Shared border, shared opportunity

Posted Wednesday, 30 July 2014, 12:40

Governor Jerry Brown and President Enrique Peña Nieto on Monday committed to work together to address air pollution and climate change, two related goals that are of understandable interest to both neighbors. A study last year by the California EPA showed how California is already being hit hard by climate change, and Mexico with even longer coastlines and a drier climate is likely to feel the heat even more. And both have long been infamous for their intractable air pollution problems, especially in the great cities of Los Angeles and Mexico City.

The one clear, shared commitment that stands out in the agreement to actually tackle these issues is clean vehicle standards. California, as the world leader in clean vehicle standards, has a lot to offer Mexico. And Mexico, with a skyrocketing manufacturing sector and an expanded market for vehicles, has something to offer here in return.

Mexico is quickly moving toward being a global leader in automobile manufacturing: It has replaced Brazil as Latin America’s top auto producer (see here and here) and now has lower manufacturing costs than China, especially for goods intended for the U.S. market. BMW, Daimler, Nissan and Volkswagen and Kia all plan major investments in new facilities in Mexico. Meanwhile, California is trying to woo manufacturers and suppliers back into the State, especially manufacturers of high-end, advanced-technology vehicles and parts.

1.7 million new vehicles were sold last year in California (11% of the U.S. market). Of those, 9% were advanced technology vehicles. Mexico’s market is smaller, 1.1 million, but climbing.

As California helps Mexico to ensure that some of the cleanest vehicles coming off the assembly lines stay right there in Mexico, cooperating to expand the market demand for those clean vehicles will help drive down costs and help manufacturers work more efficiently on both sides of the shared border.

Just a couple of weeks ago, Alberto Ayala, the Deputy Executive Officer of the California Air Resources Board, attended a workshop on passenger vehicle greenhouse gas and criteria pollutant standards hosted by the key regulatory and technical agencies in Mexico—SEMARNAT, INECC, CONUEE, and SE—and co-sponsored by ICCT, the Global Fuel Economy Initiative (GFEI) and the Climate and Clean Air Coalition (CCAC). One of the key take-aways of that workshop was that harmonization of standards could help reduce compliance costs for both the manufacturers and the regulators. Another was that Mexico, which took the first step at harmonization of passenger vehicle greenhouse gas standards last year and is considering leapfrogging to world-class emissions standards for heavy-trucks, is really in the perfect position to embrace these advantages and continue its progress towards adoption of the most advanced clean vehicle standards in the world for both cars and trucks.

While an essential first step, world class new vehicle standards are, of course, not the only policies needed to clean up the vehicle fleet in Mexico. Workshop speakers described a whole packet of policies and tools, including vehicle labels to inform consumers what they are getting, low-emission zones to reduce exposure, elimination of fuel subsidies (see here and here and here), and other fiscal and policy measures to accelerate the transition to the cleanest vehicles. But new vehicle standards are a critical first step. If not, Mexico could fall quickly behind, leaving a used vehicle from California as the cleanest option.