New EPA, DOE fuel regs give automakers longer to reduce CO₂ emissions

This week, the US Department of Energy and the Environmental Protection Agency have published new fuel efficiency rules that will go into effect in 2026. The rules favor both battery-electric vehicles and also plug-in hybrid EVs, but not to the degree as proposed by each agency last April.

Those would have required automakers to sell four times as many electric vehicles as they do now. This was met with a rare display of solidarity across the industry—automakers, workers, and dealers all called on the White House to slow its approach.

Under the 2023 proposals, the DOE would change the way that Corporate Average Fuel Economy regulations are calculated for model years 2027–2032 (which would take place from partway through calendar year 2026 until sometime in calendar year 2031), and the EPA would implement tougher vehicle emissions standards for light- and medium-duty vehicles for the same time period.

Among the changes was a new “petroleum-equivalency factor,” which currently is extremely generous in the way it “converts the measured electrical energy consumption of an electric vehicle into a raw gasoline-equivalent fuel economy value” when determining an automaker’s fleet average.

According to the EPA, the proposed rules were met positively by “environmental and public health NGOs, states, consumer groups,” and EV-only automakers. But many other automakers told the agency that the rules were too ambitious, the EPA’s technical analysis was “overly optimistic,” and worries about supply chains, customer demand, and charging infrastructure delays could all throw big spanners in the works. Labor groups “urged a slower transition” to plug-in vehicles to prevent potential job losses.

What’s changed?

The DOE and EPA have tried to keep everyone happy with the final rules. The revised rules (DOE, EPA) arrive at roughly the same levels of emissions for model year 2032 as before.

But the way that CAFE used DOE’s formulae gets a bit more complicated, with “a PEF value based on the expected survivability-weighted lifetime mileage schedule of the fleet of vehicles sold during the regulatory period,” and a revised balance of different energy sources used to determine how clean the grid will be for each model year.

Cars will be allowed to emit up to 85 grams of CO₂ per mile, light trucks up to 90 CO₂ g/mile, for a combined fleet average for light-duty vehicles of 85 CO₂ g/mile. And medium-duty vehicles will need to emit less than 245 CO₂ g/mile for vans and 290 CO₂ g/mile for pickups by 2032.

One hopefully important change is a decrease in the allowable footprint for light trucks over time. The EPA hopes this will prevent automakers from “upsizing” trucks and SUVs and will emerge unscathed from the 2023 proposed rule.

Although the model-year 2032 endpoints are almost in the same places, both DOE and EPA rules give automakers more time to meet them, with less strict goals than before for model years 2027 through 2031.

In total, the White House says that the final rule will avoid 7.2 billion tons of CO₂ emissions through 2055, with $99 billion in net benefits to society.

Is everyone still angry?

The automakers are pleased with the slower ramp-up. “Moderating the pace of EV adoption in 2027, 2028, 2029, and 2030 was the right call because it prioritizes more reasonable electrification targets in the next few (very critical) years of the EV transition. These adjusted EV targets—still a stretch goal—should give the market and supply chains a chance to catch up. It buys some time for more public charging to come online, and the industrial incentives and policies of the Inflation Reduction Act to do their thing.

“And the big one? The rules are mindful of the importance of choice to drivers and preserves their ability to choose the vehicle that’s right for them,” said John Bozzella, president and CEO of the Alliance for Automotive Innovation.

“We know these strengthened standards are critical for cleaning up our environment. We also know they will help protect our economy and foster innovation in the auto industry that will lead to better, cleaner and more economical cars for consumers,” said Sandra Purohit, federal advocacy director for the nonpartisan business group E2.

The United Automobile Workers are in favor of the regulation, too: “The EPA has made significant progress on its final greenhouse gas emissions rule for light-duty vehicles. By taking seriously the concerns of workers and communities, the EPA has come a long way to create a more feasible emissions rule that protects workers building ICE vehicles, while providing a path forward for automakers to implement the full range of automotive technologies to reduce emissions,” it said in a statement.

Environmental groups also appear broadly in favor. “The Biden administration’s new clean car standards will save lives and money for families. And with investments from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act underway, these new standards will only further help US manufacturers in building American-made and union-built zero-emission vehicles,” said Sierra Club executive director Ben Jealous.

“These commonsense standards will slash the source of a fifth of the nation’s carbon footprint. Over time, these rules will prevent more carbon pollution than the entire US economy coughs up in a year. They’ll save drivers money at the pump and cut tailpipe pollution that endangers public health. In the longer journey to confront the climate crisis, these standards take us in the right direction,” said Manish Bapna, president and CEO of the Natural Resources Defense Council.