Industry, Advocates Battle On Whether To Toughen EPA Auto GHG Plan

Source: By Doug Obey, InsideEPA • Posted: Wednesday, September 29, 2021

States, environmentalists and efficiency advocates are pressing EPA to strengthen its near-term vehicle greenhouse gas proposal, while offering mixed reviews on the extent to which the plan offers enough of a first step toward curbing GHG emissions through both electrification and advanced conventional fuel-saving technologies.

The arguments surface in recently issued comments on the agency’s Aug. 5 proposed rule, with traditional auto manufacturers in their own comments offering a tentative endorsement of the plan — with the proviso that EPA retain or expand a series of compliance flexibilities and forego calls to strengthen the top-line targets.

The dynamic underscores that EPA’s auto GHG proposal is just one component of Biden administration efforts to achieve GHG cuts from the transportation sector, with industry urging the government to couple rules with other incentives for electric vehicles (EVs) and environmentalists arguing the rule is at best a building block for future, more stringent regulations.

The comments, filed by a Sept. 27 deadline, also illustrate how the debate over the agency’s proposed tighter standards, covering model years 2023-2026, focuses both on top-line stringency the details of its crediting mechanisms.

EPA’s light duty emissions plan includes a preferred option with top-line requirements stricter than a Trump-era deal California struck with several automakers, as well as other regulatory options.

Among those is an “alternative 2” with a stringency more closely resembling Obama-era standards scrapped by the Trump administration, as well as a request for comment on a MY26 standard 10 grams of carbon dioxide per mile (gpm) tighter than the agency’s proposal, with the latter option intended to account for the possibility of quicker-than-expected EV adoption.

“We urge EPA to adopt the most stringent standards it concludes are feasible, commensurate with the undeniable need for urgent and rigorous action,” a California-led coalition of nearly two dozen states and cities write in Sept. 27 comments.

The coalition says this means MY23 standards “at least as stringent” as EPA’s preferred option — even as it suggests the agency “consider” the more stringent alternative 2.

With respect to standards in MY24-26, the state and city coalition supports the “most stringent” standards floated in EPA’s plan — citing alternative 2, as well as the tighter standard in MY26.

The states also recommend a legal strategy in which EPA declares the “severability” of each model year’s standard from others — whatever stringency EPA ultimately picks — to aid in the overall defense of the rulemaking. EPA should make it clear it would have adopted each model year’s standards “on their own” and that each model year’s standards could function even if earlier model years’ standards were stayed or vacated, the comments urge.

Separate comments from the National Association of Clean Air Agencies, representing many state air agencies, similarly say alternative 2 and the tighter MY26 standard come “closest” to the group’s call for a rule stringent enough to, “at a minimum, achieve the same level of emissions benefits” as the Obama rules.

This would “put the nation on a clear trajectory” to meeting the Biden administration’s goal of 50 percent zero emission vehicle (ZEV) sales of cars and light trucks by 2030, the comments add.

The state air officials also argue that EPA’s current preferred plan “fails to take advantage” of the already planned availability of ZEVs and “does not reflect” ongoing automaker commitments regarding electrification.

‘Most Stringent’ Alternative

Similar arguments surface in comments from a range of other environmental groups, albeit with differences in emphasis in requests.

Environmental Defense Fund (EDF), for example, in its comments agrees that EPA should “consider strengthening” its MY26 standard by 10 gpm, in tandem with possible “design features and incentives” to ensure that the tighter standard actually spurs more ZEVs.

EDF, however, focuses heavily on defending EPA’s main proposal — relative to current weaker federal standards — while pointedly urging quick action on this rule to avoid slowing a longer-term rule more focused on ZEVs.

“We urge the administration to propose and finalize those next-generation standards promptly and set new multi-pollutant standards for passenger cars that eliminate tailpipe pollution from new vehicles sold by 2035.”

