Gas War: Trump Confirms U.S. Will Revoke California Fuel Waiver

While a considerable portion of Donald Trump’s Twitter announcements aren’t worth paying much attention to, he does occasionally slip some actual information in there. This week, the nugget was the confirmation that his administration intends to revoke California’s federal waiver on emissions — stripping the state of its ability to self-regulate and readying America for the gas war’s main event.

The Environmental Protection Agency was already known to be making preparations to do exactly this, but the president’s Wednesday posting made things crystal clear. “The Trump Administration is revoking California’s Federal Waiver on emissions in order to produce far less expensive cars for the consumer, while at the same time making the cars substantially SAFER,” he wrote.

For automakers, splitting the U.S. market is a nonstarter. Even those that voluntarily supported California’s revised standards did so under the assumption that it was a better alternative to endless litigation (too late) that could stymie product planning for years. The bulk of the automotive industry has suggested that dividing America would saddle the industry with a host of new issues, potentially raising the cost of production by adding unnecessary complexity to the process.

Trump’s claim that automakers not forced to adhere to extremely strict fueling regulations could produce vehicles more cheaply also holds some weight. But it’s not a certainty, what with so many brands operating globally, and the White House’s safety suggestions are rather nebulous.

The theory is that super-efficient automobiles will have to engage in a major weight loss program to achieve the kind of gas mileage California wants, leaving them vulnerable to older, larger vehicles in the event of an accident. While size does matter in a crash, there’s no reason to presume the safety of automobiles will diminish as they become more energy efficient. Safety tech will also continue to evolve, likely nullifying any safety issues relating to size disparities. Small cars will continue to be at a disadvantage against larger automobiles, but no more so than their present-day counterparts.

There are reasons to believe that backing California could be detrimental to the economy, however. China and Europe have both pursued aggressive emission mandates for automobiles and they’re believed to have negatively impacted car sales. While the issue would be hotly debated in the EU, China’s failures are undeniable. Overzealous regulations have spooked consumers and left dealers uncertain as to the legality of older vehicles. The nation also began weening the industry off EV subsidies this year. As a result, plug-in sales started to decline in July as prices began to go up. Negative growth has been the norm since then, contributing to China’s already crippled auto market — which has been in perpetual decline since the summer of 2018.

“This will lead to more production because of this pricing and safety advantage, and also due to the fact that older, highly polluting cars, will be replaced by new, extremely environmentally friendly cars,” Trump continued. “There will be very little difference in emissions between the California Standard and the new U.S. Standard, but the cars will be far safer and much less expensive. Many more cars will be produced under the new and uniform standard, meaning significantly more JOBS, JOBS, JOBS! Automakers should seize this opportunity because without this alternative to California, you will be out of business.”

According to Reuters, California Governor Gavin Newsom said the president’s decision was “a continuation of a political vendetta against California and our progress.” He said the state would prevail in court.

From Reuters:

The Alliance of Automobile Manufacturers, a trade group representing General Motors Co, Toyota Motor Corp, Volkswagen AG (VOWG_p.DE), Ford Motor Co and others, declined to take a position on Trump’s revocation of California’s waiver, saying automakers will review the decision “to get the full picture of how this impacts automakers, our workers and our customers.”

The EPA and U.S. Transportation Department plan to announce on Thursday that the government is revoking an EPA waiver California received in 2013 to set state emissions rules and will hold a news conference at 8 a.m. EDT to discuss the decision.

The Trump administration will argue that barring California from setting its own stricter rules will provide automakers with regulatory certainty and also argue that the lower emissions standards will reduce the future price of vehicles. Environmental groups contend Americans will spend more in fuel costs than they would save in upfront costs.

The Obama-era rules called for companies to ensure a fleet-wide fuel efficiency average of 46.7 miles per gallon by 2025, with average increases of about 5 percent annually. The rollback proposal suggested freezing standards at the 2020 model year, resulting in an average of 37 mpg by 2026. Rather than establish its own limits, California has adopted the current federal standards. Initially it vowed to keep the targets, regardless of what the Trump administration decided, but has since issued a revised standard that delays them by one year. It also wants over 15 percent of all new car sales to come from zero-emission vehicles by 2026 and has sought out support from sympathetic states.

The rollback was estimated by Reuters to increase domestic oil consumption by 500,000 barrels a day by 2030 while eliminating $300 billion in regulatory costs. The U.S. presently burns about 20 million barrels a day.

Officials from the Environmental Protection Agency and Department of Transportation are expected to issue a final draft of the rollback proposal later this month. EPA Administrator Andrew Wheeler recently suggested that the document might possess stricter targets than originally offered, but that’s unlikely to save the federal government from a date in court with California.

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