University of Michigan professors discuss Trump's fuel economy review.

ANN ARBOR, MI – President Donald Trump told the audience at the American Center for Mobility in Ypsilanti Township he wants the United States to be the “car capital of the world again.”

Trump announced Wednesday, March 15, that he is planning to make good on that goal in part by challenging the current Corporate Average Fuel Economy (CAFE) emissions targets that were a centerpiece of former President Barack Obama’s strategy to combat global warming.

“We’re going to work on the CAFE standards so you can make cars in America again,” Trump said. “There is no more beautiful sight than an American-made car.”

University of Michigan professors believe Trump’s announcement to re-examine federal requirements that regulate the fuel efficiency of new cars and trucks could benefit the auto industry – particularly in Michigan – but would stunt progress in decreasing greenhouse gas emissions that contribute to global warming.

The EPA under Obama’s stewardship had promulgated a rule for cars and trucks requiring a fleet-wide average of 54.5 mpg by 2025, according to the Associated Press.

Trump campaigned on eliminating “job killing” regulations, and the administration is expected to take additional steps in the coming days to roll back environmental regulations.

President Trump announces review of auto emission standards during Michigan appearance

Back in 2012, the Obama set fuel-economy regulations for model years 2017-2025. The administration agreed to complete a midterm evaluation in 2018.

But seven days before Obama left office, the EPA decided to keep the stringent requirements it had set in place for model years 2022 to 2025, according to The Associated Press. The industry balked at the decision, insisting it was rushed through to beat the change in administrations.

Trump announced Wednesday that he’s putting that midterm review back on track, so that officials can spend another year studying the issue before setting new standards in 2018.

Don Grimes, a senior research specialist at the UM’s Institute for Research on Labor, Employment and the Economy, said Trump’s challenging of the CAFE emissions targets would likely be beneficial to Michigan’s economy.

“Michigan makes a lot of trucks and SUVs, so that would probably help the Michigan economy and in particular, the auto industry overall,” Grimes said. “The fuel standards are very expensive in terms of the technology involved, and are adverse for the product mix.

“The auto industry wants to be able to respond to the consumer and not government references,” he added. “The problem with the CAFE targets is that the number of people buying larger vehicles, especially SUVs and pickups, has increased over time. So if you’re running a business, you want to sell a product that people want to buy, not one that is mandated by Washington.”

Barry Rabe, a professor at UM’s Gerald R. Ford School of Public Policy, agreed that loosening fuel economy standards would benefit the economy in Michigan on a short-term basis, but wondered how changes to emission targets would impact automobile manufacturing in the long haul.

“I think short-term, this could indeed deliver significant benefits for Michigan, because so much of the manufacturing here is concentrated on less fuel-efficient vehicles,” Rabe said. “The long term is more uncertain. You have to wonder what happens with energy prices and consumer demand. Do electric vehicles have a future, or do they fade away?

“The danger is if the Big Three double down on SUV and truck production because of the profits,” he added. “Long-term, it’s more difficult to know if that’s going to be beneficial. Is low fuel efficiency really the wave of the future?”

Rabe said Trump’s announcement affects more than CAFE emission targets, including a tailpipe emissions program of the Clean Air Act, which was integrated with CAFE standards by Obama in 2010.

Trump’s decision, Rabe said, reflects a major reversal for American vehicle production from its efforts to reduce greenhouse gas emissions and continues a recent pattern of relying on executive agency actions rather than involving Congress or the states.

“It’s a very interesting pivot in terms of policy, moving away from a hallmark move by the Obama administration to bring together the tailpipe emissions program and push that aggressively in their climate strategy,” Rabe said. “That was done without Congress. So what we have is one executive perhaps reversing what his predecessor did a few months ago.”

While the Trump administration has not said explicitly it wants to weaken the standards, a senior White House official said the Obama-era EPA had ignored reams of data cited by the automotive industry, according to The Associated Press. 

The Alliance of Automobile Manufacturers, which represents a dozen major car manufacturers including General Motors, Ford, Fiat Chrysler and Toyota, last month urged EPA Administrator Scott Pruitt to relax the standards, saying they will drive up car costs, price customers out of the market and depress the industry. Obama’s EPA had argued the costs to consumers were mitigated by gas savings and that the rules would decrease greenhouse gas emissions that contribute to global warming.

Andre L. Boehman, a UM professor of mechanical engineering and director of the W.E. Lay Automotive Laboratory, said this development opens the door for the EPA under Pruitt to reject the standards on a variety of bases.

Boehman said it makes sense to support strict fuel economy standards regardless of Trump’s stance on global warming, because they lead to savings in fuel costs and improvements in the nation’s energy security.

“These fuel economy standards are aggressive, but the automakers have made really significant strides toward increasing fuel economy in passenger cars, SUVs and other light duty vehicles in recent years,” Boehman said in an email. “The pressure put on the industry to meet these future greenhouse gas emissions standards has resulted in the implementation of many innovations — high efficiency gasoline direct injection engines, lightweighting of vehicles, start-stop and other hybridization technologies — some of which were on their way into the market already, but some of which were accelerated by this pressure.”

As a member of the committee of stakeholders appointed by the National Research Council of the National Academy of Science that initially investigated CAFE standards costs, UM Professor of Mechanical Engineering Anna Stefanopoulou said the committee’s report in 2015 essentially concluded that advances in technology would come down in price enough for automakers to economically meet the targets.

Stefanopoulou, the director of the UM Automotive Research Center, said loosening the CAFE emission targets will provide a “breathing break” to automakers, particularly those that are behind or struggling to achieve the proposed fuel economy standards.

“Staying behind a well laid out schedule that has many global players is inconsistent with growing economy,” she said. “The right thing to do is to recognize the problem, embrace new technology and become the leaders instead of complaining about the targets.”