GM Agrees to Forfeit 50 Million Tons of Greenhouse Gas Credits in Emissions Settlement

The new GM logo is seen on the facade of the General Motors headquarters in Detroit on March 16, 2021. Rebecca Cook/Reuters

General Motors (GM) has agreed to forfeit around 50 million metric tons of greenhouse gas credits as part of a settlement with the federal government over allegations that millions of GM vehicles were emitting carbon dioxide at levels higher than the company had claimed.

The U.S. Environmental Protection Agency (EPA) said on July 3 that it had reached a settlement with GM after an investigation found that 5.9 million GM vehicles from the 2012–18 model years that are currently in use were in violation.

Under Obama-era rules for light-duty vehicles for model years 2012 and later, automakers are required to carry out periodic emissions tests on in-use vehicles at one- and four-year intervals, with the EPA also conducting its own checks.

Tests done by EPA found that around 4.6 million of GM’s 2012–18 full-size pickups and SUVs and some 1.3 million of the company’s 2012–18 midsize SUVs were emitting more than 10 percent higher carbon dioxide on average than GM’s initial compliance reports claimed, according to EPA.

“Our investigation has achieved accountability and upholds an important program that’s reducing air pollution and protecting communities across the country,” EPA administrator Michael Regan said in a statement, in which he said that EPA’s in-use emissions-monitoring program is a key part of the agency’s work to combat climate change.

A GM spokesperson told The Epoch Times in an emailed statement that the company believes it complied with all relevant laws and regulations. Compliance with the greenhouse gas emissions requirements is based on measurement of carbon-related exhaust emissions (CREE).

“GM has at all times complied with and adhered to all applicable laws and regulations in the certification and in-use testing of the vehicles in-question, including with respect to their CREE and fuel economy values,“ the spokesperson said. ”We believe this is the best course of action to swiftly resolve outstanding issues with the federal government regarding this matter. GM remains committed to reducing auto emissions and working toward achieving the Administration’s fleet electrification goals.”

The greenhouse gas emissions standards in question span two sets of rule-making—one for model years 2012–16 and the other for model years 2017–25. They were adopted during the Obama administration in an effort to address climate change.

Building on those rules, the Biden administration formulated its own updated greenhouse gas emission standards for model years 2027–32.

The new, more stringent standards have been the subject of multiple lawsuits, including by a coalition of more than 30 different industry bodies, which argue that the new rules will effectively ban most new gas cars and traditional hybrids from the U.S. market in less than a decade.

In his statement to The Epoch Times, the GM spokesperson also clarified that in context of the settlement with the EPA, the company recalculated its carbon credit balance and retired excess greenhouse gas credits generated by GM or purchased from other manufacturers.

Consistent with industry practice and permitted under regulations as a compliance mechanism, GM buys carbon credits, which can be used to offset excess emissions.

Some companies, such as Tesla and other electric car manufacturers, generate significant revenue from selling carbon credits to other automakers.

Tesla’s sale of carbon credits to its peers, for example, has become a multibillion-dollar bonanza for the company. In the first quarter of 2024, revenue from carbon credits amounted to $442 million, or a whopping 38.6 percent of its $1.14 billion in net income.

In a separate development, GM also agreed to a monetary fine and the retirement of some gas mileage credits to resolve fuel-efficiency compliance issues with the National Highway Traffic Safety Administration, the GM spokesperson told The Epoch Times.