The oil industry has historically not been a fan of ethanol and biodiesel producers. They are competition in a crowded market. But now API, refiners and biofuel producers are uniting against a common enemy: the Biden administration that wants to make the EV revolution happen whatever it takes, including unrealistic fuel efficiency standards.
Earlier this month, the American Petroleum Institute filed a lawsuit in the D.C. Circuit Court of Appeals challenging the federal government’s new fuel efficiency standards. They call on automakers to implement emissions reductions of 50% by 2032 from 2026 levels by raising the required level of fuel efficiency for the 2027-2032 model years to 50.4 miles per gallon.
It’s worth noting that the rule was revised under pressure from the auto industry, which quickly protested the original 58 miles to the gallon target as proposed by the National Highway Transportation Safety Administration. However, even an increase to 50.4 miles per gallon would be a pretty significant increase: currently, the fleet-wide fuel efficiency average stands at 29.1 miles per gallon.
API and its former foes-turned-friends the National Corn Growers Association and the American Farm Bureau Federation believe the purpose of this doubling of fuel efficiency is to force automakers to sell more EVs, which will harm their business and, they argue, the economy. in general. Supporters of the rules from the federal government swear it does not constitute a mandate for sales of electric vehicles.
“We designed the standards to be technology-neutral and performance-based to give manufacturers the flexibility to choose which combination of pollution control technologies is best for their consumers,” said EPA Administrator Michael Regan, as quoted by Reuters, in March when the final rules were announced. He also stressed that there was “absolutely no mandate” for EV.
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While there may not be an outright mandate, it’s easy to see why API and the biofuels industry see something of a mandate in the whole thing. Doubling the fuel efficiency of all cars made in the US in three short years would be a huge undertaking – one that the industry could and probably would have done voluntarily if it had a commercial point. So from Big Oil and Big Corn’s point of view, the new rules essentially amount to a stealth mandate for more electric vehicle sales because they aren’t taking off on their own.
“By adopting end-of-pipe standards that focus exclusively on electric vehicles, the EPA has ignored the proven benefits that corn ethanol plays in reducing greenhouse gas emissions and combating climate change,” said the president of the National Corn Growers Association when its pool and API, plus half. a dozen car dealers file their lawsuit.
Harold Wolle added that NCGA had tried to make its case for ethanol to the EPA, but “to no avail,” making the next step inevitable. Because for API and ethanol and biodiesel producers, an EV mandate, however worded, would mean losing — if it works.
This appears to be a possibility that API, NCGA and the other plaintiffs in what are now two lawsuits are not entertaining. They don’t need to, really. What they see is a threat to their livelihood, so they are taking action to neutralize this threat. And soon they may have a new strong friend: the car manufacturing industry.
So far, automakers have largely been on board with the Biden administration’s efforts to make electric cars a more frequent sight on American roads. In fact, for the most part, they’ve been on board with sound and enthusiasm — until the losses they’re making on every EV they sell started piling up.
Ford is losing $100,000 on every EV it sells. GM booked a $1.7 billion loss on its EV business for 2023. Stellantis made a profit on electric vehicle sales last year—because it sells them in Europe. It has yet to begin selling electric vehicles in the U.S. market, where its cars may or may not qualify for the full set of incentives the federal government offers EV manufacturers.
Because of these numbers, Big Auto is now changing its ambitious plans to go all-electric in less than a decade. Markets speak louder than advertisers in transition, and what they’re saying now is that most people don’t want an EV yet. That’s after billions of investments in electric car manufacturing capacity and a rush to secure the materials and components needed for an all-electric future.
It may only be a matter of time before the car industry tires of emissions reduction targets that would effectively squeeze its business with a load of extra costs. It may only be a matter of time before automakers join API and NCGA, as well as the rest of those affected by the Biden administration’s transition plans.
By Irina Slav for Oilprice.com
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