The US Environmental Protection Agency estimates that the repeal of Biden-era greenhouse gas standards for vehicles will save Americans money. New modeling from Resources for the Future shows that the repeal will actually cost Americans more than $700 billion over the next two and a half decades.
Losing the Endangerment Finding: What Are the Costs and Benefits of Deregulation?
In February 2026, the US Environmental Protection Agency repealed the endangerment finding—the federal government’s formal scientific determination that greenhouse gases cause climate change that endangers public health and welfare. This blog series uses best-practice benefit-cost analysis to show how endangerment finding–related rollbacks will affect the health and well-being of everyday Americans.
When the US Environmental Protection Agency (EPA) rescinded the endangerment finding and repealed all greenhouse gas emissions standards for vehicles earlier this year, the agency claimed it was doing all of us a favor: over the next 25 years, US households and businesses would be better off by as much as $1 trillion. However, this claim incorrectly assumes that there are no climate and air quality costs of higher vehicle emissions, and that American households enjoy only about 25 percent of the actual fuel savings on balance.
This blog post presents new modeling results that correct these assumptions and shows that repealing the light-duty vehicle emissions standards would actually cost society at least $700 billion through 2050 (we do not model emissions standards for trucks, which EPA has also repealed). EPA has overstated the benefits of repeal by almost $2 trillion.
How Did the Environmental Protection Agency’s Analysis of Greenhouse Gas Standards Change?
Consistent with standard practices for benefit-cost analysis, the Trump EPA’s 2026 analysis of vehicle emissions standards updated the assumptions on fuel prices and other policies to reflect how conditions have changed since 2024, when the Biden EPA analyzed the same standards. The updated fuel prices (which do not account for the Iran war) are lower than the Biden administration’s predictions. The Trump EPA also accounts for Congress repealing the Inflation Reduction Act subsidies for plug-in vehicles. The Trump EPA made three other major changes to its benefit-cost analysis that depart from best practices:
- EPA did not include the economic costs of greenhouse gas emissions, arguing that the global temperature increase that would result from repealing the standards would be eclipsed by the uncertainty in these estimates. The temperature changes are small because of the legacy of historical greenhouse gas emissions and the global nature of the problem. However, small temperature changes caused by individual policies can add up to large changes across many complementary policies, and according to best practices, small changes should be added in a manner that accounts explicitly for uncertainty rather than ignoring the effects entirely.
- EPA includes only the first 2.5 years of fuel cost savings in its benefits calculation, rather than savings over a vehicle’s lifetime. The vehicle emissions standards reduce fuel costs because manufacturers comply with the standards by increasing the average fuel economy of gasoline vehicles and by selling more plug-in vehicles (which have lower fuel costs than gasoline vehicles). In 2024, EPA accounted for the resulting fuel cost savings that would accrue to consumers over the entire vehicle lifetime. However, the current EPA argues that the standards would force consumers to adopt technologies they don’t like, such as plug-in vehicles and gasoline vehicles with fuel-efficiency technologies. EPA argues, based on a misreading of research on consumer valuation, that technology-adoption costs cancel out most fuel cost savings, and only the first 2.5 years of fuel savings should be counted as benefiting households.
- The current EPA ignores local air-quality effects that result from the shift to higher-emitting vehicles. The rationale is similar to that for ignoring the effects of emissions standards on climate change.
Model and Scenarios
We use the RFF Vehicle Market Model to estimate the effects of the repeal of vehicle standards on greenhouse gas emissions, vehicle manufacturer profits, and vehicle consumer well-being between 2026 and 2050. The model predicts vehicle prices and sales given consumer preferences, manufacturing costs, and policies. We model how households decide whether to keep, sell, or scrap older vehicles and how much to drive them.
We compare two scenarios:
- a baseline that includes finalized regulations and the economic outlook from February 2026, prior to the repeal
- a repeal that removes the greenhouse gas vehicle standards but is otherwise the same as the baseline
The baseline includes policy changes that occurred in 2025 and early 2026, which is consistent with the latest EPA modeling. These policy changes in the baseline substantially reduce predicted plug-in vehicle sales.
