Indiana University experts weren’t surprised an EPA review concluded Obama-era fuel emission standards were too high, but they disagree on whether a rule change is necessary.
The U.S. Environmental Protection Agency has determined fuel emission standards passed under former President Barack Obama were not appropriate. Those standards are still in place, but this week’s announcement from the EPA signals the regulatory agency’s intention to change them.
The rules were a joint effort between the National Highway Traffic Safety Administration and the EPA. The safety administration sets miles-pergallon standards, and the EPA sets carbon emission standards. In 2012, the two organizations worked together to come up with standards that aligned.
The EPA rules, which are in effect until 2025, required a mid-term evaluation to be completed by April 2018. An evaluation was completed before Obama left office, and then-EPA head Gina McCarthy concluded the standards were still appropriate. President Donald Trump’s administration decided to do its own review, which took place over the past year. EPA administrator Scott Pruitt came to a different conclusion than McCarthy.
Research from IU’s School of Public and Environmental Affairs contributed to the recent EPA review. They examined the economic impact and effectiveness of the regulations based on updated data. For instance, 2025 fuel prices were projected to reach $3.84 per gallon when the rules were set in 2012. New projections in 2016 were $2.74 per gallon. This difference reflects lower oil prices due to the slowing of the Chinese economy and the surge of “fracking” for oil in the U.S.
The study also found the cost of manufacturing vehicles that met the 54.5 mpg target for 2025 would be between 11 percent and 54 percent more expensive than originally thought. Researchers determined more lightweight materials, which are more expensive than conventional steel, would need to be used to reach the target based on 2016 data.
The researchers concluded the 2012 fuel emission standards would have a negative economic effect early on, but a positive effect in the long run. Higher manufacturing costs and lower fuel prices would slow new vehicle sales from 2017 to about 2025, sending ripple effects through the economy. Fewer people buying new, fuel-efficient vehicles would also reduce the effectiveness of the rules.