The Biden administration on Monday hiked U.S. fuel-efficiency standards on vehicles to their highest level ever, raising the bar for auto manufacturers even as the Democrats’ incentive-laden climate package teetered on the verge of collapse.
The final rule unveiled by the Environmental Protection Agency sets the 2026 fleetwide average standard for passenger cars and light trucks at 40 mpg by model year 2026, well above the Trump administration’s target of 32 mpg and also surpassing the Obama-era 2025 standard of 36 mpg, based on Real World Label Value estimates.
EPA administrator Michael Regan said the standards would fight climate change by slashing U.S. carbon dioxide emissions by 3 billion tons by 2050 while saving consumers during the same period between $210 billion and $420 billion on fuel costs.
“The final rule for light duty vehicles reflect core principles of this administration: We followed the science, we listened to stakeholders, and we are setting robust and rigorous standards that will aggressively reduce the pollution that is harming people and our planet – and save families money at the same time,” Mr. Regan said.
He said he was optimistic that the industry could meet the ambitious levels, even though the auto industry has tied such efficiencies to enhanced electric-vehicle tax credits and other federal support in the $2 trillion Build Back Better plan.
Electric-vehicle sales account for less than 4% of market share today, but under the final rule, the EPA foresees sales of EVs and plug-in hybrid vehicles reaching 7% in model year 2023 on the way to nearly 17% in 2026.
Sen. Joe Manchin III, West Virginia Democrat, all but doomed the package Sunday by announcing his opposition, but Mr. Regan suggested that President Biden could still deliver on “equities in terms of tax credits [and] clean-energy opportunities within Build Back Better.”
“That’s not to say that we’re not going to continue to fight tirelessly for those incentives that are in the Build Back Better proposal,” Mr. Regan said. “But nevertheless, we believe that we proposed a rule that’s doable.”
Less confident was John Bozzella, president and CEO of the Alliance for Automotive Innovation, who stressed the importance of federal support in meeting the EPA’s model year 2023-26 fuel-efficiency goals as well as the EV targets.
He noted that the EPA final rule for greenhouse-gas reductions is even more stringent than the rule proposed in August, “requiring a substantial increase in electric vehicle sales, well above the four percent of all light-duty sales today.”
“Achieving the goals of this final rule will undoubtedly require enactment of supportive governmental policies — including consumer incentives, substantial infrastructure growth, fleet requirements, and support for U.S. manufacturing and supply chain development,” said Mr. Bozzella in a statement. “Collaboration between industries across the economy and government will be essential to achieving our shared goals for a cleaner transportation future that benefits all communities and enhances U.S. economic competitiveness.”
He added that the auto industry is on track to invest $330 billion in electrification by 2025, and “continues to make significant progress improving fuel economy and reducing GHG emissions.”
Far more enthusiastic about the administration’s strict fuel benchmarks were climate groups, which cheered the Biden administration for doing away with the Trump EPA’s 2020 rollbacks on the Obama-era standards.
“We can all breathe a collective sigh of relief now that a strong federal clean car rule is restored,” said Morgan Folger, Environment America’s Destination: Zero campaign director. “Despite pushback from the auto industry, we’ve fought for the past six years for a clean cars rule that would radically reduce air and climate pollution. Today is a win on that front, creating an onramp to a future with zero emissions from our cars and trucks.”
On the other side were critics who blasted the EPA’s tougher standards as tone deaf, given Mr. Manchin’s defection and worries about rising inflation.
“Senator Manchin’s statement destroying the so-called Build Back Better agenda indicates there is little appetite for these kinds of policies in Congress, let alone the country as a whole,” said Power the Future Western director Larry Behrens. “It’s clear that President Biden is not willing to let American families choose for themselves because they might just choose to not buy into the green agenda.”
Anthony Watts, senior fellow at the Heartland Institute, raised concerns about auto safety and reliability, saying the standards would incentivize manufacturers to use lighter materials such as high-temperature-resistant plastic instead of metal.
“These additional CAFE standards are going to put pressure on manufacturers for being able to meet mileage specifications, and they’re going to have to lighten and cheapen the way the cars are built,” Mr. Watts said. “From my perspective, this compromises safety and reliability, and to what end? China continues to produce tremendous amounts of carbon dioxide even though the United States has gone through reductions over the last 10 years.”
U.S. greenhouse-gas emissions declined by 13% from 2005-19, according to EPA figures, as natural gas increasingly replaces coal in power plants and green energy continues to grow.
The U.S. transportation sector accounted for 29% of U.S. greenhouse-gas emissions in 2019, ahead of electricity generation, which was second with 25%, the EPA reported.
Last year, the free-market Competitive Enterprise Institute sued to stop the EPA’s fuel-efficiency standards, arguing that the agency failed to consider the extent of the impact on safety.
“CEI hopes that federal courts will consider the strong evidence presented in the administrative record by CEI and others and overturn EPA’s new final vehicle fuel efficiency rule,” said Myron Ebell, director of CEI’s Center for Energy and Environment. “The EPA’s new standards are the latest example of the Biden administration’s widescale efforts to put government in charge of decisions that should be made by individual people.”