RT @SPGlobal: Essential Intelligence from S&P Global helps you dive below the surface. Because a better, more prosperous world is yours for…
UPDATE: Biden challenges automakers to make EVs half of all new US vehicles by 2030
US President Joe Biden is challenging global automakers to make half of all new vehicles sold in the US electric by 2030, but stopped short of mandating it, as part of his bid to decarbonize transportation, the largest GHG-emitting sector in the country.
The White House announcement came early on 5 August, and later in the day Biden signed an executive order that included a proposed rulemaking to redo weaker long-term fuel efficiency and CO2 emissions standards for light vehicles the prior administration put in place in March 2020.
The future of the US automotive industry is "electric, and there's no turning back," Biden said before signing the order at a White House ceremony.
Flanked by the heads of Ford, General Motors, Stellantis, and the United Autoworkers (UAW), as well as members of Congress including Michigan's delegation, Biden asked: "The question is whether we will lead or follow behind in the race for the future. It is whether we build the vehicles here in the US and the batteries that we put into them or rely on other countries for it."
"Together, today's announcements would put us on track to reduce greenhouse gas emissions from new passenger vehicle sales by more than 60% in 2030 compared to vehicles sold last year, and facilitate achieving the President's goal of 50-52% net economy-wide greenhouse gas emission reductions below 2005 levels in 2030," the White House said in a fact sheet accompanying the announcement.
Biden's actions come days after Democratic and Republican senators reached a compromise on an infrastructure bill that would provide $7.5 billion to build out the first-ever national network of electric vehicle (EV) chargers in the US, another $5 billion for purchasing zero-emission and low-carbon buses, and $2.5 billion for low-carbon ferries.
US not as aggressive as EU
The US goal is just shy of the European Commission's proposal that seeks a 55% CO2 emissions reduction for passenger vehicles and 51% reduction for light commercial vehicles below 2021 levels by 2030.
Both the US and EU proposals apply to battery-electric vehicles (BEV), fuel cell-electric vehicles (FCEV), and plug-in hybrid electric vehicles (PHEV).
Unlike the EC though, the US is not seeking to eliminate CO2 emissions entirely from its light vehicle fleet by 2035. The US also is not mandating that at least half of US light vehicle sales be electric by the target date, the goal is voluntary, according to the nonprofit Center for Biological Diversity (CBD), which described it as a Swiss cheese laden with loopholes.
"Today's proposal relies on voluntary commitments from carmakers to make up to 50% of their fleets electric by 2030. But such promises are unenforceable—and unreliable given that the industry reneged on its deal with the Obama administration," Dan Becker, director of the CBD's Safe Climate Transport Campaign, said in a statement.
Transportation was responsible for 1,875.73 million mt of GHG emissions in 2019, 29% of the US total, with light vehicles (passenger cars and light trucks including sports-utility vehicles) contributing 59% of that total.
Builds on California regulations
The US Environmental Protection Agency (EPA), which, though it shares responsibility for setting fuel economy standards with the US Department of Transportation's National Highway Traffic Safety Administration, will initiate the regulatory process for model years 2023-2026 with a proposed rule.
EPA said it also would start work on a proposal to regulate GHGs and other key ozone- and haze-forming pollutants from heavy duty trucks, starting with model year 2027.
The EPA proposal was expected to start with an annual 3.7% increase in fuel economy that was included in the 2020 voluntary agreement California reached with five automakers—Ford, Honda, Volkswagen Group, BMW, and Volvo—in 2020 to tighten fuel economy standards and also increase volumes of EV sales.
By model year 2025, the standards under the California agreement are expected to require 5% annual improvements, along the lines of what automakers had agreed to meet in 2012, according to the nonprofit Environment America and the US Public Interest Research Group, who have been pushing for more stringent fuel economy standards.
The EPA proposal goes further: it aims to tighten emissions standards to 52 miles per gallon equivalent for model year (MY) 2026 vehicles, which the agency said would be "the most stringent federal light-duty vehicle GHG emissions standards ever set."
The agency is also seeking to increase by 10% the stringency of the standards for MY 2023 vehicles, compared with the prior year. The stringency would increase by about 5% each year from MY 2024 through MY 2026.
However, the agency is seeking to extend credits for overcompliance with fuel efficiency standards set for MY 2016 through 2020, and it is also seeking to restore credits for manufacturers for selling vehicles with advanced technologies, such as batteries and fuel cells.
The EPA justified the use of credits in the proposal, saying they would prompt automakers to use currently available clean technologies, and help stimulate production of more electric and hybrid vehicles.
Environmental groups welcome the tightening of standards, but aren't pleased that auto manufacturers are receiving credits.
