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Eight ridiculous things in Trump clean car roll-back (and one they got right)

Renew Economy, 8 August 2018
President Trump has followed through on his promise to roll back Obama-era fuel economy and emissions standards for passenger cars and trucks, proposing to freeze standards at 2020 levels. Given the tremendous benefits of these rules to-date and the promising future for 2025 and beyond, you can imagine that justifying this rollback requires contortions that would qualify the administration for Cirque du Soleil…and you would be right. Here are just a few of the ridiculous assertions found in the proposal to justify rolling back such a successful policy:

Absurdity #1: Consumers will benefit from the rollback
Consumers, of course, stand to be the biggest losers from this rollback. To date, these rules have saved consumers over $64 billion in fuel costs.

Every class of vehicle is seeing record fuel economy levels, with the most popular vehicle classes showing the greatest improvement since the rules went into effect. This rollback threatens to put all of that in jeopardy, limiting consumer choice.

Absurdity #2: More efficient vehicles will be less safe
Last year, a study (that the administration even cites!) showed that fuel economy standards have resulted in reduced fatalities since their inception by reducing the average weight disparity in a crash, refuting oft-trotted out nonsense from groups like the Heritage Foundation and the Competitive Enterprise Institute who hysterically claim that making more efficient cars kills people in an effort to eliminate the rules.

Rather than sticking with the science, the administration is borrowing this ideological argument to market its rollback agenda as safety.

Lightweight materials were first deployed for safety reasons, and manufacturers have been using high-strength steel and aluminum and other lightweight materials to significantly reduce the weight of the biggest vehicles on the road, like the F-150.

This is good for society, reducing the lethality of the largest and least efficient vehicles. The National Highway Traffic Safety Administration’s latest data confirms this, of course—but the agencies instead fudge the economics of their model to spit out the answer that the boss in the White House wants.

Absurdity #3: The fleet will get older and travel more without the rollback (and therefore be less safe)
The people who wrote this proposal somehow came up with ridiculously high fatality numbers, which they use to justify rolling back these incredibly popular and consumer friendly standards.

About 99% of the increase in fatalities have absolutely nothing to do with the safety of new vehicles but come instead from an economic model that claims older, less safe vehicles will stay on the road longer and that there will be a massive increase in total miles traveled if the standards stay in place (more miles = more crashes = more fatalities).

There is no consistency to this logic—they claim that these newer and more efficient vehicles will be so great that everyone will travel more, but not so great that people will want to buy them.

Never mind, of course, that manufacturers are on pace for 17 million in annual sales for the fourth consecutive year, extending an industry record, or that the primary source of vehicle travel are commutes, which are fixed, and that there is little evidence of as high an increase in “rebound” or additional travel as the agencies claim.

Absurdity #4: “Energy dominance” means we don’t have to worry about conserving energy
Ignoring the absurdity of “energy dominance” itself, the notion that increasing domestic oil production means we don’t care about energy conservation doesn’t just defy the Energy Policy and Conservation Act requirements of the fuel economy program—it defies basic economics.

Oil is the one of the most fungible commodities in the world—that means that prices are set on a global market, by the basics of supply and demand.

As such, the best way to insulate yourself from global uncertainty (and I think we can all agree there is plenty of that) is to simply decrease demand, which sets downward pressure on market prices and helps buffer against volatility.

The decoupling of economic growth and oil demand is not just good for the environment—it’s good for consumers and national security.

Absurdity #5: Zero emission vehicle standards are inherently fuel economy standards
Perplexing to anyone who understands California’s air quality challenge and the history of the Zero Emission Vehicle (ZEV) program is the Trump administration’s assertion that the ZEV program is connected to fuel economy.

In fact, the ZEV program predates California Assembly Bill 1493, which is what pushed the state to adopt global warming emissions standards for vehicles (it should of course be noted here that those, too, are under attack, despite also not being fuel economy standards).

California’s ZEV program is designed to improve air quality in the state and is a critical part of the state’s plan to meet federal air quality requirements. Other states have adopted the standard because they see ZEVs as a critical part of their sustainable transportation future, including for air quality reasons.

The administration suggesting that a regulation aimed squarely at eliminating tailpipe pollution is pre-empted by fuel economy standards is not just legally dangerous—it’s bad for anyone who breathes air in the states adopting those standards.

