Mary Nichols, chair of the California Air Resources Board, announced an agreement last week between the state of California and four automakers to make their vehicles significantly more efficient than would be required under the Trump administration’s rollback. Photo: Emmett Institute/Flickr

Four Automakers Stand Firm With California Against a Trump Administration Rollback

, senior vehicles analyst | August 1, 2019, 9:17 am EDT
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Last week, California’s governor and lead regulator announced an agreement with four automakers (BMW, Ford, Honda, and Volkswagen) on vehicle emissions standards that exceed anything the Trump administration has proposed, though it remains lower than what is on the books today.

With the current administration shirking its responsibility to reduce emissions from the passenger vehicle fleet, California has once again stepped up to its longstanding leadership role by negotiating a compromise directly with four automakers. The agreement allows manufacturers to sell a national fleet which meets a reduced standard to count as compliance with the state’s own, stronger standards, providing certainty and meaningful global warming emissions reductions.

This is an important step forward—first and foremost, the automakers are acknowledging California’s leadership on reducing emissions and the continued role the state must play in moving the nation forward. The automakers are also acknowledging what we’ve been saying all along, which is that they can go well beyond the rollbacks proposed by both the administration and their own trade groups. Honda and Volkswagen have made similar statements previously, but BMW and Ford committing to this proposal shows the breadth of the consensus in the industry that the technology is there to reduce emissions—what is needed now is a full commitment across the board to go beyond letters and actually manufacture the efficient vehicles needed to reduce emissions and save consumers money.

There are many details which I’ll work through below, but the obvious question is simply, “What about all the other automakers, like General Motors and Toyota?” Are any more going to step forward to the challenge, or are they just going to remain as they have throughout the past six decades, pushing for weaker regulations that cost consumers and the environment?

What automakers stand to gain

Right now, we have a nationwide program on vehicle emissions—the Obama administration looked at the evidence on the current standards and saw that its standards remained feasible and appropriate. California agreed, and the standards we currently have on the books would nearly halve global warming emissions from vehicles through 2025, saving consumers money at the pump and reducing emissions from transportation, the US’s largest contributor to global warming emissions today.

The Trump administration came in and threw a giant wrench in the gears, eliminating the consensus-based nationwide program by proposing to roll back the federal standard at the industry’s request. The administration is also trying to illegally eliminate the authority of California and the 13 states who’ve adopted California’s Advanced Clean Car Standards, leaving manufacturers with the challenge of complying with two sets of books, one for the 35 percent of sales reported in the states maintaining California’s program, and the other for the rest of the country dealing with the Trump rollback. It also falls out of line with more stringent requirements from China and Europe for these global companies. Combined with the inevitable lawsuits resulting from the Trump administration’s gift to the oil industry, this creates massive uncertainty for automakers (albeit of their own making).

In the agreement with BMW, Ford, Honda, and Volkswagen, California has agreed to accept as compliance with its own standard automakers selling a fleet nationwide which averages 3.7 percent per year improvement from 2021 onwards, up to 1 percent of which can be made up of bonus credits given to electric vehicles. This is weaker than what California would have otherwise required of those manufacturers within its state’s borders, but recreates a nationwide standard for those automakers, providing greater certainty and ease of compliance.

What we stand to gain

Many in the industry are investing in technologies to reduce fuel use, whether that is more advanced and efficient transmissions, next-gen engine designs involving more efficient combustion or ever more clever engine “right-sizing” strategies, or cutting gasoline use altogether by switching to battery-electric vehicles.

Some of these new technologies have been deployed in new cars that consumers have been buying over the last 8 years, thanks to the existing standards.  However, the Trump administration’s proposed rollback threatens to stall out these and further advancements in the industry. Automakers don’t put energy-saving technology in cars without a push—with the Trump administration shirking its responsibilities, that push is having to come from California and the states adopting California’s standards

Ensuring that these manufacturers sell more efficient vehicles nationwide means that not only will Californians, or New Yorkers, or other folks who live in states with strong standards get the most efficient vehicle choices—these agreements help bring parity of choice to consumers across the country, which means the amount we all spend on gas stands to decrease, no matter where we live.

For the environment, what this means is that while a cloud of uncertainty hangs over anything the administration puts forward, as it lies in legal limbo, we are continuing to push efficiency forward. If a future administration acknowledges the problem of climate change, we will be closer to the needed trajectory to solve it under this proposal than under the years of delay which would result from the President’s proposal.

Better than standing still

At the same time, it is important to acknowledge that this agreement is not going to put us on the path we need to be to meet the Paris agreement targets, nor is it keeping us on the path we are on right now. There will be increases in emissions, even under the agreement signed by California and the four automakers.

Notably, this agreement only covers four automakers, representing just 30 percent of annual sales in the US. In order for this agreement to really make a dent in emissions, the entire industry needs to be bought into it. This is what makes the Trump administration’s rollback so frustratingly stupid—they have the biggest lever to exercise in the fight against climate change, and they’re using it instead to benefit oil companies.

Our analysis shows that if all manufacturers were to join this agreement, we would retain about 75 percent of the benefits of the current standards.

If the entire industry signed up for California’s plan, our analysis indicates that about 75 percent of the emissions reductions from vehicles sold through 2025 would be retained. This agreement represents a significantly better proposal than the 100 percent of emissions lost under the Trump administration’s proposal, but the foregone emissions reductions will have lasting consequences.

