Car Industry

EPA boss Pruitt kills Obama-era fuel economy standards

The head of the EPA is now poised for a battle with California over its right to set its own climate regulations.

EPA head Scott Pruitt believes the Obama-era CAFE requirements to be unattainable and damaging to the auto business.

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Environmental Protection Agency boss Scott Pruitt announced on Monday that the EPA would be throwing out the Obama-era 50 mpg corporate average fuel economy (CAFE) targets for 2022 through 2025, calling them "too high."

This change in standards has set the stage for a massive showdown between the federal government, automakers and the state of California over whether there will be one federal standard or if things will go back to California imposing its own, stricter standard, as it did on vehicle emissions decades ago.

California's right to set its own regulations for emissions is unique among states and is made possible by a waiver granted by the EPA. Pruitt is looking into the possibility of revoking California's waiver despite being a proponent of states' rights to self-regulate. California Attorney General Xavier Becerra is ready to sue the EPA on behalf of the state.

This is an exceedingly sticky situation for the Trump administration, Pruitt's EPA and automakers, because California is the most populous state in the union. It's also the world's sixth-largest economy and a massive market for automobiles. Thus it has incredible clout when it comes to standing up to the federal government in instances such as these.

California Attorney General Xavier Becerra has said that he will sue the EPA on the state's behalf to maintain its right to set its own emissions standards.

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Automakers are understandably nervous about the reimplementation of a double standard, given that it would significantly increase development costs on new drivetrains.

"The best way to achieve our collective goals is under a single national program that provides an aggressive but achievable pathway, a variety of compliance tools and factors in the role of customers," John Bozzella, CEO of the Association of Global Automakers, told Reuters.

Conversely, environmentalists are worried that the regression of fuel economy standards would not only cause increased damage to the planet, but also the economy, since less efficient vehicles would have less appeal to consumers overseas.