President Trump announced Wednesday that his administration intends to rework planned changes to federal fuel economy standards that require automakers' fleets to increase their average to at least 36 miles per gallon by 2025, up from around 26 miles per gallon in today’s new cars.
While we don't know what the new Trump administration rules will look like, they're certain to be weaker than those set under President Obama. And environmental and consumer groups are already expressing concern about what this will mean for the climate and car buyers' wallets.
"From an environmental perspective, it's terrible," says Tim Donaghy, a researcher at Greenpeace, in a phone call with The Verge. "Tailpipe emissions are really bad for the climate, but they're also just really bad for air quality. In the United States every year, 50,000 people die from particulate matter and ozone pollution coming from vehicles."
Light vehicle emissions account for about 16 percent of the United States' greenhouse gasses, making them one of the country's top polluters and a major contributor to climate change. Improving fuel efficiency has been seen as a key way to address those issues, and doing so is critical to meeting the United States' obligations under the Paris climate agreement and avoiding the more catastrophic effects of climate change.
"We have to start turning the battleship much faster if we're actually going to meet the goals that were agreed to in Paris,” says Donaghy.
The Paris Agreement requires the United States to reduce its carbon emissions to about 27 percent below where they were in 2005 by 2025, and Donaghy says that would be a challenge even with the stricter rules. With Trump weakening them, meeting that obligation "is just going to make it much more expensive and much more difficult," since the country will need to catch up later.
Trump characterized the fuel standards, which weren’t due to be finalized until early 2018, as an "11th hour executive action" by the previous administration.
"If the standards threaten auto jobs, then common sense says changes could have and should have been made," Trump said at a rally yesterday in Detroit.
The president said his administration would redo the 2018 review of fuel standards covering 2022 through 2025 model years. "We are going to ensure that any regulation we have protect and defend your jobs, your factories," he said. "We're going to be fair, we're going to be fair. This is an issue of deep importance to me."
It's a general rule that when gas prices are low, consumers tend to buy gas guzzlers. The auto industry loves this, because those trucks and SUVs are often more profitable than passenger cars. In fighting against the fuel standards, automakers seem to be making a bet that gas prices won’t increase much in the long term, so they’d rather not undercut their favored vehicles with increasingly efficient smaller ones.
The threat of job loss is among of the reasons automakers said the administration should take another look at the fuel standards. In one document, Fiat Chrysler says that "hundreds of thousands of jobs are at stake" due to potential loss of vehicle sales. That might happen, the filing says, if the fuel standards drive up vehicle costs.
Roland Hwang, energy and transportation director at the Natural Resources Defense Council, questioned that assessment, saying that fuel standards have previously led to job creation and a stronger auto sector. "Since the depth of the recession, the auto industry has added 700,000 jobs while achieving record fuel efficiency," he said in a phone call with The Verge.
Hwang also warned that letting fuel economy slip could put American automakers at a competitive disadvantage, particularly if oil prices rise and buyers lose interest in bigger vehicles like SUVs.
"You look at every oil shock that has occurred, the US auto industry has lost market share because we lack [standards] or standards were stagnant and the rest of the world has had common sense policies in place to make sure their auto industry doesn't get dependent selling gas guzzlers," he says.
But the auto industry is pleased with the announcement. The Auto Alliance, which represents 12 vehicle manufacturers including Ford, GM, and Fiat Chrysler, issued a statement saying "we applaud the administration’s decision" and that the review do-over would let regulators "reach a thoughtful and coordinated outcome" based on more current data.
"Our industry is committed to producing even safer and more energy-efficient vehicles in the future and that’s what this process is all about," the statement concluded.
Ford, GM, and Fiat Chrysler all pointed to the group's statement when asked for comment. A Ford representative added that the company "remain[s] absolutely committed to our electrification strategy."
Auto dealers also supported the announcement, with Peter Welch, CEO of the National Automobile Dealers Association, saying dealers’ “top priority will always be ensuring that working men and women have the ability to purchase the fuel-efficient cars and trucks they need at prices they can afford.”
While the auto industry has shown concerns about rising costs under the higher fuel standards, consumer advocates say they would prefer to see gains in fuel economy, which can save consumers more money over the lifetime of a vehicle.
In a statement, representatives for the Consumers Union, an advocacy division of Consumer Reports, criticized the standards as a way to "funnel more money to oil companies at consumers' expense." The standards, by their calculation, could have saved buyers of 2025 model year vehicles up to $3,200 per car and $4,800 per truck.
Donaghy says this is particularly damaging for lower-income households. "It'll be essentially a stealth tax on working families," he says. "Lower-income families spend a larger percentage of their monthly expenses on gasoline, and if they could have a more fuel efficient car, that would free up a lot of cash to spend on other things that need to be spending money on."
From here, the administration has about a year to finalize the new fuel standards. While there's no doubt that they'll be weakened, the bright spot for environmental activists is that the administration can only go so far. Federal law requires that fuel standards be put in place, and regulators are directed to set them at the "maximum feasible level."
Another variable here is California and a coalition of more than a dozen states behind it. California has long had a federal waiver allowing it to set its own fuel standards, and many other states have agreed to follow them, setting a sort of de facto national policy given their large combined market size. Under Obama, California came in sync with the federal government so that there was a single nationwide standard, but it could change course if the Trump administration dramatically lowers the bar.
Already, California has indicated plans to stick to the stricter rules decided by the Obama administration. California air regulators told Reuters that they plan to finalize the standards set under Obama later this month. "If for some reason the federal government and the industry decide to abandon those agreements that we all reached, we will have to reexamine our options," Mary Nichols, chair of the California Air Resources Board, tells Reuters.
That sets up what could become a major conflict, as automakers contend with multiple sets of fuel standards and the uncertainty that comes with the federal government possibly trying to revoke California's authority on fuel economy. It's already been suggested that the EPA could go down that road, though the White House told Reuters yesterday that it doesn't currently plan to do that and is hoping to work with the state to set new standards they can both agree to.
Trump’s announcement Wednesday is just one of many steps his administration is taking to roll back environmental protections. Trump has installed an opponent of the Environmental Protection Agency at the head of the agency, and in the coming days he’s expected to announce a rewrite of Obama’s Clean Power Plan, which is vital to meeting the Paris Agreement.
That agreement is meant to keep global temperatures from rising more than 2 degrees Celsius above pre-industrial levels, which is seen as the cutoff point for avoiding the worst effects of climate change. In 2014, a United Nations climate group said increasing temperatures could lead to food and water shortages across all contents, as well as health issues and conflicts over resources and land. Stopping some effects of climate change are already seen as futile, and Trump’s willingness to roll back protections only amplifies how difficult it will be for future administrations to avoid the worst impacts of rising temperatures.