President Trump plans to revoke California’s authority to regulate greenhouse gas emissions from cars. This move — paired with Trump’s effort to roll back federal greenhouse gas standards — could have major repercussions. Transportation accounts for one-third of the United States’ carbon dioxide emissions, so this battle between Trump and California could have major consequences for climate change.

Here’s what you need to know and what could happen next.

What is the California waiver?

At issue is a waiver that grants California the authority to regulate auto emissions and promote zero-emission vehicles under its Advanced Clean Cars Program. The Environmental Protection Agency granted the waiver under the Clean Air Act, which allows California to request such a waiver even though other states are prohibited from passing their own auto emission regulations.

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Because of its severe smog, California was the only state that had enacted auto emission rules before the Clean Air Act was passed in 1970, and California’s congressional delegation allied with Southern legislators who supported states’ rights to win the ability to seek this waiver.

Why does the California waiver matter?

California’s waiver has mattered in several ways. For one, California has shown that stringent standards can be met, even when the auto industry said it wasn’t possible.

For example, in the early 1970s, the auto industry said it could not meet both new emissions standards and existing fuel economy rules. While the federal government delayed new emission standards, California enforced its own. After it did prove possible to make cars both cleaner and more efficient, the EPA implemented the same standards in 1981.

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California’s waiver has also shaped policy in other states — a result known as the “California effect.” Currently, 14 states and the District of Columbia have adopted California’s standards. This California effect is what the current head of the EPA acknowledged when he said, “We embrace federalism and the role of the states, but federalism does not mean that one state can dictate standards for the nation.”

Why does California pursue stricter emissions standards?

California’s distinctive politics have enabled it to have stricter standards. Consumers and businesses have long supported such standards to fight smog and preserve the state’s natural beauty, which is critical to industries like tourism and film.

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Moreover, California manufacturers benefited from 1970s requirements to install catalytic converters, and today California’s clean tech sector stands to benefit from an expanded market for low-emission and electric vehicles. Thus, economic pressures have pushed California to design regulations to promote environmental quality.

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The political costs of stricter standards are also minimized because the major automakers are located outside the state. California political leaders don’t face the same consequences for imposing addition regulation. The same is true for the states that have adopted California’s rules.

If California loses its waiver, what comes next?

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To this point, the auto industry hasn’t embraced the Trump administration’s position. Automakers prefer a standard that is more flexible, and weaker than the Obama standard, but they balked when Trump announced the federal rollback. Several even signed a deal with California to implement a weakened version of its standards.

Here are two possible scenarios for what may happen next.

Scenario 1: Other forces push automakers toward more efficient cars — even without strict standards in California

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The automakers’ willingness to sign on to voluntary standards suggests that clean transportation technologies are near the middle of what’s called the “technology experience curve.” That means that new technologies are well enough developed that it’s feasible to meet the stricter standards, but this possibility sparks opposition from “incumbent technologies,” in this case the oil and gas industry. Standards are needed to continue development of advanced technologies that are not quite market competitive.

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If automakers are willing to sign on to stricter standards, as several did in this deal with California, then there would be a “shadow system” of voluntary standards that would push automakers to continue investing in clean technologies.

International policies may also push automakers in this direction. Other countries have imposed strict standards, and China is pushing zero-emission vehicles. This helps explain why the automakers would cut a deal with California. The automakers will have to invest in new technologies to meet other countries’ standards, and stricter standards in the United States help to promote adoption of those technologies here.

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Still, even this optimistic scenario requires caution. The effectiveness of voluntary standards remains unclear. What’s more, it remains to be seen how many automakers will sign on to the voluntary system, especially now that the Trump administration has announced antitrust litigation against the companies that signed the deal with California.

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Scenario 2: Without California’s waiver, technological development and fuel efficiency stalls

There will likely be a long legal battle between the Trump administration and California. The courts have usually ruled against Trump: his administration has lost 93 percent of the lawsuits filed against its efforts to change environmental policy.

But in this case, the administration isn’t merely arguing that California’s stricter standards are bad policy, it is claiming that federal law, and federal fuel economy standards, must take precedence over state standards. This argument could be a more persuasive defense of regulatory rollbacks.

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If the automakers lose the antitrust lawsuit in court, then the voluntary system falls apart. And if Trump remains in the White House beyond 2020, the rollback of the federal standards will presumably proceed.

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Local efforts could prove insufficient to compensate for weakened federal standards. Although some cities and states have also adopted policies to promote low-emission or electric cars, these states don’t have California’s influence with domestic and foreign automakers. Moreover, conservative groups, especially the networks associated with Charles and the late David Koch, have been fighting clean transportation policies at the state and local level -- for instance, lobbying to roll back fuel efficiency standards and working to prevent light rail in Nashville.

Ultimately, without California’s waiver, the regulatory uncertainty would likely discourage automakers from investing in new technologies that would make cars more fuel efficient and reduce greenhouse gases. The transportation sector offers tremendous leverage in addressing climate change, since it accounts for one-third of U.S. carbon dioxide emissions. Without U.S. leadership in promoting clean technologies in the auto industry, slowing the warming of the planet will only get harder.

Parrish Bergquist is a postdoctoral associate with the Yale Program on Climate Change Communication.

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