Covid-19 lockdowns could drop carbon emissions to their lowest level in since World War II. But the change may be temporary
Updated 11:24 AM EDT May 19, 2020
An international study of global carbon emissions found that daily emissions declined 17% between January and early April, compared to average levels in 2019, and could decline anywhere between 4.4% to 8% by the year’s end. That figure would mark the largest annual decrease in carbon emissions since World War II, researchers said.
The findings appeared today in the journal Nature Climate Change.
It’s not clear how long or severe the pandemic will be, which makes it difficult to predict how emissions will be affected long-term. And because the changes driving reduced emissions haven’t fundamentally changed the economy or the energy much of the world relies on, the declines are likely to be temporary.
Plus, 2020 is still on track to be one of the top five hottest years on record.
“I can’t celebrate a drop in emissions driven by unemployment and forced behavior,” said Rob Jackson, study co-author and professor in Stanford University’s Earth Science Systems department. “We’ve reduced emissions for the wrong reasons.”
Researchers created a lockdown index
The study centered on 69 countries, all 50 US states and 30 Chinese provinces, which account for 85% of the world population and 97% of all global carbon dioxide emissions.
Real-time carbon emissions data doesn’t exist, so researchers made their own algorithm. They created a confinement index based on the severity of pandemic policies — 0 represents no policy, and 3 represents a maximum lockdown with stay-at-home orders and a shuttered economy.
They used that lens when they examined daily data from six sectors of the economy that contribute to carbon emissions, including transportation, aviation, industry and commerce. With the confinement index indicating the severity of countries’ lockdowns and these data on drops in carbon-emitting activities, they could predict changes in daily emissions.
The carbon reductions were primarily driven by fewer people driving — surface transport activity levels dropped 50% by the end of April. The most significant decline in activity occurred in aviation — a 75% decrease — but it accounts for a smaller slice of global emissions, Jackson said.
By the end of April, carbon emissions declined by 1,048 metric tons of carbon dioxide, the researchers predicted — that’s roughly 2,312,649 pounds. The decline is largest in China, where the pandemic began, where emissions dropped 533,500-plus pounds. In the US, carbon emissions declined by 456,350-plus pounds. China and the US are the two largest carbon emitters globally.
What comes next
Whether these changes last — and whether they’ll make a difference in slowing climate change — depends on what the world does when the pandemic ends.
By the end of the year, emissions will have declined somewhere between 4.4% and 8%, the researchers predict. It’s the most significant decline in over a decade, but it’s the result of forced changes, not the restructuring of global economies and energy.
According to United Nations Environment projections, to keep global temperatures from rising more than 1.5 degrees Celsius, we need to reduce emissions by 7.6% every single year between now and 2030.
And in order to stay under 2 degrees Celsius of warming, which scientists agree is important to avoid the most devastating impacts of climate change, we need to continue to reduce emissions by 2.6%, per the 2015 Paris climate accords.
“Unfortunately, past crises suggest that emissions will rise again,” Jackson said.
He compared the pandemic to the last global crisis, the 2008-2009 Great Recession. Global emissions decreased 1.4% in 2009. Then, in 2010, emissions shot back up 5% — as if nothing had changed.
One crisis that did alter things fundamentally — the oil shocks in the 1970s, when shortages dramatically drove up gas prices. The energy shock prompted manufacturers to make smaller cars and move toward solar and wind power.
Still, he said, we can’t rely on a pandemic to solve our climate woes.
“Crises do not solve the climate problem,” he said. “They buy us a year or two’s worth of time at most.”
Transportation, he said, is one of the most significant emitters of carbon dioxide and also one of the most challenging sectors to change. Most people still drive gas-powered cars.
But, Jackson said, we’re presented with the opportunity to “jumpstart the electrification of mobility and transport.” Cities are already closing off roads so pedestrians and bicyclists can use them.
The virus may also make people leery of public transport, too, he said.
It’s not clear how society will change in the wake of the virus, but to prevent devastating climate change, “we need to electrify transport quickly, coupled with clean energy,” he said.
“The blue skies that people have seen as we’ve parked our cars have shown people what we could have every day by driving clean vehicles or walking and biking,” he said.
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Shell: OK, We May Actually Be Fucked This Time
The coronavirus has sent oil demand plummeting, and it may never return to where it once was. In a stunning admission, Shell CFO Jessica Uhl told investors she sees “major demand destruction that we don’t even know will come back.”
