Proposed Rulemaking To Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 49454-49789 [E9-22516]
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49454
Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Parts 86 and 600
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety
Administration
49 CFR Parts 531, 533, 537, and 538
[EPA–HQ–OAR–2009–0472; FRL–8959–4;
NHTSA–2009–0059]
RIN 2060–AP58; RIN 2127–AK90
Proposed Rulemaking To Establish
Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate
Average Fuel Economy Standards
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AGENCY: Environmental Protection
Agency (EPA) and National Highway
Traffic Safety Administration (NHTSA).
ACTION: Proposed rule.
SUMMARY: EPA and NHTSA are issuing
this joint proposal to establish a
National Program consisting of new
standards for light-duty vehicles that
will reduce greenhouse gas emissions
and improve fuel economy. This joint
proposed rulemaking is consistent with
the National Fuel Efficiency Policy
announced by President Obama on May
19, 2009, responding to the country’s
critical need to address global climate
change and to reduce oil consumption.
EPA is proposing greenhouse gas
emissions standards under the Clean Air
Act, and NHTSA is proposing Corporate
Average Fuel Economy standards under
the Energy Policy and Conservation Act,
as amended. These standards apply to
passenger cars, light-duty trucks, and
medium-duty passenger vehicles,
covering model years 2012 through
2016, and represent a harmonized and
consistent National Program. Under the
National Program, automobile
manufacturers would be able to build a
single light-duty national fleet that
satisfies all requirements under both
programs while ensuring that
consumers still have a full range of
vehicle choices.
FOR FURTHER INFORMATION CONTACT:
Comments: Comments must be received
on or before November 27, 2009. Under
the Paperwork Reduction Act,
comments on the information collection
provisions must be received by the
Office of Management and Budget
(OMB) on or before October 28, 2009.
See the SUPPLEMENTARY INFORMATION
section on ‘‘Public Participation’’ for
more information about written
comments.
Hearings: NHTSA and EPA will
jointly hold three public hearings on the
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following dates: October 21, 2009 in
Detroit, Michigan; October 23, 2009 in
New York, New York; and October 27,
2009 in Los Angeles, California. EPA
and NHTSA will announce the
addresses for each hearing location in a
supplemental Federal Register Notice.
The hearings will start at 9 a.m. local
time and continue until everyone has
had a chance to speak. See the
SUPPLEMENTARY INFORMATION section on
‘‘Public Participation’’ for more
information about the public hearings.
ADDRESSES: Submit your comments,
identified by Docket ID No. EPA–HQ–
OAR–2009–0472 and/or NHTSA–2009–
0059, by one of the following methods:
• www.regulations.gov: Follow the
on-line instructions for submitting
comments.
• E-mail: a-and-r-Docket@epa.gov.
• Fax: EPA: (202) 566–1741; NHTSA:
(202) 493–2251.
• Mail:
Æ EPA: Environmental Protection
Agency, EPA Docket Center (EPA/DC),
Air and Radiation Docket, Mail Code
2822T, 1200 Pennsylvania Avenue,
NW., Washington, DC 20460, Attention
Docket ID No. EPA–HQ–OAR–2009–
0472. In addition, please mail a copy of
your comments on the information
collection provisions to the Office of
Information and Regulatory Affairs,
Office of Management and Budget
(OMB), Attn: Desk Officer for EPA, 725
17th St., NW., Washington, DC 20503.
Æ NHTSA: Docket Management
Facility, M–30, U.S. Department of
Transportation, West Building, Ground
Floor, Rm. W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590.
• Hand Delivery:
Æ EPA: Docket Center, (EPA/DC) EPA
West, Room B102, 1301 Constitution
Ave., NW., Washington, DC, Attention
Docket ID No. EPA–HQ–OAR–2009–
0472. Such deliveries are only accepted
during the Docket’s normal hours of
operation, and special arrangements
should be made for deliveries of boxed
information.
Æ NHTSA: West Building, Ground
Floor, Rm. W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590,
between 9 a.m. and 5 p.m. Eastern Time,
Monday through Friday, except Federal
Holidays.
Instructions: Direct your comments to
Docket ID No. EPA–HQ–OAR–2009–
0472 and/or NHTSA–2009–0059. See
the SUPPLEMENTARY INFORMATION section
on ‘‘Public Participation’’ for more
information about submitting written
comments.
Public Hearing: NHTSA and EPA will
jointly hold three public hearings on the
following dates: October 21, 2009 in
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Detroit, Michigan; October 23, 2009 in
New York, New York; and October 27,
2009 in Los Angeles, California. EPA
and NHTSA will announce the
addresses for each hearing location in a
supplemental Federal Register Notice.
See the SUPPLEMENTARY INFORMATION
section on ‘‘Public Participation’’ for
more information about the public
hearings.
Docket: All documents in the dockets
are listed in the www.regulations.gov
index. Although listed in the index,
some information is not publicly
available, e.g., confidential business
information (CBI) or other information
whose disclosure is restricted by statute.
Certain other material, such as
copyrighted material, will be publicly
available only in hard copy. Publicly
available docket materials are available
either electronically in
www.regulations.gov or in hard copy at
the following locations: EPA: EPA
Docket Center, EPA/DC, EPA West,
Room 3334, 1301 Constitution Ave.,
NW., Washington, DC. The Public
Reading Room is open from 8:30 a.m. to
4:30 p.m., Monday through Friday,
excluding legal holidays. The telephone
number for the Public Reading Room is
(202) 566–1744. NHTSA: Docket
Management Facility, M–30, U.S.
Department of Transportation, West
Building, Ground Floor, Rm. W12–140,
1200 New Jersey Avenue, SE,
Washington, DC 20590. The Docket
Management Facility is open between 9
a.m. and 5 p.m. Eastern Time, Monday
through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT:
EPA: Tad Wysor, Office of
Transportation and Air Quality,
Assessment and Standards Division,
Environmental Protection Agency, 2000
Traverwood Drive, Ann Arbor MI
48105; telephone number: 734–214–
4332; fax number: 734–214–4816; e-mail
address: wysor.tad@epa.gov, or
Assessment and Standards Division
Hotline; telephone number (734) 214–
4636; e-mail address asdinfo@epa.gov.
NHTSA: Rebecca Yoon, Office of Chief
Counsel, National Highway Traffic
Safety Administration, 1200 New Jersey
Avenue, SE., Washington, DC 20590.
Telephone: (202) 366–2992.
SUPPLEMENTARY INFORMATION:
A. Does This Action Apply to Me?
This action affects companies that
manufacture or sell new light-duty
vehicles, light-duty trucks, and
medium-duty passenger vehicles, as
defined under EPA’s CAA regulations,1
1 ‘‘Light-duty vehicle,’’ ‘‘light-duty truck,’’ and
‘‘medium-duty passenger vehicle’’ are defined in 40
CFR 86.1803–01. Generally, the term ‘‘light-duty
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and passenger automobiles (passenger
cars) and non-passenger automobiles
(light trucks) as defined under NHTSA’s
CAFE regulations.2 Regulated categories
and entities include:
NAICS
codes A
Category
Industry ......................................................................
Industry ......................................................................
A North
Examples of potentially regulated entities
336111
336112
811112
811198
541514
Motor vehicle manufacturers.
Commercial Importers of Vehicles and Vehicle Components.
American Industry Classification System (NAICS).
How Do I Prepare and Submit
Comments?
In this joint proposal, there are many
issues common to both EPA’s and
NHTSA’s proposals. For the
convenience of all parties, comments
submitted to the EPA docket will be
considered comments submitted to the
NHTSA docket, and vice versa. An
exception is that comments submitted to
the NHTSA docket on the Draft
Environmental Impact Statement will
not be considered submitted to the EPA
docket. Therefore, the public only needs
to submit comments to either one of the
two agency dockets. Comments that are
submitted for consideration by one
agency should be identified as such, and
comments that are submitted for
consideration by both agencies should
be identified as such. Absent such
identification, each agency will exercise
its best judgment to determine whether
a comment is submitted on its proposal.
Further instructions for submitting
comments to either the EPA or NHTSA
docket are described below.
EPA: Direct your comments to Docket
ID No EPA–HQ–OAR–2009–0472. EPA’s
policy is that all comments received
will be included in the public docket
without change and may be made
available online at www.regulations.gov,
including any personal information
provided, unless the comment includes
information claimed to be Confidential
Business Information (CBI) or other
information whose disclosure is
restricted by statute. Do not submit
information that you consider to be CBI
or otherwise protected through
www.regulations.gov or e-mail. The
www.regulations.gov Web site is an
‘‘anonymous access’’ system, which
means EPA will not know your identity
or contact information unless you
provide it in the body of your comment.
If you send an e-mail comment directly
to EPA without going through
www.regulations.gov your e-mail
address will be automatically captured
and included as part of the comment
that is placed in the public docket and
made available on the Internet. If you
submit an electronic comment, EPA
recommends that you include your
name and other contact information in
the body of your comment and with any
disk or CD–ROM you submit. If EPA
cannot read your comment due to
technical difficulties and cannot contact
you for clarification, EPA may not be
able to consider your comment.
Electronic files should avoid the use of
special characters, any form of
encryption, and be free of any defects or
viruses. For additional information
about EPA’s public docket visit the EPA
Docket Center homepage at https://
www.epa.gov/epahome/dockets.htm.
NHTSA: Your comments must be
written and in English. To ensure that
your comments are correctly filed in the
Docket, please include the Docket
number NHTSA–2009–0059 in your
comments. Your comments must not be
more than 15 pages long.3 NHTSA
established this limit to encourage you
to write your primary comments in a
concise fashion. However, you may
attach necessary additional documents
vehicle’’ means a passenger car, the term ‘‘lightduty truck’’ means a pick-up truck, sport-utility
vehicle, or minivan of up to 8,500 lbs gross vehicle
weight rating, and ‘‘medium-duty passenger
vehicle’’ means a sport-utility vehicle or passenger
van from 8,500 to 10,000 lbs gross vehicle weight
rating. Medium-duty passenger vehicles do not
include pick-up trucks.
2 ‘‘Passenger car’’ and ‘‘light truck’’ are defined in
49 CFR part 523.
This list is not intended to be
exhaustive, but rather provides a guide
regarding entities likely to be regulated
by this action. To determine whether
particular activities may be regulated by
this action, you should carefully
examine the regulations. You may direct
questions regarding the applicability of
this action to the person listed in FOR
FURTHER INFORMATION CONTACT.
B. Public Participation
NHTSA and EPA request comment on
all aspects of this joint proposed rule.
This section describes how you can
participate in this process.
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to your comments. There is no limit on
the length of the attachments. If you are
submitting comments electronically as a
PDF (Adobe) file, we ask that the
documents submitted be scanned using
the Optical Character Recognition (OCR)
process, thus allowing the agencies to
search and copy certain portions of your
submissions.4 Please note that pursuant
to the Data Quality Act, in order for the
substantive data to be relied upon and
used by the agencies, it must meet the
information quality standards set forth
in the OMB and Department of
Transportation (DOT) Data Quality Act
guidelines. Accordingly, we encourage
you to consult the guidelines in
preparing your comments. OMB’s
guidelines may be accessed at https://
www.whitehouse.gov/omb/fedreg/
reproducible.html. DOT’s guidelines
may be accessed at https://www.dot.gov/
dataquality.htm.
Tips for Preparing Your Comments
When submitting comments,
remember to:
• Identify the rulemaking by docket
number and other identifying
information (subject heading, Federal
Register date and page number).
• Follow directions—The agency may
ask you to respond to specific questions
or organize comments by referencing a
Code of Federal Regulations (CFR) part
or section number.
• Explain why you agree or disagree,
suggest alternatives, and substitute
language for your requested changes.
• Describe any assumptions and
provide any technical information and/
or data that you used.
• If you estimate potential costs or
burdens, explain how you arrived at
your estimate in sufficient detail to
allow for it to be reproduced.
• Provide specific examples to
illustrate your concerns, and suggest
alternatives.
3 See
49 CFR 553.21.
character recognition (OCR) is the
process of converting an image of text, such as a
scanned paper document or electronic fax file, into
computer-editable text.
4 Optical
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• Explain your views as clearly as
possible, avoiding the use of profanity
or personal threats.
Make sure to submit your comments
by the comment period deadline
identified in the DATES section above.
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How Can I Be Sure That My Comments
Were Received?
NHTSA: If you submit your comments
by mail and wish Docket Management
to notify you upon its receipt of your
comments, enclose a self-addressed,
stamped postcard in the envelope
containing your comments. Upon
receiving your comments, Docket
Management will return the postcard by
mail.
How Do I Submit Confidential Business
Information?
Any confidential business
information (CBI) submitted to one of
the agencies will also be available to the
other agency. However, as with all
public comments, any CBI information
only needs to be submitted to either one
of the agencies’ dockets and it will be
available to the other. Following are
specific instructions for submitting CBI
to either agency.
EPA: Do not submit CBI to EPA
through https://www.regulations.gov or
e-mail. Clearly mark the part or all of
the information that you claim to be
CBI. For CBI information in a disk or
CD–ROM that you mail to EPA, mark
the outside of the disk or CD–ROM as
CBI and then identify electronically
within the disk or CD–ROM the specific
information that is claimed as CBI. In
addition to one complete version of the
comment that includes information
claimed as CBI, a copy of the comment
that does not contain the information
claimed as CBI must be submitted for
inclusion in the public docket.
Information so marked will not be
disclosed except in accordance with
procedures set forth in 40 CFR part 2.
NHTSA: If you wish to submit any
information under a claim of
confidentiality, you should submit three
copies of your complete submission,
including the information you claim to
be confidential business information, to
the Chief Counsel, NHTSA, at the
address given above under FOR FURTHER
INFORMATION CONTACT. When you send a
comment containing confidential
business information, you should
include a cover letter setting forth the
information specified in our
confidential business information
regulation.5
In addition, you should submit a copy
from which you have deleted the
5 See
49 CFR part 512.
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claimed confidential business
information to the Docket by one of the
methods set forth above.
Will the Agencies Consider Late
Comments?
NHTSA and EPA will consider all
comments received before the close of
business on the comment closing date
indicated above under DATES. To the
extent practicable, we will also consider
comments received after that date. If
interested persons believe that any new
information the agency places in the
docket affects their comments, they may
submit comments after the closing date
concerning how the agency should
consider that information for the final
rule. However, the agencies’ ability to
consider any such late comments in this
rulemaking will be limited due to the
time frame for issuing a final rule.
If a comment is received too late for
us to practicably consider in developing
a final rule, we will consider that
comment as an informal suggestion for
future rulemaking action.
How Can I Read the Comments
Submitted by Other People?
You may read the materials placed in
the docket for this document (e.g., the
comments submitted in response to this
document by other interested persons)
at any time by going to https://
www.regulations.gov. Follow the online
instructions for accessing the dockets.
You may also read the materials at the
EPA Docket Center or NHTSA Docket
Management Facility by going to the
street addresses given above under
ADDRESSES.
How Do I Participate in the Public
Hearings?
NHTSA and EPA will jointly host
three public hearings on the dates and
locations described in the DATES and
ADDRESSES sections above.
If you would like to present testimony
at the public hearings, we ask that you
notify the EPA and NHTSA contact
persons listed under FOR FURTHER
INFORMATION CONTACT at least ten days
before the hearing. Once EPA and
NHTSA learn how many people have
registered to speak at the public hearing,
we will allocate an appropriate amount
of time to each participant, allowing
time for lunch and necessary breaks
throughout the day. For planning
purposes, each speaker should
anticipate speaking for approximately
ten minutes, although we may need to
adjust the time for each speaker if there
is a large turnout. We suggest that you
bring copies of your statement or other
material for the EPA and NHTSA panels
and the audience. It would also be
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helpful if you send us a copy of your
statement or other materials before the
hearing. To accommodate as many
speakers as possible, we prefer that
speakers not use technological aids (e.g.,
audio-visuals, computer slideshows).
However, if you plan to do so, you must
notify the contact persons in the FOR
FURTHER INFORMATION CONTACT section
above. You also must make
arrangements to provide your
presentation or any other aids to
NHTSA and EPA in advance of the
hearing in order to facilitate set-up. In
addition, we will reserve a block of time
for anyone else in the audience who
wants to give testimony.
The hearing will be held at a site
accessible to individuals with
disabilities. Individuals who require
accommodations such as sign language
interpreters should contact the persons
listed under FOR FURTHER INFORMATION
CONTACT section above no later than ten
days before the date of the hearing.
NHTSA and EPA will conduct the
hearing informally, and technical rules
of evidence will not apply. We will
arrange for a written transcript of the
hearing and keep the official record of
the hearing open for 30 days to allow
you to submit supplementary
information. You may make
arrangements for copies of the transcript
directly with the court reporter.
Table of Contents
I. Overview of Joint EPA/NHTSA National
Program
A. Introduction
1. Building Blocks of the National Program
2. Joint Proposal for a National Program
B. Summary of the Joint Proposal
C. Background and Comparison of NHTSA
and EPA Statutory Authority
1. NHTSA Statutory Authority
2. EPA Statutory Authority
3. Comparing the Agencies’ Authority
D. Summary of the Proposed Standards for
the National Program
1. Joint Analytical Approach
2. Level of the Standards
3. Form of the Standards
E. Summary of Costs and Benefits for the
Joint Proposal
1. Summary of Costs and Benefits of
Proposed NHTSA CAFE Standards
2. Summary of Costs and Benefits of
Proposed EPA GHG Standards
F. Program Flexibilities for Achieving
Compliance
1. CO2/CAFE Credits Generated Based on
Fleet Average Performance
2. Air Conditioning Credits
3. Flex-Fuel and Alternative Fuel Vehicle
Credits
4. Temporary Lead-time Allowance
Alternative Standards
5. Additional Credit Opportunities Under
the CAA
G. Coordinated Compliance
H. Conclusion
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II. Joint Technical Work Completed for This
Proposal
A. Introduction
B. How Did NHTSA and EPA Develop the
Baseline Market Forecast?
1. Why Do the Agencies Establish a
Baseline Vehicle Fleet?
2. How Do the Agencies Develop the
Baseline Vehicle Fleet?
3. How Is the Development of the Baseline
Fleet for this Proposal Different From
NHTSA’s Historical Approach, and Why
is This Approach Preferable?
4. How Does Manufacturer Product Plan
Data Factor Into the Baseline Used in
This Proposal?
C. Development of Attribute-Based Curve
Shapes
D. Relative Car-Truck Stringency
E. Joint Vehicle Technology Assumptions
1. What Technologies Do the Agencies
Consider?
2. How Did the Agencies Determine the
Costs and Effectiveness of Each of These
Technologies?
F. Joint Economic Assumptions
III. EPA Proposal for Greenhouse Gas
Vehicle Standards
A. Executive Overview of EPA Proposal
1. Introduction
2. Why Is EPA Proposing This Rule?
3. What Is EPA Proposing?
4. Basis for the Proposed GHG Standards
Under Section 202(a)
B. Proposed GHG Standards for Light-Duty
Vehicles, Light-Duty Trucks, and
Medium-Duty Passenger Vehicles
1. What Fleet-Wide Emissions Levels
Correspond to the CO2 Standards?
2. What Are the CO2 Attribute-Based
Standards?
3. Overview of How EPA’s Proposed CO2
Standards Would Be Implemented for
Individual Manufacturers
4. Averaging, Banking, and Trading
Provisions for CO2 Standards
5. CO2 Temporary Lead-Time Allowance
Alternative Standards
6. Proposed Nitrous Oxide and Methane
Standards
7. Small Entity Deferment
C. Additional Credit Opportunities for CO2
Fleet Average Program
1. Air Conditioning Related Credits
2. Flex Fuel and Alternative Fuel Vehicle
Credits
3. Advanced Technology Vehicle Credits
for Electric Vehicles, Plug-in Hybrids,
and Fuel Cells
4. Off-cycle Technology Credits
5. Early Credit Options
D. Feasibility of the Proposed CO2 Standards
1. How Did EPA Develop a Reference
Vehicle Fleet for Evaluating Further CO2
Reductions?
2. What Are the Effectiveness and Costs of
CO2-Reducing Technologies?
3. How Can Technologies Be Combined
into ‘‘Packages’’ and What Is the Cost
and Effectiveness of Packages?
4. Manufacturer’s Application of
Technology
5. How Is EPA Projecting That a
Manufacturer Would Decide Between
Options To Improve CO2 Performance To
Meet a Fleet Average Standard?
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6. Why Are the Proposed CO2 Standards
Feasible?
7. What Other Fleet-Wide CO2 Levels Were
Considered?
E. Certification, Compliance, and
Enforcement
1. Compliance Program Overview
2. Compliance With Fleet-Average CO2
Standards
3. Vehicle Certification
4. Useful Life Compliance
5. Credit Program Implementation
6. Enforcement
7. Prohibited Acts in the CAA
8. Other Certification Issues
9. Miscellaneous Revisions to Existing
Regulations
10. Warranty, Defect Reporting, and Other
Emission-related Components Provisions
11. Light Vehicles and Fuel Economy
Labeling
F. How Would This Proposal Reduce GHG
Emissions and Their Associated Effects?
1. Impact on GHG Emissions
2. Overview of Climate Change Impacts
From GHG Emissions
3. Changes in Global Mean Temperature
and Sea-Level Rise Associated With the
Proposal’s GHG Emissions Reductions
4. Weight Reduction and Potential Safety
Impacts
G. How Would the Proposal Impact NonGHG Emissions and Their Associated
Effects?
1. Upstream Impacts of Program
2. Downstream Impacts of Program
3. Health Effects of Non-GHG Pollutants
4. Environmental Effects of Non-GHG
Pollutants
5. Air Quality Impacts of Non-GHG
Pollutants
H. What Are the Estimated Cost, Economic,
and Other Impacts of the Proposal?
