Markets can't reward hypocrisy in battle over vehicle emissions standards

Markets can't reward hypocrisy in battle over vehicle emissions standards
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California is burning again, but the difference from past years’ historically damaging blazes is that this year’s fires, driven by high winds, are even worse. Scientists say the western U.S. fire season has grown 105 days, the average number of large fires has tripled since the 1970s, and half the acreage burned since then is attributable to climate change.  

I watched last week as smoke from the Getty fire surrounded my Los Angeles apartment, but through the haze I clearly saw headlines that several major car companies, including Toyota and GM, sided with the Trump administration against California’s efforts to reduce greenhouse gas emissions.

It’s ironic that the companies that gave us the Toyota Prius and Chevy Bolt, which have long cultivated an image of corporate responsibility, have now joined one of the most environmentally destructive administrations in modern American history. In fact, GM CEO Mary Barra recently joined nearly 200 CEOs who signed onto a new age of corporate responsibility by committing to put purpose ahead of profit.

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These automakers had three options in President TrumpDonald John TrumpButtigieg surges ahead of Iowa caucuses Biden leads among Latino Democrats in Texas, California Kavanaugh hailed by conservative gathering in first public speech since confirmation MORE’s war against clean cars. The first option was joining Ford — whose CEO Jim Hackett also signed the corporate responsibility pledge — VW, Honda and BMW in their deal with California to preserve more aggressive standards. By siding with California, these four car manufacturers opened the door for GM and Toyota to join the deal.

Their second option was to stay on the sidelines and allow the courts to decide — the route taken by Daimler, Volvo and Jaguar

The third option was siding with the Trump administration in a short-sighted manner, similar to actions that nearly bankrupted the industry in 2008. GM, Fiat Chrysler, Toyota and other members of the cynically named “Coalition for Sustainable Automotive Regulation” chose to side with the Trump administration’s efforts to gut existing environmental standards. But there is absolutely nothing “sustainable” about this stance — from a business or climate perspective. 

Their irresponsible move was just one more twist in a long-running saga: In 2011, 12 automaker CEOs — including Toyota, GM and Fiat Chrysler — stood with President Obama to announce federal actions specifically targeting vehicle greenhouse gas emissions reduction.

I was well aware of the agreement’s innumerable details; I led the U.S. Environmental Protection Agency team that developed the regulations. But the headline was that automakers, the federal government and California agreed to national standards to cut vehicle emissions 50 percent by 2025 while doubling the fuel economy of passenger cars and light-duty trucks to 54.5 MPG by 2025, saving more than 4 billion barrels of oil and $1.7 trillion for consumers.

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Accelerate to November 2016, days after Trump’s election, when automakers appealed to the new president for relief from the agreement, even though they were not exactly in need of “relief” after experiencing record growth and profits while meeting, and often exceeding, the annual standards.

Nonetheless, in 2018 the Trump administration unveiled plans to freeze the 2025 standards at 2020 levels and challenge California’s authority to set their own tailpipe emissions standards — a move that could cost consumers $400 billion through 2050 and increase transportation emissions 10 percent by 2035. The rollback was so extreme that even automakers rebuked it, leading four of them to agree in July to join California’s stringent standards instead to trying to forecast and plan in the midst of years of litigation.

Within days, Trump’s Department of Justice announced the companies “illegally have colluded to cut a deal with California” and ordered an investigation, even though automakers have voluntarily cooperated with states and the federal government for decades to produce cleaner cars that protect public health. The move was a scare tactic — and it worked. Companies that were reportedly considering joining the deal, including Daimler, pulled back.

Since the 1960s, California has consistently been more innovative and aggressive in combatting toxic tailpipe emissions, leading Congress to grant the state the unique right to set its own emissions rules, provided they are more stringent than federal standards. Since then, 14 states plus Washington, D.C., have adopted California’s standards over the federal standards, meaning California sets more stringent auto emissions standards for nearly 40 percent of the U.S. auto market, making it a powerful player in any negotiations with automakers.

The Trump administration is attacking more than 40 years of legal precedent by withdrawing California’s authority to set its own standards. A legal paper by Greg Dotson, University of Oregon School of Law professor and former House Energy and Commerce Committee staff member, argues the legal precedent is clear: California has the authority to set its own emission standards to protect its people because science says climate change poses significant threats to the state, including an increase in smog pollution.

Despite the environmental consequences of their actions and the likelihood of eventual defeat in the courts, Toyota, GM and other companies chose to support the Trump administration’s effort to revoke states’ rights to protect their people from the devastating climate change and air pollution effects of greenhouse gases.

The boards and investors of these companies must ask three simple questions from the CEOs of these backward-thinking car manufacturers — and if they don’t get responsible answers, they must divest from these corporations.

  • Did you choose to support the Coalition for Sustainable Regulations because it makes good business sense, or because you were forced by the White House?
  • What are the short- and long-term financial impacts of your decision, and how does it compare with that of the companies who made a deal with California?
  • How does this decision align with your branding about being an environmentally conscious automaker? How are you going to explain this to your customers?

The residents of California and the 23 states that have joined lawsuits challenging Trump’s clean cars rollback must also check their conscience when they are in the market for a new car. Intransigent automakers should not be on their lists.

The time for greenwashing and hypocrisy is over — markets cannot reward such behavior any longer.

Margo Oge served as the director of EPA’s Office of Transportation and Air Quality from 1994-2012 and is the author of “Driving the Future: Combatting Climate Change with Cleaner, Smarter Cars.”