Pruitt relaxed car rules. Will Europe and Canada follow?

Source: Maxine Joselow and Camille von Kaenel, E&E News reporters • Posted: Monday, April 16, 2018

EPA’s decision to ease emissions standards for cars could ripple into other countries that once looked to the United States to lead on climate policies.

In the European Union, clean car advocates fear the EPA decision could help automakers there make a case for weaker rules. Europe is considering what would be the most stringent fuel economy standards in the world through 2030. In Canada, the government adopted the U.S. rules implemented under President Obama to help meet its climate goals under the Paris Agreement. Now it might reconsider that decision.

Meanwhile, both the European Union and Canada are keeping an eye on China, which is forging ahead with a production quota for electric vehicles effective in 2019.

These global regulatory decisions could shape what type of technology is developed and where the jobs are located. They could also have global repercussions on climate change, which is increasingly affected by tailpipe emissions.

What’s up with Europe

European automakers have long pressed the European Union for less ambitious emissions targets for cars. At stake right now are new rules through 2030.

The European Parliament is debating a compromise proposal struck last fall between the European Commission and industry. The plan would set targets for 2025 and 2030 by relying on slightly more fuel-efficient technology than the existing U.S. standards. That could thrust the European Union into the lead on climate policies for vehicles.

Environmental groups in Europe have been pressing for more stringent standards to meet the Paris climate targets. Transportation represents around a quarter of the European Union’s carbon emissions. The 28 countries agreed to reduce those by 20 percent from 2008 levels by 2030.

“What is on the table is not in line at all with our own climate goals,” said Julia Poliscanova, clean vehicles manager at Transport & Environment, a Brussels-based environmental group. She expressed concern that industry would be able to convince more lawmakers to change the timeline of the new rules, now that the United States is weakening its rules.

“If the industry can delay the investment needed, that’s a very shortsighted view, because other players are making those investments,” Poliscanova said.

The German Association of the Automotive Industry, or VDA, pressed the European Union to reconsider its climate policies following President Trump’s withdrawal from the Paris accord. It called the bar set by the European Commission “high, perhaps too high,” in the fall.

“Firstly, the ability to further optimize economical diesel and gasoline engines is starting to butt up against the limits of the technically and economically feasible,” VDA spokesman Peter Mair said in a statement. “Secondly, ever fewer low CO2 emission diesel models are being sold and thirdly there is still uncertainty surrounding electric mobility.”

Mair said he could not comment on the EPA decision because it was unclear what the new rules would look like.

Kasper Peters, a spokesman for the European Automobile Manufacturers’ Association (ACEA), said in an email, “Given the importance of both dossiers for the future of the EU automobile industry, ACEA is in regular contact with the European Commission to improve understanding of industry-related issues and concerns, and to constructively contribute to effective policy and legislation in these fields.”

ACEA also disputed the commission’s targets in a recent paper, published March 23.

Northern neighbors

The U.S. decision creates a conundrum for Canadian regulators. The federal government in Canada formally adopted the Obama-era targets as its own in 2012. Now it could be weighing a divorce from the U.S. rules.

Unlike the United States, the liberal government of Prime Minister Justin Trudeau remains committed to the Paris climate targets — but it is falling behind (Climatewire, March 27).

Canadian Environment Minister Catherine McKenna held a phone call with California Gov. Jerry Brown (D) last week. Aligning Canada’s standards with more stringent ones implemented by California could be an option if Pruitt rolls back federal limits. Some provinces, like Quebec, previously made moves to adopt California’s more stringent rules.

A spokeswoman for Environment and Climate Change Canada said the government was paying “close attention” to the U.S. revision.

“The Government continues to look for opportunities to reduce GHG emissions across the transportation sector and will consider Canada-specific requirements to maximize the benefits to Canada’s environment and economy,” she said in a statement.

Canada is going through a scheduled review of the rules now and will have to decide what to do with the rules this year.

The vehicle rules represent an important fraction of the country’s overall target, in addition to its Pan-Canadian Framework on Clean Growth and Climate Change — a package of carbon prices, efficiency measures, and curbs for methane emissions and hydrofluorocarbons. Environmental advocates said leaving the United States behind on cars could help Canada achieve the position of international climate leader it has been seeking.

“It could be a way to say, yes, we’re here, we’re going all in on the climate,” said Isabelle Turcotte, a senior analyst at the Pembina Institute.

The Canadian car industry is smaller than its counterpart in the United States. Canadian parts suppliers have argued for maintaining the Obama-era target because they have been investing in new technology.

Canada also has seven auto assembly plants in Ontario making cars such as the Honda Civic and the Toyota RAV4. They have stayed mostly quiet during the car changes. Their fate is also tied up in negotiations over the North American Free Trade Agreement, which could overshadow the debate over the standards.

Global perspective

Clean car advocates said it’s shortsighted for U.S. automakers to lobby for weaker standards.

For one thing, they said, their lobbying undermines global efforts to meet the targets of the Paris accord. For another, China is forging ahead with stricter standards that U.S. automakers will still have to meet in those markets. So U.S. automakers could lose their competitive edge on the global stage.

“Whether it’s European or American industry, it’s shortsighted,” Poliscanova said.

“The global perspective cannot be forgotten. The big market is China; they’re not delaying anything,” she said, noting that China will implement a 2019 quota for electric vehicle production.

China’s Ministry of Industry and Information Technology announced last year that companies manufacturing more than 30,000 vehicles would have to meet a threshold of 10 percent being all-electric battery vehicles or plug-in hybrids.

“Now that the U.S. may be taking a step backward, while Europe is going forward, it’s unlikely that China will slow down because of the U.S., and that pressure will definitely shift,” said Anup Bandivadekar, program director with the International Council on Clean Transportation. “Manufacturers will have to take their cues from Chinese and European markets more than the U.S.”

Yet Gloria Bergquist, spokeswoman for the Alliance of Automobile Manufacturers, appeared unconcerned that the revision of fuel economy standards would harm U.S. automakers’ ability to compete globally.

Asked about how the decision would affect competitiveness, Bergquist shifted gears and focused instead on the effects of higher gas prices in Europe.

“The automakers I represent sell vehicles around the world, and in Europe they sell different vehicles, generally smaller, lighter, less powerful, because the cost of fuel approaches $10 a gallon,” Bergquist said in an email. “If gas taxes were that high here, they would sell those vehicles here. But at the relatively cheap price of gas here compared to Europe, consumers make different choices.”