Don't Roll Back the Vehicle Fuel Standards

March 8, 2017
Don't Roll Back the Vehicle Fuel Standards

Op-ed written by Harvard Law School Professor and HUCE faculty associate Jody Freeman discussing the implications of weakened standards for consumers, the environment, and the auto industry.

The New York Times

By Jody Freeman

One of the signal achievements of the Obama administration was reaching an agreement with the auto industry to dramatically increase fuel efficiency standards for vehicles, doubling them to 54.5 miles per gallon by 2025.

The industry now wants to renege. At its behest, the Trump administration is expected to initiate a rollback.

Weakening these standards would be a mistake for consumers, the environment and the auto industry itself. They are the most important action the United States has taken to address climate change and reduce the nation's dependence on oil.

From 2022-25 alone, they are projected to reduce American oil consumption by 1.2 billion barrels, cut half a billion metric tons of carbon pollution and save consumers millions of dollars in fuel costs, according to the Environmental Protection Agency. The net benefits to society are estimated at $100 billion. And these gains are on top of those achieved through 2016 and expected through 2021.

The standards also provide badly needed uniformity and predictability for the auto industry. When we adopted our strategy, car companies were facing the prospect of three different and conflicting sets of standards.

The National Highway Traffic Safety Administration had traditionally set fuel economy standards. But in 2007, the Supreme Court held that the E.P.A. could regulate greenhouse gas pollution from vehicles under the federal Clean Air Act, adding another regulator to the mix.

Complicating matters, the Clean Air Act allowed California to set its own more stringent air pollution standards after it received a waiver to do so from the E.P.A. Thirteen states and the District of Columbia, representing 40 percent of the national car market, copied California's rules. We ended up with multiple regulators with different approaches.

To fix this regulatory mess, we proposed a single national standard set jointly by the two federal agencies, which California agreed to support. To ease any burden on the auto companies, we would phase the standards in and provide plenty of compliance flexibility.

I led the White House negotiations with the industry in 2009 that resulted in this historic agreement. We worked with the companies to set standards for each type of vehicle they planned to make, according to its size and attributes. Consumer choice would not be restricted. Our only demand was that all new cars and trucks had to steadily improve fuel efficiency for every type of vehicle over time.

Nothing revolutionary was required. The companies can meet their targets by adopting technologies already available or well within reach, like advanced transmissions and turbocharging, or by improving vehicle aerodynamics. The standards don't require a dramatic shift to electric vehicles but depend overwhelmingly on improvements to traditional internal combustion engines.

In exchange for this clarity, the auto companies signed formal commitment letters agreeing not to challenge the standards. Indeed, industry lawyers helped the government to successfully defend them in court.

The Obama administration used the same template to set standards for medium and heavy-duty trucks, again with industry support. Other countries, like Canada, copied our approach, creating a consistent North American strategy.

Unraveling the agreement now will undo this alliance, plunging the companies back into regulatory chaos, with all its uncertainty, acrimony and cost.

And if the Trump administration tries to significantly weaken the rules, California will withdraw its consent and enforce its own higher standards using its waiver, which is valid to 2025. Should the E.P.A. try to revoke the waiver prematurely, California will, without question, sue.

Even if the companies want to take that risk, a rollback is not warranted by the facts. Market conditions now favor tighter standards, even though automakers say the 2025 target is expensive and unrealistic for them to meet as consumers shift away from smaller vehicles to bigger, less fuel-efficient pickups and S.U.V.s.

In reality, the standards for larger vehicles are markedly less stringent than for smaller cars, so the industry gets the benefit of a sliding scale. Manufacturers stoke the demand for larger vehicles by aggressively marketing them to reap bigger profits. Still, even the biggest trucks and S.U.V.s can become more efficient using off-the-shelf technologies.

There is a real downside to selling a greater share of larger vehicles, however: The auto fleet produces less efficiency overall. With S.U.V.s flying off the lots, the original target of 54.5 miles per gallon by 2025 already has dropped to 51.4 m.p.g. in the E.P.A.'s recent estimates. This will result in extra fuel costs and more pollution.

If anything, we should be strengthening standards when gas prices are low, to prevent slippage in fuel efficiency actually achieved. But the Obama administration never suggested doing that, instead honoring the deal it had struck.

Above all, we believed that cost-effective technologies were available to improve vehicle efficiency at a reasonable cost to consumers and that the domestic auto industry, stagnant in 2009, would benefit from being prodded to innovate.

As it has turned out, the industry is now thriving, with record sales. And it has easily exceeded the fuel efficiency standards every year since 2012. There is no reason to think it cannot continue to do so.