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Four automakers strike fuel efficiency deal with California

25 July 2019

Four automakers—including Ford, Honda, Volkswagen and BMW—have struck a deal with the California Air Resources Board (CARB) to produce more fuel-efficient cars for their US fleets in coming years, according to a report by The Washington Post. The automakers agreed to produce light-duty vehicles that could average 50 mpg by 2026, undercutting efforts by the US Environmental Protection Agency (EPA) to freeze them at the 2020 level of about 37 mpg.

Under the new accord the four companies, which represent roughly 30% of the US auto market, have agreed to produce fleets averaging nearly 50 mpg by model year 2026. The deal is also a relaxation of the existing, Obama-era standards—which call for a 51 mpg fuel economy to be reached by 2025—but the standards would be much stronger than the EPA proposal.

As part of the new agreement, California has pledged to certify vehicles from the four automakers and provide the firms with additional flexibility in how they meet each year’s emissions goal. The four carmakers will improve their fleet’s average efficiency by 3.7% a year, as opposed to 4.7% dictated under the existing standards.

Mary D. Nichols, CARB Chairwoman, said that she sees the agreement as a potential “olive branch” to the Trump administration and hopes it joins the deal. “What we have here is a statement of principles intended to reach out to the federal government to move them off the track that they seem to be on and onto a more constructive track,” Nichols said, adding that the companies approached California officials last month about a potential compromise.

In a joint statement, the four automakers said their decision to seek a deal with CARB was driven by a need for predictability, as well as a desire to reduce compliance costs, keep vehicles affordable for customers and be good environmental stewards.

The four companies represent roughly 30% of the US auto market. All of the above fuel efficiency figures are CAFE values, which are different from EPA vehicle stickers or real world fuel economy.

The EPA/NHTSA action to relax the GHG and fuel economy regulations has been triggered by the opposition of the auto industry to the existing, stringent regulations. The US auto industry petitioned the then President-elect Donald Trump in November 2016, and the then-EPA Administrator Scott Pruitt in February 2017, requesting that the EPA reconsider the 2025 GHG emission standards.

Only after the Trump administration has set the wheels in motion, carmakers realized that the likely outcome of the action may be two parallel sets of fuel economy and GHG standards: one federal and one in California and other states that follow California standards. The EPA intended to finalize their relaxed GHG emission rule in winter 2018, but it seems the rulemaking process is stuck in limbo because of the California controversy.

Source: Washington Post