Under the current standards for vehicle emissions, automakers have a variety of ways to achieve compliance. These are known as "compliance flexibilities" which allows an automaker to sell electric vehicles to off-set gad-guzzlers like SUVs as an example. But the recent proposal by the Trump administration to ease emission standards, will remove these flexibilities.
The proposal unveiled last week would freeze fuel-economy and emissions standards at their 2020 levels for several years beyond that. This would seem like a positive for automakers as trucks and SUVs/crossovers are selling like hotcakes. But the removal of this provision has automakers crying fowl, saying these help with global vehicle development. The heads of the Alliance of Automobile Manufacturers and the Association of Global Automakers wrote a letter to Trump stating that the “flexible compliance pathways that pave the way for research and deployment in advanced fuel-saving technologies”.
“We are global manufacturers; to compete around the world, we must continue to invest in both more efficient internal combustion engine technologies, electric-drive technologies and fuel cells,” said Mitch Bainwol of the Alliance, and John Bozzella of the Global Automakers.
But there is a reason the government is removing those compliance flexibilities as it "existing fuel-economy program easier to administer and more transparent". This makes it easier for regulators and consumers to verify an automaker's claim. The current system is somewhat confusing, as thirstier automakers can buy into compliance by trading emission credits from more efficient ones. The trades and prices can be shielded from public viewing.
Source: Bloomberg
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