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SAFE Rule Examined Part 1 Climate Change and the Great Lockdown

It’s been almost a month since the National Highway Traffic Safety Administration (NHTSA) and Environmental Protection Agency (EPA) released the Final Safer Affordable Fuel Efficient (SAFE) Vehicles Rule. The rule establishes corporate average fuel economy (CAFE) standards and carbon dioxide (CO2) tailpipe standards for model year 2021-2026 passenger cars and light trucks. The agencies propose and finalize both standards at the same time due to their intrinsic mathematical relationship. A motor vehicle’s tailpipe CO2 emissions per mile are directly proportional to its fuel consumption per mile.

After many hours pondering the final rule, final regulatory impact analysis, and final environmental impact statement, I am more persuaded than ever that fuel economy regulation makes endless work for lawyers, activists, bureaucrats, federal judges, and others with no accountability to voters or shareholders. Consumers, not government, should choose how much average fuel economy the totality of new motor vehicles achieves. Congress, alas, decreed otherwise when it created the national fuel economy program in 1975 and amended it in 2007.

Nonetheless, under their respective statutes, the Clean Air Act and Energy Policy Conservation Act, the Trump administration EPA and NHTSA have the power to adjust the CO2 tailpipe and CAFE standards inherited from the prior administration. The Obama administration’s 2012 CAFE/CO2 tailpipe standards rule prioritized fuel savings and “climate ambition.” The SAFE Rule prioritizes reducing the regulatory costs borne by manufacturers and new-car buyers. I expect the SAFE Rule to survive the coming litigation onslaught by California and its allies.

Due to the size and density of the regulatory documents, this post will run as a series. Each part will examine different issues in the SAFE Rule controversy. Today’s segment (1) recaps the differences between the SAFE Rule and the 2012 rule it replaces, (2) opines how the current chaos affects pre-pandemic estimates of the SAFE Rule’s impacts, and (3) rebuts progressive criticism that the SAFE Rule rescinds critical climate protections.

Topics covered later in the series include the SAFE Rule’s effects on air quality, vehicle safety, and consumer choice; the agencies’ rationale for replacing the 2012 rule; why the agencies chose to tighten standards by 1.5 percent annually rather than freeze them, as originally proposed; and the agencies’ rebuttals to legal objections raised during the comment period.

In citations to the main regulatory documents, FSR stands for Final SAFE Rule, FRIA for Final Regulatory Impact Analysis, and FEIS for Final Environmental Impact Statement. Numbers following the abbreviations are page numbers.

Quick Overview

The SAFE Rule increases by 1.5 percent annually the stringency of corporate average fuel economy (CAFE) and carbon dioxide (CO2) emission standards for model year 2021-2026 passenger cars and light trucks. That is a retreat from the agencies’ August 2018 proposal to freeze CAFE and CO2 standards at model year 2020 levels but still deregulatory compared to the Obama administration’s 2012 rule and January 2017 midterm evaluation, which would increase the stringency of model year 2021-2025 standards by about 5 percent annually.

More simply put, the SAFE Rule requires average new car fuel economy to increase from 37 miles per gallon in 2020 to 40 mpg in 2026. In contrast, the 2012 rule, if still in effect today, would require average fuel economy to increase from 37 mpg in 2020 to 47 mpg in 2025 (FSR, 159).

Surreal Debate

Before delving into the regulatory tomes, a big caveat is in order. The agencies and their critics are dueling over analyses that were mostly completed prior to the coronavirus pandemic and the Great Lockdown. What can anyone say with confidence at this point about the SAFE Rule’s economic and environmental impacts?

Even before the current crisis upended all prior economic forecasts, the controversy over the SAFE Rule was already somewhat surreal. The respective impacts of the SAFE Rule and 2012 rule on vehicle prices, vehicle sales, auto safety, national fuel consumption, consumer fuel savings, auto industry employment, and air pollution differ only at the margins. The climate change impacts differ only in the margin of the margins.

Based on the agencies’ estimates, replacing the 2012 rule with the SAFE Rule will:

  • Reduce average new car prices by 3.4 percent (FSR, 1716)
  • Boost new car sales during model years 2021-2029 by 1.4 percent (FSR, 786)
  • Increase average consumer fuel expenses by $24-$36 per year (FSR, 15)
  • Avoid 71 fatal crashes on average per year (FSR, 1461)
  • Increase air pollution mortality by 13-31 deaths on average per year (FSR, 1514)
  • Reduce annual national gasoline consumption during 2020-2050 by 32 percent instead of 43 percent (FSR, 57)
  • Reduce auto industry employment by 1.1 percent in model year 2029 (FSR, 1721)
  • Add 0.003°C to global warming by 2100 (FSR, 1171).

