseless polluters. Where I diverge with you is your description of the U.S. blamelessness in all of this. As I understand it, the U.S. is responsible for about 25% of global greenhouse gas emissions, due largely to our scale and high standard of living. So I think we as a country could do more while also not having the costs being born largely by poor folk. For example, one less airplane flight taken, scaled up, is a big deal.

        • 0 avatar
          Dan

          There you have it. Developed people, stop flying. Undeveloped people, keep f–king.

          • 0 avatar
            Jeff Waingrow

            I didn’t suggest people stop flying, as should be obvious from my comment. And poorer countries would be less prone to overpopulation if the Catholic Church and the Republican Party weren’t at war with birth control assistance and other ways of family planning. Would it really be so hard for you to reduce your carbon footprint just a bit?

        • 0 avatar
          28-Cars-Later

          There’s no problem here an ICBM couldn’t cure.

        • 0 avatar
          285exp

          Nobody said the US was blameless in this. Our percentage of global CO2 emissions is around 15%, not 25, while China’s is over 27%, and their emissions have been rising while the US has had the largest decrease in emissions of any country in the world.

          If we’re serious about saving the planet, we can’t let the fact that it might force the poor to give up their gas guzzling polluters or cut down on their driving to stop us from doing the right thing. You want to reduce the demand for something? Increase the price. If you don’t want the ones responsible for the emissions to pay for them, who is? The poor are not going to be buying any electric cars, even at the bargain price of $35k, they’ll just keep on driving the least efficient and most polluting vehicles. Plus, since the EV drivers aren’t paying any road tax, a massive fuel tax hike will help to cover the price of road maintenance and construction for the rich people to drive their EVs on.

          If you want to make the changes necessary for the US to significantly decrease CO2 emissions, the cost is going to be born by the poor through increased energy costs, unless you can tax the 1% enough. Good luck with that.

          • 0 avatar
            Art Vandelay

            Anyone who honestly thinks this is going to kill our planet that isn’t calling for a Thanks style solution is a hypocrite. The true fix is less people, not more people and more taxes.

          • 0 avatar
            Art Vandelay

            Thanos, not thanks…darned autocorrect.

      • 0 avatar
        James Charles

        theBrandler,
        This will not occur overnight, so the impact on the less fortunate in society is minimised. Over a period of time the better off will invest in lower emission and fuel efficient vehicles. Also, from a social perspective the minimum wage and income tax can be adjusted to create the society you want.

        The idea I have is not to screw over China or other less well off nations, but to force then to clean up their country. My idea also taxes pollution, look at what is occurring in Brazil with Vale and their tailing dams, how much should Brazilian iron ore cost?

        This will force countries, multinationals, business and society to value what we do and how we do it. It doesn’t stop capitalism. It reduces the damage from capitalism and creates new tech, processes, materials, etc.

        • 0 avatar
          285exp

          Your suggestion that we just levy a tax on Chinese goods isn’t going to force them to lower their emissions, because they aren’t going to be paying the tax, we are.

          • 0 avatar
            James Charles

            2855exp,
            That’s the idea of a consumption tax, the consumer is taxed on consumption. Or, I suppose you could call it a pollution and emissions production tax.

        • 0 avatar
          285exp

          But it still won’t force the Chinese to do anything about reducing their CO2 emissions, it will just increase the price of those goods here, that the consumers here will be paying, not the Chinese.

          • 0 avatar
            James Charles

            285exp,
            You are correct for the short term until new lines of trade and supply develop as others can be more competitive.

            This will force multinationals to not only look at the cheapest Labor costs, but the environmental impact becomes a significant consideration.

            China will not change unless forced by the rest of the world. The world will not change quickly.

            The change I’m talking will take time.

    • 0 avatar
      Art Vandelay

      Man, you sure know a lot about Australia…just like that guy “…FromOz” that used to post here frequently. And your prose is very similar. As are your views. Strange.

      • 0 avatar
        James Charles

        Art, maybe I’m an Aussie. Ever thought of that?

        • 0 avatar
          Art Vandelay

          Oh I have no doubt you are not only Australian, but a very specific Australian that used to post here frequently. Honestly I’m glad you are back, but you missed out by not being here when the Ranger came out…the midsized truck jihad is your true calling.

  • avatar
    jacob_coulter

    Just keep the current fuel economy standards for the foreseeable future, let consumers decide what mpgs they want, and take comfort in the fact the fleet will largely be electric in the coming years.

    Then the next battle will be how much electricity the cars use, with Tesla-type performance being the new “energy hogs” that we have to regulate and brow-beat.

  • avatar
    danio3834

    When CAFE 2025 was introduced, the EPA said it estimated meeting the targets would “only” add $3,000 of cost per vehicle on average, while the SAE estimated between $5,000 and $8,000. Hence the disappearance of low margin cars.

    The EPA’s argument is that consumers would win the long run with fuel savings. Depending on your usage, your mileage may vary, but you’ll pay up front no matter what. With consumers being largely tapped out on new car credit, who’s gonna pay more for this tech?

