Innovation in the Auto Industry: The Role of the U.S. Environmental Protection Agency
Carley, Sanya, Betts, Natalie Messer, Graham, John D., Duke Environmental Law & Policy Forum
Rapid innovation is occurring in the design of propulsion systems for the cars, light passenger trucks, and heavier commercial trucks that dominate the modern transportation systems in both the developed world and in emerging economies. (1) A common theme in these innovations is diminished use of petroleum to power the movement of people and goods.
The desire to reduce petroleum use is rooted in both energy security and environmental concerns. Although some scholars question the severity of the security risks (2) or the environmental risks (3) of petroleum dependence, few scholars deny the significance of both risks. Since there is a large literature on the risks of petroleum dependence, we summarize here only some of the key concerns.
From a security perspective, a national economy that depends on petroleum for transportation is vulnerable to unexpected supply disruptions and to the unpredictable behavior of the Organization of Petroleum Exporting Countries (OPEC), the coalition of oil-exporting nations that restricts global oil supplies and holds the price of oil above the level that would be observed in a highly competitive market. (4) Inflated world oil prices are also believed to play a perverse, indirect role in international affairs. For example, the inflated flow of oil dollars from oil-importing to oil-exporting countries is believed to sustain a future for autocratic regimes that violate human rights, condone terrorism, and oppose pro-democracy efforts around the world. (5)
From an environmental perspective, oil use causes environmental damage throughout the supply chain, from the oil spills that occur during exploration, extraction, and transport of crude oil, to the vehicle tailpipe emissions that contribute to the unhealthy levels of smog and soot in urban air. (6) More recently, the dominant environmental concern has been climate change resulting from an increase in greenhouse gas emissions such as carbon dioxide, which is exacerbated by the heavy use of petroleum to power vehicles. (7)
In this article, prepared on the occasion of the fortieth anniversary of the creation of the U.S. Environmental Protection Agency (EPA), our primary objective is to highlight the influential role that EPA is playing in the rapid innovation that is underway in the transport sector of the U.S. economy. Although we acknowledge that EPA is not the only governmental actor influencing the innovation process, we argue that EPA--through a variety of older and newer regulatory authorities created by Congress and judicial interpretation--is a key player in the public policy debate surrounding emerging transportation technologies. EPA is making significant decisions that will change the future of propulsion systems used in the United States and around the world.
Our objective is not to make a normative argument as to whether EPA's influence has been--or will be--beneficial or harmful to the public interest, or to second guess whether EPA is making the most prudent decisions given the current state of knowledge regarding the viability of alternative transport technologies. Instead, we make a positive claim that we live in a world where agencies such as EPA have a meaningful degree of discretion to influence market decisions and technological futures and that EPA is likely to play a significant role in the future of automotive propulsion systems in the United States. We acknowledge that EPA shares responsibility for transport alternatives with a number of other agencies--including the California Air Resources Board (CARB), the Department of Energy (DOE), the Department of Transportation (DOT), the United States Department of Agriculture (USDA), and the Internal Revenue Service (IRS)--but we conclude that EPA plays a unique and influential role. Since we conclude that EPA decisions are significant in this arena, we encourage talented students of law, policy, economics, science, and engineering to consider making a professional contribution to this important federal agency. …