Biden Administration Announces Major New Vehicle Emissions Rule
The Environmental Protection Agency (EPA) on Wednesday finalized a major new rule to curb vehicle pollution. The rule, while less aggressive than an initial proposal from last year, represents the toughest standards to date for tailpipe emissions in the US. The rule advances the Biden administration’s goal of having at least 50% of all new cars sold in 2030 be zero-emissions models by volume and is part of the administration’s broader strategy to tackle emissions from the transportation sector.
What does the new rule say?
The final EPA rule sets the most stringent emissions standards ever for tailpipe emissions.
- It will require car manufacturers to meet new average emissions standards for cars, SUVs, light pickup trucks, medium-duty large pickups, and vans for model years 2027–2032.
- The rule is technology neutral, meaning manufacturers can produce a range of vehicles to meet the standards, including cleaner gasoline vehicles, hybrids, plug-in hybrids, and full battery EVs. It is not a ban on gasoline-powered cars.
- In order to be compliant, carmakers must roughly halve the emissions for model year 2032, as compared to model year 2027. See chart below.
- Companies—not consumers—that do not meet the standards will be liable for penalties. The rule does not explicitly state penalties for noncompliance, but historically, failure to meet EPA emissions standards could reach into the billions of dollars, based on the number of vehicles sold and the degree to which they do not meet the standards.
Light-duty vehicle GHG standards: Projected targets, by regulatory class (CO2 grams/mile)
Source: EPA.
What will be the impact of the rule?
The EPA claims the rule will have a range of benefits. The rule aims to significantly curb carbon dioxide (CO2) as well as toxic pollutants such as nitrogen oxides (NOx) and particulate matter, and in doing so achieve better climate and health outcomes. According to an EPA fact sheet, the rule is projected to:
- Reduce carbon dioxide by roughly 7.2 billion metric tons through 2055.
- Accelerate the adoption of electric vehicles, with carmakers expected to produce 30–56% of new light-duty vehicle sales as electric vehicles.
- Provide USD 13 billion in annual health benefits.
- Reduce annual fuel costs nationwide by USD 46 billion.
- Cut nearly USD 16 billion in annual maintenance and repair costs for drivers, as more EVs are adopted with fewer mechanical parts that require regular maintenance.
Some critics of the rule have argued that it will limit choices for the public, while others have critiqued the rule for not being aggressive enough to hit the administration’s net-zero goals.
The big picture
The largest source of US emissions comes from transportation. And the highest share of transportation emissions comes from light-duty vehicles. To meet the country’s net-zero goals, the country must eliminate nearly all emissions from the sector by 2050.
Source: EPA.
The move to electric vehicles is an essential part of this transition. However, in the US, electric vehicle sales comprise only 6% of passenger vehicle sales. This compares to about 22% in China, and 80% in Norway.
The broader US target around EVs is also less ambitious than those in Europe, which aims for zero emissions for all light vehicles by 2035.
The new EPA rule fits into a larger suite of policy actions from the Biden administration designed to decarbonize transportation. These include:
- Development of the US National Blueprint for Decarbonizing Transportation, a joint initiative of the EPA, Department of Energy, Department of Transportation, and Housing and Urban Development.
- Investments in a national network of Electric Vehicle chargers, through the Bipartisan Infrastructure Law.
- Tax credits for the purchase of electric vehicles, through the Inflation Reduction Act.
- An executive order setting a non-binding goal of 50% of all new cars sold in 2030 to be zero-emissions models.
Source: EPA.
What comes next?
The EPA rule is already receiving pushback from Republicans in Congress. Senators Dan Sullivan (R-Alaska) and Pete Ricketts (R-Nebraska) issued a joint statement vowing to introduce Congressional Review Act (CRA) legislation to overturn the rule. However, given President Biden’s veto power, the rule is unlikely to be overturned. If former President Donald Trump returns to power, he has vowed to revoke the rule, but doing so would not be a quick or easy process. A potentially more serious threat to the rule will come from legal challenges. The new EPA rule is widely expected to be brought to court and eventually considered before the 6–3 conservative leaning Supreme Court—which in 2022 limited the EPA’s authority to regulate emissions from power plants.
Materials presented by EGA Climate Policy
For additional information, reach out to Andy.Morimoto@EdelmanEGA.com
