How a geeky calculation could weaken 2 clean car rules

By Jean Chemnick, Mike Lee | 02/28/2024 06:07 AM EST

A regulation that almost no one has heard of could allow carmakers to keep making gas-gulping SUVs.

President Joe Biden speaks at a General Motors electric vehicle assembly plant in Detroit.

President Joe Biden speaks at a General Motors electric vehicle assembly plant in Detroit. Evan Vucci/AP

The Biden administration is about to release two major rules to expand electric vehicles and make gas-powered cars run cleaner.

But a third rule could undercut those efforts.

A regulation being finalized by the Department of Energy would revise formulas that translate the power consumption of an electric car into gasoline use, or the miles per gallon equivalent. DOE proposed slashing the estimated fuel economy of electric cars and trucks last year, then announced in the fall it would accept more comments on the idea.


That gave carmakers a second chance to plead their case for easing the rule, prompting concern among climate and consumer advocates that the administration might soften the DOE proposal and allow auto manufacturers to keep making gasoline-gulping models.

The formula — known as the petroleum equivalency factor — determines how electric cars are scored under the corporate average fuel economy standards, a separate rule that’s being updated by the National Highway Traffic Safety Administration. The old standard gave credit to carmakers for each EV they produced, allowing them to offset the high fuel consumption of gas guzzlers.

Lowering the mpg equivalency for EVs could force car companies to make fewer gas-gulping SUVs, trucks and vans because the average fuel economy of their entire fleet would fall.

Here’s one example: The proposed DOE petroleum equivalency factor, or PEF, would reduce the fuel economy rating of Ford’s F-150 Lightning from 238 mpg to 67 mpg. It calls for similar decreases on other models.

If it’s weakened, leaving EVs with a higher estimate of their fuel economy, it could mean that automakers don’t have to increase the efficiency of their gasoline-powered cars as much to meet fleetwide average fuel economy standards.

“It basically meant you could build a few EVs and offset a significant number of really low-efficiency gasoline-powered vehicles,” Chris Harto, senior energy policy analyst at Consumer Reports, said of the old petroleum equivalency factor.

DOE officials declined to comment about potential changes to the rule.

Concerns around the softening of the DOE regulation come as the Biden administration is reportedly weakening other pillars of its climate agenda for transportation. EPA appears to be slowing down the speed at which its upcoming clean car rule would make manufacturers ramp up EV sales, and agency officials have hinted publicly that they may give power companies more time to shut down fossil fuel plants. The Securities and Exchange Commission is also considering rolling back elements of its climate disclosure law.

Dialing back proposed changes to the petroleum equivalency factor could erode the climate benefits of EPA’s clean car rules and NHTSA’s fuel economy standards, analysts say. The three rules are being reviewed by the White House budget office, a sign that they could be finalized within weeks.

The three are designed to be a regulatory Rubik’s Cube, working in tandem with a raft of incentives in the Inflation Reduction Act to push manufacturers toward more efficient — and climate-friendly — battery-powered vehicles.

The EPA rule for light- and medium-duty vehicles gradually lowers the amount of carbon new vehicles are allowed to emit on a fleetwide average basis and is expected to prod carmakers to electrify 67 percent of their new vehicles by 2032. That does a lot to encourage companies to invest in electric vehicles but very little to ensure that gasoline-powered models they still sell get good gas mileage.

NHTSA’s proposal on CAFE standards would raise the fleetwide average from 46.7 mpg in 2026 to 57.8 mpg in 2032. It would effectively backstop EPA’s rule, ensuring that in years when there are fewer electric offerings, new vehicles with internal combustion engines still meet fuel economy minimums.

An NHTSA spokesperson declined to comment on DOE’s petroleum equivalency factor but said the agency plans to release the CAFE standard soon. The White House did not respond to requests for comment.

EPA said in an email that it couldn’t comment on the clean car rule because it’s under review.

“EPA received more than 240,000 public comments from a wide range of stakeholders for the proposed rulemaking and the Agency will be addressing those comments as part of the final rule,” the agency said.

If DOE’s assumptions about the efficiency of certain electric or plug-in hybrid models are lofty enough, a relatively small set of vehicles that run on electricity can allow a manufacturer to show compliance with the NHTSA rule even if it mostly sells gasoline-fueled cars that get low gas mileage.

“The problem is that the programs are meant to be complementary,” said Dave Cooke, senior vehicles analyst at the nonprofit Union of Concerned Scientists.

Cooke and other advocates say that if DOE retains its decades-old approach to measuring the efficiency of EVs — a formula designed to help the fledgling industry get off the ground — electric models will still be assumed to achieve the equivalent of 300 mpg or more.

“By maintaining the inflated PEF value [carmakers] are getting today as long as possible, it limits what they have to deploy under CAFE not just in terms of electric vehicle sales, but also in terms of fuel economy of their gasoline-powered vehicles,” Cooke. said.

DOE proposed tightening the petroleum equivalency factor last year in response to a petition from environmental groups that said the old figures don’t reflect the efficiency of the power grid or EVs.

But carmakers pushed back, and DOE eventually initiated a second public comment period.

The Detroit Three — General Motors, Ford and Stellantis — face the highest hurdles related to the new calculations, because they build and sell a broad range of vehicles — including gas-guzzling vans, trucks and SUVs. They also make EVs to help balance the fuel economy of their massive fleets.

The three companies argued in joint comments that they were counting on getting credit for their EV production to bring them into compliance with the higher CAFE standards that NHTSA is expected to finalize. Failure to meet those standards could result in thousands of dollars in fines for each vehicle.

Other carmakers, such as Toyota and Hyundai, produce a mix of smaller cars and hybrids, making it easier for them to meet the higher fuel economy rules — even without generous crediting for electric vehicles.

That “disproportionate impact” on U.S. carmakers, the Detroit Three argued, “must be remedied, not only by DOE in its rulemaking, but also by NHTSA in its rulemaking.”

This story also appears in Energywire.