The Fuse

EPA Puts Fuel Economy Review Back on Original Timetable

by Matt Piotrowski | March 15, 2017

The Environmental Protection Agency (EPA) is reopening a review of national fuel efficiency standards, after the Obama administration moved up the timetable during its final days in office. President Trump’s move puts the assessment for tighter standards for 2022-25 back to its original schedule, to which carmakers had originally agreed in 2012, while his EPA will not address at this time the controversial California waiver for the state to set its own rules.

In remarks at the Center for Mobility Wednesday outside of Detroit, Michigan at the American Center for Mobility, Trump promised to restore “American automotive leadership” and to protect U.S. industries and jobs when considering any vehicle regulations going forward. “We’re going to work on the CAFE standards so you can make cars again in America,” Trump said, reinforcing that his main priority is to keep auto manufacturing in the U.S.

“Everyone assumes that because we are putting the midterm review back on track people think we are going to roll the standards back, that’s not what we’re saying.”

The opening of the review has prompted worries from environmentalists and advocates of tighter fuel economy for energy security that the standards will be rolled back. But that might not be the case. “Everyone assumes that because we are putting the mid-term review back on track, people think we are going to roll the standards back. That’s not what we’re saying,” a White House official told reporters on Tuesday.

The Trump administration is revisiting the rules due to frustration from the automakers that the mid-term review they originally agreed upon—which set aggressive standards through 2025—was not fully honored.

“We’re going to pull back the EPA’s determination because we don’t think it’s right,” the White House official said. “We’re going to spend another year looking at the data in front of us, making sure everything is right, so that in 2018 we can set standards that are technologically feasible, economically feasible, that allow the auto industry to grow and create jobs, that’s very important for the president.”

Some automakers have said the standards through 2025 are costly for them and are difficult to meet as consumers have shifted to less fuel efficient vehicles because of low prices. EPA and the National Highway Traffic Safety Administration (NHTSA) will have until April of next year to determine whether to keep the current standards in place or amend them.

CAFE standards were revised in 2012 so that fuel economy reaches a goal of 54.5 miles per gallon by 2025—but that number is largely symbolic, as the actual on-road levels for new vehicles would be closer to 37 mpg. Sales-weighted fuel economy has leveled out since 2014, when oil prices crashed and consumers started buying larger vehicles.

A new way forward with alternative & highly efficient vehicles

Trump gave his speech Wednesday at an autonomous vehicle facility, perhaps a sign that his administration will be open to the new technology and see it as a way of improving efficiency. The Mid-term Evaluation opens the door to including new trends in vehicle technology, such as autonomy, that have developed since the standards were first put in place in 2012, which could lead to even greater efficiency and larger reductions in greenhouse gases in the longer term.

“Regulators must develop ways to measure fuel efficiency implications of advanced driver assist features and autonomous vehicles, which will incentivize software developers to create self-driving algorithms that improve fuel efficiency.”

Securing America’s Future Energy (SAFE), in a report released this week, urges the federal government to provide incentives to auto and tech companies to develop more efficient autonomous vehicles, and deploy alternative fuel drivetrains: “Regulators must develop ways to measure fuel efficiency implications of advanced driver assist features and autonomous vehicles, which will incentivize software developers to create self-driving algorithms that improve fuel efficiency,” SAFE says.

In the report, SAFE also highlights a path forward for a compromise that is attractive to different sides in the debate, and can still keep tough regulations in place to achieve energy security of goals of reducing consumption, limiting economic damage from dependence on oil, and cutting crude imports from unstable regimes. “Rather than provide minor adjustments to the current framework, leverage the restored timeline to create rules that are smart, effective, and fully integrate modern technologies and business models,” SAFE says.

One recommendation involves recommitting to one national program in order to avoid different regulations on both the national and state levels. Furthermore, the EPA can grant flexibility to the auto industry by extending the program through 2030-35 in order to provide more certainty for auto makers.

By regulating the entire mobility system instead of single vehicles, the government can open a framework to further reduce oil demand than envisioned in the original fuel economy framework.

Crucially, though, the review provides the opportunity to update standards by adding new technologies and business models into the mix, such as autonomous vehicles and ridesharing. By regulating the entire mobility system instead of single vehicles, the government can open a framework to further reduce oil demand than envisioned in the original fuel economy framework. This provides a chance to create incentives to bring in more efficient vehicles for high-utilization deployments, SAFE says. With market changes occurring at a rapid pace, the EPA should also implement five-year reviews of the new program to take into consideration shifts in technology and fuel prices.

This refined approach can provide certainty moving forward for all stakeholders by offering automakers increased flexibility, slicing oil demand at a faster pace as a result of new technology, and providing more choices to consumers. “There’s no reason for environmentalists, automakers, and conservatives to risk a nuclear war over these rules, which will result in zero progress for all sides,” said SAFE’s CEO Robbie Diamond.

 

 

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