California warns of break from Washington on clean-air rules

Bloomberg

California sent a warning shot in a potential showdown with the incoming Trump administration, with the state’s clean-air regulators digging in on mandates for an ever-greater number of electric and fuel-cell cars.
The staff of California’s Air Resources Board called national efforts to promote electrification “very modest” after 2025 as it
released a more than 660-page report on the future of zero-emission vehicles, or ZEVs. If federal emissions standards are substantially changed, the state may revisit whether to keep coordinating with Washington’s policies, they said.
“The message we want to send is that post-2025 California is moving not just to moderate, but to very aggressive, stringency on greenhouse gases and zero-emission vehicles,” Joshua Cunningham, chief of the regulator’s sustainable transport staff, said in an interview. “We’re pushing the boundaries.”
The report suggests California should maintain ZEV targets already in place for 2022 to 2025. Elon Musk, chief executive officer of electric-car maker Tesla Motors Inc., said in August the regulator’s standards were “pathetically low” and “a crying shame.”
Other automakers are criticizing the Air Resources Board for being unrealistic. The staff’s recommendations for no immediate change to the ZEV mandate “is questionable given an environment of historically low gas prices and stagnant demand for electric vehicles,” said John Bozzella, president of Global Automakers, a trade group that represents a dozen automakers including Toyota Motor Corp., Honda Motor Co. and Hyundai Motor Co.

TRUMP SHOWDOWN
As the regulator takes heat from both sides, it may also have to navigate a potential confrontation with Donald Trump. The president-elect has pledged to deregulate and nominated a fighter of Environmental Protection Agency actions to serve as the regulator’s next administrator.
As the biggest auto market among US states, California has the market clout and legal authority to set pollution rules that are tougher than national standards. Pruitt, who’s gone to court to fight more than a dozen actions by the agency, said he would review California’s authority and stopped short of saying it will be upheld during a confirmation hearing Wednesday in Washington.
“California will continue to lead the world in addressing climate change and advancing clean energy regardless of who is in the White House or at the EPA,” Kevin de Leon, president of the California senate, said in an e-mailed statement. “Mr. Pruitt should get used to that and not try to impose his Oklahoma views on the Golden State.”

PLUG-IN HYBRIDS
The report contains a blow to automakers that depend on credits for plug-in hybrids to comply with ZEV standards. Air Resources Board staff recommended that, prior to 2025, car companies should get no additional credits for offering plug-in hybrids, citing emissions resulting from frequent restarting of cold motors.
General Motors Co., Toyota and Honda, among others, had pressed for more plug-in credits, arguing in part that these vehicles are easier to sell than battery-only cars and still help promote investment in batteries and electric motors.
Automakers have been critical in recent months of steps they say represent a rush by regulators to preserve clean-air rules developed under President Barack Obama before Trump’s inauguration on Friday.

EPA’S STANDARDS
The EPA last week finalized a decision it signaled in November to keep fuel economy standards intact through the 2025 model year. The move forces Trump’s administration to have to go through a lengthy rule-making process if it chooses to reverse course. Ford Motor Co. Chief Executive Officer Mark Fields on Dec. 2 called the EPA’s actions “eleventh-hour politics.”
An Air Resources Board embrace of staff recommendations as the basis for formal rule-making would have a similar effect. The move would come just two months after Trump takes office, leaving little time for his appointees to review the policies.
The Air Resources Board staff said Wednesday the agency should increase its ZEV mandate to help California meet its goal of cutting carbon dioxide emissions to 40 percent below 1990 levels by 2030. The staff has said that to meet this goal, as much as 40 percent of new-vehicle sales will need to be zero-emission or plug-in hybrid vehicles by 2030. The current target is 3 percent.
Despite a steady influx of new ZEVs and plug-in hybrids, sales of such vehicles have been stuck at about 3 percent of the total in
California since 2014. People familiar with the situation have said
that GM expects to lose about $9,000 on each of the all-electric Chevy Bolts the company started delivering last month.