Making Sense of the Trump Administration's Fuel Economy Standards

WASHINGTON—The recent announcement by the Trump administration of its intention to revisit federal fuel economy standards for cars and light trucks has raised questions about its impacts on a key component of US climate and energy policy. However, according to a new study released by Resources for the Future (RFF) and Columbia University’s Center on Global Energy Policy, rolling back the scheduled standards for 2022–2025 would have very small impacts over the next decade on key outcomes such as gasoline use, greenhouse gas emissions, and oil imports.

Furthermore, the analysis by RFF Senior Fellow and University of Maryland Professor Joshua Linn and Columbia University’s Jason Bordoff and Akos Losz also finds that many of the commonly cited rationales for forgoing those standards are insufficient to justify repeal on benefit-cost grounds.

On April 2, 2018, the US Environmental Protection Agency (EPA) announced that planned fuel economy increases for model year 2022–2025 cars and light trucks are too stringent and should be revised. The EPA thus initiated a process to set new standards for 2022–2025, in partnership with the National Highway Transportation Safety Administration.

The standards were a central part of the Obama administration’s efforts to reduce US greenhouse gas emissions. The move to weaken the standards has been sharply criticized by many environmental groups, policymakers, and others. Supporters of the current standards argue that the standards would substantially reduce emissions at modest cost. But the standards have been highly controversial, and the move has also received a great deal of praise from other groups. Those who support weakening the standards—including many in the Trump administration—argue that the current standards would be excessively costly to consumers and automakers, while providing little or no benefit.

To facilitate discussion of these important public policy issues, the analysis makes two overall points about the EPA’s announcement:

Due to the gradual turnover of the on-road vehicle fleet, eliminating the tighter fuel economy standards for 2022–2025 would have small effects on gasoline consumption, greenhouse gas emissions, and oil imports during those years and even out to 2030. However, the ultimate impact of the weaker standards could be greater, especially if they hurt the progress of new technologies and the political momentum for tighter standards in the United States and in other countries over the longer term.

Changes in the social cost of carbon, fuel prices, miles traveled, and market shares of light trucks since the 2016 analysis are unlikely to cause the benefits of rolling back the standards to exceed the costs. If the agencies conclude that the benefits of rolling back the standards exceed the costs, the reasoning will likely be based on other factors, such as consumer willingness-to-pay for fuel-saving technologies or the cost and effectiveness of those technologies.

Read the full report: Making Sense of the Trump Administration's Fuel Economy Standard Rollback.