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Proposed clean car rules expected to increase US electricity demand by just 1.3%

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Proposed clean car rules expected to increase US electricity demand by just 1.3%

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The U.S. electric grid is not expected to buckle under new proposed vehicle standards released Aug. 5 by the Biden administration.
Source: Geri Lavrov/Getty Creative via Getty Images

The Biden administration's new proposed climate standards for cars and light-duty trucks are projected to cut the equivalent of about one year's worth of petroleum combustion from the nation's greenhouse gas footprint by 2050.

But the proposed standards, which cover model years 2023 through 2026, will have little impact on the U.S. electric grid, according to joint regulatory impact analysis produced by the U.S. Environmental Protection Agency and U.S. Department of Transportation.

Released Aug. 5, the proposed standards would replace a much weaker Trump-era regulation — the Safer Affordable Fuel-Efficient Vehicles, or SAFE, rule — that actually would have increased planet-warming carbon dioxide emissions relative to earlier Obama-era standards.

The SAFE rule would have required automakers to achieve a real-world fleetwide fuel economy of 32.2 miles per gallon by the model year 2026, while its proposed replacement would require 38.2 miles per gallon by then. Automakers can meet the more aggressive target by making cars and light-duty trucks more fuel-efficient, selling additional zero-emission vehicles in exchange for compliance credits, or both.

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The new proposed standards are projected to result in significant emissions cuts, but their impact over the lifetime of model years covered would only increase U.S. electricity consumption by 1.3% beyond a business-as-usual case, according to the EPA's and DOT's estimates.

However, Biden on Aug. 5 also issued an executive order calling for all-electric cars to make up 50% of new sales in the country by 2030. He was joined at the White House by representatives from Detroit's three leading carmakers — General Motors Co., Ford Motor Co. and Stellantis NV — who pledged to meet that goal.

In the meantime, California's clean car rules are more likely to drive widespread electric-vehicle adoption and impact the grid more dramatically compared to federal tailpipe standards, said Joshua Linn, a senior fellow at the independent research organization Resources for the Future.

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In September 2019, the Trump administration revoked California's long-held waiver authority under the Clean Air Act to set its own tough vehicle pollution standards, setting off a bitter legal brawl.

The Biden administration is now in the middle of rescinding that action and is expected to grant the state a new waiver. That could allow 12 states that follow California's rules to adopt the targets in its zero-emission vehicle program, which requires automakers to sell a gradually increasing percentage of electric vehicles. California is already looking to end the sale of gas-powered passenger vehicles by 2035.

"It's really zero-emissions vehicle programs that are driving electric vehicle market shares, at least in those states and in a lot of the country," Linn, who also researches the U.S. electricity and transportation sectors as a professor at the University of Maryland, said in an interview.

Linn added that the details of Democrats' $3.5 trillion budget reconciliation package, which is tied to a smaller $1.2 trillion bipartisan infrastructure deal, will prove especially fateful for EV adoption and its related impact on the U.S. power grid. The current federal tax credit of up to $7,500 for all-electric vehicles phases out for automakers after 200,000 units are sold.

In an Aug. 6 research note, however, ClearView Energy Partners LLC said it expects Democrats' budget reconciliation measure to revise manufacturer-specific tax credits so that they begin to phase down after approximately 600,000 vehicles.

"If Congress extends those subsidies, then that's going to have a big effect and support those targets that those companies are announcing, and then also investments in the charging infrastructure," Linn said.