EPA Administrator Scott Pruitt’s decision to revise fuel-efficiency standards for cars and trucks drew applause from some Michigan automakers, but not everyone expects to see large economic benefits for the state’s economy as a result.
The Environmental Protection Agency announced earlier this month that fuel-efficiency and greenhouse gas standards advanced during the Obama administration for the vehicle model years 2022 through 2025 were set too high and were out of sync with real-world situations.
The relaxation of the corporate average fuel economy (CAFE) standards should serve the auto industry well, according to Jason Hayes, director of environmental policy for the Mackinac Center for Public Policy in Midland. The carmakers are going to produce more vehicles as a result of the rule adjustments, and that means more jobs, Hayes said.
“Their primary business is related to SUVs and pickup trucks, which are typically hardest hit by CAFE standards,” Hayes told Watchdog.org
Mitch Bainwol, president and CEO of the Auto Alliance, an advocacy group for car manufacturers, emphasized in a recent opinion article on the Real Clear Politics website that the “adjustments” now under discussion don’t amount to “rollbacks.”
“We have invested substantially in energy-efficient technologies that we would like to see consumers embrace,” Bainwol said. “We expect that fuel economy will keep rising. The only issue is at what speed. … The (2012) projections were materially imperfect, and conditions have fundamentally changed.”
Hayes views the free market, rather than government regulations, as the most efficient means to encourage automakers to continue to make progress on fuel economy and pollution reductions.
“Today we’re finding that markets are pushing people in the direction of efficiency and cleaner vehicles …” he said. “Relaxing new standards back to where they were before makes sense.”
The CAFE standards have had other negative effects, according to Hayes.
“CAFE standards also force less safe vehicles onto the roads,” he said, noting that some lighter vehicles have not reacted well during accidents.
Hayes also predicted that re-examining the regulatory framework would not increase pollution because affluent American consumers continue to demand cleaner, fuel-efficient vehicles.
“Some people say relaxing the standards means we’re just letting industries pollute willy-nilly, and we’re going to go back to the days of rivers catching on fire,” he said. “That’s nonsense. That’s not going to happen.”
But David Livingston, deputy director of climate and advanced energy at the Atlantic Council’s Global Energy Center, sees the CAFE standards as flexible and not nearly as costly as some critics imagine.
“It is unlikely that Michigan would see an increase in jobs or economic activity if the standards are relaxed,” Livingston told Watchdog.org in an email.
The standards are designed to address multiple kinds of vehicles, consumer attitudes and carmakers, he said.
“Because automakers can make trade-offs between various vehicle attributes, the cost of the regulations to consumers and automakers is lower than is commonly assumed, meaning that the net benefit is even higher,” Livingston said.
Adjustments to fuel-efficiency regulations could also have negative consequences for those involved in the manufacturing of high-efficiency car components and auto parts, he said. Nearly a quarter of U.S. jobs in this sector of the economy are in Michigan, where an estimated 70,000 employees work on technologies aimed at cutting pollution, according to Livingston.
“Some of these jobs and activities may be endangered if standards are dramatically weakened,” he said.
Livingston also criticizes the idea that lower standards would make vehicles more affordable. Up-front costs might be marginally lower, he said, but the consumer would end up paying more overall due to the higher fuel costs over the life of the car.
Barry Rabe, a professor at the Ford School of Public Policy at the University of Michigan, characterized the EPA’s initial proposal as a bold move that could bring an extended conflict with California. That state historically has used its power under the Clean Air Act to get a waiver from federal regulations in order to impose more stringent emission standards.
It remains unclear if the EPA proposal was exactly what automakers wanted, according to Rabe. The manufacturers seemed initially to want to keep the existing fuel-efficiency targets but be given more paths and options to meet them, he said.
Rabe sees the automakers as trying to balance trends in both the domestic and international markets.
“It’s no secret that an enormous base of profits … is not small, fuel-efficient vehicles but small trucks and SUVs,” he told Watchdog.org.
But manufacturers are also trying to keep pace with international trends, according to Rabe. China, for example, is aggressively transitioning away from large internal-combustion engines, so for the Big Three automakers to be competitive on the world stage, they need to focus on hybrids and high-efficiency vehicles too, he said.
Rabe remains open to the possibility that the EPA and the auto industry will work out a regulatory plan that addresses many stakeholder concerns.
“It does appear that we have entered into a period of quieter negotiations” in the wake of the EPA’s initial announcement, he said.