Major Automakers Strike Climate Deal with California, Rebuffing Trump on Proposed Mileage Freeze

July 25, 2019

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by Juliet Eilperin and Brady Dennis (Washington Post) The agreement could have vehicles hit 50 miles per gallon on average by 2026 -- Four automakers from three continents have struck a deal with California to produce fleets that are more fuel-efficient in coming years, undercutting one of the Trump administration’s most aggressive climate policy rollbacks.

The compromise between the California Air Resources Board and Ford, Honda, Volkswagen and BMW of North America came after weeks of secret negotiations and could shape future U.S. vehicle production, even as White House officials aim to relax gas-mileage standards for the nation’s cars, pickups and SUVs.

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In a joint statement, the four automakers said their decision to hash out a deal with California was driven by a need for predictability, as well as desires to reduce compliance costs, keep vehicles affordable for customers and be good environmental stewards.

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The deal comes as the Trump administration is working to finalize a huge regulatory rollbackthat would freeze mileage requirements for cars and light trucks next fall at about 37 miles per gallon on average, rather than raising them over time to about 51 mpg for 2025 models — the level the industry and government agreed to during the Obama administration. The proposal would also revoke California’s long-standing authority to set its own rules under the Clean Air Act, a practice the federal government has backed for decades.

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Officials from the National Highway Traffic Safety Administration, which is co-writing federal tailpipe standards, noted in a statement that the administration’s proposal does not prevent manufacturers from building more-efficient vehicles if they so choose.

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The share of the U.S. auto market affected by the new terms could grow significantly if other automakers join the deal. Last month, the Canadian government also pledged to align mileage requirements for its auto market with California rather than the Trump administration.

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Thirteen states and the District of Columbia have pledged to follow California’s lead, and several of them are already challenging the Trump administration’s move.

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While the new agreement will require car companies to meet stricter targets than under the Trump administration’s proposal, it also could provide a hedge in case a Democrat wins the presidential election next year. California regulators committed to maintaining the tailpipe standards even if control of the White House flips. READ MORE

California and Four Major Automakers Commit to Increased Fuel Efficiency, Undermining Trump Administration’s Rollback of Clean Car Standards (Sierra Club)

Automakers rebuff Trump, strike fuel efficiency deal with California (The Hill)

Automakers buck Trump, sign fuel economy deal with Calif. (E&E News)

Colorado Comes To Terms With All Major Automakers On Emissions & ZEV Mandates (Clean Technica)

HOUSE DEMOCRATS PRESS ON THE GAS: (Politico's Morning Energy)

Blue states line up behind California (Politico's Morning Energy)

SEEC Leaders encourage all automakers to join greenhouse gas pollution standards deal with California (U.S. House of Represenatives Sustainability Energy and Environment Coalition)

Mercedes to join California emissions pact, report says (Automotive News Europe)

Excerpt from The Hill: “What exactly are you hoping to accomplish?” Rep. Paul Tonko (D-N.Y.) asked administration officials as they appeared before the House Energy and Commerce Committee.

“At best it isn’t clear. A reasonable observer would be forgiven for seeing an Administration so blinded by contempt for its predecessors and so willing to hurt consumers to support oil companies at any cost that it would defy science and common sense to move forward with a proposal with near universal condemnation from stakeholders,” Tonko added.

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Democrats from California and Michigan, a state with a strong auto industry presence, praised the deal.

“This move highlights that the Trump EPA’s so-called ‘SAFE Vehicles’ rule is dead on arrival. It’s bad for our climate. It’s bad for consumers. It’s bad for the auto industry,” said Rep. Doris Mastui (D-Calif.), “I strongly urge all automakers to support this reasonable path forward that could prevent years of litigation and economic uncertainty.”

Rep. Debbie Dingell (D-Mich.) hopes the agreement will be used to drive EPA back to the bargaining table.

“This is a positive development. The auto industry needs certainty. This industry is more fragile than many realize. If the United States is to be competitive, we have to stay at the forefront of innovation and technology, which will help us transition to the next generation of more fuel-efficient vehicles,” she said in a statement. “I would urge this framework to be a catalyst for all stakeholders to go back to the table. It would be win-win for everyone.” READ MORE

Excerpt from Clean Technica: The manufacturers and state officials went back and forth over the past 6 months trying to find a way forward that was acceptable to all parties. The clock is ticking, as the Trump maladminstration is busy drafting new rules that will roll back emissions standards to levels unseen in America this century. Last week., California announced it had reached an agreement with four automakers — Ford, Honda, Volkswagen, and BMW — that would see those companies drop their opposition to the CARB protocols in exchange for a little extra time to comply with stricter standards.

Now Colorado says it has reached a similar agreement, but this time with the two trade associations that represent virtually all automobile manufacturers in America — the Association of Global Manufacturers, which includes Nissan, Subaru, Toyota, Honda, Hyundai, and KIA as well as a number of “Tier One” suppliers like Panasonic and Bosch, and the Alliance of Automobile Manufacturers, whose members include the three major US manufacturers plus BMW, Jaguar Land Rover, and Mercedes.

