With help from Lorraine Woellert
New lines are being drawn in the fight over car pollution standards. And we have what you missed at the weekend’s global climate summit.
AUTOMAKERS SHIFT GEARS AFTER BIDEN WIN — President Donald Trump still hasn’t conceded, but he’s losing more supporters by the day. The latest defectors: General Motors and Nissan, onetime Trump cheerleaders who have wasted no time switching sides.
In recent weeks, the automakers abandoned an administration lawsuit challenging California’s authority to enforce its own vehicle pollution standards, and they’ve encouraged their industry peers to do the same.
Call it an act of expediency. President-elect Joe Biden is expected to allow California to continue enforcing state tailpipe rules that exceed federal restrictions. And he’s promised to seek more rigorous nationwide emissions limits on cars and heavy-duty vehicles, which are the country’s largest source of greenhouse gasses.
To speed things along, he wants to install 550,000 charging stations, about a fivefold increase that would require congressional support and a federal investment in the billions of dollars.
GM and Nissan are just a first step, said Luke Tonachel, director of the clean vehicles and fuels group at the Natural Resources Defense Council. The holdouts, including Toyota, Fiat Chrysler, Hyundai, Subaru and other smaller automakers, should do the same. That group, together with GM and Nissan, formed the Coalition for Sustainable Automotive Regulation in 2019, breaking with other automakers, including Ford and Volkswagen, that stood with California and endorsed stricter emissions and fuel economy standards.
What happens next? “They haven’t made their intentions clear,” Tonachel told The Long Game.
GM Chief Sustainability Officer Dane Parker said his company is “open to conversations” with the Biden administration, California and the industry to find common ground on national emissions and fuel efficiency standards.
“We didn’t want this to be about politics, and we have always wanted the various parties to come together for a common solution,” Parker said in an email. GM is committed to a zero-emissions future, he said, noting its recent pledge to spend $27 billion over the next five years on electric and autonomous vehicles, outpacing investments on gas and diesel development for the first time. GM also is working to expand charging infrastructure powered by renewable energy.
Still, automakers are driving into a dead end while an open road beckons. GM and others continue to defend the current administration in another lawsuit, this one filed by environmental groups and states challenging Trump’s rollback of Obama-era fuel efficiency rules.
The Trump EPA’s SAFE Vehicles rule requires manufacturers to boost fuel efficiency by 1.5 percent a year through 2026, well below the 5 percent required under the prior rule. Automakers, in pursuit of a single national standard, lobbied the Trump administration early on to weaken the rules set under President Barack Obama.
On Dec. 1 — after GM pulled out of the California lawsuit — the Coalition for Sustainable Automotive Regulation told POLITICO it was sticking with Trump on fuel efficiency.
Toyota said it supports year-over-year improvements in fuel efficiency and is assessing the situation now that Biden will take over the White House.
Hyundai said it’s committed to zero emissions and will work with the Biden administration to achieve that goal.
Fiat Chrysler and Subaru did not respond to requests for comment.
Will California be a national template? Democrats — including Michigan Rep. Debbie Dingell, a former GM executive — and environmental groups want the industry to build off of a voluntary agreement reached this summer between California and five automakers. That memorandum sets emissions targets lower than Obama’s, but higher than Trump’s.
Daniel Sperling, a member of the California Air Resources Board that negotiated the deal, said if GM, Toyota and other automakers embrace the state’s standards, they will become de facto federal regulation. Companies that don’t get on board would have a steep hill to climb come 2026, when the board starts drafting even stricter tailpipe rules.
Sperling said he hopes California’s effort can be done in tandem with Team Biden, which is expected to direct EPA and the Transportation Department to craft new, long-term clean car standards. Whether they are more aggressive than Obama’s remains to be seen.
Welcome to The Long Game. Any resolutions for 2021? You can tell us. Send tips, critiques and all your sustainability questions — and answers — to [email protected] and [email protected] Find us on Twitter @ceboudreau and @woellert. If you missed last week’s issue, go back and take a look — we previewed what could be a new chapter in global climate diplomacy. Did someone forward this to you? Subscribe here.
SPEAKING OF POLLUTING CARS — French President Emmanuel Macron on Monday said he will push other European countries to commit to banning the dirtiest cars by 2030 because France can’t go it alone, our colleague Louise Guillot reports.
