U.S. automakers brace for Biden climate rule

By Hannah Northey, Timothy Cama, Emma Dumain | 04/10/2023 01:55 PM EDT

Complying with EPA’s proposed rule or Biden’s ambitious climate goals could be a tall order, given the nation’s current infrastructure; a dearth of minerals like lithium, graphite and nickel; not to mention the threat of lawsuits.

President Joe Biden drives a Cadillac Lyriq through the showroom during a tour at the Detroit Auto Show

President Joe Biden drives a Cadillac Lyriq through the showroom during a tour at the Detroit Auto Show on Sept. 14, 2022, in Detroit. AP Photo/Evan Vucci, File

This story was updated at 3 p.m. EDT.

The Biden administration is poised this week to release what’s slated to be one of its biggest climate rules to date aimed at boosting electric vehicles, a move that’s riling the auto sector and Capitol Hill and triggering widespread questions about the availability of critical minerals.

Front and center are EPA’s plans to reveal performance-based vehicle emissions standards, which could be stringent enough to result in electric-powered vehicles making up as much as 67 percent of the new vehicle fleet by 2032, The New York Times reported Saturday, expanding on an earlier report from Bloomberg that the rule could be released Wednesday in Detroit (Climatewire, April 10).


“This requires a massive, 100-year change to the U.S. industrial base and the way Americans drive,” according to major automakers belonging to the Alliance for Automotive Innovation, including Ford Motor Co., General Motors Co., Mazda Motor Corp., Toyota Motor Corp., Nissan Motor Co. Ltd., Volkswagen Group and Volvo Group.

EPA has yet to release the regulation, and EPA spokesperson Tim Carroll said the proposal process is not yet final. And yet U.S. automakers have been quick to raise serious questions with the Biden administration’s approach, noting in a memo last week that the success of such a regulation will hinge on a much larger section of the economy — from battery makers to miners — and that the stringency of EPA’s regulations must match market conditions.

Complying with EPA’s proposed rule or President Joe Biden’s ambitious climate goals could be a tall order, given the nation’s current infrastructure; a dearth of minerals like lithium, graphite and nickel; not to mention the threat of lawsuits. Questions loom around around charging, critical minerals and consumer appetite, according to the alliance.

Among those questions: How will the American population respond, how will the sector grapple with an insufficient number of EV charging stations and just how easily can automakers secure the critical minerals needed to feed a growing supply chain around EVs — while pivoting away from China’s control?

By 2030, North America is only estimated to fulfill only a fraction — 3.5 percent and 3.4 percent — of its cathode and anode demands, respectively, the alliance noted in its memo. That means more processing and production facilities must be ramped up in the U.S., North America and allied countries.

The alliance also noted that fewer EVs will be eligible for lucrative tax credits under the landmark Inflation Reduction Act, just as EPA’s proposed rule could be rolled out. The Treasury Department last month unveiled long-awaited guidance that’s poised to make fewer EVs eligible for $7,500 tax credits meant to encourage consumers to ditch gas-powered cars (Greenwire, March 31). While calling the guidance “a positive policy,” the alliance said it’s not yet clear how infrastructure and supply-side provisions under the Inflation Reduction Act and bipartisan infrastructure law will help shape EV supply chains over the course of EPA’s proposed rule, expected to apply to model years 2027 through 2032.

“Remember this: the IRA’s revised 30D EV tax credit (with strict new rules on the origin of critical minerals and battery components that kick-in after April 18) means fewer EVs will qualify for the $7,500 customer purchase incentive,” the alliance wrote.

Push to shape the rule

Representatives from the alliance met with Biden administration officials from EPA and the White House Office of Information and Regulatory Affairs in February to push their case as the White House reviewed the proposal, according to OIRA’s records.

“Automakers are committed to the EV transformation,” the alliance said in a handout at the meeting, calling for a “feasible and practical rule” that considered factors outside of EPA’s control, like EV affordability, mineral availability and charging capacity.

The alliance meeting was one of more than a dozen such meetings OIRA and other officials held with people and organizations lobbying on the rule since February. Environmentalists, EV makers, state environmental regulators, biofuel industry officials and others all had White House meetings.