Absurdity #6: Manufacturers will improve fuel economy without regulations
The real impacts of the rollback would look too bad on paper, so the administration cooked the books by claiming that manufacturers will overcomply with the 2020 standards by nearly 3 miles per gallon, out of the goodness of their hearts and because they know people will buy fuel-efficient vehicles (no, the administration does not seem to sense the irony here in claiming that people will buy these fuel-efficient vehicles but not even more efficient vehicles).

This of course smacks of ignorance—the fleet-wide efficiency of cars did not increase absent regulation in the past 40 years — in fact, in the 1990s fuel economy actually went down as a result of flatlined standards (see figure). To pretend like fuel economy improvements are going to magically happen without regulation defies the historical record.

Absurdity #7: Manufacturers will put on more technology than necessary to meet the standards
A corollary to the modeling of the rollback magically adopting fuel economy improvements for free is the ridiculous amount of technology being applied to meet the standards, helping to drive up costs for the standards.

The administration has crafted a modeling approach so insane that the output shows manufacturers putting on more technology than is needed to meet the standards—so much, in fact, that the manufacturers will overcomply and earn credits that will expire before they can be used!

This is completely at odds with how manufacturers actually plan to comply with the regulations. Generally, manufacturers try to target an individual vehicle’s performance to the average standard over the car’s product lifecycle.

Since cars generally don’t change much over a 5-year span, a vehicle will tend to perform better than the standard initially, generating credits, which can then be used to compensate for the vehicle’s underperformance relative to the standard in the latter years.

In the agencies’ modeling, manufacturers improve their vehicles so quickly and to such a strong degree that they end up banking credits that never get used! That is beyond economically inefficient—it’s just dumb.

And it’s yet another cynical ploy by the administration to inflate the estimate of the cost of the currents regulations.

Absurdity #8: Everyone’s going to need to drive “turbo hybrids” in 2025 if the standards aren’t rolled back
The end result of these ridiculous assumptions on technology is borne out in a vehicle fleet that no manufacturer would possibly design.

There are many issues with the technical assumptions in the rule, but perhaps my favorite is a concept the agencies have introduced called a “turbo hybrid”.

Their modeling effort claims that initially, manufacturers will adopt turbocharged engines (which we’re seeing—about ¼ of vehicles on the road incorporate a smaller, boosted engine), and then eventually they will be forced to become hybrids like the Prius…but they will maintain that turbocharged engine in the hybrid. This is not how manufacturers would design a car.

This idea is so ludicrous that the only example that I could find of anything close to this was the incredibly complex engines found in Formula 1 race cars.

The reason an auto manufacturer would never make this choice is that the electric motor on a hybrid car already provides power supplemental to the engine—you don’t need to turbo boost it as well.

There are lots of examples of car companies taking advantage of the extra power provided by a hybrid and pairing it with a smaller engine, like how the Toyota Prius utilizes the much more efficient Atkinson cycle or why the new Honda Insight can get away with using just a 1.5L engine.

There’s no reason a manufacturer is going to add cost and complexity when they don’t have to. But by pretending like this is how manufacturers would comply, the agencies have been able to artificially inflate the costs of the current standards.

The one thing they get right: These standards are going to cost jobs
Surprising to me was that the agencies acknowledge in their analysis that this rollback is bad for the automotive sector.

According to their analysis, the industry stands to lose $200-$250 billion in revenue, cut investments in technology by $40 billion, and cut jobs in the automotive sector by 60,000 in 2030.

We pointed out how bad this rollback will be for the economy as a whole, as consumers are forced to spend more money on oil and less money on sectors with greater job growth potential, which will cut overall job growth by 125,000 in 2035 and nix $8 billion from national GDP—but this is confirmation that this rollback is terrible for the industry that asked for it.

The industry asked for this rollback—now it’s up to them to stop it
The industry opened up Pandora’s box by requesting the administration take another look at standards that are working for the American people. Now we are getting a clearer picture of what that action means for consumers at the pump, the economy, the environment, and the auto industry—in short, it’s terrible.

It is up to the auto industry to try to fix what they broke. I have little faith that this administration is interested in the facts—industry voices, on the other hand, may carry a lot more weight.

So, auto companies—are you willing to go to bat for the American people? Or are you going to sit on the sidelines and watch this disaster of your own making unfold?

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