There are countless metrics that show how absolutely bonkers and unheard of the current crisis is. Oil traded for negative dollars last week. Demand has dropped while production continues, which has led producers to store the equivalent of a fifth of all pre-pandemic daily offshore on supertankers. A trillion dollars in oil company revenue—more than the entire GDP of Shell’s home country, the Netherlands—is projected to disappear this year. These are changes that could permanently alter the industry.
As the global economy comes to a standstill amid the coronavirus, energy demand is set to drop a…
Chesapeake Energy, the company that led the American fracking boom, is preparing to file for bankruptcy, according to Reuters. And even monster companies like Shell are watching the ground shift beneath them.
Lockdowns mean people are traveling less. Job losses have created less demand for almost everything. Because everything from fast fashion to Star War-themed sex toys requires oil to produce and ship, demand just isn’t there. For better or worse, this is forcing society to reevaluate what really matters and what we value. When we get to the other side of the pandemic, we may well value oil-intensive products and experiences less than we have in the past. Shell is all too aware of this and what it could mean for their bottom line.
“I think a crisis like this has the potential to capitalize society into a different way of thinking, much as the Paris Agreement has had,” company CEO Ben van Beurden told investors.
Uhl said Shell expects an “L-shaped recovery” in the wake of the pandemic. That implies demand for oil will stay at the levels it’s plummeting to—about 9 percent below last year according to a recent International Energy Agency forecast—rather than rebounding sharply for the mythical V-shaped recovery or slowly in a U-shaped one.
What the world really needs is a backward-slash shaped recovery where oil demand and production keep falling. Unplugging the economy from oil and other fossil fuels is essential to protecting the climate and, by extension, society. We’re not headed there (yet), but there were signs oil was already in trouble before the pandemic.
American fracking companies saddled themselves with massive debt that set up the house of cards and major energy companies have seen their stocks fail to keep pace with other large industries. That’s led companies and CEOs to lash out in increasingly desperate ways and turn toward plastic as a way to keep juicing demand. This isn’t to say oil companies still don’t have massive amounts of political power or money at hand. But that power was starting to erode, and the coronavirus has been like a tidal wave speeding that process along. While some governments (cough, cough, Trump) are doing their damnedest to keep the industry afloat, society may have different plans. So does the climate.
Therein lies the biggest issue for the industry. Demand drop isn’t going away, and the government making it rain while wearing a blindfold is not going to change that. That will lead to more chaos. Huge corporations hate uncertainty almost as much as they hate not making money. Uhl warned that the “relatively disorderly way in which all systems start to shut down is also going to affect us in ways that are very hard to predict.”
With that in mind, I’d like to once again offer up an increasingly popular solution that would provide some certainty. There’s no better time to nationalize the industry, bring production in line with demand, and begin setting it on that backward-slash trajectory needed for a habitable planet.
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BEIJING — China’s economy contracted for the first time on record in the first quarter as the coronavirus shut down factories and shopping malls and put millions out of work.
Gross domestic product (GDP) fell 6.8% in January-March year-on-year, official data showed on Friday, a slightly larger decline than the 6.5% forecast by analysts and reversing a 6% expansion in the fourth quarter of 2019.
It was the first contraction in the world’s second-largest economy since at least 1992, when official quarterly GDP records were first published.
Providing a silver lining was a much smaller-than-expected fall in factory production in March, suggesting tax and credit relief for virus-hit firms was helping restart parts of the economy shut down since February.
However, analysts say Beijing faces an uphill battle to revive growth and stop massive job losses as the global spread of the virus devastates demand from major trading partners and as local consumption slumps.
“First-quarter GDP data is still largely within expectations, reflecting the toll from the economic standstill when the whole society was on lockdown,” said Lu Zhengwei, Shanghai-based chief economist at Industrial Bank.
- Thanks for reading The Times.
“Over the next phase, the lack of overall demand is of concern. Domestic demand has not fully recovered as consumption related to social gatherings is still banned while external demand is likely to be hammered as pandemic spreads.”
On a quarter-on-quarter basis, GDP fell 9.8% in the first three months of the year, the National Bureau of Statistics said, just off expectations for a 9.9% contraction, and compared with 1.5% growth in the previous quarter.
