So the Trump administration has formally proposed to roll back CAFE standards for model years beginning in 2021. And California has announced its intention to start separately enforcing its own standards if the federal standards are weakened. Trying to sort it all out, I was somehow reminded of the famous Winston Churchill statement:
Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…
No one who’s thought seriously about the environmental impacts of emissions from cars can really argue that CAFE standards are a good way to go about it. They are just a way to tax emissions by subterfuge. In one of the few statements in the proposed rulemaking with which I agree, NHTSA and EPA state that:
There remains no single technology that the majority of vehicles made by the majority of manufacturers can implement at low cost without affecting other vehicle attributes that consumers value more than fuel economy and CO2 emissions.
Well, sure – but consumers don’t face the actual costs imposed by their driving, because the externalities resulting from motor vehicle fuel consumption aren’t factored into the price. Of course consumers don’t value reductions in emissions. If emissions were factored into the price of gasoline, consumers would by definition “value” emissions, because they’d be paying for them.
In the power plant context, I’ve long been a supporter of some kind of grand bargain that would trade elimination of New Source Review for either a cap-and-trade program or a carbon tax. Why not an even grander bargain. Let’s call it the grandest bargain – an economy-wide carbon tax at really meaningful levels in return for elimination of both NSR and CAFE standards.
I admit that some details would have to be worked out, but I’m just an ideas man. I’ll leave implementation to Congress. After all, isn’t the U.S. Senate the world’s greatest deliberative body?
Ok, let’s think seriously about emissions. This is far from a straightforward case of gasoline consumption and CO2. Every refinery cranked up to maximize gasoline production is emitting more carcinogenic polycyclic aromatics than it would if those units were cranked down. Yes, the externalities are important, and there are several.