An analysis indicates that Americans may face higher fuel costs if Donald Trump is successful in repealing tailpipe pollution regulations. The implications extend beyond fuel prices, with potential job and GDP declines anticipated due to diminished innovation in the transportation sector.
The Trump administration aims to eliminate the Environmental Protection Agency’s authority to regulate greenhouse gas emissions. This move could hinder automakers’ progress toward producing more fuel-efficient and electric vehicles. Trump has inaccurately labeled the climate pollution standards as an “EV mandate,” suggesting they would compel consumers to purchase more expensive electric cars. However, an analysis by the nonpartisan climate policy think tank Energy Innovation suggests that without these regulations, Americans could incur additional costs of up to $310 billion over 25 years, primarily through increased gasoline prices. Each household could see an average annual increase of $83 in energy expenses during this period.
The reasoning is straightforward: deregulating pollution standards could slow the adoption of cleaner, more efficient technologies. Increased fuel consumption leads to higher gas expenditures and a deteriorating living environment.
“This will have an adverse impact not just on the US economy, but at the household level, at the kitchen-table level.”
Sara Baldwin, senior director of electrification at Energy Innovation, emphasizes that reducing the number of efficient electric vehicles in circulation will increase demand for gasoline and diesel. “Households are going to be paying more to drive,” she stated. “This will have an adverse impact not just on the US economy, but at the household level, at the kitchen-table level.”
With compelling evidence linking climate-related pollution to public health risks, the EPA has pursued regulations under the Clean Air Act aimed at reducing greenhouse gas emissions. Automakers have been meeting these regulations by improving vehicle efficiency, developing cleaner engines, and manufacturing more electric vehicles. In July, the Trump administration proposed rescinding scientifically supported guidelines that would remove limits on greenhouse gas emissions from vehicles. Additionally, the Biden-era electric vehicle tax credit, which Republicans opted to end earlier this year, is set to expire today.
Energy Innovation has estimated the economic implications of finalizing the proposal to remove greenhouse gas standards for vehicles (details of their open-source model can be found here). Their analysis considers various factors, including the rising costs of electricity and the higher upfront prices of electric vehicles. Despite these challenges, the benefits associated with a transition to cleaner transportation remain substantial.
Encouraging companies to produce more efficient vehicles ultimately stimulates economic growth, potentially leading to increased hiring of scientists and new design innovations in materials. Dan O’Brien, a senior modeling analyst at Energy Innovation, stated, “That money gets passed around the economy, resulting in more jobs across both the automotive sector and in manufacturing.”
Conversely, if automakers continue to market existing gas-dependent vehicles, opportunities for economic growth will diminish. The report indicates that abolishing greenhouse gas tailpipe standards could lead to cumulative GDP losses of $710 billion by 2050. This scenario might also result in the loss of 110,000 jobs each year over the next 25 years compared to a future where the standards remain in effect. Furthermore, public health could suffer from increased pollution. While electric vehicles still generate some pollution, eliminating tailpipe emissions can significantly reduce carbon dioxide as well as pollutants that contribute to soot and smog. The analysis posits that repealing greenhouse gas standards could result in up to 700 premature pollution-related deaths annually.
The report forecasts that the share of zero-emission vehicles in new car sales by 2035 would be less than if the standards are kept. Specifically, it predicts that 55 percent of new light-duty vehicle sales would comprise zero-emission models in 2035 under repeal, compared to 70 percent if the standards continue. With an uptick in oil demand leading to rising gas prices, Energy Innovation anticipates a 6-cent increase in gasoline prices by 2030, escalating to 36 cents by 2040, before settling at 31 cents in 2050. Over time, households may spend an additional $400 on gasoline by 2043 as a result of these projected increases.
The Trump administration has put forth its own contentious estimates regarding the economic consequences of eliminating the endangerment finding, which are based on limited data. According to the EPA, repealing all greenhouse gas regulations could result in annual savings of $54 billion. However, these figures do not account for the far-reaching costs linked to climate change. The analysis has been criticized for assuming lower gas prices and for inadequately representing fuel savings over a brief period, only considering two and a half years. Baldwin highlights that consumers factor in long-term fuel costs when purchasing vehicles and notes that gas prices fluctuate due to global market conditions, which are largely beyond US control.
“To assume that gas prices are going to remain low as demand increases contradicts basic economic principles,” Baldwin asserts.
