U.S. EPA Readies Strictest Vehicle Emission Requirements Ever

We’ve got good news for people who want fewer choices in the type of cars they’ll be able to purchase in the future.

The U.S. Environmental Protection Agency (EPA) has finalized strict new vehicle emissions requirements through 2026 that would reverse the current standards set by the agency under former President Donald Trump. The Trump administration rolled back some of the long-term environmental policies implemented under the Obama administration. However, the Biden administration has said its biggest focus will be on addressing climate issues by dissolving those policies restoring the targets established when Barack Obama was still in the White House. The agency released some proposals in August outlining the general path it would be taking. But the details dropped by EPA Administrator Michael Regan on Monday vastly exceed those Obama metrics serving as a benchmark.

“The final rule for light duty vehicles reflect core principles of this Administration: We followed the science, we listened to stakeholders, and we are setting robust and rigorous standards that will aggressively reduce the pollution that is harming people and our planet – and save families money at the same time,” said Regan. “At EPA, our priority is to protect public health, especially in overburdened communities, while responding to the President’s ambitious climate agenda. Today we take a giant step forward in delivering on those goals, while paving the way toward an all-electric, zero-emissions transportation future.”

From the U.S. EPA:

The standards finalized today are the most ambitious vehicle emissions standards for greenhouse gases ever established for the light-duty vehicle sector in the United States. They are based on sound science and grounded in a rigorous assessment of current and future technologies with supporting analysis that shows the standards are achievable and affordable. EPA’s final standards for 2025 and 2026 deliver even greater net benefits and emissions reductions than those proposed in the initial rulemaking stage in August of 2021. Through 2050, the program will result in avoiding more than 3 billion tons of GHG emissions which is equivalent to more than half the total U.S. CO2 emissions in 2019.

These ambitious standards are cost-effective and achieve significant public health and welfare benefits. The benefits of this rule exceed the costs by as much as $190 billion. Benefits include reduced impacts of climate change, improved public health from lower pollution, and cost savings for vehicle owners through improved fuel efficiency. American drivers will save between $210 billion and $420 billion through 2050 on fuel costs. On average over the lifetime of an individual MY 2026 vehicle, EPA estimates that the fuel savings will exceed the initial increase in vehicle costs by more than $1,000 for consumers.

Your author has some serious doubts. Those Obama-era standards that would have originally seen Corporate Average Fuel Economy (CAFE) rise to 54 mpg by 2025 were deemed unsustainable by that administration’s own EPA. The truth of the matter is that Americans have been transitioning to larger vehicles since the 1990s and the practical average fuel economy has been largely stagnant since 2014. The University of Michigan ran a great study tracking those figures on a monthly basis up through 2017. But the current EPA’s own research has the national average stuck around 25.0 mpg through 2020.

Officially, the Biden policies only seek to have CAFE requirements of about 40 mpg in 2026 due to ground lost during (and even before) the Trump years. Obama’s regulators originally required 5 percent annual increases. However, the previous administration’s EPA changed those yearly increments to just 1.5 percent after team Trump suggested it would be more feasible for the industry and agreeable to U.S. consumers who have a penchant for larger cars. The Biden rules will take effect for the 2023 model year and require a whopping 28.3 percent reduction in vehicle emissions through 2026.

The EPA’s August proposal had the number set at 38 mpg by 2026 while the Trump administration was targeting 32 mpg. Though I need to reiterate that the practical average economy for all light-duty vehicles sold in the United States has been hovering at 25 mpg for almost a decade.

Additionally, U.S. regulators are planning to add a new emphasis on fleetwide emission in a way that mimics how the European Union regulates its cars. Under the revised plan, the EPA is requiring a combined fleet-wide average of 202 grams of carbon dioxide per mile. This represents a 9.8 percent increase in austerity over the Trump-era standards for MY 2022. For the 2024 model year, requirements would tack on an additional 5.1 percent, followed by another 6.6 percent in MY 2025 and 10.3 percent in MY 2026.

“We are setting robust and rigorous standards that will aggressively reduce the pollution that is harming people and our planet – and save families money at the same time,” EPA Administrator Regan explained.

There are plenty of obstacles standing in the way, however. Smaller, more efficient automobiles have actually become less common on the North American market of late and EV adoption isn’t on track to come anywhere close to achieving the desired metrics. The Biden administration had hoped to spur electrification by pouring new incentives on the market and giving the industry more money to accelerate their production via provisions in the Build Back Better Act. But it has stalled in Congress after Sen. Joe Manchin (D-WV) said he would not support a $2 trillion domestic investment bill that includes many items that have nothing to do with infrastructure (referencing adjusted tax codes and IRS funding), opens the door to additional government spending during a period of severe inflation, and carves out loftier, potentially unlimited EV tax credits that favor union automakers.

Public support for the bill also seems to be dwindling with polls showing a growing opposition to the Build Back Better agenda (Ed. note — other polls show more support for BBB, so, as is often the case with polling, results can be mixed.). Even Tesla CEO Elon Musk, America’s EV godfather, has expressed his distaste for how the plan was structured – though his company would arguably benefit from its existence and was already helped by the previous (now exhausted) credit scheme. Most manufacturers that aren’t one of the Big 3 have similarly decried the union aspects of the plan as unfair. However, global automotive lobbies still appear to be in favor of any plan that encourages more cooperation with government bodies if they’re willing to help by allocating taxed money for EV production.

“EPA’s final rule for greenhouse gas emissions is even more aggressive than originally proposed, requiring a substantial increase in electric vehicle sales, well above the four percent of all light-duty sales today,” the Alliance for Automotive Innovation stated in response to the EPA’s announcement.

“Achieving the goals of this final rule will undoubtedly require enactment of supportive governmental policies – including consumer incentives, substantial infrastructure growth, fleet requirements, and support for U.S. manufacturing and supply chain development. Collaboration between industries across the economy and government will be essential to achieving our shared goals for a cleaner transportation future that benefits all communities and enhances U.S. economic competitiveness.”

The EPA has estimated that its targets would achieve/require 17 percent of all new U.S. vehicle sales to be either EV or plug-in hybrids by 2026. That means the number of electric vehicles sold annually would need to more than quadruple within a few years. But the Biden administration said that CAFE standards would continue being an average, meaning automakers could continue building gas-guzzlers if the fleet included the right kind of vehicles to offset their presumably low mpg figures and high carbon output. The EPA likewise stated that carbon credits and trading would remain a useful tool for automakers that exceed or fail to achieve the desired government targets.

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