Agreement on Auto Emission Regulations Appears Likely

There is mounting evidence that we are about to witness a formal agreement on auto emissions similar to the one that occurred at the beginning of Obama’s presidency. On May 19th, 2009, scores of government officials, environmentalists, and dignitaries from the automotive community gathered at the White House to hear President Obama proudly announce their historic bargain. In 2007, the U.S. Supreme Court had affirmed the authority of the Environmental Protection Agency to regulate greenhouse gases, and now there were signed commitments from all the automakers that would empower the EPA to assert that authority for the very first time. The deal was the result of tireless backroom negotiations, outlining ambitious new emission standards enforced by a flexible regulatory scheme. It was hailed as a major victory in the battle against climate change, and would eventually lead to the corporate average fuel economy standards that have been in place since 2012.

Biden’s EPA will likely be able to negotiate a similar pact. There is currently a lot of unwelcome legal uncertainty regarding Trump’s rollback of the CAFE standards and whether or not California’s coalition of progressive states will retain the right to enforce their own emission regulations. Automakers are divided over whether to continue supporting Trump’s obstructive efforts. Momentum is building for new regulations that would end the legal standoff. On February 8th, the U.S. Court of Appeals for the D.C. Circuit granted a motion by the Biden administration to pause the litigation while his agencies review their options.

Electric vehicles are at the heart of the impasse. The California Air Resources Board has issued stringent mandates requiring automakers to market a steadily increasing percentage of zero emission vehicles. The EPA’S regulatory framework includes incentives to sell ZEVS, but it is far more flexible. Automakers have lobbied for a single national program, and have resisted being forced to market ZEVS to reluctant consumers.

But EVS are beginning to compete admirably against internal combustion vehicles, and their batteries just keep getting better. Resistance to ZEV mandates appears to be fading, and it is becoming difficult to argue that they are not feasible. There have recently been numerous announcements from automakers declaring their aspirations to rapidly modernize their fleets, and scores of new EV models are scheduled to hit U.S. showrooms over the next five years.

President Biden has a strong incentive to negotiate a sweeping deal. With a razor thin Democratic majority in the Senate, much of his popular climate agenda will have to rely on the EPA’S broad authority under the Clean Air Act. Rejoining the international Paris Climate Agreement increases pressure on the United States to deliver significant emission reductions. Biden has promised to support EV charging infrastructure, the procurement of EVS by government agencies, and the federal EV tax incentive. But the legal stalemate in the regulatory arena could drag on for years, slowing EV adoption considerably. Both sides have an interest in ending the impasse.

A negotiated settlement would give Biden an important climate victory, even if it included reasonable concessions to automakers. If his EPA can pull it off, the grand bargain will be more impressive than the one announced by Obama in the spring of 2009. Earth Day is April 22nd.