EPA carbon rule is expected to add $800-$1,100 to new car sticker prices and reduce oil consumption by 1.2 billion barrels

While the oil industry was watching OPEC, U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy has issued a final proposal to leave the carbon emissions standards for model years 2022-2025 in place. “This extensive body of analysis shows that manufacturers can meet the standards at similar or even a lower cost than what was anticipated in the 2012 rulemaking,” the EPA said in a press release and support materials on Wednesday.

EPA Carbon Standards for Cars, Light Trucks to Reduce Oil Consumption by 1.2 Billion Barrels

Source: EPA

The EPA said “the standards will deliver significant fuel savings for American consumers, as well as benefits to public health and welfare from reducing the pollution that contributes to climate change.

“Full implementation of the standards will cut about 6 billion metric tons of GHG emissions over the lifetimes of the vehicles sold in model years 2012-2025. Cars and light trucks are the largest source of GHG emissions in the U.S. transportation sector,” the agency said.

You will pay about $1,000 more for a car

Bottom line: the EPA carbon rules require technologies that will tack on $800 – $1,100 to the price tag of a new car or light truck and consumers will pay for it.

EPA Carbon Standards for Cars, Light Trucks to Reduce Oil Consumption by 1.2 Billion Barrels

Source: EPA

“In our analysis for this Proposed Determination, we are proposing to retain unaltered the existing MY2022-2025 standards established in the 2012 final rule, and as such are applying these same footprint-based standards to the updated fleet projections for MY2025. It is important to keep in mind that the updated MY2025 fleet wide projections reflected in this Proposed Determination are still just projections … and that the actual GHG emissions/fuel economy level achieved in MY2025 will not be determined until the manufacturers have completed their MY2025 production,” the EPA said.

In its support materials the EPA makes a claim that “automakers have a wide range of technology pathways available to meet the carbon standards. Standards are achievable with very low penetration of strong hybrids, electric vehicles and plug-in hybrid electric vehicles. The auto industry can meet the standards primarily with advanced gasoline vehicle technologies and with very low levels of strong hybridization and full electrification (plug-in vehicles),” the EPA said.

House Energy and Commerce Committee rips EPA’s proposed emissions standards

“This action is completely unnecessary and will have grave consequences on jobs and manufacturing,” Committee Chairman Fred Upton (R-MI), Commerce, Manufacturing, and Trade Subcommittee Chairman Michael C. Burgess, M.D. (R-TX), and Energy and Power Subcommittee Vice Chairman Pete Olson (R-TX) said after the Environmental Protection Agency released its proposed emissions targets for model years 2022-2025.

“Under EPA’s own regulations this determination is not required for another year and a half, but with the clock ticking on the administration, the regulatory frenzy is underway. Federal regulations should not stand in the way of the car-buying public having their choice of vehicles at prices they can afford.”

EPA Carbon Standards for Cars, Light Trucks to Reduce Oil Consumption by 1.2 Billion Barrels

Source: EPA

Rule was driven by Paris climate agreement

EPA said in its supporting documents: “Continued Reductions in CO2 Emissions Are Essential to Help Address the Threat of Climate Change. In December 2015, the U.S. was one of over 190 signatories to the Paris Climate Agreement. In the Paris agreement, individual countries agreed to commit to putting nationally determined contributions (NDCs) for greenhouse gas emissions reductions to the United Nations Framework Convention on Climate Change. Further, the countries agreed to revise their NDCs every five years, with the expectation that they will strengthen over time.

“The Paris agreement reaffirms the goal of limiting global temperature increase to well below 2°Celsius, and for the first time urged efforts to limit the temperature increase to 1.5°Celsius. The U.S. submitted a non-binding intended NDC target of reducing economy-wide GHG emissions by 26-28 percent below its 2005 level in 2025 and to make best efforts to reduce emissions by 28 percent.

“The White House recently discussed the importance of near-term emission reductions, including to spur technology cost reductions that will facilitate sustained economy-wide emission reductions beyond 2025 in the United States Mid-Century Strategy, released in November 2016 at the same time that Canada and Mexico released their respective Mid-Century Strategies.

“EPA recognizes that climate change is a long-term global environmental challenge. Any meaningful plan to address the climate challenge must prioritize early GHG emissions reductions and make continual progress toward long-term goals. Transportation is projected to be an increasingly significant contributor to U.S. (and global) CO2 emissions well into the future. … While EPA is not yet prepared to begin a formal light-duty vehicle GHG emissions rulemaking process beyond MY2025, the agency believes that it is important to have a dialog with the industry and other key stakeholders, including the State of California and non-governmental organizations, about future light-duty vehicle GHG emissions reductions.

Energy and Commerce Committee reaction

“The mid-term review was previously established to allow government to move forward with the most up to date information available. Instead, these complicated and onerous standards were rushed through at the 11th hour without taking into consideration their complexity, impact on consumer’s pocketbooks, the impact on the auto industry and jobs, innovation, and changes occurring in the marketplace, including the cost of new safety technologies.”

Seeking public comment

EPA is seeking public comment on this proposed adjudicatory determination that the GHG standards currently in place for MY2022-2025 remain appropriate under the Act and rulemaking to change them is not warranted.

Under the EPA regulations, this Final Determination must be made no later than April 1, 2018. However, the EPA administrator has discretion to make the Final Determination sooner than April 1, 2018, “as EPA recognizes that long-term regulatory certainty and stability are important for the automotive industry and will contribute to the continued success of the national program, which in turn will reduce emissions, improve fuel economy, deliver important fuel savings to consumers, and benefit public health and welfare,” the agency said.

The EPA background report on the rule is available here.

29 days to give comments to the EPA

The comment period closes December 30, 2016 — For information regarding the comment period and how to submit comments on the Proposed Determination, please see the Federal Register Notice:

Notice of Availability of a Proposed Order: Proposed Determination on the Appropriateness of the Model Year 2022-2025 Light-duty Vehicle Greenhouse Gas Emissions Standards under the Midterm Evaluation (PDF) . Comments may be submitted at www.regulations.gov to Docket EPA-HQ-OAR-2015-0827.

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