The Environmental Protection Agency (EPA) has finalized its emission rules under the Biden administration. This takes effect for cars under model years 2023 through 2026, pushing the most ambitious federal greenhouse gas (GHG) emissions standards for passenger cars and light trucks ever.

According to EPA, the final standards take advantage of advances in clean car technology to unlock $190 billion in net benefits to Americans. The goal is to reduce climate pollution, improve public health, and save money at the pump. More importantly, it ushers in a good launch point for the Agency's next phase of standards for MY 2027 and beyond.

The EPA's final rule is even stricter than proposed in the initial rulemaking stage in August 2021. It follows strict fuel efficiency standards during the Obama administration in a bid to reduce greenhouse gas emissions and fight climate change. This was slowed down during Trump's administration.

By numbers, the EPA rules result in a fleetwide average of about 40 mpg in 2026. In comparison, the August proposal required 38 mpg, while the Trump admin only required 32 mpg. Trump also rolled back the annual efficiency increase to 1.5 percent. The new EPA rule increases it back to 5 percent, which was the standard during Obama's time.

The final standards should result in 28.3 percent combined CO2 emissions reduction through 2026 – a significant jump from the previous 7.4 percent projected reduction under the SAFE rule standards.

According to the Agency, the stringent standards are cost-effective and should return significant public health and welfare benefits amounting to as much as $190 billion. EPA projects that American drivers will save between $210 billion and $420 billion through 2050 on fuel costs. 

By MY 2026, EPA projects that the final standards can be met by a 17 percent increase in EV sales, along with wider use of advanced gasoline engine and vehicle technologies available today.

The EPA also noted that under the Bipartisan Infrastructure Law, $7.5 billion is allocated for EV charging and related programs with a target of having 500,000 public charging stations by 2030. Over $7 billion is set aside for investments in battery manufacturing, materials, and recycling to drive down costs, increase sustainability, and build the batteries that will power the future vehicles in the US.

Of note, Biden has signed an Executive Order requiring that 50 percent of new car sales by 2030 should either be EV or PHEV.

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