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According to CNET, the secret sauce that made the agreement possible was Colorado’s willingness to defer full implementation of the CARB rules until 2023 model year cars are offered for sale. “Automakers who sell electric vehicles in Colorado in the 2021 and 2022 model years will be given credits that can offset ZEV goals for model years 2023 to 2025. This should provide a benefit for automakers who already sell EVs in the state and it may spur other OEMs to bring their products to Colorado earlier, says CNET.

The agreement must be approved by the Colorado Air Quality Control Commission, which will hold a hearing on the proposed agreement on August 13. It is expected the commission will approve the terms of the agreement. READ MORE

Excerpt from Politico's Morning Energy: HOUSE DEMOCRATS PRESS ON THE GAS: Eight senior House Democrats, led by Rep. Doris Matsui (D-Calif.), are following in the footsteps of 30 Senate Democrats today to press major automakers to sign onto the agreement struck between California and four other carmakers ahead of the Trump administration's auto emissions rollback, Pro's Anthony Adragna reports.

The deal reached last month between the Golden State and Ford, Volkswagen, Honda and BMW North America would see vehicles average 50 miles per gallon by 2026 — a standard less aggressive than the Obama-era rules would have required, but far above the Trump administration's plan.

"While not on par with the Obama Administration standards, this agreement brings our transportation sector closer to the goals of the current standards while providing greater certainty for industry," the House lawmakers wrote. "We encourage all automakers to come to the table and work towards pragmatic solutions that will better protect the planet while preventing years of litigation and economic uncertainty."

Signers include Energy and Commerce's Environment and Climate Change subcommittee Chairman Paul Tonko (D-N.Y.) and senior members of the House Sustainable Energy & Environment Coalition. The letter went to the leaders of Aston Martin, Fiat Chrysler, General Motors, Hyundai, Jaguar, Kia, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Porsche, Subaru, Toyota and Volvo. READ MORE

Excerpt from Poltico's Morning Energy: STATES LINE UP BEHIND CALIFORNIA: Democrat-controlled states awaiting the Trump administration's planned rollback of the Obama-era federal emissions and fuel economy standards are looking to California. States like Colorado and New Mexico are enacting their own rules modeled after the Golden State, Pro's Alex Guillén reports this morning, as they anticipate a legal challenge between California and the Trump administration over the auto standards.

Auto regulations are the purview of the federal government. By adopting California's standards, states can oppose the Trump administration's deregulatory agenda — but that's only if California ultimately wins the court battle over its right to set its own regulation, Alex reports.

EPA is also expected to finalize its legal determination to revoke a waiver to the Clean Air Act that has given California the right in the past to set its own vehicle regulations, and subsequently its own emissions rules. Should California prevail in defending its waiver in the eventual court battle, it could result in two sets of emissions regulations: one for California and the states that have lined up with it, and another for the rest of the country, Alex writes.

Colorado is the closest to lining up with California. Last year it adopted the state's carbon dioxide standards, and is expected to adopt a similar zero-emissions vehicle program (more on that below). New Mexico is also moving to California's side. And although Colorado and New Mexico together only make up about 2 percent of new auto sales, according to data from the Alliance of Automobile Manufacturers and IHS Markit, they are among the biggest onshore oil-producing states.

"Oil has been a big part of their economies for a long time," said Andrew Linhardt, advocacy director for the Sierra Club's Clean Transportation for All campaign. "But I think what everyone is realizing, except for it seems the Republican party, is that climate change is happening, the impacts are being felt now and we need to take real, immediate aggressive steps to mitigate CO2 pollution."

A tidbit that didn't make the story: Although the Clean Air Act allows almost any state to follow California's rules, it turns out Hawaii isn't one of them. The law requires states have nonattainment or maintenance areas under the National Ambient Air Quality Standards in order to follow California's emissions rules, a threshold met by almost every state. But in Hawaii, trade winds quickly carry pollution out over the Pacific Ocean, meaning EPA has never had to declare it in nonattainment. In addition, Hawaii does not plan to adopt a ZEV program because of infrastructure concerns, said Carilyn Shon, Hawaii's chief energy officer.

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ROCKY MOUNTAIN CHARGE: The Colorado Air Quality Control Commission is slated to vote today on the agreement the state reached with automakers on a zero-emissions vehicles program. The deal, announced last month, would require automakers to meet sales quotas for electric vehicles, hybrids and fuel cell vehicles.

Automakers tend to oppose such requirements, as it places the onus on them to sell EVs, but they agreed this time because Colorado is already a leading EV sales state and has instituted EV-friendly policies. State officials say the deal will curb 3 million tons of carbon dioxide by 2030 and help the state cut down on its ozone pollution. READ MORE