"This proposal is headed in a better direction, but the Biden administration can and should be more ambitious," said Environment America Destination: Zero Carbon Campaign Director Morgan Folger, who added that the country has lost five years because the prior administration had weakened the standards and momentum for fuel efficiency improvements.
CBD's Becker considers it a "give away."
According to the White House, tighter fuel efficiency standards would deliver around $140 billion in net benefits over the life of the standards, including asthma attacks avoided and lives saved, saving about 200 billion gallons of gasoline, and reducing around 2 billion mt of carbon pollution.
California Governor Gavin Newsom also hailed the announcement, especially as the prior administration had, through the 2020 rule, taken away the state's ability to set more stringent GHG standards for its mobility sector as the Clean Air Act allows.
"California applauds the Biden administration's move to boldly reduce climate pollution from cars, inspired by California's nation-leading framework," Newsom said in a statement.
According to IHS Markit, the automakers under the California framework agreed to deliver GHG reductions at a national average annual rate of 3.7% year on year for model years 2022 through 2026, with 1% of this achievable through the use of an advanced technology multiplier.
Manufacturers receive additional credit for selling PHEVs, BEVs, and FCEVs in the form of sales multipliers, which allow automakers to count these vehicles as more than one vehicle in emissions compliance calculations.
Major US and global automakers, automotive trade groups, and unions represented by the UAW, as well as numerous environmental groups, said they back the plan.
John Bozella, CEO of the Alliance for Automotive Innovation, said automakers are committed to a net-zero transportation sector by midcentury, saying the industry has committed to investing more than $330 billion to bring all manner of EVs including plug-in hybrid, battery, and fuel cell vehicles onto the market. "And we support stringent GHG and fuel economy standards that are aligned and encourage continued improvements," Bozella said.
In sync with automakers' plans
Coordinated with the White House announcement, Ford, GM, and Stellantis, which collectively make up about 44% of US market share, announced they were targeting EVs accounting for 40-50% of their annual US volumes by 2030.
The White House said the 2030 target, which represents the upper bound of what the automakers say they will achieve, is "calibrated" to catalyze automakers and to give them time to upgrade existing manufacturing facilities without stranding assets.
According to IHS Markit Automotive Senior Analyst Stephanie Brinley, their combined target can have a real impact on the vehicle propulsion systems that dominate the US market.
"IHS Markit sees regulation is quickly becoming a primary driver of electrification, enabled by automakers' technology development, as well as focus on reducing costs," Brinley wrote in a 5 August note.
Nearly all automakers have been aggressively working toward electrification solutions to meet increasingly stringent regulations, but in the recent years, efforts have intensified significantly, Brinley said.
She pointed to GM's announcement of manufacturing 100% zero-emissions vehicles by 2035 and its intention to adopt the California framework as well as Ford's plan for expanding into the EV market.
Ford CEO Jim Farley in a separate statement noted that the company is proud to be the first full-line automaker to bring all-electric full-size pickup trucks and commercial vans to customers in the US. "The E-Transit will be available to customers later this year, the F-150 Lightning will be by mid-2022, and both will be assembled in the US by UAW workers," he said.
While saying "the European Union is essentially leading this charge today," Brinley added that the US could catch up quickly.
In the US alone, IHS Markit forecasts EV sales could be as high as 32% of total light vehicle sales by 2030 and could reach 45% by 2035.
In contrast, IHS Markit forecasts the EU could see EV sales reach 50% of all passenger car sales as soon as 2030, while mainland China may see new-energy vehicles reach 38% of sales in 2030 and 40% by 2035.
EVs sales surged ahead in 2020 to capture a record 4.6% share of the new vehicle market, and this growth is expected to continue, according to the International Energy Agency (IEA).
The number of EVs registered around the world is expected to increase from about 10 million today to 145 million in 2030 as countries pursue decarbonization of the transportation sector, the IEA said in its "Global EV Outlook 2021" late April report.
Adds Biden quotes.
- US EV consumer demand not matched by production capacity as registrations rise: S&P Global Mobility
- Republican states target California’s authority to set stringent vehicle GHG standards
- North American biogas industry gets $2-billion infusion
- US Postal Service hit with three lawsuits over slow-walk approach to EVs
- California proposes to accelerate mandate for zero-emission vehicle sales
- Obtaining funding for clean transportation projects in North America: Q&A with GNA Senior Vice President Joe Annotti
- Suzuki Motor to make inroads into India’s EV market with $1.2-billion Gujarat plants: analyst
- Rising US gasoline costs make EV ownership even more favorable, say advocates
Each year, we commemorate Asian American & Pacific Islander Heritage Month to celebrate the rich, diverse culture a… https://t.co/oOU06vryXV