U.S. CO2/CAFE Regulations: Trump administration plans significant relaxation of current standards

California vows to fight back, automakers voice support for a single national standard

2018/06/04

Summary

Chevrolet Bolt
Second generation Chevrolet Bolt EV/Autonomous drive (exhibited at the WCX18: SAE World Congress Experience held in April 2018)

This report presents the latest moves by the Trump administration to relax the current standards for U.S. CO2 and Corporate Average Fuel Economy (CAFE) regulations, and the current state of the Zero Emission Vehicle (ZEV) regulations that California is driving to further tighten from 2018.

The MY2017-2025 CO2 and CAFE standards for light vehicles were created as national unified standards during the Obama administration by the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) in cooperation with the state of California. The Trump administration announced its direction to relax the standards as the current ones are said to be excessively stringent, inhibiting the growth of the automotive industry.

On the other hand, according to the U.S. Clean Air Act regulations amended in 1970, the state of California was granted a waiver to establish its own environmental regulations (i.e. CARB, California Air Resources Board) more stringent than the federal standards. Since there are other 13 states that have adopted the same stringent CARB standards, the total sales volume for these states account for 1/3 of the total vehicle sales volume in the U.S.

In the case the Trump administration relaxes the federal standards, the state of California intends to maintain its own standards (which are aligned with the current federal standards), but the final decision will be left to the courts and are not expected to be resolved in the near future. Until the case is resolved by the courts, two separate standards would exist in the U.S. market.

In the spring of 2017, U.S. automakers lobbied the Trump administration to reassess the current emissions standards due to the slow sales of electric vehicles and a significant increase in the sales demand for light trucks in the U.S. market in recent years. However, with the significant relaxation of the standards recently proposed by the Trump administration automakers are not expecting two separate standards to exist for both CO2 and CAFE regulations. Automakers though are appealing for minor adjustments to government regulation of the industry be made such as a reduction of fines in the case of non-compliance to the standards and the inclusion of incentives (preferential treatment) for adoption of technologies associated with the latest trends like car sharing and autonomous driving. GM and Ford continue to develop electric vehicles as originally planned and are also working to improve the fuel economy of internal combustion engines.

Furthermore, California regulations associated with its Zero Emission Vehicle (ZEV) program requires automakers to sell a certain number of FCVs, EVs, and PHVs, the same regulations of which are also followed by 9 other states. These ZEV regulations will be tightened further from 2018 and are expected to result in annual increase in the sales volumes of the requisite number of FCVs, EVs, and PHV models.

Until 2017, in these other 9 states the "Travel Provision" of the ZEV program allowed automakers to receive credits for the sales of ZEVs in California even if they don't sell ZEVs in any of the other 9 states, resulting in a lower number of FCVs, EVs, and PHV sold. However, from 2018 this travel provision will be removed so that automakers are required to sell ZEVs also in these other 9 states. Automakers are expected to increase their lineup of EVs and PHVs sold in these 9 states going forward, with plans to expand policies for promoting the sales of ZEVs and the development of charging infrastructure in each state, resulting in an increase in the sales of FCVs, EVs, and PHVs in these 9 states.


Related reports:
2021-2030 CO2 regulations in Europe, backlash against diesel, and electrification (May 2018)
OEM Electrification Strategies: Strengthening HVs and diversifying into EVs, PHVs, and FCVs (May 2018)
OEM Electrification Strategies: Acceleration of EV and PHV Lineup Expansion (Apr. 2018)