Clean Car and Fuel Economy Standards: What’s Next?

The Trump administration is planning to roll back successful clean car and fuel economy standards. It's bad for the environment, consumers and auto workers. NRDC explains how we got here and where it headed.

The Trump administration is expected to propose a dramatic rollback of the historic and successful clean car and fuel economy standards adopted under President Obama with car makers’ support. The standards are designed to nearly double new vehicles’ fuel economy and cut their carbon pollution in half by 2025, and will save the average car owner more than $6,000 over the life of the car, sustain 288,000 jobs, and cut the nation’s oil consumption 2.4 million barrels per day by 2030

The auto industry agreed to these standards in 2010 and 2012. In return the three independent regulators with authority to set standards for carbon emissions or fuel economy—the Environmental Protection Agency, the Transportation Department, and California and allied states—agreed to establish one nationwide set of standards. The industry won the advantages of aligning three regulatory systems into one consistent package and of knowing what to expect from regulators through 2025. Because the standards strengthen continuously over this period, every American won as well, with better cars, savings at the pump, cleaner air, and less climate-changing pollution. 

The automakers, however, have not stood by their bargain. When President Trump took office, they immediately asked him to weaken these standards. But now there’s every sign that the Trump rollback proposal will go much farther than even the auto industry wants by flatlining the standards after 2020 and seeking to preempt the authority of California and the 13 jurisdictions that follow its standards.

The rollback is far from a done deal. If pursued, the Trump proposal will kick off a years-long legal battle involving public hearings and public comment, and court challenges. The only sure thing at this point is uncertainty – for automakers, car buyers, working men and women, and those at risk from pollution and climate change. Even auto industry leaders are now wondering if they have opened Pandora’s box. 

There’s a lot of misinformation out there on what the legal framework allows and requires, how the current standards work, their impact on consumers’ pocketbooks and workers’ jobs, and their effects on oil consumption, air pollution, and safety.  To clear up the confusion, here are straight answers to the most common questions. 

How Did We Get the Current Clean Car and Fuel Economy Standards?

The current standards bring together two important national objectives–curbing our dependence on oil and cutting dangerous air pollution–and align the efforts of three different agencies charged with regulating our cars, SUVs, pick-ups, and other light-duty vehicles. 

Back in the 1950s, California took the lead in curbing dangerous air pollution from automobiles. The federal government assumed a national role controlling car pollution starting in the 1960s, when Congress passed Clean Air Act amendments that charged EPA to set national emission standards but explicitly recognized California’s authority to continue leading with its own stronger standards. Congress later gave other states the option to choose either the California or EPA standards. After the first oil embargo of 1973-1974, Congress also charged the Transportation Department’s National Highway Traffic Safety Administration (NHTSA) with setting fuel economy standards (Corporate Average Fuel Economy Standards, or CAFE) to reduce U.S. dependence on oil and the price swings of the global oil market.

With emerging concerns about climate change, California used its air pollution laws in the early 2000s to set standards to cut emissions of carbon dioxide and other heat-trapping air pollutants from new cars and light trucks. Twelve other states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington) and the District of Columbia have adopted California’s standards.

At the federal level, the Supreme Court ruled in Massachusetts v. EPA in 2007 that the Clean Air Act covers the air pollutants that cause climate change, and that EPA has the authority and responsibility to set federal emission standards for these pollutants. The high court specifically held that both the Clean Air Act and the Energy Policy and Conservation Act (the law that created federal fuel economy standards) apply to new cars, and urged EPA and NHTSA to work together. After Massachusetts, two federal district courts rejected automaker lawsuits claiming that California’s air pollution standards, though authorized under the Clean Air Act, are preempted by CAFE standards.

When President Obama took office in 2009, his administration negotiated what some have called the “clean car peace treaty” with car makers, states, labor, and environmentalists. The 2010 agreement ended the long-running legal and political battle with consensus on a set of coordinated clean air and fuel economy federal standards issued jointly by EPA and NHTSA. By agreement, these standards were set essentially at the level of the California standards. California and its state allies agreed to align their standards with the new federal ones. 