“The standards should be ambitious enough to lock in significant emissions reductions by the end of the decade, putting the country on a trajectory to achieve full transportation electrification,” the Zero Emission Transportation Association, which represents EV companies like Tesla Inc. and Lucid Group Inc., said in a handout at their meeting.

Consumer Reports Inc. asked EPA to consider eyeing an ambitious 75 percent reduction in vehicles’ greenhouse gas emissions by 2030, while the American Lung Association said the rules “must drive towards zero emissions” for light- and medium-duty vehicles.

Separately Monday, the Department of Energy said it will change how it calculates the energy efficiency of EVs and hybrids for the first time in more than two decades.

DOE, which is responsible for the calculations under a 1979 law, said it will update how it determines “miles per gallon equivalent” — or “MPGe” — ratings for EVs to account for factors that have changed since 2000, like the nation’s electrical grid and the EV market.

The move comes as a response to a petition filed by the Natural Resources Defense Council and the Sierra Club. DOE agreed that the calculations’ inputs “are outdated, and the technology and market penetration of electric vehicles has significantly changed,” according to a notice set to be published in the Federal Register on Tuesday for public comment.

Hill reaction

The proposed rule is inflaming Capitol Hill Republicans who see the evangelism around EVs as coming from the liberal elites who would seek to foist expensive new cars on Americans and tout innovations that would undermine the fossil fuel industry.

“Yet another draconian rule from the Biden Admin,” Rep. Dan Newhouse (R-Wash.), the chair of the Congressional Western Caucus, tweeted over the weekend. “From gas stoves to vehicles, their anti-American energy policies put our nation on a dangerous path. It’s time for the government to stop over-regulating our lives and protect our energy independence.”

“The EPA needs to explain to the constituents in my district that they should be driving some puny electric car instead of their pickup trucks,” Rep. Eric Burlison (R-Mo.) posted to Twitter on Monday. “I don’t think it would go over well.”

Rep. Chip Roy (R-Texas), who now serves on the House Rules Committee that sets the parameters for floor debate on legislation, went so far as to suggest on Twitter that “slashing EPA’s funding should be at the top of the list” of GOP efforts to “use the power of the purse to END the weaponization of the federal bureaucracy.”

Overall, members of Congress were slow to respond to the EPA news Monday, as they continued an extended recess on the heels of a holiday weekend.

There was no immediate response from Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.), who was pivotal in crafting the language surrounding the EV tax credit in the Inflation Reduction Act but has been deeply critical of the Treasury Department’s interpretation and road map for implementation.

The committee’s ranking member, Sen. John Barrasso (R-Wyo.), complained in a statement that “the ‘electrification of everything’ is not a solution. It’s a road to higher prices and fewer choices.”

The new emissions standards — and the promotion of policies that would directly advantage one sector over others — could ultimately spur more investigations from House Republicans who are eager to use their new majority to take the administration to task for overregulation.

House Oversight and Accountability Chair James Comer (R-Ky.), for instance, has since the year’s start been inundating EPA as well as DOE with demands for information and staff briefings on an array of issues.

“The Biden Administration’s plan to drastically raise auto pollution standards is a radical Green New Deal initiative designed to extend the reach of the federal government and force Americans to purchase electric vehicles,” Comer said in a statement Monday to E&E News. “This is short-sighted policy that puts the interests of the American people last, and EPA officials should be prepared to provide Congress an explanation.”

Comer sent out two fresh requests just last week — the first to Energy Secretary Jennifer Granholm regarding Biden’s release of 180 million barrels of oil from the Strategic Petroleum Reserve, the second to EPA Administrator Michael Reagan surrounding his proposed rule allowing third parties to report methane leaks.

House Republicans are also likely to be bullish about their party’s own proposals to boost U.S. energy dominance, pointing to their freshly passed H.R. 1, the “Lower Energy Costs Act,” which would expand the production of critical minerals on federal lands that are used to make electric car batteries.

“You don’t plug that electric car into a tree,” House Majority Leader Steve Scalise (R-La.) said in a floor speech last month in support of the bill. “You’ve got to actually use baseload energy. Where does the battery come from, by the way, that you’re charging? Well, we know right now the batteries are coming from China.”