Industry Representatives and Administrator Pruitt looking quite pleased at the press conference where they rolled out their rollback of the fuel efficiency standards. Left to right - Peter Welch, NADA, Administrator Pruitt, Mitch Bainwal, Alliance, John Bozzella, Global. Screenshot from C-SPAN

5 Things the EPA Gets Wrong as it Re-Evaluates the Fuel Efficiency Standards (and One Thing it Ignores)

, Sr. Manager of Government Affairs | April 4, 2018, 10:32 am EDT
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On Monday April 2nd, the EPA released a “redetermination” of the incredibly popular and successful car and light truck global warming emissions standards – spoiler alert – EPA said that the standards are not appropriate and need to be weakened.  As a reminder, the Obama administration previously completed the mid-term evaluation of the standards and issued a Final Determination that the standards are appropriate out through 2025.  Within a month of taking office, Administrator Pruitt promised that he would redo the Final Determination and voilà – here it is.

Reading the EPA’s redetermination is mind-boggling – it is basically a regurgitation of industry talking points put forward by the Alliance of Automobile Manufacturers (Alliance) and Global Automakers (Global) in the public record.

Some comments that were in opposition to the auto industry talking points were alluded to in the document, but there is no substantive evaluation of any of them. Nothing approaching a robust technical debate of any information is presented in this report — it is simply declarative, substituting the political will of the Administrator to side with industry for the hard, scientific rigor found in the 2017 Final Determination.

Although the redetermination is full of questionable assumptions and strange conclusions, we picked five falsehoods that are core to their reasoning and explain why they’re wrong.

Falsehood 1

What they say: Vehicle costs were underestimated in the EPA’s original record that was foundational to the first Final Determination.

Why they’re wrong: When it comes to technology costs, EPA ignores the large number of peer-reviewed publications from its own technical staff showing how manufacturers can meet the 2025 standards, even without significant penetration of plug-in electric vehicles or strong hybrids.  It takes at face value automaker claims about the level of technologies needed to achieve the standards, without actually examining the studies cited by the automakers in making those erroneous claims, studies which in fact contradict the automakers’ assertions that significant penetration of advanced technology is necessary.  It also ignores the latest evidence on the vehicle costs needed to meet the rules.

Falsehood 2

What they say: Gas prices have changed since the rule was finalized in 2012.

Why they’re wrong: Gas price projections did change between 2012 and 2018.  However, when the agency updated their analysis for the mid-term evaluation and did the Final Determination in January 2017, they took that into account.  The projected gas prices used in the previous administrations’ Proposed and Final Determinations are nearly identical to current gas price projections.  Why the current EPA decided to focus on this and say it was a reason to re-evaluate the Final Determination is beyond me.

In one place, the redetermination exclaims that “lifetime fuel savings to consumers can change by almost 200 percent per vehicles based on the assumption on gas prices according to the 2016 Proposed Determination (Table IV.12).”  This is true.  A quick look at the table (below) clearly shows that fuel savings can go from good to great depending on the gas prices expected in 2025, ranging from $1,439 to $4,209 over the lifetime of the average vehicle, which is all good news for consumers.

Falsehood 3

What they say: “Consumers’ preferences are not necessarily aligned to meet emission standards and there is uncertainty on this issue that merits further consideration.”

Why they’re wrong: They go out of their way to say that consumers don’t want fuel efficient vehicles, which is not the data we’ve seen.

They cite an automaker point that only 5% of 2017 sales of normal gasoline-powered vehicles would meet 2025 standards. I don’t know why they would expect today’s vehicles to meet standards 8 years out.  The whole point of the standards is to make sure that vehicles get more efficient over time.

Auto manufacturers redesign vehicles every five years or so – it is in these product redesigns that they make major changes in the body style, and the efficiency of the engine and other components.  In eight years, all vehicles are going through at least one redesign, which is plenty of opportunity to make vehicles more efficient so they meet the standards.

It’s worth noting that models of popular vehicles like the Ford F-150 and Toyota Camry already meet targets well into the future—there is lots of opportunity to improve the efficiency of these vehicles and ample technology to do so, as reams and reams of research ignored by the agency can attest.

In addition, the way the standards work, not every vehicle needs to be exactly in compliance every year because they are based on an average.  There are flexibilities built into the program that allow manufacturers to bank and borrow credits over time because it is understood that vehicles will be more efficient right after a redesign and may be less efficient than the standards when it’s approaching its next redesign.

They also show misleading data on the uptake of electric vehicles by consumers.  Plug-in electric vehicle sales are increasing every year and as more models are introduced in varying sizes, more consumers will be able to consider them as an option for their lifestyle. Moreover, hybrid sales also grew from 2016 to 2017; conveniently, EPA excluded 2017 because it was a chart lifted from Alliance comments rather than analyzed with any sort of independent rationale.