1. Conceptual Framework for Evaluating
Consumer Impacts
2. Costs Associated With the Vehicle
Program
3. Cost per Ton of Emissions Reduced
4. Reduction in Fuel Consumption and Its
Impacts
5. Impacts on U.S. Vehicle Sales and
Payback Period
6. Benefits of Reducing GHG Emissions
7. Non-Greenhouse Gas Health and
Environmental Impacts
8. Energy Security Impacts
9. Other Impacts
10. Summary of Costs and Benefits
I. Statutory and Executive Order Reviews
1. Executive Order 12866: Regulatory
Planning and Review
2. Paperwork Reduction Act
3. Regulatory Flexibility Act
4. Unfunded Mandates Reform Act
5. Executive Order 13132 (Federalism)
6. Executive Order 13175 (Consultation
and Coordination With Indian Tribal
Governments)
7. Executive Order 13045: ‘‘Protection of
Children From Environmental Health
Risks and Safety Risks’’
8. Executive Order 13211 (Energy Effects)
9. National Technology Transfer
Advancement Act
10. Executive Order 12898: Federal Actions
to Address Environmental Justice in
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Minority Populations and Low-Income
Populations
J. Statutory Provisions and Legal Authority
IV. NHTSA Proposal for Passenger Car and
Light Truck CAFE Standards for MYs 2012–
2016
A. Executive Overview of NHTSA Proposal
1. Introduction
2. Role of Fuel Economy Improvements in
Promoting Energy Independence, Energy
Security, and a Low Carbon Economy
3. The National Program
4. Review of CAFE Standard Setting
Methodology Per the President’s January
26, 2009 Memorandum on CAFE
Standards for MYs 2011 and Beyond
5. Summary of the Proposed MY 2012–
2016 CAFE Standards
B. Background
1. Chronology of Events Since the National
Academy of Sciences Called for
Reforming and Increasing CAFE
Standards
2. NHTSA Issues Final Rule Establishing
Attribute-Based CAFE Standards for MY
2008–2011 Light Trucks (March 2006)
3. Ninth Circuit Issues Decision re Final
Rule for MY 2008–2011 Light Trucks
(November 2007)
4. Congress Enacts Energy Security and
Independence Act of 2007 (December
2007)
5. NHTSA Proposes CAFE Standards for
MYs 2011–2015 (April 2008)
6. Ninth Circuit Revises Its Decision re
Final Rule for MY 2008–2011 Light
Trucks (August 2008)
7. NHTSA Releases Final Environmental
Impact Statement (October 2008)
8. Department of Transportation Decides
not to Issue MY 2011–2015 final Rule
(January 2009)
9. The President Requests NHTSA to Issue
Final Rule for MY 2011 Only (January
2009)
10. NHTSA Issues Final Rule for MY 2011
(March 2009)
11. Energy Policy and Conservation Act, as
Amended by the Energy Independence
and Security Act
C. Development and Feasibility of the
Proposed Standards
1. How Was the Baseline Vehicle Fleet
Developed?
2. How were the Technology Inputs
Developed?
3. How Did NHTSA Develop the Economic
Assumption Inputs?
4. How Does NHTSA Use the Assumptions
in Its Modeling Analysis?
5. How Did NHTSA Develop the Shape of
the Target Curves for the Proposed
Standards?
D. Statutory Requirements
1. EPCA, as Amended by EISA
2. Administrative Procedure Act
3. National Environmental Policy Act
E. What Are the Proposed CAFE Standards?
1. Form of the Standards
2. Passenger Car Standards for MYs 2012–
2016
3. Minimum Domestic Passenger Car
Standards
4. Light Truck Standards
F. How Do the Proposed Standards Fulfill
NHTSA’s Statutory Obligations?
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can achieve substantial reductions of
greenhouse gas (GHG) emissions and
improvements in fuel economy from the
light-duty vehicle part of the
transportation sector, based on
technology that is already being
commercially applied in most cases and
that can be incorporated at a reasonable
cost.
This joint notice is consistent with the
President’s announcement on May 19,
2009 of a National Fuel Efficiency
Policy of establishing consistent,
harmonized, and streamlined
requirements that would reduce
greenhouse gas emissions and improve
fuel economy for all new cars and lightduty trucks sold in the United States.6
The National Program holds out the
promise of delivering additional
environmental and energy benefits, cost
savings, and administrative efficiencies
on a nationwide basis that might not be
available under a less coordinated
approach. The proposed National
Program also offers the prospect of
regulatory convergence by making it
possible for the standards of two
different Federal agencies and the
standards of California and other States
to act in a unified fashion in providing
these benefits. This would allow
automakers to produce and sell a single
fleet nationally. Thus, it may also help
to mitigate the additional costs that
manufacturers would otherwise face in
having to comply with multiple sets of
Federal and State standards. This joint
notice is also consistent with the Notice
of Upcoming Joint Rulemaking issued
by DOT and EPA on May 19 7 and
responds to the President’s January 26,
2009 memorandum on CAFE standards
for model years 2011 and beyond,8 the
details of which can be found in Section
IV of this joint notice.
I. Overview of Joint EPA/NHTSA
National Program
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G. Impacts of the Proposed CAFE Standards
1. How Would These Proposed Standards
Improve Fuel Economy and Reduce GHG
Emissions for MY 2012–2016 Vehicles?
2. How Would These Proposed Standards
Improve Fleet-Wide Fuel Economy and
Reduce GHG Emissions Beyond MY
2016?
3. How Would These Proposed Standards
Impact Non-GHG Emissions and Their
Associated Effects?
4. What Are the Estimated Costs and
Benefits of These Proposed Standards?
5. How Would These Proposed Standards
Impact Vehicle Sales?
6. What Are the Consumer Welfare Impacts
of These Proposed Standards?
7. What Are the Estimated Safety Impacts
of These Proposed Standards?
8. What Other Impacts (Quantitative and
Unquantifiable) Will These Proposed
Standards Have?
H. Vehicle Classification
I. Compliance and Enforcement
1. Overview
2. How Does NHTSA Determine
Compliance?
3. What Compliance Flexibilities Are
Available under the CAFE Program and
How Do Manufacturers Use Them?
4. Other CAFE Enforcement Issues—
Variations in Footprint
J. Other Near-Term Rulemakings Mandated
by EISA
1. Commercial Medium- and Heavy-Duty
On-Highway Vehicles and Work Trucks
2. Consumer Information
K. Regulatory Notices and Analyses
1. Executive Order 12866 and DOT
Regulatory Policies and Procedures
2. National Environmental Policy Act
3. Regulatory Flexibility Act
4. Executive Order 13132 (Federalism)
5. Executive Order 12988 (Civil Justice
Reform)
6. Unfunded Mandates Reform Act
7. Paperwork Reduction Act
8. Regulation Identifier Number
9. Executive Order 13045
10. National Technology Transfer and
Advancement Act
11. Executive Order 13211
12. Department of Energy Review
13. Plain Language
14. Privacy Act
The National Program is both needed
and possible because the relationship
between improving fuel economy and
reducing CO2 tailpipe emissions is a
very direct and close one. The amount
of those CO2 emissions is essentially
A. Introduction
The National Highway Traffic Safety
Administration (NHTSA) and the
Environmental Protection Agency (EPA)
are each announcing proposed rules
whose benefits would address the
urgent and closely intertwined
challenges of energy independence and
security and global warming. These
proposed rules call for a strong and
coordinated Federal greenhouse gas and
fuel economy program for passenger
cars, light-duty-trucks, and mediumduty passenger vehicles (hereafter lightduty vehicles), referred to as the
National Program. The proposed rules
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1. Building Blocks of the National
Program
6 President Obama Announces National Fuel
Efficiency Policy, The White House, May 19, 2009.
Available at: https://www.whitehouse.gov/
the_press_office/President-Obama-AnnouncesNational-Fuel-Efficiency-Policy/ (last accessed
August 18, 2009). Remarks by the President on
National Fuel Efficiency Standards, The White
House, May 19, 2009. Available at: https://www.
whitehouse.gov/the_press_office/Remarks-by-thePresident-on-national-fuel-efficiency-standards/
(Last accessed August 18, 2009).
7 74 FR 24007 (May 22, 2009).
8 Available at: https://www.whitehouse.gov/
the_press_office/Presidential_Memorandum_
Fuel_Economy/ (last accessed on August 18, 2009).
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constant per gallon combusted of a
given type of fuel. Thus, the more fuel
efficient a vehicle is, the less fuel it
burns to travel a given distance. The less
fuel it burns, the less CO2 it emits in
traveling that distance.9 While there are
emission control technologies that
reduce the pollutants (e.g., carbon
monoxide) produced by imperfect
combustion of fuel by capturing or
destroying them, there is no such
technology for CO2. Further, while some
of those pollutants can also be reduced
by achieving a more complete
combustion of fuel, doing so only
increases the tailpipe emissions of CO2.
Thus, there is a single pool of
technologies for addressing these twin
problems, i.e., those that reduce fuel
consumption and thereby reduce CO2
emissions as well.
a. DOT’s CAFE Program
In 1975, Congress enacted the Energy
Policy and Conservation Act (EPCA),
mandating that NHTSA establish and
implement a regulatory program for
motor vehicle fuel economy to meet the
various facets of the need to conserve
energy, including ones having energy
independence and security,
environmental and foreign policy
implications. Fuel economy gains since
1975, due both to the standards and
market factors, have resulted in saving
billions of barrels of oil and avoiding
billions of metric tons of CO2 emissions.
In December 2007, Congress enacted the
Energy Independence and Securities Act
(EISA), amending EPCA to require
substantial, continuing increases in fuel
economy standards.
The CAFE standards address most,
but not all, of the real world CO2
emissions because EPCA requires the
use of 1975 passenger car test
procedures under which vehicle air
conditioners are not turned on during
fuel economy testing.10 Fuel economy is
determined by measuring the amount of
CO2 and other carbon compounds
emitted from the tailpipe, not by
attempting to measure directly the
amount of fuel consumed during a
vehicle test, a difficult task to
accomplish with precision. The carbon
content of the test fuel 11 is then used to
calculate the amount of fuel that had to
be consumed per mile in order to
9 Panel on Policy Implications of Greenhouse
Warming, National Academy of Sciences, National
Academy of Engineering, Institute of Medicine,
‘‘Policy Implications of Greenhouse Warming:
Mitigation, Adaptation, and the Science Base,’’
National Academies Press, 1992. p. 287.
10 EPCA does not require the use of 1975 test
procedures for light trucks.
11 This is the method that EPA uses to determine
compliance with NHTSA’s CAFE standards.
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produce that amount of CO2. Finally,
that fuel consumption figure is
converted into a miles-per-gallon figure.
CAFE standards also do not address the
5–8 percent of GHG emissions that are
not CO2, i.e., nitrous oxide (N2O), and
methane (CH4) as well as emissions of
CO2 and hydrofluorocarbons (HFCs)
related to operation of the air
conditioning system.
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b. EPA’s Greenhouse Gas Standards for
Light-Duty Vehicles
Under the Clean Air Act EPA is
responsible for addressing air pollutants
from motor vehicles. On April 2, 2007,
the U.S. Supreme Court issued its
opinion in Massachusetts v. EPA,12 a
case involving a 2003 order of the
Environmental Protection Agency (EPA)
denying a petition for rulemaking to
regulate greenhouse gas emissions from
motor vehicles under section 202(a) of
the Clean Air Act (CAA).13 The Court
held that greenhouse gases were air
pollutants for purposes of the Clean Air
Act and further held that the
Administrator must determine whether
or not emissions from new motor
vehicles cause or contribute to air
pollution which may reasonably be
anticipated to endanger public health or
welfare, or whether the science is too
uncertain to make a reasoned decision.
The Court further ruled that, in making
these decisions, the EPA Administrator
is required to follow the language of
section 202(a) of the CAA. The Court
rejected the argument that EPA cannot
regulate CO2 from motor vehicles
because to do so would de facto tighten
fuel economy standards, authority over
which has been assigned by Congress to
DOT. The Court stated that ‘‘[b]ut that
DOT sets mileage standards in no way
licenses EPA to shirk its environmental
responsibilities. EPA has been charged
with protecting the public‘s ‘health’ and
‘welfare’, a statutory obligation wholly
independent of DOT’s mandate to
promote energy efficiency.’’ The Court
concluded that ‘‘[t]he two obligations
may overlap, but there is no reason to
think the two agencies cannot both
administer their obligations and yet
avoid inconsistency.’’ 14 The Court
remanded the case back to the Agency
for reconsideration in light of its
findings.15
12 549
U.S. 497 (2007).
FR 52922 (Sept. 8, 2003).
14 549 U.S. at 531–32.
15 For further information on Massachusetts v.
EPA see the July 30, 2008 Advance Notice of
Proposed Rulemaking, ‘‘Regulating Greenhouse Gas
Emissions under the Clean Air Act’’, 73 FR 44354
at 44397. There is a comprehensive discussion of
the litigation’s history, the Supreme Court’s
findings, and subsequent actions undertaken by the
13 68
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EPA has since proposed to find that
emissions of GHGs from new motor
vehicles and motor vehicle engines
cause or contribute to air pollution that
may reasonably be anticipated to
endanger public health and welfare.16
This proposal represents the second
phase of EPA’s response to the Supreme
Court’s decision.
c. California Air Resources Board
Greenhouse Gas Program
In 2004, the California Air Resources
Board approved standards for new lightduty vehicles, which regulate the
emission of not only CO2, but also other
GHGs. Since then, thirteen States and
the District of Columbia, comprising
approximately 40 percent of the lightduty vehicle market, have adopted
California’s standards. These standards
apply to model years 2009 through 2016
and require CO2 emissions for passenger
cars and the smallest light trucks of 323
g/mi in 2009 and 205 g/mi in 2016, and
for the remaining light trucks of 439 g/
mi in 2009 and 332 g/mi in 2016. On
June 30, 2009, EPA granted California’s
request for a waiver of preemption
under the CAA.17 The granting of the
waiver permits California and the other
States to proceed with implementing the
California emission standards.
2. Joint Proposal for a National Program
On May 19, 2009, the Department of
Transportation and the Environmental
Protection Agency issued a Notice of
Upcoming Joint Rulemaking to propose
a strong and coordinated fuel economy
and greenhouse gas National Program
for Model Year (MY) 2012–2016 light
duty vehicles.
B. Summary of the Joint Proposal
In this joint rulemaking, EPA is
proposing GHG emissions standards
under the Clean Air Act (CAA), and
NHTSA is proposing Corporate Average
Fuel Economy (CAFE) standards under
the Energy Policy and Conservation
Action of 1975 (EPCA), as amended by
the Energy Independence and Security
Act of 2007 (EISA). The intention of this
joint rulemaking proposal is to set forth
a carefully coordinated and harmonized
approach to implementing these two
statutes, in accordance with all
substantive and procedural
requirements imposed by law.
Climate change is widely viewed as
the most significant long-term threat to
the global environment. According to
the Intergovernmental Panel on Climate
Bush Administration and the EPA from 2007–2008
in response to the Supreme Court remand.
16 74 FR 18886 (Apr. 24, 2009).
17 74 FR 32744 (July 8, 2009).
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Change, anthropogenic emissions of
greenhouse gases are very likely (90 to
99 percent probability) the cause of
most of the observed global warming
over the last 50 years. The primary
GHGs of concern are carbon dioxide
(CO2), methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons,
and sulfur hexafluoride. Mobile sources
emitted 31.5 percent of all U.S. GHG in
2006, and have been the fastest-growing
source of U.S. GHG since 1990. Lightduty vehicles emit four GHGs—CO2,
methane, nitrous oxide, and
hydrofluorocarbons—and are
responsible for nearly 60 percent of all
mobile source GHGs. For Light-duty
vehicles, CO2 emissions represent about
95 percent of all greenhouse emissions,
and the CO2 emissions measured over
the EPA tests used for fuel economy
compliance represent over 90 percent of
total light-duty vehicle greenhouse gas
emissions.
Improving energy security by
reducing our dependence on foreign oil
has been a national objective since the
first oil price shocks in the 1970s. Net
petroleum imports now account for
approximately 60 percent of U.S.
petroleum consumption. World crude
oil production is highly concentrated,
exacerbating the risks of supply
disruptions and price shocks. Tight
global oil markets led to prices over
$100 per barrel in 2008, with gasoline
reaching as high as $4 per gallon in
many parts of the U.S., causing financial
hardship for many families. The export
of U.S. assets for oil imports continues
to be an important component of the
U.S.’ historically unprecedented trade
deficits. Transportation accounts for
about two-thirds of U.S. petroleum
consumption. Light-duty vehicles
account for about 60 percent of
transportation oil use, which means that
they alone account for about 40 percent
of all U.S. oil consumption.
NHTSA and EPA have coordinated
closely and worked jointly in
developing their respective proposals.
This is reflected in many aspects of this
joint proposal. For example, the
agencies have developed a
comprehensive joint Technical Support
Document (TSD) that provides a solid
technical underpinning for each
agency’s modeling and analysis used to
support their proposed standards. Also,
to the extent allowed by law, the
agencies have harmonized many
elements of program design, such as the
form of the standard (the footprint-based
attribute curves), and the definitions
used for cars and trucks. They have
developed the same or similar
compliance flexibilities, to the extent
allowed and appropriate under their
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respective statutes, such as averaging,
banking, and trading of credits, and
have harmonized the compliance testing
and test protocols used for purposes of
the fleet average standards each agency
is proposing. Finally, as discussed in
Section I.C., under their respective
statutes each agency is called upon to
exercise its judgment and determine
standards that are an appropriate
balance of various relevant statutory
factors. Given the common technical
issues before each agency, the similarity
of the factors each agency is to consider
and balance, and the authority of each
agency to take into consideration the
standards of the other agency, both EPA
and NHTSA are proposing standards
that result in a harmonized National
Program.
This joint proposal covers passenger
cars, light-duty-trucks, and mediumduty passenger vehicles built in model
years 2012 through 2016. These vehicle
categories are responsible for almost 60
percent of all U.S. transportation-related
GHG emissions. EPA and NHTSA
expect that automobile manufacturers
will meet these proposed standards by
utilizing technologies that will reduce
vehicle GHG emissions and improve
fuel economy. Although many of these
technologies are available today, the
emissions reductions and fuel economy
improvements proposed would involve
more widespread use of these
technologies across the light-duty
vehicle fleet. These include
improvements to engines,
transmissions, and tires, increased use
of start-stop technology, improvements
in air conditioning systems (to the
extent currently allowed by law),
increased use of hybrid and other
advanced technologies, and the initial
commercialization of electric vehicles
and plug-in hybrids.
The proposed National Program
would result in approximately 950
million metric tons of total carbon
dioxide equivalent emissions reductions
and approximately 1.8 billion barrels of
oil savings over the lifetime of vehicles
sold in model years 2012 through 2016.
In total, the combined EPA and NHTSA
2012–2016 standards would reduce
GHG emissions from the U.S. light-duty
fleet by approximately 21 percent by
2030 over the level that would occur in
the absence of the National Program.
These proposals also provide important
energy security benefits, as light-duty
vehicles are about 95 percent dependent
on oil-based fuels. The benefits of the
proposed National Program would total
about $250 billion at a 3% discount rate,
or $195 billion at a 7% discount rate. In
the discussion that follows in Sections
III and IV, each agency explains the
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related benefits for their individual
standards.
Together, EPA and NHTSA estimate
that the average cost increase for a
model year 2016 vehicle due to the
proposed National Program is less than
$1,100. U.S. consumers who purchase
their vehicle outright would save
enough in lower fuel costs over the first
three years to offset these higher vehicle
costs. However, most U.S. consumers
purchase a new vehicle using credit
rather than paying cash and the typical
car loan today is a five year, 60 month
loan. These consumers would see
immediate savings due to their vehicle’s
lower fuel consumption in the form of
reduced monthly costs of $12–$14 per
month throughout the duration of the
loan (that is, the fuel savings outweigh
the increase in loan payments by $12–
$14 per month). Whether a consumer
takes out a loan or purchases a new
vehicle outright, over the lifetime of a
model year 2016 vehicle, consumers
would save more than $3,000 due to
fuel savings. The average 2016 MY
vehicle will emit 16 fewer metric tons
of CO2 emissions during its lifetime.
This joint proposal also offers the
prospect of important regulatory
convergence and certainty to automobile
companies. Absent this proposal, there
would be three separate Federal and
State regimes independently regulating
light-duty vehicles to reduce fuel
consumption and GHG emissions:
NHTSA’s CAFE standards, EPA’s GHG
standards, and the GHG standards
applicable in California and other States
adopting the California standards. This
joint proposal would allow automakers
to meet both the NHTSA and EPA
requirements with a single national
fleet, greatly simplifying the industry’s
technology, investment and compliance
strategies. In addition, in a letter dated
May 18, 2009, California stated that it
‘‘recognizes the benefit for the country
and California of a National Program to
address greenhouse gases and fuel
economy and the historic
announcement of United States
Environmental Protection Agency (EPA)
and National Highway Transportation
Safety Administration’s (NHTSA) intent
to jointly propose a rule to set standards
for both. California fully supports
proposal and adoption of such a
National Program.’’ To promote the
National Program, California announced
its commitment to take several actions,
including revising its program for MYs
2012–2016 such that compliance with
the Federal GHG standards would be
deemed to be compliance with
California’s GHG standards. This would
allow the single national fleet used by
automakers to meet the two Federal
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requirements and to meet California
requirements as well. This commitment
was conditioned on several points,
including EPA GHG standards that are
substantially similar to those described
in the May 19, 2009 Notice of Upcoming
Joint Rulemaking. Many automakers and
trade associations also announced their
support for the National Program
announced that day.18 The
manufacturers conditioned their
support on EPA and NHTSA standards
substantially similar to those described
in that Notice. NHTSA and EPA met
with many vehicle manufacturers to
discuss the feasibility of the National
Program. EPA and NHTSA are confident
that these proposed GHG and CAFE
standards, if finalized, would
successfully harmonize both the Federal
and State programs for MYs 2012–2016
and would allow our country to achieve
the increased benefits of a single,
nationwide program to reduce lightduty vehicle GHG emissions and reduce
the country’s dependence on fossil fuels
by improving these vehicles’ fuel
economy.
A successful and sustainable
automotive industry depends upon,
among other things, continuous
technology innovation in general, and
low greenhouse gas emissions and high
fuel economy vehicles in particular. In
this respect, this proposal would help
spark the investment in technology
innovation necessary for automakers to
successfully compete in both domestic
and export markets, and thereby
continue to support a strong economy.
While this proposal covers MYs
2012–2016, EPA and NHTSA anticipate
the importance of seeking a strong,
coordinated national program for lightduty vehicles in model years beyond
2016 in a future rulemaking.
Key elements of the proposal for a
harmonized and coordinated program
are the level and form of the GHG and
CAFE standards, the available
compliance mechanisms, and general
implementation elements. These
elements are outlined in the following
sections.
C. Background and Comparison of
NHTSA and EPA Statutory Authority
This section provides the agencies’
respective statutory authorities under
which CAFE and GHG standards are
established.
1. NHTSA Statutory Authority
NHTSA establishes CAFE standards
for passenger cars and light trucks for
each model year under EPCA, as
18 These letters are available at https://
www.epa.gov/otaq/climate/regulations.htm.
