Oil industry and biofuel groups are campaigning against new regulations that aim to replace most new gasoline-fuelled US cars and trucks with battery-powered electric vehicles (EVs).
The landmark regulations, which President Joe Biden's administration proposed on 12 April, would set increasingly strict tailpipe emission standards for cars, trucks and larger commercial vehicles, beginning in model year 2027.
These standards could bring about a major shift. They are due to accelerate sales of battery-powered EVs so that by 2032 they would account for 67pc of car and light truck sales, and 46pc of medium-duty van and commercial vehicle sales, according to the US Environmental Protection Agency (EPA). In 2022, battery electric and plug-in EVs together accounted for just 8.4pc of light-duty vehicles.
The proposed standards mean oil producers and refiners would lose nearly 2.75mn b/d of oil demand by 2040. They argue that the EPA is far exceeding its powers under the Clean Air Act by proposing emission standards that could be met only if automakers aggressively phase out internal combustion engines in favour of batteries. "Congress has never come anywhere close to providing EPA with the authority it asserts here," American Fuels and Petrochemical Manufacturers president Chet Thompson says.
Ethanol producers, renewable diesel groups, fuel retailers and others that stand to lose out have joined the campaign against the regulations. Those groups, alongside oil producers, signed a letter on 11 July faulting the rules and urging Biden to consider a "broader range" of alternatives to curtail vehicle emissions, such as greater use of renewable fuels.
The pending EPA regulations are a core part of Biden's non-binding goal for EVs to account for half of US vehicle sales by 2030. To support this goal, the US is rolling out $7.5bn in infrastructure funds to build a national network of chargers. The recent expansion of a tax credit of up to $7,500 per vehicle, alongside subsidies for battery manufacturing, is intended to further accelerate the transition to EVs. The EPA aims to finalise the vehicle standards by March 2024.
US automakers say they support Biden's EV goal but need time to scale their supply chains, acquire critical minerals for batteries and build charging infrastructure. The EPA's draft proposal is "neither reasonable nor achievable" in the intended timeframe, the Alliance for Automotive Innovation says. Oil producers cite similar concerns, as well as scant consumer appetite for EVs. "This proposal is a de facto ban that will eliminate competition," American Petroleum Institute president Mike Sommers says. Even so, automakers are aggressively expanding their EV offerings and their marketing to consumers. And the market for critical minerals has doubled over the past five years, with investment surging by 30pc last year following a 20pc increase in 2021, the IEA says.
Questions for Biden
If the EPA finalises the tailpipe standards without changes, critics are preparing legal claims that could find a receptive audience in federal court. One argument is that phasing out internal combustion engines is a "major question" that was never delegated to the EPA and could have "vast economic and political significance". The US Supreme Court last year cited the newly conceived "major questions doctrine" to throw out an earlier climate rule affecting power plants.
Biden's congressional critics are also looking for options to curtail his EV policies. Republicans in the US House of Representatives last week held a subcommittee vote advancing bills to block the tailpipe standards and curtail California's ability to set its own vehicle rules.
