#CorporateAverageFuelEconomy

Now that the U.S. Environmental Protection Agency (EPA) looks poised to reinstate California’s waiver under the Clean Air Act — allowing the state to establish stricter tailpipe emissions than the federal limits — the coastal region has resumed its quest to abolish gasoline-powered vehicles in earnest. While the California Air Resources Board (CARB) has yet to finalize all the details, the latest proposal calls for strengthened emissions standards for new light-duty vehicles in anticipation of the necessary approvals.

The scheme would require pure electrics and plug-in hybrids (PHEVs) to make up 35 percent of new-vehicle sales for the 2026 model year. By 2030, that number will become 68 percent before hitting 100 percent for MY 2035. CARB said zero-emission vehicles comprised 12.4 percent of the state’s new market in 2021, hinting that the number could have been higher without the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One having stifled its progress.

With the United States Department of Transportation having formally announced upgraded Corporate Average Fuel Economy (CAFE) standards starting in 2024, the Biden administration was quick to point out that the decision would likely make automobiles even more expensive than they already are. However, the caveat to this was that it also assumed fuel prices would come down as improved efficiencies reduced North America’s hunger for fuel.

This effectively undoes fueling rollbacks instituted under the Trump administration on the grounds of reducing costs to consumers and cutting regulatory red tape for a prospective future where fuel prices are reduced without the need to spur oil production. But what does that actually mean in terms of dollars and cents?

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.

Last month, the U.S. National Highway Traffic Safety Administration (NHTSA) proposed new rules that would increase fines for automakers who previously failed to adhere to fuel efficiency requirements. EV manufacturer Tesla has predictably endorsed the rules and has begun urging the federal government to put the plan in action as soon as possible.

While automakers have issued concerns that increasing penalties could cost them over $1 billion per year through regulatory fines and the purchasing of carbon credits, Tesla has been asking the Biden administration and a U.S. appeals court to expedite the process and make the proposals binding. Though that’s undoubtedly because the company sells its credits to the tune of at least $350 million annually and doesn’t build a single automobile that’s powered by gasoline.

The National Highway Traffic Safety Administration is considering increasing penalties for automakers that fail to meet fuel-efficiency requirements. Though this could be considered a restoration of older standards, depending upon your perspective.

Shortly before leaving office, President Donald Trump postponed a regulation from the last days of the Obama administration that would have effectively doubled fines for vehicle manufacturers failing to meet Corporate Average Fuel Economy (CAFE) requirements. Automakers had been complaining that the rule would have dramatically increased operating costs, suggesting that would trickle down to vehicle pricing and give manufacturers selling carbon credits an unfair advantage.

Tesla is demanding the reinstatement of a 2016 Obama regulation that more than doubles penalties for manufacturers who fail to adhere to fuel efficiency requirements. Gee, I wonder why it would do such a thing.

While focusing on the environment is an admirable endeavor, much of the discussion surrounding environmentalism on the corporate level really skirts around the periphery of Scamville. Elon Musk is no fool and understands that the more stringent regulations are enacted against his competitors, the more desperate they will be to buy up Tesla’s mountain of carbon credits. With a little help from the government, electric-vehicle companies can effectively bankrupt their more-traditional rivals while earning a nice payday for themselves. In fact, Tesla has only managed to become a profitable company because of this practice.

Following requests from Senator Tom Carper (D-DE) for a formal investigation into whether the Safer Affordable Fuel-Efficient (SAFE) Vehicle Rules proposed by the Trump administration violates the Clean Air Act (or some currently undetermined regulatory requirement that might stop it from coming to fruition), the U.S. Environmental Protection Agency’s Office of Inspector General said it will indeed evaluate the emissions rollback.

As the ranking minority member of the Senate Environment and Public Works Committee, Carper’s opposition to the fuel rollback is to be expected. With politicians unwilling to find common ground and engage in good-faith discussions that might result in some amount of compromise in service to the people, opposition tactics have devolved into partisan lawsuits and trying to halt the new rules over technicalities.

The Environmental Protection Agency’s (EPA) Scientific Advisory Board (SAB) is once again applying pressure on the Trump administration’s proposed fuel economy rollback. Similar to the complaints issued by a coalition of scientists back in March of 2018, the board expressed concerns that significant weaknesses exist in the analysis underpinning the plan that should be addressed before any rules are made final. A draft report was circulated earlier in the week, with the SAB scheduling a public meeting meeting on January 17th.

“[The] EPA always appreciates and respects the work and advice of the SAB,” the U.S. regulatory agency said in a statement. “When implemented, the [rollback] will benefit all Americans by improving the U.S. fleet’s fuel economy, reducing air pollution, and making new vehicles more affordable for all Americans.”

