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The U.S. Environmental Protection Agency (EPA) today – as expected from controlled media leaks – announced new proposed federal vehicle emissions standards that historically are the strongest for cars and trucks.
EPA said the new regulations would deliver on President Biden’s promise to tackle the climate crisis and deliver health and economic benefits for all. The combined proposals, EPA said, would avoid ~10 billion tons of CO2 emissions, equivalent to more than twice the total US CO2 emissions in 2022, saving thousands of dollars over the lives of the vehicles meeting the new standards and reduce America’s reliance on approximately 20 billion barrels of oil imports. Yes, but…*
“These ambitious standards are readily achievable thanks to President Biden’s Investing in America agenda, which is already driving historic progress to build more American-made electric cars and secure America’s global competitiveness,” said EPA Administrator Michael S. Regan.
Thus far automakers are not commenting in public with specific details. AutoInformed suggests that this is likely due to the complexity of the problem and backroom lobbying by special interests groups and affected companies or international automotive groups with complex regulatory environments, so to speak, in various areas. The European Union, Britain and Canada have at present enacted similar vehicle emissions standards designed to phase out the sale of new gasoline-powered vehicles by ~2035 while transitioning to electric vehicles.
*However, in the US, most automakers have missed, repeat missed, their GHG targets every year since 2015, even with the increased offerings of electrified-vehicles. This comes from EPA’s own data in its last Automotive Trend Report for 2021. Moreover, the shortfalls were from standards that were not as rigorous as the EPA proposal. Therefore there is an open question at AutoInformed if, big IF, automakers can meet these new targets. Moreover, the number of vehicles that quality for the full $7500 tax credit gets cut in half after April 17! (autoinformed.com on:EPA Automotive Trends – 2021 Fuel Economy at Record High. Emissions at Record Low.)
Editor’s note: Mike Spagnola is President and CEO of the Specialty Automotive Equipment Association (SEMA). His opinion follows:
“The U.S. Environmental Protection Agency (EPA) released a proposal last month for strict new federal multi-pollutant emissions standards for light- and medium-duty vehicles. The proposal would decisively tilt the U.S. car and truck market toward electric vehicles (EVs) over the next decade. The new standards would initiate for the ’27 model year and gradually increase through the ’32 model year.
“If the EPA drafts standards are implemented by 2032 as proposed, the agency anticipates that two-thirds of all new-car sales in the United States would be EVs. This large-scale shift would significantly disrupt automotive industry supply chains and potentially eliminate large numbers of jobs in vehicle manufacturing, parts production and repair shops. Ford alone estimates a 30% labor reduction in its transition to EVs
“Likewise, much of the automotive specialty-equipment market–the parts and modifications you make to your vehicle once it leaves the car lot–is built around the internal combustion engine. The $51 billion aftermarket industry supports more than one million jobs in U.S. automotive manufacturing. The automotive specialty-equipment market has also led the way in alternative fuel innovations such as hydrogen, replacing older engine technologies with newer, cleaner versions, and even conversions of older internal combustion engine-based cars to new electric, hydrogen and other alternative fuels. Yet none of that is considered part of the broader plan to reduce greenhouse gases and criteria pollutants from automobiles.
“Small businesses would be the most vulnerable to the disruptions caused by a seismic shift to battery-electric vehicles. According to the most recent Census Bureau tally of the almost 1,200 auto engine and transmission parts suppliers in the United States, more than 60% had 20 or fewer employees. These companies often make specialized components, operate on tight margins and rely on long-term contracts. They employ American workers with technical skills and create the often politically celebrated blue-collar jobs.
“Large automakers are losing billions a year in their EV programs, despite the massive financial infusion of taxpayer dollars they are receiving from the government and subsidies to purchase EVs. If they are struggling, how are small businesses expected to survive?