Statistics bureau spokesman Mao Shengyong told a press briefing after the data that China’s economic performance in the second-quarter is expected to be much better than in the first
However, weaker domestic consumption, which has been the biggest growth driver, remains a concern, as incomes slow and the rest of the world falls into recession.
Per capita disposable income, after adjusting for inflation, fell 3.9% from a year earlier in the first quarter, the data showed.
“We are hesitant to think that this is just a one quarter event, Q2 will also likely be lower than expectation,” said Ben Luk, senior multi asset strategist at State Street Global Markets in Hong Kong.
“To offset weakness in external demand, we will see some policy support later this month or early May.”
Industrial output fell by a less-than-expected 1.1% in March from a year earlier. Highlighting the challenges in consumption, however, was a 15.8% fall in retail sales, which was larger than expected. Fixed asset investment dropped 16.1% in January-March from a year earlier.
Investors and policymakers worldwide are closely watching to see how long it takes China to recover from the virus shock, as the United States and a number of other afflicted countries begin to consider cautious reopenings of their economies.
“As long as there are strict social distancing measures, the recovery of activity will be very slow, and this will be reflected in consumption,” analysts at ING said in a not
Economists’ forecasts for first-quarter GDP had ranged widely given the many uncertainties around the pandemic’s economic and social impact in China.
The virus has infected more than 2 million globally and killed more than 140,000. China, where the virus first emerged, has reported more than 3,000 deaths although new infections have dropped significantly from their peak.
Of major concern for policymakers is social stability among its 1.4 billion citizens, millions of whom migrate from rural areas to cities to find work each year.
The urban jobless rate fell to 5.9% in March from 6.2% in February, suggesting the pain in the labour market is yet to be reflected in official numbers.
However, analysts warn of nearly 30 million job losses this year due to stuttering work resumptions and plunging global demand, outpacing the more than 20 million layoffs seen during the 2008-09 financial crisis.
China’s stability-obsessed leaders have pledged more steps to combat the slump but are mindful of the lessons learned in 2008-09 when massive stimulus saddled the economy with mountains of debt.
Last month, the ruling Communist Party’s Politburo said it was considering measures such as more local government special bonds and special treasury bonds
“We expect Beijing to deliver a large stimulus package soon to combat the worst recession in decades, with most of the financing to be provided by the PBOC (People’s Bank of China),” Ting Lu, chief China economist at Nomura, said in a note.
The PBOC has already loosened monetary policy to help free up credit to the economy, but its easing so far has been less aggressive than during the financial crisis.
China has cut a number of key policy rates in recent months and is widely expected to lower its benchmark lending rate again on Monday at its monthly fixing. Regulators have also encouraged banks to offer cheap loans to the hardest-hit sectors and tolerate late loan repayments.
The government will also lean on more fiscal stimulus to spur infrastructure investment and consumption, which could push the 2020 budget deficit to a record high.
For 2020, China’s economic growth is expected to tumble to 2.5%, its slowest annual pace in nearly half a century, a Reuters poll showed this week.
(Reporting by Lusha Zhang, Kevin Yao and Gabriel Crossley; Editing by Sam Holmes)
22 million have lost their jobs over the past month—real unemployment rate likely nearing 18%
Another 5.2 million Americans filed initial unemployment claims in the week ending April 11. That brings the total unemployment claims over the past four weeks to 22 million, according to the U.S. Department of Labor.
The total weekly claims fell close to 1.4 million from last week’s 6.6 million initial unemployment claims. Economists had been expecting the report to show the ranks of jobless Americans increasing by 5.5 million.
But these claims are still staggering: The one-week record—before the current streak of multi-million claims—was 695,000 in October 1982.
Seoul’s Full Cafes, Apple Store Lines Show Mass Testing Success
South Korea did not Close it’s Businesses and It succeeded in flattening the curve because it did extensive testing and researched individual contact history.
Why have we not followed South Korea’s success and get back to normal faster and safer by understanding Covid19 by extensive testing.
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APRIL 15, 2020 / 1:06 AM / UPDATED 7 HOURS AGO
Oil in the age of coronavirus: a U.S. shale bust like no other
HOUSTON/DENVER (Reuters) – Texas oilman Mike Shellman has kept his MCA Petroleum Corp going for four decades, drilling wells through booms and busts and always selling his crude to U.S. oil refiners.
FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant/File Photo
But now the second-generation oilman has abandoned drilling any new wells this year and postponed some maintenance amid a sharp drop in global oil prices and brimming storage tanks. He is considering shutting most of his production down, for the first time ever.
Oil fields from Texas and New Mexico to Oklahoma and North Dakota are going quiet as drilling halts and tens of thousands of oil workers lose their livelihood. Fuel demand has plunged by as much as 30 million barrels per day (bpd) – or 30% – as efforts to fight the coronavirus pandemic have grounded aircraft, reduced vehicle usage and pushed economies worldwide toward recession.
“What scares me is not even being able to sell the product,” the grizzled oil hand said from his firm’s San Marcos, Texas, headquarters.
Refiners and other buyers are warning they may refuse his oil once contracts expire this month, he said. Or they may offer to buy at a price below his costs, so he is preparing to dip into retirement savings to pay employees, he said.
The governments of global oil producers and consumers are seeking to make unprecedented cuts to overall supply of some 19.5 million bpd. U.S. President Donald Trump heralded the deal to cut supply as one that would save hundreds of thousands of U.S. jobs.
But oil prices fell again this week, dropping as much as 10% on Tuesday, because even those cuts may fail to stem the glut. Prices remain far below production costs for many U.S. producers, including those in the U.S. shale fields – the scene of a revolution in the energy industry over the past decade that made the United States the world’s top producer.
Across the United States, up to 240,000 oil-related jobs will be lost this year, about a third of the onshore and offshore oilfield workforce, estimates consultancy Rystad Energy.
The U.S. oil boom died on March 6, the day Saudi Arabia and Russia ended a four-year pact that curbed output and gave shale a price umbrella. Shale firms have accrued hefty debt during the years of expansion, leaving them exposed to the price crash that followed.
In March, U.S. oil futures tumbled to $20 a barrel, a third of the January price and less than half what many require to cover production costs. The March drop led dozens of shale producers to cut spending and several retained debt advisors.
“As soon as the virus hit and oil prices dropped, they sent everybody home,” said Joel Rodriguez, chief administrator of La Salle County, home of Texas’s second-most productive oilfield.
Shale oil producers face well closures and “industry wide financial distress” even after the OPEC cuts, said Artem Abramov, head of shale at consultancy Rystad Energy. In some fields, he expects regional prices will hit single-digits per barrel, he said. (For a graphic, click here)
Spending on oil field services will fall 21% to $211 billion this year, the lowest since 2005, according to researcher Spears & Associates.
Unlike the 2014-2016 oil bust, lenders are not making more financing available to producers, said Raoul Nowitz, head of restructuring at SOLIC Capital Advisors. He predicts up to 60 oil producers will seek protection from creditors this year, and many will not emerge under new owners. Some banks are setting up operations to take over and run failed producers.
LAYOFFS AND SHUT-INS
OPEC’s cuts may not be deep enough for oil producer Texland Petroleum, which operates 1,200 wells in the Permian Basin, the top U.S. oilfield. U.S. refiner and pipeline operator Phillips 66 asked President Jim Wilkes to reduce his deliveries by 15%, and another buyer canceled his contract outright.
“We’ve never had a time when we couldn’t sell the oil we produce. And that’s going to happen this time,” said Wilkes.
Average daily U.S. oil production this year will fall 500,000 bpd, to 11.8 million bpd and sink another 700,000 bpd next year, the Energy Information Administration estimated. (For a graphic, click: here)
Production cuts are too late for workers like Jeremy Davis, a 36-year-old who in March lost his business development job at Advanced BioCatalytics, which makes chemicals for hydraulic fracturing.
“They won’t be fracking many wells for the rest of the year,” said Davis, who after 16 years in the oilfield would now consider work outside the oil business. “I can’t wait around for the industry to come back,” he said.
Wall Street investors had already pulled back on the shale sector over the past couple of years because of poor returns, leaving producers with limited options for refinancing, said industry executives and analysts.
“There is no more lifeline,” said Lance Loeffler, the finance chief at top U.S. fracking service provider Halliburton Co.
PayZone Directional Services, a Denver-based driller, threw in the towel last month.
“We could have stayed open and run until the money was gone but sometimes you just have to know when to cash in your chips and leave the table,” said Beth Thibodeaux, chief executive officer.
