ENVIRONMENT
04/06/2018 04:48 pm ET Updated Apr 10, 2018

Automakers Got Exactly What They Wanted From Scott Pruitt’s EPA

Car companies' promises on climate change are running on empty.
National Automobile Dealers Association President Peter Welch, Environmental Protection Agency Administrator Scott Pruitt, Au
EPA
National Automobile Dealers Association President Peter Welch, Environmental Protection Agency Administrator Scott Pruitt, Auto Alliance President Mitch Bainwol and Association of Global Automakers President John Bozzella pose for a photo after Tuesday's press conference. 

Automakers scrambled to distance themselves from a White House that, in rolling back the only federal rule restricting planet-warming emissions from vehicles this week, gave the companies exactly what they wanted.

Last week, Ford Motor Company’s top executives called for “increasing clean car standards” in a blog post titled, “A Measure of Progress.” An assistant vice president at American Honda Motor told The New York Times: “We didn’t ask for that. The position we outlined was sensible.” Chevrolet dealers nixxed a Virginia dealership owner’s plan to host Environmental Protection Agency Administrator Scott Pruitt’s press conference announcing the rollback, wary that hosting the event would associate the General Motors brand with an unpopular policy decision.

Yet automakers still tied their reputations to the Trump administration on Tuesday when Pruitt declared the Obama-era fuel efficiency standards too strict and began the process of rewriting the landmark clean air regulation. Executives from three of the top auto industry trade groups flanked the embattled EPA administrator ― who is facing loudening calls to resign amid a rapidly cascading series of ethical controversies ― at a press conference.

“What an exciting day,” Pruitt said in the EPA’s historic Rachel Carson Green Room. “We always like to have guests here at the EPA.”

The rule, which the Obama administration implemented in 2012 with automakers’ overwhelming support, required vehicles to average 54.5 miles per gallon by 2025. The regulation would have cut oil consumption by 12 billion barrels and tailpipe emissions in half. Fuel efficiency would have doubled, saving drivers $3,200 to $5,700 in gasoline costs over a vehicle’s lifetime. The rule would also have prevented the release 6 billion metric tons of heat-trapping emissions ― equivalent to what 150 power plants produce in a year.

The Obama administration expedited a review of the rule, determining in January 2017 that the new standards were fair and feasible. But the same automakers now trying to distance themselves from the Trump EPA appealed immediately to the incoming administration. On Monday, Pruitt issued his own finding ―  that the “determination was wrong,” and the standards were “too high.”

Exhaust flows out of the tailpipe of a vehicle in Florida in 2007. 
Joe Raedle via Getty Images
Exhaust flows out of the tailpipe of a vehicle in Florida in 2007. 

Analysts suggest the industry wanted tweaks to the regulation, such as increased credits for building more electric vehicles or reducing emissions in the production process. The companies may not have foreseen the EPA’s eagerness to scorch existing rules, and got more than they bargained for. Bloomberg wrote that the “carmakers may regret what they wished for.” As one former Obama administration official put it: “It might be like the dog that caught the car.”

That may be the result of roaming with the wrong pack. The three groups whose leaders spoke at Pruitt’s press conference ramped up lobbying efforts last year. The Alliance of Automobile Manufacturers spent $8.1 million on total lobbying last year, a nearly 9 percent increase from the previous year, according to data collated by the Center for Responsive Politics. The National Automobile Dealers Association spent a record $4.8 million on lobbying last year, and the Association of Global Automakers increased its lobbying expenditures by nearly 50 percent, to $3.5 million.

The Auto Alliance sent Trump a letter days after the November 2016 election and another one to Pruitt after the Senate confirmed him as the 14th EPA administrator in February 2017. As DeSmog reported, the Auto Alliance ramped up pressure over the past year, submitting a report co-authored by Joseph D’Aleo, a policy adviser from right-wing climate change denial group Heartland Institute, calling the accuracy of climate science into question.

That report appears to have made an impact. In its 38-page finding released Monday afternoon, the EPA said it planned to reverse the Obama-era determination on the rules in part because “the social cost of carbon” and “energy security valuation ... should also be updated to be consistent with the literature and empirical evidence.” The memo made no mention of climate change.

The rule also set a single national standard, creating a compromise with California’s congressionally granted right under the Clean Air Act to set its own, stricter emissions targets, and allowing carmakers to produce vehicles to one specification for the entire country. The EPA is now quietly negotiating with California regulators to come up with a new agreement, though Golden State officials say they are ready to go to court to defend the standards already in place.

The trio at Tuesday’s press conference sparred with California as far back as 2002, when the California Senate passed the first bill in the country to limit carbon dioxide emissions from vehicle exhaust. At the time, Peter Welch ― the National Automobile Dealers Association president who kicked off Tuesday’s EPA announcement ― worked for the California New Car Dealers Association, and called the legislation “a dumb idea.” In 2007, the Auto Alliance went head-to-head with then California Gov. Arnold Schwarzenegger, a Republican, urging federal lawmakers to intervene on behalf of automakers.

