When the Trump administration decided in April to roll back Obama-era fuel economy standards, California and a coalition of other states decided they weren’t going to take the decision lying down.

Under the 1963 Clean Air Act, California has the right to set tighter air pollution rules for vehicles than the federal government, owing to the Los Angeles Basin’s notoriously poor air quality. This right gave California a seat at the table as the past two administrations debated the issue, and a compromise was reached in both cases. Neither President Bush nor Obama—nor the auto industry—wanted to end up with separate standards for the nation and the state of California.

But now, California and the Trump administration seem sufficiently far apart that California may well choose to exercise its authority and try to go its own way, likely by enforcing the original Obama administration fuel economy targets through 2025 for new vehicles sold in the state. Thirteen other states and the District of Columbia currently adopt California’s clean air regulations and would likely follow suit, as the Clean Air Act permits states to follow California’s lead rather than federal regulations. Colorado just announced that it will soon become state number fourteen.

If California does indeed break with the feds, and the courts uphold that decision, automakers will be confronted with two fuel economy standards: one for California and the coalition of affiliated states, and a weaker standard everywhere else. The automakers have encouraged the parties to find a compromise that avoids this outcome, citing the additional cost of complying with two standards. Meanwhile, environmentalists are pushing California and the other states to break away, believing that reducing emissions in some states is better than reducing no emissions at all. Yet, despite the costs to automakers and consumers imposed by the regulatory split, it is likely that enactment of stricter standards by California and the other states will actually result in zero reductions in carbon emissions, at least in the near-term.

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Areas of Focus: Environment
Definition
Environment
Producing and using energy damages people’s health and the environment. EPIC research is quantifying the social costs of energy choices and uncovering policies that help protect health while facilitating growth.
Air Pollution
Definition
Air Pollution
Air pollution from fossil fuel combustion poses a grave threat to human health worldwide. EPIC research is using real-world data to calculate the effects of air pollution on human health...
Fuel Economy Standards
Definition
Fuel Economy Standards
Fuel economy standards are the United States’ cornerstone transportation policy aimed at reducing both oil consumption and greenhouse gas emissions. EPIC research is exploring whether these standards are structured optimally...
Transportation
Definition
Transportation
Mobility is central to economic activity. Yet, a lack of fuel diversity and continued demand growth have made the transportation industry a major contributor to global pollution and carbon emissions....