To Undo the Damage of Trump Rollbacks, Biden Needs to Set Car Standards Stronger than Obama’s

July 26, 2021

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(American Council for an Energy Efficient Economy (ACEEE)) The Biden administration can soon undo the damage of President Trump’s clean car rollback, but only by setting more stringent standards to make up for lost progress. In the face of recent climate change-related extreme heat and flooding events, the administration can’t afford to lose this opportunity when it proposes new standards, due this month.

We modeled the impact of several options. We found that, at a minimum, Biden would need to ramp up to a fleetwide standard of 55 miles per gallon-equivalent (mpg) or 161 grams per mile (gpm) of carbon dioxide (CO2) emissions by the 2026 model year to undo the damage of the less-efficient models being sold now because of the Trump rollback.

Anything less ambitious would bring several more years of needlessly inefficient vehicles, locking in 15 years or more of extra greenhouse gas (GHG) emissions. If the administration set standards that simply reached the same fleetwide average as the Obama standards by 2026, it would recover only two-thirds of the emissions reductions possible under the Obama program. Achieving the President’s climate goal of a 50-52% reduction in overall emissions by 2030 almost certainly requires stronger action.

Obama vs. Trump Standards

The Obama administration’s standards, set in 2012, required approximately 4.7% annual growth in efficiency for model years (MY) 2021 to 2025, reaching 47 mpg-equivalent or 190 gpm (this is below the originally announced figure of 54.5 mpg largely due to a larger than expected share of vehicles sold being light trucks rather than cars). However, the Trump administration undid these standards with the Safe Affordable Fuel Efficient (SAFE) rule, which requires only 1.5% annual growth. ACEEE’s analysis found that the SAFE rule would mean losing almost 80% of the lifetime emissions reductions for MYs 2021-2026 compared to the Obama standards. Some of this damage is already done: The MY 2021 and 2022 cars are here. At stake now are the standards for the 2023-2026 model years.

Possibilities for a New Standard

The standards for MY2023-2026 could take a variety of forms. Below we highlight the impacts of possibilities discussed by observers.

California MOU Standard

To ensure momentum in vehicle efficiency, in 2019 California announced it had reached a Memorandum of Understanding (MOU) with four automakers (now five) to require an annual growth rate of 3.7% for these automakers. While this is an improvement over the Trump standard, it still provides fewer emissions benefits than the original Obama standards.

One possibility mentioned in the press is using the California MOU as the basis for new federal standards. This would mean a 3.7% annual growth rate for all automakers for MY 2023-2026, not just the five current signatories to the deal. We found that this standard would recover only about 31% of the possible emissions reductions under the Obama standards for MY 2021-2026, reaching 43 mpg-equivalent or 205 gpm by the 2026. This is a result of both smaller annual improvements in efficiency and added flexibilities given to automakers in the MOU. The biggest flexibility is that automakers can meet one percentage point of the 3.7% annual growth by giving extra weight to electric vehicles (EVs) sold. This is known as the “EV multiplier” and is explained further below. Our analysis assumes that in all scenarios, EVs reach about 10% of new light-duty vehicles sales by 2026.

Obama Fleetwide Average

If the new standards were to reach the same fleetwide average efficiency in 2026 as the original Obama standards, they would recover only two-thirds of the emissions savings of the Obama standards. This means that lifetime emissions for MY 2021-2026 would be about 6% higher than if the Obama standards were never rolled back.

This scenario assumes that the standards account for the emissions from the electricity powering EVs, called “upstream accounting” (explained below) and that there are no multipliers for EVs. Without upstream accounting and with EV multipliers, the annual rate would have to be higher to avoid more erosion in emissions reductions. Because we need to make up for lost time because of the Trump rollback, simply achieving the improvement rate of the Obama standards would be insufficient.

