The Fuse

SAFE Joins Voices Calling for Negotiated Settlement with California on Fuel Economy

by The Fuse | October 30, 2018

Friday was the deadline for stakeholders to submit their comments on the proposed rulemaking on fuel efficiency standards, and EPA/NHTSA’s preferred option to freeze the standards at 2020 levels through 2026. The automotive industry was unified in its request that the federal government not go through with the freeze, and instead pursue a negotiated settlement with the state of California. Honda, General Motors, and others have all voiced opposition to the current plan. Mark Reuss, GM’s executive vice president of global product development, told reporters that “we know that we can do better” than Trump’s proposal. The Alliance of Automobile Manufacturers issued a statement reiterating their support for One National Program, and even Royal Dutch Shell submitted comments opposing the freeze because of the impact on climate change.

SAFE’s comments focus on the need for a negotiated settlement with California, and urge the federal government not to base its rulemaking on assumptions about low and stable oil prices that are outside of U.S. control. A few key points from SAFE’s submission:

  • Improved light-duty fuel efficiency has been critically important in lowering the oil intensity of the economy, which in turn strengthens U.S. economic and national security by insulating businesses and consumers from oil price volatility.
  • According to the agencies’ calculations, the cost to the U.S. of defending the global oil supply is zero. Failure to accurately assess the true military cost of protecting the global oil supply underestimates the value of the benefits. At minimum, approximately $81 billion per year is spent by the U.S. military protecting global oil supplies. The implicit subsidy for all petroleum consumers is approximately $11.25 per barrel of crude oil, or $0.28 per gallon.
  • Although the nation is undoubtedly more energy secure than it was before the revolution in U.S. shale oil 10 years ago, the United States’ dependence on oil continues to present significant economic and national security risks.
  • SAFE understands the agencies have expressed safety concerns regarding vehicle lightweighting, but existing research supports the finding that mass reduction can be safely integrated into the current vehicle fleet mix. The agencies’ own analysis confirms that mass changes will only bring about a small impact on the overall fatality rate.
  • SAFE disagrees that the standards have meaningfully contributed to higher vehicle prices and believes that existing data shows that fuel efficiency standards: do not contribute to higher vehicle prices; have not negatively impacted new vehicle sales; and are not keeping consumers in older, dirtier, and less safe vehicles.
  • The agencies propose a range of significant changes to the off-cycle technology program, including ending or sunsetting all off-cycle flexibilities. Any elimination, or phase-out, of the off-cycle technology adjustments would threaten to deter or delay investment in connected and automated vehicle technologies and runs counter to the goals of this rulemaking.

In addition, SAFE makes the following recommendations to the agencies:

  • SAFE believes the agencies should include the true military cost of protecting the global oil supply in their benefit-cost analysis.
  • We encourage the agencies to select an alternative that increases the stringency of the program by at least 2 percent per year.
  • Rather than focus on mass changes, SAFE urges the agencies to instead incentivize the introduction of advanced driver assistance technologies (ADAS) to reduce overall crash frequencies and fatalities.
  • The agencies should retain the off-cycle technology program, while considering a number of potential improvements tailored to accommodate truly innovative technologies.
  • SAFE believes that the agencies should seize this opportunity to enable greater long-term reductions in oil demand by continuing to incentivize advanced fuel vehicles such as those that operate on electricity, hydrogen, and natural gas.