Features
22 Jul 19

Trump prepares to roll back on fuel efficiency targets

The Trump administration has shelved tough new penalties for failing to meet fuel economy standards in what some analysts believe is a prelude to a wider ‘rollback’ of environmental legislation.

Civil penalties for failing to meet Corporate Average Fuel Economy requirements were set to rise from $5.50 to $14 for each 0.1 mile per gallon over the current threshold of 37.1mpg, but the Trump administration has suspended the higher charges.

The move is the latest twist in a long-running battle between the Federal and State Governments over who has the right to set environmental standards in the automotive sector.

In 2015, the Obama administration, along with the state of California and several car manufacturers agreed that cars and light trucks must achieve average fuel economy of 49.7 mpg by 2025. 

The Alliance of Automobile Manufacturers (AAM), a trade group representing General Motors, Volkswagen, Toyota, Fiat Chrysler and others said the new fines regime could increase industry compliance costs by $1 billion annually.

California

Last year, the Trump administration proposed a freeze on fuel efficiency standards and the removal of California’s right to set its own emissions framework. The state currently has special dispensation to set tougher standards than the federal government under the US Clean Air Act of 1963.

Thirteen other states adhere to California’s tougher rules limiting greenhouse gas emissions from cars and 24 State Governors have signed a pledge asking the federal Government not to dilute current standards.

While the move was welcomed by some carmarkers, others expressed concerns that the dispute could lead to a two-speed approach to fuel economy and emissions standards which would create confusion among car buyers.

The AAM said: “It is untenable to face a marketplace with different standards in different states, but it is also untenable to face standards that rise so high that only a handful of electric vehicles can achieve them. We encourage both the federal government and states to come together and meet midway on a final rule that is good for the environment, achievable and consistent across the 50 states.”

Car exports

The watered down standards, could also make it increasingly difficult for the US to export automotive technologies to the rest of the world at a time when US car exports are already falling as a consequence of the trade war with China.

According to the US Environmental Protection Agency, the average fuel consumption of the typical US vehicle sold in 2017 was 24.9mpg – an improvement of 0.2mpg over the previous year. 

Improved fuel economy enabled most of the main manufacturers to contribute to the improved average efficiency except Fiat Chrysler (FCA), which paid $77 million in CAFE non-compliance fines in 2018 and has paid Tesla $2 billion to pool its car fleets to avoid emissions fines in Europe.

Image: Donald Trump

Author: Mark Sutcliffe