By hitting the brakes on the decades-long drive to reduce automotive carbon emissions, President Donald Trump's administration has taken its most consequential step yet toward undoing his predecessor's legacy on climate change.
Scott Pruitt, the embattled chief of the Environmental Protection Agency, announced the reversal on Monday in a "final determination" that President Obama's plan for the 2022-2025 model years went too far and would be revised.
Pruitt did not yet announce a replacement for the Corporate Average Fuel Economy (CAFE) standards, which dictate fuel efficiency and therefore emissions. And even after he does—after more consultations and debate—it's likely to be challenged in court.
So would another aspect of his plan: his threat to refuse a waiver to California, which is intent on setting its own tough standards.
"Cooperative federalism doesn't mean that one state can dictate standards for the rest of the country," Pruitt said. "It is in America's best interest to have a national standard, and we look forward to partnering with all states, including California, as we work to finalize that standard."
California immediately pledged to "vigorously defend" the existing rules. "EPA's action, if implemented, will worsen people's health with degraded air quality and undermine regulatory certainty for automakers," California Air Resources Board Chair Mary Nichols said. "This decision takes the U.S. auto industry backward."
If Pruitt prevails on auto standards, it would be at least as significant as the other main rollback of climate rules set in motion by the Trump administration—the attempt to dismantle of the Clean Power Plan limits on emissions from power plants. That one, too, is entangled in protracted litigation.
But there's a big difference that could makes the move on automobiles more damaging to the fight against global warming.
Even with the Clean Power Plan stuck in limbo, it's becoming increasingly evident that electric companies are going to meet the plan's overall targets anyway, because renewables, natural gas and conservation are all overpowering dirty coal in the marketplace for electricity.
Not so for cars and trucks, according to the experts and the lessons of history. Fuel efficiency, alternative vehicles and reductions in greenhouse gas emissions are unlikely to progress without some kind of forceful federal action.
One Giant Step
When Obama first set the standards, the EPA calculated that they would prevent more than 6 billion metric tons of greenhouse gases—more than one year's worth of total U.S. carbon emissions—over the lifetime of the vehicles sold in model years 2012 through 2025.
"It's the single biggest step to date that any nation has taken to address global warming," said Daniel Becker, director of the Safe Climate Campaign, who has been a leading advocate of fuel-efficient cars for decades.
But not if the steadily tighter standards are lifted—even temporarily.
"It's important not just where we end up in annual emissions. How we get there really matters," said Samantha Houston, a consultant to the system dynamics group at the MIT Sloan School of Management, who has been studying the implications of a rollback for eventually meeting the world's climate goals set out in the 2015 Paris accord. "If it looks like we're going to have only a modest decline in the short run, we're going to have to drop off a cliff steeply in the future."
Until now, the auto industry, on average, has out-performed the federal vehicle standards.
But greenhouse gas emissions from the transportation sector are increasing with strong vehicle sales, led by SUVs and other light trucks, and a rise in miles driven. Carbon dioxide emissions from the transportation sector last year reached their highest level since the 2008 economic downturn, now accounting for 37 percent of U.S. emissions from energy consumption, according to the U.S. Energy Information Administration.
For the second consecutive year, transportation surpassed the electric power sector (34 percent of U.S. energy-related emissions) as a contributor to greenhouse gas pollution; prior to that, power plants had been the largest U.S. emissions source since the late 1970s.
Market forces, meanwhile, helped drive U.S. electric power sector emissions last year to their lowest level since 1990, as generators switched from coal to less carbon-intensive natural gas and renewable sources like wind and solar continued their rapid growth. Electric power sector emissions are down more than 27 percent from 2005 levels. The Clean Power Plan's aim was to reduce emissions 32 percent by 2030.
Meanwhile, oil prices, which were about $100 per barrel when both the federal and California light-duty vehicle standards were being developed, are now just over $60 per barrel, and not expected to increase over the next two years as global production exceeds consumption. Relatively low gasoline prices mean that there's less incentive for consumers to seek out fuel-saving vehicles.
"There is no momentum in the right direction," said Becker, "and a lot of momentum in the wrong direction right now."
Original CAFE Deal Was Unprecedented
The history of the fuel economy and emissions standards is a lesson in compromise, not confrontation.
The fuel economy of the U.S. vehicle fleet had stagnated for two decades before Congress, seeking in part to address the pain of consumers grappling with record-high oil prices, passed legislation to force improvements in 2007. Soon after taking office, President Barack Obama announced a plan to accelerate that progress with standards based for the first time on greenhouse gas emissions. At a Rose Garden ceremony, he was flanked by representatives of 10 automakers, their unions, and then-California Gov. Arnold Schwarzenegger—an unusual show of partnership brought on by unique circumstances.
