EPA Faces Environmental, EV Sector Calls To Tighten Vehicle GHG Plan

Source: By Doug Obey, Inside EPA • Posted: Thursday, August 26, 2021

Environmentalists and some industry groups are pressing EPA to tighten its proposed near-term vehicle greenhouse gas plan to spur more emissions cuts and possibly greater electric vehicle (EV) adoption than the agency’s preferred option, highlighting the pressure officials face to write ambitious standards.

The groups’ appeals, raised at EPA’s Aug. 25-26 public hearing on its proposed update to model year 2023-2026 rules, come as outside observers and the agency itself cite the rules as just a first step toward stricter rules.

Many comments from the hearing show general support for strengthening standards rolled back by the Trump administration as well as skepticism of proposed compliance flexibilities many groups argue could undercut the GHG benefits of the standards.

“EPA must maximize the pollution reductions, minimize the loopholes, and finalize the rule this year,” said Paul Billings, the senior vice president for advocacy at the American Lung Association (ALA), in Aug. 25 remarks.

Such criticisms align with recently unveiled concerns that the Office of Management and Budget told EPA officials during internal review of the proposal that it may not be strict enough.

Early reaction from major automakers included expected Aug. 26 testimony from the trade group Alliance for Automotive Innovation saying it “supports the goals of EPA’s GHG program” but calls for a “comprehensive national strategy” including “state, local and federal investments” to enable the transition to EVs.

Officials from Ford, Hyundai and other automakers were also scheduled to address the Aug. 26 session.

ALA’s Billings was the first witness at a proceeding in which numerous environmental and public health groups questioned “loopholes” in the proposal they claimed could erode the program’s stringency.

Multiple environmentalists urged EPA to adopt a final rule at least as stringent as the plan’s “alternative 2” that would adhere more closely to Obama-era standards than the agency’s default. Some specifically also referenced EPA’s separate request for comment on toughening the requirement in MY26, which would result in a GHG standard 5 to 10 grams per mile (gpm) lower in that year than the agency’s preferred option, reflecting the potential for quicker deployment of EVs than expected in EPA’s default plan.

One source familiar with the issue says environmental groups prior to the proceeding appeared to reach a degree of consensus in support of alternative 2, as well as the related push for a tighter MY26 standard.

In this vein, Billings’ testimony encourages “EPA to pursue, at a minimum, the stringency laid out in Alternative 2, and remove excess crediting and loopholes that will work to reduce the real-world benefits of this more health-protective alternative.”

Natural Resources Defense Council (NRDC) staff scientist Vijay Limaye in Aug. 25 testimony likewise urged that EPA finalize a rule “at least as stringent as alternative 2” and argued that the net benefits of stronger car rules are “even higher than those currently estimated by EPA,” citing a peer-reviewed analysis he co-authored on health costs from climate change not necessarily factored into EPA’s plan.

NRDC also noted that EPA’s “stronger alternative would achieve between $8 billion and $16 billion more net benefits than the preferred proposal over the lifetimes of MY23-26 vehicles,” the group said in a blog post.

Center for Biological Diversity staff attorney Scott Hochberg also called for tougher rules and criticized the EPA proposal as falling far short of needed ambitions and jeopardizing longer-term GHG cuts. But he acknowledged the alternative 2 and MY26 options in EPA’s plan as “closer to the mark” of what needs to happen.

EV Sector

Adding to the support for a stricter rule were additional voices from industry, including Plug In America, an association of EV drivers, as well as electric truck maker Rivian.

“Given the choices, we would advocate for alternative number 2 from the proposal, although we are concerned that it is not nearly ambitious enough,” Plug in America Executive Director Joel Levin said.

Levin said EPA’s estimate that its rule would result in an 8 percent EV penetration rate by 2026 is “simply too cautious” of a goal, given the vehicles’ roughly 4 percent market share estimated for MY21.

“We urge the EPA to go beyond these alternatives and establish standards that aim for a 25% EV market share for 2026, which would put us on track to achieve 100% EV market share by 2035, as many countries and a number of U.S. states have already committed to,” he said.

Rivian’s public policy direct Chris Nevers in prepared remarks added that EPA’s near-term plan “leads in the right direction,” but he also endorsed alternative 2, while flagging concerns over several compliance flexibilities in the proposal as delaying progress toward the administration’s goals. He specifically flagged EPA’s proposal to extend credit “multipliers” for EVs and other advanced technology vehicles.

“[P]erhaps counterintuitively, we recommend not extending the credit multiplier for advanced technology vehicles. This multiplier is no longer needed and weakens the stringency of the program as a whole by double-counting emissions reductions,” Nevers argued.

