The EPA Footprint Rule & Emissions

A few days ago, the EPA announced new fuel economy rules, ending the absurd policies put in place by the prior administration that allowed new cars to spew more harmful emissions instead of less. If you read the headlines, the new rules require automakers to reach a corporate average fuel economy of 55 miles per gallon by 2026. That seems a giant step forward, doesn’t it?

It is, sort of, but please curb your enthusiasm. As we reported when the new rules were announced, that number is based on an old formula. Employing the new formula used today to calculate the fuel economy numbers you see on the window sticker at your local dealership — a formula designed to more accurately predict what motorist should experience in real world driving — the CAFE number is actually a hair less than 40 miles per gallon.

Grams Per Mile Vs Miles Per Gallon

What many of us missed when the new EPA rules were published is that the standard for emissions now is grams of carbon dioxide emitted per mile. What the agency has done is extrapolate what the new standard means in terms of fuel economy. So vehicles are not required to get 55 mpg. They are required to achieve something called a “projected fleetwide CO2 standard.” This is a good thing. The European Union started using a grams of CO2 per kilometer standard years ago. The bad news here is that the grams per mile standard is 132 gm/mile for passenger cars but 187 gm/mile for light duty trucks.

The EPA expects the combined fleet average will be 161 gm/mile, but that is based on an expectation that sales in 2026 will be 47% passenger cars and 53% light duty trucks. Is that a realistic expectation? Not in the slightest. Can you name a passenger car that GM, Ford, or Chrysler sells today? There are a few, but not many. The Big Three ditched sedans years ago. Gone are the Crown Vic, the Chevy Impala and Malibu, and the Dodge Dart. Almost all the passenger cars they make are so-called muscle cars like the Camaro, Mustang, and Charger/Challenger twins.

Take a look at this chart from FRED, aka Federal Reserve Economic Data, that tracks vehicle sales in the US. Does it support that 47%/53% assumption? Absolutely not. The upshot is the new standard is based on a false assumption, one that will undercut much of the intent behind the new rules.

Not Your Average Average

The key word in all this is “average.” The fuel economy rules envision two categories of vehicles — passenger cars and light duty trucks. Treehugger says, “It may have once made sense to treat light duty trucks differently than cars when they were actually working vehicles, but as Brad Plumer noted a decade ago in the Washington Post, “Automakers quickly realized that they could build more SUVs and light trucks (as well as cars designed to meet light-truck standards, like the Subaru Outback) in order to sidestep the rules.”

The truth of the matter is that the vast majority of new vehicles sold today fall into the light duty truck category. Are manufacturers building bigger and bigger SUVs because that’s what consumers want or are they building them because they generate enormous profits for the companies? According to Statista, the auto industry spent close to $12.5 billion advertising their wares in 2020. Care to hazard a guess as to how much of that went to promote the sale of vehicles that fall into the “light duty truck” category? If you said “most of it,” go straight to the head of the class.

Ever notice how there aren’t many station wagons around anymore? What happened? Did Americans wake up one morning and say, “I am so done with station wagons. I’m going to buy an SUV instead?” Or did the honchos in Detroit say to themselves, “A station wagon is a passenger car. An SUV is a light duty truck. We can make more money selling SUVs so let’s make a bunch of them and advertise the heck out of them!”

There’s more to this story. Light duty trucks (which includes most SUVs) do not have to meet the same rigorous safety standards as passenger cars. To make matters worse, medium duty trucks — anything with the numerals 250 or 2500 in their name — are allowed to pollute more and meet even lower safety standards! What a country, huh? Which do you think costs less to manufacture — a passenger car that meets the toughest safety and fuel economy standards or a truck/SUV that meets lower safety and fuel economy standards? Exactly.

The Takeaway

The good news is the EPA has finally transitioned away from trying to control emissions by regulating fuel economy. The bad news is, the new rules set standards that are laughable and include demonstrably false assumptions about the mix of new vehicles in the future. The rest of the world must be snickering up their sleeves at such weak regulations even while some will scream about how tough they are.

Keep in mind that while Ford joined with the state of California to support its stricter emissions standards, General Motors and Chrysler did not. And don’t forget that Toyota has spent more money lobbying against stricter standards than any other automaker. We can expect all the attorneys general of states controlled by the Red Team to challenge the new rules  in court. If control of the government shifts in the future, these new rules — as weak as they may be — will be tossed overboard faster than you can say “carbon dioxide.”

The hook here is that the EPA is depending on the sale of electric vehicles to drag down average emissions to the point where automakers will be in compliance with the new standards. “By MY 2026, EPA projects that the final standards can be met with sales of about 17 percent electric vehicles (EVs), and wider uptake of advanced gasoline engine and vehicle technologies available today.”

In reality, based on the increase in sales of electric vehicles taking place lately and the imminent introduction of battery-electric pickup trucks from Ford, Chevrolet, and Dodge, those expectations may be exceeded by a wide margin. By 2026, concerns about tailpipe emissions may become moot. What a glorious prospect that is!