Co-authored by Charles Griffith, Ecology Center Climate Energy Director and Scott Hardin, Staff Writer
It is not surprising that a “pro-business” president would choose to pursue policies that help reduce regulatory requirements on American businesses, but the Trump administration’s new proposal to freeze fuel economy standards in 2020 is so blind to changes in the automotive industry that they may actually do more harm to automakers than help them, and potentially take billions from consumer pocket-books at the same time.
The proposed rules, which would roll back Obama-era standards to improve fuel standards for cars and light trucks and freeze them at the 2020 levels, is based on the idea that relaxed regulations will allow automakers to produce cheaper cars, passing these savings on to consumers. In the administration’s defense of the rule, this will entice more consumers into buying newer cars that are more fuel efficient and safer than the older vehicles that they currently drive. While to the casual observer this may sound like it makes sense, it falls apart completely under critique.
Unfortunately, while reducing fuel efficiency requirements for new cars may save consumers a little money on their new car purchases, it will cost them, even more, every time they fuel up. The Natural Resources Defense Council estimates that it would cost the average consumer $6,000 more over the life of a car, in fact, compared to today’s cars. Collectively, they estimate, by sticking with the existing Obama-era standards, consumers buying vehicles from 2021 through 2025 would save up to $98 billion dollars, even after factoring in the cost of cleaner, more efficient technologies.
Not only is it presumptuous for Trump administration officials to suggest that consumers care more about the marginal cost of the next car they buy than about the added costs of fueling those vehicles, it is equally concerning that they suggest Americans don’t care anymore about saving fuel or reducing emissions of greenhouse gases, which now the rank as the leading contributor to climate change. Interestingly, the EPA still has a link on its web page indicating consumer and GHG emission savings from the current fuel economy and greenhouse gas standards.
The Trump administration plan also seeks to limit the ability of individual states—in particular, California—to set stricter standards than the federal level. One of the most important accomplishments of the former administration’s efforts was creating one national standard that incorporated the requirements from California and other states that had chosen to adopt their more stringent standards. To now choose to go its own way and attempt to disallow standards that are any stronger only invites a viscous fight. It’s no surprise that twenty state attorneys general have already stated that they plan to challenge this policy in court (sadly, not our own AG).
Adding further intrigue to this saga, recent news reports also reveal that staff within the Environmental Protection Agency, one of the two agencies proposing these standards, did not even agree with the data and analysis used to devise the proposed rules. While Department of Transportation (DOT) staff claimed that the new standards would reduce future traffic deaths, EPA staff argued the opposite--that the standards would increase them.
Likewise, the DOT staff claimed that the standards would create a net societal benefit of $49 billion, while EPA argued that it would lead to a net cost of $83 billion. Ultimately, EPA’s newly appointed Administrator Bill Wheeler chose to ignore his own staff and consent to the DOT analysis and proposal.
Fortunately, since automakers tend to develop their products and strategies on long-term scales, they are unlikely to change their direction anytime soon. Uncertainty in the marketplace hurts their ability to plan, and until things get resolved and there is a unified approach that includes California, automakers seem likely to stay the course. Smart money suggests that the proposed new rules will be stuck in the courts, possibly for years. In addition, automakers seem to understand that consumers now expect gas mileage to continue to improve, and will likely not want to disappoint new car buyers or risk losing market share. Further, automakers have to consider that 2020 may bring with it a new president who could re-instate the standards.
In short, neither manufacturers nor consumers really want what the Trump administration is proposing. The only industry that would seem to benefit are the oil companies.
There is still a chance the administration will choose not to freeze the standards at 2020 levels. The proposal included a few different options for commenters to comment on, including raising standards at a reduced rate, or keeping with the original standards. We expect millions of Americans will chime in to say that the current standards should remain. In addition, the administration has announced that there will be a few public hearings around the country, including in Detroit.
No matter what the administration decides to do, though, we remain confident that automakers will continue to invest in better technology, including electric vehicles, both to secure the manufacturers’ long-term profitability as well as provide better products to consumers while improving both our public health and our environment.
In the Trump EPA’s latest bone-headed move, they have also proposed to replace the Obama admin’s Clean Power Plan regulation for power plants with a new rule that lets states set their own emission standards. Yes, we know, that kind of defeats the purpose of having a unified national standard that tries to bring the laggards into greater alignment with the leaders (who, by the way, are already setting their own standards). We just thought you should know.
Published on August 30, 2018