Carmakers Miss U.S. Tailpipe Goals While Seeking Trump Relief

Source: By Ryan Beene, Bloomberg • Posted: Friday, January 12, 2018

Model year 2016 cars and light trucks sold in the U.S. failed to achieve the Environmental Protection Agency’s greenhouse gas emissions standards for the first time, despite a small efficiency improvement from the prior year.

The vehicles averaged emissions of 272 grams of carbon dioxide per mile, 9 grams per mile worse than the regulatory standard set for the 2016 model year, according to a report released Thursday by the agency. The industry overall had outperformed the carbon emission targets in each year since 2012, when the efficiency targets took effect.

EPA regulations establish annual targets for carbon dioxide emissions, which are closely linked to fuel economy, and get tougher — that is, lower — each year. Despite the miss, all automakers were in compliance with the regulations, the agency said in a statement. Credits accumulated in prior years offset the industry’s 2016 shortfall.

Luke Tonachel, director of the clean vehicles and fuels project at the Natural Resources Defense Council, wrote in a blog post Thursday that the 2016 results illustrate how the U.S. government’s auto efficiency regulations are “designed to work this way precisely because there will be years when automakers have lulls in their vehicle redesign cycles and apply less technology.”

“Manufacturers still have ample credits in their accounts to draw on for future years if needed,” he said.

In a separate Fuel Economy Trends report, also released on Thursday, the EPA said 2016 model year vehicles averaged 24.7 miles per gallon. The average was a record, but the pace of gains has slowed, partly because more Americans are buying larger, less fuel-efficient vehicles. The 2016 average was up 0.1 mpg from 2015, compared to a 0.5 mpg gain from 2014 to 2015, the EPA said.

The EPA’s emissions standards grow tougher each year through 2025 under a plan enacted by the Obama administration to boost average fuel economy to more than 50 mpg by that time. Those rules are under review by President Donald Trump’s administration. Automakers have pushed for relief for in light of low gas prices and booming sales of light trucks.

Automakers lobbying the administration will likely use the industry’s 2016 shortfall to bolster their case for easing vehicle efficiency standards for 2022 through 2025.

Driveways, Not Showrooms

The report shows “automakers are deploying a wide range of technologies that improve fuel economy as well as alternative fuel options. However, it’s important to remember that the standards don’t measure what we put in showrooms, they measure what consumers put in driveways,” said Wade Newton, a spokesman for the Alliance of Automobile Manufacturers, a trade group for a dozen automakers including General Motors, Ford and Fiat Chrysler.

Among the large manufacturers the EPA ranked for fuel economy, Mazda Motor Corp. was the highest with an average of 29.6 mpg in 2016. Fiat Chrysler Automobiles NV, for the sixth year in a row, was at the bottom with 21.5 mpg. FCA’s numbers may be restated later, the agency said, because of an ongoing review of possible reporting violations.

“Being last again puts increased pressure on FCA management,” said Gopal Duleep, president of H-D Systems, a Washington, D.C.-based research company. “They’ll need to invest more in new technology, or find the buyer they’ve been seeking, or lobby aggressively for a less-stringent standard.”

Automakers have questioned the cost of achieving the required fleet average of over 50 mpg by 2025. In some cases, automakers can use pollution credits to meet their regulatory requirements on fuel efficiency. Automakers can gain credits by selling optional flexible-fuel vehicles, which can run on either gasoline or ethanol, and by using certain air-conditioning technology, or they can buy them from other automakers. The flexible fuel credits expired in model year 2016.

During the 2016 model year, FCA purchased 21.9 million credits, the most of any automaker. Daimler AG’s Mercedes unit, the second-largest purchaser, bought 6.2 million. Honda Motor Co., the largest seller, sold 20.7 million credits, followed by Tesla Inc. with 3.6 million.