RULES UP FOR REVIEW
Do automakers want to gut emissions standards? The answer’s not clear.
Do automakers want to gut emission standards? Following President Trump’s announcement, the answer’s not clear.
SAN FRANCISCO — President Trump talked tough in Detroit on Wednesday, confirming that his administration will open up Obama-era auto emissions standards for review and change them if they threaten auto jobs.
Environmentalists went ballistic, pumping out news releases that said any rollback would harm the environment, cost consumers money and threaten jobs.
The administration has until April 2018 to complete its review. It’s impossible, though, to accurately predict how the current emissions regulations — which call for automakers to significantly boost the miles per gallon their cars get by 2025 — might change, except to say they won’t get stricter.
Are they in for a wholesale gutting? Just a few tweaks? Something in between?
Much will depend on what the automakers want and how deft they are at persuading the Trump administration to give it to them. Even a significant overhaul probably won’t have much effect on the cars that people see on dealer lots for years because of the leng thy development process involved with putting out a new vehicle.
Automakers strongly supported a review of the emissions standards, but they have been vague about what they want specifically. A number of executives attended Trump’s event Wednesday in a suburb of Detroit, including General Motors Chief Executive Mary Barra and Ford Chief Executive Mark Fields.
“By restarting this review, analysis rather than politics will produce a final decision consistent with the process we all agreed to,” said Mitch Bainwol, presi-
dent of the Auto Alliance, which represents the industry.
Bainwol said automakers want to improve mileage and reduce emissions, but want to do so in a data-driven way that balances “prior assumptions against new market realities” and takes into account auto jobs and vehicle affordability.
It’s possible that Trump and Scott Pruitt, the new chief of the Environmental Protection Agency, will push for more deregulation than the automakers themselves.
That’s because markets are changing rapidly, the industry continues to grow more global and many environmental standards around the world are as tough or tougher than even the Obama administration’s regulations. Government incentives for electric cars and other low-emission vehicles are also strong.
“They want to be global players in important markets, from China to California,” said Michelle Krebs, senior analyst at Autotrader. And while it’s not top of the list in an era of low gasoline prices, studies have shown fuel mileage is important to consumers when they compare models of cars and trucks.
California — which in the 1970s was granted a federal waiver that allows it to set and operate under its own emissions standards — will be a big part of the regulatory review process, and it comes armed with enormous clout. The state has led the country on emissions regulations for decades and 13 other states have followed its lead, covering 40% of the U.S. market for cars and light trucks.
Under Obama, federal emissions rules were brought in line with California’s, creating a consistent set of standards.
If California doesn’t like the Trump administration’s potential changes, it could ignore them and go its own way again.
A dual set of standards would put automakers “in a very difficult position,” forcing companies to configure different cars for different states, said Jack Gillis, director of public affairs for the Consumer Federation of America. That would add complications and increase costs.
“We don’t expect California to back down,” Gillis said.
The Trump administration understands the state’s importance. “We welcome California to the table,” a senior White House official told reporters Tuesday.
But, he added, “If California decides they want to go in a different direction, we’ll have to deal with it at that point.”
Daniel Sperling, a member of the California Air Resources Board, the state’s air quality enforcer with a hard-nosed reputation, said that “California is committed to being part of this process over the next year.”
“If we’re in agreement about the stringency of the standards, we’ll be unified,” he said. “If they insist on a weakening, California will certainly not join in and will maintain our own standards.”
Any attempt to stop the state from setting its own standards “would mean many years of lawsuits,” Sperling said. But he doesn’t think that will happen.
The Trump administration explicitly said it is not challenging the federal waiver that allows the state to set stricter rules. Zero Emission Vehicle standards remain in place, a mandate that in effect requires automakers to sell significantly more electric vehicles in California and nine other states. And the White House has not even hinted that the federal $7,500 tax credit for purchasers of electric cars is in jeopardy.
Sperling noted that no emissions rollbacks have yet been proposed. “My prediction is that there will be very few changes at the end of this process,” he said.
Others aren’t so sure, fearing that automakers would be happy to scrap strict regulations for shortterm gain.
“They profit from selling higher-cost, lower-mileage SUVs and pickups,” said David Richardson, executive director of Impax Asset Management, a green-business investment group. “They sell a lot more of those here than they do in China.”
Mark Cooper, director of research for the Consumer Federation of America, said “it’s their instinct to be short termers and make a quick buck and look at later when it’s later.”
That may have been true in the past. It may still be true. But from electric cars to ride-hailing to subscription ownership to driverless cars, the auto industry is going through its biggest transformation since Henry Ford introduced the assembly line. The outcome of the regulatory review will say a lot about where the U.S. wants its auto industry to go.