Trump Administration Cuts Fuel Economy, CO2 Standards with Final Regulations

April 01, 2020

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by Sean Szymkowski (Road Show) The changes, wrapped into the SAFE Vehicles Rule, will result in less stringent CAFE improvements through 2026. -- The SAFE Vehicle Rule, announced by the Environmental Protection Agency and the National Highway Traffic Safety Administration, lowers required fuel economy and CO2 improvements to 1.5% each year through 2026. Under previous Obama administration regulations, automakers were set to increase vehicle efficiency across their fleet by 5% annually. Although the new rule relaxes the regulations a great deal, it's more stringent than the White House had originally proposed.

The Trump administration first proposed a fleet-wide average of just 37 miles per gallon by 2026. The official changes will result in an average of 40.4 mpg. Under the outgoing Obama-era regulations, automakers were expected to meet a corporate-wide average of 54 mpg.

The administration cited a few major factors in the final rules, including significantly lower oil prices, expanded US oil production and a major uptick in consumer demand for larger vehicles, which are often less fuel efficient. Gas prices dipped drastically in recent weeks, largely due to a Saudi-Russian price war and the coronavirus outbreak, which has left millions of Americans at home and off the roads. Officials also said the 2012 regulations were based on assumptions no longer relevant in today's auto market.

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There's no guarantee automakers will pass the savings along to customers, however.

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These rules also effectively create a single national fuel economy standard -- a move at odds with California's standards, which numerous other states follow. The administration noted all vehicles will still need to meet the Clean Air Act's pollution standards.

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The EPA and NHTSA underscored the regulations don't create a ceiling, but a "floor," and nothing will stop automakers from introducing more efficient and zero-emission vehicles. Nearly every automaker doing business in the US has plans to electrify vehicles, or introduce new battery-electric cars.

Opponents of the rule, such as the Environmental Protection Network, have already slammed the rule and cited an increase in oil consumption through 2040. READ MORE

The Safer Affordable Fuel Efficient (SAFE) Vehicles Final Rule for Model Years 2021-2026 (U.S. Environmental Protection Agency)

Biofuel groups blast final fuel economy rule (Agri-Pulse)

RFA: Final Fuel Economy Rule a Missed Opportunity for High-Octane, Low-Carbon Fuels (Renewable Fuels Association)

Ethanol Blog: EPA Rule Provides No Incentive for Ethanol High-Octane Future (DTN Progressive Farmer)

EPA, NHTSA fail to address high-octane fuel in SAFE Vehicles rule (Ethanol Producer Magazine)

What They Are Saying: U.S. DOT and EPA Put Safety and American Families First with Final Rule on Fuel Economy Standards (U.S. Environmental Protection Agency)

The Un-SAFE Rule Update: Weakening Fuel Economy and Emissions Standards Costs Consumers Money in Every State (Consumer Reports)

Trump administration issues final rule on lower fuel-economy increases: Next up, a protracted legal fight with automakers, states split (AutoBlog)

U.S. Sets Final Fuel Economy, Emissions Standards for 2021–2026 Vehicles (Car and Driver)

Government Agencies Set Final Rule on Fuel Economy Standards (FenderBender)

ADDING UP EPA'S MATH: The Trump administration on Tuesday officially unveiled its rollback of stringent fuel efficiency targets (Politico's Morning Energy)

SAFE Vehicles Rule Misses High Octane Opportunity (Energy.AgWired.com)

Trump's car rule would cause more pollution deaths (E&E News)

DATAPOINT: (Politico's Morning Energy)

ENVIROMENTAL GROUP PRESSES CAR COMPANIES ON ROLLBACK: (Politico's Morning Energy)

Farmers Union: SAFE rule hurts ethanol industry (Grand Island Independent)

New Trump mileage standards to gut Obama climate effort (Associated Press)

Ahead of the hearing, (Poltico's Morning Energy)

The discussion of octane-related issues beings on page 397.

Excerpt from Renewable Fuels Association: According to the Renewable Fuels Association, the final rule ignores the input of automakers, ethanol producers, farmers, environmental groups, retailers and others who called on the agencies to establish a pathway in the rule for transitioning to high-octane low carbon liquid fuels. In response to hundreds of comments calling for the inclusion of high octane fuels as a tool to help automakers meet more stringent fuel economy and emissions requirements, EPA said only that “establishing a higher minimum octane for gasoline is a complex undertaking” and “the present rulemaking is not the appropriate vehicle to set octane levels.”

