The Trump administration was taken aback when four major auto manufacturers made a deal with Californiato continue making vehicles that follow the Obama-era Environmental Protection Agency rules calling for reduced emissions. While politics certainly played a role in California’s leveraging of its large portion of the U.S. economy, Ford, Volkswagen, Honda, and BMW (the companies working with the state) likely agreed to the partnership because it also makes good business sense.
On the surface, rolling back environmental protections and regulatory restrictions sounds like a short-term benefit for a business, leaving aside the harm to the planet and long-term economic threat. However, automakers are no longer in the same position as fossil fuel companies that benefit from cars burning through more gasoline.
First, auto manufacturers have to consider all of their investment in technology to improve MPGs and reduce emissions. After spending that money to recalibrate their supply chain, they’d be spending more money to revert back to the old ways of doing business under a less restrictive regulatory environment, leaving emissions-lowering equipment and research on the sideline. So, a more relaxed emissions rule that seems like a winner to energy producers is actually a sunk cost for car makers at this point.
Another factor is that vehicle efficiency is a highly salient issue for consumers. You don’t have to be familiar with the science to read the mileage estimate for a new car and know that it will either increase or decrease your travel expenses.
Demand for more efficient vehicles isn’t limited to the U.S., either. Since all of these companies operate globally, they’ll have an easier time meeting international consumer demand by continuing forward with previous EPA goals, rather than reverting to the preferences of a smaller constituency. In this case, it isn’t just about California flexing its economic muscle. It’s about California better reflecting the will of the purchasing public and the global customer base of these four businesses.
The primary reason to reduce pollution is to protect the planet. A healthy Earth also means less disastrous economic (and environmental) outcomes in the long run. But as we’ve seen in cases like this and the rapid growth of renewables, environmental stewardship also makes good short-term business sense. Communications professionals, clean tech companies and climate activists ought to take advantage of this growing trend. We’ve always had the science backing us up. Now we also have the economics in our favor.