“I’m open to it but this solution can only be applied at a European level,” Macron said in response to a proposal by the Citizens’ Climate Convention, a group of 150 randomly chosen French citizens. The government plans to add a clause to its upcoming climate law, but it would have to be implemented by the European Union. Without EU support, any French restrictions could create a trade barrier, officials said.
The convention also proposed enshrining climate and environment protection in the French Constitution. Macron on Monday confirmed that he will call a referendum on the issue, which will have to approved by national lawmakers first before being put to the general public for a vote.
SPEAKING OF CLIMATE COMMITMENTS — France isn’t the only country doing the climate prodding. Over the weekend, global leaders gathered for a virtual summit after blocking some world leaders from a speaking slot if they didn’t make bold enough commitments to slash greenhouse gas emissions.
The event was a chance for the U.K., which co-hosted the event with the U.N., to showcase its post-Brexit climate leadership. Prime Minister Boris Johnson promised to raise the country’s 2030 emissions cut to 68 percent and pursue a green industrial strategy that would make the country “the Saudi Arabia of wind.” He said the U.K. would stop financing fossil fuel projects overseas, with limited exceptions for those that abide by the parameters of the Paris agreement.
On Monday, the U.K. upped the ante again, announcing its own cap-and-trade system to reduce emissions, our Aitor Hernández-Morales reports. The plan is to go further than the one abandoned after Britain left the EU. But it isn’t clear whether the new system will be set up before Jan. 1, when the Brexit transition period ends.
Leaders from Argentina, Canada and Pakistan touted new emissions pledges over the weekend, too. A day before the summit, Canadian Prime Minister Justin Trudeau committed to raising the national carbon tax (the proceeds of which will be returned to residents) and slash emissions to at least 31 percent below 2005 levels.
Argentina announced a net-zero emissions goal by 2050. Pakistan, a major coal user, will shutter coal power plants and boost the share of clean energy to 60 percent by 2030, Prime Minister Imran Khan said.
Most of the attention was on Chinese leader Xi Jinping. His speech was substantive from a geopolitical perspective, but short on specifics. It’s not known how exactly China, the world’s largest emitter, would reach its goal of net-zero emissions by 2060 while it continues to build new coal-fired power plants, said Li Shuo, senior adviser to Greenpeace East Asia, told POLITICO’s Kalina Oroschakoff.
The no-shows: Russia, Brazil, Saudi Arabia and Australia were missing from the event.
BORROWING IS GETTING RISKIER — Climate change and increasingly strict environmental regulations are making corporate debt a riskier business. Sectors with a combined $4.5 trillion in debt, including the auto and oil and gas sectors, have high exposure to efforts to reduce carbon emissions, Moody’s Investors Service reports.
The upshot for these companies is more expensive borrowing costs, if capital can be had at all, as the world moves to a low-carbon economy and the physical effects of climate change mount.
Trump never did deliver on his promise to save coal, and Moody’s labels the sector’s $10 billion in debt at the highest risk. Coal’s share of the U.S. power supply could fall by half — to 10 percent — over the next decade, Moody’s predicts.
Moody’s environmental credit risk heat map surveyed 89 global sectors with combined borrowing of about $79 trillion. In all, industries with a combined $3.4 trillion in debt have high or very high environmental credit risk, up 49 percent from 2018 and 64 percent from 2015.
And there’s this: The Federal Reserve joined the Network for Greening the Financial System, an international group of central banks and financial regulators developing rules to address climate risks. The Fed is the first federal agency to join the group, which includes the European Central Bank, the Bank of England and the Bank of Japan. The New York Department of Financial Services until now was the only member from the U.S., POLITICO’s Zachary Warmbrodt reports. The move signals an escalation in the Fed’s work to address potential climate risks lurking in the financial system.
— The expiration of the federal eviction ban at the end of the month will disproportionately hurt Black and Latino tenants, financially hobbling them for years and ensuring that the nation’s staggering racial wealth gap won’t narrow anytime soon, POLITICO’s Katy O’Donnell and Janaki Chadha report.
— An oil and gas industry group created Women for Natural Gas, which claims to be a grassroots network of supporters. But a Mother Jones investigation found that the website testimonials are from women who don’t actually exist.