Full Emissions Reduction Standard

To recover the full emissions reductions that the Obama standards would have delivered, the new standards would need to reach a compliance level of at least 55 mpg-equivalent or 161 gpm by MY 2026. This would make up for near stagnation in the standards for model years 2021 and 2022 by surpassing the Obama standard for MY 2026, which is 47 mpg-equivalent or 190 gpm. This ambitious rate of growth can be achieved using current technology and increased electrification, with both greater use of hybrid technology and full battery-electric vehicles. Since the Obama standards were first introduced, technology has advanced rapidly with more affordable and high-performing hybrids and EVs. We should not limit our ambition to the assumptions of 10 years ago when designing new standards.

This scenario also assumes upstream EV accounting is included and that and no EV multiplier flexibilities are provided to maximize emissions reductions from the new MY 2023-2026 standard. Appropriately accounting for EVs can have a significant impact on real-world emissions and is increasingly important as EVs proliferate. If either or both of these assumptions do not hold, the annual growth rate from the new Biden standards will need to be 1-2 percentage points higher.

Impact of Compliance Flexibilities

If the Biden administration were to build in flexibilities like those in the California MOU, the ambition of the standard would be significantly reduced. EV multipliers allow automakers to give extra weight to EVs (often 1.5 or 2x weight) when calculating their fleetwide average, which means that they can use EVs to offset the sales of larger, higher-emitting vehicles. Automakers need to meet an annual sales-weighted average efficiency level and the EV multipliers give disproportionate weight to EVs, which are generally more efficient. This means that each electric model sold actually increases overall fleetwide emissions despite EVs themselves emitting less. Also, while the multipliers may have been introduced to spur EV sales, there is evidence to suggest they are not having that effect and may actually hinder EV sales. The Obama standards included a phase-out of these multipliers by MY 2021.

Another major flexibility involves not counting upstream emissions for EVs. This means that EVs are treated as entirely zero-emission vehicles, which ignores the carbon dioxide emissions from generating the electricity they run on. This treatment, like the EV multiplier, gives too much credit to EVs and increases overall emissions by allowing automakers to sell less efficient internal-combustion engine vehicles. The lack of upstream accounting can actually make the negative effect of EV multipliers worse. Because EV multipliers give greater weight to EVs in compliance, if EVs are also treated as having zero emissions, their sales make it even easier for automakers to comply while selling inefficient vehicles. Both of these flexibilities should be avoided in the upcoming standards.

The Biden administration has an important opportunity with these standards to set the United States on a course for greater fuel efficiency, increased vehicle electrification, and larger GHG emission reductions from vehicles. If we are to meet our national greenhouse gas emissions targets, it is vital that, at a minimum, the new standards fully recover the benefits of the Obama program. READ MORE

Rolling Back the Rollbacks: Putting Cars and Trucks Back on Track to Meeting Climate Goals (Union of Concerned Scientists)

CALIFORNIA DREAMIN’: (Politico's Morning Energy)

Agencies expected to miss Biden’s deadline for tailpipe rule (E&E News Climatewire)

Unified Auto Industry Pledges to Work with Biden Administration on Establishing National Program to Reduce Greenhouse Gas Emissions (Alliance for Automotive Innovation)

Biden Admin To Strengthen Vehicle Mileage Standards (Our Daily Planet)

EXCLUSIVE: Biden mileage rule to exceed Obama climate goal (ABC News/Associated Press)

A Brief History of US Fuel Efficiency Standards (Union of Concerned Scientists)

BIDEN WILL RAMP UP TAILPIPE STANDARDS: (Politico's Morning Energy)

Biden Admin's Greenhouse Emission Plan to Push Some Drivers to Electric Vehicles by 2030 (Newsweek)

Biden plan would tighten mileage for new cars over the next four years (Washington Post)

Biden car rules may backfire on EVs — report (E&E News)

Biden wants U.S automakers to pledge 40% electric vehicles by 2030 -sources (Reuters/AutoBlog)

Fuel-Efficiency Standards Are Set to Get Tougher. The Question Is by How Much. -- Auto industry pushes for middle ground as environmentalists seek aggressive mileage targets (Wall Street Journal)

The Interaction of the Clean Air Act, California’s CAA Waiver, Corporate Average Fuel Economy Standards, Renewable Fuel Standards and California’s Low Carbon Fuel Standard (Advanced Biofuels USA)

