Utilities point way to CAFE compromise

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WASHINGTON — Automakers seeking to protect a nationwide clean-car program against the Trump administration’s proposed rollback of fuel economy and emissions standards may find an ally in the nation’s electric utilities.

The administration’s aggressive proposal to freeze fuel economy standards at 2020 levels has left automakers worried that they will be left out of step with California regulations, which are followed by a dozen other states. They fear they will have to shoulder the expense of engineering cars to two separate standards or forgo sales of some models in some of the biggest auto markets. That has led to calls for a negotiated deal between automakers and California to head off such an outcome and set a de facto national standard.

But what would such a compromise look like? The White House initiative, which also would rescind California’s power to set its own emissions rules, doesn’t seem to leave much middle ground.

One little-noticed idea was advanced by the National Coalition for Advanced Transportation, which is pushing for policies that encourage adoption of electric vehicles. Its 16 members are mostly power and utility companies but also include businesses that supply batteries and electric charging infrastructure, along with the ultimate EV booster, Tesla Inc.

Utilities, like other members of the coalition, are looking at the prospect of increased revenue as automakers adopt more electrified powertrains.

In a May 31 letter to the California Air Resources Board, the industry group recommended an alternative path by which automakers could meet California’s rules: voluntarily taking certain steps nationwide that show sustained, robust investment in EVs and other advanced powertrain technologies that effectively reduce pollution levels as California intended.

“We believe that it is conceptually the logical path forward if the federal standard is considerably weakened, because it’s one of the only ways to accommodate everyone’s collective interest” in a harmonized national system while providing automakers some additional flexibility, Robert Wyman, a partner at Latham & Watkins and the coalition’s outside counsel, told Automotive News.

Wyman also participates on the EPA’s Clean Air Act federal advisory committee.

So far, he said, there has been little response, but he remained optimistic that the proposal eventually will serve as the basis for a constructive dialogue among key parties.

Modifications

From the start of the Trump administration, automakers pushed for added flexibility in achieving the targets of the Obama-era fuel economy program, which called for gradual improvements through the 2025 model year. But they have signaled through their trade associations that they think Trump’s proposal issued in August goes too far. Instead, they want to maintain existing standards with some modifications to ease compliance. At a public listening session held by NHTSA and the EPA last week near Detroit, Ford Motor Co. and Fiat Chrysler Automobiles representatives testified against freezing the standards.

“Let me be clear: We do not support standing still,” Bob Holycross, Ford global director of sustainability and vehicle environmental matters, testified. “Clean-car standards should increase year over year, with the inclusion of provisions that promote ongoing investment in technology that will further drive greenhouse-gas reductions.”

The alternative approach, according to the coalition, would achieve much of what California and the automakers want. It should function like the existing standards in promoting steady gains, maintain or enhance incentives for developing advanced vehicle technologies and infrastructure, and allow for a broader, more flexible set of criteria to gauge compliance, the group said.

Among the key components of the proposal:

Continue to count EVs and plug-in hybrids as zero-emission vehicles.

Extend and restructure existing bonus credits for alternative-fuel vehicles so automakers get more points for vehicles with greater all-electric range; for deploying ZEVs in ride-hailing and ride-sharing applications; or for exceeding California’s ZEV sales mandate.

Reform the program for off-cycle credits — credits for technologies that reduce carbon emissions but aren’t measured on the regular testing cycle.

Consider additional emission performance, technology deployment or sales criteria for one or more years beyond the 2025 model year.

Under the existing fuel economy program, vehicle makers can bank credits earned in one year for exceeding mileage and apply them to future models that fall short of the target, or they can buy credits from a rival.

Lawsuit

CARB is soliciting comments on other ways to maintain alignment with the federal standards or reward national actions to promote cleaner vehicles.

The coalition said the voluntary program could be established through rule-making or by CARB policy to exercise discretion in enforcing state standards against automakers that otherwise meet the broader criteria.

In the meantime, the coalition is trying to protect the existing program. It is among several parties to a lawsuit that claims federal agencies didn’t properly follow administrative law when they reopened the midpoint review of the Obama-era emissions standards this year.

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