The Trump administration’s attempt to revoke California’s authority to set its own clean vehicle standards is “the latest in a series of calamities caused by an EPA that seems determined to sabotage the competitiveness of the U.S. auto industry at the behest of the fossil fuel lobby,” said Sue Reid, vice president of climate and energy at Ceres. She added that the most recent move “flies in the face of concerns raised by investors with a vested interest in the long-term competitiveness of the U.S. auto sector.”
The proposed revocation, announced via Twitter today by President Trump, aims to dissolve states’ rights enshrined in the 1970 Clean Air Act. The Act specifically allows California to set stricter standards than those of the federal government pursuant to a waiver granted by EPA, and enables other states to follow California’s lead, as 13 other states and the District of Columbia — representing over 36% of the U.S. market — have chosen to do. The Act notably contains no provision allowing for the revocation of a waiver once it has been granted.
California has vowed to maintain stronger clean vehicle standards as the Trump administration seeks to roll back federal standards set by the Obama administration, and the Golden State recently reached a compromise with four major automakers that would ensure emissions reductions, promote electric vehicles, and provide regulatory certainty.
Reid added:
“Investors understand that California’s stronger standards spur innovation and keep the U.S. auto industry competitive, and they know undermining those standards would throw the industry into disarray. There is no clear authority for the Trump administration to revoke the California waiver, and today’s action to undermine states’ rights will trigger lawsuits from states and others challenging such an unprecedented and unauthorized move. It will thus further exacerbate the regulatory limbo the Administration’s actions have already created, undermining the global competitiveness of the U.S. auto industry at a time when the global marketplace is racing toward clean vehicles. We urge automakers to join the compromise agreement with California.”
Investors have long argued in favor of strong clean vehicle standards, opposing the proposed rollback of the standards set during the Obama administration and supporting the compromise agreement between California and Ford, BMW, Honda, and Volkswagen. Ceres analysis found that weakening fuel economy and emissions standards would harm the economy and the auto industry, especially auto parts suppliers, who provide 2.5 times more jobs than automakers, and that strong vehicle standards protect automakers from oil price volatility.
“Investors have seen this movie before. Efforts aimed at protecting the transport industry by opposing efficiency regulations ultimately hurt companies in the long run, curbing their access to the world’s fastest growing markets.” said Ken Locklin, Director at Impax Asset Management LLC.