Manufacturers on track to meet Obama-era standards

Source: Camille von Kaenel, E&E News reporter • Posted: Wednesday, March 28, 2018

Auto manufacturers are expected to use controversial credits to meet the standards they’re pressing the Trump administration to relax, according to a new study.

Manufacturers are on track to raise their average fuel economy from about 25 mpg in 2016 to Obama’s promised 35 mpg in 2025, according to the study. The Trump administration is now reviewing that target.

But automakers are getting there in part by using controversial technology credits. And the use of those credits could lessen actual fuel efficiency improvements by up to a third, the study says.

The “off-cycle credits” give manufacturers points toward their pollution target for using technologies that have little to do with the actual engine but might still reduce carbon emissions. Highly efficient exterior lights or solar panels, for example, can win automakers some points because they shave off carbon emissions.

It’s entirely legal, but environmentalists have warned that the strategy could be ripe for loopholes.

“A lot more is happening than anyone anticipated, and it dramatically changes how automakers could comply with 2025 standards,” said Nic Lutsey, an analyst with the International Council on Clean Transportation (ICCT) and the author of the study.

The results coincide with a tentative decision this week by the Trump administration to relax the Obama-era fuel efficiency targets for model years 2022 to 2025 (Climatewire, March 26). Automakers have been lobbying for relief from the rules, saying they make it difficult to sell the cars Americans want. But it’s still unclear how much more exhaust regulators will allow. To avoid mayhem with the automakers and with California, the administration is likely to go after the vehicle rules with a scalpel, not a hatchet, and for that it has blades galore, including legislation and tweaks to the design of the rules.

One of those blades could be boosting the availability of the extra credits automakers are increasingly claiming.

Automakers are using these credits at a rate four to nine times higher than even the people who wrote the regulations anticipated, found Lutsey and Aaron Isenstadt at the ICCT, a nonprofit research group. The trend has picked up significantly since 2015.

The increased use means the off-cycle technologies could by themselves bring automakers 26 to 55 percent closer to their carbon targets in 2025.

There are two potential wrinkles there.

First, the use of off-cycle credits can compensate for lackluster improvements in engine technology. That lowers the actual fuel economy drivers of new cars can expect to get. Instead of the average 35 mpg Obama promised in 2025, they can expect 31 to 33 mpg. Drivers of passenger trucks can expect to give up more of the promised fuel economy than drivers of cars. And that’s not counting any additional changes President Trump makes.

Second, environmentalists aren’t always sure the technologies reduce emissions by as much as manufacturers promise. Automakers must petition U.S. EPA for permission to claim these extra bells and whistles, and provide an estimate of their carbon emissions. EPA does its best to verify the claims, but it’s often extremely complicated. It’s also difficult to judge whether the auto manufacturers would have adopted those technologies regardless of the rules, whose goal is to prompt entirely new improvements.

Regulators have built in a cap on the number of extra credits automakers can claim, and some manufacturers are already closing in on the maximum, nine years ahead of schedule. They’ve now started claiming credits for new technologies that aren’t capped.

For example, General Motors Co. first asked EPA to give it credit for using a special type of technology that makes air conditioning in cars more efficient. BMW AG, Ford Motor Co., Hyundai Motor Co. and Toyota Motor Corp. quickly followed.

“It shows the heightened interest from automakers to make full use of these credits,” said Lutsey.

One way the Trump administration could help automakers along is by offering more of these credits, especially those related to autonomous driving, which automakers can claim makes their cars more efficient. Under Obama, regulators denied such requests because the data didn’t clearly show new carbon reductions.