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Customer LoginsUS EPA recommends no change to 2025 regulations; public comment period starts
The US Environmental Protection Agency (EPA) has announced that it recommends leaving the 2025 standards in place, prompting the next steps in the midterm review and moving towards final rule approval.
IHS Markit Perspective
- Significance: The US Environmental Protection Agency (EPA) recommends that the proposed rules for 2022- through 2025-model-year greenhouse gas emissions are adopted. After a public comment period, the agency must issue a final determination by 1 April 2018.
- Implications: The EPA's decision to propose that regulations for the 2022 to 2025 model year remain as drafted is not a surprise, given the conclusion of the draft technical assessment report in July 2016, which indicated that the agency believes the 2025 targets are achievable.
- Outlook: The announcement is part of the process surrounding the midterm review, which began earlier in 2016. The EPA's announcement triggered a 30-day comment period, which will end on 30 December 2016. At that time the current EPA administrator will "decide if she has enough information to make a final determination" on the standards. According to the formal steps of the midterm evaluation process, the EPA administrator must make a final determination no later than 1 April 2018 - although the agency could make that determination earlier.
The US Environmental Protection Agency (EPA) has officially recommended leaving in place the proposed greenhouse gas emissions standards for model years 2022 through 2025. The statement came after a midterm technical analysis review by the EPA, National Highway Traffic Safety Administration (NHTSA), and California's Air Resources Board (CARB) in summer 2016. The Draft Technical Assessment Report (TAR) came to the conclusion that automakers are well-positioned to meet the standards.
The EPA statement said, "Today's proposed determination is based on years of technical work, including an exhaustive technical report released earlier this year, and the agency's thorough review and consideration of comments received on that report. This extensive body of analysis shows that manufacturers can meet the standards at similar or even a lower cost than what was anticipated in the 2012 rulemaking, and that the standards will deliver significant fuel savings for American consumers, as well as benefits to public health and welfare from reducing the pollution that contributes to climate change .… Although EPA's technical analysis indicates that the standards could be strengthened for model years 2022-25, proposing to leave the current standards in place provides greater certainty to the auto industry for product planning and engineering. This will enable long-term planning in the auto industry, while also benefiting consumers and the environment."
The EPA has maintained that the auto industry has experienced more success and a lower cost in meeting targets and noted that all major automakers met the current standards at the end of 2015, with manufacturers outperforming the standards on average.
Outlook and implications
The announcement is part of the process surrounding the midterm review, which began earlier in 2016. The EPA's announcement triggered a 30-day comment period, which will end on 30 December 2016. At that time, the current EPA administrator will "decide if she has enough information to make a final determination" on the standards. According to the formal steps of the process, the EPA administrator must make a final determination no later than 1 April 2018 - although he or she could make that determination earlier. If the final determination comes prior to 19 January 2017, it will be made under President Barak Obama's administration. If it is made after 20 January 2017, when President-elect Donald Trump is sworn in, it will be made under his administration.
If the current EPA administrator does not make a final determination prior to leaving office, it would be up to the new administrator to make the final determination by 1 April 2018. President Trump is expected to appoint a new administrator to the EPA, and the agency itself will be led by a new Department of Transportation secretary. Trump has nominated Elaine Chao to that Cabinet position. Although she must still be confirmed by the US Senate, this is expected to happen (see United States: 30 November 2016: US president-elect Trump nominates new transportation secretary).
Public comments on the initial report were due to the agency by 26 September 2016; an attempt to extend that deadline to the end of November was rejected in August (see United States: 24 August 2016: US regulators reject appeal for longer comment period on fuel efficiency regulations - report). While comments to the proposal made today are due by 30 December 2016, the EPA administrator is not required to issue the final determination until 1 April 2018. Making the proposal, however, triggered a 30-day public comment period, soon after which the agency could make a final determination.
However, automakers now know what the current EPA expects. Until the final determination is settled, the largest automakers are unlikely to make major changes to forward plans. The industry also looks likely to have a more sympathetic administration under Trump than over the past eight years, although how that will affect regulations remains to be seen.
Forces outside of the United States are also driving investment in expensive solutions for lowering emissions and increasing fuel efficiency. The United States is not the only region putting pressure for lower emissions. Automakers are preparing for more stringent emissions standards globally. Additionally, efforts toward mobility and autonomous cars may be more friendly for electric vehicles (EVs), although much of those impacts may be felt beyond 2025. Daimler AG and Volkswagen AG both made significant announcements regarding their EV plans at the Paris Motor Show in September 2016, reflecting that these initiatives are not purely a reaction to the US market and its regulations. At the end of the day, more strict regulations are expected to be imposed. IHS Automotive will continue to monitor the situation and adjust forecasts as necessary.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.