Auto Sector to Rev Up Pressure on California for Emissions Deal

The auto industry wants the Trump administration and California to meet in the middle on future fuel economy limits, and they say the ball is in California’s court to make a deal happen.

Automakers and parts manufacturers have called nearly unanimously for a compromise among federal agencies—the Environmental Protection Agency and the National Highway Traffic Safety Administration—and California regulators on a single set of fuel economy and greenhouse gas limits for passenger cars.

Industry is urging the Trump administration to steer away from its proposal to freeze the limits at 2020 levels and settle on a level that increases year over year at a rate less stringent than the Obama-era standards.

Auto industry representatives said at a Motor & Equipment Manufacturers Association event Nov. 27 in Washington that they’re concerned that on the other side of the talks, California isn’t ready to budge.

California has the special ability under the Clean Air Act to set its own tailpipe standards—although the Trump administration is proposing to eliminate that authority. The state has already adopted the Obama-era standards through 2025 and is in talks with the auto industry about future limits.

Containing greenhouse gas emissions from the transportation sector is critical to the Golden State’s ability to meet its climate goals. Any changes to the federal standards could complicate California’s ability to work with the auto industry to set new standards and move toward cleaner cars. All sides have said they want to avoid having two separate fuel economy and greenhouse gas programs in the U.S.

“The pressure’s not there for California to really acquiesce,” Gregory T. Garr, director of market creation at Umicore Autocat USA Inc., said. “How do you put pressure on them? I’m not sure.”

Ongoing Talks

California air regulators presented a plan countering the Trump administration’s Aug. 24 proposal to EPA officials earlier this month, according to EPA acting Administrator Andrew Wheeler in remarks Nov. 13 at EPA headquarters.

Industry representatives said they haven’t seen the counteroffer. And even though the EPA and California regulators are involved in ongoing discussions, NHTSA doesn’t appear to be at the table, Garr said.

The EPA and the California Air Resources Board didn’t immediately respond to requests for comment.

Mary Nichols, California’s top air regulator, has previously expressed a willingness to strike a deal, but her optimism waned slightly after the Trump administration unveiled its plans.

California regulators haven’t seen any evidence that the current standards are too stringent, and the agencies haven’t offered much to back up their claims, Nichols said last month.

“I don’t see any way to take what’s out there and turn it into an acceptable proposal,” she said Oct. 26, the deadline to submit comments on the Trump proposal.

Auto Industry Jobs

Freezing the standards could cost the U.S. 67,000 auto industry jobs by 2025, affecting vehicle manufacturers, parts suppliers, and dealerships, the Motor & Equipment Manufacturers Association said in a Nov. 27 analysis.

Auto parts suppliers further argue that a standards freeze could lead to millions of dollars in stranded investments.

Several major automakers, including Ford Motor Co., General Motors Co., and American Honda Motor Co. Inc., publicly criticized Trump plans to freeze federal fuel economy limits. They are urging the administration to work with California and pull back on efforts to challenge its ability to set state-level limits.

A few automakers, though, including Fiat Chrysler Automobiles NV and Toyota Motor Corp., said in comments to the proposal that they would support an attack on California’s authority if the agencies were unable to reach a deal with the state’s regulators.

Room for Compromise

Auto supplier representatives say room for compromise exists.

They point to an expansion of programs within the fuel economy standards that allow automakers to earn credits toward compliance for using technologies that aren’t specifically covered in the standards, such as using climate-friendly refrigerants in mobile air-conditioning systems.

“That’s one area where the auto industry is united,” Laurie Holmes, senior director of environmental policy for the Motor & Equipment Manufacturers Association, said. She added that California regulators have expressed an interest in exploring how to expand those credits.

It is unclear, however, whether California would publicly make a commitment to move away from the Obama-era levels.

“The politics of this are just awful,” Matt Meenan, senior director of public affairs for the Aluminum Association, said at the event.

California and the Trump administration have staked out opposite sides on climate change, and that makes it politically hard to compromise.