In big climate move, EPA set to unveil tough limits on auto emissions

Environmental groups see the auto emissions rules as enormously consequential in meeting the overall U.S. climate goals. The transportation sector is the country’s biggest source of planet-warming gases, and Detroit and President Biden have often aligned on boosting the sales of EVs — which have no tailpipe emissions — as their fastest way to address climate change.

But the most aggressive options in the EPA’s proposal are so stringent that many automakers, especially those slowest to adopt electric cars and trucks, will see it as more aggressive than what they can realistically meet, the people said.

Biden has promised more aggressive rules for cars since he was a candidate. During his first year in office he paired new near-term standards for vehicle emissions with voluntary targets he agreed to with automakers for electric vehicles, hydrogen-fuel cell and plug-in hybrid vehicles to make up 50 percent of U.S. sales by 2030.

The new proposal could go even beyond that. It includes four different options, the most aggressive of which would set emissions reductions requirements so stringent that automakers would have to boost electric vehicles’ share of the market to between 54 percent and 60 percent by 2030, according to two of the people.

The requirements — previously reported by the New York Times — apply to the model years 2027 through 2032, and would continually ramp up in stringency over that period. They would peak with EV sales at 64 percent to 67 percent of all sales by the end of that period, the people said.

The EPA rules limit the emissions each auto company’s fleet of sold vehicles will produce. So while the rule changes wouldn’t order or require auto companies to sell a certain number of electric vehicles, it would set emissions limits so tightly the only way to comply would be to sell large percentages of EVs.

“Tailpipe emissions pollute the air we breathe and worsen severe weather,” Fred Krupp, president of Environmental Defense Fund said in a statement cheering news of the proposals. “The race to cleaner air, a safer climate and more made in America jobs — is on.”

EPA and White House officials declined to comment on details, with one official saying “the proposal process is not yet final.”

In conversations laying out its options, EPA officials have stressed its most aggressive choice may not become the final rule and that they are eager to engage with industry officials and state regulators on what works, two of the people said. They could choose some of the more lenient options or mix various parts of the different scenarios under consideration into a final proposal.

The rules will undergo extensive public comment and analysis before the EPA decides. Rules like this typically take months to complete after engagement from a range of stakeholders including the auto industry, environmental groups, consumer advocates and energy companies. And environmentalists have urged the administration for months to go faster, to ensure that they are complete and legally sound before Biden faces reelection next year.

The administration has been planning to announce the new rules as soon as Wednesday. The rollout will also include a separate proposal for heavy-duty trucks, according to two people familiar with the agency’s plan. While that proposal will also include several possible options, at least one will match a proposal put forward by California regulators that is the strongest emissions limits for heavy-duty trucks in the country, one of the people said.

The announcement was originally scheduled for Detroit. The EPA, citing “scheduling shifts,” said Saturday the meeting will instead be in Washington.

Several of the world’s largest automakers with big U.S. footprints have been reluctant to attend such an early-stage announcement on what’s considered their home turf while they have major concerns about what the administration might ultimately decide, according to two people familiar with the auto companies’ position.

“We are now looking forward to welcoming a range of stakeholders to an event in Washington, D.C.,” an EPA spokeswoman said in an email.

Automakers have been in the middle of remaking their companies and assembly lines to produce more EVs, but have said they need time and help. Congress has approved hundreds of millions of dollars in subsidies for new factories, charging stations and consumers in the past two years.

But it also attached requirements for the industry to build more and get more material from the U.S. and its allies to maximize the subsidies. That poses challenges for an industry reliant on supply chains anchored in China.

Working under those restrictions, the Treasury Department in recent weeks proposed new guidance that is expected to cut the number of EVs eligible for tax credits, potentially for years. That could limit demand growth among consumers, analysts and lobbyists said.

Demand is still growing, fed by an increasing number of new models, improving technology and other factors. It reached almost 10 percent of the U.S. car market in December, according to the industry’s biggest trade group, the Alliance for Automotive Innovation.

But that is still far from the market share the EPA envisions, coming at a time when analysts say demand growth is slowing. In a memo released Thursday in anticipation of a new EPA proposal coming soon, the Alliance for Automotive Innovation said a lack of public charging stations nationwide also limits growth among consumers and uncertainty about where to access minerals raises questions about whether the industry can get enough batteries and other domestic parts to grow supply.

“Regulatory mandates alone will not address the conditions … that will determine the ultimate success of the EV transition,” the group said.