Sensing trouble, automakers prepare to bargain with EPA, CARB on emissions

April 12, 2017

For most new-car buyers, haggling is a necessary evil. Now, car companies themselves are learning just how unpleasant haggling can be, as they try to find common ground with the Environmental Protection Agency and the California Air Resources Board on the subject of auto emissions.

A recap 

One month ago, Donald Trump went to Detroit, where he announced a review of the EPA's decision to maintain the status quo on emissions regulations for cars from the 2022 to 2025 model years. 

However, the president didn't suggest that he wanted the EPA to revoke the waiver that CARB received 2009, which allows CARB to set its own emissions standards. That could create a very complicated, confusing situation for automakers:

1. One set of emissions guidelines for California, the 13 states that follow CARB rules (Arizona, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington), and the District of Columbia.

2. Another, presumably less stringent set of emissions guidelines for the rest of the U.S.

That has automakers worried. None of them want to create a lineup of vehicles for the one-third of Americans who live in places that follow CARB regulations and another lineup for the rest of the country. And so, they're preparing to bargain.

What will that bargain look like? No one knows for sure. But the Alliance of Automobile Manufacturers, a trade group that represents automakers, says that it doesn't want to roll back current EPA guidelines. AAM's chief executive, Mitch Bainwol, said that car companies simply want a "rational, predictable, stable policy".

Specifically, Bainwol is aiming to adjust the timeline for meeting the EPA's 2025 emissions goals. Those goals are tied to a fleet-wide fuel economy benchmark of 54.5 mpg as set by the National Highway Traffic Safety Administration.

Bainwol essentially admitted as much by stating that "We will get to the Obama numbers. We will get beyond the Obama numbers. The question is when and how."

Automakers have been worried about meeting those numbers for some time, as low fuel prices have diminished demand for fuel-sipping small cars and hybrids. Companies say that they can build fuel-efficient vehicles, but if current sales trends continue, there's little chance that shoppers will buy them.

Meanwhile, studies have shown that a significant number of Americans want automakers to achieve increasingly better fuel economy. And at least one study has demonstrated that meeting current EPA goals could be 40 percent cheaper than originally projected. 

Our take

Bainwol appears to be a little disingenuous when he says things like "The talk the of rollback is fallacious. What we are talking here is the nature of the slope." If he's asking CARB and the EPA to push back the timeline for achieving current 2025 emissions and fuel economy goals, then he is, in essence, asking for a rollback.

While the current head of the EPA, Scott Pruitt, might buy Bainwol's line of reasoning, we're not so sure CARB will feel the same. He might be better served by sticking with the hard facts of economics, which seem more persuasive. 

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