In our repeal scenario, even though manufacturers no longer have to comply with the greenhouse gas standards, there is no backsliding; manufacturers do not reduce fuel economy or sell fewer plug-in vehicles than in 2025. The final report in this series will consider the possibility of backsliding and explain why the assumed lack of backsliding may understate the societal costs of repeal.
Of the three EPA analytical changes mentioned, this analysis addresses the first two changes. We include the costs of greenhouse gas emissions from the repeal, and we use the model to estimate direct changes in consumer welfare rather than making the arbitrary assumption to count just the first 2.5 years.
A future blog post will quantify the health costs of increased air pollutant emissions, which the administration currently assumes are zero.
Losing the Vehicle Emissions Standards Harms Welfare
Table 1 shows that repealing the emissions standards reduces prices of gasoline vehicles and plug-in vehicles, based on a snapshot of results from 2032 (which is the year the Biden-era standards would have become most stringent). Manufacturers reduce gasoline vehicle costs by offering less fuel economy (which causes fuel costs to rise), and they pass along some of their lower costs to consumers by reducing vehicle prices. Lower gasoline vehicle prices make plug-in vehicles less competitive with gasoline vehicles, causing manufacturers to also reduce prices of those vehicles. Lower new vehicle prices reduce demand for used vehicles, causing used vehicle prices to fall, as well.
Table 1. Simulated Prices and Market Shares for Light-Duty Vehicles in 2032
These price changes reflect our modeling of manufacturer pricing choices given consumer preferences and demand, which contrasts with EPA analysis that does not consider strategic pricing behavior, instead assuming that compliance costs are simply passed through to consumers. The Trump EPA predicted that the repeal would reduce gasoline vehicle prices by $2,400 per vehicle, which is larger than what we estimate (a price reduction of $1,808 per vehicle) and partly reflects EPA’s choice to ignore pricing behavior.
While consumers benefit from the lower vehicle prices shown in Table 1, this benefit is more than offset by higher fuel costs. Table 2 shows the present discounted values of economic welfare changes in 2026–2050 using a 3 percent discount rate. Excluding fuel costs, the repeal benefits consumers by $717 billion, mainly because vehicle prices are lower, but once fuel costs are included, repeal would leave consumers worse off by $170 billion.
Table 2. Change in Welfare Caused by the Repeal of Light-Duty Vehicle Emissions Standards
The repeal increases manufacturer profits by $864 billion because the standards no longer compel manufacturers to increase fuel economy and sell more plug-in vehicles than consumers want.
Greenhouse gas damages (based on the social cost of carbon) amount to $1.4 trillion, and on net, the repeal of these standards harms society by $710 billion. The lower plug-in vehicle sales in the repeal scenario will reduce electricity demand and decrease emissions from electricity generation. We expect the associated greenhouse gas changes from the power sector to be relatively small and will report estimates in a future blog post.
The results for vehicle manufacturers and consumers differ from the findings of EPA’s analysis in two important ways. First, EPA assumes that manufacturers pass all costs of complying with standards to consumers, which implies that manufacturers would not benefit from a repeal. In contrast, our modeling indicates that manufacturers would have absorbed much of the compliance costs of the Biden standards had the Trump administration not repealed them. Repeal increases manufacturer profits.
Second, the Trump EPA analysis includes only the first 2.5 years of the fuel cost savings that households would have enjoyed from the Biden standards. The remaining fuel cost savings ($665 billion) are assumed to represent the costs to consumers of buying vehicles they don’t want. Repealing the emissions standards avoids those consumer costs, making those forgone costs the benefits of repealing the standards. However, rather than making arbitrary assumptions about the value of those consumer costs, we model them directly, and our modeling puts these consumer-choice costs at just $114 billion, implying that the Trump EPA overstates those benefits of repealing the standards by $551 billion. Combining that overestimate with the $1.4-trillion cost of greenhouse gas emissions that the Trump EPA ignores means that the agency’s faulty assumptions overstate the benefits of repealing these standards by nearly $2 trillion, even without considering the public health costs of worse air quality. Instead of benefiting society, repeal will cost us.
