US President Donald Trump ordered a review of the Obama administration's decision in January to finalize stiff fuel economy standards for the 2022-2025 period The White House clashed with environmentalists over President Donald Trump's retreat from tough future auto emission standards, with both sides predicting potentially big consequences for America's car fleet.
Appearing in Detroit, Trump ordered a review of the Obama administration's decision in January to finalize stiff fuel economy standards for the 2022-2025 period.
Trump cast his decision as a defense of American jobs, while his new Environmental Protection Agency administrator, Scott Pruitt—an avowed skeptic of climate-change science—decried the rules as "costly for automakers and the American people."
But the Natural Resources Defense Council warned the move would lead to a proliferation of gas guzzlers, while Senate Democratic leader Charles Schumer called the decision "one of the first steps in an all-out assault by the Trump administration to dismantle important environmental protections."
Although Trump's action opens the door to a potentially big change, auto industry experts said it is more likely the actual consequences will turn out to be less monumental than suggested by the rhetoric on both sides.
"It's safe to assume, I imagine, we'll have a less strict proposal sometime in the future," said David Whiston, an auto industry equity analyst at Morningstar who predicted major investments in hybrid and more efficient internal combustion technology would have lasting impacts.
"Long term, companies are still going to invest in electric, and plug-in hybrids and hydrogen regardless of what these rules are."
Big investments
US automakers have already sunk large amounts into factories and technology programs to meet tough fuel economy standards in America and other key markets, such as Europe and China, the International Council on Clean Transportation (ICCT) said.
"Anything that puts the US 2025 standards at risk carries with it the risk that the US could once again become a relative technology laggard in the industry, with clear implications for US-based companies' competitive position," the think-tank said.
Trump's move on Wednesday concerns a deal originally struck between Obama and many leading automakers in 2011 that envisioned a series of gradual increases through 2025, when average fuel economy would rise to 54.5 miles per gallon.
To meet the standards, automakers have adopted lighter-weight materials such as aluminum and structural tweaks to promote better aerodynamics, among other moves.
As part of the agreement, the auto industry won a promise for a "midterm evaluation" of the deal scheduled for 2018 to assess the standards in light of technological changes and business conditions.
Obama administration officials finalized the review and upheld the standards in their final days in office, drawing criticism from the industry, which argues the rules are costly and out of step with current market dynamics, including the rising popularity of light trucks in the United States.
Automakers cheered Trump's move Wednesday.
"By restarting this review, analysis rather than politics will produce a final decision consistent with the process we all agreed to... for greenhouse gases and fuel economy standards," said Mitch Bainwol, president of the Alliance of Automobile Manufacturers.
Efraim Levy, an auto industry analyst at the research group CFRA, said relaxing the rules should result in lower costs for automakers that can be passed on to consumers, boosting sales.
Clash with California
At the same time, analysts predict automakers will continue to invest heavily in hybrids and other fuel-efficient and electric vehicles to meet changing consumer tastes in an era when companies like Tesla are pushing the envelope with electric cars.
Pressure is also coming from US states that have adopted tough environmental rules, especially California, which has taken advantage of a provision under the Clean Air Act that permits states to set fuel emissions standards that go beyond federal rules.
An effort by the Trump administration to challenge California's authority would almost certainly wind up in court, where it would create a legal quagmire.
"As much as automakers might want some leniency from the standards, they don't want leniency with much greater uncertainty," ICCT program director Nic Lutsey said.
One outcome of the review could be greater leniency in how automakers are tested for fuel economy, he said, permitting more technologies that boost fuel economy but are difficult to account for during the rule-setting process.
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