In addition, EPA said in the final rule it “also is declining to adopt new incentives for flex-fueled vehicles (FFVs) (vehicles designed to operate on gasoline or E85 or a mixture), as some commenters suggested.” The agency said FFV incentives are “outside the scope” of the vehicle fuel economy rule, despite the fact that the rule includes incentives for natural gas vehicles, electric vehicles, and other alternative fuel vehicles. As an example, EPA’s rule assumes that electric vehicles have no “upstream” greenhouse gas emissions related to their use; in other words, the agency completely ignores emissions related to producing electricity from coal, natural gas, and other sources and distributing the electricity to the vehicle. This results in a significant fuel economy “credit” for electric vehicles that is not based on any real emissions reduction.

Commenting on the release of the final rule, RFA President and CEO Geoff Cooper offered the following statement:

“EPA’s final rule is yet another missed opportunity to bring higher-octane, lower-carbon fuels to the market and enable more efficient internal combustion engine technologies. Of all the stakeholders who provided input to EPA on the topic of octane, only the oil industry voiced opposition to EPA using its authority to set standards for higher-octane fuels. Once again, EPA has sided with the oil industry over automakers, biofuel producers, farmers, environmental advocates, and consumers. This rule should have established the roadmap toward cleaner, more efficient, more affordable liquid fuels for our nation’s consumers. Instead, it sends our nation’s vehicles and fuels down yet another pothole-filled road to ruin.” READ MORE

Excerpt from DTN Progressive Farmer: American Coalition for Ethanol Chief Executive Officer Brian Jennings said in a press statement the EPA rule was disappointing.

"The final rule is a missed opportunity to provide a roadmap for high octane mid-level ethanol blends after EPA specifically requested comments on the role 100 Research Octane Number (RON) E30 could play to help automakers meet fuel economy and emissions standards," he said.

"We are also disappointed the rule appears to give special treatment to natural gas vehicles but fails to extend much needed incentives for the continued production of flexible-fuel vehicles, just another example of EPA choosing fossil fuels over low-carbon fuels and rural America.

"There are a number of regulatory barriers restricting market access to high-octane mid-level ethanol blends that we set forth in our comments in the fall of 2018 and it's unfortunate that after requesting information from the public on the 'ideal octane level,' the 'benefits of increasing fuel octane,' and specifically how higher octane fuel will play a role in 'engine technologies and product offerings' and 'improvements to fuel economy and CO2 reductions,' EPA failed to incorporate what the agency previously conceded: 'higher octane fuel can provide auto manufacturers more flexibility to meet more stringent standards by enabling opportunities for use of lower CO2 emitting technologies.'"

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Renewable Fuels Association President and Chief Executive Officer Geoff Cooper said the EPA chose to listen to the oil industry in the rule.

"Of all the stakeholders who provided input to EPA on the topic of octane, only the oil industry voiced opposition to EPA using its authority to set standards for higher-octane fuels," he said.

"Once again, EPA has sided with the oil industry over automakers, biofuel producers, farmers, environmental advocates, and consumers." READ MORE

Excerpt from AutoBlog: The announcement — condemned by Democrats and environmentalists while being lauded by big business — sets up a legal battle, with California and 22 other states planning to challenge the rewrite of what had been one of most ambitious U.S. policies aimed at combating climate change.

The Trump administration called the move its largest single deregulatory action and said it would will save automakers upwards of $100 billion in compliance costs. The policy reversal marks the latest step by Trump, a Republican, to erase environmental policies pursued by Obama, a Democrat.

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House of Representatives Speaker Nancy Pelosi, a Democrat, disagreed, saying the administration's decision will harm public health and endanger U.S. economic security.

"The Trump administration's anti-science decision to gut fuel standards will unleash massive amounts of pollution into the air at the worst possible time," Pelosi said, alluding to the coronavirus pandemic.

A coalition of states previously challenged the Trump administration's decision to revoke California's authority to set its own stiff vehicle tailpipe emissions rules.

