It would appear that Donald Trump’s version of the Environmental Protection Agency has learned the lesson of the VW and others diesel emissions scandal. It would also appear that pretty much no one else has. If you set emissions standards that are expensive to reach then people won’t reach them – they’ll lie, cheat and dissemble instead. There is indeed a better method of dealing with these emissions problems though, simply increase the gas tax to cover the social cost of those emissions. With the EPA’s CAFE standards there is also that one more point to make, that the standards themselves have created that SUV which is the thing most complained about.
This thus looks like good and sensible policy:
US environmental regulators announced on Monday they would ease emissions standards for cars and trucks, saying that a timeline put in place by Barack Obama was not appropriate and set standards “too high”.
The Environmental Protection Agency (EPA) said it had completed a review that would affect vehicles for model years 2022-25 but it did not provide details on new standards, which it said would be forthcoming. Current regulations from the EPA require the fleet of new vehicles to get 36 miles per gallon in real-world driving by 2025. That’s about 10 miles per gallon over the existing standard.
The agency said in its decision that the regulation set under the Obama administration “presents challenges for auto manufacturers due to feasibility and practicability, raises potential concerns related to automobile safety, and results in significant additional costs on consumers, especially low-income consumers”.
So, to cross that well-trodden ground about the VW and diesels emissions standards. Basic physics tells us that we can have diesels, with relatively low CO2 emissions, we can have expensive diesels which also have low NOx emissions, or we can have cheap diesel engines with low CO2 and high – relatively – NOx. There is no squaring this circle. We cannot have cheap diesels that everyone wants to use thus reducing CO2 and also have low NOx. Sorry, that’s just that pesky reality poking its little nose in.
With the demand that we had both relatively low CO2 and NOx, what was the solution everyone came up with? For it’s not just VW, it’s near anyone making mass market diesels. No, they didn’t only make and we only buy expensive diesels. Instead everyone lied. This does not benefit the environment.
Now consider higher fleet standards. What will actually happen? Americans don’t get the engines they desire, manufacturers desire to stay in business, they’ll all lie of course. The mpg standards will be gamed and in a decade we’ll find that the fleet on the roads doesn’t meet these new standards. Oh, and GM and Chrysler will need rescuing again, won’t they?
We could, of course we could, say but the Yanks are different and they’ll all obey the rules. Oh Yeah? So explain the SUV to us all then?
The original set of those CAFE standards said that cars would be held to one standard, car bodies or similar placed upon pick up truck chassis and engine combinations would be held to another, lower, one. At which point car bodies were placed upon pick up truck chassis and engine combinations so that Americans could get the engines they desired and so the SUV was born. OK, now anyone want to insist that people won’t dodge the regulations, lie to gain what they want?
Fortunately we do in fact have something we can do instead. As with climate change in Nick Stern’s report, as with the basic economics of externalities. Regulation might sometimes be the correct method of dealing with them but not all that often. Better, if it is possible, to just stick a crowbar into the price system and then leave that do the heavy lifting for us. As has been pointed out many a time stick 50 cents upon a gallon of American gas and we’re pretty much done in fact. OK, if you must, a $, lowering other taxes to compensate at the same time.
Sure we can all shout that climate change is a crock and exhaust pollution never did me any harm. We might even be right. But it’s still true that if we’re to take them seriously CAFE standards just aren’t the right way to deal with it. Tax, not regulation, often on the grounds that people lie through their teeth.
Something that all too many seem not to have grasped from the VW problems when we talk about mpg standards. Leaving us with why the hell haven’t they?