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Trump proposes a sharp rollback of US vehicle fuel efficiency rules

Automakers and sources have confirmed that the Trump administration will announce on Wednesday a major rollback in fuel economy standards, which former president Joe Biden finalized last summer, as part of its latest push to encourage automakers to offer gasoline-powered vehicles.

National Highway Traffic Safety Administration will propose a significant reduction in fuel economy requirements for model years 2022-2031. The National Highway Traffic Safety Administration will also make radical changes to the program, including eliminating credit-trading among automakers. It will also end some credits that were given for fuel-saving technologies.

The proposal will be unveiled by President Donald Trump, Stellantis CEO of Chrysler and Ford Motor at 2:30 pm EST (1930 GMT) with the help of the CEOs.

Karoline Leavitt, White House Press Secretary, confirmed the plan on social media. She said that the administration would propose a "reset" of federal fuel standards. Trump signed a bill earlier this year that eliminated fuel economy penalties. The NHTSA also confirmed the plan, saying they would not be fined for models older than 2022.

Credit trading is a risky business. It could harm automakers such as Tesla and Rivian who have sold credit to competitors making gas-powered cars.

Ford CEO Jim Farley, in a press release issued ahead of the event praised Trump for "aligning gasoline economy standards with market reality." We can achieve real progress in carbon emissions and energy-efficiency while giving customers choices and affordability.

Mary Barra, GM's CEO, said on Tuesday that the auto industry was faced with requirements in some states to have 35% of all new vehicles sold by 2026 be EVs before Congress blocked California’s zero-emission car rules in June.

Barra stated that "we were going to shut down plants, because we wouldn't be able build and sell these vehicles."

NHTSA increased the Corporate Average Fuel Efficiency requirements in June 2024 during the Biden Administration to around 50.4 miles per galon (21.4 kilometers per liter) for light-duty cars by 2031. This was up from 39.1 mpg last year. This rule didn't increase the requirements for light trucks in 2027 or 2028, but required 2% increases between 2029 and 2031.

NHTSA, under Biden's leadership in 2022, increased fuel efficiency for model years 2024-2025 by 8% per year and for 2026 by 10%.

Last year, the agency said that the passenger cars and trucks rule would reduce gasoline use by 64 billion gallons. It also cut emissions by 659 millions metric tons. Fuel costs will be reduced and drivers can expect to receive a net benefit of $35.2 billion.

It was estimated that the 2022 rule would reduce fuel consumption by more than 200 billion gallon through 2050.

Kathy Harris, director for clean vehicles of environmental nonprofit Natural Resources Defense Council said that "the Trump Administration is punishing drivers at the gas pump with higher prices, all in the name of the oil industry... The rules will increase the cost of fuel for drivers by hundreds of dollars every year.

Trump has taken a number of steps that will make it easier for gas-powered cars to be sold and to discourage EV production. These include rescinding EV Tax Credits and preventing California from banning traditional gas-powered vehicle sales after 2035.

(source: Reuters)