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The final rule acknowledges that drivers will pay more in higher fuel costs than they will save in new vehicle prices but said they will save more in overall vehicle ownership costs.

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The Trump administration has battled with California over auto regulations. Last month, the U.S. Justice Department closed an antitrust investigation into a voluntary agreement that four automakers reached with California on emissions without taking any action.

Ford, BMW AG, Honda and VW AG struck a voluntary deal with California last year on emissions standards, prompting the investigation. The deal with the California Air Resources Board bypassed a White House effort to strip the state of the right to fight climate change and drew Trump's ire.

Ford said on Tuesday it remains "committed to meeting emission reductions consistent with the California framework."

Also, Tuesday, Volvo revealed it is in talks to meet the higher California standards as well. READ MORE

Excerpt from Car and Driver: But while critics (and some automakers) have slammed the White House for increasing emissions, those increases exist only on government paper. They're in relation to future targets that haven't been met—targets the EPA says most automakers are still not meeting "without resorting to the use of credits." In reality, the new rule continues to mandate an annual decrease in emissions and fuel consumption, just on a significantly gentler curve.

"Their [credit] banks have been significantly depleted and we're not seeing the same demonstration of compliance from actual reductions," said Anne Idsal, the EPA's air quality assistant administrator.

Those federal credits (not to be confused with zero-emission-vehicle credits, which are part of the state-level ZEV mandate led by California) allow automakers to compensate for the many non-complying vehicles in their fleets that would otherwise lead to penalties. For example, in addition to building alternative-fuel vehicles like EVs, automakers can petition for "off-cycle" credits (such as high-efficiency alternators) that aren't bench-tested during a vehicle's certification or have nothing directly to do with efficiency, such as for automated and connected vehicle technology. The new rule will continue EV credits through 2026 and will bring back credits for natural gas vehicles, which dropped off the list years ago. READ MORE

Excerpt from Politico's Morning Energy: ADDING UP EPA'S MATH: The Trump administration on Tuesday officially unveiled its rollback of stringent fuel efficiency targets for the nation's fleet of cars and small trucks, Pro's Alex Guillén and Zack Colman report. The Safer Affordable Fuel-Efficient Vehicles rule will cause drivers to spend more on gasoline than they would save on cheaper cars, according to the administration's analysis, but automakers will save billions of dollars compared to what they would have spent to comply with the tougher Obama-era requirements.

More lives will be lost to air pollution-related health problems, although the administration says those deaths are outweighed by fewer traffic fatalities as people switch to newer, safer cars and trucks. And almost a billion more tons of planet-warming carbon dioxide will go into the atmosphere, while oil consumption rises by nearly 2 billion barrels over the vehicles' lifetimes.

Following the rule announcement, California officials announced Volvo intends to join four other automakers — Ford, Honda, Volkswagen and BMW North America — that have agreed to maintain stricter-than-federal vehicle emissions rules.

DÉJÀ VU: Trump took to Twitter Tuesday to promote the rule, writing: "My proposal to the politically correct Automobile Companies would lower the average price of a car to consumers by more than $3500, while at the same time making the cars substantially safer. Engines would run smoother. Positive impact on the environment! Foolish executives!" If that sounds familiar, it's because Trump tweeted almost exactly the same thing on Aug. 21 — at that time citing just $3,000 in savings.

The $2,100 Question: EPA and the National Highway Traffic Safety Administration said the rule would reduce upfront costs by $1,000 and total ownership costs by $1,400. The White House on Tuesday did not answer queries about the president’s source for the $2,100 discrepancy. READ MORE

Excerpt from E&E News: On Page 1,525, the Trump administration's rule to roll back emissions standards for cars offers a striking assessment: it could cause 444 to 1,000 premature deaths from air pollution.

That's just one remarkable figure tucked away in the Safer Affordable Fuel Efficient (SAFE) Vehicles Rule, which EPA and the Department of Transportation released earlier this week.

Other figures show the rollback could result in a net cost to society of $13.1 billion and also cause hundreds of additional cases of respiratory illnesses in comparison to the clean car standards established by President Obama, according to an E&E News review of the document.

In public remarks, Trump administration officials have insisted the rollback would benefit society by increasing traffic safety and lowering the price of new cars.

