INSIGHT: 16 US states may restrict sale of combustion-based autos

HOUSTON (ICIS)–Several US states could adopt restrictions on the sale of light vehicles that rely primarily on internal combustion engines (ICE), which would lower demand for liquid fuels while increasing demand for plastics and chemicals used to make electric vehicles (EVs).

• California is waiting on the federal government to grant it a waiver so it can adopt its Advanced Clean Cars II (ACC II) regulations. These would require auto companies to sell increasing shares of plug-in hybrids, electric vehicles (EVs) and fuel-cell based vehicles.
• Non-plug-in hybrids and light vehicles powered by internal combustion engines would make up a shrinking share of the state’s auto sales, until they are prohibited in 2035.
• If California gets the waiver, seven other states could adopt the same restrictions on sales of hybrids and light vehicles powered by internal combustion engines (ICE). Another eight are in the process of adopting similar regulations.
• California has a separate programme for medium- and heavy-duty vehicles known as the Advanced Clean Fleets (ACF) regulations.

HOW THE CALIFORNIA REGULATIONS WORK
California’s ACC II regulations work by requiring EVs, fuel cells and plug-in hybrids to make up an ever-increasing share of the state’s auto sales.

Plug-in hybrids are also known as plug-in hybrid electric vehicles (PHEV) because they rely primarily on electric power. Like an EV, the battery is so large in a PHEV, it needs to be plugged in a charging station for recharging, according to the US Department of Energy. The combustion engines of a plug-in hybrid kicks in only after the battery runs out of power.

The following chart shows the share of electric-based vehicles that would need to be sold in California by model year under the state’s ACC II regulations.

ZEV stands for zero-emission vehicle and includes EVs and vehicles with fuel cells
Source: California Air Resources Board

The regulations only restrict the sale of hybrids and light vehicles powered by internal combustion engines. They would not prevent people in California from owning such vehicles, and they can continue driving them and filling them up with gasoline or diesel, according to the California Air Resources Board.

NEXT STEPS FOR CALIFORNIA REGULATIONS
Before California can impose the sales restrictions, it needs a waiver from the federal government, according to the Environmental Protection Agency (EPA). The Clean Air Act requires California to receive authorisation from the federal government before it can adopt its own emission standards.

Already, the waiver is being opposed by some members in Congress.

A bill to prevent the EPA from granting the waiver was proposed by US Senators Markwayne Mullin (Republican-Oklahoma), Roger Marshall (Republican-Kansas) and Pete Ricketts (Republican-Nebraska). It is called the Preserving Choice in Vehicle Purchases Act.

A companion bill was introduced in the House of Representatives by Representative John Joyce (Republican-Pennsylvania).

The bill will unlikely become law because the Republican party lacks a majority in the Senate, and US President Joe Biden is a Democrat.

OTHER STATES FOLLOW CALIFORNIA
Other states can adopt auto emission regulations that are identical to those in California. These states do not need waivers from the federal government, so their regulations would take effect after California receives authorisation from the federal government.

The following seven states are set to adopt the Advanced Clean Cars II regulations, if they have not done so already, according to the California Air Resources Board.

The percentage in parentheses represents the state’s share of new light-vehicle registrations in the US.

• Maryland (1.8%): The state governor announced that Maryland will adopt the ACC II regulations.
• Massachusetts (2.0%): The state adopted ACC II regulations.
• New York (5.7%): The state’s Department of Environmental Conservation adopted ACC II regulations.
• Oregon (1.1%): The state’s Department of Environmental Quality (DEQ) adopted ACC II regulations.
• Vermont (0.3%): The state’s Department of Environmental Conservation adopted ACC II regulations.
• Virginia (2.2%): According to the AFPM, the state’s 2021 law requires it to adopt California’s ACC II regulations.
• Washington (1.9%): The state’s Department of Ecology adopted ACC II regulations.

These seven states and California (11.8%) make up 26.8% of the new light-vehicle registrations in the US.

STATUS OF OTHER STATES
An additional seven states have adopted various zero-emission vehicle (ZEV) regulations based on those in California. These states are in various stages of approving ACC II regulations.

The following list shows the status of these states in regards to the ACC II regulations. The percentage in parentheses represents the state’s share of new light-vehicle registrations in the US.