President Barack Obama delivers remarks on the economy at the Daimler Trucks North America Mt. Holly Truck Manufacturing Plan
John W. Adkisson via Getty Images
President Barack Obama delivers remarks on the economy at the Daimler Trucks North America Mt. Holly Truck Manufacturing Plant on March 7, 2011 in Mt. Holly, North Carolina. President Obama outlined incentives to promote development of more fuel-efficient cars and to make it easier for people to buy and operate next-generation vehicles. 

Trade associations historically push for rules that appease their most regulation-averse members. In response, big companies have quit trade groups in recent years in protest of their opposition to climate science and environmental rules. The most notable examples are when Apple and Nike withdrew from the U.S. Chamber of Commerce in 2009.

It may be time for automakers to do the same, said Roland Hwang, a managing director at the Natural Resources Defense Council.

“Any auto company that truly wants to distinguish itself should separate itself from the least common denominators as represented by their associations,” he told HuffPost. “To the extent that they are still in, we have to assume that they are being hypocritical in terms of their stance.”

Toyota did not respond to questions about whether it would consider leaving trade groups that oppose emission rules. In a statement to HuffPost, the Japanese auto giant said it “supports the goal of progressively stronger fuel economy standards” and that it’s “working together with other manufacturers and regulators to review a framework” for vehicle emissions standards that “consider market trends and conditions” and “what technology can realistically deliver.”

General Motors directed questions about the Auto Alliance to the trade group, but said it remains “committed to improving fuel economy, reducing emissions and an all-electric future.” Fiat Chrysler Automobiles referred all questions about the EPA decision to the Auto Alliance but forwarded links to its 2016 sustainability reports.

Ford and Volkswagen did not immediately respond to a request for comment.

Car advertising began talking up the eco-friendliness of their vehicles roughly a decade ago, leading to accusations of greenwashing. But automakers started aggressively burnishing their environmental reputations three years ago. On one end of the industry, Volkswagen, the largest global automaker by sales, took a beating after the EPA uncovered its scheme to retrofit diesel cars with software to cheat emissions tests. The Department of Justice charged the company with felony counts of conspiracy and fraud, its stock price tanked and its top executives resigned in disgrace. At the other end of the industry, electric carmaker Tesla’s stock was soaring, propelling its billionaire CEO, Elon Musk, to near-Hollywood stardom. The United States helped broker the Paris climate agreement with support from automakers.

Car companies began rolling out hybrid and battery-powered vehicles to rival Tesla. Ford vowed to spend $4.5 billion on electric vehicles by 2020. General Motors assigned half its designers to alternative vehicles. The International Energy Agency declared 2015 “the year electric vehicles went mainstream.”

But it was business as usual at the industry’s trade associations.

They look at it like a deli looks at liverwurst. They don’t want to make it, but if you ask for it, they’ll make it for you. Dan Becker, Safe Climate Campaign

By mid-2016, when Democratic nominee Hillary Clinton still seemed likely to win the presidency, groups like the Auto Alliance began preparing to demand a break on fuel efficiency standards. By that time, fuel prices had fallen from a record national average of $3.60 per gallon in 2012. As the cost of driving a gas guzzler decreased, Americans began buying more trucks and SUVs, according to Rebecca Lindland, an executive analyst at the auto data firm Kelley Blue Book.

“When the original agreement went into place and fuel economy standards started to change, we were at, like, 50-50 truck-car,” she told HuffPost. “Now we’re at like 65, sometimes 70, truck-car. We have to understand what the consumer is buying and how we do make the most fuel-efficient version of that vehicle.”

The problem, according to Daniel Becker, the director of the D.C.-based Safe Climate Campaign’s Center for Auto Safety, is that trucks reap large profits for automakers. A $73,000 Cadillac Escalade, for example, earns $35,000 profit for each one sold, The Detroit News reported. By contrast, electric vehicles are considered half as profitable as cars with combustion engines, a Daimler executive admitted last year.

“They look at it like a deli looks at liverwurst,” Becker said of how auto manufacturers view their electric vehicle offerings. “They don’t want to make it, but if you ask for it, they’ll make it for you.”

U.S. emission standards are already behind Japan, the European Union and China, the world’s largest auto market. To compete in those markets, U.S. automakers will be forced to manufacture the standards they say are unattainable domestically. But the Trump administration is taking steps to make fuel-efficient foreign-made vehicles more expensive, protecting the U.S. market for domestic manufacturers. The White House asked the EPA, and the Commerce and Transportation departments to draft plans to put stiffer environmental standards on imported vehicles, driving up the cost in what’s called a “nontariff barrier,” according to The Wall Street Journal.

Becker said it’s no mistake that an industry that spends roughly $15 billion a year on marketing continues to promote pickup trucks and SUVs during coveted and costly Super Bowl time slots.   

“They create demand,” said Becker. “They know how to market vehicles ―  that’s what they do for their existence. They want to make the vehicles that they make the biggest profit on.”

 

UPDATE: April 10, 1:25 p.m. ― In an email sent four days after this article published, a Honda spokesman dismissed the premise of the story and sent a boilerplate statement noting that the carmaker supports “maintaining the stringency of the standards.” 

“This is not a ‘story’ based on his inquiry, but a commentary with a strong viewpoint,” the spokesman said. 

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