This week, the Environmental Protection Agency announced the finalization of new tailpipe emission standards. The agency boasted that these were the strictest standards ever, adding that they would save money, create jobs, and eliminate billions of tons of CO2 emissions.
The American Petroleum Institute, along with the American Fuel & Petrochemical Manufacturers, issued an immediate reaction, warning that the new standards would make all gasoline and diesel-powered light vehicles illegal in less than 10 years. And that will not be a good thing.
According to the EPA, tightening tailpipe emission standards to an average level of 85 grams per mile would eliminate more than 7 billion tons of carbon dioxide emissions by 2055. This, the agency said, was "roughly equal to four times the emissions of the entire transportation sector in 2021."
The agency also made claims about public health benefits from the cleaner air and more jobs being created in the manufacturing industry as electric vehicle production picks up and expands.
The API and the AFPM, in their reaction, noted that gasoline cars still constitute the overwhelming bulk of total passenger vehicle sales in the country. They cited Cox Automotive figures for last year-which saw record EV sales-that revealed EVs only accounted for less than 8% of total car sales. Related: ING Sees Oil Prices Rising Further on Supply Risk
Not only did EVs account for less than a tenth of total car sales, but most of them were made in California, and towards the end of the year, sales growth began to weaken. This prompted forecasts that this is a trend and would affect carmakers' plans for EVs.
Indeed, carmakers changed their plans, seeing as they weren't selling anywhere near the number of EVs they assumed they would, given the pointed support of the federal government and many state governments. So, they lobbied for less stringent tailpipe emission standards.
The lobbying apparently worked because, originally, the 85 gram/mile standard was supposed to kick in as of 2030. Now, this has been delayed to 2032, which, according to the Wall Street Journal, gives the industry more time to adjust to the situation. In fairness, two years will hardly make any difference for anyone.
There is also the fact that these revised standards would still require a huge increase in EV sales, at between 31% and 40%, per the WSJ, for model year 2030, for example. How exactly carmakers could go from less than 10% to 31% in six years remains a mystery, especially with the signs of waning EV demand among drivers.
The API and the AFPM warn that the new standards are not going to be popular with people. "This regulation will make new gas-powered vehicles unavailable or prohibitively expensive for most Americans. For them, this wildly unpopular policy is going to feel and function like a ban," they said in their joint statement.
Indeed, the new standards are a form of ban on internal combustion engine car sales, just like the bans that the EU and the UK approved recently, aiming at the very same thing-phasing out internal combustion technology.
Be that as it may, the worry of the API and the AFPM may well be premature. The new standards aim to change the car market in the United States. To do this, they are targeting the supply side. But they can do little-short of direct and bound to be unwelcome intervention-to influence the demand side.
People will not be easily forced into switching to an EV, even if these become less expensive, although lower prices would definitely help EV adoption. Yet there is also the problem of charging infrastructure, range anxiety, which does not seem to have gone anywhere, and exorbitant insurance premiums.
Because of these problems, many drivers would likely prefer to keep their old cars for longer instead of going electric. This would interfere with the federal government's EV plans and likely hurt carmakers considerably.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
EVs are a fad. They will never ever prevail over ICEs no matter how many government
legislations are approved.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert