California Regulators Issue Rules for GHG Reductions

Published August 1, 2004

The California Air Resources Board (ARB) on June 14 published first-of-its-kind regulations requiring a 30 percent cut in greenhouse gas emissions. By ARB’s own estimates, the proposed regulations would impose a hefty price on California consumers and do little to protect the environment. Legal experts say the rules are unlikely to pass scrutiny by the courts.

The plan is required by legislation passed by the California legislature and signed by Governor Gray Davis in 2002 calling for reducing auto emissions to 30 percent below 2002 levels by 2014.

The regulations are intended to achieve the “maximum feasible and cost-effective” reduction of greenhouse gas emissions, including carbon dioxide, beginning in 2006, as a means of combating climate change. All new vehicles must be in compliance by model year 2009. The proposals would create two vehicle classes: one consisting of light trucks and passenger vehicles, the other of heavier trucks. The 30 percent reduction in greenhouse gas emissions would be achieved in two phases, 2009-2011 and 2012-2014.

Costly Implementation

ARB estimates in its draft report that the regulations will reduce CO2 emissions in the state by 85,900 tons per day in 2020 and by 143,300 tons per day in 2030. The ARB report claims, “This translates into a 17 percent reduction in emissions from the light duty fleet in 2020 and a 25 percent overall reduction in 2030.”

To reach such reductions, the new law will raise the price of a vehicle by $328 in 2009, growing to more than $1,000 per vehicle in 2015, according to ARB estimates. Industry observers believe those estimates are too conservative.

“The assumptions on cost and the assumptions on the impact on fuel economy are purely theoretical,” said General Motors spokesperson Chris Preuss. “The new proposal is likely to add thousands of dollars on each vehicle,” warned Eron Shosteck of the Alliance of Automobile Manufacturers (AAM).

In a statement released July 7, AAM said, “Consumers today can choose to invest in cutting-edge fuel-efficient technologies. Fully 85 percent of automobile models are available with one or more of the highly fuel-efficient technologies identified in a 2002 National Academy of Sciences report.

“However,” continued AAM, “there is a large gap between what can feasibly be accomplished and what ARB is proposing. In fact, ARB’s proposed standards go far beyond what the National Academy of Sciences found could be achieved cost-effectively. The implementation approach suggested by ARB would dramatically raise consumer costs and limit consumer choice.”

ARB’s cost estimates also do not include the value of lost safety, convenience, or choices that would result as car and truck manufacturers try to comply with the new regulation. In 2002, when the legislation calling for the emissions reduction was passed, AAM said, “AB 1058 may force automakers to strip from vehicles popular features that consumers demand. All vehicles sold in the state, from the pickups bought by farmers in the Central Valley, to the minivans driven by soccer moms in Marin County, to the SUVs driven by tradesmen in Los Angeles, may become smaller, lighter, and less powerful. As a result of this legislation, some of the best-selling models may effectively be banned for sale in California.”

No Environmental Benefits

The environmental benefits of the new law are likely to be nonexistent or too small to measure, according to several experts. Jerry Taylor of the Cato Institute points out in a July 1 Daily Commentary on Cato’s Web site that improving fuel efficiency in vehicles reduces the costs of driving, and as a result, people drive more and traffic congestion increases.

Citing the work of economist Andrew Kleit of Pennsylvania State University, Taylor wrote, “A 50 percent increase in fuel efficiency of the automobile fleet will increase net automobile emissions of volatile organic compounds by 1.9 percent, nitrogen oxides by 3.4 percent, and carbon monoxide by 4.6 percent.

“In other words,” noted Taylor, “environmentalists are asking us to trade off an infinitesimal reduction in global temperature for more smog than we might experience otherwise.”

Taylor and other analysts predict auto and truck manufacturers may sell higher-powered and higher-performance vehicles in other states, effectively offsetting any reduction in emissions in California. Some California citizens will cross the border and buy their cars in other states.

Jay Lehr, science director for The Heartland Institute and author of several standard environmental science reference books, submitted comments to ARB on the proposed rules. “Wishful thinking aside,” noted Lehr, “reducing carbon dioxide emissions from California cars and trucks cannot have any effect on the global climate, owing to a few simple facts of physics.”

After recounting those facts–including the share of greenhouse gas emissions attributable to transportation and California’s share of those emissions–Lehr concluded, “the proposed law would likely reduce the human impact on world climate in the order of 1 percent of 1 percent of 1 percent of 1 percent. That means the proposed law would solve about one millionth of 1 percent of the global warming problem.”

Court Challenge Likely

There is also doubt the plan will survive legal challenges from the car and truck industry. “Legal action absolutely is an option here,” said GM’s Preuss, who predicted automakers would coordinate their approach and, as a single group, challenge the regulations.

By forcing a 30 percent cut in greenhouse gas emissions, the plan essentially imposes new, more stringent fuel economy standards on vehicles sold in California. “It’s very clear in our view that the federal government has sole authority to set fuel economy standards,” said Dave Barthmuss, also a General Motors spokesperson.

“It is illegal,” said AAM’s Shosteck bluntly. “States cannot set their own fuel economy standards.”

“I would be skeptical if that really would come into law in California,” added Chrysler Chief Executive Dieter Zetsche.

The comments of General Motors and Chrysler spokesmen carried extra weight considering the recent success of the two automakers in fighting similarly bold California automobile restrictions. In 2002, General Motors and Chrysler successfully obtained a court injunction against California’s plan to require automakers to meet state quotas regarding low-emission vehicle sales. The automakers dropped their suit in 2003 only after winning significant concessions from the state.

National Standards Preferred

“What will happen, of course, is that California will do its thing, and then New England will start to weigh in, New York state, and pretty soon we’ll end up with a patchwork,” said Ford Motor Company CEO William Clay Ford, Jr. “I really would like to have a national approach to this, because otherwise we and other manufacturers will have a really hard time responding.”

“It would be a logistical and engineering challenge, and a costly problem,” added Barthmuss. “It’s more cost-effective for us to have one set of emissions [standards] everywhere.”

Even without new legislation being adopted by New England states, however, the new emission standard if allowed to stand is likely to spread. Maine, Massachusetts, New York, Rhode Island, and Vermont have already adopted California’s vehicle emission standards instead of national standards. Since their laws must mimic California’s, they too would have to adopt the 30 percent reduction in greenhouse gas emissions.

Sandy Liddy Bourne is director of the Natural Resources Task Force for the American Legislative Exchange Council. Her email address is [email protected]. James M. Taylor and Joseph Bast contributed to this article.

For more information …

see Heartland Science Director Jay Lehr’s comments on the California Air Resources Board proposal, available online at