What’s in the EPA’s New Pollution Standards for Cars & Trucks?

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Your questions on the EPA’s proposed emissions regulations, answered.

Proposed: EPA Emission Regulations For Passenger Cars & Trucks

This article is part of a series designed to explain in simple terms the definition of zero-emission transportation regulations, who must comply, what is required for compliance, and more.

Transportation is the highest source of greenhouse gas (GHG) emissions in the United States, accounting for 39% of total emissions (excluding non-energy related emissions). Rapid electrification of the transport sector and the widespread adoption of zero-emission electric vehicles (EVs) can dramatically cut GHG emissions and help achieve US climate goals.

The Environmental Protection Agency’s (EPA) proposed emission regulations for passenger cars and trucks are the most stringent to date and have significant market implications; this article will detail when compliance is required, who must comply, and how this regulation could impact the automotive sector if upheld.

What are the EPA’s proposed tailpipe emission rules, and who has to comply?

On April 12, 2023, the EPA released two performance-based rules for manufacturers regulating greenhouse gases (GHG) and criteria pollutants — particulate matter (PM), ozone, nitrogen oxides (NOx), and carbon monoxide — for light- and medium-duty vehicles as well as heavy-duty trucks. The standards establish emission limits and are designed to allow manufacturers to meet these targets by any means that are economically suitable for their business.

Under the proposed regulation, original equipment manufacturers (OEMs) must document that their new product line does not exceed the average tailpipe emission limit. This policy impacts the point of sale and does not require any action by the consumer. In fact, tailpipe emission regulations are already in place today, and the proposed rules simply increase the stringency for vehicles manufactured in model 2027 and beyond.

Key facts: (what is in scope and what is not)

1. This is not a ban on internal combustion engine (ICE) vehicle use or sales: The EPA rule does not outlaw diesel and petrol vehicle sales. Manufacturers must meet average limits across their product line, and the sale of ICE vehicles will not immediately cease in 2027.
2. The regulations do not impact the operation of vehicles today or vehicles sold before 2027: This rule impacts vehicle sales; starting in 2027 automakers will have a series of options to ensure new vehicles meet the EPA requirements. These include implementing particulate filters to reduce PM emissions and adopting other technology improvements to reduce the CO2 from conventional fossil fuel vehicles.
3. This rule does not directly impact drivers: Drivers will not be subject to emissions checks or mandates under this specific rule; this rule only indirectly affects consumers when they purchase a new vehicle starting in 2027, as it will likely impact the type of vehicle that is available for purchase.

How is the EPA able to regulate tailpipe emissions?

Tailpipe emissions are released when a combustion engine burns fuel. During this process, various compounds (i.e., PM, NOx, CO2) are released through the tailpipe as an emission byproduct. Under the Clean Air Act, the EPA is permitted to set air pollution requirements for mobile sources, including vehicles. In 1994, the EPA established the first federal emission standards for vehicles and has adopted increasingly stringent tailpipe emissions standards to improve air quality ever since.

The proposed April 2023 rule represents the EPA’s latest iteration to establish performance-based emission standards for vehicles. Manufacturers are permitted to meet these standards via any means they select, adopting economically advantageous technologies to meet the statutory limit on greenhouse gas emissions and criteria pollutants.

How will the rule accelerate EV adoption?

While manufacturers are not obligated by the proposed regulation to manufacture electric vehicles (EVs), it is anticipated that producing and selling EVs will be a cost-effective strategy for complying with the revised tailpipe emission limits. Therefore, the proposed EPA rules are expected to increase EV sales. According to the EPA’s projections, if the new rules are followed, EVs could represent 67% of new light-duty vehicle sales according to the EPA’s definition, 46% of new medium-duty vehicle sales, and 34% of new heavy-duty day cab tractors by 2032.

ACT annual sale percentage requirements by weight class Graph

Implementing the EPA tailpipe emissions rule could help balance EV supply and demand. The EPA tailpipe emission rules act as a supply-side lever setting binding targets for OEMs, and selling EVs will represent a key compliance pathway. Conversely, the already enacted Inflation Reduction Act is increasing EV demand, as the tax credits made available for EVs lowers the purchase price and could create sustained demand through 2032. Together, the proposed EPA tailpipe emissions rules and IRA credits can work collectively to increase EV sales through 2032.

How do the rules complement existing market and policy trends?

The proposed standards align with commitments made by automakers and US states as they plan to accelerate clean vehicle technologies in the light- and medium-duty fleets in the next 10 to 15 years. Car and truck companies are moving to include electric vehicles as an integral and growing part of current and future product lines, leading to an increasing diversity of clean vehicles for consumers. The proposed rules are also consistent with President Joe Biden’s Executive Order, “Strengthening American Leadership in Clean Cars and Trucks,” and the EPA Clean Trucks Plan.

Why is this rule needed? What is the expected impact?

By implementing these standards, numerous benefits can be achieved, including reducing CO2 emissions, improved public health, and cost savings for drivers through lower fuel and maintenance expenses.

The EPA claims the following projected impacts if the rules take effect:

• Through 2055, the EPA projects that the proposed standards would avoid nearly 10 billion tons of CO2 emissions (equivalent to more than twice the total US CO2 emissions in 2022). The proposed standards would reduce other harmful air pollution and lead to fewer premature deaths and serious health effects such as hospital admissions due to respiratory and cardiovascular illnesses.
• By accelerating the adoption of technologies that reduce fuel and maintenance costs alongside pollution, the proposed standards would save the average consumer $12,000 over the lifetime of a light-duty vehicle, as compared to a vehicle that was not subject to the new standards.
• Together, the proposals would reduce oil imports by approximately 20 billion barrels.
• Overall, the EPA estimates that the benefits of the proposed standards would exceed costs by at least $1 trillion.

What happens next?

The comment period to submit a comment to the EPA on the proposed tailpipe emission rules ended June 16, 2023, the EPA is now in the process of weighing those comments before revising and finalizing a rule proposal. The EPA is expected to release a final rule in early 2024. Once issued it could then be subject to litigation. However, as mentioned above, for decades the EPA has been granted standing to regulate vehicle tailpipe emissions.

By Marie McNamara, Olivia Alves, © 2023 Rocky Mountain Institute. Published with permission. Originally posted on RMI.

Featured Photo by Khunkorn Laowisit, Pexels