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amended by EISA. EPCA mandates a
motor vehicle fuel economy regulatory
program to meet the various facets of the
need to conserve energy, including ones
having environmental and foreign
policy implications. EPCA allocates the
responsibility for implementing the
program between NHTSA and EPA as
follows: NHTSA sets CAFE standards
for passenger cars and light trucks; EPA
establishes the procedures for testing,
tests vehicles, collects and analyzes
manufacturers’ data, and calculates the
average fuel economy of each
manufacturer’s passenger cars and light
trucks; and NHTSA enforces the
standards based on EPA’s calculations.
a. Standard Setting
We have summarized below the most
important aspects of standard setting
under EPCA, as amended by EISA.
For each future model year, EPCA
requires that NHTSA establish
standards at ‘‘the maximum feasible
average fuel economy level that it
decides the manufacturers can achieve
in that model year,’’ based on the
agency’s consideration of four statutory
factors: technological feasibility,
economic practicability, the effect of
other standards of the Government on
fuel economy, and the need of the
nation to conserve energy. EPCA does
not define these terms or specify what
weight to give each concern in
balancing them; thus, NHTSA defines
them and determines the appropriate
weighting based on the circumstances in
each CAFE standard rulemaking.19
For MYs 2011–2020, EPCA further
requires that separate standards for
passenger cars and for light trucks be set
at levels high enough to ensure that the
CAFE of the industry-wide combined
fleet of new passenger cars and light
trucks reaches at least 35 mpg not later
than MY 2020.
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i. Factors That Must Be Considered in
Deciding the Appropriate Stringency of
CAFE Standards
(1) Technological Feasibility
‘‘Technological feasibility’’ refers to
whether a particular method of
improving fuel economy can be
available for commercial application in
the model year for which a standard is
being established. Thus, the agency is
not limited in determining the level of
new standards to technology that is
19 See Center for Biological Diversity v. NHTSA,
538 F.3d. 1172, 1195 (9th Cir. 2008) (‘‘The EPCA
clearly requires the agency to consider these four
factors, but it gives NHTSA discretion to decide
how to balance the statutory factors—as long as
NHTSA’s balancing does not undermine the
fundamental purpose of the EPCA: Energy
conservation.’’)
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already being commercially applied at
the time of the rulemaking. NHTSA has
historically considered all types of
technologies that improve real-world
fuel economy, except those whose
effects are not reflected in fuel economy
testing. Principal among them are
technologies that improve air
conditioner efficiency because the air
conditioners are not turned on during
testing under existing test procedures.
(2) Economic Practicability
‘‘Economic practicability’’ refers to
whether a standard is one ‘‘within the
financial capability of the industry, but
not so stringent as to’’ lead to ‘‘adverse
economic consequences, such as a
significant loss of jobs or the
unreasonable elimination of consumer
choice.’’ 20 This factor is especially
important in the context of current
events, where the automobile industry
is facing significantly adverse economic
conditions, as well as significant loss of
jobs. In an attempt to ensure the
economic practicability of attributebased standards, NHTSA considers a
variety of factors, including the annual
rate at which manufacturers can
increase the percentage of its fleet that
employs a particular type of fuel-saving
technology, and cost to consumers.
Consumer acceptability is also an
element of economic practicability, one
which is particularly difficult to gauge
during times of frequently-changing fuel
prices. NHTSA believes this approach is
reasonable for the MY 2012–2016
standards in view of the facts before it
at this time. NHTSA is aware, however,
that facts relating to a variety of key
issues in CAFE rulemaking are steadily
evolving and seeks comments on the
balancing of these factors in light of the
facts available during the comment
period.
At the same time, the law does not
preclude a CAFE standard that poses
considerable challenges to any
individual manufacturer. The
Conference Report for EPCA, as enacted
in 1975, makes clear, and the case law
affirms, ‘‘a determination of maximum
feasible average fuel economy should
not be keyed to the single manufacturer
which might have the most difficulty
achieving a given level of average fuel
economy.’’ 21 Instead, NHTSA is
compelled ‘‘to weigh the benefits to the
nation of a higher fuel economy
standard against the difficulties of
individual automobile manufacturers.’’
Id. The law permits CAFE standards
exceeding the projected capability of
any particular manufacturer as long as
20 67
FR 77015, 77021 (Dec. 16, 2002).
793 F.2d 1322, 1352 (D.C. Cir. 1986).
21 CEI–I,
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the standard is economically practicable
for the industry as a whole. Thus, while
a particular CAFE standard may pose
difficulties for one manufacturer, it may
also present opportunities for another.
The CAFE program is not necessarily
intended to maintain the competitive
positioning of each particular company.
Rather, it is intended to enhance fuel
economy of the vehicle fleet on
American roads, while protecting motor
vehicle safety and being mindful of the
risk of harm to the overall United States
economy.
(3) The Effect of Other Motor Vehicle
Standards of the Government on Fuel
Economy
‘‘The effect of other motor vehicle
standards of the Government on fuel
economy,’’ involves an analysis of the
effects of compliance with emission,22
safety, noise, or damageability standards
on fuel economy capability and thus on
average fuel economy. In previous CAFE
rulemakings, the agency has said that
pursuant to this provision, it considers
the adverse effects of other motor
vehicle standards on fuel economy. It
said so because, from the CAFE
program’s earliest years 23 until present,
the effects of such compliance on fuel
economy capability over the history of
the CAFE program have been negative
ones. For example, safety standards that
have the effect of increasing vehicle
weight lower vehicle fuel economy
capability and thus decrease the level of
average fuel economy that the agency
can determine to be feasible.
In the wake of Massachusetts v. EPA
and of EPA’s proposed endangerment
finding, granting of a waiver to
California for its motor vehicle GHG
standards, and its own proposal of GHG
standards, NHTSA is confronted with
the issue of how to treat those standards
under the ‘‘other motor vehicle
standards’’ provision. To the extent the
GHG standards result in increases in
fuel economy, they would do so almost
exclusively as a result of inducing
manufacturers to install the same types
of technologies used by manufacturers
in complying with the CAFE standards.
The primary exception would involve
increases in the efficiency of air
conditioners.
Comment is requested on whether
and in what way the effects of the
California and EPA standards should be
22 In the case of emission standards, this includes
standards adopted by the Federal government and
can include standards adopted by the States as well,
since in certain circumstances the Clean Air Act
allows States to adopt and enforce State standards
different from the Federal ones.
23 42 FR 63184, 63188 (Dec. 15, 1977). See also
42 FR 33534, 33537 (Jun. 30, 1977).
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considered under the ‘‘other motor
vehicle standards’’ provision or other
provisions of EPCA in 49 U.S.C. 32902,
consistent with NHTSA’s independent
obligation under EPCA/EISA to issue
CAFE standards. The agency has already
considered EPA’s proposal and the
harmonization benefits of the National
Program in developing its own proposal.
(4) The Need of the United States To
Conserve Energy
‘‘The need of the United States to
conserve energy’’ means ‘‘the consumer
cost, national balance of payments,
environmental, and foreign policy
implications of our need for large
quantities of petroleum, especially
imported petroleum.’’ 24 Environmental
implications principally include
reductions in emissions of criteria
pollutants and carbon dioxide. Prime
examples of foreign policy implications
are energy independence and security
concerns.
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(a) Fuel Prices and the Value of Saving
Fuel
Projected future fuel prices are a
critical input into the preliminary
economic analysis of alternative CAFE
standards, because they determine the
value of fuel savings both to new
vehicle buyers and to society. In this
rule, NHTSA relies on fuel price
projections from the U.S. Energy
Information Administration’s (EIA)
Annual Energy Outlook (AEO) for this
analysis. Federal government agencies
generally use EIA’s projections in their
assessments of future energy-related
policies.
(b) Petroleum Consumption and Import
Externalities
U.S. consumption and imports of
petroleum products impose costs on the
domestic economy that are not reflected
in the market price for crude petroleum,
or in the prices paid by consumers of
petroleum products such as gasoline.
These costs include (1) higher prices for
petroleum products resulting from the
effect of U.S. oil import demand on the
world oil price; (2) the risk of
disruptions to the U.S. economy caused
by sudden reductions in the supply of
imported oil to the U.S.; and (3)
expenses for maintaining a U.S. military
presence to secure imported oil supplies
from unstable regions, and for
maintaining the strategic petroleum
reserve (SPR) to provide a response
option should a disruption in
commercial oil supplies threaten the
U.S. economy, to allow the United
States to meet part of its International
24 42
FR 63184, 63188 (1977).
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Energy Agency obligation to maintain
emergency oil stocks, and to provide a
national defense fuel reserve. Higher
U.S. imports of crude oil or refined
petroleum products increase the
magnitude of these external economic
costs, thus increasing the true economic
cost of supplying transportation fuels
above the resource costs of producing
them. Conversely, reducing U.S. imports
of crude petroleum or refined fuels or
reducing fuel consumption can reduce
these external costs.
(c) Air Pollutant Emissions
While reductions in domestic fuel
refining and distribution that result
from lower fuel consumption will
reduce U.S. emissions of various
pollutants, additional vehicle use
associated with the rebound effect 25
from higher fuel economy will increase
emissions of these pollutants. Thus, the
net effect of stricter CAFE standards on
emissions of each pollutant depends on
the relative magnitudes of its reduced
emissions in fuel refining and
distribution, and increases in its
emissions from vehicle use.
Fuel savings from stricter CAFE
standards also result in lower emissions
of CO2, the main greenhouse gas emitted
as a result of refining, distribution, and
use of transportation fuels. Lower fuel
consumption reduces carbon dioxide
emissions directly, because the primary
source of transportation-related CO2
emissions is fuel combustion in internal
combustion engines.
NHTSA has considered
environmental issues, both within the
context of EPCA and the National
Environmental Policy Act, in making
decisions about the setting of standards
from the earliest days of the CAFE
program. As courts of appeal have noted
in three decisions stretching over the
last 20 years,26 NHTSA defined the
‘‘need of the Nation to conserve energy’’
in the late 1970s as including ‘‘the
consumer cost, national balance of
payments, environmental, and foreign
policy implications of our need for large
quantities of petroleum, especially
imported petroleum.’’ 27 Pursuant to
that view, NHTSA declined in the past
25 The ‘‘rebound effect’’ refers to the tendency of
drivers to drive their vehicles more as the cost of
doing so goes down, as when fuel economy
improves.
26 Center for Auto Safety v. NHTSA, 793 F.2d
1322, 1325 n. 12 (D.C. Cir. 1986); Public Citizen v.
NHTSA, 848 F.2d 256, 262–3 n. 27 (D.C. Cir. 1988)
(noting that ‘‘NHTSA itself has interpreted the
factors it must consider in setting CAFE standards
as including environmental effects’’); and Center for
Biological Diversity v. NHTSA, 538 F.3d 1172 (9th
Cir. 2007).
27 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis
added).
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to include diesel engines in determining
the appropriate level of standards for
passenger cars and for light trucks
because particulate emissions from
diesels were then both a source of
concern and unregulated.28 In 1988,
NHTSA included climate change
concepts in its CAFE notices and
prepared its first environmental
assessment addressing that subject.29 It
cited concerns about climate change as
one of its reasons for limiting the extent
of its reduction of the CAFE standard for
MY 1989 passenger cars.30 Since then,
NHTSA has considered the benefits of
reducing tailpipe carbon dioxide
emissions in its fuel economy
rulemakings pursuant to the statutory
requirement to consider the nation’s
need to conserve energy by reducing
fuel consumption.
ii. Other Factors Considered by NHTSA
NHTSA considers the potential for
adverse safety consequences when in
establishing CAFE standards. This
practice is recognized approvingly in
case law.31 Under the universal or ‘‘flat’’
CAFE standards that NHTSA was
previously authorized to establish, the
primary risk to safety came from the
possibility that manufacturers would
respond to higher standards by building
smaller, less safe vehicles in order to
‘‘balance out’’ the larger, safer vehicles
that the public generally preferred to
buy. Under the attribute-based
standards being proposed in this action,
that risk is reduced because building
smaller vehicles tends to raise a
manufacturer’s overall CAFE obligation,
rather than only raising its fleet average
CAFE. However, even under attributebased standards, there is still risk that
manufacturers will rely on
downweighting to improve their fuel
economy (for a given vehicle at a given
28 For example, the final rules establishing CAFE
standards for MY 1981–84 passenger cars, 42 FR
33533, 33540–1 and 33551 (Jun. 30, 1977), and for
MY 1983–85 light trucks, 45 FR 81593, 81597 (Dec.
11, 1980).
29 53 FR 33080, 33096 (Aug. 29, 1988).
30 53 FR 39275, 39302 (Oct. 6, 1988).
31 See, e.g., Center for Auto Safety v. NHTSA
(CAS), 793 F.2d 1322 (D.C. Cir. 1986)
(Administrator’s consideration of market demand as
component of economic practicability found to be
reasonable); Public Citizen 848 F.2d 256 (Congress
established broad guidelines in the fuel economy
statute; agency’s decision to set lower standard was
a reasonable accommodation of conflicting
policies). As the United States Court of Appeals
pointed out in upholding NHTSA’s exercise of
judgment in setting the 1987–1989 passenger car
standards, ‘‘NHTSA has always examined the safety
consequences of the CAFE standards in its overall
consideration of relevant factors since its earliest
rulemaking under the CAFE program.’’ Competitive
Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107,
120 at n.11 (D.C. Cir. 1990).
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footprint target) in ways that may
reduce safety.
In addition, the agency considers
consumer demand in establishing new
standards and in assessing whether
already established standards remained
feasible. In the 1980’s, the agency relied
in part on the unexpected drop in fuel
prices and the resulting unexpected
failure of consumer demand for small
cars to develop in explaining the need
to reduce CAFE standards for a several
year period in order to give
manufacturers time to develop
alternative technology-based strategies
for improving fuel economy.
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iii. Factors That NHTSA Is Statutorily
Prohibited From Considering in Setting
Standards
EPCA provides that in determining
the level at which it should set CAFE
standards for a particular model year,
NHTSA may not consider the ability of
manufacturers to take advantage of
several EPCA provisions that facilitate
compliance with the CAFE standards
and thereby reduce the costs of
compliance.32 As noted below in
Section IV, manufacturers can earn
compliance credits by exceeding the
CAFE standards and then use those
credits to achieve compliance in years
in which their measured average fuel
economy falls below the standards.
Manufacturers can also increase their
CAFE levels through MY 2019 by
producing alternative fuel vehicles.
EPCA provides an incentive for
producing these vehicles by specifying
that their fuel economy is to be
determined using a special calculation
procedure that results in those vehicles
being assigned a high fuel economy
level.
iv. Weighing and Balancing of Factors
NHTSA has broad discretion in
balancing the above factors in
determining the average fuel economy
level that the manufacturers can
achieve. Congress ‘‘specifically
delegated the process of setting * * *
fuel economy standards with broad
guidelines concerning the factors that
the agency must consider.’’ The breadth
of those guidelines, the absence of any
statutorily prescribed formula for
balancing the factors, the fact that the
relative weight to be given to the various
factors may change from rulemaking to
rulemaking as the underlying facts
change, and the fact that the factors may
often be conflicting with respect to
whether they militate toward higher or
lower standards give NHTSA discretion
to decide what weight to give each of
32 49
U.S.C. 32902(h).
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the competing policies and concerns
and then determine how to balance
them—as long as NHTSA’s balancing
does not undermine the fundamental
purpose of the EPCA: Energy
conservation, and as long as that
balancing reasonably accommodates
‘‘conflicting policies that were
committed to the agency’s care by the
statute.’’
Thus, EPCA does not mandate that
any particular number be adopted when
NHTSA determines the level of CAFE
standards. Rather, any number within a
zone of reasonableness may be, in
NHTSA’s assessment, the level of
stringency that manufacturers can
achieve. See, e.g., Hercules Inc. v. EPA,
598 F.2d 91, 106 (D.C. Cir. 1978) (‘‘In
reviewing a numerical standard we
must ask whether the agency’s numbers
are within a zone of reasonableness, not
whether its numbers are precisely
right’’).
v. Other Requirements Related to
Standard Setting
The standards for passenger cars and
those for light trucks must increase
ratably each year. This statutory
requirement is interpreted, in
combination with the requirement to set
the standards for each model year at the
level determined to be the maximum
feasible level that manufacturers can
achieve for that model year, to mean
that the annual increases should not be
disproportionately large or small in
relation to each other.
The standards for passenger cars and
light trucks must be based on one or
more vehicle attributes, like size or
weight, that correlate with fuel economy
and must be expressed in terms of a
mathematical function. Fuel economy
targets are set for individual vehicles
and increase as the attribute decreases
and vice versa. For example, size-based
(i.e., size-indexed) standards assign
higher fuel economy targets to smaller
(and generally, but not necessarily,
lighter) vehicles and lower ones to
larger (and generally, but not
necessarily, heavier) vehicles. The fleetwide average fuel economy that a
particular manufacturer is required to
achieve depends on the size mix of its
fleet, i.e., the proportion of the fleet that
is small-, medium- or large-sized.
This approach can be used to require
virtually all manufacturers to increase
significantly the fuel economy of a
broad range of both passenger cars and
light trucks, i.e., the manufacturer must
improve the fuel economy of all the
vehicles in its fleet. Further, this
approach can do so without creating an
incentive for manufacturers to make
small vehicles smaller or large vehicles
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larger, with attendant implications for
safety.
b. Test Procedures for Measuring Fuel
Economy
EPCA provides EPA with the
responsibility for establishing CAFE test
procedures. Current test procedures
measure the effects of nearly all fuel
saving technologies. The principal
exception is improvements in air
conditioning efficiency. By statutory
law in the case of passenger cars and by
administrative regulation in the case of
light trucks, air conditioners are not
turned on during fuel economy testing.
See Section I.C.2 for details.
The fuel economy test procedures for
light trucks could be amended through
rulemaking to provide for air
conditioner operation during testing and
to take other steps for improving the
accuracy and representativeness of fuel
economy measurements. Comment is
sought by the agencies regarding
implementing such amendments
beginning in MY 2017 and also on the
more immediate interim alternative step
of providing CAFE program credits
under the authority of 49 U.S.C.
32904(c) for light trucks equipped with
relatively efficient air conditioners for
MYs 2012–2016. These CAFE credits
would be earned by manufacturers on
the same terms and under the same
conditions as EPA is proposing to
provide them under the CAA, and
additional detail is on this request for
comment for early CAFE credits is
contained in Section IV of this
preamble. Modernizing the passenger
car test procedures, or even providing
similar credits, would not be possible
under EPCA as currently written.
c. Enforcement and Compliance
Flexibility
EPA is responsible for measuring
automobile manufacturers’ CAFE so that
NHTSA can determine compliance with
the CAFE standards. When NHTSA
finds that a manufacturer is not in
compliance, it notifies the
manufacturer. Surplus credits generated
from the five previous years can be used
to make up the deficit. The amount of
credit earned is determined by
multiplying the number of tenths of a
mpg by which a manufacturer exceeds
a standard for a particular category of
automobiles by the total volume of
automobiles of that category
manufactured by the manufacturer for a
given model year. If there are no (or not
enough) credits available, then the
manufacturer can either pay the fine, or
submit a carry back plan to NHTSA. A
carry back plan describes what the
manufacturer plans to do in the
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following three model years to earn
enough credits to make up for the
deficit. NHTSA must examine and
determine whether to approve the plan.
In the event that a manufacturer does
not comply with a CAFE standard, even
after the consideration of credits, EPCA
provides for the assessing of civil
penalties, unless, as provided below, the
manufacturer has earned credits for
exceeding a standard in an earlier year
or expects to earn credits in a later
year.33 The Act specifies a precise
formula for determining the amount of
civil penalties for such a
noncompliance. The penalty, as
adjusted for inflation by law, is $5.50 for
each tenth of a mpg that a
manufacturer’s average fuel economy
falls short of the standard for a given
model year multiplied by the total
volume of those vehicles in the affected
fleet (i.e., import or domestic passenger
car, or light truck), manufactured for
that model year. The amount of the
penalty may not be reduced except
under the unusual or extreme
circumstances specified in the statute.
Unlike the National Traffic and Motor
Vehicle Safety Act, EPCA does not
provide for recall and remedy in the
event of a noncompliance. The presence
of recall and remedy provisions34 in the
Safety Act and their absence in EPCA is
believed to arise from the difference in
the application of the safety standards
and CAFE standards. A safety standard
applies to individual vehicles; that is,
each vehicle must possess the requisite
equipment or feature that must provide
the requisite type and level of
performance. If a vehicle does not, it is
noncompliant. Typically, a vehicle does
not entirely lack an item or equipment
or feature. Instead, the equipment or
features fails to perform adequately.
Recalling the vehicle to repair or replace
the noncompliant equipment or feature
can usually be readily accomplished.
In contrast, a CAFE standard applies
to a manufacturer’s entire fleet for a
model year. It does not require that a
particular individual vehicle be
equipped with any particular equipment
or feature or meet a particular level of
fuel economy. It does require that the
manufacturer’s fleet, as a whole,
comply. Further, although under the
attribute-based approach to setting
CAFE standards fuel economy targets
are established for individual vehicles
based on their footprints, the vehicles
are not required to comply with those
targets. However, as a practical matter,
33 EPCA does not provide authority for seeking to
enjoin violations of the CAFE standards.
34 49 U.S.C. 30120, Remedies for defects and
noncompliance.
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if a manufacturer chooses to design
some vehicles that fall below their target
levels of fuel economy, it will need to
design other vehicles that exceed their
targets if the manufacturer’s overall fleet
average is to meet the applicable
standard.
Thus, under EPCA, there is no such
thing as a noncompliant vehicle, only a
noncompliant fleet. No particular
vehicle in a noncompliant fleet is any
more, or less, noncompliant than any
other vehicle in the fleet.
2. EPA Statutory Authority
Title II of the Clean Air Act (CAA)
provides for comprehensive regulation
of mobile sources, authorizing EPA to
regulate emissions of air pollutants from
all mobile source categories. Pursuant to
these sweeping grants of authority, EPA
considers such issues as technology
effectiveness, its cost (both per vehicle,
per manufacturer, and per consumer),
the lead time necessary to implement
the technology, and based on this the
feasibility and practicability of potential
standards; the impacts of potential
standards on emissions reductions of
both GHGs and non-GHGs; the impacts
of standards on oil conservation and
energy security; the impacts of
standards on fuel savings by consumers;
the impacts of standards on the auto
industry; other energy impacts; as well
as other relevant factors such as impacts
on safety.
