Auto companies might like EPA rollback — but they’ll pay for it in the long run

Auto companies might like EPA rollback — but they’ll pay for it in the long run
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President TrumpDonald John TrumpJimmy Carter: 'I hope there's an age limit' on presidency White House fires DHS general counsel: report Trump to cap California trip with visit to the border MORE prides himself on the art of the deal, but let’s call his rollback of clean car standards at the federal and state levels what it is — a terrible deal for the United States.

The Trump Administration’s proposal to reverse existing federal fuel efficiency standards by freezing planned improvements starting in 2020, and their plan to revoke California’s authority under the Clean Air Act to set more stringent vehicle emissions standards, threatens the future of the U.S. auto industry and will drive further climate change, along with pain at the pump.

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Let’s start with the U.S. auto industry, just 10 years removed from bankruptcies at Chrysler and GM. When gasoline prices spiked to $4 a gallon, consumers didn’t want to buy the gas-guzzling vehicles U.S. automakers were selling, and so sales of more efficient autos went to our foreign competitors.

 

This was part of the reason that U.S. automakers welcomed the fuel efficiency standards set in 2012, which would have doubled the miles per gallon of vehicles sold in the U.S. by 2025. The car companies had developed the standards in cooperation with the federal government. They knew the standards would make them more competitive against foreign vehicles, and the standards would create a unified national market, bringing California and the 13 states that adopted the California way (totaling 35 percent of the U.S. market) together with the rest of the country.

Good jobs and lots of investment followed the new rules. For example, 288,000 Americans are currently working at 1,200 facilities in 48 states to make today’s vehicles cleaner and more efficient, and the clean car standard would create more than 250,000 jobs in 2035. Most of the $76 billion invested by the auto industry since 2008 has gone to reduce fuel consumption, and auto parts suppliers stand to gain $90 billion in increased orders for fuel-efficient technology.

Meanwhile U.S. automakers have remained quite profitable: In 2017 Fiat Chrysler “posted another record performance,” Ford Motor Company “achieved our eighth consecutive year of solid earnings,” and General Motors reported its “third straight year of 10-percent or higher margins.”  

This isn’t surprising. Analysts forecast U.S. automakers would remain profitable even with very low fuel prices, and gross domestic product would increase by $16 billion in 2035. In fact, the National Highway Traffic Safety Administration reported in 2016 that car companies could meet the higher standards with lower costs and no safety concerns.

But those gains may have just been driven into a ditch: Foreign automakers are racing to build clean cars and electric vehicles, largely to meet rising fuel efficiency standards and EV targets in major markets like China, Europe, and India, as well as California, the single-biggest U.S. market. If the U.S. drops out of this race, automakers and drivers alike will suffer.

Automakers typically have a five-year planning horizon and need roughly three years to develop new vehicles and get them into production. Trump’s clean cars rollback faces several years of legal challenges from 18 states which have already sued over the plan — so how can car companies plan for a competitive future without any certainty over which standards will be law?

U.S. auto companies might like a short-term rollback, but they’ll pay for it in the long run as global competitors shift toward efficient technology and innovative designs. Is it any surprise Ford Motor Company Chairman Bill Ford opposes rolling back federal fuel efficiency standards?

Trump’s clean car rollback also threatens U.S. consumers. Energy Innovation forecasts this move will increase gasoline consumption by 363 million gallons in 2035 and cost consumers $457 billion through 2050 in additional fuel costs.

And don’t listen to Trump’s claims that heavier gas-guzzlers are safer than fuel-efficient vehicles: Fatalities per-hundred million miles of travel decreased from 1.46 in 2005 to 1.18 in 2016, and 2018 model vehicles featured 12.3 advanced safety features compared to 7.4 in 2011 model vehicles — both improvements happening as vehicles got lighter and more efficient. As the International Council on Clean Transportation reports, a broad group of experts on auto safety and fuel economy say auto safety has been decoupled from vehicle mass.

Finally, and significantly, rolling back clean car standards threatens worse climate change and more extreme weather. Trump may not believe that greenhouse gas emissions change our climate, but 97 percent of climate scientists do, and cars that burn more gasoline will contribute a staggering level of emissions.

The U.S. transportation sector became our country’s largest source of emissions in late 2016, passing the rapidly decarbonizing power generation sector, and Energy Innovation’s modeling forecasts Trump’s rollback will increase transportation sector emissions by 139 million metric tons in 2035.

If we want to avoid a future where today’s record heatwaves are tomorrow’s normal temperatures, we must build more efficient vehicles. Rolling back clean car standards would steer us in the opposite direction.

History argues that strong standards make for strong companies. Our auto engineers have shown they can make innovative, safe, clean, and profitable cars — if they have time and certainty to do so.

Trump may call his plan the S.A.F.E. (Safer and Affordable Fuel Efficient) Vehicles Rules, but they are quite the opposite: Rolling back fuel standards is dangerous gamble for the U.S. economy, our citizens, and our environment.

Margo Oge served at the U.S. EPA for more than 32 years and was director of EPA’s Office of Transportation and Air Quality from 1994-2012.  

Hal Harvey is the CEO of Energy Innovation, a policy and technology firm that delivers research and analysis to policymakers on energy issues.