But joint comments from an array of other groups, including Center for Biological Diversity, Union of Concerned Scientists, Natural Resources Defense Council and others, state “there is no doubt that the most stringent proposed alternative is urgently needed in light of the climate crisis, that it is eminently feasible, and that its many benefits will exceed its costs both at the societal level and for consumers, who will save money at the pump.”

Both the joint environmental group comments and individual submissions from several environmental and efficiency groups also train their fire on several compliance flexibilities EPA proposed to offer.

They include: a credit “multiplier” for ZEVs, plug-in hybrids, and fuel-cell vehicles; a life extension for certain GHG credits earned between MY16-20; a proposed reinstatement of incentives for full-size hybrid pickups; and a plan to generally increase to 15 gpm the current 10 gpm cap on certain credits for off-cycle emissions.

“EPA should not expand a program that EPA and [the Department of Transportation] both acknowledge is rife with substantive and procedural problems,” the joint comments state.

Separate comments from the American Council for an Energy-Efficient Economy (ACEEE) push for strengthening EPA’s proposal, in part by citing concern EPA’s projections of EV sales under its proposal would require sales to grow 44 percent per year between MY26 and MY30 to meet the administration’s EV goal.

“Either EPA is underestimating the rate of EV sales growth during the rule, and therefore pushing standards that may well be achieved with no improvements in [combustion engine vehicle] emissions, or EPA is planning for a scenario where the administrations goals will be unachievable,” ACEEE writes.

World Resources Institute argues that updating EPA’s estimates of ZEV market share to accurately reflect current trends would result in standards “significantly more stringent than either the proposal or alternative 2.” The group also urges EPA to set specific standards for conventional vehicles to ensure continued GHG cuts from them regardless of how quickly the ZEV market share grows.

Industry Comments

Underscoring the increasing industry focus on EV development — and questions about how quickly that could influence near-term vehicle GHG policy — the comment period on EPA’s rule closed the same day Ford Motor Co. announced plans to invest $11.4 billion along with SK Innovation in two new “mega sites” in Tennessee and Kentucky to produce electric trucks and “batteries to power future electric ford and Lincoln vehicles.”

Meanwhile, the main traditional auto industry trade group, Alliance for Automotive Innovation, voices general support in its comments for EPA’s proposal, while pushing to preserve or expand additional compliance flexibilities and press for complementary policies including EV purchase incentives outside of EPA’s purview.

The group also urges EPA, separate from its proposal, to take steps including a “comprehensive fuels rulemaking” citing the “timespan over which [internal combustion engine] technology will continue to be available to new vehicle purchasers.”

The Alliance opposes both alternative 2 and a tighter MY26 requirement, calling alternative 2 “an unrealistic standard to meet in the near term” and stating that a tighter MY26 standard “presumes that the lead time provided is sufficient to make an even larger leap forward in stringency in the next four years. The development of the EV market and complementary policy measures remains highly uncertain.”

The auto trade group also defends various flexibilities EPA included in the proposal, such as the ZEV multipliers, off-cycle provisions and credit trading. “Such flexibilities do not ‘squander’ emissions benefits as some stakeholders assert. Rather, they help to ensure a well-balanced program that achieves its near-term goals and enables greater future emissions reductions,” the group writes.

Also, the group seeks additional flexibilities in a final rule, including a less strict cap on the use of the EV multipliers than EPA proposed. “Auto Innovators believes additional EV production can be incentivized by a higher credit cap while still balancing with the policy goal to maximize near term GHG benefits,” the group writes.

Separate comments from automaker Stellantis, formerly known as Fiat Chrysler Automobiles, generally embrace EPA’s proposal “with improvements to flexibilities,” while defending EPA’s proposed hybrid truck incentives.

“Stellantis supports EPA’s focus on crediting hybrid technology on trucks and believes crediting all hybrid technology on trucks has opportunity to maximize near-term GHG reductions,” the company says. — Doug Obey (dobey@iwpnews.com)

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