The potential for EV credit multipliers to slow, rather than speed, deployment of EVs is also coming up in other venues, including research by Yale University economist Kevin Gillingham suggesting that such multipliers could reduce EV sales.

“[C]ounting electric vehicles under a standard with a multiplier or assuming zero upstream emissions can reduce electric vehicle market share by weakening the standards,” Gillingham writes in a May paper.

That conclusion appears to be at odds with EPA’s regulatory analysis suggesting that the multipliers would actually encourage more EVs than if such credits were omitted from the rule.

Other flexibility provisions Rivian cites as potentially problematic include EPA’s proposal to expand from 10 to 15 gpm the allowed use of certain off-cycle emissions credits, and a proposed extension of the lifetime of other compliance credits that would otherwise expire under the program.

Environmental Law and Policy Center federal legislative director Ann Mesnikoff added during the hearing that “excessive technology credits and loopholes allow automakers to stall gasoline vehicle improvements and will fail to significantly boost the electric vehicle market given automakers’ announced plans.”

Compliance Credits

But the hearing showcased splits on the off-cycle credit issue, with the Manufacturers of Emissions Controls Association (MECA) Executive Director Rasto Brezny saying his group “supports EPA’s continuation of the off-cycle credit program at a higher credit cap in order to provide the benefit of verifiable, real-world CO2 reductions and allow us to reduce GHG emissions by all technological means.”

MECA broadly embraces stronger vehicle GHG standards to keep pace with global markets, arguing Trump-era rollbacks put the U.S. “behind other strong auto manufacturing regions like Europe and China.”

The group also urges that EPA “continue to improve and expand the off-cycle program by sharing data and resources with [the Department of Transportation and California] as well as adding a supplier-initiated process for conditional credits like that included in the California framework” agreement with several automakers.

The hearing comes as Bloomberg recently flagged some internal Biden administration criticism that EPA’s plan might not be stringent enough, suggesting that backers of a stronger plan might be able to leverage the public comment process to win stronger provisions.

Among the issue flagged during interagency review of the plan by one administration official was the potential for the multiplier credits to “counter-intuitively, reduce EV penetration” into the market, according to the report, the same issue Rivian referenced.

The report also more broadly cites OMB feedback to EPA that “most reviewers suggested considering a more stringent proposal,” than what EPA chose as its preferred option.

But it remains to be seen how hard the Biden EPA will push in its near-term rule, with even some backers of stringent standards suggesting that the rule should not delay action on still-tougher long-term requirements.

“EPA’s top priority must be a post-2026 rule to establish a clear regulatory requirement to achieve near 100 percent zero emissions car and light truck sales by 2035,” said former EPA official Jeff Alson in Aug. 25 testimony on behalf of the Environmental Protection Network. The group “strongly supports” the proposed near-term standards as the “minimum” foundation for subsequent regulations. “Any changes should be in the direction of more, not less stringent, standards.”

Consulting firm ClearView Energy Partners in an Aug. 25 analysis suggests a number of factors, including the agency’s discussion of limited lead time for its proposal, as a potential sign EPA would finalize its proposed standard, rather than alternative 2 or a separate alternative 1 that would be weaker than its default plan and largely echo the top-line requirements of California’s Trump-era deal with auto companies.

“Both alternatives may function, metaphorically speaking, as countermeasures intended to draw fire away from the central proposal,” ClearView wrote.

However, the hearing also featured testimony from state officials suggesting that EPA should err on the side of stringency in its vehicle rule.

“EPA should quickly act on this proposal and adopt the most stringent alternative, while working to recognize progress leading companies have made,” said California Air Resources Board Chairwoman Liane Randolph.

Northeast States for Coordinated Air Use Management representative James Flynn likewise called strong national standards “a critical building block” for state efforts to accelerate the EV transition, urging swift adoption of the “most stringent GHG emissions standards” feasible for light duty vehicle through MY26 and quick action on future rules.

Environmentalists and some industry groups are pressing EPA to tighten its proposed near-term vehicle greenhouse gas plan to spur more emissions cuts and possibly greater electric vehicle (EV) adoption than the agency’s preferred option, highlighting the pressure officials face to write ambitious standards.

Northeast States for Coordinated Air Use Management representative James Flynn likewise called strong national standards “a critical building block” for state efforts to accelerate the EV transition, urging swift adoption of the “most stringent GHG emissions standards” feasible for light duty vehicle through MY26 and quick action on future rules. — Doug Obey (dobey@iwpnews.com)

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