The Biden administration wants automakers to raise gas mileage and cut tailpipe pollution between now and model year 2026, and it has won a voluntary commitment Thursday from the industry that electric vehicles will comprise up to half of U.S. sales by the end of the decade.
The moves are big steps toward U.S. President Joe Biden’s pledge to cut emissions and battle climate change as he pushes a history-making shift in the U.S. from internal combustion engines to battery-powered vehicles. They also reflect a delicate balance to gain both industry and union support for the environmental effort, with the future promise of new jobs and billions in new federal investments in electric vehicles.
The administration on Thursday announced there would be new mileage and anti-pollution standards from the Environmental Protection Agency and Transportation Department, part of Biden’s goal to cut U.S. greenhouse gas emissions in half by 2030. It said the auto industry had agreed to a target that 40% to 50% of new vehicle sales be electric by 2030.
Both the regulatory standards and the voluntary target will be included in an executive order that Biden plans to sign later Thursday.
The standards, which have to go through the regulatory process including public comments, would reverse fuel economy and anti-pollution rollbacks done under President Donald Trump. At that time, the increases were reduced to 1.5% annually through model year 2026.
Still, it remained to be seen how quickly consumers would be willing to embrace higher mileage, lower-emission vehicles over less fuel-efficient SUVs, currently the industry’s top seller. The 2030 EV targets ultimately are nonbinding, and the industry stressed that billions of dollars in electric-vehicle investments in legislation pending in Congress will be vital to meeting those goals.
Only 2.2% of new vehicle sales were fully electric vehicles through June, according to Edmunds.com estimates. That’s up from 1.4% at the same time last year.
The White House didn’t release information on the proposed annual mileage increases late Wednesday, but Dan Becker, director of the safe climate campaign for the Center for Biological Diversity, said an EPA official gave the numbers during a presentation on the plan.
The official said the standards would be 10% more stringent than the Trump rules for model year 2023, followed by 5% increases in each model year through 2026, according to Becker. That’s about a 25% increase over the four years.
Last week, The Associated Press and other news organizations reported that the Biden administration was discussing weaker mileage requirements with automakers, but they apparently have been strengthened. The change came after environmental groups complained publicly that they were too weak to address a serious problem.
Transportation is the single biggest U.S. contributor to climate change. Autos in the U.S. spewed 824 million tons (748 million metric tons) of heat-trapping carbon dioxide in 2019, about 14% of total U.S. emissions, according to the EPA.
The voluntary deal with automakers defines an electric vehicle as plug-in hybrids, fully electric vehicles and those powered by hydrogen fuel cells.
Environmental groups said the administration should move faster.
“This proposal helps get us back on the road to cleaning up tailpipe pollution,” said Simon Mui of the Natural Resources Defense Council. “But given how climate change has already turned our weather so violent, it’s clear that we need to dramatically accelerate progress.”
Scientists say human-caused global warming is increasing temperatures, raising sea levels and worsening wildfires, droughts, floods and storms globally.
“We urgently need to cut greenhouse gas pollution, and voluntary measures won’t cut it,” Becker said.
Several automakers already have announced similar electric vehicle sales goals to those in the deal with the government. Last week, for instance, Ford’s CEO said his company expects 40% of its global sales to be fully electric by 2030. General Motors has said it aspires to sell only electric passenger vehicles by 2035. Stellantis, formerly Fiat Chrysler, also pledged over 40% electrified vehicles by 2030.
The Trump rollback of the Obama-era standards would require a projected 29 mpg in “real world” stop-and-start driving by 2026. It wasn’t clear what the real world mileage would be under the Biden standards. Under Obama administration rules, it would have increased to 37 mpg.
Automakers said they would work toward the 40% to 50% electric vehicle sales goal.
“You can count on Toyota to do our part,” said Ted Ogawa, the company’s North America CEO.
General Motors, Stellantis and Ford said in a joint statement that their recent electric-vehicle commitments show they want to lead the U.S. in the transition away from combustion vehicles.
They said the change is a “dramatic shift” from the U.S. market today, and can only happen with a policies that include incentives for electric vehicle purchases, adequate government funding for charging stations and money to expand electric vehicle manufacturing and the parts supply chain.
The United Auto Workers union, which has voiced concerns about being too hasty with an EV transition because of the potential impact on industry jobs, did not commit to endorsing a 40% to 50% EV target. But UAW said it stands behind the president to “support his ambition not just to grow electric vehicles but also our capacity to produce them domestically with good wages and benefits.”
Under a shift from internal combustion to electric power, jobs that now involve making pistons, fuel injectors and mufflers will be supplanted by the assembly of lithium-ion battery packs, electric motors and heavy-duty wiring harnesses.
Many of those components are now built overseas, such as China. Biden has made the development of a U.S. electric vehicle supply chain a key part of his plan to create more auto industry jobs.
“We are in a global competition for who gets to make the clean cars of the future, and President Biden’s leadership means that we’ll develop that manufacturing and those supply chains right here in America,” said Sen. Tom Carper, D-Del., who chairs the Senate Environment and Public Works Committee.
In a bipartisan infrastructure bill awaiting Senate passage, there is US$7.5 billion allocated for grants to build charging stations, about half of what Biden originally proposed. He wanted $15 billion for 500,000 stations, plus money for tax credits and rebates to entice people into buying electric vehicles.
The Alliance for Automotive Innovation, a large industry trade group, said it will work with the administration to reach zero carbon emissions from transportation. But it said the best opportunity for environmental benefits will come after 2026 as more electric vehicles are sold.
The industry, it said, will invest more than $300 billion in electrification by 2025, producing 130 electric models by 2026. Only about 50 are available today.
