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HomeFinanceBiden's EPA advances toughest-ever tailpipe emissions rules

Biden’s EPA advances toughest-ever tailpipe emissions rules


The Biden Administration is advancing the toughest-ever U.S. limits on tailpipe emissions from cars, SUVs, vans and pickup trucks, it announced Wednesday.

The proposal from the Environmental Protection Agency governs tailpipe emissions of carbon dioxide, smog-forming nitrogen oxide and other pollution from vehicles manufactured for model years 2027 through 2032. Some auto-industry analysts said the new rules will likely push up retail costs for both standard and electric vehicles.

Wednesday’s announcement does stop short of a ban on gas-powered vehicles and a mandate to buy electric, although the more stringent emissions rules are expected to push more manufacturers to roll out electric vehicles, even while more than half of U.S. drivers remain uncertain that an EV will be their next auto purchase. The interest level in EVs has moved higher over recent years.

In addition, a second EPA rule advanced Wednesday would update vehicle emissions standards for greenhouse gas pollution from buses, freight trucks, and other heavy-duty vehicles. This rule builds on the final standards that EPA released in December 2022.

By EPA measures, the new standards would protect public health by cutting nearly 10 billion tons of CO2 emissions — twice the annual U.S. emissions today. They would also save consumers on average $12,000 over the lifetime of a vehicle. And they would strengthen American energy security by reducing reliance on 20 billion barrels of imported oil.

The proposed standards on vehicles were first reported earlier this month by Bloomberg News and others.

The EPA says its approach is technology-neutral, meaning that better-designed gas vehicles, hybrids, fuel cell vehicles, and other innovations could all be used to meet stricter standards, leaving the approach to adoption up to each manufacturer.

But with EV technology getting more advanced and cheaper, and consumer demand rising compared to just a few years ago, many manufacturers would likely rely on fully electric vehicles for compliance, the EPA and the White House said.

EPA estimates that by 2032, if finalized, the proposed rules could result in electrification of 67% of new sedans, crossovers, SUVs, and light trucks; 50% of new
vocational vehicles (such as buses and garbage trucks); 35% of new short-haul freight tractors; and 25% of new long-haul freight tractors.

Since 2021, the number of available electric models have doubled while the number of electric car sales have tripled. There are over 130,000 public chargers now available across the country – with all 50 states now implementing a federal investment to build a new national charging network, according to the White House.

The private sector has committed more than $120 billion into the American-made electric vehicle and battery supply chain in the last two years alone.

Still, some polls show a majority of Americans aren’t yet sold on going electric for their next cars, which they pin on higher prices relative to traditional cars and too few charging stations.

About 4 in 10 U.S. adults are at least somewhat likely to switch to an EV for their next buying round, said a recent poll by The Associated Press-NORC Center for Public Affairs Research and the Energy Policy Institute at the University of Chicago. Only 8% of U.S. adults say they or someone in their household owns or leases an electric vehicle, and just 8% say their household has a plug-in hybrid vehicle.

U.S.-based automakers General Motors Co.
GM,
-0.90%

 and Ford Motor Co.
F,
+1.18%

remain generally bullish for EV sales in coming years, while overseas manufacturers, including Hyundai
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+3.18%

 plan U.S.-based battery factories in order to get more of their EV offerings to qualify for consumer breaks stateside. Still, environmental advocates say aggressive tailpipe standards are necessary in the years needed to build up greater EV adoption.

Environmental groups, public-health and EV market participants have lobbied the administration to ensure requirements for model-year 2030 vehicles are 75% tougher than those covering 2021 models.

GM, Ford and the makers who still need traditional autos to generate the revenue that will fund EV expansion have argued that emissions rules should be limited in scope and extend just a few years. Major EV-only producer Tesla Inc.
TSLA,
+1.24%

 on the other hand has pushed for tougher emissions rules, which could help its sales.

The shift will require a “massive, 100-year change to the U.S. industrial base,” and the rule should be based on “a clear-eyed assessment of market readiness,” the Alliance for Automotive Innovation has said.

“The Biden Administration’s latest and more aggressive EPA mandates would require an unrealistic level of investment in everything from vehicle production to infrastructure support,” said Executive Analyst Karl Brauer of consumer-focused auto information site ISeeCars.

Brauer suggests the amount of tinkering to the EV rebate portion of the Inflation Reduction Act already illustrates how moving too quickly can actually hurt electric vehicle sales, “as fewer EVs qualify for tax credits today than qualified 6 months ago.”

He predicts price hikes for both EVs and gasoline models to meet the standards.

“Electric vehicles certainly have a role to play in the future of personal transportation,” Brauer said. “As EV sales and production numbers rise their costs will drop, ideally at the same rate our infrastructure evolves to support consumer charging needs.”

Even with federal rules under consideration, states are grappling with their own decision-making. As more buyers weigh an electric or hybrid gas-electric vehicle to save on volatility from gas prices
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-1.31%

 or because of personal convictions when it comes to manmade climate change, some states have been leaning toward setting their own emissions standards, taking a lead from California.

Under the Clean Air Act, states must abide by the federal government’s standard vehicle emissions standards unless they at least partially opt to follow California’s stricter requirements.

Limits on vehicle pollution factor into a U.S. pledge to meet its Paris Agreement commitment to cut greenhouse gas emissions
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+0.15%

 by at least 50% from 2005 levels by the end of the decade. Biden has laid down an ambition for at least half of all new vehicle sales to be electric models by 2030.



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