Emissions Standards: A 1970s Problem That Needs a 2018 Solution
As published in Real Clear Energy on August 15, 2018.
U.S. fuel efficiency and emissions standards were first crafted in the 1970s in response to an energy and oil crisis. While the standards have become more stringent over time and reduced air pollution nationwide, they’ve also become increasingly complex to the point where they may be neither technically achievable for automakers nor cost effective for car buyers.
Today, a long political and legal fight is starting up between the Trump administration, which has proposed rolling back fuel efficiency and emissions standards, and a dozen U.S. states. It has already captured the attention of state regulators, car makers, car buyers, oil and gas markets, and electric utilities. While reform is needed, the best approach to enacting auto emission standards is not to pit the federal government against states, who are responding to real, local air quality and climate concerns.
If enacted, the administration’s proposal will be challenged in court and add uncertainty, risk, and cost to the U.S. auto market. The proposal by National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) would freeze existing Corporate Average Fuel Economy (CAFE) and greenhouse gas emissions standards for passenger cars and light trucks covering model years 2021 through 2026. The proposal also would revoke California’s five-year old “waiver” allowing the state to implement its own stringent greenhouse gas standards, Low Emission Vehicle and Zero Emission Vehicle programs. Finally, it would restrict programs in more than a dozen other states that have followed California’s lead.
Emissions standards must strike a balance that is both ambitious and achievable. First, steady, incremental increases in fuel economy standards over a longer timeline will give automakers the sure footing they need to plan investments and compete in aggressive international markets. Through this rulemaking, the federal government should establish a predictable, year-over-year increase in fuel efficiency standards for the next decade. Periodic course corrections will be necessary, but those corrections should be incremental and not include steep “ramp ups” or “freezes” in standards.
The U.S. auto industry has consistently demonstrated an ability to reach ambitious targets on time and under budget. Incremental emission standard increases will keep our auto industry ready to compete on the world stage.
Such a rulemaking process would provide a chance to consolidate and simplify the federal regulatory framework. Currently, the EPA and NHTSA administer separate credit systems that give automakers the ability to trade credits between cars and trucks for a single manufacturer and between manufacturers. These programs allow manufacturers the flexibility to meet fuel efficiency standards more easily, but the issue lies in their redundancies. The cost of compliance can be reduced through the creation of a single credit market.
We should remember that fuel efficiency standards were first adopted in the 1970s in response to an oil embargo to reduce the risk and economic impact of fuel shortages. Fortunately, that is not our problem now. With domestic production setting record highs, the U.S. is in a better position than ever to further grow exports to our friends and allies. Today, we should be setting the stage for international fuel consumption and technical innovation in transportation. We should absolutely be employing the most efficient technologies here at home and capturing the highest value for U.S. oil and gas resources in high-growth international markets.
In the end, the administration should provide firm regulatory guardrails for automakers and maximize the value of our domestic oil and gas resources. This can be done by implementing aggressive but achievable emissions standards increases overtime, reducing compliance costs by consolidating redundant programs, and focusing on growing opportunities for U.S. businesses to export oil, gasoline, and cars abroad.
Time is of the essence. The administration should prioritize reforms that will allow businesses to plan and increase U.S. exports rather than waiting for these issues to be resolved through the courts. This is an opportunity to help bring a new generation of low- and zero-emission vehicles on the road, ensure consumers get more out of their auto purchases, and protect both human health and the environment.
Charles Hernick is the Director of Policy and Advocacy at Citizens for Responsible Energy Solutions (CRES) Forum, a nonpartisan, nonprofit organization committed to educating the public and influencing the national conversation about clean energy.