New tailpipe emissions standards proposed by the US Environmental Protection Agency April 12 could prompt a surge in electric vehicle sales to account for 67% of new car sales by model year 2032 while bolstering US energy security by slashing US oil imports by 20 billion barrels.
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The standards for passenger vehicles and heavy-duty trucks are expected to cut carbon pollution by nearly 10 billion metric tons by 2055, roughly equivalent to twice the amount of total US CO2 emissions in 2022.
"EPA is proposing the strongest-ever federal pollution technology standards for both cars and trucks," EPA Administrator Michael Regan said at an April 12 press conference. "Together, today's actions will accelerate our ongoing transition to a clean vehicles future, tackle the climate crisis head on and improve air quality for communities all across the country."
Criticism from all sides
Republicans were quick to criticize the two proposed rules as part of a climate agenda that would drive up the cost of purchasing and owning vehicles and make the US more reliant on China for critical minerals used in EV batteries. And the oil lobby asserted the rules would lead to an effective ban on gasoline- and diesel-powered vehicles.
"EPA's choice to fixate on tailpipe emissions rather than full fuel and vehicle lifecycle is a huge error that will stymie investment and artificially cap the potential of carbon abatement for liquid fuels and vehicles on the road today," American Fuel & Petrochemical Manufacturers President and CEO Chet Thompson said in a statement.
Biofuel groups accused the EPA of blatantly putting a thumb on the scale for EVs while ignoring near-term opportunities for significant vehicle efficiency improvements and carbon emissions reductions offered by ethanol fuel blends.
"This proposal would constrict innovation and risk leaving millions of tons of carbon reductions on the table -- setting us on a path towards eliminating any role for proven, emissions-reducing biofuel blends precisely when we should be embracing a strategy that supports multiple low carbon options," Growth Energy CEO Emily Skor said.
Asked whether the new standards would put traditional internal combustion engines out of business, Regan said the agency was giving the automobile industry options for how best to achieve very ambitious climate goals that are necessary to protect the planet as well as health and public safety.
"We're not prescribing any mandate, and we're not driving any particular technology out of business, so to speak," he said.
As for critical mineral concerns, Regan reminded reporters that the new standards would not kick in until model year 2027.
"We hope that we can take advantage of that runway and follow the investments of historic legislation to bring manufacturing, especially battery manufacturing, back here domestically," he said. "It's our goal that we are more competitive and don't rely solely on China for batteries."
He added that the proposals also had energy security benefits.
"We're reducing our reliance on fossil fuels and harmful pollution, but we're also encouraging significant opportunities for job growth and manufacturing back here domestically, while we win the 21st century with this technology competition."
Still, the proposed standards also caught criticism from environmental groups.
"The draft rule fails to require any improvement in the tens of millions of new gas-guzzlers, and even the strongest option falls well short of the 75% pollution cut necessary to protect our planet," said Dan Becker, director of the Center for Biological Diversity's Safe Climate Transport Campaign. "Biden shouldn't let automakers' can't-do attitude sabotage his best shot at cutting carbon emissions."
Light- and medium-duty standards
The EPA's first set of proposed standards would apply to light- and medium-duty vehicles such as passenger cars, pickup trucks and SUVs.
The EPA's proposed rules for light-duty vehicles would require a 13% average annual reduction in carbon emissions across model years 2027-2032. The steepest required reduction would come in the earlier model years, with a proposed 18% reduction for model year 2027. The proposed emission limits would then gradually taper down, requiring an 11% reduction by model year 2032.
The EPA also proposed three regulatory alternatives of varying stringency, with average annual emission reductions ranging from 11% to 15%. Under the most stringent alternative, light-duty vehicles would be required to achieve a 24% reduction in carbon emissions by model year 2027.
The EPA estimated the proposed standards will add an average of $1,200 to new vehicle purchase prices by model year 2032. But owners of electric sedans or wagons would still save an estimated $1,720 in total average annual expenses by model year 2032, with most of that coming from savings on fuel and maintenance, according to the agency's analysis. Electric pickup truck owners would save an estimated $1,870 in total average annual expenses by model year 2032.
Automakers can achieve compliance flexibility by producing zero-emission vehicles such as EVs.
The proposed standards are expected to drive a more than ten-fold increase in light-duty EV adoption, with battery electric vehicles (BEVs) achieving 67% market penetration by model year 2032. EVs are also projected to account for 46% of all new medium-duty model years by the same model year.
"The new emission standards proposed by the EPA could drive a more rapid transition to BEVs than we currently expect," Matthias Heck, vice president-senior credit officer for Moody's, said in an April 12 email. "However, risks for this carbon transition are high, if not very high, for the industry, because electrification will require further substantial investments into new BEVs, battery technology, supply chain and manufacturing capacity, and charging infrastructure."
US President Joe Biden in 2021 set his sights on having zero-emissions vehicles make up 50% of new vehicle sales by 2030. While automakers have applauded the administration's steps to strengthen US leadership in clean cars and trucks, they have pushed for a timeline that would allow for manufacturing facility upgrades without stranding assets.
White House Climate Advisor Ali Zaidi noted on a press call April 11 that EV sales have already tripled since Biden took office, while the number of available models has doubled. And multiple leading automakers -- including Volkswagen, General Motors and Ford -- have announced plans to fully electrify their passenger vehicle fleets by 2035.
States representing approximately 40% of the US auto market also plan to adopt California regulations that ban the sale of gasoline-powered passenger vehicles by 2035.
EPA staff said April 11 that the agency's regulatory impact analysis accounts for the Inflation Reduction Act, which included a federal tax credit of up to $7,500 on new EV purchases. A bipartisan infrastructure law passed in 2021 also included $7.5 billion for the first nationwide EV charging network.
Zaidi also highlighted an April 11 announcement by Walmart in which the retail giant said it plans to install new EV fast-charging stations in "thousands" of Walmart and Sam's Club parking lots across the country.
A second set of standards proposed April 12 applies to heavy-duty vehicles like dump trucks, buses and tractor-trailers that currently account for a quarter of US transportation-related GHG emissions.
It is the final step of a three-phase approach to achieving a zero-emission freight sector more quickly. According to the EPA, its Clean Trucks Plan was designed to be feasible for the trucking industry to meet, with consideration paid to lead times, costs and other factors.
The last phase of the plan would update GHG emissions standards for model year 2027 that were finalized in December and create new, progressively more stringent standards for model years 2028 through 2032 for different subcategories of vocational vehicles and tractors.
For instance, model year 2032 school buses would have to meet a fleetwide target of 149 grams of CO2 per mile, an almost 22% reduction from the 190 grams of CO2 per mile permitted in model year 2027. A heavy-haul tractor would have to reduce its emissions 15% between model years 2027 to 2032 to achieve a targeted 41.1 grams of CO2 per mile standard.
The EPA projected that the standards would boost model year 2032 zero-emission vehicle adoption rates for vocational trucks to 50%, for short-haul tractors to 35% and for long-haul tractors to 25%.
Alternatives of varying stringencies were also proposed for which the EPA is seeking comment.
The new and significantly stronger GHG standards for heavy-duty vehicles are expected to cut 1.8 billion mt of CO2 through 2055, the equivalent of a whole year's worth of GHG emissions from the US transportation sector. The standards also have projected net benefits between $180 billion and $320 billion, Regan said.
Both sets of vehicle emissions standards are likely to face legal challenges once finalized. A coalition of Republican attorneys general is already challenging the EPA's standards for model years 2023-2026 in an ongoing case that could eventually land before the US Supreme Court.