Ford, BMW and others sign binding emissions agreement with California

They've committed to building cars that outperform federal fuel efficiency standards.

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Five major automakers have signed a binding agreement with California that will compel them to follow the state’s vehicle emissions standards. Its fuel economy rules are stricter than federal ones, which has put the state at odds with the Trump administration.

Ford, Honda, BMW and Volkswagen agreed in principle to follow California’s standards in July 2019, as did Volvo in March. The deal they signed with the state this week will mean they have to abide by those guidelines. “We went into this voluntarily, but it is now binding, it’s enforceable,” Spencer Reeder, director of government affairs and sustainability at VW-owned Audi of America, told the New York Times.

The five companies account for around 30 percent of the auto market in the US. Per the California rules, they’ll need to improve their vehicles’ fuel economy from the current average of around 38 miles per gallon to approximately 51 miles per gallon by 2026.

This spring, however, the Trump administration rolled back Obama-era regulations that would have required vehicles to have an average fuel economy of 54.5 miles per gallon by 2025. They’ll only need to hit a benchmark of 40 miles per gallon, on average.

The administration also sought to prevent states from setting their own emissions standards. California had a waiver from the Environmental Protection Agency to set its own benchmarks, but the agency revoked that in September. In the same month, the Department of Justice opened an antitrust investigation against the four companies that originally agreed to the California guidelines. It reportedly closed the investigation in February.

Should he emerge as the victor in the presidential election, it seems likely Joe Biden would seek to restore the Obama-era emissions rules. But regardless of whether Biden or Donald Trump win the White House, those five automakers will abide by California’s standards.

In doing so, the companies have effectively made a nationwide commitment to selling vehicles that are more fuel efficient and have lower emissions than are required by federal regulations. It’ll be far easier for them to make cars that follow a single set of standards instead of splitting the market. Thirteen other states, including New York and Washington, follow California’s standards and will enforce the binding agreement.

Meanwhile, a lawsuit is in progress that seeks to block the government’s federal rollback and/or ensure that states can continue to set their own, more stringent rules. It appears likely the Supreme Court will ultimately rule on the case.