California’s Plan to End Gasoline Vehicle Sale by 2035 Awaits EPA Approval


  • The California Air Resources Board (CARB) approved a plan in August 2022 to terminate the sale of gas-only vehicles in the state by 2035.
  • The U.S. Environmental Protection Agency (EPA) is considering a waiver from CARB under the Clean Air Act to allow this plan.
  • California’s annual zero-emission vehicle standards from 2026 are also being adopted by 12 other states.
  • The Biden administration has not specified a date to eliminate the sale of gas-only vehicles.
  • According to a separate EPA proposal, it’s expected that auto manufacturers will produce 60% electric vehicles (EVs) by 2030 and 67% by 2032.
  • California’s zero-emission rules will reduce pollution from light-duty vehicles by 25% in 2037, with rules stating 35% of new cars sold should be EVs or powered by hydrogen fuel cells.

Pending Approval of Emission Reduction Plans

The California Air Resources Board (CARB) gave a go-ahead in August 2022 for a revolutionary plan. This plan encompasses discontinuation of the sale of exclusively gasoline vehicles in California, with its implementation aimed for 2035. In May, CARB requested the U.S. Environmental Protection Agency (EPA) to grant a waiver under the guidelines of the Clean Air Act.

EPA is currently in the process of a thorough examination, slated to hold a public discussion on January 10 and accept comments through February 27 about CARB’s appeal. CARB has voiced its appreciation toward EPA for organizing a hearing in relation to its application.

Implementation of Zero Emission Vehicle Rules

California’s laid-out rules point to a step-wise increase in zero-emission vehicle requisites starting from the year 2026. These rules are being accepted and implemented by a minimum of 12 states. Biden’s administration however, has refrained from endorsing a firm date to stop the sales of gasoline-only vehicles thus far.

An autonomous EPA proposition released in April, aiming to dramatically slash vehicle emissions by 2032, expects automakers to manufacture 60% EVs by 2030 and subsequently, 67% by 2032 to meet standards. This anticipated surge in EV production is resulting in automakers urging the Biden administration to moderate its proposal.

Political Battles Over Emission Regulations

Recently, the Republican-led U.S. House of Representatives passed a vote to hinder EPA from administering future emissions regulations. The White House promptly responded, threatening to veto any such proposal.

Former President Donald Trump, who is aiming for the Republican nomination to challenge Biden in the 2024 elections, promised to repeal the newly laid EV rules.

Anticipated Impact of Zero-Emission Rules

According to California’s zero-emission laws, vehicular pollution causing smog would decrease by 25% by 2037. The current statute mandates 35% of newly sold cars to be plug-in hybrid electric (PHEV), EVs or hydrogen fuel cell driven by 2026. This figure is expected to spike to 68% by 2030 and eventually touch 100% by 2035.

In the waiver request made by California, the implementation of the zero emissions rules is estimated to cost a total of $210.35 billion, generating a total returns of $301.41 billion by 2040. Under CARB’s laws, automakers can sell up to 20% PHEVs by 2035.

In conclusion, these regulatory changes could potentially shape the forex or trading markets, particularly impacting the valuation of assets tied to the automotive and petroleum industries.

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