Lastly, multiple polls have shown that consumers value fuel economy strongly. A NRDC poll from 2016 showed that 95% of Americans agree that “Automakers should continue to improve fuel economy for all vehicle types” and 79% of Americans believe that “The U.S. government should continue to increase fuel efficiency standards and enforce them”. Consumers Union has also published multiple polls that show that nearly 9 in 10 Americans think that automakers should continue to raise vehicle fuel economy.  And a poll released by the American Lung Association last week showed that after people hear balanced arguments from each side, their support for the standards increases slightly. It’s like I’m not alone in wanting to spend less money at the gas station.

Falsehood 4

What they say:  Consumers will be priced out of the market by these standards.

Why they’re wrong: Consumers are the greatest beneficiary of these savings.  As noted above, consumers stand to save thousands of dollars in fuel costs over the lifetime of their vehicles. In fact, consumers that finance their vehicles save money as soon as they drive their new cars off the lot, as the marginal cost of the fuel saving technology on their monthly payment is far exceeded by the money they save on fuel every month.

They also say that average new car sales transaction costs have increased as a result of the standards, a point which has been debunked repeatedly.  For example, Consumers Union showed that new car prices have remained relatively flat over the past 20 years with respect to inflation, and used car prices have fallen.  Similarly, auto analysts Alan Baum and Dan Luria showed that transaction prices are on the rise as a direct result of automakers upselling luxury packages to increasingly wealthy consumers.  All of this ignores consumers who are currently saving money due to paying less at the pump, which recent research shows disproportionately benefits low-income individuals, again a study acknowledged and ignored by Administrator Pruitt.

Falsehood 5

What they say: The growing preference for larger vehicles over cars make it harder to comply with the standards.

Why they’re wrong: The popularity of SUVs and light trucks doesn’t undermine the standards—it reinforces the need to maintain their strength.  Rather than setting a single greenhouse gas emission target for the average vehicle sold by a manufacturer, which is what the original vehicle standards did in the 1970’s, the new vehicle standards consider the size and type of the vehicles sold to determine each manufacturer’s target. This ensures that all vehicles improve their efficiency, including trucks and SUVs, while giving automakers flexibility in hitting their targets, based on the vehicles they sell. This system means that no particular vehicle model needs to be “in compliance”; some vehicles can achieve greater fuel economy and others less in a given year and the manufacturer’s fleet can still be in compliance with the standards.

What’s missing from the redetermination?

What they don’t say: Weakening the global warming emission standards endangers public health and welfare by contributing to global warming

Missing from the Revised Final Determination is any mention of climate change or its impacts, which endangers Americans now and into the future and is the reason that EPA sets these standards. Scientists warn that we must significantly reduce emissions of global warming pollutants to avoid the worst effects of climate change, including sea level rise, wildfires, and infectious diseases.  As it stands now, no other federal policy is delivering greater global warming emissions reductions than these vehicle standards. If the EPA completely rolls back the regulations, as some have signaled, that will mean an additional half billion tons of global warming emissions just from the vehicles sold between 2022-2025.  Doing so would make hitting our obligations under the Paris Climate Accord a virtual impossibility, significantly damaging our ability to hold global warming to 2 degrees Celsius.

We knew that this day was coming, but the extent to which this redetermination relies solely on industry arguments and ignores the robust analytics that underlie the original Final Determination is confounding.  It makes me think about the story that came out around Administrator Pruitt’s confirmation, when we learned that he took a letter written by a Devon energy lobbyist and put it on his OK Attorney General letterhead and submitted it to the Department of Interior.

This redetermination feels like that – like he just read the Alliance and Global comments and used their quotes to rewrite the determination.  It’s a slap in the face to everyone who cares about data, analytics, scientific integrity, and our climate.  We know he’s going to propose rolling back the standards in the proposed rule that we expect to see this summer.  The question is by how much.  We will keep a close eye on this and let you know what he proposes and ask for your help in keeping the standards strong.

 

Posted in: Global Warming, Vehicles Tags: , , ,

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  • solodoctor

    Thanks for a comprehensive summary. No surprise that Pruitt, et al don’t want to be bothered by the facts. They just want to serve the auto industry’s profits.

    As Pruitt is embroiled in an increasingly problematic ethical scandal maybe he will resign or be asked to leave by Trump. This plus court action by UCS and other organizations may buy enough time to prevent the implementation of these changes until the 2020 election takes place. Hopefully, voters will not keep Trump in office at that time.

    In the meantime, what can UCS members do to try to delay the implementation of these changes?