Automakers want to dial down EPA's 2025 goals, but energy advocates & consumers push back

June 30, 2016

In 2011, the Environmental Protection Agency unveiled bold, new fuel economy standards for the year 2025. With less than a decade to go before that deadline, automakers are now asking the EPA to lower the high bar it's set, but energy advocates and the general public have urged the agency to stay the course.

The EPA's benchmarks include a Corporate Average Fuel Economy (CAFE) of 54.5 mpg for automakers' U.S. fleets*. The new regs also require a 35 percent reduction in carbon-dioxide emissions compared to 2011 stats.

In October 2014, the EPA said that automakers were on-track to meet those goals, despite getting off to a slow start. Now, the EPA, the National Highway Traffic Safety Administration, and the California Air Resources Board are coming together for a formal, midterm evaluation of the plan. Depending on how those discussions go, officials could choose to soften some of their 2025 goals.

Automakers weigh in

That's certainly what automakers are hoping they'll do. The lobbying group known as the Alliance of Automobile Manufacturers represents major players in the auto industry, including Fiat Chrysler, Ford, General Motors, Toyota, and Volkswagen. It has presented the EPA, NHTSA, and CARB with a report outlining some of its major concerns about the 2025 regulations.

Among the Alliance's biggest fears is that the EPA's goals will require many more hybrid vehicles than initially projected. At first, the EPA suggested that the number of hybrids (or equally efficient all-gas models) would need to grow by five percent to meet 2025 goals. The Alliance report claims that the actual number could now be closer to 47 percent.

Why such a huge discrepancy? The EPA's projections were in part based on the assumption that new gas-powered vehicles would become exponentially more fuel efficient by 2025. However, the EPA didn't count on today's low gas prices, which have eased public concerns about fuel economy (though as we mention below, it's still a priority for many). Due to cheap gasoline, consumers have continued buying gas-powered cars, trucks, and crossovers rather than more expensive hybrids because they know it'll take longer to earn back the extra cost of a hybrid via fuel savings.

The Alliance report also criticizes the California Air Resources Board, which it accuses of setting impractical standards--standards that have now been adopted by nine other states. CARB's requirements say that by 2025, at least 15.4 percent of new-vehicle sales must consist of zero-emissions cars like battery-electric or fuel-cell vehicles. 

Activists and consumers push back

The Ceres investment group take the opposite view. Along with organizations like the International Council on Clean Transportation, Ceres is encouraging the EPA to stick to its guns in the interest of energy security. The group also says that higher fuel standards will strengthen the auto industry by insulating it from fuel-price fluctuations.

A recent survey conducted by Consumers Union, the advocacy arm of Consumer Reports, suggests that shoppers feel the same. When asked whether automakers should continue to improve fuel economy, 84 percent of more than 1,000 survey respondents answered that they should. The answer varied little, no matter where respondents lived or what their political party affiliation might have been.

A smaller but still sizable majority of 70 percent said that the U.S. government should mandate higher fuel economy standards. Sixty percent said that they'd pay more for a fuel-efficient ride, and when asked which attribute of their current car, truck, or crossover needed improving most, respondents picked "fuel economy" over other things like safety and reliability.

Our take

As the 2025 deadline grows nearer, it's natural for automakers to seek concessions on upcoming regulations--especially those with lofty goals. Heck, if car companies weren't balking, we'd be concerned that the EPA hadn't set its sights high enough.

Of course, automakers have some valid points. Developing efficient technologies isn't cheap, and those costs will be passed on to consumers. Even if car companies offer as many hybrids and electrics as the EPA would like, the question remains: will consumers buy them?

On the other hand, advocates for energy security and environmental stewardship have equally valid points. It's hard to argue against energy independence or cleaner air.

Bottom line: if the EPA sticks to its guns, and if fuel prices remain low, the agency will likely need to help secure federal and state incentives for consumers. Without tax credits or other enticements, there'll be little to lure shoppers away from gas-guzzlers and into more fuel-efficient rides. 

*Keep in mind, CAFE is higher than real-world fuel economy, so the increase is high, though not quite as high as you'd think. Current real-world fuel economy for U.S. new vehicles is 25.4 mpg, while CAFE is 31.7 mpg.

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