Transportation

Why Biden Needs To Go Big On The Upcoming Clean Car Standards


No president has talked more boldly about fighting climate change than Joe Biden. A little over a week into his term, he proposed spending $2 trillion on an infrastructure package designed to create jobs and help tackle the climate crisis. A couple of months later, he committed the United States to cutting its carbon pollution in half by 2030, compared to 2005 levels. These are huge commitments, but now the rubber is hitting the road. Biden can follow through on his intentions by using EPA authority to deliver an environmental victory that will create jobs, make American companies more competitive, and save lives with a new and more ambitious Clean Cars Program.

By the end of July, the EPA is expected to announce a proposal to restore the Obama Clean Cars Program for years 2023-2026. If adopted, the program will reduce greenhouse gas emissions from passenger cars across the country. This is a good first step, but nowhere near what the U.S. must do to reduce carbon pollution from the transportation sector, the number one contributor to greenhouse gas emissions.

President Biden must take bolder actions to keep America competitive in the accelerating race to clean transportation, but also in the race to save the planet. Along with the infrastructure bill and other fiscal initiatives, he should direct EPA to develop a new set of longer term, post 2026 regulations, targeting cars and SUVs. These new regulations should effectively require that 50 to 60% of new cars sales be zero emissions by 2030, and 100% by 2035. If we really aspire to zero emissions from our cars and trucks by 2050 as the science tells us, 2035 is the halfway point to replace the 289 million registered motor vehicles on U.S. roads.

The recently announced EU climate plan is an example of extraordinary leadership. On July 14, the European Commission presented a plan to reduce net greenhouse gas emissions by 55 percent below 1990 levels by 2030. Among the dozen proposals, one is to practically phase out sales of gasoline and diesel cars in the EU by 2035.  

In 2012, when the Obama clean car program was finalized, it required less than 3% of new car sales to be zero emissions in 2025. That was the year that Tesla delivered its first mass-produced electric cars, 2650 of them. Today, it is the most valuable car company in the world and is on track to produce a million vehicles per year.

In less than a decade, more than 12 million electric vehicles (EVs) are now on the roads globally and Bloomberg forecasts that the electric vehicle economy offers a $46 trillion opportunity through 2050. Rapid changes in EV technology are driving this shift, with battery costs dropping by over 85% and range going from around 100 miles to over 400 miles. Across the major markets, battery electric vehicles are predicted to reach purchase price parity with internal combustion vehicles within the next several years.

Such new, post-2026 regulations would require no additional action on the part of Congress as they are already authorized under the Clean Air Act, a technology forcing law in nature. The benefits would be significant. According to an EDF report, if all new cars sold in 2035 were zero emissions, it would reduce carbon pollution by more than 11.5 billion metric tons by 2050 — far more than the total carbon emissions of China last year. It would also prevent 98,000 premature deaths, save consumers $2.0 trillion by 2050, and, according to a new U.C. Berkeley study, create more than 2 million jobs by 2035.

Just as importantly, I believe that the president will find broad support from the auto industry for an ambitious new Clean Cars Program. Here’s why:

Today, when Biden says the future is electric, he’s not telling the automakers anything new. Veteran automakers around the world are investing more than $340 billion in electrification according to a new study by the International Council on Clean Transportation. What’s more, ambitious standards by 2035 are not out-of-step with the goals some companies are already setting for themselves. Ford expects nearly 40% of its global vehicle volume to be electric by 2030. GM has declared that it intends to stop selling internal combustion powered vehicles by 2035 and go all electric. Chrysler and Jeep both joined the electrification race with recent announcements. In Europe, VW, Mercedes, and other auto makers have declared similar targets.

The rewards for such commitments have proven to be huge, and immediate. At its peak in August 2020, Tesla’s market cap exceeded not only that of the next ten automakers combined, but that of ExxonMobil, Shell, and BP combined. Ford stock has doubled since November 2020 when it announced its electric Mustang Mach-E. VW’s stock has also virtually doubled as it has begun to deliver on its massive transformation into the world’s largest electric vehicle maker. GM saw its stock price increase some 50% after its 2035 announcement. Wall Street has clearly taken notice of the value of electrification and no company is going to push back against a regulatory requirement that rewards them in the markets.

President Biden also talks about competitiveness and job creation, which is another major reason to press for a new Clean Cars Program: ironically, the U.S. is now being left behind in the global electrification race that was largely triggered by the success of a U.S company, Tesla. Currently, the U.S. can claim only 17 percent of global EV sales, in a distant third place behind China, which claims 44 percent and the EU, which claims 31 percent. Of the $340 billion global investment in electric vehicles, only 15% is being invested in US.

The same is true for EV battery production. China is leading with 93 “giga-factories” with only four in the United States, according to Benchmark Mineral Intelligence, and each giga-factory means thousands of new jobs. For example, the new Tesla factory in Texas is will create 10,000 new jobs. If current trends continue, China is projected to have 140 giga-factories by 2030, while Europe and UK will have 38 and the United States just 10. That means new jobs for workers in those foreign countries, when they could be created right here in the U.S.

Again, this competitiveness gap comes back to a lack of bold policies. China and the EU currently have both stronger fiscal incentives and ambitious regulatory requirements than the U.S. But that same model would work at home. Look no further than the state with the strongest regulatory mandates and fiscal incentives, California, which also has 50 percent of the country’s total EV sales. California recently announced a target for all new vehicles sold in the state to be zero emission by 2035. Absent strong leadership from Washington, 14 other states have followed California’s lead. Together these states represent 40% of total car sales in the U.S., and a much higher percentage of EV sales.

President Biden has put climate change at the center of his administration’s legislative agenda. But regardless of what happens in Congress, he can use an executive order directing EPA to develop the post 2026 Clean Car Program which would send a clear message to car manufacturers: this administration is committed to ambitious greenhouse gas standards. Bold standards will send clear market signals that encourage companies that want to do business in the U.S. to invest in EVs, while telling the oil industry that they need to speed up their transitions to renewable energy.

A new Clean Cars Program, requiring all new vehicles to be zero-emission by 2035, will ensure the United States can win the EV race and create jobs. Most importantly, it will be the strongest action by any president to combat global warming and preserve a livable world for future generations.



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