April 1 Showdown Between U.S. EPA and California Looms

"The [U.S. Environmental Protection Agency] faces an April 1 deadline to decide whether Obama-era corporate average fuel economy standards [CAFE] for cars and light trucks from 2022 to 2025 are attainable or should be revised," reports Bloomberg News. EPA Administrator Scott Pruitt has already dismissed a report issued by the Obama administration that led to the prior administration's rejection of a bid by automakers to reduce fuel economy standards in the midterm review.

Pruitt did not directly answer [during an interview with Bloomberg News on March 13] whether he would seek to revoke waivers from the federal law that allows California to set its own air pollution requirements. But he signaled his concern with California's outsize role. 

"California is not the arbiter of these issues," Pruitt said. California regulates greenhouse gas emissions at the state level, "but that shouldn't and can't dictate to the rest of the country what these levels are going to be."

The stakes couldn't be higher for the California Air Resources Board (CARB), the powerful regulatory body charged with reducing greenhouse gas (GHG) emissions by 40 percent below 1990 levels by 2030. Transportation accounts for 39 percent of the state's GHG emissions. Worse yet, "increased fuel consumption in 2015 resulted in a 3 percent increase in emissions from the transportation sector," according to CARB, while emissions from other sectors have been decreasing.

According to Bloomberg, CARB officials offered to consider easing current GHG emission standards in exchange for extending them beyond that 2025, but Pruitt rejected their offer.

Winners and losers

While Calfornia will be the loser in a rejection of the EPA waiver by making by making it more difficult, if not impossible, to meet its SB 32 target, automakers, particularly those that manufacture light trucks, including the profitable and fuel-inefficient (compared to cars) full-sized SUVs, will be the winners.

Automakers aggressively lobbied Trump to take a new look at the standards, arguing that they need to be reviewed in light of surging light-truck sales, low gasoline prices and tepid demand for plug-in vehicles.

Shares of "Fiat Chrysler Automobiles NV, which has the most to gain as the U.S. automaker with the highest percentage of light trucks in its lineup, have more than doubled in value since Trump's election, in part on optimism that the automaker will be able to sell more Jeep SUVs and Ram pickups if the Trump administration rolls back standards set under Obama," adds Bloomberg.

• Reuters: "California-Trump administration fuel-efficiency talks intensify," Jan. 16, 2018
• Union of Concerned Scientists: "Pruitt’s EPA Attempts to Undermine California’s Leadership on Vehicle Standards," Feb. 2, 2018

Hat tip to Al Sattler via Sierra Club California Energy-Climate Committee.