TIME TO MOVE ON
So much unsold oil is sloshing around that some pipeline operators, fearful of having their lines clogged, are insisting that producers halt connecting new wells and prove they have buyers or storage outlets before oil from existing wells can be put into a line.
They have warned “by mid-May storage is full” and will refuse to take any more, said Scott Sheffield, CEO at Permian Basin producer Pioneer Natural Resources.
He and some other executives in Texas and Oklahoma want state regulators to mandate up to 20% output cuts, sparing only the smallest producers. In Texas, energy regulators on Tuesday heard Sheffield call for a state order to halt 1 million bpd from its shale fields to prevent sale at below production cost.
MCA Petroleum owner Shellman said he tells friends who lost their jobs that it is time to leave the oil business. “It’s not ever going to be like it was.”
Shellman, who as a youngster got his first taste of the oil business accompanying his parents to their own oil wells, has promised to pay his employees from savings even if they have to shut in wells. But the pain goes well beyond Shellman’s wallet.
“From an emotional standpoint, this is killing me,” he said.
Reporting by Jennifer Hiller in Houston, Liz Hampton in Denver; editing by Gary McWilliams and Edward Tobin
APRIL 14, 2020 / 10:47 AM / UPDATED 18 MINUTES AGO
Texas hearing on oil production curbs stirs hornet’s nest
4 MIN READ
HOUSTON (Reuters) – Texas energy regulators on Tuesday morning started to hear from dozens of energy executives on an initiative calling for the state to mandate an output cut to stem the sharpest oil price drop in decades.
FILE PHOTO: A pump jack on a lease owned by Parsley Energy operates in the Permian Basin near Midland, Texas U.S. August 23, 2018. Picture taken August 23, 2018. Picture taken August 23, 2018. REUTERS/Nick Oxford
Oil and gas companies are gushing red ink and cutting tens of thousands of workers as oil prices have crashed to about $22 a barrel from $61 in January. On Monday, Texas refiner Valero Energy Corp (VLO.N) forecast a first-quarter loss of up to $2.1 billion on falling demand.
The proposal, submitted by executives from shale producers Pioneer Natural Resources Co (PXD.N) and Parsley Energy Inc (PE.N), has stirred up anger at the Texas Railroad Commission, the state’s oil and gas regulator, for considering cutbacks, and fury that livelihoods are disappearing.
The industry is heading for a historic collapse with Permian Basin production still growing and storage filling, Pioneer Chief Executive Scott Sheffield warned commissioners on Tuesday. He predicted $3 to $10 per barrel oil in the next several weeks. “This is probably going to be worse than ‘86,” Sheffield said. “Demand is not going to come roaring back.”
Companies are already cutting spending as much as 50% and U.S. shale output has started falling, said Lee Tillman, CEO of Marathon Oil Corp (MRO.N), who opposes state-mandated cuts. “I would argue that among global producers, the U.S. has acted first and has acted quite strongly,” Tillman said. “The bottom line is we’re already cutting and cutting deeply.”
But Marilyn Craaybeek, who owns a small oil company, said small producers were failing, something she blamed on government inaction.
“This was my retirement and I will die poor,” she wrote in a letter to the commission in favor of the production curbs.
The hearing is being held days after the Organization of the Petroleum Exporting Countries and allies agreed to reduce their output by 9.7 million barrels per day (bpd) in May and June. Other non-OPEC countries and government reserve purchases could lift the total reduction to 19 million bpd, analysts said.
However, U.S. crude futures CLc1 plunged nearly 6% on Tuesday to about $21 a barrel, below the average cost of production in all Texas oilfields. Traders have bet the historic OPEC deal was not large enough to counter oil demand destruction caused by coronavirus-related travel restrictions and business halts.
At least two votes on the three-member Texas Railroad Commission are needed to pass the proposal. Commissioner Ryan Sitton has pushed for evaluating statewide cuts, while Wayne Christian, the commission’s current chairman, and Christi Craddick, the third commissioner, have been careful not to take a position.
Craddick voiced a common industry concern during the hearing that output curbs could cause operators to shift production to other states such as New Mexico and North Dakota. “What if other states don’t do this?” Craddick asked.
The idea, however, has gained proponents elsewhere. A group of Oklahoma oil producers on Monday filed a request with their state also asking for a hearing to consider production curbs.