This was a giant win-win. The car makers gained, in practice, one coordinated set of national standards (which they call the “One National Program”), and a clear path to guide their investments in better cars. The whole nation got the cleaner air, climate protections, and fuel savings of the California standards. 

The 2010 clean car peace treaty governed the model years 2012 through 2016 and contributed to the auto industry’s dramatic recovery from the bankruptcies and plunging sales of the Great Recession of 2008-2009. It worked so well that all the parties came together in 2012 in a second agreement that extended the tri-part alignment of standards out to model year 2025, requiring steady reductions in carbon pollution and increases in fuel economy with each new model year.

How Do the Standards Work?

EPA and California set standards for how many grams per mile of carbon dioxide and three other greenhouse gases new vehicles may emit. NHTSA sets standards for how many miles per gallon new vehicles must achieve.

There is one set of emissions and fuel economy standards for cars and small SUVs, and another set for larger SUVs, pickups, and vans. 

Both sets of standards are determined on a sliding scale so that larger vehicles (measured by the “footprint” of their four wheels) are subject to more lenient limits than smaller ones. 

That was a reform adopted in the 2010 and 2012 agreements at the automakers’ request. It means the standards are no harder for larger vehicles to meet than smaller ones. Each manufacturer’s emissions and miles per gallon (mpg) targets are an average based on the number and types of vehicles it sells, which means the standards automatically adjust when they sell more SUVs or trucks.

So, there is no basis for the auto industry’s oft-repeated claim that the standards got harder to meet because the industry is selling fewer cars and more trucks than projected in 2012. That is just false.

Why Are the Standards Always Called Fuel Economy or mpg Standards?

Most people can think in “miles per gallon” but few are familiar with “grams per mile.” So, it has been common for government and industry leaders and the media to use the target of achieving more than 50 mpg by 2025 as a sort of shorthand to refer to both the GHG emissions and fuel economy standards.

It's understandable that people would leave out the target of reducing GHG emissions to 173 grams per mile of carbon dioxide-equivalent (to account for CO2 and the other greenhouse gases). But it's important to remember that EPA and California and states that follow its standards regulate auto emissions, not fuel economy.

Why Doesn’t the Regulatory mpg Target Match the Showroom Fuel Economy Label?

There’s a significant difference between the mpg measured in a laboratory and what vehicles get driving on the road. Both EPA and NHTSA rely on laboratory test procedure results for setting their respective standards. The test values are then adjusted by automakers (according to an EPA procedure) to reflect typical driving conditions. Car shoppers see the adjusted value, which reflects real-world driving, on the window label in the showroom.

EPA projects vehicles will reach a fleetwide average of 51.4 mpg by 2025, which is consistent with 36 mpg in real-world driving.

How Do the Standards Safeguard Our Health and Planet?

Under the standards, the country's cars, pickup trucks, SUVs and minivans are getting much cleaner. EPA’s online counter shows that new vehicles sold since model year 2012 have already avoided the emissions of more than 242 million tons of carbon pollution. The 2012-2025 standards are the biggest federal climate-protection program in place. If fully implemented, cleaner vehicles sold as a result of the standards will cut pollution that warms the planet by nearly 6 billion tons.

By reducing greenhouse gas emissions, the standards slow the warming of our planet, and they protect our health by reducing the number of high-smog days that would come with a hotter world.

How Do the Standards Help Consumers?

Because the standards require all vehicles to go farther on a gallon of gas, consumers have to make fewer trips to the gas station. Consumers would save $6,000 over the life of a vehicle that meets 2025 standards compared to the average vehicle on the road today, even after accounting for the incremental cost increase of making cars and trucks that employ advanced fuel-saving technology. EPA analysis shows that under recent gas price projections (e.g. a gas price of $2.97 per gallon in 2025), consumers buying vehicles from 2021 through 2025 that meet the standards would collectively save $98 billion dollars, even after factoring in with the cost of cleaner, more efficient technologies.

How Do the Standards Affect Low-Income Americans? 

The standards improve the efficiency of the used car market so lower income buyers of used cars can also save thousands of dollars on fuel. Additionally, by holding down total gasoline demand, these standards put downward pressure on the price of gas – which is why rolling back the standards would be good for Big Oil.

