Economy

EPA to Ease Vehicle Emissions Standards, But at What Cost?

April 9, 2018

EPA Administrator Scott Pruitt announced last week that the agency plans to roll back the Obama-era standards for fuel efficiency and greenhouse gas emissions. The Obama administration’s goals “don’t comport with reality and are too high,” Pruitt said. Offering no details of the plan, he added, “The EPA will set a national standard for greenhouse gas emissions that allows auto manufacturers to make cars that people both want and can afford — while still expanding environmental and safety benefits of newer cars.”

Environmental advocates are preparing for the worst. “Just what you’d expect from a climate-change denier like Pruitt,” they lament. “Putting auto industry profits above public health. It’s despicable,” they say.

But the issue is hardly that simple. It’s not a question of whether we need a strong auto industry or good air quality. It’s a question of where we draw the line, as a society, to achieve acceptable levels of both.

The Obama administration appears to have taken the Robert Browning approach to regulation: “A man’s reach should exceed his grasp.” Set standards that seem impossibly high, so the industry will give its all to attain them. But that is not always the best course of action. Just ask the man on the flying trapeze. What the auto companies have achieved in making vehicles lighter and more fuel efficient is nothing short of amazing, but they are in danger of falling flat on their faces.

Automakers have been struggling to meet the current regulations that call for a fleetwide fuel economy average of more than 50 miles per gallon by 2025. Without drawing on credits, some would already be out of compliance and facing enormous fines.

So, is the EPA’s announcement a positive step to set a mark the industry may actually be able to achieve, or does it threaten to undermine the environmental progress that has been made? Tough vehicle emissions standards have driven innovation in automotive design, including the development of advanced high-strength steels. Will relaxing the standards have the opposite effect and steal some of the urgency from R&D?

“Absolutely not,” says Jody Hall, vice president of automotive for the Steel Market Development Institute. The steel industry has been working with its customers in the auto sector to make vehicles lighter and safer since the 1970s. That collaboration will undoubtedly continue.

Keep in mind that auto manufacturing is a global market. U.S. carmakers need to be able to sell their products to countries in Europe and other parts of the world that have even stricter emissions standards. “Our standards are influenced by standards in foreign countries,” Hall notes, “although they don’t drive trucks there like we do here.”

The timing of the EPA’s announcement also blunts its impact. Any changes in the standards would not take effect until the 2022-25 model years. Those vehicles are already being designed and engineered today. “Automakers are really focused on the original targeted numbers because they can’t afford to wait,” Hall says.

Steel may benefit disproportionately from an easing of the mileage standards by the EPA. If the car companies can hit the new targets using advanced high-strength steels, they have less incentive to use more expensive materials such as aluminum. SMDI maintains that steel offers the best value for the consumer and the environment when factoring in steel’s recyclability and the environmental impact of producing alternative materials such as aluminum and carbon fiber.

Brett Smith of the Center for Automotive Research said the EPA has not disclosed details of the new standards, which will be announced sometime later this year. “They determined that the Obama-era law is not viable and not good for the country and they are going to reassess. Most likely decreasing the standards, most likely significantly, but we don’t know.”

Relatively few Americans will be up in arms over a weakening of environmental standards for automobiles. “Mass market consumers in the United States don’t seem interested in spending their money on fuel-efficiency technologies, even if it saves them money over the lifetime of their vehicles. They would rather spend it on heated seats and entertainment packages. That is a challenge for the auto industry,” Smith said.

If the U.S. really becomes less stringent on emissions than other countries, vehicles can be made and sold more cheaply. Carmakers and their customers will be happy. On the other hand, if the U.S. becomes a backwater in terms of technology, companies will relocate their R&D to other markets. “If we become a low-tech market, we lose the high-tech manufacturing and the high-tech jobs. Both scenarios are possible, and probably some mix of that will happen,” Smith said.

Ultimately, it’s not just about the cost of the car, but the cost to society of safeguarding the quality of the air we all breath. “The current administration has a very different estimate of the social cost of driving these vehicles,” Smith said.