Chrome exhaust pipe
Two days ago, the U.S. Environmental Protection Agency issued a ruling that existing limits on tailpipe emissions of carbon dioxide for 2022 through 2025 should remain in place.
The EPA's carbon limits correspond exactly to NHTSA standards for corporate average fuel economy, and the EPA decision was widely (if incorrectly) reported to be about CAFE.
Its recommendation, which came unexpectedly early, largely reiterated points made in a voluminous Technical Assessment Report issued in July.
The report said that automakers have the technical abilities to meet the emission standards, although higher-than-projected sales of SUVs and light trucks may cause them to miss the mark slightly.
Now what happens?
The short answer is that, as yet, there are few certainties about how the Trump Administration will choose to address the many, many promises of radical policy change pledged by candidate Trump.
U.S. Capitol Building
A few basic facts are clear, however.
(1) Automaker lobbyists and much of the industry want the standards stopped.
Even before the EPA decision, the Alliance of Automanufacturers issued a letter within days of Trump's election calling on him to delay, relax, adjust, or repeal the second part of the EPA regulations.
Efforts to repeal the decision will increase now that the agency has moved to keep its rules in place. Or as Car Talk memorably put it: "CAFE Regs Upheld; Cue the Whining."
The day of the decision, the Alliance slammed the EPA's "extraordinary and premature rush to judgment" on the feasibility of the standards.
Some arguments border on the incoherent: a National Automobile Dealers Association statement said that keeping existing fuel-economy standards would "halt progress on fuel economy."
As confusing as that may be, NADA said it "looks forward to working with the Trump Administration" to reverse or delay the fuel-economy rules.
2017 Chevrolet Bolt EV pre-production vehicles at Orion Township Assembly Plant, March 2016
(2) Automakers don't want an uncertain regulatory environment that changes radically and suddenly.
At the same time, automaking is a hugely expensive industry with long lead times and billion-dollar investments.
That means car manufacturers are strongly averse to sudden and unpredictable upsets in the regulatory environment they must comply with over the next five to seven years, or the planning cycle for a complete vehicle architecture.
Think back to 2009, when Obama took office. Under his predecessor, George W. Bush, the EPA slow-walked the issuance of standards to reduce carbon-dioxide emissions from vehicles even after the Supreme Court had said that not only did the agency have the right to regulate CO2, but that it had to do so.
Carmakers were less than two years away from the start of the 2012 model year when Obama took office, one reason he was able to lock automakers, the EPA, and the powerful California Air Resources Board together in a room and tell them not to emerge until they agreed on 2012-2016 rules.
The carmakers may not have liked the idea of boosting fuel economy much, but regulatory certainty was more important. (The effects of the global recession and the government-backed restructuring of two of the three native U.S. makers after their bankruptcy also weakened their hands.)
Thus it's likely that automakers would welcome a pause or delay in CAFE standards, but don't necessarily want them thrown out.
Chrome exhaust pipe
Eliminating them altogether could render worthless a substantial portion of the billions they've spent on smaller and more efficient engines, multi-speed transmissions, lightweighting, and all the rest.
Even more, it would hurt them in their efforts to sell cars globally.
(3) The U.S. is no longer the largest global auto market, and reducing fuel-economy standards has no impact on the much tougher standards in Asia and Europe.
"What needs to be understood, however, is that automakers are global," says Michelle Krebs, senior analyst at Autotrader.
"Markets outside the U.S.—as well as California—are demanding more fuel-efficient and lower-emitting vehicles.
"Automakers will still be on the hook to develop and produce these vehicles and will need economies of scale to make them profitable.”
National Plug-In Day 2012: San Francisco, with 60 Nissan Leafs in front of the Golden Gate Bridge
(4) California isn't going to change, regardless of what happens nationally
In fact, changing national fuel-economy standards would have the effect of changing national emission standards, given the direct linkage between fuel consumed and CO2 emitted.
For four decades, California has had the legal right—affirmed by the Supreme Court—to set its own, stricter air-quality standards.
Every other state can choose either to comply with national emission standards or adopt the stiffer California rules; so far, 10 states in the Northeast and Pacific Northwest have adopted the more stringent limits.
"The real challenge will be getting the California Air Resources Board to back off their Zero Emissions Vehicle mandate," suggests Rebecca Lindland, senior analyst for Kelley Blue Book.
"That mandate has a goal of 1.5 million zero-emission vehicles on the state's roads by 2025 (there are about 230,000 today).
"Moreover," Lindland continued, "a 2013 memorandum of understanding signed with seven other states commits them to more than 3 million ZEVs on the roads in these states by 2025.
"Even if the federal regulations are eased, without California and its cohorts following suit, I don’t know that it [would] be a “win” for the manufacturers.”
Golden Gate Bridge, connecting San Francisco and Marin County, California
And California has ambitious goals for reducing carbon emission, meaning it's likely to uphold—or even strengthen—its own car and light truck standards for 2022 through 2025.
Those standards today are consistent with the standards now under review by the EPA and NHTSA.
Carmakers are terrified of having different standards for California—and the 10 other states that follow its standards—and the rest of the country, which would require them to track emissions state-by-state and adjust their vehicle mixes and offerings to stay within two different sets of limits.
The desire not to have that happen was one of the drivers that led the industry to accept the 2012-2017 and then 2018-2025 standards back in 2009 and 2010.
And as Bloomberg and others have pointed out, California will resist—probably strongly and angrily—any efforts to affect its own, legally-guaranteed emission-reduction efforts.
(5) Altering the existing EPA national emission rules won't necessarily be easy.
As industry trade journal Automotive News points out, changing the rules can't be accomplished with a flick of President Trump's pen.
The NHTSA still has to conduct a full rulemaking process on the recommended standards, because it legally oversees fuel economy.
Chrome exhaust pipe
While there's no legal requirement that fuel-economy standards align with greenhouse-gas emission standards, automakers desperately want emission limits and CAFE standards to remain aligned.
Meanwhile, it would be "a protracted process, subject to the full complement of notice and comment requirements," Auto News writes.
That would also mean "overturning thousands of pages of agency science [that underpin] the current standards," not to mention "surviving an inevitable court challenge from environmental groups."
In other words, the greenhouse-gas emission regulations now in effect—which the EPA has determined should stay put—will stay in place for many months to come even if repealing them is deemed among the highest priorities of the new administration.
U.S. Environmental Protection Agency adminstrator Lisa Jackson and President Barack Obama
(6) Congress will have to pick and choose which of many Obama accomplishments it wants to undo.
Finally, despite the many actions promised by Trump and planned by his party come the new administration on January 20, only so many acts can be repealed and regulations can be overturned.
As The Washington Post notes, "each rule reversal takes up 10 hours of floor time in the Senate and senators must also confirm key political nominees and pass a budget."
Of the rules enacted in the last weeks of the Obama administration, an unnamed aide estimated, Congress was likely to overturn between five and seven.
Under normal circumstances, the EPA emission rules would still require a corresponding rulemaking process by the NHTSA (as noted above).
Where reduction of carbon emissions from vehicles and higher fuel economy falls in importance for a Trump presidency remains to be seen.
But it should be noted that the benefits touted by automaker lobbyists come with risks of their own.
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