Reporting by Jennifer Hiller in Houston; Editing by Paul Simao, Marguerita Choy and Jonathan Oatis
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MARCH 30, 2020 / 5:46 PM / UPDATED A DAY AGO
Oil pipeline, producer standoff prompts new call for Texas shale curbs
5 MIN READ
HOUSTON (Reuters) – As a weekend standoff over oil shipments emerged between Texas pipeline operators and shale producers, a state energy regulator has renewed his controversial call for mandated cuts to address a growing crude glut.
Oil prices have fallen more than 60% this year as the coronavirus pandemic has destroyed fuel demand and Saudi Arabia and Russia kicked off a price war in a battle for market share. Oil in Midland, Texas, home of the biggest U.S. shale field, traded on Monday for under $10 a barrel, far below the cost of production.
“Large-scale production interruptions appear inevitable and imminent,” executives from Pioneer Natural Resources and Parsley Energy wrote in a joint letter to the state’s energy regulatory commission on Monday. In the latest sign of a growing oil glut in the state, crude oil purchasers across Texas have warned producers that storage will be limited in May and output must be cut, they said.
In at least one case, a shale pipeline operator told customers it planned to renegotiate its contracts.
Texas Railroad Commission, the state’s energy regulator, is set to meet on April 21, but Parsley and Pioneer have asked it to meet sooner and curtail production as early as May.
“I want to do it as soon as possible,” said Ryan Sitton, the commissioner who first floated the idea of cuts two weeks ago.
“We think it’s important to save this industry,” said Pioneer Chief Executive Scott Sheffield, adding that he would suggest a uniform 20% production cut but leave out the state’s smallest producers.
One of the state’s top producers and the three largest oil and gas producer groups in Texas have opposed mandated production cuts.
“Putting any kind of export quotas on Texas producers could penalize the most efficient producers,” Chevron Corp Chief Executive Michael Wirth said in an interview last week. “We don’t expect unique assistance from governments.”
Chevron is the second largest U.S. oil company and a top U.S. shale producer.
“I’m not advocating we do anything on our own,” Sitton told Reuters, saying he would expect any state-mandated cuts to hinge on Saudi Arabia and Russia agreeing to cut their output. “If it is the right thing to keep some stability in the world, we can do it.”
His comments prompted a call from OPEC Secretary General Mohammad Barkindo and an invitation to the group’s next meeting in June. Sitton said he plans to attend.
But mandated output cuts would lead to less cash for already hurting producers, said Karr Ingham, executive vice president of the Texas Alliance of Energy Producers, which represents more than 3,300 small and midsize oil and gas companies and opposes such reductions.
“You’re worse off than you were before,” Ingham said.
The state has not imposed production limits since 1972, but has the authority to do so, said Sitton.
“For 90 years someone has been setting the price of oil in the world,” he said, referring to Texas in the 1930s and later to the role of the Organization of the Petroleum Exporting Countries. “I don’t see why we can’t at least be part of the discussion right now.”
PRODUCTION BUDGETS SQUEEZED
Top shale producers have pledged to reduce their 2020 oil budgets by 30% to 50% and slashed jobs as prices fell well below production costs. Widespread cuts could lower U.S. output by up to 1 million barrels per day by December.
U.S. President Donald Trump said he would get involved in the oil price war at the appropriate time and last week named an envoy to Saudi Arabia to press U.S. concerns.
Oil gatherers who buy shale from producers are cancelling contracts with producers and insisting on new terms, according to letters reviewed by Reuters. One buyer said its own contract with a refiner had been canceled and would be renegotiated May 1.
“This is a uniquely catastrophic time for the industry,” said Parsley CEO Matt Gallagher, adding that mandated cuts could keep the shale industry from collapse.
The state’s two other regulators have not publicly endorsed cuts. Commissioner Wayne Christian said he is willing to discuss the topic and Commissioner Christi Craddick has declined to comment.
Reporting by Jennifer Hiller in Houston; Editing by Marguerita Choy and Rosalba O’Brien
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MARCH 31, 2020 / 10:09 AM / UPDATED AN HOUR AGO
Trump finalizes rollback of Obama-era vehicle fuel efficiency standards
6 MIN READ
WASHINGTON (Reuters) – President Donald Trump’s administration on Tuesday completed a rollback of U.S. vehicle emissions standards adopted under his predecessor Barack Obama and will require 1.5% annual increases in efficiency through 2026 – far weaker than the 5% increases in the discarded rules.
