Car emissions aren’t falling, so use cap and trade?

Source: Camille von Kaenel, E&E reporter • Posted: Wednesday, August 10, 2016

Experts and officials are starting to weigh new ways to cut carbon pollution from vehicles as fuel economy standards fail to lower emissions on U.S. roadways. Suggestions include a cap-and-trade system and more electrification.

The Obama administration has embraced a goal of reducing 80 percent of 2005 light-duty vehicle greenhouse gas emissions by 2050, but current trends show a significant gap. The transportation sector recently started emitting more carbon than the nation’s power plants, according to the U.S. Energy Information Administration.

The key governmental policy to address the emissions — corporate average fuel economy (CAFE) and greenhouse gas emissions standards for light-duty vehicles — only extends to 2025. With a major review of the standards now underway, some officials and experts are turning their attention to what happens after 2025.

“The next set of standards has to be transformational to get on the right trajectory,” said Margo Oge, former head of U.S. EPA’s Office of Transportation and Air Quality.

As part of the review, officials with EPA and the National Highway Traffic Safety Administration will decide to tighten, loosen or maintain the 2025 standards by 2018. The process kicked off last month with a major technical report. It found automakers would miss the original projected targets for fuel economy in 2025 unless the standards were tightened because more Americans are choosing trucks and sport utility vehicles over passenger cars.

After that, it’s unclear.

A 2013 National Academy of Sciences report found that to meet the 80 percent reduction goal by increasing efficiency only, the average fuel economy for new cars in 2050 would have to reach 180 mpg. The current standards are expected to achieve a little more than one-quarter of that by 2025, or 50 mpg.

“The agencies need to start thinking of new realities and new innovation, like in the areas of autonomous vehicles and shared vehicles,” Oge said. “If you started properly, with that in mind, you could have an opportunity to meet the 2050 goals.”

EPA has started gathering ideas.

Christopher Grundler, director of EPA’s Office of Transportation and Air Quality, called on the industry to start thinking beyond four years of standards at a Michigan conference last week. He suggested a “new policy framework” for controlling pollution, given changes in the transportation sector.

According to his draft remarks, he listed several such changes: Falling battery costs are making electrification more feasible, shared and autonomous mobility could lower costs, young people tend to have less interest in individual vehicle ownership, and the industry is receptive to “selling miles instead of vehicles.”

“What we know is, just from the math, if we’re going to achieve what science tells us we need to achieve by 2050, we’re going to need to see a lot of zero and near-zero emissions technology coming into the fleet,” Grundler told Bloomberg News.

EPA has several regulatory actions to finish before President Obama leaves office. One of them is a fuel economy rule for heavy-duty vehicles, which account for around a quarter of on-road transportation emissions. It is expected within a week.

A State Department official said the administration is on track to meet 2020 emissions reduction goals, but did not give numbers for the role of transportation. Given current trends, the Energy Information Administration estimates that energy-related emissions from transportation will fall by about 83 million metric tons, or 4.5 percent, by 2025, which accounts for only about 1.5 percent of economywide emissions.

Role of electric vehicles

Getting to the 2050 goals will require more electrification, according to a new literature review published yesterday by Chris Gearhart, the director of the Transportation and Hydrogen Systems Center of the National Renewable Energy Laboratory, in the journal MRS Energy & Sustainability.

Even with improvements to vehicle efficiency in areas like weight, aerodynamics, tire rolling resistance, transmissions and idling, vehicles will only meet the goals with low-carbon fuels like electricity or biofuels, Gearhart found.

“It’s going to have to be ‘all of the above,'” said Gearhart. “It can’t be just a question of better vehicles or better fuels. You’re going to need both of them in conjunction.”

Fuel economy targets for 2025 require none to very little electrification. In their technical report, the agencies expected electric vehicles to make up less than 5 percent of new vehicles by 2025, which falls just below official Energy Information Administration projections.

Automakers, which have resisted more stringent fuel economy standards, said there’s only so much they can do by themselves to cut carbon emissions.

“It is important to note that much of what is being done today will shape what’s possible post-2025,” wrote a spokesman for the Alliance of Automobile Manufacturers in an email. “Automakers can continue to produce [plug-in hybrid electric vehicles], [battery electric vehicles], and fuel cell vehicles, but consumers also have to be interested in buying them, and that requires changes in long established behaviors and preferences.”

Cap and trade?

Other experts are exploring a market-based measure to cut transportation pollution. Michael Greenstone, director of the Energy Policy Institute at the University of Chicago, proposed a cap-and-trade system for the sector this March in a New York Times op-ed.

Sam Ori, the institute’s executive director, said they’re working on a more detailed proposal.

“Right now, CAFE regulates the efficiency of the vehicle at the point of sale, but we’re not doing anything to capture the lifetime costs of operations for vehicles, which is probably the more important area to focus on,” he said.

Under his proposal, lifetime emissions would be estimated for each new vehicle based on projected usage. Automakers would trade credits to meet a lowering cap on sectorwide emissions.

“The icing on the cake is if you start linking it up with the power sector, you clear a path to the lowest-cost pathway to decarbonization economywide,” Ori said.

Last November, five Northeastern states (Connecticut, Delaware, New York, Rhode Island and Vermont) and the District of Columbia promised to work together on a market-based measure covering transportation emissions.

The concept is still in the works, says Kate Zyla, deputy director of the Georgetown Climate Center, which is organizing the initiative, but would be complementary to the fuel economy standards.