Fuel economy: California and EPA dispute a rule of efficiency

Another major legal battle is looming for the US auto industry, adding to its policy of political trouble under the Trump administration.

Andrew Wheeler, a director of the Environmental Protection Agency, said Thursday at the Washington Auto Show that he is considering freezing the fuel economy regulations for vehicles, which even some automakers do not want. When finalized later this spring, this would likely lead to a major legal dispute between the federal government and the country's largest auto market: the state of California. Wheeler said the EPA is ready for the fight.

"What would happen if [California’s air regulator] continues the government on auto standards? We would go to court if they did, "Wheeler said. "I believe we have a strong legal basis and that our standards will be respected by the courts."

An endless court dispute over environmental rules is the last thing American automakers are asking for right now, industry officials at the Washington show said, knowing the industry is already resisting US trade policies. Trump administration who contributed to the closure of the factories. and thousands of layoffs.

However, the fuel economy rules determine which cars are built, how efficient they are, how much pollution they have and where they can be sold. They are therefore integral to the way builders plan for the future.

This future is now more and more uncertain. What is clear is that automakers are getting more than they expected when they asked the Trump administration to revise the fuel economy regulations in 2017.

A long legal battle between California and the federal government is looming

Let's go back to see how we got there. California benefits from exemptions to federal regulations on vehicle emissions since 1968 because the state had its own rules in place when the Federal Cleanliness Act passed. ;air. State pollution rules have often been more stringent than federal regulations.

While California is the only state authorized to set its own motor vehicle emission standards, 12 states and the District of Columbia are currently following the Golden State initiative.

Car manufacturers have long known that they now have to deal with a patchwork of environmental standards across the country. Every car sold in the United States must meet the country's strictest emissions limits or manufacturers must design different models for different states. As California is the largest car market, it pushed the rest of the country to comply with stricter air pollution rules than the federal government.

The Obama administration has introduced new emissions and fuel economy rules for cars and trucks after the congressional Chrysler and General Motors bailout in the aftermath of the 2008 financial crisis. the name of the company's average fuel economy standard, the Obama EPA proposal represents the largest increase in fuel economy regulations in 30 years.

The standard required automakers to reduce their average greenhouse gas emissions from passenger cars and light trucks to 163 grams per mile by 2025. Companies can use various tactics to achieve this figure, but if they do only with improved fuel economy, they would need 54.5 miles per gallon on average across their entire product line. This would effectively create a national standard by raising the bar for everyone.

Car manufacturers complained that compliance with these rules would increase the cost of a new vehicle by an average of $ 1,836 by 2025 and cost the industry 150,000 jobs here. 2021, according to a study from the University of Indiana funded by the Alliance of Automobile Manufacturers.

When the Trump Administration took office in 2017, automakers seized the opportunity to get a listen to their complaints. In response to lobbying, the Trump Administration announced in 2017 that it would cancel the fuel economy goals of the Obama era.

Automakers wanted relaxed targets and more ways to comply with the rules, such as reducing refrigerant leaks used in air conditioning systems. Instead, the industry has gone through a complete rollback. The Trump administration now wants to freeze the fuel economy standards in 2020 and revoke the California waiver to obtain a uniform rule for the 50 states.

Following the announcement of the dismantling, California brought 17 states to sue the EPA, challenging the agency's power to revoke the Obama era car rules. The EPA then began negotiations with the California Air Resources Board to develop a new national vehicle pollution rule that would satisfy state authorities.

But negotiations got bogged down and last month, the EPA interrupted negotiations and advanced its initial plan.

"Federalism does not mean that a single state can dictate the standard for the entire country," Wheeler told EPA Thursday at the Washington Auto Show. "I have met CARB three times since taking office at the head of the EPA last July, but despite our best efforts, we have not been able to reach a solution and have decided to end the discussions. "

The EPA has invoked bizarre and fragile justifications to justify this change. The agency argued that lower fuel economy standards would lower the price of new vehicles, reducing overall ownership costs by $ 2,300. This would make it easier for Americans to upgrade. Since the new vehicles are safer than the old ones, it would save lives – more than 1,000 a year. EPA internal communications, however, showed that the agency expected the rules to increase the number of deaths.

"There is nothing in the law or in fact to justify the current proposal for deregulation, as our many comments clearly show," CARB President Mary Nichols said last year.

Now CARB and EPA are on a collision course. Wheeler said the fuel economy rules would be finalized this "spring or early summer". California will likely sue the federal government as soon as it happens. Both sides are rooted and the battle of the courtrooms will last for years.

The uncertainty is worse for automakers than the strict rules of fuel economy

Car manufacturers say a new car requires about three to five years of development. Car manufacturers must therefore comply with the regulations, as they will be in the future. That's why no automaker has publicly supported the elimination of the fuel economy rules, despite pressure from the Trump administration.

Automotive companies are also under pressure from other Trump administration policies, such as imported steel tariffs and the ongoing trade and border dispute with Mexico, a major supplier to the United States. American automobile industry. Trade was a factor in General Motors' decision to lay off more than 14,000 American workers last year.

Umair Irfan / Vox

A long legal battle over car construction standards will only make the situation more risky for automakers.

At the same time, the automotive sector is facing radical technological changes. Cars and electric trucks that produce no exhaust emissions are deploying quickly. There are already more than one million electric vehicles on the roads in the United States and industry groups expect this number to increase to 18 million by 2030.

Even automotive icons such as the successful Ford F-150 pickup truck will have electric versions on the market in the near future. General Motors now says that "the future is entirely electric".

Electrification is also essential to the fight against climate change. In the United States, the transportation sector is the largest source of greenhouse gases. Cars and light trucks account for 60% of these emissions.

But the Trump administration has also created uncertainty on this front by threatening to end the subsidies granted to electric vehicles.

However, automakers are optimistic about electricity. On the one hand, the cost of vehicle batteries is decreasing rapidly. Bloomberg New Energy Finance announced last month that the cost of vehicle batteries had dropped by 35% just since last year.

Another key factor is that the automotive industry is a global market. Other countries have adopted aggressive rules on fuel economy and policies favoring electric cars. In particular, China is thirsty for new cars and its government wants most of them to be electric. The size of the market pushes the global automotive industry towards cars, trucks and electric buses.

"About half of what the Volkswagen brand sells around the world is in China," said Pietro Zollino, executive vice president in charge of communications for the Volkswagen Group of America. "If you want to be a player in the market, you have to offer electric cars."

So, while the present runs on gasoline, future cars will roll on electrons. The question is how fast are we going to get there?