Associated Press writers Hope Yen and Seth Borenstein in Washington contributed to this report
Keystone pipeline temporarily closed following Kansas oil spill
The energy company in charge of the pipeline has not said what caused the spill or how much oil was released.
The Keystone pipeline has halted operations following an oil spill into a creek in the United States state of Kansas. The pipeline carries more than 600,000 barrels of oil from Canada to the Texas Gulf Coast each day.
Canada-based TC Energy said in a press release that it shut down the pipeline on Wednesday night in response to a drop in pipeline pressure. The company has yet to offer information on the scale and cause of the spill.
“The system remains shut down as our crews actively respond and work to contain and recover the oil,” the release said.
The spill resulted in oil leaking into a creek in northeastern Kansas and the company has said they were using machinery to prevent the oil from moving further downstream. Pipelines have long spurred concerns about the destructive potential of oil spills.
Another pipeline previously proposed by TC, the Keystone XL pipeline, would have been 1,930 kilometres (1,200 miles) long and cut across US states such as Montana, South Dakota and Nebraska.
That proposal spurred strong opposition from advocates who said it would increase the chance of spills, undermine the rights of Indigenous communities and worsen climate change.
Former President Donald Trump approved a permit for the contentious project in 2017 but a court halted construction in 2018 before the permit was cancelled by President Joe Biden’s administration last year.
TC finally abandoned the effort in June 2021 but has since filed a claim seeking remuneration for losses it says it faced because of the cancellation.
The spill on Wednesday occurred several years after the Keystone pipeline leaked about 1.4m litres (383,000 gallons) of oil in eastern North Dakota in 2019.
As word of the shutdown spread on Wednesday, oil prices ticked upwards by about five percent.
“It’s something to keep an eye on, but not necessarily an immediate impact for now,” said Patrick De Haan, head of petroleum analysis at GasBuddy, which tracks gasoline prices, according to the Associated Press. “It could eventually impact oil supplies to refiners, which could be severe if it lasts more than a few days.”
In their statement, Keystone said their primary focus was the “health and safety of onsite staff and personnel, the surrounding community, and mitigating risk to the environment through the deployment of booms downstream as we work to contain and prevent further migration of the release”.
Previous Keystone spills have resulted in stoppages that lasted up to two weeks. However, analysts have noted that the current stoppage could possibly last longer because it involves a body of water.
Bank of Canada policy will ‘hit home’ in 2023: David Rosenberg
The Bank of Canada may be signalling a possible end to its months-long aggressive interest-rate hike cycle, but economist David Rosenberg said next year will see the lagging impact of 2022’s monetary policy “hit home” for Canadians.
“Next year is the payback,” Rosenberg, chief economist and strategist at Rosenberg Research and Associates Inc., said in an interview with BNN Bloomberg.
“2022 was the year of the sharp run-up in rates, 2023 will be the year where the policy lags from those rising rates hit home.”
He made the comments Thursday, a day after the Bank of Canada raised its overnight lending rate by 50 basis points to 4.25 per cent, as the central bank continued with its approach to bringing down inflation.
Rosenberg predicted a “severe recession” for Canada next year based on the rate hike cycle, calling for a “triple whammy” with economic impacts compounded by high levels of household debt, a housing bubble and ripples in the global economy.
Possible spillover effects from the interest rate cycle could be felt, Rosenberg said, as banks may constrain the availability of credit and spending drops across various sectors.
Based on the latest rate increase, Rosenberg said he predicts at potentially one more rate hike from the bank before a pause. Once inflation starts to come down, Rosenberg said he thinks the central bank may start to cut rates, possibly in the second half of 2023.
“The next stage is going to be waiting for the inflation to come down, which I think it will, and the recession is going to catch a lot of people by surprise,” he said.
A similar pattern may play out in the U.S., but Rosenberg said Canadians are more exposed to higher interest rates through variable-rate mortgages and because more consumer credit is tied to short-term interest rates.
“As bad as it’s going to be in the U.S., and believe me, it’s not going to be a pretty picture there, I think the Canadian situation in the next year is going to be clouded at best,” he said.
CRTC rejects Telus’ request to charge credit card processing fee for some services
The Canadian Radio-television and Telecommunications Commission ruled Thursday that Telus is not able to charge a credit card processing fee for regulated home telephone services.
This ruling applies to Alberta and B.C. services that are regulated by the CRTC, which are generally home telephone services in certain smaller communities.
Since Oct. 6, most Canadian businesses, except in Quebec, can charge their customers a fee for credit card transactions, following a class-action lawsuit filed by retailers against Visa, MasterCard and card-issuing banks.
Quebec is not included in this decision due to the province’s Consumer Protection Act, which prohibits the application of such surcharges.
On Aug. 8, Telus filed an application with the CRTC to introduce a credit card processing fee of 1.5 per cent, plus taxes, for payments made with a credit card.
On. Oct. 17, Telus began to charge the fee to clients paying by credit card in areas where services are not regulated by the CRTC, which includes its wireless and internet customers outside of Quebec.
Telus does not need to ask for the CRTC’s approval to add the surcharge to its unregulated services but the organization said it is “very concerned” about this practice as it goes against affordability and consumer interest.
“We heard Canadians loud and clear: close to 4,000 of you told us that you should not be subjected to an additional fee based on the method you choose to pay your bill,” Ian Scott, chairperson and CEO of the CRTC, said in a statement. “We expect the telecommunications industry to treat Canadians with respect and do better.”
The CRTC said, with this ruling, it is sending a “clear message” to Telus and other telecommunications service providers that are thinking of imposing a fee like this one on their customers.
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