Let’s Make a Deal on Fuel Economy

04.11.17 | Blog | By:

The Detroit News reports this week that at a panel of auto industry insiders at the New York Auto Show, both the Trump Administration and the auto industry have no intention of “rolling back” fuel economy standards with Mitch Bainwol, president of the Alliance of Automobile Manufacturers, noting, “The pressures to meet fuel economy goals are global. The question is whether the slope is consistent with consumer demand.”

The panel seemed to indicate the Administration is going to try and cut some kind of deal with the industry and California, which has the legal ability to set its own standards under an applicable waiver of the Clean Air Act. The Administration’s focus will be on crafting one set of rules that automakers can meet nationwide, which is something the auto industry wants. And I say good luck to that. What I read between the lines is that the Administration and the auto industry have one view, and California has quite another. So, California will need to come to the table.

The state has made crystal clear it is not about to walk away from the 2022-2025 fuel economy standards that have now been set there, and it sure isn’t walking away from its ZEV program, which was part of the waiver. In fact, the California Air Resources Board is now in the process of working to extend the ZEV program to 2030. The state has got years of legal precedent and case law on its side and a continuously compelling justification to back up its regulatory approach. It hired former Attorney General Eric Holder and is prepared for a fight.

I have a hard time seeing California at the bargaining table with any option that would remotely be appealing, not even a delay. Except for one thing: a firm commitment of some kind from the Administration and auto industry revolving around ZEVs that would require more of them on the roads nationally. And, maybe something that would keep the federal tax credit for electric vehicles in place though that is more of a congressional play. Something to watch in the coming months.

 

Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.

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