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

AI SaaS

An EV charger and a fuel container on a balance

Aurich Lawson | Getty Images

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.

AI SaaS

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