The Trump administration announced that it would no longer be in talks with the California Air Resources Board (CARB) over the Obama-era fuel economy standards. California holds a significant chip in these negotiations, as the state holds a waiver to establish its own standards for tailpipe emissions.
In a series of discussions, CARB has been defending Obama’s regulation, mandating that new cars average 54.5 miles per gallon by 2026. The Trump administration, however, has moved forward with its plan to freeze standards at 2020 levels.
The move to freeze standards ensures that consumers will not be burdened by new, unattainable, and costly government regulations. Under Obama’s Corporate Average Fuel Economy (CAFE) standards, the cost of new automobiles would skyrocket. A 2016 analysis conducted by the Heritage Foundation suggested that the previous auto mandate increased the price of cars by $6,800 when compared to pre-regulation trends. The Trump administration’s plan to freeze current CAFE standards at 2020 levels will save $2,340 to the average cost of owning a new car, according to the EPA.
Not only does this decision save money; it saves lives. In deregulating the market, the Trump administration is opening the door for many consumers to purchase new cars. New cars are generally safer, and include options for safety features, like blind side detection and backup cameras. Figures from the administration suggest that the freeze could save upwards of 1,000 lives annually.
In ending these talks, Trump has signaled that he will not jeopardize the savings and safety of Americans in exchange for a regulation that does little for its intended outcome. Advocates for these standards suggest that the regulations decrease greenhouse gas emissions, but consumer behavior would suggest otherwise.
Because of the price increases associated with CAFE, many consumers are priced out of the market for new cars. This sector of the market continues in driving their old vehicles, which naturally are less fuel-efficient. By holding onto old vehicles, and in some cases, purchasing used cars, 13-16% of the expected fuel savings leak into the used car market. Additionally, the increased fuel efficiency of cars encourages those who can afford the new models to drive more. This phenomenon, known as the “rebound effect,” reduces estimated fuel savings by 32%.
Had the White House folded under California’s demands, the effect on climate change would be negligible. The DOT and the EPA have reported that in the best-case scenario, the difference between Trump’s 37 mpg number and Obama’s 54.5 mpg number would be 0.00004 degrees annually.
CAFE standards fail to serve the public good. They serve as another example of overregulation in the free market. Their dismissal is a win for the American consumer. For this decision, Americans for Tax Reform applaud President Trump, the EPA and the DOT.