Excerpt from Politico's Morning Energy: CALIFORNIA DREAMIN’: Over 100 lawmakers are pushing EPA Administrator Michael Regan today to formally give his blessing for California’s stricter tailpipe emissions standards. The lawmakers, spearheaded by chairs of infrastructure-related committees including Carper and Rep. Frank Pallone, wrote to Regan that the Trump administration acted unlawfully when it repealed the Clean Air Act waiver that let California adopt the standards, which have since been adopted by 13 states and D.C. “EPA has never previously withdrawn a waiver, and we believe the agency lacks the authority to do so,” they write.

The signatories also cite California’s “long-standing and continuing air quality problems” and the program’s incentives for zero-emissions vehicles as reasons to grant the waiver. Read their letter here. READ MORE

Excerpt from E&E News Climatewire:

Hours after being sworn in as president, Joe Biden gave EPA and the Transportation Department a July 2021 deadline to undo a Trump administration rule that gutted the clean car standards Biden helped craft as vice president.

The agencies are not expected to meet this week’s deadline, and questions are swirling about the scope of a cars rule that could play a central role in cutting emissions from the nation’s biggest source of CO2.

...

Fuel economy standards are jointly set by EPA and the National Highway Traffic Safety Administration, a division of the Department of Transportation. EPA sent its proposed rule to the White House for review last month, but NHTSA didn’t submit its draft until last week, making a July release unlikely, multiple sources said.

...

EPA must issue a final rule by the end of the year in order to apply the standards to model year 2023 vehicles.

...

For example, the California deal does not require automakers to account for upstream emissions from power plants that charge electric vehicles. READ MORE

Excerpt from Politico's Morning Energy: BIDEN WILL RAMP UP TAILPIPE STANDARDS: The Biden administration will propose rules increasing federal tailpipe greenhouse gas standards by ramping up annual targets through model year 2026, the Associated Press reports, citing auto industry and government officials. The rules could be proposed as soon as next week.

Specifically, the AP says the joint EPA-NHTSA rules (Reg. 2060-AV13, Reg. 2127-AM34) will apply the standard adopted in California's 2019 deal, around 3.7 percent, starting with 2023 vehicles. That will ramp up through 2025 to roughly Obama-era 5 percent improvements, and in 2026 go even higher, potentially up to 7 percent. EPA also seems poised to revive extra credit granted for electric vehicle sales, the AP says, which automakers say will boost EV adoption but that environmentalists argue waters down the program and obscures emissions from gas guzzler sales.

The Biden rule has the makings of a classic Washington compromise: Everyone is dissatisfied. Automakers have been pushing Biden to pick something in between the California program and the original Obama standards, so industry likely will call this too stringent (especially considering that it sets up EPA to mandate more aggressive percentages later this decade). Meanwhile, environmentalists are already blasting the proposal, with Dan Becker of the Center for Biological Diversity calling it "a loophole-riddled Swiss cheese auto pollution standard masquerading as a seven-course champagne dinner." The rules are still under review at the White House.

Dept. of Good Timing: CBD has a full-page ad in today’s New York Times (which the president reads in print) depicting a pickup truck teetering on the edge of a cliff and urging Biden to adopt stronger rules with the goal of phasing out gasoline-powered light vehicles by 2030. READ MORE

Excerpt from E&E News:

(Yale University economist Kenneth) Gillingham’s paper argues that rather than giving extra credit for EVs, there should be a ramp-up of the overall stringency of emissions and fuel efficiency requirements.

It also floats the idea of enacting a second set of vehicle standards applying exclusively to gas cars. Known as a "backstop standard,” such a plan would go into effect only if EVs were to suddenly become inexpensive — due to a breakthrough in battery production, for instance — and more widespread. The aim would be to ensure the automakers didn’t peel back gains in gas cars’ efficiency and emissions simply because they were selling lots of EVs.

"The worry is that the automakers would step back from today’s level of [gas car] technology," said Gillingham. READ MORE