Congruent with one of President Joe Biden's very first executive orders signed on his first day in office, the Biden administration's EPA will present a proposal for more stringent fuel economy and emissions standards by July. EPA Administrator Michael Regan told Bloomberg in an interview published Tuesday the new regulations must meet the "urgency" of the climate crisis.
The EPA told Roadshow in a statement the review began as part of Executive Order 13990, which notably revoked the Keystone XL pipeline permit, and will follow "science and the law and recognizing the immediacy of the climate crisis to act soon to protect health, environment, welfare while providing good union jobs and growing the economy."
As it stands, per the Trump administration's SAFE Vehicles Rule, automakers must make 1.5% improvements each year through 2026 when it comes to CO2 emissions and fuel economy. Under previous Obama administration regulations, automakers were set to increase vehicle efficiency across their fleet by 5% annually. Translating the improvements to corporate average fuel economy, or CAFE, requirements, current standards from the Trump administration require automakers to meet a 40.4 mile per gallon fleet-wide average by 2026. The Obama-era rule targeted 54 mpg. Automakers previously complained the Obama regulation was unrealistic, though they hardly cheered the Trump-era regulation, which companies said dialed things back too much. Numerous automakers also dropped support for the Trump administration's lawsuit working to strip California of its ability to set stricter standards, which came with the rollback.
It's not clear how far the Biden administration will go in the proposal, though automakers already started urging the new administration to adopt a California compromise deal as a blueprint. Automakers would love nothing more than to operate under one national set of standards, rather than meeting federal and California regulations. In the voluntary agreement, Ford, Honda, Volkswagen and BMW struck a deal with California to increase fuel efficiency by 3.7% each year, rather than the federal regulation of 1.5%. It's this deal that drew a line in the sand with various automakers; while the four sided with California, other major companies like General Motors, Stellantis, Toyota and Hyundai originally sided with the Trump administration. That has since changed, with most automakers now falling in line with California.
Biden has been a big proponent of EV adoption, too, which could play a big part in the EPA's proposal. Last week, the president announced a sweeping $2.25 trillion infrastructure bill that would invest in EV charging stations and even subsidize the purchase of an electric car for buyers.