Going in reverse on fuel efficiency will ultimately hurt consumers

In 2012, the Environmental Protection Agency (EPA) finalized standards to double the fuel efficiency of new vehicles to 54.5 miles-per-gallon by 2025. This profound move would require new cars to reduce the gasoline needed by half, thereby reducing their oil dependence and CO₂ emissions by half.

The plan aligned EPA with California’s legal ability to set more stringent emissions standards, so automakers could build to one unified national standard instead of two. The plan had national implications: Other states can choose whether to follow California or federal standards, and today, 40 percent of America’s population lives in the 13 states that chose California’s. The plan even had the support of automakers, which like regulatory certainty and prefer building to one set of standards.

{mosads}All in all, this was pretty brilliant policy. Unfortunately, the Trump administration is considering upending the deal by lowering future targets. Automakers, in a trust-crushing move worthy of VW, asked for softer standards in 2017, even though they promised to support the agreement. EPA Administrator Scott Pruitt seems determined to reverse any policy protecting the public, so EPA now faces an April 1 deadline to issue a review of the fuel efficiency requirements. The game is on.

A simple rollback faces obstacles — and here is where it gets interesting. Consumers love more efficient vehicles, as witnessed by the popularity of new Ford pickups, with lightweight aluminum beds and an “Ecoboost” V6. The Ford F150, featuring these technologies, is the top selling vehicle in America.

The federal government is also prohibited from simply deleting the regulations: The Administrative Procedures Act requires evidence, hearings, and justification for major regulatory changes, including rollbacks. And, perhaps most important, California will not give up this fuel-efficiency policy, so the country could revert to two sets of standards.

These obstacles pushed EPA into negotiations with the California Air Resources Board (CARB) to find a plan suiting the state and Pruitt’s EPA. The EPA has a pretty big weapon to force California’s hand: the EPA might try to revoke California’s waiver. This would inspire a mighty legal battle, and would be both an environmental and political disaster, but the threat is real.

Auto companies may intensely dislike California’s process, but they dislike uncertainty even more. “The nightmare for the industry is California and the feds go their separate ways,” Mike Jackson told the Wall Street Journal. Jackson is the CEO of AutoNation Inc., the largest U.S. car dealership chain. As a rule, car companies are okay with tough standards if they are uniformly applied, have long lead-times, and are not fraught with uncertainty.

One path to success might be to extend the standards to 2030, steadily tightening them the whole way (more certainty, more lead time), and allow more flexibility in the years in between. This would be good policy (if the devilish details are properly handled), but it would require good faith negotiations — unfortunately, EPA and the auto manufacturers have lost credibility there.

The darker scenario, which some consider most likely, is an all-out war by EPA to shut off California’s power to set tighter standards — also, of course, restricting rights for the 13 states that now follow California’s course. “EPA would have to take unprecedented legal action to try to revoke that waiver,” CARB Chair Mary Nichols told Bloomberg.

A great deal is at stake: For 40 years, our national security worries have multiplied because of our foreign oil dependence, costing well over $1 trillion to defend access to that oil. That threat is ameliorating today, because of increased domestic oil production and a more efficient auto fleet, but are we really dumb enough to give back this leverage we finally wrested from OPEC?

U.S. automakers, too, are facing massive competition. Electric vehicles, autonomous cars, and ride-sharing services are moving in — their world is changing fast. Does that require relaxed fuel efficiency standards to give them breathing space? Quite the opposite.

China, Europe, and other countries are demanding cleaner, more efficient cars. If we relax our standards, our automakers will relax their imperative to innovate, and they will get crushed by foreign competition.

We already saw this movie. In 1986 General Motors and Ford requested a federal fuel efficiency rollback, and the Reagan administration complied, so until 2012, U.S. automakers added power and weight while Japanese and German competitors added new efficiency technologies. This helped drive two of the big three U.S. car companies into bankruptcy.

Strong standards make strong companies. If we demand safer cars, we get them. If car makers are required to make more efficient cars, well, they do that too.

Finally, we would be roundly anti-science to give up the climate benefits of more efficient cars. While this may be happening in Trump’s EPA, it is hard to think of a better way to squander our American, or our global future, than throwing fuel efficiency in reverse.

Hal Harvey is CEO of clean energy and climate policy firm Energy Innovation and has spent 25 years working on energy policy in the U.S., China, Europe, and India.