Administration Cooks the Books to Justify Rollback of the Clean Car Standards

This post was written by EDF consultant Chester France, who served as a Senior Executive at EPA and led the development of vehicle standards at the agency

The Trump administration is now trying to roll back the Clean Car Standards – a proven American success story created with a mountain of evidence to support it.

From 2009 through 2016, the U.S. government published 10,000 pages of information proving that the Clean Car standards are feasible and cost effective. That’s the most comprehensive and rigorous U.S. automotive technology analysis ever conducted.

Rather than building on that massive technical record, the proposal released on Thursday indicates that the Trump administration has embraced shoddy and biased analysis to support its desired eight-year freeze of the Clean Car Standards at essentially 2018 levels through 2026.

The analysis attempting to justify the proposed rollback is a stunning 180-degree reversal of what the Environmental Protection Agency (EPA) and Department of Transportation (DOT) had found over the last decade. For instance:

• As recently as 2016, EPA and DOT found that the standards through 2025 would have net societal benefits of almost $100 billion.
• Now, the administration wants us to believe the same standards will have net societal costs of $200 billion.

That’s a change of almost $300 billion.

The only way to achieve such a massive analytical flip-flop is to “cook the books” – by manipulating design elements and input assumptions in the modeling tool – until the Trump administration arrived at the answers that it wants.

And it’s clear the Trump administration had answers it wanted from the beginning. EDF uncovered an email proving that a long-standing climate denier within the Trump administration had – at the urging of the White House – directed EPA staff to immediately roll back the Clean Car Standards on February 7, 2017. That email reflects a purely political decision within weeks of the President’s inauguration in 2017 – before anyone could have conducted any analysis of the benefits of the program. The facts had no bearing then, and clearly still do not now.

Our experts have identified scores of changes improperly biased in the direction of weakening the standards and making them appear less cost effective. Here are just a few of the most egregious examples:

1. Highly deceptive safety claims

The administration projects that freezing the Clean Car Standards for eight years would reduce total fatalities from driving. This finding is based almost exclusively on the projection that flatlining the standards will result in Americans voluntarily driving less because they will have to spend more on gasoline.

Driving fewer miles reduces the risks of accidents and fatalities, of course, but that lost mobility is a harm to society. It reflects the lost trips to visit family, get to work, or go on vacation that this administration anticipates under its proposed, gutted standards.

The appropriate metric for evaluating safety, and the one DOT has historically used, is a fatality rate that is measured in comparison to the number of miles that we drive our cars – that is, fatalities per billion miles traveled.

By that metric, the Clean Car Standards’ impact on driving has no meaningful effect on vehicle safety.

The linchpin of the Trump administration’s bizarre logic is that the government should make cars more polluting and substantially less fuel efficient to discourage Americans from driving.

2. Phantom miles traveled

When you unpack the administration’s claims about how much less Americans will drive under the rollback of the Clean Car Standards — which, again, is a key source of their misleading safety claims — the numbers don’t add up.

The administration projects that freezing the standards for eight years will mean that Americans will drive three trillion fewer miles.

A little more than half of this reduced mobility is due to the “reverse rebound effect.” That’s the economic theory that people will drive less when the cost of driving increases – whether due to lower fuel economy, increased gas prices, or other factors. However, the administration has doubled the miles associated with this effect by claiming the rebound effect is now twice as high as previously understood. At least one prominent economic consulting firm, the Analysis Group, recently concluded that the latest literature does not support the very high rebound effect assumed in the latest Trump administration analysis.

The remaining reduced mobility has no discernible rationale – not from common sense or economic theory – and appears to be an inexplicable artifact of poor model design. These are simply “phantom miles.”

The phantom miles alone bias the cost benefit analysis by as much as $140 billion. DOT is projecting about $120 billion in benefits from the monetization of reduced fatalities and non-fatal crash injuries due to the lower miles traveled calculated from the phantom inflated baseline, and about $20 billion in benefits from reduced congestion calculate from those same flawed numbers.

At the same time, DOT assumes there is no societal cost associated with Americans driving less.

The bottom line is that most of this reduced mobility — all of the phantom miles and some of the excessively high reverse rebound effect miles — is preposterous and undermines the credibility of the entire modelling exercise.

3. Wildly exaggerated vehicle technology cost

In July 2016, EPA projected incremental vehicle technology costs of $900 to meet its Clean Car Standard for model year 2025 vehicles, while DOT estimated $1,200.

Now, just two years later, DOT is projecting vehicle technology costs of $2,340 – approximately double their own projection in 2016, and two-and-a-half times the recent EPA projection.

These projections are caused by a number of model flaws – in particular, a reliance on obsolete data (in some cases, engine and transmission maps that are several years old) that yield overly pessimistic technology, cost, and redesign cycle assumptions.

The flawed model also includes numerous improbable assumptions that artificially force highly irrational and inefficient “choices,” including:

• Prohibiting the use of some technologies that are already available and on the market
• Assuming minimal use of credit trading (which makes compliance cheaper) – both by minimizing automaker car-truck trading (the standards allow an automaker who generates credits on its cars to offset debits on its trucks, and vice versa) and by minimizing trading between companies (one automaker can purchase credits from another automaker)
• Not allowing manufacturers to exclude a costly technology even when it is redundant
• Using a flawed vehicle technology cost optimization algorithm — which means the simulation does not choose the most cost-effective compliance pathways based on available technologies

The indefensible $2,340 vehicle technology cost projection alone accounts for about $150 billion in extra costs – or about half of the $300 billion change relative to what DOT projected in 2016.

4. Blatant internal inconsistencies

Throughout the model, there are major inconsistencies with how people are assumed to behave within certain modules.

For example:

• In the module that examines vehicle sales, consumers are assumed to care about vehicle cost and not fuel savings.
• In the rebound module, consumers are assumed to care about fuel savings and not vehicle cost.

In each of these modules, DOT has consistently chosen the assumption that makes the current standards look more costly, even when it causes logical inconsistencies and disparities with other parts of the model.

The Trump administration’s proposal cooks the books to justify gutting a highly successful program

The Clean Car Standards are one of the most important actions taken by any country to address climate change. They are a made-in-America success story, spurring new technology innovation that strengthens America’s economic competitiveness and creates jobs, while also creating large pollution reductions and oil savings, saving Americans money on gasoline, and helping automakers achieve their current high sales and profits.

Rolling back the Clean Car Standards would be a terrible mistake.