GM and Chrysler had just accepted billions of dollars of assistance from taxpayers to rescue them from the brink of collapse due to the economic downturn. The automakers also were facing the unwelcome prospect of two sets of fuel economy standards, since the Obama administration seemed prepared to allow California to exercise its authority under the Clean Air Act to set its own, more stringent auto standards.
Obama used the opportunity to forge a three-way agreement with automakers and California to reduce oil dependence, carbon emissions, and transition to a new fleet of cleaner vehicles.
"In the past, an agreement such as this would have been considered impossible," Obama said at the time.
It took three years for the details to be hammered out, along with an agreement by California officials to accept the federal standards as equivalent to their own, and a pledge by the automakers and their trade associations to end more than a dozen pending lawsuits challenging California's right to regulate greenhouse gas emissions. The standards as finalized required automakers to double the average fuel economy of passenger vehicles to the equivalent of 54.5 miles per gallon by 2025.
"It was an unprecedented process that heavily included consulting with the auto industry," said Jody Freeman, who was counselor for energy and climate change in the Obama White House and an architect of the deal. "They agreed because they were getting something of real value. They were getting the uniformity and clarity that had been lacking for so many years."
But in a letter submitted at the start of the Trump administration, the Alliance of Automobile Manufacturers said that their cooperation with the program was contingent on the federal government's promise to conduct a thorough midterm review of the standards and continue its consultation with the industry. Instead, commenters were given less than a month to respond when the Obama administration's EPA proposed to maintain the targets on Nov. 30, 2016. The automakers' association said the government had "abruptly abrogated" its commitments.
The Obama administration had concluded that the savings to motorists of $1.7 trillion in fuel costs over the life of the vehicles would outweigh the cost to the auto industry, which it put at about $200 billion over 13 years. But the automakers' alliance said that "staggering" sum was an underestimate. Although the Obama administration had concluded that the standards could be met mainly with improvements to gasoline-powered internal combustion technology, the auto industry's assessment was they could not be achieved without a rapid transition to electric cars at much higher cost. "Adjustments to the regulations are needed to allow automakers to build vehicles that consumers want and can afford," the automakers said in comments submitted to the EPA.
All of the carmakers have plans to expand their offerings of electric and alternative-fuel vehicles—GM plans to launch a new family of electric cars in 2021 on which it expects to make a profit. But to bolster their argument for less stringent standards, their Alliance last month submitted to EPA a report co-authored by Joseph D'Aleo—a consultant for the Heartland Institute, a conservative think tank that challenges mainstream climate science—citing studies funded by the American Petroleum Institute.
InfluenceMap, a nonprofit that tracks corporate lobbying, calculated that the auto industry spent at least $49 million lobbying in 2017, the most since it sought federal bailout money in 2008.
California's Special Influence Over Automakers
In the wake of Pruitt's determination that the Obama standards were too stringent, the most important question is what will happen to California's standards. Dating back to the Clean Air Act of 1970, Congress recognized a special role for California, which was ahead of the nation in tackling pollution.
California was permitted to set its own air pollution standards, as long as it received a waiver from the U.S. EPA certifying that the state standards were at least as protective of public health and welfare as federal standards and that the state had shown they were necessary to meet "compelling and extraordinary conditions." Over the years, California has received more than 50 such waivers and has led the nation in requirements for catalytic converters, unleaded gasoline and other air pollution advances.
More than a dozen states—accounting for more than 40 percent of the U.S. car market—have set their light-duty vehicle standards based on the California standard, as they are permitted to do under the Clean Air Act.
Pruitt's action today does not undo that—and it's not clear that it ever will.
"The auto industry will only make one 'car'," said David Bookbinder, chief counsel for the Niskanen Center. That means that the California standard serves as a de facto national standard. "California is the whole game," he said.
And California has made clear its commitment to cutting greenhouse gas emissions from autos, with Gov. Jerry Brown in January setting a new target of 5 million zero-emission vehicles in California by 2030, up from the state's prior target of 1.5 million by 2025.
The automakers, said Freeman, may end up "like the dog that caught the car"—getting something it really doesn't want: more litigation and uncertainty.
Weak Targets Now, Higher Costs in the Future
But if regulators today set targets that are not aggressive enough, the risks and increased costs will be passed to future generations. If the United States rejoins the world's other nations in the effort to hold the world's temperature increase below 2 degrees Celsius, it will have to play catch-up—and seek steeper, more costly increases in vehicle fuel efficiency to achieve the same cumulative carbon cuts envisioned under the Obama plan, explained Houston. "If we chipped away at it little by little, there would not be the need to make such drastic reductions in the future," she said.
That would be penny wise and pound foolish, the paper said.
"The additional effort—and cost," it said, "should give automakers and policy makers pause."