EPA’s latest tailpipe emission proposal is the toughest yet. USC experts discuss what happens next.

April 19, 2023


The Biden administration wants to steer the nation’s auto industry to make more electric vehicles by getting tough on tailpipe emissions.

The EPA proposal released earlier this month resembles California’s as it limits auto emissions and sets goals for EV production that ratchet up the supply over time. The agency wants two-thirds of all new U.S. cars electric by 2032, while California is aiming for 100% EV fleets by 2035.

USC experts advise that first, several systems — including the electrical grid — need a tune-up.

Contact: Nina Raffio, raffio@usc.edu or (213) 442-8464

The mandate could hit low-income Americans the hardest

ImageMatthew Kahn, an expert in environmental and urban economics, has mixed feelings about the EPA’s new emission standards.

“On the one hand, we need to harness market forces to decarbonize our transportation sector. On the other, this regulation will raise the costs of new automobiles and this will impose costs on poor people and limit their urban mobility.”

“Poor people who own older internal combustion engine vehicles will be less likely to scrap their older vehicles and will drive these polluting vehicles more miles. This will increase local air pollution in areas where poor people tend to live. And as richer people substitute to electric vehicles, gasoline stations will close and they will be converted into EV chargers. Since poor people tend to own older internal combustion engine vehicles, they will spend many more hours driving to the last surviving gas stations to refuel their vehicles.”

Kahn is a provost professor of economics and spatial sciences at the USC Dornsife College of Letters, Arts and Sciences.

Contact: kahnme@usc.edu

More EVs means more chargers. The grid needs an upgrade.

Image“Electricity for most EVs will be coming from regional power grids that reflect the unique fleet of power plants supplying energy to each grid,” said Kelly Sanders, the Dr. Teh Fu Yen Early Career Chair and an associate professor of civil and environmental engineering at the USC Viterbi School of Engineering.

Sanders explained that the electricity supply that is used to charge an EV is highly dependent on the power generators that supply electricity to a regional grid at the time of charging, and that even within regional grids, the fleet of power generators might change considerably over time based on the availability of renewable energy sources and total demand for electricity.

“In California, the grid is very clean during the day because of very abundant solar generation resources, but the grid gets more carbon intensive as the sun goes down and natural gas-fired generators have to come online to meet the electricity demand that can no longer be met by solar.

“Whether or not we have enough electricity to supply EVs will depend on how well we manage when we charge our EVs. If done well, EVs could be an important tool for transitioning to a cleaner grid since well-timed charging can help us support more variable renewable sources like wind and solar. If done poorly, EVs could add a lot of stress to a system that is already challenged by weather extremes.”

Contact: ktsanders@usc.edu

A cascade of effects on auto companies, workers and consumers

Image“Assuming the rule stays in place after the November 2024 presidential election and in future administrations, the mandate will negatively impact auto companies’ ability to fund EV development,” said Shon Hiatt, an associate professor of business administration at USC Marshall School of Business.

“The Department of Energy estimates that EVs will represent 15% of all vehicles produced by 2030 based on market demand and the planned expansion of charging infrastructure. What the Biden administration wants to do with this mandate is accelerate that so by 2032, 67% of all vehicles produced will be EVs. The problem with this is that auto manufacturers won’t have enough profits from internal combustion engine vehicles to actually fund development of EVs.

“The mass production of EVs may also oversaturate consumers’ desire to purchase EVs. That means the manufacturing companies will simply reduce the production of vehicles made, say from 5 to 6 million a year to 1 to 2 million. When that happens, we would see three things: mass layoffs of employees in the auto industry, companies going to the federal government for a bailout or increased EV subsidies, or bankruptcy.”

Contact: shiatt@marshall.usc.edu

Success requires changes to transportation, the grid and supply chains

ImageTo global supply chain expert Nick Vyas, the transition to electric vehicles and meeting the EPA’s emission standards by 2032 is an ambitious goal that faces significant infrastructure constraints.

“To achieve this goal, a coordinated effort is required between the government, industry, and other stakeholders to address the challenges of global competition, supply chain issues, and investment needs. The need for significant changes to the existing transportation infrastructure and upgrades to the power grid to support the increased demand for electricity also highlights the enormity of the task.

“The success of this transition hinges on addressing these challenges and creating an ecosystem that supports the production, recycling, and manufacturing of batteries and computer chips, along with the necessary investment in infrastructure.”

Vyas is an associate professor of clinical data sciences and operations at USC Marshall.

Contact: nikhilvy@marshall.usc.edu

New standards signal opportunity for US energy independence

Image“If the U.S. wants to continue moving toward energy independence, it should focus on the clean energy of the future and support the local development of EV assembly and battery cells manufacturing,” said Greys Sošić, the E. Morgan Stanley chair in business administration at USC Marshall.

“As of 2021, 211 major battery factories are planned or under construction globally; out of that number, 156 were in China, and 12 in the U.S. As of 2020, Chinese firms represented over 60% of the world’s lithium and nickel refining and over 70% of cobalt refining, the minerals necessary for EV battery production. At the same time, U.S. companies accounted for only 4% of lithium, 1% of nickel, and 0% of cobalt refining.

“To enable sustainable future production from local resources, the U.S. needs to reduce the amount of lithium used in batteries and/or seek alternative local sources of lithium. While recycling is widely considered a potential alternative source of lithium, it would not be enough to fulfill such steep increases in demand; geothermal brine lithium recovery is one possible alternative source,” she said, noting that California has already started exploring the option.

“Southern California’s Imperial Valley is becoming known as Lithium Valley, thanks to numerous geothermal energy projects at the Salton Sea Geothermal Resource Area and the fact that the geothermal brine generated by the process is rich in lithium.”

Contact: sosic@marshall.usc.edu