What Could A Canada, California Agreement On Auto Pollution Standards Mean For Automakers?

Speaker 1: 00:00 California got across border ally in the fight against a significant environmental rollback by president Trump Canada joints, California in the fight against Trump's decision to weaken auto pollution standards as part of coverage from the KPBS climate change desk. I interviewed Mark Jacobson, associate professor of economics at the University of California San Diego. He specializes in environmental regulation of the transportation and auto industry. Well, start with the regulation at issue here. The corporate average fuel economy or cafe standard. What is it and how did it change under President Barack Obama? Speaker 2: 00:36 So the fuel economy standards been around for a long time. It's about the average fuel economy or miles per gallon that cars sold in the u s have to get under the Obama Administration early on a California was thinking about making the standards stricter than the rest of the country. Uh, we have a history of, uh, lots of policy in that direction and eventually, uh, the Obama Administration decided to make its national standards much stricter as well. Basically matching what California would have done had it acted on its own Speaker 1: 01:05 in what did he want to do? What was the plan under Obama? W how much miles? How many miles? Speaker 2: 01:10 Yeah. It was extremely ambitious. The stated target was about 54 or 54 and a half miles per gallon on average in about five or 10 years. Speaker 1: 01:18 And they hadn't been right. Hadn't happened. Raised in a long time. The cafe standard, right? Speaker 2: 01:21 That's right. It had been creeping up slowly for us SUVs and pickup trucks and had been more or less flat for cars for many years. Speaker 1: 01:29 Now let's move on to the Donald Trump administration. What's he planning to do with the cafe standard? Speaker 2: 01:34 So we got news last summer that the plan was to roll back the standard, uh, essentially freezing them at the 2020 levels. So next year would be a little bit better fuel economy than this year on average. And then it would just be flat from there on out. So we want to further improvement. Speaker 1: 01:48 We weren't going to get anywhere near 54, right? Speaker 2: 01:50 No, no. It would be a 30 year or so. Speaker 1: 01:54 All right. And now, so how is California trying to fight back against Trump's, uh, action regarding the cafe standard? Speaker 2: 02:00 Well, so it's interesting because California had, had had its own standard, a sort of ready to go and then it got preempted by the Obama administration standards that sort of satisfied with California was looking for. And uh, it's sort of, uh, in the cards that as soon as the rollback, uh, is made official, which is likely to happen here pretty soon, that California will say, well, it wants to do what it always wanted to do, which was to have more, more efficient cars and that will do that sort of, anyway, now that fly in the ointment of that is that as part of the rollback of the standard that Trump administration is also attempting to remove California's ability to regulate fuel economy on its own, uh, for this date. Speaker 1: 02:38 But now Canada has agreed to join California and fighting back against the change in these fuels standards, what's been agreed between our state and Canada. Speaker 2: 02:47 So of course the state doesn't enter in foreign policy particularly directly. But what's happened here is that Canada has for at least 20 years, been following exactly what the u s does on fuel economy. And this, it kind of makes sense. We're pretty much the same auto market, the same models of cars are sold in both places and so on. Now the looks like there might be a split between what the federal government is doing and what California is doing. Canada kind of had to make a choice and that choice was to stick with California's version of, of what fuel economy should be. Um, and so they, they haven't, it's not a treaty or a binding agreement or anything, but, but Canada's has said that they're gonna follow us rather than follow the follow. We're with you a, yeah. I want to say there, are there other states also wanting to join with California in this and kind of a block of states to fight this rollback or these standards? Speaker 2: 03:39 That's right. So there's about 13 states. There's, I think 16 are currently suing the EPA. Some something on that order. It's about 40% of us car sales are in a, this block is the western states and most of the northeast of the u s are trying to come together in a block to regulate their fuel economy separate from the federal government. And now that we've got Canada and now we've got Canada big market we're talking about, that's right. California has had almost exactly 2 million car sales, uh, 2 million new cars sold just in the state of the last four or so years running each year. Yeah. In Canada, it turns out their market is almost identical in size to California as market. It's almost exactly 2 million vehicles a year. Uh, so we're ended, of course, California is the largest car market in the US. And so it's sort of an equal player, I guess, in the, so living in California without the beach boys and the curse. Speaker 2: 04:29 Uh, so it seems the auto makers, they're facing tough standards and markets as big as California, Canada, and these other states. Witness simply makes sense for the auto makers to make the cleaner cars and sell them to anybody regardless of what the Trump rollbacks is. That's right. One interesting thing about it is it's an average standard. And so this creates some, some potential problems with overlaps. So carmakers make course lots of different types of cars. I'm very efficient and hybrid and electric and so on. And some very inefficient. And if they're trying to meet an average for the u s as a whole, but they have to hit a tighter target in California, its partner states and now Canada, what they could end up doing is selling more of their fuel efficient models here and in the group of partner states and then other cars and the rest, right. Speaker 2: 05:17 Uh, the larger cars presumably in the rest of the country. Um, and that the gray box and to the extent there is demand for them there, they could be sold there. Uh, and, and this makes it, um, difficult for the, the u s and the, and this other group of states to try and act in, um, all sort of at odds in, in fuel economy. Well, let's talk about the auto makers themselves. What's their reaction been to a Trump turn to roll back these higher mileage standards? Like any industry, they don't like being regulated as much as they would like not being regulated. Uh, but at the same time they've designed cars for five years or more out into the future and they, they know how they were going to get to these fuel economy, tried against and now to have them pulled out from under them all of a sudden has made them sort of unhappy with that. Speaker 2: 06:03 I think that that it's hard to know what's what's in their minds, but I think what they had most been hoping for is a relaxing, a bit of the standards and maybe some free giveaways of credits and things that others might call loopholes or credits. Um, in order to meet the standards that somewhat lower cost to themselves, but to go all the way to a rollback was, I think took them somewhat by, by surprise. And there seems to be, uh, some sort of mixed messages coming out of, uh, automobile manufacturing about this show. Detroit's not that crazy, but yeah, no, no. Speaker 1: 06:39 Um, no, and like most of like something in between and having lower cafe standards or, or conversely trying to increase them and having far more ambitious ones as the Obama administration was, was trying to do that has a big impact as it not on CO2 emissions and a heat trapping pollution that a, we're trying to, to combat in this age of climate change. Speaker 2: 07:01 Right. I think that's actually the most important message here is that just in the last few years, the private automobile sector has become the largest producer of CO2, uh, in the u s it's been the largest producer of CO2 in California for a long time, but it's now the largest producer in the u s uh, it passed electric power, right? It used to be electric power was the sort of the big target and the big source of CO2. Now it's cars. I think the most interesting thing about this whole case and the politics that are likely to kick off here is that the question fundamentally becomes, do states have the right to regulate their own to, to, to regulate their own carbon economy? Because cars are the biggest piece. And so to the extent that, that is fully controlled by the federal government as opposed to the states, the states no longer sort of have the ability to do things on climate that, or do some of the most important things on climate that they, they could. Speaker 1: 07:56 Okay. I've been speaking with Mark Jacobson, associate professor of economics in the University of California, San Diego. Thanks very much, professor. Speaker 2: 08:03 Thanks very much for having me. Speaker 3: 08:07 Uh.