Obama’s Landmark Greenhouse Gas and Fuel Economy Standards Are Working - Now Let’s Look to the Future

This week the US Environmental Protection Agency (EPA), the National Highway Traffic and Safety Administration (NHTSA) and the California Air Resources Board (CARB) released a very positive report regarding the historic federal greenhouse gas and fuel economy standards.  In a nutshell, car manufacturers can meet the current 2025 goals to improve efficiency and slash greenhouse gas emissions at a cost similar or less than expected four years ago.

But despite these clear and comprehensive findings, some elements in the auto industry will inevitably push back, arguing that the rules will be too expensive or that gasoline prices are so low that customers don't want fuel-efficient vehicles. 

These arguments against long-term standards are myopic.  Remember that when these rules were first adopted in 2009, the auto industry was in collapse.  The fate of iconic car companies, for decades the pride of the United States, was a huge question mark.  Eventually, the federal government decided to throw GM, Chrysler and Ford a multi-billion dollar lifeline.  It was in the midst of these economic conditions, with fragile domestic manufacturers and gasoline prices around $2.00 a gallon--actually lower than today--that EPA, NHTSA and CARB first began developing today's greenhouse gas and fuel economy standards.

To its credit, domestic and foreign manufacturers agreed to the groundbreaking standards. American manufacturers realized they had become overly dependent on heavy, gas-guzzling trucks and SUVs.  In 2009, they began to chart a new course that would ensure their long-term competitiveness, both domestically and globally.  They bet on building a next generation of vehicles for a cleaner and more efficient future.  The environmental upside to this innovation was staggering.  Six billion metric tons of CO2 emissions would be avoided and consumers would save $1.7 trillion at the pump.

So how does the auto industry stand seven years later?  Have manufacturers crashed and burned?  No.  From a bankrupt shambles in 2009, US auto industry sales have expanded dramatically.  In 2015, they grew by 4.5 million vehicles, numbers on par with historic highs. Profits are also back on solid footing.  GM, the largest of the Big Three, has swung from a $30.9 billion loss in 2008 to nearly $10 billion in profits in 2015.  In fact, according to one analysis, the "Big Three" stand to fully recover compliance costs and be even more profitable per a range of future scenarios.

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