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Trump targets tough US fuel-economy standards

15 Mar 2017, 9.16 am GMT

Trump targets tough US fuel-economy standards

Washington, 15 March (Argus) — President Donald Trump has taken the first step toward weakening US fuel-economy standards projected to lift the efficiency of cars and trucks by 40pc by 2025.

The administration will revive a "mid-term" review of fuel-economy standards the US Environmental Protection Agency (EPA) concluded on 13 January, which would have applied to model year 2022-25 vehicles.

The White House and the EPA made the announcement ahead of Trump's visit to Detroit, where he is meeting chief executives of US automakers and plans to address auto workers at a rally.

The EPA in the final week of former president Barack Obama's administration determined that the 2022-25 standards were economically feasible.

Automakers have complained that former president Barack Obama's administration rushed that review to shield it from changes. They say the standards, which are projected to lift the fuel-economy of a model year 2025 vehicle to 51.4 miles/USG from 36.6 miles/USG today, need to account for consumer preferences for trucks and sports-utility vehicles, rather than smaller vehicles with costly fuel-saving technology.

The Trump administration has all but endorsed that view. But it said it would be objective in completing the review of 2022-25 standards next year. "The industry says [the proposed standards] are aggressive, but we are not saying that," a senior White House official said. Still, "there is a voluminous amount of data that the EPA has ignored. Read the testimony by automakers. The process was short-circuited, and the public did not have an opportunity to weigh in."

The estimated costs of compliance are a "huge deal" for Trump and his economic growth agenda, a senior White House official said. "The government should not be an obstacle for the US auto industry to compete globally and to innovate."

The EPA in 2012 estimated compliance costs at $6.5bn/yr in 2010 dollars, compared with fuel and other savings of $26bn/yr.

Environmentalists believe industry is targeting the regulations so they can preserve sales of more profitable vehicles, and complain automakers have failed to put their advertising muscle behind efficient vehicles. They are also promising to defend regulations that the EPA projects will cut about 594mn tons (540mn metric tonnes) of CO2 over the lifespan of model year 2022-25 vehicles, the equivalent of about 8pc of annual US greenhouse gas emissions.

A new mid-term review by the EPA would generate the technical documents and economic studies that could form the basis of a proposed rulemaking to weaken the standards, even if the agency does not end up changing the stringency of standards. Automakers plan to submit industry-funded studies on potential job losses and other issue related the existing fuel-economy standards.

The White House said it directed the EPA to make greater reliance on the US National Highway Traffic Safety Administration in informing its decisions on the mid-term review, contending that the previous administration prioritized climate concerns over economic feasibility of standards.

The administration for now does not plan to challenge the federal waiver California has to implement its greenhouse gas emissions standards for new cars and light trucks. "We will have to work with California, and that will not change when 2018 comes around," the White House said.

US automakers under existing rules would have to reach 42.9 miles/USG for model year 2021 vehicles. Enforcing the proposed 2022-25 standards would have shaved 230,000 b/d from US gasoline demand in 2025 compared with that 2021 baseline, according to projections from consulting firm ClearView Energy Partners.

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