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.