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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.
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