Trump's relaxed vehicle standards could raise fuel costs and emissions

The Trump administration's planned rollback of vehicle emissions standards could drive staggering increases in both fuel costs and transportation emissions.

Where it stands: The White House has received from the EPA the final Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for review. The relaxed regulations have sparked blowback from the auto industry, from California and the states that follow its stricter standards, and even from Canada, which signed an emissions-related memorandum of understanding with California.

Details: The relaxed rule freezes federal emissions standards at 2020 levels, stagnating fuel economy at 37 mpg rather than the scheduled 51.4 mpg by 2025.

• It also threatens California’s authority to set its own standards, which 13 other states and Washington, D.C., have adopted.

The impact: Modeling performed on Energy Innovation's peer-reviewed Energy Policy Simulator reflects the scale of the rule's consequences.

• An additional 7.6 billion barrels of gasoline would be burned, costing as much as $400 billion through 2050. The nonprofit advocacy organization Consumer Reports has released similar findings, reporting $460 billion in lost fuel savings.
• Vehicle emissions would increase up to 10% by 2035, the year of maximum impact.

The catch: The effects are harder to predict if California maintains its standards. Depending on how automakers respond, the costs could run between $240 billion and $400 billion through 2050, with emissions increasing between 6% and 10% by 2035.

• If Canada were to mirror U.S. federal standards, rather than California's, that decision could cost Canada $67 billion through 2050 and increase emissions 11% by 2035.

Between the lines: Beyond these financial and environmental impacts, the proposal could cost up to 60,000 jobs in the auto industry and affiliated industries, according to the administration's own estimate. Other studies have forecast higher job losses, and Consumer Reports estimates industry sales would drop by more than 2 million vehicles.

• Yes, but: Freezing fuel standards could create small economy-wide financial gains in the first few years, because less-efficient cars are cheaper to build, though increased fuel costs would quickly outweigh those savings.

What to watch: The SAFE rule is expected to be finalized in September. Meanwhile, it's already being opposed in court, and California is leading a coalition of state attorneys general to litigate should the Trump administration finalize its rollback.

Megan Mahajan is a policy analyst at Energy Innovation.