The economic and energy market forecasts cited by both the agencies and their opponents have all been overtaken by events. Last week, oil futures prices crashed below zero for the first time in history, a consequence not only of cratering demand but also of Saudi-Russian machinations to ramp up production and flood the market.

New fuel saving technology is more valuable when fuel prices, gasoline consumption, and vehicle miles traveled (VMT) increase, and more affordable when the economy booms and businesses are hiring. Average U.S. gasoline prices fell to $1.77/ per gallon on April 26, U.S. gasoline consumption dropped 40 percent from March 13 to April 17, VMT is down 70 percent compared to 2019 levels, the IMF projects U.S. GDP to decline by 5.9 percent in 2020, and U.S. jobless claims exceed 26 million.

We are in uncharted territory. Nobody knows how long the global recession will last or how much damage the stay-at-home directives and trillions in new debt will ultimately do to the U.S. economy. All near-term (2021-2025) SAFE Rule impact projections made by the Trump agencies and their critics should be taken with several handfuls of salt.

This much is clear. The current crisis decreases the value and affordability of new fuel saving technology and further tips the scales in favor of policies lowering the purchase price of new motor vehicles.

Is the SAFE Rule a Planet Wrecker?

Because climate change is a long-term, cumulative, global phenomenon, the Great Lockdown should not affect the SAFE Rule’s climate impact estimates. Progressives tout the 2012 rule as a “climate solution” and slam the SAFE Rule as a recipe for planetary ruin. That is nonsense. Both rules are climatologically irrelevant.

By relaxing fuel economy standards, the SAFE Rule will increase fuel consumption over the lifetimes of the covered vehicles. That will increase CO2 emissions compared to the 2012 standards by a total of 867 million metric tons. That may sound like a lot, but it is equivalent to only 2.9 percent of the lifetime emissions of motor vehicles built to the 2012 standards (FSR, 1569).

Compared to the 2012 rule, the SAFE Rule will, in 2100, increase CO2 concentrations by 0.66 ppm, global average temperatures by 0.003°C, and sea levels by 0.07 cm—less than three-hundredths of an inch (FEIS, 8-27). The table below is based on standard EPA climate modeling. The “Alt. 0-No Action” row shows climate projections under the 2012 rule baseline. The “Alt. 3” row shows projections under the SAFE Rule.

In the bar chart below, the difference in global average temperature under the 2012 rule (Alt. 0-No Action) and the SAFE Rule (Alt. 3) is invisible to the naked eye in 2040 and 2060, and barely discernible in 2100 (FEIS, 8-30).

Climate sensitivity, usually defined as the change in global average surface temperature after the climate system fully adjusts to a doubling of atmospheric CO2 concentration, remains an area of active investigation and debate. Accordingly, NHTSA used a range of climate sensitivities (1.5°C, 2.0°C, 2.5°C, 3.0°C, 4.5°C, and 6.0°C) to estimate the SAFE Rule’s potential effects on global warming. Even under the least stringent alternative considered (the originally proposed CAFE freeze) and assuming the highest climate sensitivity (6.0°C), the global mean surface temperature in 2100 is only 0.006°C higher than under the 2012 standards. “Thus, accounting for some of this uncertainty, impacts on global mean surface temperature resulting from this action remain very small” (FSR, 1708).

I would state the point a bit more emphatically. Six thousandths of a degree C is 13 times smaller than the margin of error for measuring changes in global average annual temperature. That vanishingly small change in global temperature 80 years from now will have no discernible effect on weather patterns, crop yields, polar bear populations, or any other environmental condition people care about.

Some commenters argued that because climate change is an “existential threat,” no emission-reduction measure is too small to be neglected. “We know what is at stake,” the agencies respond, “but we also recognize that NHTSA is not charged by Congress to single-mindedly address carbon emissions at the expense of all other considerations” (FSR, 1709).

Part 2 of this series will examine the SAFE Rule’s impacts on air quality and vehicle safety.

Updated May 5, 2020.