This proposal implements a specific
provision from Title II, section 202(a).35
Section 202(a)(1) of the Clean Air Act
(CAA) states that ‘‘the Administrator
shall by regulation prescribe (and from
time to time revise) * * * standards
applicable to the emission of any air
pollutant from any class or classes of
new motor vehicles * * *, which in his
judgment cause, or contribute to, air
pollution which may reasonably be
anticipated to endanger public health or
welfare.’’ If EPA makes the appropriate
endangerment and cause or contribute
findings, then section 202(a) authorizes
EPA to issue standards applicable to
emissions of those pollutants.
Any standards under CAA section
202(a)(1) ‘‘shall be applicable to such
vehicles * * * for their useful life.’’
Emission standards set by the EPA
under CAA section 202(a)(1) are
technology-based, as the levels chosen
must be premised on a finding of
technological feasibility. Thus,
standards promulgated under CAA
section 202(a) are to take effect only
‘‘after providing such period as the
Administrator finds necessary to permit
the development and application of the
35 42
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requisite technology, giving appropriate
consideration to the cost of compliance
within such period’’ (section 202(a)(2);
see also NRDC v. EPA, 655 F.2d 318,
322 (D.C. Cir. 1981)). EPA is afforded
considerable discretion under section
202(a) when assessing issues of
technical feasibility and availability of
lead time to implement new technology.
Such determinations are ‘‘subject to the
restraints of reasonableness’’, which
‘‘does not open the door to ‘crystal ball’
inquiry.’’ NRDC, 655 F.2d at 328,
quoting International Harvester Co. v.
Ruckelshaus, 478 F.2d 615, 629 (D.C.
Cir. 1973). However, ‘‘EPA is not
obliged to provide detailed solutions to
every engineering problem posed in the
perfection of the trap-oxidizer. In the
absence of theoretical objections to the
technology, the agency need only
identify the major steps necessary for
development of the device, and give
plausible reasons for its belief that the
industry will be able to solve those
problems in the time remaining. The
EPA is not required to rebut all
speculation that unspecified factors may
hinder ‘real world’ emission control.’’
NRDC, 655 F.2d at 333–34. In
developing such technology-based
standards, EPA has the discretion to
consider different standards for
appropriate groupings of vehicles
(‘‘class or classes of new motor
vehicles’’), or a single standard for a
larger grouping of motor vehicles
(NRDC, 655 F.2d at 338).
Although standards under CAA
section 202(a)(1) are technology-based,
they are not based exclusively on
technological capability. EPA has the
discretion to consider and weigh
various factors along with technological
feasibility, such as the cost of
compliance (see section 202(a)(2)), lead
time necessary for compliance (section
202(a)(2)), safety (see NRDC, 655 F.2d at
336 n. 31) and other impacts on
consumers, and energy impacts
associated with use of the technology.
See George E. Warren Corp. v. EPA, 159
F.3d 616, 623–624 (D.C. Cir. 1998)
(ordinarily permissible for EPA to
consider factors not specifically
enumerated in the Act). See also Entergy
Corp. v. Riverkeeper, Inc., 129 S.Ct.
1498, 1508–09 (2009) (congressional
silence did not bar EPA from employing
cost-benefit analysis under Clean Water
Act absent some other clear indication
that such analysis was prohibited;
rather, silence indicated discretion to
use or not use such an approach as the
agency deems appropriate).
In addition, EPA has clear authority to
set standards under CAA section 202(a)
that are technology forcing when EPA
considers that to be appropriate, but is
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not required to do so (as compared to
standards set under provisions such as
section 202(a)(3) and section 213(a)(3)).
EPA has interpreted a similar statutory
provision, CAA section 231, as follows:
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While the statutory language of section 231
is not identical to other provisions in title II
of the CAA that direct EPA to establish
technology-based standards for various types
of engines, EPA interprets its authority under
section 231 to be somewhat similar to those
provisions that require us to identify a
reasonable balance of specified emissions
reduction, cost, safety, noise, and other
factors. See, e.g., Husqvarna AB v. EPA, 254
F.3d 195 (DC Cir. 2001) (upholding EPA’s
promulgation of technology-based standards
for small non-road engines under section
213(a)(3) of the CAA). However, EPA is not
compelled under section 231 to obtain the
‘‘greatest degree of emission reduction
achievable’’ as per sections 213 and 202 of
the CAA, and so EPA does not interpret the
Act as requiring the agency to give
subordinate status to factors such as cost,
safety, and noise in determining what
standards are reasonable for aircraft engines.
Rather, EPA has greater flexibility under
section 231 in determining what standard is
most reasonable for aircraft engines, and is
not required to achieve a ‘‘technology
forcing’’ result.36
This interpretation was upheld as
reasonable in NACAA v. EPA, (489 F.3d
1221, 1230 (D.C. Cir. 2007)). CAA
section 202(a) does not specify the
degree of weight to apply to each factor,
and EPA accordingly has discretion in
choosing an appropriate balance among
factors. See Sierra Club v. EPA, 325 F.3d
374, 378 (D.C. Cir. 2003) (even where a
provision is technology-forcing, the
provision ‘‘does not resolve how the
Administrator should weigh all [the
statutory] factors in the process of
finding the ’greatest emission reduction
achievable’ ’’). Also see Husqvarna AB
v. EPA, 254 F. 3d 195, 200 (D.C. Cir.
2001) (great discretion to balance
statutory factors in considering level of
technology-based standard, and
statutory requirement ‘‘to [give
appropriate] consideration to the cost of
applying * * * technology’’ does not
mandate a specific method of cost
analysis); see also Hercules Inc. v. EPA,
598 F. 2d 91, 106 (D.C. Cir. 1978) (‘‘In
reviewing a numerical standard we
must ask whether the agency’s numbers
are within a zone of reasonableness, not
whether its numbers are precisely
right’’); Permian Basin Area Rate Cases,
390 U.S. 747, 797 (1968) (same); Federal
Power Commission v. Conway Corp.,
426 U.S. 271, 278 (1976) (same); Exxon
Mobil Gas Marketing Co. v. FERC, 297
F. 3d 1071, 1084 (D.C. Cir. 2002) (same).
36 70
FR 69664, 69676, November 17, 2005.
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a. EPA’s Testing Authority
Under section 203 of the CAA, sales
of vehicles are prohibited unless the
vehicle is covered by a certificate of
conformity. EPA issues certificates of
conformity pursuant to section 206 of
the Act, based on (necessarily) pre-sale
testing conducted either by EPA or by
the manufacturer. The Federal Test
Procedure (FTP or ‘‘city’’ test) and the
Highway Fuel Economy Test (HFET or
‘‘highway’’ test) are used for this
purpose. Compliance with standards is
required not only at certification but
throughout a vehicle’s useful life, so
that testing requirements may continue
post-certification. Useful life standards
may apply an adjustment factor to
account for vehicle emission control
deterioration or variability in use
(section 206(a)).
Pursuant to EPCA, EPA is required to
measure fuel economy for each model
and to calculate each manufacturer’s
average fuel economy.37 EPA uses the
same tests—the FTP and HFET—for fuel
economy testing. EPA established the
FTP for emissions measurement in the
early 1970s. In 1976, in response to the
Energy Policy and Conservation Act
(EPCA) statute, EPA extended the use of
the FTP to fuel economy measurement
and added the HFET.38 The provisions
in the 1976 regulation, effective with the
1977 model year, established
procedures to calculate fuel economy
values both for labeling and for CAFE
purposes. Under EPCA, EPA is required
to use these procedures (or procedures
which yield comparable results) for
measuring fuel economy for cars for
CAFE purposes, but not for labeling
purposes.39 EPCA does not pose this
restriction on CAFE test procedures for
light trucks, but EPA does use the FTP
and HFET for this purpose. EPA
determines fuel economy by measuring
the amount of CO2 and all other carbon
compounds (e.g. total hydrocarbons
(THC) and carbon monoxide (CO)), and
then, by mass balance, calculating the
amount of fuel consumed.
b. EPA Enforcement Authority
Section 207 of the CAA grants EPA
broad authority to require
manufacturers to remedy vehicles if
EPA determines there are a substantial
number of noncomplying vehicles. In
addition, section 205 of the CAA
authorizes EPA to assess penalties of up
to $37,500 per vehicle for violations of
various prohibited acts specified in the
CAA. In determining the appropriate
37 See
49 U.S.C. 32904(c).
41 FR 38674 (Sept. 10, 1976), which is
codified at 40 CFR part 600.
39 See 49 U.S.C. 32904(c).
38 See
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penalty, EPA must consider a variety of
factors such as the gravity of the
violation, the economic impact of the
violation, the violator’s history of
compliance, and ‘‘such other matters as
justice may require.’’ Unlike EPCA, the
CAA does not authorize vehicle
manufacturers to pay fines in lieu of
meeting emission standards.
3. Comparing the Agencies’ Authority
As the above discussion makes clear,
there are both important differences
between the statutes under which each
agency is acting as well as several
important areas of similarity. One
important difference is that EPA’s
authority addresses various GHGs,
while NHTSA’s authority addresses fuel
economy as measured under specified
test procedures. This difference is
reflected in this rulemaking in the scope
of the two standards: EPA’s proposal
takes into account air conditioning
related reductions, as well as proposed
standards for methane and N2O, but
NHTSA’s does not. A second important
difference is that EPA is proposing
certain compliance flexibilities, and
takes those flexibilities into account in
its technical analysis and modeling
supporting its proposal. EPCA places
certain limits on compliance flexibilities
for CAFE, and expressly prohibits
NHTSA from considering the impacts of
the compliance flexibilities in setting
the CAFE standard so that the
manufacturers’ election to avail
themselves of the permitted flexibilities
remains strictly voluntary.40 The Clean
Air Act, on the other hand, contains no
such prohibition. These considerations
result in some differences in the
technical analysis and modeling used to
support EPA’s and NHTSA’s proposed
standards.
These differences, however, do not
change the fact that in many critical
ways the two agencies are charged with
addressing the same basic issue of
reducing GHG emissions and improving
fuel economy. Given the direct
relationship between emissions of CO2
and fuel economy levels, both agencies
are looking at the same set of control
technologies (with the exception of the
air conditioning related technologies).
The standards set by each agency will
drive the kind and degree of penetration
of this set of technologies across the
vehicle fleet. As a result, each agency is
trying to answer the same basic
question—what kind and degree of
technology penetration is necessary to
achieve the agencies’ objectives in the
rulemaking time frame, given the
40 74
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agencies’ respective statutory
authorities?
In making the determination of what
standards are appropriate under the
CAA and EPCA, each agency is to
exercise its judgment and balance many
similar factors, such as the availability
of technologies, the appropriate lead
time for introduction of technology, and
based on this the feasibility and
practicability of their standards; the
impacts of their standards on emissions
reductions (of both GHGs and nonGHGs); the impacts of their standards on
oil conservation; the impacts of their
standards on fuel savings by consumers;
the impacts of their standards on the
auto industry; as well as other relevant
factors such as impacts on safety.
Conceptually, therefore, each agency is
considering and balancing many of the
same factors, and each agency is making
a decision that at its core is answering
the same basic question of what kind
and degree of technology penetration is
it appropriate to call for in light of all
of the relevant factors. Finally, each
agency has the authority to take into
consideration impacts of the standards
of the other agency. EPCA calls for
NHTSA to take into consideration the
effects of EPA’s emissions standards on
fuel economy capability (see 49 U.S.C.
32902 (f)), and EPA has the discretion
to take into consideration NHTSA’s
CAFE standards in determining
appropriate action under section 202(a).
This is consistent with the Supreme
Court’s statement that EPA’s mandate to
protect public health and welfare is
wholly independent from NHTSA’s
mandate to promote energy efficiency,
but there is no reason to think the two
agencies cannot both administer their
obligations and yet avoid inconsistency.
Massachusetts v. EPA, 549 U.S. 497, 532
(2007).
In this context, it is in the Nation’s
interest for the two agencies to work
together in developing their respective
proposed standards, and they have done
so. For example, the agencies have
committed considerable effort to
develop a joint Technical Support
Document that provides a technical
basis underlying each agency’s analyses.
The agencies also have worked closely
together in developing and reviewing
their respective modeling, to develop
the best analysis and to promote
technical consistency. The agencies
have developed a common set of
attribute-based curves that each agency
supports as appropriate both technically
and from a policy perspective. The
agencies have also worked closely to
ensure that their respective programs
will work in a coordinated fashion, and
will provide regulatory compatibility
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that allows auto manufacturers to build
a single national light-duty fleet that
would comply with both the GHG and
the CAFE standards. The resulting
overall close coordination of the
proposed GHG and CAFE standards
should not be surprising, however, as
each agency is using a jointly developed
technical basis to address the closely
intertwined challenges of energy
security and climate change. As
discussed above, in determining the
standards to propose the agencies are
called upon to weigh and balance
various factors that are relevant under
their respective statutory provisions.
Each agency is to exercise its judgment
and balance many similar factors, such
as the availability of technologies, the
appropriate lead time for introduction of
technology, and based on this, the
feasibility and practicability of their
standards; and the impacts of their
standards on the following: Emissions
reductions (of both GHGs and nonGHGs); oil conservation; fuel savings by
consumers; the auto industry; as well as
other relevant factors such as safety.
Conceptually, each agency is
considering and balancing many of the
same factors, and each agency is making
a decision that at its core is answering
the same basic question of what kind
and degree of technology penetration is
appropriate and required in light of all
of the relevant factors. Each
Administrator is called upon to exercise
judgment and propose standards that
the Administrator determines are a
reasonable balance of these relevant
factors.
As set out in detail in Sections III and
IV of this notice, both EPA and NHTSA
believe the agencies’ proposals are fully
justified under their respective statutory
criteria. The proposed standards can be
achieved within the lead time provided,
based on a projected increased use of
various technologies which in most
cases are already in commercial
application in the fleet to varying
degrees. Detailed modeling of the
technologies that could be employed by
each manufacturer supports this initial
conclusion. The agencies also carefully
assessed the costs of the proposed rules,
both for the industry as a whole and per
manufacturer, as well as the costs per
vehicle, and consider these costs to be
reasonable and recoverable (from fuel
savings). The agencies recognize the
significant increase in the application of
technology that the proposed standards
would require across a high percentage
of vehicles, which will require the
manufacturers to devote considerable
engineering and development resources
before 2012 laying the critical
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foundation for the widespread
deployment of upgraded technology
across a high percentage of the 2012–
2016 fleet. This clearly will be
challenging for automotive
manufacturers and their suppliers,
especially in the current economic
climate. However, based on all of the
analyses performed by the agencies, our
judgment is that it is a challenge that
can reasonably be met.
The agencies also evaluated the
impacts of these standards with respect
to the expected reductions in GHGs and
oil consumption and, found them to be
very significant in magnitude. The
agencies considered other factors such
as the impacts on noise, energy, and
vehicular congestion. The impact on
safety was also given careful
consideration. Moreover, the agencies
quantified the various costs and benefits
of the proposed standards, to the extent
practicable. The agencies’ analyses to
date indicate that the overall quantified
benefits of the proposed standards far
outweigh the projected costs. All of
these factors support the reasonableness
of the proposed standards.
The agencies also evaluated
alternatives which were less and more
stringent than those proposed. Less
stringent standards, however, would
forego important GHG emission
reductions and fuel savings that are
technically achievable at reasonable cost
in the lead time provided. In addition,
less stringent GHG standards would not
result in a harmonized National
Program for the country. Based on
California’s letter of May 18, 2009, the
GHG emission standards would not
result in the State of California revising
its regulations such that compliance
with EPA’s GHG standards would be
deemed to be compliance with
California’s GHG standards for these
model years. The substantial cost
advantages associated with a single
national program discussed at the outset
of this section would then be foregone.
The agencies are not proposing any of
the more stringent alternatives analyzed
largely due to concerns over lead time
and economic practicability. The
proposed standards already require
aggressive application of technologies,
and more stringent standards which
would require more widespread use
(including more substantial
implementation of advanced
technologies such as strong hybrids)
raise serious issues of adequacy of lead
time, not only to meet the standards but
to coordinate such significant changes
with manufacturers’ redesign cycles. At
a time when the entire industry remains
in an economically critical state, the
agencies believe that it would be
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unreasonable to propose more stringent
standards. Even in a case where
economic factors were not a
consideration, there are real-world time
constraints which must be considered
due to the short lead time available for
the early years of this program, in
particular for model years 2012 and
2013. The physical processes which the
automotive industry must follow in
order to introduce reliable, high quality
products require certain minimums of
time during the product development
process. These include time needed for
durability testing which requires
significant mileage accumulation under
a range of conditions (e.g., high and low
temperatures, high altitude, etc.) in both
real-world and laboratory conditions. In
addition, the product development
cycle includes a number of preproduction gateways on the
manufacturing side at both the supplier
level and at the automotive
manufacturer level that are constrained
by time. Thus adequate lead-time is an
important factor that the agencies have
taken into consideration in evaluating
the proposed standards as well as the
alternative standards.
As noted, both agencies also
considered the overall costs of their
respective proposed standards in
relation to the projected benefits. The
fact that the benefits are estimated to
considerably exceed their costs supports
the view that the proposed standards
represent a reasonable balance of the
relevant statutory factors. In drawing
this conclusion, the agencies
acknowledge the uncertainties and
limitations of the analyses. For example,
the analysis of the benefits is highly
dependent on the estimated price of fuel
projected out many years into the
future. There is also significant
uncertainty in the potential range of
values that could be assigned to the
social cost of carbon. There are a variety
of impacts that the agencies are unable
to quantify, such as non-market
damages, extreme weather, socially
contingent effects, or the potential for
longer-term catastrophic events, or the
impact on consumer choice. The
agencies also note the need to consider
factors such as the availability of
technology within the lead time
provided and many of the other factors
discussed above. The cost-benefit
analyses are one of the important things
the agencies consider in making a
judgment as to the appropriate
standards to propose under their
respective statutes. Consideration of the
results of the cost-benefit analyses by
the agencies, however, includes careful
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consideration of the limitations
discussed above.
One important area where the two
agencies’ authorities are similar but not
identical involves the transfer of credits
between a single firm’s car and truck
fleets. EISA revised EPCA to allow for
such credit transfers, but with a cap on
the amount of CAFE credits which can
be transferred between the car and truck
fleets. 49 U.S.C. 32903(g)(3). Under CAA
section 202(a), EPA is proposing to
allow CO2 credit transfers between a
single manufacturer’s car and truck
fleets, with no corresponding limits on
such transfers. In general, the EPCA
limit on CAFE credit transfers is not
expected to have the practical effect of
limiting the amount of CO2 emission
credits manufacturers may be able to
transfer under the CAA program,
recognizing that manufacturers must
comply with both the proposed CAFE
standards and the proposed EPA
standards. However, it is possible that
in some specific circumstances the
EPCA limit on CAFE credit transfers
could constrain the ability of a
manufacturer to achieve cost savings
through unlimited use of GHG
emissions credit transfers under the
CAA program.
The agencies request comment on the
impact of the EISA credit transfer caps
on the implementation of the proposed
CAFE and GHG standards, including
whether it would impose such a
constraint and the impacts of a
constraint on costs, emissions, and fuel
economy. In addition, the agencies
invite comment on approaches that
could assist in addressing this issue,
recognizing the importance the agencies
place on harmonization, and that would
be consistent with their respective
statutes. For example, any approach
must be consistent with both the EISA
transfer caps and the EPCA requirement
to set annual CAFE standards at the
maximum feasible average fuel economy
level that NHTSA decides the
manufacturers can achieve in that
model year, based on the agency’s
consideration of the four statutory
factors. Manufacturers should submit
publicly available evidence supporting
their position on this issue so that a well
informed decision can be made and
explained to the public.
D. Summary of the Proposed Standards
for the National Program
1. Joint Analytical Approach
NHTSA and EPA have worked closely
together on nearly every aspect of this
joint proposal. The extent and results of
this collaboration is reflected in the
elements of the respective NHTSA and
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EPA proposals, as well as the analytical
work contained in the Joint Technical
Support Document (Joint TSD). The
Joint TSD, in particular, describes
important details of the analytical work
that are shared, as well as any
differences in approach. These includes
the build up of the baseline and
reference fleets, the derivation of the
shape of the curve that defines the
standards, a detailed description of the
costs and effectiveness of the technology
choices that are available to vehicle
manufacturers, a summary of the
computer models used to estimate how
technologies might be added to vehicles,
and finally the economic inputs used to
calculate the impacts and benefits of the
rules, where practicable. Some of these
are highlighted below.
EPA and NHTSA have jointly
developed attribute curve shapes that
each agency is using for its proposed
standards. Both agencies reviewed the
shape of the attribute-based curve used
for the model year 2011 CAFE
standards. After a new and thorough
analysis of current vehicle data and the
comments received from previous two
CAFE rules, the two agencies improved
upon the constrained logistic curve and
developed a similarly shaped piece-wise
linear function. Further details of these
functions can be found in Sections III
and IV of this preamble as well as
Chapter 2 of the Joint TSD.
A critical technical underpinning of
each agency’s proposal is the cost and
effectiveness of the various control
technologies. These are used to analyze
the feasibility and cost of potential GHG
and CAFE standards. The technical
work reflected in the joint TSD is the
culmination of over 3 years of literature
research, consultation with experts,
detailed computer simulations, vehicle
tear-downs and engineering review, all
of which will continue into the future
as more data becomes available. To
promote transparency, the vast majority
of this information is collected from
publically available sources, and can be
found in the docket of this rule. Nonpublic (i.e., confidential manufacturer)
information was used only to the
limited extent it was needed to fill a
data void. A detailed description of all
of the technology information
considered can be found in Chapter 3 of
the Joint TSD (and for A/C, Chapter 2
of the EPA RIA).
This detailed technology data forms
the inputs to computer models that each
agency uses to project how vehicle
manufacturers may add those
technologies in order to comply with
new standards. These are the OMEGA
and Volpe models for EPA and NHTSA
respectively. The Volpe model is
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tailored for NHTSA’s EPCA and EISA
needs, while the OMEGA model is
tailored for EPA’s CAA needs. In
developing the National Program, EPA
and NHTSA have worked closely to
ensure that consistent and reasonable
results are achieved from both models.
This fruitful collaboration has resulted
in the improvement of both approaches
and now, far from being redundant,
these models serve the purposes of the
respective agencies while also
maintaining an important validating
role. The models and their inputs can
also be found in the docket. Further
description of the model and outputs
can be found in Sections II and IV of
this preamble, and Chapter 3 of the Joint
TSD.
This comprehensive joint analytical
approach has provided a sound and
consistent technical basis for each
agency in developing its proposed
standards, which are summarized in the
sections below.