How Do the Standards Sustain and Increase Jobs?

Clean car and fuel economy standards boost jobs in two ways: The standards create demand for new vehicle technologies that need to be produced with skilled labor, and the standards save consumers money that they can spend in their local economies, spurring economic growth that increases the demand for labor. A new study by Synapse Energy Economics found that the 2017-2025 standards will add more than 100,000 jobs in 2025 and 250,000 jobs in 2035 across the United States.

Today more than 288,000 Americans are making components that go into cleaner, more fuel-efficient vehicles. Weakening the standards would stifle innovation and the creation of new products to meet them, putting these jobs—and future innovation-fueled growth—at risk. U.S. vehicle component suppliers, who support maintaining strong vehicle standards and employ 2.6 times more Americans than the automakers, could cut U.S. employees and move operations to other countries that are building the clean cars we need now and into the future.

How Could the Standards Change and When Could It Happen?

The Trump administration recently announced it will roll back clean car and fuel economy standards. The EPA’s thinly-supported “Final Determination” conflicts sharply with the three agencies’ robust technical assessments in 2016, which found the standards remain achievable and appropriate.

Now, instead of continuing the steady improvement in emissions and fuel economy required by the current standards, EPA and NHTSA  are expected to propose flatlining them for 2020 through 2026, according to a draft obtained by Senator Tom Carper. Furthermore, the agencies are seeking to preempt or revoke the authority of California and other states to maintain the tighter clean car standards they’ve adopted.

Will Trump Attempted Rollbacks Stand Up in Court? 

The administration’s moves are already opening a new legal fight. Seventeen states, led by California, and the District of Columbia filed a court challenge to the Trump administration’s decision to re-open the standards. If the administration proceeds with its current rollback plans, the legal fight alone could cause years of uncertainty for automakers and their vast numbers of global component suppliers.

None of the administration’s proposed grounds for rolling back existing clean car and fuel economy standards pass legal muster.

In 2012, when EPA and NHTSA first set standards for model years 2017 to 2025, the agencies based their decision on extensive technical analysis. Through the midterm evaluation process in 2016, the agencies’ updated their analysis in a lengthy technical support document, and concluded that the standards through 2025 remained feasible, cost-effective, and well within automakers’ reach. EPA’s skimpy Final Determination does not offer any concrete evidence contradicting its earlier, well-supported findings.

If EPA and NHTSA try to block California from continuing to run its own clean car program, they will lose the legal battles that are bound to follow. Congress explicitly wrote the Clean Air Act to empower California to craft its own program, and Congress gave other states the choice whether to follow the federal or California standards. EPA can block California only in extreme circumstances. EPA has never taken away the waiver that allows California to regulate, and the federal government is unlikely to win that legal fight.

NHTSA will almost surely also lose if it argues that its fuel economy regulations preempt California’s power to curb vehicle pollution. The Supreme Court held in Massachusetts v. EPA in 2007 that both EPA and NHTSA have concurrent, overlapping authority to regulate vehicles, one for emissions, the other for fuel economy. District courts in Vermont and California have already confirmed that California can regulate vehicle greenhouse gas emissions under the Clean Air Act, even though NHTSA regulates fuel economy. The agencies are unlikely to win if they try to relitigate that question. The judge in the Vermont case laid it out clearly, writing: “Congress has consistently acknowledged interplay and overlap between emissions reductions regulations and fuel economy regulations, and could not have intended that an EPA-approved emissions reduction regulation did not have the force of a federal regulation.”

Who Does the Rollback Help?

With the clean car peace treaty, the auto industry got certainty. Now, those companies—and their hard-working engineers and production workers—may be facing a costly nightmare of not knowing what vehicles they should plan to make as courts decide the legality of the administration’s rollbacks.

Only the oil industry benefits from weaker standards. The public gets betrayed with more pollution and higher gasoline bills. Our nation increases its dependence on oil. Innovation by the U.S. auto industry will stall, and car makers will cede automotive technology leadership to other countries and risk American jobs.

Americans overwhelmingly support maintaining the existing 2025 standards, according to poll, after poll, after poll. If the Trump administration wants to serve the public (instead of Big Oil), it should keep existing strong standards in place.