The average lifetime of cars exceeds 15 years and is getting longer—even if all automakers bought into the agreement with California, the vehicles sold under this weaker proposal would cost consumers around $100 billion more in fuel over their lifetimes. The nearly 300 million metric tons in additional global warming emissions will also cost us and future generations precious time in the fight against climate change.

Who will be the next to stand up?

BMW, Ford, Honda, and Volkswagen did the right thing in stepping away from their trade associations to work directly with California, but this agreement alone is simply not enough to address the severity of the challenge. President Trump may be ignoring the problem entirely, but it’s time to show the American people that the auto industry is serious about addressing climate change.

Toyota talks a big game about its environmental bona fides, but its fleet has actually increased its average fuel use and emissions over the past few years thanks to a lack of investment in the very segments it’s working to grow, trucks. Committing to, and taking, strong action is a way to show it’s serious about reversing that trend.

General Motors has lobbied for a meager 1 percent per year improvement from its gasoline-powered fleet, despite them making up more than 90 percent of its projected sales over the next decade. While it may claim to be “driving toward a future of zero emissions,” GM’s proposal was slated to get there at horse-and-buggy speed. If GM wants to finally merge into the fast lane toward its zero emissions future, joining this agreement with California would be a way of assuring its commitment to “meaningful year-over-year reductions.”

Getting those two manufacturers on board would double the number of vehicles covered by this agreement with California and go a long way towards bringing the rest of the industry on board. But whether GM and Toyota are leaders in the next phase of this agreement or the last ones to sign on, we need to get more companies on board to really push forward and undo the damage that the industry has done by seeking Trump’s help in a rollback.

We know that the industry can be doing a lot more to reduce emissions from the vehicles it sells—while this agreement is still not commensurate with where we could and should be going, it’s at least a welcome step in the right direction.

Photo: Emmett Institute/Flickr
Mary Nichols @ Twitter
brionv @ Flickr

Posted in: Vehicles Tags: , , , ,

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  • FresnoMikey

    HEY !!! There should be a THANK YOU ACTION here !!! We need to activate more GRATITUDE. Please do this at least once a week. People work hard to save the planet. We need to stick together against the filthy corporations like the Koch nightmares. See new book, KOCHLAND. THANK YOU !!!

  • Tom Becker

    Volkswagen was convicted of installing emissions defeat software in their diesel cars. Now CARB has hopped in bed with convicted felons. Follow the money.

    • The auto industry has had numerous regulatory issues throughout its history, as we’ve documented in this report: http://ucsusa.org/automaker-uturn. However, being the regulated party they must continue to both be engaged and held accountable by regulators.

      As a result of the dieselgate scandal, VW has made significant investments in electrification, which gives the company added incentive to push for stronger regulation. This is, in part, why they pulled themselves off the automaker legal brief supporting the administration’s finding that the regulations need to be changed and why they have previously stated that they can meet the 2025 standards.

      In an effort to provide regulatory certainty to more strongly ensure continued investment in efficiency technology, California is working with companies including not just VW but BMW, Ford, and Honda to establish a compliance pathway that continues to protect Californians but limits regulatory burdens. And I’m sure they will continue to work with whatever companies are willing in order to meet that objective.

      • Tom Becker

        Volkwagen EV sales for 2019 through the end of June were 1,893 units. Their total sales were 184,608. That’s a little more than 1%. In 1990, CARB promised that dedicated electric vehicle sales would account for at least 10% of total sales by 2003.

        EV sales are not “ramping up”. Dedicated electric vehicle sales will not account for more than 5% of total registrations in the next 20 years. The Union of Concerned Scientists should stop their EV con job, and should 100% support ICE vehicles that are capable of being powered by 100% renewable alcohol and biodiesel fuels.

  • al

    Would this not be the story of CAFE over the decades not including trucks in it, the average?

    Cars only in Cafe, that’s why the pickup and SUV’s have a large new vehicle purchasing gain, now a majority of sales. Or is it not?

  • Allen Greenberg

    Fascinating – thank you!

  • Allen Greenberg

    Great post as always, Dave. I have an implementation question. I think that California has the authority to create only one standard (which other states can choose to follow instead of the national standard). Under the Obama Administration, the Feds and California agreed to the same standard, but that certainly hasn’t always been the case and need not be the case in the future. If some companies “sign the deal” with California and others don’t, it doesn’t seem to me that California would have the authority to establish one standard for the “deal signers” and another for other companies (that would be setting two standards). Assuming that California retains its waiver and the Trump Administration succeeds at axing the current national standard, what would stop a non-signing company from taking advantage of both the reduced California standard and the “axed” Federal standard. Thank you.

    • While the devil is in details not yet fleshed out, including questions around enforcement, etc., the agreement states that California is accepting as compliance with its state standard an alternate pathway based upon a national average standard that is lower. Ultimately, the CA standard itself, and therefore the waiver, remains unchanged.

      [Per the agreement: “Participating companies are choosing to pursue a voluntary agreement in which California accepts these terms as compliance with its program, given its authority, rather than challenge California’s GHG and ZEV programs.”]

      A company that does not sign the agreement would be responsible for meeting two standards, one a federal average at whatever low bar is set by the current administration and the other the current standards in effect in California averaged over only its California sales.

      This agreement is meant simply to make compliance simpler, allowing a manufacturer to keep just one set of books. Essentially, this could be seen as a version of the “deem to comply” provision in effect through the 2020 model year. Even under the previous administration, California maintained its own state-level emissions standard–however, given the similarity of the federal program to its state program, it accepted compliance with a national fleet average standard as compliance with its own standard.