2. Level of the Standards
In this notice, EPA and NHTSA are
proposing two separate sets of
standards, each under its respective
statutory authorities. EPA is proposing
national CO2 emissions standards for
light-duty vehicles under section 202 (a)
of the Clean Air Act. These standards
would require these vehicles to meet an
estimated combined average emissions
level of 250 grams/mile of CO2 in model
year 2016. NHTSA is proposing CAFE
standards for passenger cars and light
trucks under 49 U.S.C. 32902. These
standards would require them to meet
an estimated combined average fuel
economy level of 34.1 mpg in model
year 2016. The proposed standards for
both agencies begin with the 2012
model year, with standards increasing
in stringency through model year 2016.
They represent a harmonized approach
that will allow industry to build a single
national fleet that will satisfy both the
GHG requirements under the CAA and
CAFE requirements under EPCA/EISA.
Given differences in their respective
statutory authorities, however, the
agencies’ proposed standards include
some important differences. Under the
CO2 fleet average standard proposed
under CAA section 202(a), EPA expects
manufacturers to take advantage of the
option to generate CO2-equivalent
credits by reducing emissions of
hydrofluorocarbons (HFCs) and CO2
through improvements in their air
conditioner systems. EPA accounted for
these reductions in developing its
proposed CO2 standard. EPCA does not
allow vehicle manufacturers to use air
conditioning credits in complying with
CAFE standards for passenger cars.41
CO2 emissions due to air conditioning
operation are not measured by the test
procedure mandated by statute for use
in establishing and enforcing CAFE
standards for passenger cars. As a result,
improvements in the efficiency of
passenger car air conditioners would
not be considered as a possible control
technology for purposes of CAFE.
These differences regarding the
treatment of air conditioning
improvements (related to CO2 and HFC
reductions) affect the relative stringency
of the EPA standard and NHTSA
standard. The 250 grams per mile of CO2
equivalent emissions limit is equivalent
to 35.5 mpg 42 if the automotive industry
were to meet this CO2 level all through
fuel economy improvements. As a
consequence of the prohibition against
NHTSA’s allowing credits for air
conditioning improvements for
purposes of passenger car CAFE
compliance, NHTSA is proposing fuel
economy standards that are estimated to
require a combined (passenger car and
light truck) average fuel economy level
of 34.1 mpg by MY 2016.
NHTSA and EPA’s proposed
standards, like the standards NHTSA
promulgated in March 2009 for model
year 2011 (MY 2011), are expressed as
mathematical functions depending on
vehicle footprint. Footprint is one
measure of vehicle size, and is
determined by multiplying the vehicle’s
wheelbase by the vehicle’s average track
width.43 The standards that must be met
by the fleet of each manufacturer would
be determined by computing the salesweighted harmonic average of the
targets applicable to each of the
manufacturer’s passenger cars and light
trucks. Under these proposed footprintbased standards, the levels required of
individual manufacturers depend, as
noted above, on the mix of vehicles
sold. NHTSA and EPA’s respective
proposed standards are shown in the
tables below. It is important to note that
the standards are the attribute-based
curves proposed by each agency. The
values in the tables below reflect the
agencies’ projection of the
corresponding fleet levels that would
result from these attribute-based curves.
As shown in Table I.D.2–1, NHTSA’s
proposed fleet-wide CAFE-required
levels for passenger cars under the
proposed standards are projected to
increase from 33.6 to 38.0 mpg between
MY 2012 and MY 2016. Similarly, fleetwide CAFE levels for light trucks are
projected to increase from 25.0 to 28.3
mpg. These numbers do not include the
effects of other flexibilities and credits
in the program. NHTSA has also
estimated the average fleet-wide
required levels for the combined car and
truck fleets. As shown, the overall fleet
average CAFE level is expected to be
34.1 mpg in MY 2016. These standards
represent a 4.3 percent average annual
rate of increase relative to the MY 2011
standards.44
TABLE I.D.2–1—AVERAGE REQUIRED FUEL ECONOMY (MPG) UNDER PROPOSED CAFE STANDARDS
2011base
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Passenger Cars .......................................................................................
Light Trucks .............................................................................................
Combined Cars & Trucks ........................................................................
41 There is no such statutory limitation with
respect to light trucks.
42 The agencies are using a common conversion
factor between fuel economy in units of miles per
gallon and CO2 emissions in units of grams per
mile. This conversion factor is 8,887 grams CO2 per
gallon gasoline fuel. Diesel fuel has a conversion
factor of 10,180 grams CO2 per gallon diesel fuel
though for the purposes of this calculation, we are
assuming 100% gasoline fuel.
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30.2
24.1
27.3
2012
33.6
25.0
29.8
43 See 49 CFR 523.2 for the exact definition of
‘‘footprint.’’
44 Because required CAFE levels depend on the
mix of vehicles sold by manufacturers in a model
year, NHTSA’s estimate of future required CAFE
levels depends on its estimate of the mix of vehicles
that will be sold in that model year. NHTSA
currently estimates that the MY 2011 standards will
require average fuel economy levels of 30.5 mpg for
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2013
2014
34.4
25.6
30.6
35.2
26.2
31.4
2015
36.4
27.1
32.6
2016
38.0
28.3
34.1
passenger cars, 24.2 mpg for light trucks, and 27.6
mpg for the combined fleet.
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Accounting for the expectation that
some manufacturers would continue to
pay civil penalties rather than achieving
required CAFE levels, and the ability to
use FFV credits, NHTSA estimates that
the proposed CAFE standards would
lead to the following average achieved
fuel economy levels, based on the
projections of what each manufacturer’s
fleet will comprise in each year of the
program: 45
TABLE I.D.2–2—PROJECTED FLEET-WIDE ACHIEVED CAFE LEVELS UNDER THE PROPOSED FOOTPRINT-BASED CAFE
STANDARDS (MPG)
2012
Passenger Cars ...............................................................................................................................
Light Trucks .....................................................................................................................................
Combined Cars & Trucks ................................................................................................................
NHTSA is also required by EISA to set
a minimum fuel economy standard for
domestically manufactured passenger
cars in addition to the attribute-based
passenger car standard. The minimum
standard ‘‘shall be the greater of (A) 27.5
miles per gallon; or (B) 92 percent of the
average fuel economy projected by the
Secretary for the combined domestic
and non-domestic passenger automobile
fleets manufactured for sale in the
United States by all manufacturers in
the model year * * *.’’ 46
Based on NHTSA’s current market
forecast, the agency’s estimates of these
minimum standards under the proposed
MY 2012–2016 CAFE standards (and,
32.5
24.1
28.7
2013
33.4
24.6
29.6
2014
34.3
25.3
30.4
2015
35.3
26.3
31.6
2016
36.5
27.0
32.7
for comparison, the final MY 2011
standard) are summarized below in
Table I.D.2–3.47 For eventual
compliance calculations, the final
calculated minimum standards will be
updated to reflect any changes in the
average fuel economy level required
under the final standards.
TABLE I.D.2–3—ESTIMATED MINIMUM STANDARD FOR DOMESTICALLY MANUFACTURED PASSENGER CARS UNDER FINAL
MY 2011 AND PROPOSED MY 2012–2016 CAFE STANDARDS FOR PASSENGER CARS (MPG)
2011
2012
28.0 ..................................................................................................................................................
EPA is proposing GHG emissions
standards, and Table I.D.2–4 provides
EPA’s estimates of their projected
overall fleet-wide CO2 equivalent
emission levels.48 The g/mi values are
CO2 equivalent values because they
30.9
2013
31.6
2014
32.4
2015
33.5
2016
34.9
include the projected use of A/C credits
by manufacturers.
TABLE I.D.2–4—PROJECTED FLEET-WIDE EMISSIONS COMPLIANCE LEVELS UNDER THE PROPOSED FOOTPRINT-BASED
CO2 STANDARDS (G/MI)
2012
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Passenger Cars ...............................................................................................................................
Light Trucks .....................................................................................................................................
Combined Cars & Trucks ................................................................................................................
261
352
295
2013
253
341
286
2014
246
332
276
2015
235
317
263
2016
224
302
250
As shown in Table I.D.2–4, projected
fleet-wide CO2 emission level
requirements for cars under the
proposed approach are projected to
increase in stringency from 261 to 224
grams per mile between MY 2012 and
MY 2016. Similarly, fleet-wide CO2
equivalent emission level requirements
for trucks are projected to increase in
stringency from 352 to 302 grams per
mile. As shown, the overall fleet average
CO2 level requirements are projected to
be 250 g/mile in 2016.
EPA anticipates that manufacturers
will take advantage of program
flexibilities such as flex fueled vehicle
credits, and car/truck credit trading.
Due to the credit trading between cars
and trucks, the estimated improvements
in CO2 emissions are distributed
differently than shown in Table I.D 2–
4, where full manufacturer compliance
is assumed. Table I.D.2–5 shows EPA
projection of the achieved emission
levels of the fleet for MY 2012 through
2016, which does consider the impact of
car/truck credit transfer and the increase
in emissions due to program flexibilities
including flex fueled vehicle credits and
the temporary leadtime allowance
alternative standards. The use of
optional air conditioning credits is
considered both in this analysis of
achieved levels and of the projected
levels described above.. As can be seen
in Table I.D.2–5, the projected achieved
levels are slightly higher for model years
2012–2015 due to the projected use of
the proposed flexibilities, but in model
45 NHTSA’s estimates account for availability of
CAFE credits for the sale of flexibly-fuel vehicles
(FFVs), and for the potential that some
manufacturers would pay civil penalties rather than
complying with the proposed CAFE standards. This
yields NHTSA’s estimates of the real-world fuel
economy that could be achieved under the
proposed CAFE standards. NHTSA has not
included any potential impact of car-truck credit
transfer in its estimate of the achieved CAFE levels.
46 49 U.S.C. 32902(b)(4).
47 In the March 2009 final rule establishing MY
2011 standards for passenger cars and light trucks,
NHTSA estimated that the minimum required
CAFE standard for domestically manufactured
passenger cars would be 27.8 mpg under the MY
2011 passenger car standard. Based on the agency’s
current forecast of the MY 2011 passenger car
market, NHTSA now estimates that the minimum
required CAFE standard will be 28.0 mpg in MY
2011.
48 These levels do not include the effect of
flexible fuel credits, transfer of credits between cars
and trucks, temporary lead time allowance, or any
other credits with the exception of air conditioning.
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year 2016 the achieved value is
projected to be 250 g/mi for the fleet.
TABLE I.D.2–5—PROJECTED FLEET-WIDE ACHIEVED EMISSION LEVELS UNDER THE PROPOSED FOOTPRINT-BASED CO2
STANDARDS (G/MI)
2012
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Light Trucks .....................................................................................................................................
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NHTSA’s and EPA’s technology
assessment indicates there is a wide
range of technologies available for
manufacturers to consider in upgrading
vehicles to reduce GHG emissions and
improve fuel economy.49 As noted,
these include improvements to the
engines such as use of gasoline direct
injection and downsized engines that
use turbochargers to provide
performance similar to that of larger
engines, the use of advanced
transmissions, increased use of startstop technology, improvements in tire
performance, reductions in vehicle
weight, increased use of hybrid and
other advanced technologies, and the
initial commercialization of electric
vehicles and plug-in hybrids. EPA is
also projecting improvements in vehicle
air conditioners including more efficient
as well as low leak systems. All of these
technologies are already available today,
and EPA’s and NHTSA’s assessment is
that manufacturers would be able to
meet the proposed standards through
more widespread use of these
technologies across the fleet.
With respect to the practicability of
the standards in terms of lead time,
during MYs 2012–2016 manufacturers
are expected to go through the normal
automotive business cycle of
redesigning and upgrading their lightduty vehicle products, and in some
cases introducing entirely new vehicles
not on the market today. This proposal
would allow manufacturers the time
needed to incorporate technology to
achieve GHG reductions and improve
fuel economy during the vehicle
redesign process. This is an important
aspect of the proposal, as it avoids the
much higher costs that would occur if
manufacturers needed to add or change
technology at times other than their
scheduled redesigns. This time period
would also provide manufacturers the
opportunity to plan for compliance
using a multi-year time frame, again
consistent with normal business
49 The close relationship between emissions of
CO2—the most prevalent greenhouse gas emitted by
motor vehicles—and fuel consumption, means that
the technologies to control CO2 emissions and to
improve fuel economy overlap to a great degree
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practice. Over these five model years,
there would be an opportunity for
manufacturers to evaluate almost every
one of their vehicle model platforms
and add technology in a cost effective
way to control GHG emissions and
improve fuel economy. This includes
redesign of the air conditioner systems
in ways that will further reduce GHG
emissions.
Both agencies considered other
standards as part of the rulemaking
analyses, both more and less stringent
than those proposed. EPA’s and
NHTSA’s analysis of alternative
standards are contained in Sections III
and IV of this notice, respectively.
The CAFE and GHG standards
described above are based on
determining emissions and fuel
economy using the city and highway
test procedures that are currently used
in the CAFE program. Both agencies
recognize that these test procedures are
not fully representative of real world
driving conditions. For example EPA
has adopted more representative test
procedures that are used in determining
compliance with emissions standards
for pollutants other than GHGs. These
test procedures are also used in EPA’s
fuel economy labeling program.
However, as discussed in Section III, the
current information on effectiveness of
the individual emissions control
technologies is based on performance
over the two CAFE test procedures. For
that reason EPA is proposing to use the
current CAFE test procedures for the
proposed CO2 standards and is not
proposing to change those test
procedures in this rulemaking. NHTSA,
as discussed above, is limited by statute
in what test procedures can be used for
purposes of passenger car testing;
however there is no such statutory
limitation with respect to test
procedures for trucks. However, the
same reasons for not changing the truck
test procedures apply for CAFE as well.
Both EPA and NHTSA are interested
in developing programs that employ test
procedures that are more representative
of real world driving conditions, to the
extent authorized under their respective
statutes. This is an important issue, and
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264
365
302
254
355
291
2014
245
346
281
2015
232
332
267
2016
220
311
250
the agencies intend to address it in the
context of a future rulemaking to
address standards for model year 2017
and thereafter. This could include a
range of test procedure changes to better
represent real-world driving conditions
in terms of speed, acceleration,
deceleration, ambient temperatures, use
of air conditioners, and the like. With
respect to air conditioner operation,
EPA discusses the procedures it intends
to use for determining emissions credits
for controls on air conditioners in
Section III. Comment is also invited in
Section IV on the issue of providing air
conditioner credits under 49 U.S.C.
32902 and/or 32904 for light-trucks in
the model years covered by this
proposal.
Finally, based on the information EPA
developed in its recent rulemaking that
updated its fuel economy labeling
program to better reflect average realworld fuel economy, the calculation of
fuel savings and CO2 emissions
reductions obtained by the proposed
CAFE and GHG standards includes
adjustments to account for the
difference between the fuel economy
level measured in the CAFE test
procedure and the fuel economy
actually achieved on average under real
world driving conditions. These
adjustments are industry averages for
the vehicles’ performance as a whole,
however, and are not a substitute for the
information on effectiveness of
individual control technologies that will
be explored for purposes of a future
GHG and CAFE rulemaking.
3. Form of the Standards
In this rule, NHTSA and EPA are
proposing attribute-based standards for
passenger cars and light trucks. NHTSA
adopted an attribute standard based on
vehicle footprint in its Reformed CAFE
program for light trucks for model years
2008–2011,50 and recently extended this
approach to passenger cars in the CAFE
rule for MY 2011 as required by EISA.51
EPA and NHTSA are proposing vehicle
footprint as the attribute for the GHG
50 71
51 74
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and CAFE standards. Footprint is
defined as a vehicle’s wheelbase
multiplied by its track width—in other
words, the area enclosed by the points
at which the wheels meet the ground.
The agencies believe that the footprint
attribute is the most appropriate
attribute on which to base the standards
under consideration, as further
discussed later in this notice and in
Chapter 2 of the joint TSD.
Under the proposed footprint-based
standards, each manufacturer would
have a GHG and CAFE target unique to
its fleet, depending on the footprints of
the vehicle models produced by that
manufacturer. A manufacturer would
have separate footprint-based standards
for cars and for trucks. Generally, larger
vehicles (i.e., vehicles with larger
footprints) would be subject to less
stringent standards (i.e., higher CO2
grams/mile standards and lower CAFE
standards) than smaller vehicles. This is
because, generally speaking, smaller
vehicles are more capable of achieving
higher standards than larger vehicles.
While a manufacturer’s fleet average
standard could be estimated throughout
the model year based on projected
production volume of its vehicle fleet,
the standard to which the manufacturer
must comply would be based on its final
model year production figures. A
manufacturer’s calculation of fleet
average emissions at the end of the
model year would thus be based on the
production-weighted average emissions
of each model in its fleet.
In designing the footprint-based
standards, the agencies built upon the
footprint standard curves for passenger
cars and light trucks used in the CAFE
rule for MY 2011.52 EPA and NHTSA
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FR 14407–14409 (Mar. 30, 2009).
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worked together to design car and truck
footprint curves that followed from
logistic curves used in that rule. The
agencies started by addressing two main
concerns regarding the car curve. The
first concern was that the 2011 car curve
was relatively steep near the inflection
point thus causing concern that small
variations in footprint could produce
relatively large changes in fuel economy
targets. A curve that was directionally
less steep would reduce the potential for
gaming. The second issue was that the
inflection point of the logistic curve was
not centered on the distribution of
vehicle footprints across the industries’
fleet, thus resulting in a flat (universal
or unreformed) standard for over half
the fleet. The proposed car curve has
been shifted and made less steep
compared to the car curve adopted by
NHTSA for 2011, such that it better
aligns the sloped region with higher
production volume vehicle models.
Finally, both the car and truck curves
are defined in terms of a constrained
linear function for fuel consumption
and, equivalently, a piece-wise linear
function for CO2. NHTSA and EPA
include a full discussion of the
development of these curves in the joint
TSD and a summary is found in Section
II below. In addition, a full discussion
of the equations and coefficients that
define the curves is included in Section
III for the CO2 curves and Section IV for
the mpg curves. The following figures
illustrate the standards. First Figure
I.D.3–1 shows the fuel economy (mpg)
car standard curve.
Under an attribute-based standard,
every vehicle model has a performance
target (fuel economy for the CAFE
standards, and CO2 g/mile for the GHG
emissions standards), the level of which
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depends on the vehicle’s attribute (for
this proposal, footprint). The
manufacturers’ fleet average
performance is determined by the
production-weighed 53 average (for
CAFE, harmonic average) of those
targets. NHTSA and EPA are proposing
CAFE and CO2 emissions standards
defined by constrained linear functions
and, equivalently, piecewise linear
functions.54 As a possible option for
future rulemakings, the constrained
linear form was introduced by NHTSA
in the 2007 NPRM proposing CAFE
standards for MY 2011–2015.
NHTSA is proposing the attribute
curves below for assigning a fuel
economy level to an individual vehicle’s
footprint value, for model years 2012
through 2016. These mpg values would
be production weighted to determine
each manufacturer’s fleet average
standard for cars and trucks. Although
the general model of the equation is the
same for each vehicle category and each
year, the parameters of the equation
differ for cars and trucks. Each
parameter also changes on an annual
basis, resulting in the yearly increases in
stringency. Figure I.D.3–1 below
illustrates the passenger car CAFE
standard curves for model years 2012
through 2016 while Figure I.D.3–2
below illustrates the light truck standard
curves for model years 2012–2016. The
MY 2011 final standards for cars and
trucks, which are specified by a
constrained logistic function rather than
a constrained linear function, are shown
for comparison.
BILLING CODE 4910–59–P
53 Production
for sale in the United States.
equations are equivalent but are specified
differently due to differences in the agencies’
respective models.
54 The
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EPA is proposing the attribute curves
below for assigning a CO2 level to an
individual vehicle’s footprint value, for
model years 2012 through 2016. These
CO2 values would be production
weighted to determine each
manufacturer’s fleet average standard
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for cars and trucks. Although the
general model of the equation is the
same for each vehicle category and each
year, the parameters of the equation
differ for cars and trucks. Each
parameter also changes on an annual
basis, resulting in the yearly increases in
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stringency. Figure I.D.3–3 below
illustrates the CO2 car standard curves
for model years 2012 through 2016
while Figure I.D.3–4 shows the CO2
truck standard curves for Model Years
2012–2016.
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NHTSA and EPA propose to use the
same vehicle category definitions for
determining which vehicles are subject
to the car footprint curves versus the
truck curve standards. In other words, a
vehicle classified as a car under the
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NHTSA CAFE program would also be
classified as a car under the EPA GHG
program, and likewise for trucks. EPA
and NHTSA are proposing to employ
the same car and truck definitions for
the MY 2012–2016 CAFE and GHG
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standards as those used in the CAFE
program for the 2011 model year
standards.55 This proposed approach of
using CAFE definitions allows EPA’s
55 49
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proposed CO2 standards and the
proposed CAFE standards to be
harmonized across all vehicles. EPA is
not changing the car/truck definition for
the purposes of any other previous rule.
Generally speaking, a smaller
footprint vehicle will have lower CO2
emissions relative to a larger footprint
vehicle. A footprint-based CO2 standard
can be relatively neutral with respect to
vehicle size and consumer choice. All
vehicles, whether smaller or larger,
must make improvements to reduce CO2
emissions, and therefore all vehicles
will be relatively more expensive. With
the footprint-based standard approach,
EPA and NHTSA believe there should
be no significant effect on the relative
distribution of different vehicle sizes in
the fleet, which means that consumers
will still be able to purchase the size of
vehicle that meets their needs. Table
I.D.3–1 illustrates the fact that different
vehicle sizes will have varying CO2
emissions and fuel economy targets
under the proposed standards.
TABLE I.D.3–1—MODEL YEAR 2016 CO2 AND FUEL ECONOMY TARGETS FOR VARIOUS MY 2008 VEHICLE TYPES
Vehicle type
Example
model footprint
(sq. ft.)
Example models
CO2 emissions
target
(g/mi)
Fuel economy
target
(mpg)
40
46
53
214
237
270
41.4
37.3
32.8
44
49
55
67
269
289
313
358
32.8
30.6
28.2
24.7
Example Passenger Cars
Compact car ....................................................
Midsize car ......................................................
Fullsize car ......................................................
Honda Fit ........................................................
Ford Fusion ....................................................
Chrysler 300 ...................................................
Example Light-Duty Trucks
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Small SUV .......................................................
Midsize crossover ...........................................
Minivan ............................................................
Large pickup truck ..........................................
E. Summary of Costs and Benefits for
the Joint Proposal
This section summarizes the projected
costs and benefits of the proposed CAFE
and GHG emissions standards. These
projections helped inform the agencies’
choices among the alternatives
considered and provide further
confirmation that proposed standards
fall within the spectrum of choices
allowable under their respective
statutory criteria. The costs and benefits
projected by NHTSA to result from
NHTSA’s proposed CAFE standards are
presented first, followed by those from
EPA’s analysis of the proposed GHG
emissions standards.
