UPDATE: White House proposes weaker auto emissions rules, overriding California

But automakers say they ‘support continued improvements in fuel economy’

The Trump administration on Thursday moved to revoke California's authority to set its own strict tailpipe emissions rules and mandate the sale of electric vehicles, as it proposed weakening Obama-era federal fuel efficiency standards.

The proposal to roll back anti-pollution efforts, released early on Thursday, is in line with President Donald Trump's decision last year to abandon the 2015 Paris Agreement, under which countries agreed to take steps to mitigate global warming.

The proposal from the U.S. Transportation Department and Environmental Protection Agency would freeze fuel efficiency standards at 2020 levels through 2026, and require dramatically fewer electric vehicles as more people continue to drive gasoline-powered vehicles.

The administration said the freeze would boost U.S. oil consumption by about 500,000 barrels of oil a day by the 2030s, and save 12,700 traffic fatalities — or up to 1,000 per year — by reducing the price of new vehicles, thereby prodding people to buy newer, safer vehicles more quickly.

Environmental groups criticized the assertion about reducing crash deaths, and said the proposal would drive up gasoline prices and reverse one of the most significant steps Washington has taken to curb climate-changing greenhouse gas emissions. It would also actually put more lives at risk due to asthma-inducing emissions, they said.

The proposal, the Transportation Department says, would dramatically shrink projected regulatory costs for automakers by $319 billion through 2029; it would reduce by more than $60 billion what General Motors, Ford and Fiat Chrysler Automobiles NV each would have been expected to spend to comply with the Obama rules. Toyota would save $34 billion and Volkswagen AG $20 billion over estimated costs.

The proposal, if adopted, would dramatically shrink the number of vehicles that would need to be partially or fully electric vehicles to meet emissions requirements.

The Trump proposal estimated that under Obama-era requirements, about 70 percent of light trucks would be required to have some form of electrification by 2026, versus just 1 percent under the Trump proposal.

The administration also contends that hiking U.S. oil consumption by 2 to 3 percent over forecast levels would have a minimal impact on the environment, boosting global average temperature by just "3/1000th of a degree Celsius by 2100."

The proposal will escalate the administration's legal battle with California and about a dozen other states, making up about a third of the U.S. auto market, that have adopted California's emission rules.

Seventeen states, including California, and the District of Columbia filed a lawsuit in May challenging the U.S. Environmental Protection Agency's decision a month earlier to declare U.S. vehicle emission rules in place through 2025 "not appropriate."

In March, California Attorney General Xavier Becerra said he would use "every legal tool" to protect the current standards.

The Trump proposal calls California's zero emission vehicle rules, adopted by nine other states, "technologically infeasible." Yet automakers are investing $255 billion globally on innovation to improve electric powertrains.

The freeze would also eliminate $3 billion in estimated fines for automakers not meeting efficiency standards, but did not specify which automakers could avoid fines.

Trump promised Midwestern auto workers last year that he would tear up vehicle rules touted by the Obama administration as among its biggest climate actions. Trump has questioned whether climate change is man-made or even real, once again putting him at odds with science, U.S. intelligence community, and even the Pentagon, which has been planning for the global political destabilization it will bring.

Democrats hope to make any fuel-economy rollback a key part of the 2018 congressional elections. Republicans in states with links to the auto industry may contend the administration is working to ensure automakers can make more profitable, larger vehicles, including fuel-thirsty pickups and SUVs, without excess regulation and state interference.

Some middle ground on the issue might be possible, with acting EPA chief, Andrew Wheeler, saying Wednesday he would welcome a deal between the industry and California on vehicle fuel economy.

Wheeler and Transportation Secretary Elaine Chao wrote in a joint Wall Street Journal opinion piece that the Obama rules would require automakers to "produce vehicle lineups that are 30 percent electric or more over the next seven years — far more vehicles than buyers are likely to want."

They added "the effect of the last administration's standards was to subsidize these expensive electric vehicles at the expense of affordable traditional cars and trucks."

The rollback in emissions standards is problematic for automakers that could stand to save hundreds of billions in regulatory costs but could create more uncertainty for an industry already struggling with rising tariff risks and a murky sales outlook. If the administration were to challenge the so-called California mandate and lose, it could create two sets of standards, which automakers regard as a worst case.

Automakers have long pressed for one set of rules for emissions and greenhouse gases, saying a national regulatory framework to improve fuel economy reduces complexity and costs for the industry.

Two auto trade groups representing GM, Ford, Toyota, Volkswagen and others, said in a statement Thursday that despite the administration's proposed freeze, "automakers support continued improvements in fuel economy and flexibilities that incentivize advanced technologies while balancing priorities like affordability, safety, jobs, and the environment."

The groups said "it's time for substantive negotiations to begin. We urge California and the federal government to find a common sense solution that sets continued increases in vehicle efficiency standards while also meeting the needs of America's drivers."

The administration's "preferred option" released Thursday means the fleets of cars and light trucks sold by automakers in the United States could average about 37 miles (59.5 km) per gallon, instead of the 46.8 mpg projected for 2026 under the Obama rules.

Trump's decision to challenge California's authority to regulate vehicle emissions upends decades of federal policy undertaken to allow the largest U.S. state to combat air pollution that particularly afflicts Los Angeles.

Eliminating California's electric vehicle mandate could hurt automakers like Tesla and GM, which are already investing billions in EVs.

Relying on the state's regulatory authority, California Governor Jerry Brown, a Democrat, set a target in January of putting 5 million zero-emission vehicles on the road in California by 2030, up from a prior goal of 1.5 million by 2025.

Reporting by Joseph White and David Shepardson

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