• Colorado (1.8%): The state’s Air Quality Control Commission adopted the Colorado Clean Cars standard. This will gradually increase the share of zero-emission vehicles sold in the state until they reach 82% by model year 2032.
• Connecticut (1.0%): The state is proposing the same regulations as California’s ACC II.
  According to the AFPM, public comments have concluded.
• Maine (0.4%): Maine is considering the incorporation of California’s ACC II regulations.
• Minnesota (1.4%): The state adopted a clean-car programme in 2021, prior to California’s ACC II regulations.
  It is unclear if Minnesota will start the process to adopt ACC II regulations.
• Nevada (0.9%): Nevada adopted California’s earlier Advanced Clean Cars I (ACC I) regulations, which is based on a credit system.
  The Las Vegas Review-Journal reported that the state is starting the process to consider whether the state should adopt ACC II regulations.
• New Jersey (3.3%): The governor has filed an ACC II proposal with the Office of Administrative Law.
  According to the AFPM, public comments have just concluded.
• New Mexico (0.5%): In July 2023, the governor said the state will move to adopt clean car regulations.

Although Delaware (0.3%), has not adopted California’s zero-emission-vehicle regulations, it is in the process of amending its low-emission vehicle programme on the model of California’s ACC II regulations, according to the state’s Department of Natural Resources and Environmental Control (DNREC).

Altogether, these 16 states make up more than 36% of new light-vehicle registrations in the US, according to the California Air Resources Board.

REACTION TO ACC II REGULATIONS
In January, the National Resource Defense Council (NRDC) said the ACC II standards can help states mitigate climate change, improve air quality and lower the cost of owning an automobile. It said the ACC II is a commonsense standard that is feasible, and zero-emission vehicles are becoming increasingly affordable.

The AFPM represents refiners and petrochemical producers. It said bans are expensive and inefficient. It said that markets – not government dictate – should determine whether a technology succeeds or fails.

“Restricting consumer choice by eliminating competition and banning entire vehicle power trains is the wrong path to a cleaner future,” the AFPM said.

The AFPM warned that the ACC II would increase costs for vehicles and electricity. The US is a minor player in the supply chains for the minerals, refining and batteries needed for EVs. A rapid switch to these vehicles could threaten energy security, the group said.

The Renewable Fuels Association (RFA) represents ethanol producers. It said that it shares California’s goal of reducing emissions. However, it does not support prescriptive approaches that mandate specific technologies and that ignores other ways to reduce emissions, such as low-carbon fuels.

“We believe the best way to rapidly decarbonise the transportation sector is to set clear emissions reductions targets and then let the marketplace and consumers determine the most efficient and affordable ways of achieving those goals,” the group said. “RFA continues to encourage states that typically adopt California’s vehicle standards to think more broadly and carefully consider the dangers of putting all of their eggs into the electrification basket.”

EFFECTS ON US REFINERIES
The ACC II regulations could put financial pressure on US refiners if they reduce demand for fuels.

Refineries also produce feedstock uses to make base oils as well as petrochemicals such as propylene, benzene, toluene and mixed xylenes (MX). Policies that put stress on refiners could threaten the supplies of these products.

If oil demand declines because of the rising electrification of the nation’s auto fleet, then domestic oil production could slow down. Oil production is a significant source of ethane, the main feedstock used by crackers in the US.

RISING DEMAND FOR EV MATERIALS
Petrochemical producers can benefit from increasing demand for materials used in electric vehicles.

Orbia’s fluoromaterial subsidiary, Koura, is considering a project to produce lithium hexafluorophosphate (LiPF6), an electrolyte used in lithium-ion batteries. It would be the first plant of its kind in the US.

Another Orbia project would expand production of a feedstock used to make polyvinylidene fluoride (PVDF). PVDF is used as a binder in lithium-ion batteries.

Celanese completed a large buildout of its capacity to produce  ultra-high-molecular-weight polyethylene (UHMWPE), which is used in battery separators.

Polypropylene (PP) is the primary resin in battery packs, so increasing EV production could increase consumption of the resin in the world’s automobile industry.

Heat management and protection will require plastics such as nylon 6,6 that contain flame retardants.

Paints and coatings companies are developing EV products, such as dielectric powders and battery fire protection.

Automakers are eager to reduce the weight of EVs so they can go farther on a battery charge. That will increase demand for plastics and composites.

Additional reporting by Joseph Chang

Insight article by Al Greenwood

Thumbnail shows a charging station used by electric vehicles. Image by MICHAEL REYNOLDS/EPA-EFE/Shutterstock