The agencies recognize that there are
uncertainties regarding the benefit and
cost values presented in this proposal.
Some benefits and costs are not
quantified. The values of other benefits
and costs could be too low or too high.
For several reasons, the estimates for
costs and benefits presented by NHTSA
and EPA, while consistent, are not
directly comparable, and thus should
not be expected to be identical. Most
important, NHTSA and EPA’s proposed
standards would require slightly
different fuel efficiency improvements.
EPA’s proposed GHG standard is more
stringent in part due to its assumptions
about manufacturers’ use of air
conditioning credits, which result from
reductions in air conditioning-related
emissions of HFCs and CO2. In addition,
the proposed CAFE and GHG standards
offer different program flexibilities, and
the agencies’ analyses differ in their
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4WD Ford Escape ..........................................
Nissan Murano ...............................................
Toyota Sienna ................................................
Chevy Silverado .............................................
accounting for these flexibilities (for
example, FFVs etc.), primarily because
NHTSA is statutorily prohibited from
considering some flexibilities when
establishing CAFE standards, while EPA
is not. These differences contribute to
differences in the agencies’ respective
estimates of costs and benefits resulting
from the new standards.
Because EPCA prohibits NHTSA from
considering the use of FFV credits when
establishing CAFE standards, the
agency’s primary analysis of costs, fuel
savings, and related benefits from
imposing higher CAFE standards does
not include them. However, EPCA does
not prohibit NHTSA from considering
the fact that manufacturers may pay
civil penalties rather than complying
with CAFE standards, and NHTSA’s
primary analysis accounts for some
manufacturers’ tendency to do so. In
addition, NHTSA performed a
supplemental analysis of the effect of
FFV credits on benefits and costs from
its proposed CAFE standards, to
demonstrate the real-world impacts of
FFVs, and the summary estimates
presented in Section IV include these
effects. Including the use of FFV credits
reduces estimated per-vehicle
compliance costs of the program.
However, as shown below, including
FFV credits does not significantly
change the projected fuel savings and
CO2 reductions, because FFV credits
reduce the fuel economy levels that
manufacturers achieve not only under
the proposed standards, but also under
the baseline MY 2011 CAFE standards.
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Also, EPCA, as amended by EISA,
allows manufacturers to transfer credits
between their passenger car and light
truck fleets. However, EPCA also
prohibits NHTSA from considering
manufacturers’ ability to use CAFE
credits when determining the stringency
of the CAFE standards. Because of this
prohibition, NHTSA’s primary analysis
does not account for the extent to which
credit transfers might actually occur.
For purposes of its supplemental
analysis, NHTSA considered accounting
for the fact that EPCA allows some
transfer of CAFE credits between the
passenger car and light truck fleets, but
determined that in NHTSA’s year-byyear analysis, manufacturers’ likely
credit transfers cannot be reasonably
estimated at this time.56
Therefore, NHTSA’s primary analysis
shows the estimates the agency
considered for purposes of establishing
new CAFE standards, and its
supplemental analysis including
manufacturers’ potential use of FFV
credits currently reflects the agency’s
best estimate of the potential real-world
effects of the proposed CAFE standards.
56 NHTSA’s analysis estimates multi-year
planning effects within a context in which each
model year is represented explicitly, and
technologies applied in one model year carry
forward to future model years. NHTSA does not
currently have a basis to estimate how a
manufacturer might, for example, weigh the transfer
of credits from the passenger car to the light truck
fleet in MY 2013 against the potential to carry light
truck technologies forward from MY 2013 through
MY 2016. The agency is considering the possibility
of implementing such analysis for purposes of the
final rule.
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EPA made explicit assumptions about
manufacturers’ use of FFV credits under
both the baseline and control
alternatives, and its estimates of costs
and benefits from the proposed GHG
standards reflect these assumptions.
However, under the proposed GHG
standards, FFV credits would be
available through MY 2015; starting in
MY 2016, EPA proposes to allow FFV
credits only based on a manfucturers’s
demonstration that the alternative fuel
is actually being used in the vehicles
and the actual GHG performance for the
vehicle run on that alternative fuel.
EPA’s analysis also assumes that
manufacturers would transfer credits
between their car and truck fleets in the
MY 2011 baseline subject to the
maximum value allowed by EPCA, and
that unlimited car-truck credit transfers
would occur under the proposed GHG
standards. Including these assumptions
in EPA’s analysis increases the resulting
estimates of fuel savings and reductions
in GHG emissions, while reducing
EPA’s estimates of program compliance
costs.
Finally, under the proposed EPA GHG
program, there is no ability for a
manufacturer to intentionally pay fines
in lieu of meeting the standard. Under
EPCA, however, vehicle manufacturers
are allowed to pay fines as an
alternative to compliance with
applicable CAFE standards. NHTSA’s
analysis explicitly estimates the level of
voluntary fine payment by individual
manufacturers, which reduces NHTSA’s
estimates of both the costs and benefits
of its proposed CAFE standards. In
contrast, the CAA does not allow for
fine payment in lieu of compliance with
emission standards, and EPA’s analysis
of costs and benefits from its proposed
standard thus assumes full compliance.
This assumption results in higher
estimates of fuel savings, reductions in
GHG emissions, and manufacturers’
compliance costs to sell fleets that
comply with both NHTSA’s proposed
CAFE program and EPA’s proposed
GHG program.
In summary, the projected costs and
benefits presented by NHTSA and EPA
are not directly comparable, because the
levels being proposed by EPA include
air conditioning-related improvements
in equivalent fuel efficiency and HFC
reductions, because the assumptions
incorporated in EPA’s analysis
regarding car-truck credit transfers, and
because of the projection by EPA of
complete compliance with the proposed
GHG standards. It should also be
expected that overall EPA’s estimates of
GHG reductions and fuel savings
achieved by the proposed GHG
standards will be slightly higher than
those projected by NHTSA only for the
CAFE standards because of the reasons
described above. For the same reasons,
EPA’s estimates of manufacturers’ costs
for complying with the proposed
passenger car and light trucks GHG
standards are slightly higher than
NHTSA’s estimates for complying with
the proposed CAFE standards.
1. Summary of Costs and Benefits of
Proposed NHTSA CAFE Standards
Without accounting for the
compliance flexibilities that NHTSA is
prohibited from considering when
determining the level of new CAFE
standards, since manufacturers’
decisions to use those flexibilities are
voluntary, NHTSA estimates that these
fuel economy increases would lead to
fuel savings totaling 62 billion gallons
throughout the useful lives of vehicles
sold in MYs 2012–2016. At a 3%
discount rate, the present value of the
economic benefits resulting from those
fuel savings is $158 billion.
The agency further estimates that
these new CAFE standards would lead
to corresponding reductions in CO2
emissions totaling 656 million metric
tons (mmt) during the useful lives of
vehicles sold in MYs 2012–2016. The
present value of the economic benefits
from avoiding those emissions is $16.4
billion, based on a global social cost of
carbon value of $20 per metric ton,57
although NHTSA estimated the benefits
associated with five different values of
a one ton GHG reduction ($5, $10, $20,
$34, $56).58 See Section II for a more
detailed discussion of the social cost of
carbon. It is important to note that
NHTSA’s CAFE standards and EPA’s
GHG standards will both be in effect,
and each will lead to increases in
average fuel economy and CO2
emissions reductions. The two agencies’
standards together comprise the
National Program, and this discussion of
costs and benefits of NHTSA’s CAFE
standards does not change the fact that
both the CAFE and GHG standards,
jointly, are the source of the benefits
and costs of the National Program.
TABLE I.E.1–1—NHTSA FUEL SAVED (BILLION GALLONS) AND CO2 EMISSIONS AVOIDED (MMT) UNDER PROPOSED CAFE
STANDARDS (WITHOUT FFV CREDITS)
2012
Fuel (b. gal.) .....................................................................................................................
CO2 (mmt) ........................................................................................................................
4
44
2013
9
96
2014
13
137
2015
16
173
2016
19
206
Total
62
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Considering manufacturers’ ability to
earn credit toward compliance by
selling FFVs, NHTSA estimates very
little change in incremental fuel savings
and avoided CO2 emissions, assuming
FFV credits would be used toward both
the baseline and proposed standards:
57 We have developed two interim estimates of
the global social cost of carbon (SCC) ($/tCO2 in
2007 (2006$)): $33 per tCO2 at a 3% discount rate,
and $5 per tCO2 with a 5% discount rate. The 3%
and 5% estimates have independent appeal and at
this time a clear preference for one over the other
is not warranted. Thus, we have also included—and
centered our current attention on—the average of
the estimates associated with these discount rates,
which is $19 (in 2006$) per ton of CO2 emissions.
When converted to 2007$ for consistency with
other economic values used in the agency’s
analysis, this figure corresponds to $20 per metric
ton of CO2 emissions occurring in 2007. This value
is assumed to increase at 3% annually for emissions
occurring after 2007.
58 The $10 and $56 figures are alternative interim
estimates based on uncertainty about interest rates
of long periods of time. They are based on an
approach that models discount rate uncertainty as
something that evolves over time; in contrast, the
preferred approach mentioned in the immediately
preceding paragraph assumes that there is a single
discount rate with equal probability of 3% and 5%.
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TABLE I.E.1–2—NHTSA FUEL SAVED (BILLION GALLONS) AND CO2 EMISSIONS AVOIDED (MMT) UNDER PROPOSED CAFE
STANDARDS (WITH FFV CREDITS)
2012
Fuel (b. gal.) .....................................................................................................................
CO2 (mmt) ........................................................................................................................
NHTSA estimates that these fuel
economy increases would produce other
benefits both to drivers (e.g., reduced
time spent refueling) and to the U.S.
(e.g., reductions in the costs of
petroleum imports beyond the direct
savings from reduced oil purchases, as
well as some disbenefits (e.g., increase
traffic congestion) caused by drivers’
5
49
tendency to travel more when the cost
of driving declines (as it does when fuel
economy increases). NHTSA has
estimated the total monetary value to
society of these benefits and disbenefits,
and estimates that the proposed
standards will produce significant net
benefits to society. Using a 3% discount
rate, NHTSA estimates that the present
2013
8
90
2014
12
129
2015
15
167
2016
Total
19
204
59
639
value of these benefits would total more
than $200 billion over the useful lives
of vehicles sold during MYs 2012–2016.
More discussion regarding monetized
benefits can be found in Section IV of
this notice and in NHTSA’s Regulatory
Impact Analysis.
TABLE I.E.1–3—NHTSA DISCOUNTED BENEFITS ($BILLION) UNDER PROPOSED CAFE STANDARDS (BEFORE FFV
CREDITS, USING 3 PERCENT DISCOUNT RATE)
2012
Passenger Cars ...............................................................................................................
Light Trucks .....................................................................................................................
Combined .........................................................................................................................
Using a 7% discount rate, NHTSA
estimates that the present value of these
7.6
5.5
13.1
2013
17.0
11.6
28.7
2014
24.4
17.3
41.8
2015
31.2
22.2
53.4
2016
38.7
26.0
64.7
Total
119.1
82.6
201.7
benefits would total more than $159
billion over the same time period.
TABLE I.E.1–4—NHTSA DISCOUNTED BENEFITS ($BILLION) UNDER PROPOSED STANDARDS (BEFORE FFV CREDITS,
USING 7 PERCENT DISCOUNT RATE)
2012
Passenger Cars ...............................................................................................................
Light Trucks .....................................................................................................................
Combined .........................................................................................................................
6.0
4.3
10.3
2013
13.6
9.1
22.6
2014
19.5
13.5
33.1
2015
25.0
17.4
42.4
2016
31.1
20.4
51.5
Total
95.3
64.6
159.8
NHTSA estimates that FFV credits
could reduce achieved benefits by about
4.5%:
TABLE I.E.1–5a—NHTSA DISCOUNTED BENEFITS ($BILLION) UNDER PROPOSED CAFE STANDARDS (WITH FFV CREDITS,
USING A 3 PERCENT DISCOUNT RATE)
2012
Passenger Cars ...............................................................................................................
Light Trucks .....................................................................................................................
Combined .........................................................................................................................
7.8
6.1
13.9
2013
15.9
10.2
26.1
2014
22.5
15.9
38.4
2015
28.6
22.1
50.7
2016
37.1
26.3
63.3
Total
111.9
80.5
192.5
TABLE I.E.1–5b—NHTSA DISCOUNTED BENEFITS ($BILLION) UNDER PROPOSED CAFE STANDARDS (WITH FFV CREDITS,
USING A 7 PERCENT DISCOUNT RATE)
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2012
Passenger Cars ...............................................................................................................
Light Trucks .....................................................................................................................
Combined .........................................................................................................................
NHTSA attributes most of these
benefits—about $158 billion (at a 3%
discount rate and excluding
consideration of FFV credits), as noted
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6.2
4.7
10.9
above—to reductions in fuel
consumption, valuing fuel (for societal
purposes) at the future pre-tax prices
projected in the Energy Information
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2013
12.7
7.9
20.6
2014
18.0
12.4
20.4
2015
23.0
17.3
40.3
2016
29.8
20.6
50.4
Total
89.6
63.0
152.5
Administration’s (EIA’s) reference case
forecast from Annual Energy Outlook
(AEO) 2009. The Preliminary Regulatory
Impact Analysis (PRIA) accompanying
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this proposed rule presents a detailed
analysis of specific benefits of the
proposed rule.
TABLE I.E.1–6—SUMMARY OF BENEFITS FUEL SAVINGS AND CO2 EMISSIONS REDUCTION DUE TO THE PROPOSED RULE
(BEFORE FFV CREDITS)
Monetized value (discounted)
Amount
3% Discount rate
Fuel savings ...................................
CO2 emissions reductions .............
61.6 billion gallons ........................
656 million metric tons (mmt) .......
NHTSA estimates that the increases in
technology application necessary to
achieve the projected improvements in
fuel economy will entail considerable
7% Discount rate
$158.0 billion ................................
$16.4 billion ..................................
monetary outlays. The agency estimates
that incremental costs for achieving its
proposed standards—that is, outlays by
vehicle manufacturers over and above
$125.3 billion.
$12.8 billion.
those required to comply with the MY
2011 CAFE standards—will total about
$60 billion (i.e., during MYs 2012–
2016).
TABLE I.E.1–7—NHTSA INCREMENTAL TECHNOLOGY OUTLAYS ($BILLION) UNDER PROPOSED CAFE STANDARDS
(BEFORE FFV CREDITS)
2012
Passenger Cars ...............................................................................................................
Light Trucks .....................................................................................................................
Combined .........................................................................................................................
4.1
1.5
5.7
2013
6.5
2.8
9.3
2014
8.4
4.0
12.5
2015
9.9
5.2
15.1
2016
11.8
5.9
17.6
Total
40.8
19.4
60.2
NHTSA estimates that use of FFV
credits could significantly reduce these
outlays:
TABLE I.E.1–8—NHTSA INCREMENTAL TECHNOLOGY OUTLAYS ($BILLION) UNDER PROPOSED CAFE STANDARDS (WITH
FFV CREDITS)
2012
Passenger Cars ...............................................................................................................
Light Trucks .....................................................................................................................
Combined .........................................................................................................................
The agency projects that
manufacturers will recover most or all
of these additional costs through higher
selling prices for new cars and light
trucks. To allow manufacturers to
2.5
1.3
3.7
recover these increased outlays (and, to
a much lesser extent, the civil penalties
that some companies are expected to
pay for noncompliance), the agency
estimates that the proposed standards
2013
4.4
2.0
6.3
2014
6.1
3.1
9.2
2015
7.4
4.3
11.7
2016
9.3
5.0
14.2
Total
29.6
15.6
45.2
would lead to increases in average new
vehicle prices ranging from $476 per
vehicle in MY 2012 to $1,091 per
vehicle in MY 2016:
TABLE I.E.1–9—NHTSA INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE COSTS ($) UNDER PROPOSED CAFE
STANDARDS (BEFORE FFV CREDITS)
2012
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Passenger Cars ...............................................................................................................................
Light Trucks .....................................................................................................................................
Combined .........................................................................................................................................
591
283
476
2013
735
460
635
2014
877
678
806
2015
979
882
945
2016
1,127
1,020
1,091
NHTSA estimates that use of FFV
credits could significantly reduce these
costs, especially in earlier model years:
TABLE I.E.1–10—NHTSA INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE COSTS ($) UNDER PROPOSED CAFE
STANDARDS (WITH FFV CREDITS)
2012
Passenger Cars ...............................................................................................................................
Light Trucks .....................................................................................................................................
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231
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448
347
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591
533
2015
695
758
2016
851
895
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TABLE I.E.1–10—NHTSA INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE COSTS ($) UNDER PROPOSED CAFE
STANDARDS (WITH FFV CREDITS)—Continued
2012
Combined .........................................................................................................................................
NHTSA estimates, therefore, that the
total benefits of these proposed
standards would be more than three
times the magnitude of the
corresponding costs. As a consequence,
its proposed standards would produce
net benefits of $142 billion at a 3
percent discount rate (with FFV credits,
$147 billion) or $100 billion at a 7
percent discount rate over the useful
lives of vehicles sold during MYs 2012–
2016.
2. Summary of Costs and Benefits of
Proposed EPA GHG Standards
EPA has conducted a preliminary
assessment of the costs and benefits of
the proposed GHG standards. Table
I.E.2–1 shows EPA’s estimated lifetime
fuel savings and CO2 equivalent
emission reductions for all vehicles sold
in the model years 2012–2016. The
values in Table I.E.2–1 are projected
lifetime totals for each model year and
are not discounted. As documented in
DRIA Chapter 5, the potential credit
transfer between cars and trucks may
change the distribution of the fuel
2013
271
2014
411
571
2015
716
2016
866
savings and GHG emission impacts
between cars and trucks. As discussed
above with respect to NHTSA’s CAFE
standards, it is important to note that
NHTSA’s CAFE standards and EPA’s
GHG standards will both be in effect,
and each will lead to increases in
average fuel economy and CO2
emissions reductions. The two agency’s
standards together comprise the
National Program, and this discussion of
costs and benefits of EPA’s GHG
standards does not change the fact that
both the CAFE and GHG standards,
jointly, are the source of the benefits
and costs of the National Program.
TABLE I.E.2–1—EPA’S ESTIMATED 2012–2016 MODEL YEAR LIFETIME FUEL SAVED AND GHG EMISSIONS AVOIDED
2012
Cars ....................................................
Light Trucks ........................................
Combined ............................................
Fuel (billion gallons) ...........................
Fuel (billion barrels) ............................
CO2 EQ (mmt) ....................................
Fuel (billion gallons) ...........................
Fuel (billion barrels) ............................
CO2 EQ (mmt) ....................................
Fuel (billion gallons) ...........................
Fuel (billion barrels) ............................
CO2 EQ (mmt) ....................................
Table I.E.2–2 shows EPA’s estimated
lifetime discounted benefits for all
vehicles sold in model years 2012–2016.
Although EPA estimated the benefits
associated with five different values of
a one ton GHG reduction ($5, $10, $20,
$34, $56), for the purposes of this
overview presentation of estimated
benefits EPA is showing the benefits
associated with one of these marginal
values, $20 per ton of CO2, in 2007
dollars and 2007 emissions, in this joint
proposal. Table I.E.2–2 presents benefits
based on the $20 value. Section III.H
2013
4
0.1
51
2
0.1
30
7
0.2
81
2014
6
0.1
74
4
0.1
51
10
0.2
125
presents the five marginal values used
to estimate monetized benefits of GHG
reductions and Section III.H presents
the program benefits using each of the
five marginal values, which represent
only a partial accounting of total
benefits due to omitted climate change
impacts and other factors that are not
readily monetized. These factors are
being used on an interim basis while
analysis is conducted to generate new
estimates. The values in the table are
discounted values for each model year
throughout their projected lifetimes.
2015
8
0.2
98
6
0.1
77
14
0.3
174
11
0.3
137
9
0.2
107
19
0.5
244
2016
14
0.3
179
12
0.3
143
26
0.6
323
Total
43
1.0
539
33
0.8
408
76
1.8
947
The benefits include all benefits
considered by EPA such as fuel savings,
GHG reductions, PM benefits, energy
security and other externalities such as
reduced refueling and accidents,
congestion and noise. The lifetime
discounted benefits are shown for one of
five different social cost of carbon (SCC)
values considered by EPA. The values
in Table I.E.2–2 do not include costs
associated with new technology
required to meet the proposal.
TABLE I.E.2–2—EPA’S ESTIMATED 2012–2016 MODEL YEAR LIFETIME DISCOUNTED BENEFITS ASSUMING THE $20/TON
SCC VALUE a
[$Billions of 2007 dollars]
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Model year
Discount rate
2012
3% ....................................................................................................................................
7 .......................................................................................................................................
2013
2014
2015
2016
$20.4
15.8
$31.7
24.7
$44.9
34.9
$63.7
49.3
$87.2
67.7
Total
$248
193
a The benefits include all benefits considered by EPA such as fuel savings, GHG reductions, PM benefits, energy security and other
externalities such as reduced refueling and accidents, congestion and noise.
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Table I.E.2–3 shows EPA’s estimated
lifetime fuel savings, lifetime CO2
emission reductions, and the monetized
net present values of those fuel savings
and CO2 emission reductions. The
gallons of fuel and CO2 emission
reductions are projected lifetime values
for all vehicles sold in the model years
2012–2016. The estimated fuel savings
in billions of barrels and the GHG
reductions in million metric tons of CO2
shown in Table I.E.2–3 are totals for the
five model years throughout their
projected lifetime and are not
discounted. The monetized values
shown in Table I.E.2–3 are the summed
values of the discounted monetized-fuel
savings and monetized-CO2 reductions
for the five model years 2012–2016
throughout their lifetimes. The
monetized values in Table I.E.2–3
reflect both a 3 percent and a 7 percent
discount rate as noted.
TABLE I.E.2–3—EPA’S ESTIMATED 2012–2016 MODEL YEAR LIFETIME FUEL SAVINGS, CO2 EMISSION REDUCTIONS, AND
DISCOUNTED MONETIZED BENEFITS AT A 3% DISCOUNT RATE
[Monetized values in 2007 dollars]
$ value
(billions)
Amount
Fuel savings .......................................................
1.8 billion barrels ..............................................
CO2 emission reductions (valued assuming
$20/ton CO2 in 2007).
947 MMT CO2e ................................................
$193, 3% discount rate.
