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EPA’s car pollution rules would save Americans trillions of dollars » Yale Climate Connections

Electric vehicle (EV) sales are surging in many countries around the world, including the United States. According to the Department of Energy, EVs accounted for just 1% of new U.S. car sales in 2017. That share surpassed 3% in 2021 and approached 6% in 2022. Though the U.S. remains well below the global average EV share of new car sales, which exceeded 14% in 2022, the American market is catching up fast. According to an analysis of global markets by Bloomberg, a 5% share appears to be a tipping point at which EV sales take off in most countries.

Amid this rapidly rising EV adoption, the Biden administration in an August 2021 executive order tasked the Environmental Protection Agency with extending its vehicle tailpipe pollution regulations for vehicle model years 2027 through at least 2030. The previous EPA rules, revised in late 2021, only applied to model years through 2026. These rules set the average amount of carbon and other air pollutants that the vehicles sold by automakers are allowed to emit in a given sales year.

With EV sales surging, their prices rapidly falling, and their net pollutant emissions being substantially lower than fossil-fueled cars, the EPA saw an opportunity to issue much more stringent vehicle emissions regulations without creating any undue economic burdens associated with car ownership costs. Quite the opposite in fact — in its 758-page proposed rules for vehicle model years 2027—2032, EPA conservatively estimates that climate, health, and vehicle cost savings for Americans will substantially exceed $1 trillion* over the next three decades.

* Note that the estimated benefits in this article are present values using a 3% discount rate.

EVs will save car owners money

Many automakers have announced aggressive EV sales targets. For example, GM — which has the largest share of the U.S. auto sales market — aspires for 100% of its car sales to be EVs in 2035. If all automakers’ targets are met, EVs will account for nearly 50% of new U.S. car sales in 2030.

In its proposed tailpipe rules, the EPA estimates that the U.S. auto market is on track for EVs to account for 30—60% (most likely about 40%) of new car sales in 2030, depending on factors like battery prices and cultural acceptance of the technology. The agency estimates that to meet its proposed vehicle pollution rules, automakers will need to reach the upper end of the expected range, with EVs comprising 60% of new U.S. car sales in 2030 and 67% in 2032.

A chart shows that if EPA's rules are implemented, EV sales will accelerate, reaching 70% of new U.S. auto sales by 2032.
The EV share of new U.S. car, SUV, and light-duty truck sales to date (black), in the most likely business-as-usual scenario (gray), and if EPA’s proposed new vehicle pollution regulations are adopted (green). Created by Dana Nuccitelli from data in EPA’s proposed new rules.

So far, EV sticker prices have tended to remain higher than their gasoline-fueled counterparts, although some EV models are approaching price parity. As a result, the EPA estimates that rising EV adoption will increase the average new vehicle purchase price by about $1,000 in the early 2030s. But that doesn’t account for the tax credits of up to $7,500 for new EVs included in the Inflation Reduction Act or their fuel and maintenance cost savings.

Based on average U.S. electricity and gasoline prices over the past decade and average vehicle efficiencies, fueling an EV costs about 5 cents per mile driven, compared to over 12 cents per mile for a gasoline-fueled car. For the average American who drives over 14,000 miles per year, the EV fuel savings alone would amount to nearly $1,000 per year. And because EVs have far fewer parts that can wear down and break, EPA estimates that EVs will save car owners over $1,100 per year in fuel, maintenance, and repair costs.

Overall, even when accounting for the costs of installing many more EV charging stations, the EPA estimates that the increased EV adoption resulting from its new rules will reduce U.S. vehicle ownership costs by a total of more than $1 trillion over the next three decades.

EVs will reduce climate pollution and damages

The EPA’s proposed tailpipe rules would require that automakers reduce the average carbon pollution from cars, SUVs, and light-duty trucks by more than half between 2027 and 2032. Light-duty vehicle sales from automakers will be allowed to average no more than 82 grams of carbon dioxide per mile traveled in 2032, down from 186 grams per mile in 2026.

a chart shows grams of carbon dioxide per mile falling between 2026 and 2032 under a number of similar scenarios
Light-duty fleet average carbon dioxide emissions per mile under existing rules (dashed line), EPA’s proposed new rules (black line), and three similar alternative EPA proposals (gray lines). Source: EPA’s proposed new rules.

Though automakers can meet those carbon pollution standards however they choose, accelerating EV sales are likely to be the primary solution. That’s because electric motors are much more energy-efficient than gasoline combustion engines, which lose a lot of energy in the form of waste heat, and because the electric grid is rapidly decarbonizing.

Read: Electrifying transportation reduces emissions AND saves massive amounts of energy

The economic benefits of reduced climate damages caused by carbon pollution are estimated using what’s known as the “social cost of carbon.” An interagency working group is in the process of updating the federal government’s estimate of that number. During the Obama administration, it was estimated at around $51 per ton of carbon dioxide pollution, but recent research incorporating the latest climate science and economics literature puts the value at closer to $185 per ton.

Using the $51 per ton value, the EPA estimated that its proposed vehicle tailpipe rules will yield $330 billion in avoided climate damages globally over the next three decades. But using an updated social cost of carbon would increase that value to around $1 trillion.

EVs will reduce air pollution and health care costs

The EPA’s proposed rules also limit tailpipe emissions of other air pollutants. These would reduce vehicle small particulate matter (often called PM2.5) emissions by over 95% and nitrogen oxide and non-methane organic gas emissions by 60% by 2032. As the EPA notes in its proposed rules, “PM2.5 is associated with premature death and serious health effects such as hospital admissions due to respiratory and cardiovascular illnesses, nonfatal heart attacks, aggravated asthma, and decreased lung function.”

As a result, the estimated health benefits of reducing these tailpipe air pollutants are substantial. The EPA estimates that they would avoid about 1,000 premature deaths over the next three decades and yield health benefits totaling between $140 billion and $280 billion.

Read: ​​The number of lives that clean energy could save, by U.S. state

Climate and health modeling expert Drew Shindell at Duke University’s Nicholas School for the Environment described EPA’s health benefits estimates as “both reasonable and likely too low.”

Shindell may review the proposed new tailpipe regulations as a member of EPA’s Science Advisory Board but provided his personal opinions about the rules via email.

In his own research, Shindell has incorporated data from a broader set of countries than the EPA considered — the agency focused on studies from the U.S. and Canada. His team’s results suggested that the effects of air pollution may be roughly twice as bad as previously estimated. Shindell also noted that the EPA only includes health impacts for which there is clear evidence of a causal effect, but evidence suggests that air pollution causes substantially more illness and death through pathways that are not yet well understood.

“Again, it’s a reasonable choice on EPA’s part to include only those endpoints for which the data is extremely clear,” Shindell wrote, “but likely to lead to an undercount.”

A financial, climate, and health win-win-win

Adding it all up, the EPA estimates that its rules will save about $1.6 trillion in vehicle costs, climate damages, and health impacts between 2027 and 2055. Updating the social cost of carbon would boost those savings to well over $2 trillion, and as noted by Shindell, the health savings could also be substantially higher than EPA’s estimates, raising the rule’s total benefits close to $2.5 trillion.

In short, by accelerating the transition to EVs, EPA’s new tailpipe pollution rules could benefit Americans’ bank accounts and health while helping to curb the climate crisis.

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