FILE PHOTO: Traffic travels along a highway next to Los Angeles, California, U.S. October 11, 2019. REUTERS/Mike Blake/File Photo
The announcement – condemned by Democrats and environmentalists while being lauded by Republicans and business interests – sets up a legal battle, with California and 22 other states planning to challenge the rewrite of what had been one of most ambitious U.S. policies aimed at combating climate change.
The Trump administration called the move its largest single deregulatory action and said it would will save automakers upwards of $100 billion in compliance costs. The policy reversal marks the latest step by Trump, a Republican, to erase environmental policies pursued by Obama, a Democrat.
James Owens, acting head of the U.S. National Highway Traffic Safety Administration, said the plan “strikes the right balance between environmental considerations, health and safety considerations and economic considerations.”
Writing on Twitter, Trump said his administration was “helping U.S. auto workers by replacing the failed Obama Emissions Rule.” Auto-producing states like Michigan could be pivotal in Trump’s Nov. 3 bid for re-election.
House of Representatives Speaker Nancy Pelosi, a Democrat, said the administration’s decision will harm public health and endanger U.S. economic security.
“The Trump administration’s anti-science decision to gut fuel standards will unleash massive amounts of pollution into the air at the worst possible time,” Pelosi said, alluding to the coronavirus pandemic.
A coalition of states previously challenged the Trump administration’s decision to revoke California’s authority to set its own stiff vehicle tailpipe emissions rules and require automakers under its Zero-Emission Vehicle Program to sell an increasing number of electric cars and trucks in the most populous U.S. state.
Under the Obama-era rules, automakers were to have averaged about 5% per year increases in fuel efficiency through 2026, but the industry lobbied Trump to weaken them. The new requirements mean the U.S. vehicle fleet will average 40.4 miles per gallon rather than 46.7 mpg under the Obama rules.
The Trump administration said the new rules will result in about 2 billion additional barrels of oil being consumed and 867 to 923 additional million metric tons of carbon dioxide being emitted and boost average consumer fuel costs by more than $1,000 per vehicle over the life of their vehicles.
Obama’s environmental policies were intended to cut carbon emissions that drive climate change, while Trump has ditched numerous environmental regulations that his administration deemed harmful to industry and has aimed to increase the use of fossil fuels. Trump also has pulled the United States out of a global climate accord and moved to reverse clean water regulations and pollution standards for coal-burning power plants.
California Air Resources Board chief Mary Nichols said her agency will move forward with its zero-emissions program.
“This is a watershed moment marking the death of the old view of cars and emissions tied to petroleum use, and another that looks to vehicle technology driven by innovation,” Nichols said.
The Trump administration in August 2018 initially proposed freezing requirements at 2020 levels through 2026. Reuters reported in October automakers expected a 1.5% annual increase after talks with administration officials.
A trade group that represents General Motors Co, Volkswagen AG (VOWG_p.DE), Toyota Motor Corp and others said automakers need policies that support “a customer-friendly shift” toward electrified and other highly efficient technologies. “We are carefully reviewing the full breadth of this final rule to determine the extent to which it supports these priorities,” it said.
The U.S. Chamber of Commerce, a business group, said the final rule provides a “workable path forward on a unified national program that provides regulatory certainty while strengthening fuel economy standards and continuing emissions reductions.” Auto dealers also praised the revisions.
The administration said the revised rules will cut the future price of new vehicles by around $1,000 and reduce traffic deaths. Environmentalists dispute that the rule will reduce traffic deaths. The administration said drivers will pay more in increased fuel costs than they will save in lower vehicle prices but concluded they will save more in overall vehicle ownership costs.
The administration has battled with California over auto regulations. Last month, the U.S. Justice Department closed an antitrust investigation into a voluntary agreement between four automakers and California on emissions without taking any action.
Slideshow (3 Images)
Ford Motor Co, BMW AG, Honda Motor Co and VW struck the deal last year, prompting the federal investigation. The deal bypassed a White House effort to strip California of the right to fight climate change and drew Trump’s ire. Volvo Cars confirmed on Tuesday it was also in talks to reach a California emissions agreement.
Ford said on Tuesday it remains “committed to meeting emission reductions consistent with the California framework.”
Reporting by David Shepardson; Editing by Will Dunham