    Everyone thought the standards were a great idea when they were getting them for free. They seriously need to be repealed with a clear explanation as to why.

    • 0 avatar
      jacob_coulter

      “The EPA’s argument is that consumers would win the long run with fuel savings. ”

      _____________

      Bureaucrats are usually wrong. I doubt most of the people that came up with these standards could so much as do an oil change on a car much less understand automotive engineering. They just get their marching orders from the Sierra Club and Hollywood donors.

  • avatar
    DenverMike

    You’ll never convince me “CAFE 2025” is a real thing. It’s a threat the EPA never intends to enforce. Geeze, Honda may not be able to meet the standard, without radically stepping up the sales of Honda hybrids and electrics. The whole thing’s a joke. No way Toyota can do it.

    CARB did a similar thing, threatening to ban all commercial “pre-emissions” diesels from California, revoking their registration, on a specified schedule. That’s millions of semi trucks and commercial vehicles, 14K lbs and up, some were later models yet ‘pre-emissions’, that were scheduled to be taken off CA roads, threatening to kill 10s of thousands of small/smaller business that couldn’t comply.

    Guess what happened? CARB backed off at the very last moment, but not before 10s of thousands of companies complied with the threats, struggled to comply, or folded.

    So here we have Ford, GM and FCA seriously culling their smaller cars? Something smells. Either way, by the time 2025 rolls around, inflation should kill any real threats of CAFE fines anyway.

    • 0 avatar
      jacob_coulter

      Yea, California makes these threats until the very end to try and shake down the donor class and placate their crazy base.

      I remember they did it with electric cars also, demanding a certain percent of the automotive fleet be electric in like the 1990s. Of course that was an absurd demand also.

      Why not also pass a law demanding cold fusion as long as we’re wish casting?

      • 0 avatar
        DenverMike

        Similar to CAFE 2025, it was basic schoolyard bullying. It mattered not to CARB that older diesel trucks were totally legal, “Grandfathered”, compliant to the year they were sold new, and couldn’t be banned.

        Except it worked. The threat of “going out of business” was more than enough for most older diesel owners, and CARB got about 90% of the older trucks off the road and or out of California.

        • 0 avatar
          Ryannosaurus

          You are correct DenverMike about CA forcing older trucks out. As a person working in the logging industry I saw this first hand. Lots of worry at first about what to do. The final solution ended up with us selling our fleet’s non-compliant trucks to other states and purchasing compliant trucks (new or used).
          The whole thing seemed ridiculous because all we did was trade with other states. All of the trucks are still on the road! We didn’t scrap any that were not already planned to be junked. Just a giant shell game with other companies in other states that purchased our used trucks rather than buy new themselves. I don’t see how this reduced any emissions, unless CA air stays in CA and doesn’t cross state lines.

    • 0 avatar
      danio3834

      They’re serious about it, the EPA/NHTSA got a real power and funding boost during the last administration. It’s basically forced electrification. 2025 is just the destination, the ramp of standards up has already begun and the costs mounting. Notice that the next 6 year model cycle vehicles being introduced now are all hybrid or electric capable. It’s happening.

  • avatar
    Art Vandelay

    Honestly, the carmakers need to crap or get off the pot. They don’t want to side with the President outright because politics, and they don’t want to come out and say outright “we can’t do it” because odds are some carmakers can and then they look like idiots.

    Fine then, meet the standards or pay the fines, but as has been mentioned, if your plan is just to pay the low fines you had better be giving to the right PACs this cycle because frankly, I think in 2020 you are going to find a much less receptive audience at 1600 Pennsylvania Ave and my sympathy ran out right around the first TARP bailout.

    • 0 avatar
      DenverMike

      CAFE has simply been bastardized by political movements/agendas. Its original mission had absolutely nothing to do with forcing electric car adoption on a grand scale.

      If a decent percentage of consumers wanted EV, it’d be a different story, and obviously not much more can be done to ICE vehicles to drastically improve efficiency.

      No matter how good it feels, or who it gets happy, it makes zero sense dictating what automakers can build and offer, when consumers want something else entirely, or even a direct opposite.

      Even Honda would have to sell at least 15% EVs to comply. Forget about FCA, we’re talking closer to 50% EVs, and likely 4 EVs for every Hellcat.

  • avatar
    DenverMike

    BAF0 didn’t resurface to be anyone but “BAF0”, full strength. For a true sociopath, what would be the point of that and not sticking to his well known, warped and deranged agenda and mission?

    Yeah he was instantly recognized, no doubt about it and I’ve only spotted him, “Charles James” bringing up the Chicken tax once, but it’s gotta be killing him.

    I guess the moderators don’t care, as it adds a couple clicks a day or hour. But as longs as he’s not using profanity nor insulting other commenters, the infamous and totally banned BAF0 (Big Al from 0Z), probably using a new IP, found a loophole in the system.


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