By Robinson Meyer

These are strange times for America’s car industry.

This month, the White House will decide the fate of a set of federal rules called the Corporate Average Fuel Economy standards, or cafe standards. These laws regulate the miles-per-gallon number of “light-duty vehicles”—that is, sedans, minivans, Ford F-150s, and anything else that’s street-legal and weighs less than 10,000 pounds.

The rules work mostly by getting a little more stringent every year. In 2018, cafe requires new vehicles to average about 29 miles per gallon (or mpg). By 2025, they must hit 39 mpg. Note that these are fleet-wide numbers: Some small cars will run more efficiently, pushing 50 mpg; pickup trucks will probably hunker in the high 20s.

Or, at least, that’s how the law has worked. It now seems likely that the Trump administration will freeze the standards in 2020. In other words, starting next fall, the U.S. government would no longer require new cars to become steadily more fuel-efficient. For environmentalists and consumer advocates, it amounts to a nightmare proposal.

Does the car industry want the same? That’s an interesting question. They certainly seem to find the cafe standards frustrating. For the last two years, they’ve claimed the rules are expensive and out of step with what Americans desire; they also argue that the Obama administration rammed cafe down their throats. And the industry’s lobbyists have been complaining about the rules to any Trump administration official who would listen, up to and including the president.

And it’s clear that some parts of the rule haven’t worked as planned. As written, cafe allows automakers to trade pollution credits, so that companies that don’t meet the standards (like Chrysler and GM) can buy away rights from carmakers that exceed them (like Toyota, Nissan, and Tesla). But there’s a lot of secrecy around the credit-selling process, and automakers can only trade credits in one-to-one deals. “No one knows what it costs to buy a credit,” says Sam Ori, the executive director of the Energy Policy Institute at the University of Chicago. “If you were trying to set up the most inefficient, least liquid, and most difficult-to-understand market available, this is it.”

Sam Ori, the executive director of the Energy Policy Institute at the University of Chicago, told me he didn’t believe automakers’ protests. The industry wants the cafe standards frozen, he said. They just fear the consequences of saying so.

“They’re concerned about the public-image aspect of this,” he said. “They’re concerned that everyone’s going to see they’re self-interested, that their image as environmental stewards will be tarnished.”

“[Freezing cafe] reduces their regulatory costs,” he said. “The bottom line is just that industry wants the lowest costs possible. If you’re telling me that for some reason, in this case, industry doesn’t want the lowest costs possible, then you have to have a really good explanation—because that would run completely counter to the relationship we’ve seen between government and industry and climate policy throughout the entire history of this business.”

Continue reading at The Atlantic…

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