US Fuel Economy Standards Unrealistic

US Fuel Economy Standards Unrealistic

US Fuel Economy Standards Unrealistic

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  • The Trump administration is continuing its efforts to roll back Obama-Era regulations, and the Clean Power Plan may be next.
  • The signature plan under former President Barack Hussein Obama was finalized in Y 2015 as part of ongoing efforts to fight climate change.
  • The rule required states to reduce their carbon emissions.
  • It also offered incentives for early investments in renewable energy and energy efficiency programs in low-income communities.
  • Critics say the plan is a federal overreach and hurts coal jobs.
  • The Supreme Court froze its implementation in Y 2016 following lawsuits from several states and energy companies.
  • President Donald Trump ordered its review in March.
  • The EPA appears ready to propose a repeal.
  • The move would be in line with other recent actions by the administration to cut Obama-Era regulations.

Automaker trade groups told US regulators they should revise fuel efficiency mandates approved in the final weeks of The Obama Admin because the costs would be onerous and the standards do not reflect how cheap gasoline prices are affecting consumer demand, they stopped short of asking for a specific reduction in the requirements for Y 2025.

The comments to the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) set up the next round in a battle between automakers and the state of California and environmental groups, which argue against any retreat from limits to Greenhouse gas emissions.

Automakers want changes that would make it easier for them to comply with fuel economy standards, including flexibility in the use of a system of credits under the program.

Automakers have to meet parallel fuel economy standards overseen by the NHTSA and vehicle emissions limits regulated by the EPA.

US President Donald Trump has championed deregulation, saying it is needed to promote economic growth. In March he told auto workers, “We are going to ensure that any regulations we have protect and defend your jobs, your factories.”

The Alliance of Automobile Manufacturers, a trade group representing General Motors Co, Toyota Motor Corp , Volkswagen AG and others, said the EPA understated the costs of technologies needed to meet the Y 2025 requirements.

The Obama Admin finalized rules in Y 2012 to 2X the fleet-wide average fuel economy to 54.5 mpg by Y 2025, but the EPA revised it to 51.4 mpg based on a rising number of trucks.

The EPA said that would result in a real world average of 36 mpg by Y 2025, because of credits automakers receive and differences in test procedures versus real-world driving.

Automakers earn credits by producing cars and trucks that exceed the requirements in a given year — and can then apply credits to deficits in future years. They also earn credits for air conditioning improvements, building electric vehicles and other improvements that may not be captured in testing procedures.

Automakers said The Obama Admin finding that the Y 2025 targets were achievable at reasonable cost was based on errors in modeling the impact of new technology and assumptions about fuel prices and sales trends that have proved wrong.

Global Automakers, a group representing Honda Motor Co , Hyundai Motor Co and others, cited shifting consumer preferences for bigger vehicles as a problem.

“There is, simply put, a misalignment between the increasing stringency of the standards and the decreasing consumer demand for fuel efficiency,” the group said in comments filed late Thursday with the EPA.

The 2 auto groups said the EPA has agreed to develop a new modeling approach after they said a prior model “caused the agencies to overestimate the role that conventional technologies can play in achieving future” improvements.

The risk for automakers is that California, the most populous US state, will withdraw from a Y 2012 agreement to adhere to the national EPA standard if the current standards are weakened.

California’s standards are followed by 12 other states. Automakers have said it is vital to maintain 1 national standard for emissions regulation to avoid higher costs by having to meet 2 differing standards.

“If the federal standards are relaxed despite the overwhelming body of evidence demonstrating they should continue as is, California will maintain its standards. Moreover, we will pursue all available legal remedies to overturn federal actions that are unsupported by the facts and law,” state officials said in a statement.

Environmental groups also oppose the decision to reopen the standards.

The Natural Resources Defense Council said “automakers can meet the current standards with known technologies at reasonable cost. … Rolling them back, however, would increase pollution, raise costs for drivers, slow innovation and put jobs at risk.”

An EPA spokesman declined to comment on its reconsideration, saying it would review all comments.

Have a terrific week.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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