Economy, Regs, & Taxes

Reassessing Obama's CAFE Mandates

"We're going to be the car capital of the world again."

Arnold Ahlert · Mar. 20, 2017

Last week, President Donald Trump announced his administration will reassess the Corporate Average Fuel Efficiency (CAFE) mandates the Obama administration’s EPA tried to lock in before the Jan. 20 transition of power. “We’re going to work on the CAFE standards so you can make cars in America again,” Trump told a cheering crowd of auto workers in Ypsilanti, Michigan. “We’re going to help companies so they are going to help you. We’re going to be the car capital of the world again.”

New EPA chief Scott Pruitt promised his agency will coordinate with the Department of Transportation’s (DOT) National Highway Traffic Safety Administration (NHTSA) to decide whether the Obama administration mandates will remain in place. The deadline for making the decision is April 2018.

Why the reassessment? “In 2012 the EPA set ambitious mileage standards that required auto makers to achieve an average of 54.5 miles per gallon by 2025, nearly twice the 2011 mandate,” the Wall Street Journal explains. “The increases were backloaded such that manufacturers had to hit 36.6 miles a gallon by 2017 and 46.8 miles a gallon by 2022. In the last three years, car makers would need to squeeze an additional eight miles out of each gallon.”

In a letter sent to Pruitt in February, the Alliance of Auto Manufacturers (AAM) insisted no government agency “had ever set emissions standards so far into the future,” and that the final determination engendered by Obama’s EPA was “riddled with indefensible assumptions, inadequate analysis, and failure to engage with contrary evidence.”

The AAM further explained meeting those standards would cost far more than the $200 billion originally estimated by Obama’s EPA because the “electrified technologies” needed to meet them would raise the price of vehicles and depress auto sales. As the Journal notes, the onerous standards might have been feasible when gas cost $3.60 per gallon and passenger cars comprised more than half of all vehicle sales. But when the price of gas dropped, sales of trucks and SUVs skyrocketed, with trucks gaining a 61% market share in 2016. Moreover, the decline in gas prices mitigated the benefits of customer fuel savings the EPA used to justify the increased CAFE standards.

Those standards also increased vehicle production costs, driving vehicle manufacturers to Mexico in search of cheaper labor.

The Obama administration knew all of this and originally promised the incoming administration would get a “midterm review” of the CAFE standards to be completed by April 2018.

Make that an incoming Clinton administration. When Trump was elected, Obama’s EPA set the 2012 standards in stone, even though their own projections revealed fewer than 1% of gas-burning cars would comply with the 2022 mandate, and none would meet the standards set for 2025.

Trump’s having none of it. “We are going to restore the originally scheduled midterm review and we are going to ensure that any regulations we have protect and defend your jobs, your factories. We’re going to be fair,” Trump said. “That is why I’m proud to say I followed through on my promise.”

Predictably, Democrats and their eco-zealot allies are furious. Sen. Chuck Schumer (D-NY) characterized the review as “all-out assault” to “dismantle important environmental protections.” Kristin Igusky, Climate Program Associate at the World Resources, declared “the administration is creating more uncertainty and blocking progress toward cleaner, more efficient vehicles for America.”

Christian Science Monitor columnist Zack Coleman joins the chorus. “Transportation is now the leading sector for greenhouse gas emissions in the United States,” he writes. “The lower the so-called Corporate Average Fuel Economy (CAFE) standard, the smaller will be the reductions carbon dioxide emissions from vehicles.”

Not quite. The expansion of the aforementioned “electrified technologies” necessary to meet the Obama EPA standards have environmental problems of their own as onerous, if not more so, than vehicles themselves. “So we’re chasing the car that is fueled solely by the electricity that comes out of our walls,” writes columnist Rich Cromwell. “That electricity is apparently generated by magic, never coal, so battery-powered options would reduce cars’ carbon footprint and create a more sustainable future.”

Cromwell also eviscerates the catalytic converter, an ostensible pollutant-eliminating device that’s been around since the 70s and became government required for vehicles in 2010. “Catalytic converters, you see, are made in variety of ways, but all those ways include precious metals,” he reveals. “You know how you get precious metals? By mining them from deep under the surface of the earth.” Cromwell cites an article from MIT that “examines all the ways this kind of mining is abjectly horrible, including its carbon footprint.”

In other words, while environmentalists and their Democrat allies in Congress are quick to tout the transparent benefits of electric cars or CAFE standards, they are rather myopic regarding the unforeseen — or is that conspicuously ignored — deleterious tradeoffs that accompany them.

And not just environmental tradeoffs. As Robert Tracinski explains, one would have to drive a $90,000 electric-powered Tesla for 30 years to equalize the costs between it and a $45,000 gas-powered Lexus, based on the average number of miles most Americans drive, coupled with slightly higher gas costs than they’re currently paying. Thus, many “green energy products” are a long way from being economically viable. On the other hand, Tracinski adds, they remain “very much a plaything or status symbol for the wealthy and upper middle class, the sort of people who uniformly believe in man-made global warming and who can afford to spend tens of thousands of extra dollars just to feel good about themselves.”

One suspects ordinary Americans who can’t afford a Tesla or a Lexus and struggle to make ends meet are less “high-minded.”

And what if CAFE standards are solely about holier-than-thou self-aggrandizement? “Under the Obama Administration, CAFE standards have become a tool for combatting global warming, at which they are utterly ineffective,” Heritage Foundation writers Salim Furth and David Kreutzer declare. “Americans are paying excessively for regulations that fail any reasonable cost-benefit test.”

The benefit touted by the Obama administration — a “decrease global temperatures by 0.007 degrees to 0.018 degrees Celsius in 2100” — would be more than offset by “massive losses” imposed on consumers who would increase the number of miles they drive with more fuel-efficient cars offsetting carbon reductions. Many would also eschew higher-priced new car purchases and “delay upgrades, leaving older vehicles on the road longer.”

Pruitt has assured the nation his review of CAFE standards will engender a program that is “good for consumers and good for the environment.” Such balance is a refreshing change from the Obama administration’s “kill the economy to save the planet” mindset.

Nonetheless, he will face resistance. As columnist Ned Barnett reveals, the EPA is still infested with careerists who “believe their own views on global warming and a host of other environmental issues are the only ‘true’ positions. The president, for his part, is clearly preparing to take the challenge directly to the EPA’s permanent staff.”

Hopefully under a swamp-draining Trump administration, there’s no such thing as administrative permanence.

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