EPA keeps car-emission rules to 2025; what happens under Trump?

Two days ago, the U.S. Environmental Protection Agency issued a ruling that existing limits on tailpipe emissions of carbon dioxide for 2022 through 2025 should remain in place.

The EPA’s carbon limits correspond exactly to NHTSA standards for corporate average fuel economy, and the EPA decision was widely (if incorrectly) reported to be about CAFE.

Its recommendation, which came unexpectedly early, largely reiterated points made in a voluminous Technical Assessment Report issued in July.

The report said that automakers have the technical abilities to meet the emission standards, although higher-than-projected sales of SUVs and light trucks may cause them to miss the mark slightly.

Now what happens?

The short answer is that, as yet, there are few certainties about how the Trump Administration will choose to address the many, many promises of radical policy change pledged by candidate Trump.

A few basic facts are clear, however.

(1) Automaker lobbyists and much of the industry want the standards stopped.

Even before the EPA decision, the Alliance of Automanufacturers issued a letter within days of Trump’s election calling on him to delay, relax, adjust, or repeal the second part of the EPA regulations.

Efforts to repeal the decision will increase now that the agency has moved to keep its rules in place. Or as Car Talk memorably put it: “CAFE Regs Upheld; Cue the Whining.”

The day of the decision, the Alliance slammed the EPA’s “extraordinary and premature rush to judgment” on the feasibility of the standards.

Some arguments border on the incoherent: a National Automobile Dealers Association statement said that keeping existing fuel-economy standards would “halt progress on fuel economy.”

As confusing as that may be, NADA said it “looks forward to working with the Trump Administration” to reverse or delay the fuel-economy rules.

2017 Chevrolet Bolt EV pre-production vehicles at Orion Township Assembly Plant, March 2016

2017 Chevrolet Bolt EV pre-production vehicles at Orion Township Assembly Plant, March 2016

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(2) Automakers don’t want an uncertain regulatory environment that changes radically and suddenly.

At the same time, automaking is a hugely expensive industry with long lead times and billion-dollar investments.

That means car manufacturers are strongly averse to sudden and unpredictable upsets in the regulatory environment they must comply with over the next five to seven years, or the planning cycle for a complete vehicle architecture.

Think back to 2009, when Obama took office. Under his predecessor, George W. Bush, the EPA slow-walked the issuance of standards to reduce carbon-dioxide emissions from vehicles even after the Supreme Court had said that not only did the agency have the right to regulate CO2, but that it had to do so.

Carmakers were less than two years away from the start of the 2012 model year when Obama took office, one reason he was able to lock automakers, the EPA, and the powerful California Air Resources Board together in a room and tell them not to emerge until they agreed on 2012-2016 rules.

The carmakers may not have liked the idea of boosting fuel economy much, but regulatory certainty was more important. (The effects of the global recession and the government-backed restructuing of two of the three native U.S. makers after their bankruptcy also weakened their hands.)

Thus it’s likely that automakers would welcome a pause or delay in CAFE standards, but don’t necessarily want them thrown out.

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