Automakers ask Trump to ‘adjust’ fuel economy standards

Source: Camille von Kaenel, E&E News reporter • Posted: Friday, November 11, 2016

Automakers asked President-elect Donald Trump for tweaks that may weaken the federal fuel economy standards in a memo sent to the transition team yesterday.
In the letter, Alliance of Automobile Manufacturers President and CEO Mitch Bainwol called on Trump to “adjust” the standards and listed several policy recommendations. They suggest the automakers are looking to the new president for changes to standards they agreed to but may struggle to meet moving forward.

“Automakers want to continue improving fuel economy for our customers and greater energy independence, but standards need to be achievable,” wrote Gloria Bergquist, a spokeswoman for the alliance, in an email to E&E News. “Right now, the proposed standards get so steep that not even all hybrids can meet them. We need to have a serious conversation about the right path forward, given low gas prices.”

Although Trump has vowed to roll back many of President Obama’s U.S. EPA regulations, he has not named the greenhouse gas emissions and corporate average fuel economy (CAFE) standards. Environmental and consumer advocates said they thought it was unlikely he would eliminate the standards because the industry has approved of them and the American public values higher mileage per gallon. He could, however, loosen the 2025 standards and delay setting new standards for after 2025. Congress could also pass legislation to alter the program.

The Trump administration will have to decide whether to increase, loosen or maintain the 2022-25 fuel economy standards by April 2018 as part of an ongoing midterm review. Bainwol asked Trump to work with agencies and automakers to plan out the standards “for 2022 [model year] and beyond” before making any decision.

Better agency harmonization

Automakers have consistently met and exceeded the fuel economy standards so far, and a technical analysis by EPA this summer found that there were enough technologies available for compliance through 2025. But consumer preferences for larger gas guzzlers have offset some of the climate benefits of the program.

The automakers’ memo said the agencies’ analysis so far “over-projects technology efficiencies and inadequately accounts for consumer acceptance and marketplace realities.”

“The combination of low gas prices and the existing fuel efficiency gains from the early years of the program is undercutting consumer willingness to buy the vehicles with more expensive alternative powertrains that are necessary for the sector to comply with the more stringent standards in out-years,” the memo reads.

The memo said inconsistencies between EPA and the National Highway Traffic Safety Administration, the two agencies that set the standards, saddle automakers with extra fines and costs. It calls for better harmonization between the two.

“This regulatory friction is already occurring, driving up vehicle costs, and will become even more counterproductive as the regulatory requirements become more stringent in future Model Years,” the memo said. “Potentially billions of dollars in fines under the NHTSA CAFE program are anticipated.”

That echoes a petition automakers sent to EPA in June that would have allowed automakers to get credit for emissions-reducing technologies already on the road, bringing more cars and trucks into official compliance (ClimateWire, June 24).

But environmental groups questioned the auto industry’s motives.

“We don’t think this is about harmonization,” said Dave Cooke, senior vehicles analyst at the Union of Concerned Scientists. “This is about weakening the rules under the guise of harmonization.”

Shannon Baker-Branstetter, energy and environment policy counsel for the Consumers Union, also criticized the automakers’ requests.

“Weakening the fuel economy standard would force consumers to pay more for fuel,” she said. “This is a regulation that saves people money. It is a bipartisan effort with a great success record.”

A second recommendation asks a Trump administration for more regulatory oversight, including a “comprehensive review of all regulations (final and proposed), interpretations of regulations, guidance, information disseminations, information collections, that were promulgated or issued since September 1, 2016 to ensure that these are consistent with the policy objectives of the new administration.”

A ‘major issue’ in first two years

Environmentalists said those requests were an attempt to limit any groundwork the current EPA may be laying for the midterm review.

Andrew Linhardt, who works on federal transportation issues for the Sierra Club, called for the Obama EPA to finalize its technical analysis and propose a final decision. The latter is highly unlikely given the short time left before January.

“The more that’s finalized, the more difficult it is to roll back,” said Linhardt.

The automakers’ memo also asks for the midterm review to analyze the costs of California’s zero-emissions vehicle program, which requires that 15 percent of vehicle sales in 10 states have zero emissions by 2025. The policy creates a “much more expensive compliance pathway that will increase costs for consumers nationally,” the automakers wrote. They are concerned about a “patchwork of requirements” as states in the Northeast and California adopt differing incentives and policies to help reach that 15 percent sales target.

John Graham, the dean of the Indiana University School of Public and Environmental Affairs, who has previously received Alliance of Automobile Manufacturers funding for fuel economy policy papers, said the ZEV program and the CAFE program are “pushing the industry in conflicting technological directions” — one that replaces the internal combustion engine with electric or fuel cell vehicles, and one that makes fuel-efficient improvements to the internal combustion engine.

“Unless the Trump administration and California can work to ease this conflict, which will be difficult, I predict the EPA waiver for California’s ZEV program will become a major regulatory and/or legislative issue by 2018,” he wrote in an email. “If the controversy is not resolved, the future of federal tax credits and subsidies for plug-in electric vehicles may also be at risk.”

He said he predicted the fuel economy standards would be a “major issue” in Trump’s first two years.