“Clean air and the reduction of greenhouse gases are goals everyone can acknowledge. That said, when governments arbitrarily pick technology winners and losers, the marketplace is deprived of choices and the public suffers. Instead of forcing this transition, the EPA should put in place incentives to support a diversified zero-emissions approach that takes advantage of breakthrough technologies across the spectrum.
“Hydrogen, for example, is already being used as a power source in buildings, cars, trucks, forklifts, ships and trains. Hydrogen-powered cars have greater range and faster refueling times compared to EVs and reduce the need for limited-supply materials used in EV battery packs. And clean hydrogen generation is already feasible: The National Renewable Energy Laboratory website identifies five different methods to produce hydrogen economically from sustainable resources.
“Other renewable fuels–including synthetic eFuels that allow legacy vehicles to operate in a carbon-neutral manner–should also be part of the equation. Where are the government-backed financial incentives for these alternate technologies?
“The market is rightly skeptical of new EV technology, and right now, it simply does not have the infrastructure ready to support EVs. Yet by using multi-pollutant emissions regulations to force-feed EVs to the market, the government is effectively putting all its eggs into one technology basket.
“The Biden administration should realize that the market’s hesitation to adopt EV technology in the first place proves that putting the government’s thumb on the scale is not an effective means of persuasion. But instead of adjusting course to let the market forge the transition, the administration is effectively doubling down on a flailing policy.
“Meanwhile, a dozen states have recently introduced or passed legislation or resolutions affirming support for the internal combustion engine and for the government to remain technology-neutral in the debate to reduce automotive emissions. In Virginia, for example, it was only the state’s slim Democratic Senate majority that stymied Governor Glenn Youngkin’s campaign platform issue to repeal Virginia’s internal combustion engine ban.
“The EPA’s emissions proposal is misguided and counterproductive. Instead of trying to force a clean energy transition, the Biden administration should support the work of innovators and protect the small-business owners and those they employ by letting the market and innovation drive solutions to the environmental challenges we all seek to solve.”
“We fully support the efforts to reduce greenhouse gas emissions, but actively advocate for the ability of consumers and the marketplace to choose what works best for them. There are many options on the road to zero emissions, and we feel it is crucial for government policy to remain technology neutral. The specialty automotive aftermarket business has been built around the internal combustion engine. It is also the same industry that has led the way in fuel innovations and conversions of old vehicles into new and cleaner technologies. Yet it is clear from the Biden administration’s actions and words that electrification is their technology of choice.
“This large-scale shift will significantly disrupt automotive industry supply chains and potentially eliminate large numbers of jobs in vehicle manufacturing, parts production and repair shops. We are here to support the work of small business innovators while protecting the small business owners and those they employ by letting the market and innovation drive solutions to the environmental challenges we all seek to solve.”
Mike Spagnola is SEMA President and CEO – AutoCrat.
The Environmental Protection Agency (EPA) is out with its proposed light-duty vehicle greenhouse gas (GHG) and multi-pollutant rules for model year 2027 through 2032. Immediate reaction: Two things can be true at the same time (and in this case they are).
Yes, America’s transition to an electric and low-carbon transportation future is well underway. EV and battery manufacturing is ramping up across the country because automakers have self-financed billions to expand vehicle electrification.
It’s also true that EPA’s proposed emissions plan is aggressive by any measure. By that I mean it sets automotive electrification goals in the next few years that are… very high. In fact, the proposal exceeds the administration’s own 50% electrification target (Biden Exec order 14037) announced in August 2021 – with auto industry support – by requiring more than one EV for every new gas vehicle sold by 2030 and potentially two EVs for every gas vehicle just two years later.
And it goes beyond the National Blueprint for Transportation Decarbonization – a government-wide plan rolled out recently by four cabinet agencies that doubled down on the 50% target from 2021.
To be clear, 50% was always a stretch goal and predicated on several conditions. Those included supportive policies like the manufacturing incentives in the Inflation Reduction Act (that have only just begun to be implemented) and tax credits to support EV purchases and affordability.