But to critics, including half a dozen former EPA staffers, these figures tell a different story: The rollback could harm public health and the economy at a time when the country is reeling from the effects of the COVID-19 crisis. READ MORE

Excerpt from Politico's Morning Energy: DATAPOINT: The Trump administration's Safer Affordable Fuel-Efficient Vehicles rule, unveiled this week, would require automakers to improve fuel efficiency for trucks and light cars by 1.5 percent per year — well below the 5 percent target sought by the Obama administration. POLITICO Pro DataPoint's Patterson Clark breaks down in a new DataPoint graphic what the Environmental Defense Fund says would be an increase in deaths stemming from added petroleum pollution and increased carbon dioxide, outweighing the number of lives saved by cheaper cars. READ MORE

Trump’s SAFE rule promises cheaper, less-efficient new vehicles

Excerpt from Politico's Morning Energy: ENVIROMENTAL GROUP PRESSES CAR COMPANIES ON ROLLBACK: The activist organization Environmental Working Group published an open letter today to the CEOs of three automakers that have backed the Trump administration's rollback Obama-era vehicle fuel economy standards. The letter, addressed to the top executives at General Motors, Fiat Chrysler and Toyota, poses a series of questions and says EWG will urge its "audience of millions that when the economy recovers and the time comes to shop for a new car, they should look to auto companies that stand by their word and a shared determination to fight air pollution and climate change." READ MORE

Excerpt from Grand Island Independent: Rob Larew, president of the National Farmers Union, said when the rule was initially proposed over a year ago, NFU urged EPA to incorporate greater access mid-level ethanol blends as a way to boost octane and increase vehicle efficiency. He said that despite widespread support from automakers and retailers for a higher minimum octane level for gasoline, the agency ultimately decided against the change.

Additionally, Larew said the EPA declined to adopt new incentives for the production of flex-fuel vehicles because such incentives were deemed outside the scope of the rule-making.

“This news could not come at a worse time for American farmers and rural communities,” he said. “Over the last several years, demand for billions of gallons of homegrown biofuels has been obliterated by the misappropriation of small refinery exemptions to oil corporations. And now a global pandemic has decreased demand further, bringing ethanol prices down to a record low.

As a result, Larew said some ethanol plants stopped buying corn, while others have halted production altogether, costing family farmers millions of dollars and rural communities hundreds of good jobs.

“In the midst of these difficulties, the EPA’s lack of support for the American biofuels industry is a huge disappointment,” he said. READ MORE

Excerpt from Politico's Morning Energy: Ahead of the hearing, the top Democrat on the committee, Tom Carper (D-Del.), laid out concerns over the agency's final auto emissions rule and called on EPA's inspector general to expand a probe he previously requested into whether agency officials were skirting rulemaking requirements for the Safer Affordable Fuel-Efficient Vehicles rule.

In his letter to the IG, Carper cited documents that he says raise transparency and potential legal questions, including ones that show EPA political officials "apparently purposefully and potentially illegally" withheld concerns about the rule "from being placed into the rulemaking docket and made available to the public." The concerns laid out by EPA staffers included "numerous errors and inaccuracies in the draft final rule," which were not incorporated by the Transportation Department, Carper wrote to the IG.

In one such document released by Carper, an EPA staffer wrote that "the vast majority of EPA's comments have not yet been addressed" in a draft of the rule's preamble made available for inter-agency review. "In the day we've had to review the latest preamble, we have identified more than 250 EPA comments that have not been addressed," the document states.

In a statement, an EPA spokesperson defended the rule and the joint rulemaking process as the same used by previous administrations. "Consistent with that previous practice, written materials reflecting deliberative discussions between the co-authors of a rule on how to draft the notice, or how to respond to comments received during interagency review, are not docketed," the spokesperson said.

Also likely to come up: Chairman John Barrasso (R-Wyo.) may question Wheeler on reducing blending requirements under the Renewable Fuel Standard. A group of 15 oil-state Republicans led by Barrasso called on Wheeler to do so in a letter Tuesday , citing the crash in fuel consumption and the rise in RFS compliance costs. "A failure to grant, in part or in whole, the governors' petitions would render this provision within the Clean Air Act utterly meaningless. It would be a gross example of a federal agency nullifying an act of Congress," the letter says. READ MORE