$151, 7% discount rate.
$21.0, 3% discount rate.
$15.0, 7% discount rate.
Table I.E.2–4 shows EPA’s estimated
incremental technology outlays for cars
and trucks for each of the model years
2012–2016. The total outlays are also
shown. The technology outlays shown
in Table I.E.2–4 are for the industry as
a whole and do not account for fuel
savings associated with the proposal.
TABLE I.E.2–4—EPA’S ESTIMATED INCREMENTAL TECHNOLOGY OUTLAYS
[$BILLIONS OF 2007 DOLLARS]
2012
Cars ..................................................................................................................................
Trucks ..............................................................................................................................
Combined .........................................................................................................................
Table I.E.2–5 shows EPA’s estimated
incremental cost increase of the average
new vehicle for each model year 2012–
2016. The values shown are incremental
to a baseline vehicle and are not
$3.5
2.0
5.4
cumulative. In other words, the
estimated increase for 2012 model year
cars is $374 relative to a 2012 model
year car absent the proposal. The
estimated increase for a 2013 model
2013
$5.3
3.1
8.4
2014
$7.0
4.0
10.9
2015
$8.9
5.1
13.9
2016
Total
$10.7
6.8
17.5
$35.3
20.9
56.1
year car is $531 relative to a 2013 model
year car absent the proposal (not $374
plus $531).
TABLE I.E.2–5—EPA’S ESTIMATED INCREMENTAL INCREASE IN AVERAGE NEW VEHICLE COST
[2007 Dollars per unit]
2012
Cars ..................................................................................................................................................
Trucks ..............................................................................................................................................
Combined .........................................................................................................................................
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F. Program Flexibilities for Achieving
Compliance
EPA’s and NHTSA’s proposed
programs provide compliance flexibility
to manufacturers, especially in the early
years of the National Program. This
flexibility is expected to provide
sufficient lead time for manufacturers to
make necessary technological
improvements and reduce the overall
cost of the program, without
compromising overall environmental
and fuel economy objectives. The broad
goal of harmonizing the two agencies’
proposed standards includes preserving
manufacturers’ flexibilities in meeting
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the standards, to the extent appropriate
and required by law. The following
section provides an overview of the
flexibility provisions the agencies are
proposing.
1. CO2/CAFE Credits Generated Based
on Fleet Average Performance
Under the NHTSA and EPA proposal
the fleet average standards that apply to
a manufacturer’s car and truck fleets
would be based on the applicable
footprint-based curves. At the end of
each model year, when production of
the model year is complete, a
production-weighted fleet average
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$374
358
368
2013
$531
539
534
2014
$663
682
670
2015
$813
886
838
2016
$968
1,213
1,050
would be calculated for each averaging
set (cars and trucks). Under this
approach, a manufacturer’s car and/or
truck fleet that achieves a fleet average
CO2/CAFE level better than the standard
would generate credits. Conversely, if
the fleet average CO2/CAFE level does
not meet the standard the fleet would
generate debits (also referred to as a
shortfall).
Under the proposed program, a
manufacturer whose fleet generates
credits in a given model year would
have several options for using those
credits, including credit carry-back,
credit carry-forward, credit transfers,
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and credit trading. These provisions
exist in the MY 2011 CAFE program
under EPCA and EISA, and similar
provisions are part of EPA’s Tier 2
program for light duty vehicle criteria
pollutant emissions, as well as many
other mobile source standards issued by
EPA under the CAA. EPA is proposing
that the manufacturer would be able to
carry-back credits to offset any deficit
that had accrued in a prior model year
and was subsequently carried over to
the current model year. EPCA already
provides for this. EPCA restricts the
carry-back of CAFE credits to three
years and EPA is proposing the same
limitation, in keeping with the goal of
harmonizing both sets of proposed
standards.
After satisfying any need to offset preexisting deficits, remaining credits
could be saved (banked) for use in
future years. Under the CAFE program,
EISA allows manufacturers to apply
credits earned in a model year to
compliance in any of the five
subsequent model years.59 EPA is also
proposing, under the GHG program, to
allow manufacturers to use these
banked credits in the five years after the
year in which they were generated (i.e.,
five years carry-forward).
EISA required NHTSA to establish by
regulation a CAFE credits transferring
program, which NHTSA established in
a March 2009 final rule codified at 49
CFR part 536, to allow a manufacturer
to transfer credits between its vehicle
fleets to achieve compliance with the
standards. For example, credits earned
by over-compliance with a
manufacturer’s car fleet average
standard could be used to offset debits
incurred due to that manufacturer’s not
meeting the truck fleet average standard
in a given year. EPA’s Tier 2 program
also provides for this type of credit
transfer. For purposes of this NPRM,
EPA proposes unlimited credit transfers
across a manufacturer’s car-truck fleet to
meet the GHG standard. This is based
on the expectation that this kind of
credit transfer provision will allow the
required GHG emissions reductions to
be achieved in the most cost effective
way, and this flexibility will facilitate
the ability of the manufacturers to
comply with the GHG standards in the
lead time provided. Under the CAA,
unlike under EISA, there is no statutory
limitation on car-truck credit transfers.
Therefore EPA is not proposing to
constrain car-truck credit transfers as
doing so would increase costs with no
corresponding environmental benefit.
For the CAFE program, however, EISA
limits the amount of credits that may be
transferred, and also prohibits the use of
transferred credits to meet the statutory
minimum level for the domestic car
fleet standard.60 These and other
statutory limits would continue to apply
to the determination of compliance with
the CAFE standard.
Finally, EISA also allowed NHTSA to
establish by regulation a CAFE credit
trading program, which NHTSA
established in the March 2009 final rule
at 40 CFR Part 536, to allow credits to
be traded (sold) to other vehicle
manufacturers. EPA is also proposing to
allow credit trading in the GHG
program. These sorts of exchanges are
typically allowed under EPA’s current
mobile source emission credit programs,
although manufacturers have seldom
made such exchanges. Under the
NHTSA CAFE program, EPCA also
allows these types of credit trades,
although, as with transferred credits,
traded credits may not be used to meet
the minimum domestic car standards
specified by statute.61
2. Air Conditioning Credits
Air conditioning (A/C) systems
contribute to GHG emissions in two
ways. Hydrofluorocarbon (HFC)
refrigerants, which are powerful GHG
pollutants, can leak from the A/C
system. Operation of the A/C system
also places an additional load on the
engine, which results in additional CO2
tailpipe emissions. EPA is proposing an
approach that allows manufacturers to
generate credits by reducing GHG
emissions related to A/C systems.
Specifically, EPA is proposing a test
procedure and method to calculate CO2
equivalent reductions for the full useful
life on a grams/mile basis that can be
used as credits in meeting the fleet
average CO2 standards. EPA’s analysis
indicates this approach provides
manufacturers with a highly costeffective way to achieve a portion of
GHG emissions reductions under the
EPA program. EPA is estimating that
manufacturers will on average take
advantage of 11 g/mi GHG credit toward
meeting the 250 g/mi by 2016 (though
some companies may have more). EPA
is also proposing to allow manufacturers
to earn early A/C credits starting in MY
2009 through 2011, as discussed further
in a later section.
Comment is also sought on the
approach of providing CAFE credits
under 49 U.S.C. 32904(c) for light trucks
equipped with relatively efficient air
conditioners for MYs 2012–2016. The
agencies invite comment on allowing a
manufacturer to generate additional
60 49
59 49
U.S.C. 32903(a)(2).
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U.S.C. 32903(f)(2).
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CAFE credits from the reduction of fuel
consumption through the application of
air conditioning efficiency improvement
technologies to trucks. Currently, the
CAFE program does not induce
manufacturers to install more efficient
air conditioners because the air
conditioners are not turned on during
fuel economy testing. The agencies note
that if such credits were adopted, it may
be necessary to reflect them in the
setting of the CAFE standards for light
trucks for the same model years and
invite comment on that issue.
3. Flex-Fuel and Alternative Fuel
Vehicle Credits
EPCA authorizes an incentive under
the CAFE program for production of
dual-fueled or flexible-fuel vehicles
(FFV) and dedicated alternative fuel
vehicles. FFVs are vehicles that can run
both on an alternative fuel and
conventional fuel. Most FFVs are E–85
capable vehicles, which can run on
either gasoline or a mixture of up to 85
percent ethanol and 15 percent gasoline.
Dedicated alternative fuel vehicles are
vehicles that run exclusively on an
alternative fuel. EPCA was amended by
EISA to extend the period of availability
of the FFV incentive, but to begin
phasing it out by annually reducing the
amount of FFV incentive that can be
used toward compliance with the CAFE
standards.62 EPCA does not premise the
availability of the FFV credits on actual
use of alternative fuel by an FFV
vehicle. Under NHTSA’s CAFE
program, pursuant to EISA, after MY
2019, no FFV credits will be available
for CAFE compliance.63 For dedicated
alternative fuel vehicles, there are no
limits or phase-out of the credits.
Consistent with the statute, NHTSA will
continue to allow the use of FFV credits
for purposes of compliance with the
proposed standards until the end of the
phase-out period.
For the GHG program, EPA is
proposing to allow FFV credits in line
with EISA limits only during the period
from MYs 2012 to 2015. After MY 2015,
EPA proposes to allow FFV credits only
based on a manufacturer’s
demonstration that the alternative fuel
is actually being used in the vehicles.
EPA is seeking comments on how that
demonstration could be made. EPA
discusses this in more detail in Section
III.C of the preamble.
62 EPCA provides a statutory incentive for
production of FFVs by specifying that their fuel
economy is determined using a special calculation
procedure that results in those vehicles being
assigned a higher fuel economy level than would
otherwise occur. This is typically referred to as an
FFV credit.
63 Id.
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4. Temporary Lead-Time Allowance
Alternative Standards
Manufacturers with limited product
lines may be especially challenged in
the early years of the proposed program.
Manufacturers with narrow product
offerings may not be able to take full
advantage of averaging or other program
flexibilities due to the limited scope of
the types of vehicles they sell. For
example, some smaller volume
manufacturers focus on high
performance vehicles with higher CO2
emissions, above the CO2 emissions
target for that vehicle footprint, but do
not have other types of vehicles in their
production mix with which to average.
Often, these manufacturers pay fines
under the CAFE program rather than
meeting the applicable CAFE standard.
EPA believes that these technological
circumstances may call for a more
gradual phase-in of standards so that
manufacturer resources can be focused
on meeting the 2016 levels.
EPA is proposing a temporary leadtime allowance for manufacturers who
sell vehicles in the U.S. in MY 2009
whose vehicle sales in that model year
are below 400,000 vehicles. EPA
proposes that this allowance would be
available only during the MY 2012–
2015 phase-in years of the program. A
manufacturer that satisfies the threshold
criteria would be able to treat a limited
number of vehicles as a separate
averaging fleet, which would be subject
to a less stringent GHG standard.64
Specifically, a standard of 125 percent
of the vehicle’s otherwise applicable
foot-print target level would apply to up
to 100,000 vehicles total, spread over
the four year period of MY 2012 through
2015. Thus, the number of vehicles to
which the flexibility could apply is
limited. EPA also is proposing
appropriate restrictions on credit use for
these vehicles, as discussed further in
Section III. By MY 2016, these
allowance vehicles must be averaged
into the manufacturer’s full fleet (i.e.,
they are no longer eligible for a different
standard). EPA discusses this in more
detail in Section III.B of the preamble.
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5. Additional Credit Opportunities
Under the CAA
EPA is proposing additional
opportunities for early credits in MYs
2009–2011 through over-compliance
with a baseline standard. The baseline
standard would be set to be equivalent,
64 EPCA does not permit such an allowance.
Consequently, manufacturers who may be able to
take advantage of a lead-time allowance under the
proposed GHG standards would be required to
comply with the applicable CAFE standard or be
subject to penalties for non-compliance.
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on a national level, to the California
standards. Potentially, credits could be
generated by over-compliance with this
baseline in one of two ways—overcompliance by the fleet of vehicles sold
in California and the CAA section 177
States (i.e., those States adopting the
California program), or over-compliance
with the fleet of vehicles sold in the 50
States. EPA is also proposing early
credits based on over-compliance with
CAFE, but only for vehicles sold in
States outside of California and the CAA
section 177 States. Under the proposed
early credit provisions, no early FFV
credits would be allowed, except those
achieved by over-compliance with the
California program based on California’s
provisions that manufacturers
demonstrate actual use of the alternative
fuel. EPA’s proposed early credits
options are designed to ensure that there
would be no double counting of early
credits. Consistent with this paragraph,
NHTSA notes, however, that credits for
overcompliance with CAFE standards
during MYs 2009–2011 will still be
available for manufacturers to use
toward compliance in future model
years, just as before.
EPA is proposing additional credit
opportunities to encourage the
commercialization of advanced GHG/
fuel economy control technologies, such
as electric vehicles, plug-in hybrid
electric vehicles, and fuel cell vehicles.
These proposed advanced technology
credits are in the form of a multiplier
that would be applied to the number of
vehicles sold, such that each eligible
vehicle counts as more than one vehicle
in the manufacturer’s fleet average. EPA
is also proposing to allow early
advanced technology credits to be
generated beginning in MYs 2009
through 2011.
EPA is also proposing an Option for
manufacturers to generate credits for
employing technologies that achieve
GHG reductions that are not reflected on
current test procedures. Examples of
such ‘‘off-cycle’’ technologies might
include solar panels on hybrids,
adaptive cruise control, and active
aerodynamics, among other
technologies. EPA is seeking comments
on the best ways to quantify such
credits to ensure any off-cycle credits
applied for by a manufacturer are
verifiable, reflect real-world reductions,
based on repeatable test procedures, and
are developed through a transparent
process allowing appropriate
opportunities for public comment.
G. Coordinated Compliance
Previous NHTSA and EPA regulations
and statutory provisions establish ample
examples on which to develop an
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effective compliance program that
achieves the energy and environmental
benefits from CAFE and motor vehicle
GHG standards. NHTSA and EPA are
proposing a program that recognizes,
and replicates as closely as possible, the
compliance protocols associated with
the existing CAA Tier 2 vehicle
emission standards, and with CAFE
standards. The certification, testing,
reporting, and associated compliance
activities closely track current practices
and are thus familiar to manufacturers.
EPA already oversees testing, collects
and processes test data, and performs
calculations to determine compliance
with both CAFE and CAA standards.
Under this proposed coordinated
approach, the compliance mechanisms
for both programs are consistent and
non-duplicative. EPA will also apply
the CAA authorities applicable to its
separate in-use requirements in this
program.
The proposed approach allows
manufacturers to satisfy the new
program requirements in the same
general way they comply with existing
applicable CAA and CAFE
requirements. Manufacturers would
demonstrate compliance on a fleetaverage basis at the end of each model
year, allowing model-level testing to
continue throughout the year as is the
current practice for CAFE
determinations. The proposed
compliance program design establishes
a single set of manufacturer reporting
requirements and relies on a single set
of underlying data. This approach still
allows each agency to assess compliance
with its respective program under its
respective statutory authority.
NHTSA and EPA do not anticipate
any significant noncompliance under
the proposed program. However, failure
to meet the fleet average standards (after
credit opportunities are exhausted)
would ultimately result in the potential
for penalties under both EPCA and the
CAA. The CAA allows EPA
considerable discretion in assessment of
penalties. Penalties under the CAA are
typically determined on a vehiclespecific basis by determining the
number of a manufacturer’s highest
emitting vehicles that caused the fleet
average standard violation. This is the
same mechanism used for EPA’s
National Low Emission Vehicle and Tier
2 corporate average standards, and to
date there have been no instances of
noncompliance. CAFE penalties are
specified by EPCA and would be
assessed for the entire noncomplying
fleet at a rate of $5.50 times the number
of vehicles in the fleet, times the
number of tenths of mpg by which the
fleet average falls below the standard. In
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the event of a compliance action arising
out of the same facts and circumstances,
EPA could consider CAFE penalties
when determining appropriate remedies
for the EPA case.
H. Conclusion
This joint proposal by NHTSA and
EPA represents a strong and coordinated
National Program to achieve greenhouse
gas emission reductions and fuel
economy improvements from the lightduty vehicle part of the transportation
sector. EPA’s proposal for GHG
standards under the Clean Air Act is
discussed in Section III of this notice;
NHTSA’s proposal for CAFE standards
under EPCA is discussed in Section IV.
Each agency includes analyses on a
variety of relevant issues under its
respective statute, such as feasibility of
the proposed standards, costs and
benefits of the proposal, and effects on
the economy, auto manufacturers, and
consumers. This joint rulemaking
proposal reflects a carefully coordinated
and harmonized approach to developing
and implementing standards under the
two agencies’ statutes and is in
accordance with all substantive and
procedural requirements required by
law.
NHTSA and EPA believe that the MY
2012 through 2016 standards proposed
would provide substantial reductions in
emissions of GHGs and oil
consumption, with significant fuel
savings for consumers. The proposed
program is technologically feasible at a
reasonable cost, based on deployment of
available and effective control
technology across the fleet, and industry
would have the opportunity to plan over
several model years and incorporate the
vehicle upgrades into the normal
redesign cycles. The proposed program
would result in enormous societal net
benefits, including greenhouse gas
emission reductions, fuel economy
savings, improved energy security, and
cost savings to consumers from reduced
fuel utilization.
II. Joint Technical Work Completed for
This Proposal
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A. Introduction
In this section NHTSA and EPA
discuss several aspects of the joint
technical analyses the two agencies
collaborated on which are common to
the development of each agency’s
proposed standards. Specifically we
discuss: The development of the
baseline vehicle market forecast used by
each agency, the development of the
proposed attribute-based standard curve
shapes, how the relative stringency
between the car and truck fleet
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standards for this proposal was
determined, which technologies the
agencies evaluated and their costs and
effectiveness, and which economic
assumptions the agencies included in
their analyses. The joint Technical
Support Document (TSD) discusses the
agencies’ joint technical work in more
detail.
B. How Did NHTSA and EPA Develop
the Baseline Market Forecast?
1. Why Do the Agencies Establish a
Baseline Vehicle Fleet?
In order to calculate the impacts of
the EPA and NHTSA proposed
regulations, it is necessary to estimate
the composition of the future vehicle
fleet absent these proposed regulations
in order to conduct comparisons. EPA
and NHTSA have developed a
comparison fleet in two parts. The first
step was to develop a baseline fleet
based on model year 2008 data. The
second step was to project that fleet into
2011–2016. This is called the reference
fleet. The third step was to modify that
2011–2016 reference fleet such that it
had sufficient technologies to meet the
2011 CAFE standards. This final
‘‘reference fleet’’ is the light duty fleet
estimated to exist in 2012–2016 if these
proposed rules are not adopted. Each
agency developed a final reference fleet
to use in its modeling. All of the
agencies’ estimates of emission
reductions, fuel economy
improvements, costs, and societal
impacts are developed in relation to the
respective reference fleets.
2. How Do the Agencies Develop the
Baseline Vehicle Fleet?
EPA and NHTSA have based the
projection of total car and total light
truck sales on recent projections made
by the Energy Information
Administration (EIA). EIA publishes a
long-term projection of national energy
use annually called the Annual Energy
Outlook. This projection utilizes a
number of technical and econometric
models which are designed to reflect
both economic and regulatory
conditions expected to exist in the
future. In support of its projection of
fuel use by light-duty vehicles, EIA
projects sales of new cars and light
trucks. Due to the state of flux of both
energy prices and the economy, EIA
published three versions of its 2009
Annual Energy Outlook. The
Preliminary 2009 report was published
early (in November 2008) in order to
reflect the dramatic increase in fuel
prices which occurred during 2008 and
which occurred after the development
of the 2008 Annual Energy Outlook. The
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official 2009 report was published in
March of 2009. A third 2009 report was
published a month later which reflected
the economic stimulus package passed
by Congress earlier this year. We use the
sales projections of this latest report,
referred to as the updated 2009 Annual
Energy Outlook, here.
In their updated 2009 report, EIA
projects that total light-duty vehicle
sales will gradually recover from their
currently depressed levels by roughly
2013. In 2016, car and light truck sales
are projected to be 9.5 and 7.1 million
units, respectively. While the total level
of sales of 16.6 million units is similar
to pre-2008 levels, the fraction of car
sales is higher than that existing in the
2000–2007 timeframe. This presumably
reflects the impact of higher fuel prices
and that fact that cars tend to have
higher levels of fuel economy than
trucks. We note that EIA’s definition of
cars and trucks follows that used by
NHTSA prior to the MY 2011 CAFE
final rule published earlier this year.
That recent CAFE rule, which
established the MY 2011 standards,
reclassified a number of 2-wheel drive
sport utility vehicles from the truck fleet
to the car fleet. This has the impact of
shifting a considerable number of
previously defined trucks into the car
category. Sales projections of cars and
trucks for all future model years can be
found in the draft Joint TSD for this
proposal.
In addition to a shift towards more car
sales, sales of segments within both the
car and truck markets have also been
changing and are expected to continue
to change in the future. Manufacturers
are introducing more crossover models
which offer much of the utility of SUVs
but using more car-like designs. In order
to reflect these changes in fleet makeup,
EPA and NHTSA considered several
available forecasts. After review EPA
purchased and shared with NHTSA
forecasts from two well-known industry
analysts, CSM–Worldwide (CSM), and
J.D. Powers. NHTSA and EPA decided
to use the forecast from CSM, for several
reasons. One, CSM agreed to allow us to
publish the data, on which our forecast
is based, in the public domain.65 Two,
it covered nearly all the timeframe of
greatest relevance to this proposed rule
(2012–2015 model years). Three, it
provided projections of vehicle sales
both by manufacturer and by market
segment. Four, it utilized market
segments similar to those used in the
65 The CSM data made public includes only the
higher level volume projections by market segment
and manufacturer. The projections by nameplate
and model are strictly the agencies’ estimates based
on these higher level CSM segment and
manufacturer distribution.
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2014–2015 the changes were relatively
small. Therefore, we assumed 2016
market share and market segments to be
the same as for 2015. To the extent that
the agencies have received CSM
forecasts for 2016, we will consider
using them for the final rule.
We then projected the CSM forecasts
for relative sales of cars and trucks by
manufacturer and by market segment on
to the total sales estimates of the
updated 2009 Annual Energy Outlook.
Tables II.B.1–1 and II.B.1–2 show the
EPA emission certification program and
fuel economy guide. As discussed
further below, this allowed the CSM
forecast to be combined with other data
obtained by NHTSA and EPA. We also
assumed that the breakdowns of car and
truck sales by manufacturer and by
market segment for 2016 model year and
beyond were the same as CSM’s forecast
for 2015 calendar year. The changes
between company market share and
industry market segments were most
significant from 2011–2014, while for
resulting projections for the 2016 model
year and compare these to actual sales
which occurred in 2008 model year.
