Utilities are uniting to stop the Trump administration from weakening fuel-efficiency standards as they aim to benefit from the expected growth of electric vehicles.
An unusual coalition of utilities, such as Exelon and electric carmaker Tesla sued the Trump administration in the D.C. Circuit Court of Appeals this month for rejecting President Barack Obama’s tough fuel-efficiency rules and taking steps to weaken them.
The litigation followed lawsuits from California and other liberal states, and environmental groups.
[Environmentalists take EPA to court over fuel efficiency rules]
Utilities hope increasing fuel-efficiency standards would spur demand for electric cars and encourage automakers to make them.
Surging electricity demand from transportation and decreasing dependence on crude oil to power vehicles would boost the profits of utilities that are facing economic challenges caused by the transitioning energy grid.
“The problem with removing the current standards or replacing them is it will have a ripple effect to chill public and private investment in new technologies, which underlie and make possible the transformations going in both the energy and transportation sectors,” Bob Wyman, a lawyer at Latham & Watkins in Los Angeles who speaks on behalf of the National Coalition for Advanced Transportation, told the Washington Examiner. “That’s why the utilities care just as much as vehicle manufacturers care, because these transformations are happening simultaneously. As the transportation sector transforms, it’s important it be synchronized with the transformation of energy supply.”
The Environmental Protection Agency last month rejected the Obama standards, ruling them “not appropriate” because the agency says automakers can’t achieve them. Obama’s fuel-efficiency and greenhouse gas rules for cars and light trucks set a 54-mile per gallon standard by 2025, up from the current average of 38.3 mpg.
A leaked draft of a proposed rule by the EPA and National Highway Traffic Safety Administration includes an option to freeze fuel-efficiency targets at 2020 levels through 2025, a possibility that goes farther than what automakers want.
The EPA and NHTSA are expected to release their proposal in late May or early June.
Before the Trump administration acts, the National Coalition for Advanced Transportation is arguing that the Obama thresholds can be met.
The coalition wrote in August in comments to the Trump administration:
Exelon has the largest presence in the coalition. Of the 16 entities in the coalition, seven of them are Exelon or Exelon subsidiaries.
Exelon, the largest regulated utility in the U.S. — and the biggest nuclear plant operator — has a major stake in the electrification of the power grid, as its nuclear business is suffering from competition by lower-cost natural gas and renewables.
The utility has announced it soon will close two major nuclear plants, Three Mile Island in Pennsylvania by the end of September 2019, and New Jersey’s Oyster Creek power station in October, more than a year ahead of schedule.
“Exelon and its operating companies agree that electric vehicles are an important component of a low-carbon future, which is why we urge the EPA to maintain policies and regulations that encourage the development and deployment of advanced transportation technologies,” Robin Levy, an Exelon spokeswoman, told the Washington Examiner.
Utilities say that shifting transportation demand to electricity will increase U.S. energy production and protect against the volatility of the oil market, reducing the need for imports.
Electric vehicles also can make the grid run more efficiently, utilities say.
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Because electric vehicles have flexibility when they charge, they can boost demand for baseload power generation such as nuclear, which runs around the clock, and they don’t have to sap electricity from the grid during peak times.
“Utilities are rounding the corner and realizing electric vehicles will be an important part of what the utility of the future looks like,” Ben Prochazka, vice president of Electrification Coalition, a nonprofit promoting the deployment of electric vehicles, told the Washington Examiner. “The benefit of an electric vehicle is that it is consistent electricity demand. People’s transportation patterns tend to be a lot more consistent, compared to using air conditioners in the summer and heating in the winter.”
As the Trump administration seeks to weaken fuel standards, many automakers have announced new electric models. For example, General Motors CEO Mary Barra has renewed a pledge to offer 20 new fully electric vehicles globally by 2023.
Last year, Americans bought nearly 200,000 electric vehicles from more than a dozen manufacturers.
Moody’s predicted in January that electric vehicles, which are now less than 1 percent of global car sales, will grow to 17 to 19 percent of the market by 2030.
The Trump administration predicts a less bullish future for electric vehicles, a contention that forms a major basis of its argument for changing the Obama standards.
Some raw materials essential to electric vehicles remain scarce, and there is a shortage of places to recharge.
Battery-powered cars cost thousands of dollars more than most gasoline vehicles. And drivers in recent years have favored bigger, less fuel-efficient cars as gasoline prices have fallen, so manufacturers are having difficulty hitting the fuel-efficiency targets, automakers say.
Obama’s rules did not require the development of electric cars but encouraged automakers to speed their development. Utilities and transportation electrification supporters say strong standards are needed to continue the momentum.
“Electric vehicles are a growing part of the marketplace, but any rollback or freeze might slow down the interest of automakers to make EVs on national scale,” Prochazka said.
