Biden's Banana

This Week's Trend In Brief:

• Last week, The New York Times reported the Biden Administration plans to ease the U.S. EPA’s proposed “tailpipe” rule the agency sent to the White House for review in January 2024 that aimed to drastically cut emissions and boost EV sales.
   

• The rule was initially hailed by climate activists and administration officials as essential to addressing climate change, but critics of the rule argued it was essentially a mandate forcing the rapid adoption of EVs. 
   

• Now, seeing how the policy may influence voters in crucial states like Michigan, Biden is set to ease proposed requirements, even as auto manufacturers struggle to balance policy and market demands that are out of alignment.
   

• The proposed “tailpipe” rule is one of many regulations that may hinge on the upcoming election. As it draws closer, public affairs professionals and the companies they represent must use the time now to build an information advantage to avoid surprises and shape the debate both before and after election day.

Digging Deeper:
 

Earlier this month, The New York Times reported the Biden Administration is set to ease its proposed requirements for vehicles aiming to aggressively cut tailpipe emissions and ramp up electric vehicle sales. The proposed “tailpipe” rule, which was sent by the EPA to The White House in January, was intended to boost EV sales and lauded as a key strategy to combat climate change. EPA Administrator Michael Regan claimed the rule would “save lives through reduced air pollution” and argued his agency was “delivering on the Biden-Harris Administration’s promise to protect people and the planet.” Similarly, former EPA official Margo Oge contended the rule would “really reduce the worst impacts of climate change.” Now, however, Biden is reportedly walking back the regulation, with the news conveniently dropping in advance of the Michigan primary, where Biden was seeking to avoid an embarrassing protest vote in a state crucial to his reelection prospects.
 
When the tailpipe rule was announced, it was hailed by climate advocates as a way to meet climate goals, but critics of the rule argued it was essentially a mandate that would force the rapid adoption of EVs. Earthjustice lauded the “historic proposed car standards” and argued “electrifying cars in the United States will clean up a vast source of climate pollution in the United States.” The Sierra Club celebrated the Administration for “put[ting] the pedal to the metal to electrify transportation.” Critics of the regulation, however, argued the rule “amounts to a de facto mandate for EVs and phase out of the internal combustion engine vehicle.” Senator Joe Manchin (D-WV) even joined a bipartisan group of 139 lawmakers urging the Administration to withdraw the proposed policy, arguing it was “contradictory to all conventional predictions about where the automobile industry is headed in the coming years.”
 
But, as the election draws closer, Biden’s administration is facing pressure “on multiple fronts to weaken its electrification targets,” from voter and consumer skepticism to union concerns over jobs. As we noted in January, many voters who are skeptical of EVs and consumers remain concerned over EV range and reliability. Meanwhile, autoworkers, a significant voting block is states like Michigan, fear EVs put their jobs at risk. This pressures on his reelection have Biden walking “a political tightrope by balancing two high-profile priorities: fighting climate change and championing labor rights.” As noted by The New York Times, the relaxation of the proposed rule “was an election-year concession to labor unions” who “want more time to try to unionize new electric car plants that are opening around the country.” United Auto Workers even threatened to withhold its endorsement for Biden’s reelection campaign, arguing, “The EV transition is at serious risk of becoming a race to the bottom.” Biden’s decision to ease the regulation is a reminder that market realities cannot be regulated out of existence.
 
The Biden Administration’s reported decision to ease the proposed rule is the latest demonstration that policy demands cannot force market demand, but the question remains if Biden’s election year restraint would last in a second term. Last month, Reuters noted “automakers and suppliers are betting big on future demand for electric vehicles” but there is “a near-term global slowdown” that “is causing pain, including bankruptcies, scrapped initial public offerings and production cuts.” At the same time, major EV manufacturers like Tesla, Ford, and General Motors are reducing prices, cutting back production, and walking back EV production commitments. While Biden may have bowed to these election-year realities now by relaxing the rule, the rule still would require a sharp rise in EVs after 2030. If Biden is re-elected, automakers and energy interests could face a renewed aggressive push from the administration. Should Trump win, they could be forced to navigate entirely different pressures if Republicans push to undo incentives and other policies advancing the EV future manufacturers are already banking on.
 
As the election unfolds, public affairs professionals and the companies they represent must use the time wisely to ensure they can shape the post-election debate on EVs and other key energy issues. The proposed “tailpipe” rule is one of many the Biden Administration is considering leading into the election that could have major impacts on industry, and the presidential race is just one of the 6,477 elections for federal and state offices Americans will vote in this November. Energy industry public affairs professionals must engage early on the issues, assess the potential candidates, and understand how they will impact the industry before it is too late to shape the debate. It is crucial to build an information advantage to avoid surprises both before and after election day. Delve is here to help ensure you stay a step ahead of the elections and their consequences.
 

Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.