President Obama’s Climate Plan – which was released earlier this summer – sets as its goal a 17% national greenhouse gas reduction by 2020. The centerpiece of Obama’s plan is to regulate greenhouse gas emissions from new and existing power plants, which comprise about a third of this country’s total emissions. But, according to a recent article in the Yale Journal on Regulation, the President’s plan is unlikely to lead to any significant reduction in power plant emissions.

How is this relevant to the auto industry? The second biggest source of greenhouse gas emissions in this country behind the electricity sector is the transportation sector, which is also addressed in the President’s plan. Greenhouse gas emissions from the transportation sector account for almost thirty percent of total U.S. emissions. The Obama Administration has already finalized fuel economy standards for Model Year 2014-2018 for heavy-duty trucks, buses, and vans. The President’s plan, however, includes increasing fuel economy standards for heavy-duty vehicles post-2018 as well as pushing harder for biofuels, likely through the Renewable Fuels Standard.

The Yale Journal on Regulation article argues that Obama’s plan won’t lead to more than about a 5% reduction in power plant emissions. That means, if Obama is serious about achieving his 17% nationwide reduction by 2020, the transportation sector could end up having to reduce by more than 17% to make up the difference.

The Yale Journal on Regulation article is available here: