Despite Industry Pleas, White House Halts Progress on Fuel Economy

The Trump administration’s goal is simple — to halt further increases in the stringency of clean car standards after 2020. California and other states want to maintain the tougher standards developed by the Obama administration through negotiations with automakers. Those standards aim to cut average new car and light truck greenhouse gas emissions by an additional 23 percent from 2020 to 2025. By 2030, the rules would reduce emissions by 140 million metric tons per year compared to the Trump administration’s proposal. These are reductions we can ill afford to forego given that transportation is the largest source of U.S. greenhouse gas emissions, making up nearly 30 percent of the country’s total.

California’s lead role on pollution control dates from the 1960s, when severe smog in Los Angeles and surrounding areas moved the state to develop the world’s first serious motor vehicle emission control policies. These regulations were put in place several years before the U.S. federal government addressed the issue. So when the federal Clean Air Act was passed by Congress and signed by President Richard Nixon in 1970, it included a provision that enabled California to continue setting its own standards, which were historically stronger than those set nationally by Washington. Because automakers did not want to have to meet as many as 50 different state standards, this authority is unique to California. However, the Clean Air Act allows other states to adopt California’s standards, enabling a two-tier approach to controlling vehicle emissions through which any given state can choose to go with either the federal standards or the more stringent California standards.

The Golden State’s environmental leadership has provided enormous benefits to public health as well as technological progress. The dividends have accrued not only to its own residents but to the rest of the nation — and indeed the rest of the world — as other jurisdictions embraced clean air technologies, programs and policies pioneered in California. The state’s zero emission vehicle (ZEV) mandate, originally issued in 1990, has advanced electric car technology to the status it has today.

Moreover, the California Air Resources Board (CARB) has always been flexible in adjusting its regulations when technology readiness lagged or costs remained too high. When the state’s ZEV program was first announced in 1990, it set a target requiring 10 percent of all new cars sold in California to be all-electric by 2003. But battery technology did not progress nearly as rapidly as hoped, and the early electric vehicle sales targets were not met. The state, however, never fined car companies for failure to meet the ZEV mandate. Instead, it adjusted the regulation along the way, while still maintaining the pressure that has driven technological progress in advanced batteries and other clean vehicle technologies.

Showing such flexibility in the current standoff, CARB chairperson Mary Nichols signaled that if the long-term emissions-reduction goals remained in place, California would be receptive to modifying the 2021-2025 greenhouse gas standards to accommodate automakers’ legitimate concerns. Unfortunately, the White House and the National Highway Traffic Safety Administration have so far shown no willingness to work with California to craft a mutually agreeable solution. Contrary to the White House claims, it is clearly not intransigence on California’s part that has led to the conflict we’re seeing today.

In many ways, U.S. automakers brought this situation on themselves. Two days after Donald Trump’s election in November 2016, the Alliance of Automobile Manufacturers sent a letter to his transition team asking them to reopen the Obama-era decision to stick with the greenhouse gas reduction and fuel economy improvement targets negotiated in 2012. The new administration readily complied, with its first EPA administrator Scott Pruitt quickly acting to undo his predecessor’s reaffirmation of the standards. Pruitt then started the process that resulted in last August’s proposal to flatline the standards after 2020. Although automakers soon said that they were not seeking such drastic changes, they failed to go to work to hammer out a plan with California once it became clear that the Trump administration had little interest in negotiating.

Of course, different companies have different philosophies when it comes to regulation, as can be seen when reading the carmakers’ comments submitted to federal agencies last fall. While welcoming the Trump administration’s decision to revise the Obama-era standards, the carmakers all said that annual increases in fleet-average efficiency should continue from 2021 to 2026. Nevertheless, most were vague about how much the standards should rise beyond being in line with “market realities.” Of course, such a stance begs the question of regulation, the purpose of which is to compensate for harmful market side effects such as greenhouse gas emissions.

Only Honda’s comments forthrightly embraced the need for strong standards, saying that “the marketplace clearly has limits” for addressing societal concerns so that “government regulation, as in the case of vehicle greenhouse gas (GHG) and corporate average fuel economy (CAFE), becomes necessary.” Honda was the only company to say that the federal regulations should support annual fuel economy increases of roughly 5 percent per year, similar to what was originally planned under the Obama rules.

One important element of the current impasse is the highly profitable dependence of Detroit’s automakers on large and powerful light trucks, such as the Chevy Silverado, Ford F-Series, and Dodge Ram pickups and the luxury SUVs derived from them. These companies had already successfully insisted on big regulatory breaks for such vehicles, holding them to more lenient standards overall while delaying the need for significant fuel economy improvements. They were also given a special exemption in the 2007 energy bill, classifying the heaviest and most polluting of these light vehicles as “work trucks,” even though many of them are used for family or recreational purposes. Those used for commercial work are now equipped with levels of power and capacity far in excess of what’s actually needed to perform most chores in farming, construction, and other trades.

The standards developed under the Obama Administration would have required automakers to seriously begin cleaning up their act with these vehicles, which are among the most profitable produced by major U.S. carmakers. The reluctance to clamp down on the excessive emissions of these gas-guzzling pickup trucks is a prime example of how so-called “market realities” can become an excuse for avoiding emissions reduction needs. Yet progress in improving the efficiency of the vehicles that now gulp the most fuel and emit the most CO2 is crucial for making progress overall. California would insist on that, so perhaps some companies are content to take another decade’s worth of pollution-based profits to the bank. Moreover, it’s not just automakers who stand to benefit from Trump’s regulatory rollback. Weaker standards mean that more gasoline gets burned, a fact that has led to most of the petroleum industry also backing the administration’s plan to gut the standards.

Politically speaking, it might be tempting to see the current standoff as a drama that pits a Democratic governor, Gavin Newsom of California, against a Republican president. However, Newsom’s insistence on strong, climate-protective standards is built on many decades of a California bipartisan consensus to protect the environment. It was Republican Governor Ronald Reagan who in 1967 signed the state law establishing CARB, which today’s Republican politicians and lobbyists in Washington want to cripple. The ZEV mandate was itself created under Governor George Deukmejian and implemented by his successor, Pete Wilson — both Republicans — and proudly maintained by governors of both parties ever since. And it was GOP Governor Arnold Schwarzenegger who signed the state’s Global Warming Solutions Act in 2006, establishing what is by far the strongest climate protection policy in the world.

So where does that leave us? A bargain that would provide automakers with the unified national standards and regulatory certainty they seek seems highly unlikely at this point. California has begun girding for a protracted legal battle, and it will be supported in this fight by at least a dozen other states, including those such as New York and Massachusetts that can themselves bring formidable legal and economic power to the table. The clean car fight will be one more rallying point for environmental groups and held up as yet another example of the uncivil behavior of not just Trump’s White House, but also the mainstream Republican leadership that has so religiously backed him. Car companies will have both legal and business planning headaches with which to contend. But worst of all, a crucial area of climate action will be stalled, further delaying the greenhouse gas reductions the world so urgently needs.