Environmental Protection Agency Administrator Andrew Wheeler weighed in on the gas war this week, issuing some firm language on the matter during a visit to Chattanooga, Tennessee. His words were softer upon returning to Washington, where he reminded everyone that the EPA has made no formal decisions on the matter and suggested there could still be room for compromise.

Unfortunately, locating that happy middle ground has been a bit of a problem. Despite the fuel economy rollback’s status as a proposal, hard lines have been drawn in the sand between the Trump administration and California’s regulatory bodies. The Golden State’s compromise was to delay the Obama-era targets by one year. California also recruited municipalities, U.S. states, and automotive manufacturers to pledge their support of the plan, resulting in a handful of carmakers finding themselves on the business end of an antitrust probe.

Meanwhile, the Trump administration’s compromise has been nonexistent. Wheeler’s words suggest that might be because everyone is still making up their minds… but not before he gently razzed the West Coast for being shortsighted an singleminded.

On Tuesday, 23 governors signed a joint statement urging the Trump administration to reconsider the proposed rollback of Obama-era fueling regulations. Led, unsurprisingly, by California Governor Gavin Newsom, the letter suggests a “common-sense approach” to national requirements with an emphasis on rising standards.

A minor update in the gas war to be certain — and yet annoyingly framed by a large portion of the media as a victory for California when the realities are far more complicated. To be frank, we’re getting pretty tired of these lopsided takes. This whole thing is a regulatory and political quagmire… on all sides.

A recent study from consulting firm AlixPartners has suggested that automakers could be in for a financial ass kicking of epic proportions. As it turns out, reaching emission quotas is a difficult business and the European Union wants 95 grams of carbon dioxide per kilometer by 2021. The study suggests few automakers are on track to reach that goal and, as a result, will be forced to pay out sizable fines. We’re talking billions.

Can you guess which manufacturers are supposed to get hit the hardest?

Here’s a hint: we’ve discussed one of them having similar issues in the United States earlier this year and both of their names are in the title of this article.

Capitol Hill was the scene of some high-school drama this week after representatives from the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) reportedly refused to sit at the same table while discussing fueling regulations with the U.S. House Energy and Commerce Committee.

As petty as this seems, it illustrates the overall situation rather well. White House officials terminated talks with California in February, citing an inability to progress the debate. Meanwhile, CARB has been claiming the Trump administration doesn’t want to hear its case and has instead sought to strip the state of its ability to self regulate in order to pass reforms that would freeze national emissions standards at 2020 levels though 2026.

Thursday’s congressional bickering helped paint a clearer picture of what the communications breakdown looked like.

The United Auto Workers is spending Thursday telling Congress that the union opposes the Trump administration’s proposal to freeze fuel efficiency requirements at 2020 levels through 2026… sort of. While the UAW expressed moderate environmental concerns in the past, most of its opposition to the rollback has revolved around corporate investments into the industry. In fact, the union’s research arm called fuel economy the auto industry’s “future” in 2018.

This time around, the UAW seems to be singularly focused on business aspects. According to a prewritten testimony, UAW Legislative Director Josh Nassar intends to tell two subcommittees of the U.S. House Energy and Commerce Committee that the union is in line with automakers’ concerns about the proposal leading to “protracted litigation and uncertainty in the industry that will limit growth.”

On Tuesday, the House of Representatives Energy and Commerce Committee said it will schedule a hearing on June 20th regarding the Trump administration’s proposal to roll back automotive efficiency standards. The decision comes from Committee Chairman Frank Pallone, Jr. (D-NJ), Consumer Protection and Commerce Subcommittee Chair Jan Schakowsky (D-IL) and Environment and Climate Change Chairman Paul Tonko (D-NY) — all of whom are in clear opposition to the suggested plan.

The groups will hold a joint hearing to discuss Corporate Average Fuel Economy (CAFE) standards and carbon pollution regulations affecting light duty vehicles as they relate to the current administration’s plan to effectively freeze efficiency targets between 2020 to 2026.

The automotive industry is in turmoil. There’s an industrywide push toward electrification that has yet to prove itself as truly profitable, volume seems to be tapering off in the developed world, and emissions regulations aimed at improving air quality are operating counter to existing consumer tastes. As a result, automakers are scrambling to find the best path forward.

In 2017, that path involved encouraging the new U.S. president to roll back Obama-era fuel economy mandates, thus providing some breathing room and staving off fines as automakers began to realize they wouldn’t be able to meet tightening targets. The administration listened, leading to a proposal that would effectively freeze mileage standards at about 37 miles per gallon — rather than the previously decided 54.5 mpg — by 2025.

However, California and a coalition of supportive states claim they won’t be going along for the ride. This group says it will maintain the old standards, regardless of what the White House says. The staredown has automakers worried; they’ve now banded together to issue a letter asking both sides to calm down and keep talking.