Leaked details from the Trump administration’s draft final vehicle greenhouse gas rule rollback show the plan’s estimated net benefits have been slashed by roughly $200 billion, likely highlighting the effects of changing controversial assumptions in the proposed rule including how much vehicles are driven and replaced under the policy.
The significant decrease in claimed benefits -- from the estimated $162 billion the proposed rule would have provided -- is providing fresh fodder for critics to urge Trump officials to rethink the policy, though there is little sign that EPA and the Transportation Department (DOT) will do so.
“That is a $200 billion change in the analysis. A fundamental change. How can you not call for a re-proposal to allow the public to review these changes to see if they are legitimate?” argues former EPA transportation official Jeff Alson, who has been a vocal critic of the Trump administration’s rollback plans. “These are massive changes.”
Alson is also a member of the Environmental Protection Network, a group of former agency officials. In Jan. 17 testimony on the group’s behalf, Alston called for the administration to issue a new proposal.
Yet, the agencies are pressing ahead with Office of Management & Budget (OMB) review of the draft final plan and have scheduled about a dozen meetings to give outside groups one final opportunity to influence the measure. Administration officials have promised to unveil the completed rule within roughly the next month.
The draft final rule officially remains under wraps during OMB’s review, making it difficult to draw final conclusions on the estimated effects of the final rule.
But Sen. Tom Carper (D-DE), the ranking member of the Senate environment committee, provided new details of the pending final rule in a Jan. 22 letter to the White House.
The letter cites Trump administration estimates showing an overall net cost for the rule of between $34.4 billion and $41.3 billion -- likely highlighting how efforts to at least partially fix alleged flaws in the August 2018 proposed rule’s modeling accentuate negative effects of the rollback.
Those apparent modeling fixes not only result in drastically lower net benefit tallies, but also appear to suggest worsened outcomes in the upcoming final rule for a range of metrics, including higher carbon dioxide emissions, increased consumer costs and massively scaled back safety-related benefits.
Further, the lower benefits come even as the administration is backing off its proposal to freeze GHG and fuel economy requirements at model year 2020 levels, and instead will reportedly require a modest 1.5 percent annual improvement in emissions and fuel efficiency.
While the changes in assumptions regarding driving behavior and vehicle fleet size likely play a significant role, other factors might also affect the estimates, including possible changes between the proposal and final rule related to issues including what types of technologies earn credits under the standards, and differences between the EPA’s GHG rules and DOT requirements.
$40 Billion Costs
Comparing Carper’s summary of the rule’s net overall costs to the original proposal also highlights the scale of the gap between the administration’s prior benefit projections -- including regarding alternative policy options assuming some improvement in vehicle efficiency -- and the preliminary estimates of the final plan.
The senator’s citation of $41.3 billion in net costs to society -- based on EPA’s GHG rules under a 3 percent discount rate -- compares to $162 billion in claimed net benefits in the proposal rule for an alternative policy scenario in which the agencies require 1 percent annual GHG improvement in cars and 2 percent improvement in light trucks, instead of the proposed freeze.
Alson says that scenario -- referred to as “alternative 4” in the proposed rule -- is probably the closest analog to the 1.5 percent annual improvement that is now the apparent focus of draft final rule, though he cautions he has not seen the draft Carper cites.
He adds that such a yawning gap in the top-line conclusions of the two analyses should prompt the administration to reconsider its plans, and prod a fresh look at the issue by EPA’s Science Advisory Board (SAB), which is already poised to finalize a critique of the 2018 proposal.
“The SAB should call on the agencies to respond so that the public, for scientific and technical transparency, can review and comment on these major changes in the analysis,” he said.
Such a prospect appears unlikely at present, with EPA chief Andrew Wheeler already suggesting the agency will proceed without waiting for SAB’s analysis.
But additional comparison of Carper’s summary with the proposed rule text nevertheless appears to provide the clearest indication to date of how technical criticism of the proposal is forcing the agencies to trim their benefits estimates in the unreleased final plan.
A central critique of the proposal is that it relied on faulty modeling of new vehicle sales, vehicle scrappage and consumer driving behavior to assume fewer vehicle miles traveled (VMT) under the proposed rollback compared to the Obama-era vehicle standards that are being rolled back.
By exaggerating the size of the vehicle fleet under the current rules -- relative to the rollback -- and also overstating VMT under the current rules, the proposal thus estimated massive safety-related benefits while also blunting the assumed negative effects of the rollback on factors such as CO2 emissions and consumer fuel costs.
Regarding CO2 emissions, Carper’s letter cites the draft final plan as boosting emissions by 867 million metric tons (MMT) with respect to the EPA’s GHG rules and 923 MMT under DOT’s fuel economy standards.
According to the proposed rule’s analysis, “alternative 4” would have resulted in a much smaller increase -- 649 MMT under EPA’s rules and 634 MMT under DOT’s rules.
A similar trend appears to be in play with oil consumption. Carper’s letter notes that consumers would pay $1,423 more in fuel costs under the final rollback of the DOT standards than under the current program, and $1,461 more under the modeling of the GHG standard.
The estimates are markedly higher than the $1,090 in estimated added cost that proposed rule assumed for the modest improvement in fuel economy under the DOT’s “alternative 4” standard. The equivalent number for EPA’s rule is $1,260 in added fuel costs.
Carper’s letter also references draft final estimates for consumers’ reduced upfront costs for a new car under the rollback -- specifically $1,083 under the modeled draft final DOT standard and $977 under EPA’s rules.
Those projected cuts to sticker prices are far lower than the proposed rule’s estimates for “alternative 4.” Specifically, the proposal found the DOT rollback would cut upfront costs by $1,450, compared to a $1,770 reduction under EPA’s program.
The proposal to freeze standards resulted in even rosier benefits, including for example a $2,260 sticker price reduction under the GHG program.
This change could be the result of multiple factors, including the shift from the proposed freeze to a modest increase in the required standard, but also less pessimistic assumptions on the cost of vehicle technologies for meeting the standards after a barrage of criticism of prior assumptions from numerous quarters, including EPA staff critiques included in the rulemaking docket.
Carper’s letter also underscores the steep drop in claimed safety benefits from the standards rollback, referencing 471 total lives saved under the draft final GHG standard through 2029, and 474 under the DOT standard.
Such figures align with Inside EPA’s prior report that Trump officials decided to slash their safety-related benefits by more than a factor of 10 from the proposal, which claimed to save over 10,000 lives.
Specifically, the original proposal assumed a reduction of 15,680 fatalities from the proposed freeze of EPA’s GHG program, and 12,680 reduced fatalities under the proposed fuel economy standards freeze.
Finally, Carper’s letter argues that even the alleged reduction of roughly 470 fatalities from the draft final rules ought to be viewed with skepticism, because it does not include increased fatalities from air pollution emitted from less-efficient vehicles.
Defenders of the rollback have argued such air pollution concerns are overblown given that new vehicles remain subject to separate criteria pollutant standards.
But critics have argued that another consequence of fixing the VMT assumptions is likely to be higher estimates of air pollution relative to the current, Obama-era standards. -- Doug Obey (email@example.com)