How will EPA justify exceeding the carefully considered and data-driven goal announced by the administration in the executive order and the more recent national blueprint? That’s a key question as the rulemaking unfolds and something to look for in the expansive proposal.
You might be thinking: “Of course the auto industry would resist going faster.”
A couple of points to consider when evaluating this rule and its ultimate feasibility:
Automakers are fully committed to an electric and low-carbon transportation future.
There are now 91 EV models on the market – across all segments and price points. Electric vehicles were 10% of new vehicles sales in December, and automakers have invested billions in U.S.-based EV and battery manufacturing. I could go on about sales and product excitement.
But EV sales momentum is only the beginning of the story. Remember this: a lot has to go right for this massive – and unprecedented – change in our automotive market and industrial base to succeed, especially as 284 million light-duty vehicles across the country (that average 12 years in age) remain on the roads. As of last year, EVs accounted for just over 1% of all light-duty vehicles.
EPA and the petroleum industry should act quickly to concurrently lower the carbon intensity of liquid fuels. This will produce higher and faster returns by reducing emissions from not only new gas vehicles (including plug-in hybrid EVs), but from the millions of light-duty gas vehicles currently on the road.
Monumental amounts of capital are being invested in zero carbon personal mobility.
One challenge: every dollar invested in internal combustion technology is a dollar not spent on zero carbon technology. And vice versa.
Why does that matter? Automakers and battery partners have already committed $110 billion in the U.S. to electrify products. Requiring self-financed investments from automakers for incremental gains from gas-powered engines comes at the expense of where our collective focus ought to be: electrification. That’s the future.
So, are EPA’s new standards feasible? Will they accelerate the EV transformation?
It depends. First, factors outside the vehicle, like charging infrastructure, supply chains, grid resiliency, the availability of low carbon fuels and critical minerals will determine whether EPA standards at these levels are achievable. Did EPA consider factors outside the vehicle when it crafted its proposal?
To some extent, the baseline policy framework for the transition has come into focus. But it remains to be seen whether the refueling infrastructure incentives and supply-side provisions of the Inflation Reduction Act, the bipartisan infrastructure law, and the CHIPS and Science Act are sufficient to support electrification at the levels envisioned by the proposed standards over the coming years.
One thing we know for sure today: IRS’s new rules for the 30D EV consumer tax credit – with stricter sourcing rules for critical mineral and battery components starting April 18 – means far fewer EV models will qualify for the $7500 purchase incentive.
Another challenge: There are 100,000 publicly available, non-proprietary charging outlets in the U.S. for three million EVs on the road. That’s a ratio of 29 EVs per charger… and not enough.
Whatever happened to a national plan?
Finally, as various government agencies – federal and state – release competing or overlapping requirements for both EV and gas-powered vehicles, we’ve got to remember to get the balance right.
About six years ago we had one national standard to reduce carbon in personal mobility, providing nationwide consumer and environmental benefits through a single, streamlined regulatory path for automakers.
EPA’s new proposal on the other hand was developed separately from the Department of Transportation’s coming Corporate Average Fuel Economy (CAFE) standards expected later this spring and not in concert with EPA.
We’re committed to constructive engagement between the regulators (EPA, DOT, DOE, California Air Resources Board) and the regulated. We also believe a successful EV transformation requires several sustained commitments: sound, realistic and consistent policy; smart regulation; and concurrent action from the non-automotive sectors of the economy – namely utilities, critical mineral mining and processing operators, infrastructure providers, and energy producers.
The question isn’t can this be done, it’s how fast can it be done, and how fast will depend almost exclusively on having the right policies and market conditions in place to achieve the shared goal of a net zero carbon automotive future.
More to say during the comment period in the weeks and months ahead…
– John Bozzella is president and CEO of Alliance for Automotive Innovation.
See also Alliance for Automotive Innovation MEMO on EPA emissions rules (April 6, 2023).