Both tables show sales using the
traditional or classic definition of cars
and light trucks. Determining which
classic trucks will be defined as cars
using the revised definition established
by NHTSA earlier this year and
included in this proposed rule requires
more detailed information about each
vehicle model which is developed next.
TABLE II.B.2–1—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MANUFACTURER IN 2008 AND ESTIMATED FOR 2016
Cars
2008 MY
Light trucks
2016 MY
2008 MY
Total
2016 MY
2008 MY
2016 MY
BMW ....................................................................
Chrysler ................................................................
Daimler .................................................................
Ford ......................................................................
General Motors ....................................................
Honda ...................................................................
Hyundai ................................................................
Kia ........................................................................
Mazda ..................................................................
Mitsubishi .............................................................
Porsche ................................................................
Nissan ..................................................................
Subaru ..................................................................
Suzuki ..................................................................
Tata ......................................................................
Toyota ..................................................................
Volkswagen ..........................................................
291,796
537,808
208,052
641,281
1,370,280
899,498
270,293
145,863
191,326
76,701
18,909
653,121
149,370
68,720
9,596
1,143,696
290,385
380,804
110,438
235,205
990,700
1,562,791
1,429,262
437,329
255,954
290,010
49,697
37,064
985,668
128,885
69,452
41,584
1,986,824
476,699
61,324
1,119,397
79,135
1,227,107
1,749,227
612,281
120,734
135,589
111,220
24,028
18,797
370,294
49,211
45,938
55,584
1,067,804
26,999
134,805
133,454
109,917
1,713,376
1,571,037
812,325
287,694
162,515
112,837
10,872
17,175
571,748
75,841
34,307
47,105
1,218,223
99,459
353,120
1,657,205
287,187
1,868,388
3,119,507
1,511,779
391,027
281,452
302,546
100,729
37,706
1,023,415
198,581
114,658
65,180
2,211,500
317,384
515,609
243,891
345,122
2,704,075
3,133,827
2,241,586
725,024
418,469
402,847
60,569
54,240
1,557,416
204,726
103,759
88,689
3,205,048
576,158
Total ..............................................................
6,966,695
9,468,365
6,874,669
7,112,689
13,841,364
16,581,055
TABLE II.B.2–2—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MARKET SEGMENT IN 2008 AND ESTIMATED FOR 2016
Cars
Light trucks
2008 MY
2016 MY
Full-Size Car .........................................
Mid-Size Car .........................................
Small/Compact Car ...............................
730,355
1,970,494
1,850,522
466,616
2,641,739
2,444,479
Subcompact/Mini Car ............................
599,643
1,459,138
Luxury Car ............................................
Specialty Car .........................................
Others ...................................................
1,057,875
754,547
3,259
1,432,162
1,003,078
21,153
Total Sales .....................................
6,966,695
9,468,365
2008 MY
2016 MY
Full-Size Pickup ...................................
Mid-Size Pickup ...................................
Full-Size Van ........................................
Mid-Size Van ........................................
Mid-Size MAV * ....................................
Small MAV ...........................................
Full-Size SUV* .....................................
Mid-Size SUV .......................................
Small SUV ............................................
Full-Size CUV * .....................................
Mid-Size CUV .......................................
Small CUV ............................................
1,195,073
598,197
33,384
719,529
191,448
235,524
530,748
347,026
377,262
406,554
798,335
1,441,589
1,475,881
510,580
284,110
615,349
158,930
289,880
90,636
110,155
124,397
319,201
1,306,770
1,866,580
...............................................................
6,874,669
7,152,470
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* MAV—Multi-Activity Vehicle, SUV—Sport Utility Vehicle, CUV—Crossover Utility Vehicle.
The agencies recognize that CSM
forecasts a very significant reduction in
market share for Chrysler. This may be
a result of the extreme uncertainty
surrounding Chrysler in early 2009. The
forecast from CSM used in this proposal
is CSM’s forecast from the 2nd quarter
of 2009. CSM also provided to the
agencies an updated forecast in the 3rd
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quarter of 2009, which we were unable
to use for this proposal due to time
constraints. However, we have placed a
copy of the 3rd Quarter CSM forecast in
the public docket for this rulemaking,
and we will consider its use, and any
further updates from CSM or other data
received during the comment period
when developing the analysis for the
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final rule.66 CSM’s forecast for Chrysler
for the 3rd quarter of 2009 was
significantly increased compared to the
2nd quarter, by nearly a factor of two
66 ‘‘CSM North America Sales Forecast
Comparison 2Q09 3Q09 For Docket.’’ 2nd and 3rd
quarter forecasting results from CSM World Wide
(Docket EPA–HQ–OAR–2009–0472).
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increase in projected sales over the
2012–2015 time frame.
The forecasts obtained from CSM
provided estimates of car and trucks
sales by segment and by manufacturer,
but not by manufacturer for each market
segment. Therefore, we needed other
information on which to base these
more detailed market splits. For this
task, we used as a starting point each
manufacturer’s sales by market segment
from model year 2008. Because of the
larger number of segments in the truck
market, we used slightly different
methodologies for cars and trucks.
The first step for both cars and trucks
was to break down each manufacturer’s
2008 sales according to the market
segment definitions used by CSM. For
example, we found that Ford’s car sales
in 2008 were broken down as shown in
Table II.B.2–3:
TABLE II.B.2–3—BREAKDOWN OF
FORD’S 2008 CAR SALES
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Full-size cars .................
Mid-size cars .................
Small/Compact cars ......
Subcompact/Mini cars ...
Luxury cars ...................
Specialty cars ................
76,762 units.
170,399 units.
180,249 units.
None.
100,065 units.
110,805 units.
We then adjusted each manufacturer’s
sales of each of its car segments (and
truck segments, separately) so that the
manufacturer’s total sales of cars (and
trucks) matched the total estimated for
each future model year based on EIA
and CSM forecasts. For example, as
indicated in Table II.B.2–1, Ford’s total
car sales in 2008 were 641,281 units,
while we project that they will increase
to 990,700 units by 2016. This
represents an increase of 54.5 percent.
Thus, we increased the 2008 sales of
each Ford car segment by 54.5 percent.
This produced estimates of future sales
which matched total car and truck sales
per EIA and the manufacturer
breakdowns per CSM (and exemplified
for 2016 in Table II.B.1–1). However, the
sales splits by market segment would
not necessarily match those of CSM
(and exemplified for 2016 in Table
II.B.2–2).
In order to adjust the market segment
mix for cars, we first adjusted sales of
luxury, specialty and other cars. Since
the total sales of cars for each
manufacturer were already set, any
changes in the sales of one car segment
had to be compensated by the opposite
change in another segment. For the
luxury, specialty and other car
segments, it is not clear how changes in
sales would be compensated. For
example, if luxury car sales decreased,
would sales of full-size cars increase,
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mid-size cars, etc.? Thus, any changes in
the sales of cars within these three
segments were assumed to be
compensated for by proportional
changes in the sales of the other four car
segments. For example, for 2016, the
figures in Table II.B.2–2 indicate that
luxury car sales in 2016 are 1,432,162
units. Luxury car sales are 1,057,875
units in 2008. However, after adjusting
2008 car sales by the change in total car
sales for 2016 projected by EIA and a
change in manufacturer market share
per CSM, luxury car sales increased to
1,521,892 units. Thus, overall for 2016,
luxury car sales had to decrease by
89,730 units or 6 percent. We decreased
the luxury car sales by each
manufacturer by this percentage. The
absolute decrease in luxury car sales
was spread across sales of full-size, midsize, compact and subcompact cars in
proportion to each manufacturer’s sales
in these segments in 2008. The same
adjustment process was used for
specialty cars and the ‘‘other cars’’
segment defined by CSM.
A slightly different approach was
used to adjust for changing sales of the
remaining four car segments. Starting
with full-size cars, we again determined
the overall percentage change that
needed to occur in future year full-size
cars sales after (1) adjusting for total
sales per EIA, (2) manufacturer sales
mix per CSM and (3) adjustments in the
luxury, specialty and other car
segments, in order to meet the segment
sales mix per CSM. Sales of each
manufacturer’s large cars were adjusted
by this percentage. However, instead of
spreading this change over the
remaining three segments, we assigned
the entire change to mid-size vehicles.
We did so because, as shown in 2008,
higher fuel prices tend to cause car
purchasers to purchase smaller vehicles.
We are using AEO 2009 for this
analysis, which assumes fuel prices
similar in magnitude to actual high fuel
prices seen in the summer of 2008.67
However, if a consumer had previously
purchased a full-size car, we thought it
unlikely that they would jump all the
way to a subcompact. It seemed more
reasonable to project that they would
drop one vehicle size category smaller.
Thus, the change in each manufacturer’s
sales of full-size cars was matched by an
opposite change (in absolute units sold)
in mid-size cars.
The same process was then applied to
mid-size cars, with the change in midsize car sales being matched by an
67 J.D. Power and Associates, Press Release, May
16, 2007. ‘‘Rising Gas Prices Begin to Sway NewVehicle Owners Toward Smaller Versions of Trucks
and Utility Vehicles.’’
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opposite change in compact car sales.
This process was repeated one more
time for compact car sales, with changes
in sales in this segment being matched
by the opposite change in the sales of
subcompacts. The overall result was a
projection of car sales for 2012–2016
which matched the total sales
projections of EIA and the manufacturer
and segment splits of CSM. These sales
splits can be found in Chapter 1 of the
draft Joint Technical Support Document
for this proposal.
As mentioned above, a slightly
different process was applied to truck
sales. The reason for this was we could
not confidently project how the change
in sales from one segment preferentially
went to or came from another particular
segment. Some trend from larger
vehicles to smaller vehicles would have
been possible. However, the CSM
forecasts indicated large changes in total
sport utility vehicle, multi-activity
vehicle and cross-over sales which
could not be connected. Thus, we
applied an iterative, but straightforward
process for adjusting 2008 truck sales to
match the EIA and CSM forecasts.
The first three steps were exactly the
same as for cars. We broke down each
manufacturer’s truck sales into the truck
segments as defined by CSM. We then
adjusted all manufacturers’ truck
segment sales by the same factor so that
total truck sales in each model year
matched EIA projections for truck sales
by model year. We then adjusted each
manufacturer’s truck sales by segment
proportionally so that each
manufacturer’s percentage of total truck
sales matched that forecast by CSM.
This again left the need to adjust truck
sales by segment to match the CSM
forecast for each model year.
In the fourth step, we adjusted the
sales of each truck segment by a
common factor so that total sales for that
segment matched the combination of the
EIA and CSM forecasts. For example,
sales of large pickups across all
manufacturers were 1,144,166 units in
2016 after adjusting total sales to match
EIA’s forecast and adjusting each
manufacturer’s truck sales to match
CSM’s forecast for the breakdown of
sales by manufacturer. Applying CSM’s
forecast of the large pickup segment of
truck sales to EIA’s total sales forecast
indicated total large pickup sales of
1,475,881 units. Thus, we increased
each manufacturer’s sales of large
pickups by 29 percent. The same type
of adjustment was applied to all the
other truck segments at the same time.
The result was a set of sales projections
which matched EIA’s total truck sales
projection and CSM’s market segment
forecast. However, after this step, sales
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by manufacturer no longer met CSM’s
forecast. Thus, we repeated step three
and adjusted each manufacturer’s truck
sales so that they met CSM’s forecast.
The sales of each truck segment (by
manufacturer) were adjusted by the
same factor. The resulting sales
projection matched EIA’s total truck
sales projection and CSM’s
manufacturer forecast, but sales by
market segment no longer met CSM’s
forecast. However, the difference
between the sales projections after this
fifth step was closer to CSM’s market
segment forecast than it was after step
three. In other words, the sales
projection was converging. We repeated
these adjustments, matching
manufacturer sales mix in one step and
then market segment in the next for a
total of 19 times. At this point, we were
able to match the market segment splits
exactly and the manufacturer splits
were within 0.1% of our goal, which is
well within the needs of this analysis.
The next step in developing the
baseline fleet was to characterize the
vehicles within each manufacturersegment combination. In large part, this
was based on the characterization of the
specific vehicle models sold in 2008.
EPA and NHTSA chose to base our
estimates of detailed vehicle
characteristics on 2008 sales for several
reasons. One, these vehicle
characteristics are not confidential and
can thus be published here for careful
review and comment by interested
parties. Two, being actual sales data,
this vehicle fleet represents the
distribution of consumer demand for
utility, performance, safety, etc.
We gathered most of the information
about the 2008 vehicle fleet from EPA’s
emission certification and fuel economy
database. The data obtained from this
source included vehicle production
volume, fuel economy, engine size,
number of engine cylinders,
transmission type, fuel type, etc. EPA’s
certification database does not include a
detailed description of the types of fuel
economy-improving/CO2-reducing
technologies considered in this
proposal. Thus, we augmented this
description with publicly available data
which includes more complete
technology descriptions from Ward’s
Automotive Group.68 In a few instances
when required vehicle information was
not available from these two sources
(such as vehicle footprint), we obtained
this information from publicly
accessible Internet sites such as
Motortrend.com and Edmunds.com.69
The projections of future car and
truck sales described above apply to
each manufacturer’s sales by market
segment. The EPA emissions
certification sales data are available at a
much finer level of detail, essentially
vehicle configuration. As mentioned
above, we placed each vehicle in the
EPA certification database into one of
the CSM market segments. We then
totaled the sales by each manufacturer
for each market segment. If the
combination of EIA and CSM forecasts
indicated an increase in a given
manufacturer’s sales of a particular
market segment, then the sales of all the
individual vehicle configurations were
adjusted by the same factor. For
example, if the Prius represented 30%
of Toyota’s sales of compact cars in
2008 and Toyota’s sales of compact cars
in 2016 was projected to double by
2016, then the sales of the Prius were
doubled, and the Prius sales in 2016
remained 30% of Toyota’s compact car
sales.
NHTSA and EPA request comment on
the methodology and data sources used
for developing the baseline vehicle fleet
for this proposal and the reasonableness
of the results.
68 Note that WardsAuto.com is a fee-based
service, but all information is public to subscribers.
69 Motortrend.com and Edmunds.com are free,
no-fee Internet sites.
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3. How Is the Development of the
Baseline Fleet for This Proposal
Different From NHTSA’s Historical
Approach, and Why Is This Approach
Preferable?
NHTSA has historically based its
analysis of potential new CAFE
standards on detailed product plans the
agency has requested from
manufacturers planning to produce light
vehicles for sale in the United States.
Although the agency has not attempted
to compel manufacturers to submit such
information, most major manufacturers
and some smaller manufacturers have
voluntarily provided it when requested.
As in this and other prior
rulemakings, NHTSA has requested
extensive and detailed information
regarding the models that manufacturers
plan to offer, as well as manufacturers’
estimates of the volume of each model
they expect to produce for sale in the
U.S. NHTSA’s recent requests have
sought information regarding a range of
engineering and planning characteristics
for each vehicle model (e.g., fuel
economy, engine, transmission, physical
dimensions, weights and capacities,
redesign schedules), each engine (e.g.,
fuel type, fuel delivery, aspiration,
valvetrain configuration, valve timing,
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valve lift, power and torque ratings),
and each transmission (e.g., type,
number of gears, logic).
The information that manufacturers
have provided in response to these
requests has varied in completeness and
detail. Some manufacturers have
submitted nearly all of the information
NHTSA has requested, have done so for
most or all of the model years covered
by NHTSA’s requests, and have closely
followed NHTSA’s guidance regarding
the structure of the information. Other
manufacturers have submitted partial
information, information for only a few
model years, and/or information in a
structure less amenable to analysis. Still
other manufacturers have not responded
to NHTSA’s requests or have responded
on occasion, usually with partial
information.
In recent rulemakings, NHTSA has
integrated this information and
estimated missing information based on
a range of public and commercial
sources (such as those used to develop
today’s market forecast). For
unresponsive manufacturers, NHTSA
has estimated fleet composition based
on the latest-available CAFE compliance
data (the same data used as part of the
foundation for today’s market forecast).
NHTSA has then adjusted the size of the
fleet based on AEO’s forecast of the light
vehicle market and normalized
manufacturers’ market shares based on
the latest-available CAFE compliance
data.
Compared to this approach, the
market forecast the agencies have
developed for this analysis has both
advantages and disadvantages.
Most importantly, today’s market
forecast is much more transparent. The
information sources used to develop
today’s market forecast are all either in
the public domain or available
commercially. Therefore, NHTSA and
EPA are able to make public the market
inputs actually used in the agencies’
respective modeling systems, such that
any reviewer may independently repeat
and review the agencies’ analyses.
Previously, although NHTSA provided
this type of information to
manufacturers upon request (e.g., GM
requested and received outputs specific
to GM), NHTSA was otherwise unable
to release market inputs and the most
detailed model outputs (i.e., the outputs
containing information regarding
specific vehicle models) because doing
so would violate requirements
protecting manufacturers’ confidential
business information from disclosure.70
Therefore, this approach provides much
greater opportunity for the public to
70 See
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review every aspect of the agencies’
analyses and comment accordingly.
Another significant advantage of
today’s market forecast is the agencies’
ability to assess more fully the
incremental costs and benefits of the
proposed standards. In the past two
years, NHTSA has requested and
received three sets of future product
plan submissions from the automotive
companies, most recently this past
spring. These submissions are intended
to be the actual future product plans for
the companies. In the most recent
submission it is clear that many of the
firms have been and are clearly
planning for future CAFE standard
increases for model years 2012 and
later. The results for the product plans
for many firms are a significant increase
in their projected future application of
fuel economy improvement technology.
However, for the purposes of assessing
the costs of the model year 2012–2016
standards the use of the product plans
presents a difficulty, namely, how to
assess the increased costs of the
proposed future standards if the
companies have already anticipated the
future standards and the costs are
therefore now part of the agencies’
baseline. This is a real concern with the
most recent product plans received from
the companies, and is one of the reasons
the agencies have decided not to use the
recent product plans to define the
baseline market data for assessing our
proposed standards. The approach used
for this proposal does not raise this
concern, as the underlying data comes
from model year 2008 production.71
In addition, by developing a baseline
fleet from common sources, the agencies
have been able to avoid some errors—
perhaps related to interpretation of
requests—that have been observed in
past responses to NHTSA’s requests. For
example, while reviewing information
submitted to support the most recent
CAFE rulemaking, NHTSA staff
discovered that one manufacturer had
misinterpreted instructions regarding
the specification of vehicle track width,
leading to important errors in estimates
of vehicle footprints. Although the
manufacturer resubmitted the
information with corrections, with this
approach, the agencies are able to
reduce the potential for such errors and
71 However, as discussed below, an alternative
approach that NHTSA is exploring would be to use
only manufacturers’ near-term product plans, e.g.,
from MY 2010 or MY 2011. NHTSA believes
manufacturers’ near-term plans should be less
subject to this concern about missing costs and
benefits already included in the baseline. NHTSA
is also hopeful that in connection with the agencies’
rulemaking efforts, manufacturers will be willing to
make their near-term plans available to the public.
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inconsistencies by utilizing common
data sources and procedures.
An additional advantage of the
approach used for this proposal is a
consistent projection of the change in
fuel economy and CO2 emissions across
the various vehicles from the
application of new technology. In the
past, company product plans would
include the application of new fuel
economy improvement technology for a
new or improved vehicle model with
the resultant estimate from the company
of the fuel economy levels for the
vehicle. However, companies did not
always provide to NHTSA the detailed
analysis which showed how they
forecasted what the fuel economy
performance of the new vehicle was—
that is, whether it came from actual test
data, from vehicle simulation modeling,
from best engineering judgment or some
other methodology. Thus, it was not
possible for NHTSA to review the
methodology used by the manufacturer,
nor was it possible to review what
approach the different manufacturers
utilized from a consistency perspective.
With the approach used for this
proposal, the baseline market data
comes from actual vehicles which have
actual fuel economy test data—so there
is no question what is the basis for the
fuel economy or CO2 performance of the
baseline market data as it is actual
measured data.
Another advantage of today’s
approach is that future market shares
are based on a forecast of what will
occur in the future, rather than a static
value. In the past, NHTSA has utilized
a constant market share for each model
year, based on the most recent year
available, for example from the CAFE
compliance data, that is, a forecast of
the 2011–2015 time frame where
company market shares do not change.
In the approach used today, we have
utilized the forecasts from CSM of how
future market shares among the
companies may change over time.72
The approach the agencies have taken
in developing today’s market forecast
does, however, have some
disadvantages. Most importantly, it
produces a market forecast that does not
represent some important changes likely
to occur in the future.
Some of the changes not captured by
today’s approach are specific. For
example, the agencies’ current market
forecast includes some vehicles for
72 We note that market share forecasts like CSM’s
could, of course, be applied to any data used to
create the baseline market forecast. If, as mentioned
above, manufacturers do consent to make public
MY 2010 or 2011 product plan data for the final
rule, the agencies could consider applying market
share forecast to that data as well.
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which manufacturers have announced
plans for elimination or drastic
production cuts such as the Chevrolet
Trailblazer, the Chrysler PT Cruiser, the
Chrysler Pacifica, the Dodge Magnum,
the Ford Crown Victoria, the Hummer
H2, the Mercury Sable, the Pontiac
Grand Prix, and the Pontiac G5. These
vehicle models appear explicitly in
market inputs to NHTSA’s analysis, and
are among those vehicle models
included in the aggregated vehicle types
appearing in market inputs to EPA’s
analysis.
Conversely, the agencies’ market
forecast does not include some
forthcoming vehicle models, such as the
Chevrolet Volt, the Chevrolet Camaro,
the Ford Fiesta and several publicly
announced electric vehicles, including
the announcements from Nissan. Nor
does it include several MY 2009 or 2010
vehicles, such as the Honda Insight, the
Hyundai Genesis and the Toyota Venza,
as our starting point for vehicle
definitions was Model Year 2008.
Additionally, the market forecast does
not account for publicly announced
technology introductions, such as Ford’s
EcoBoost system, whose product plans
specify which vehicles and how many
are planned to have this technology.
Were the agencies to rely on
manufacturers’ product plans (that were
submitted), the market forecast would
account for not only these specific
examples, but also for similar examples
that have not yet been announced
publicly.
The agencies anticipate that including
vehicles after MY 2008 would not
significantly impact our estimates of the
technology required to comply with the
proposed standards. If they were
included, these vehicles could make the
standards appear to cost less relative to
the reference case. First, the projections
of sales by vehicle segment and
manufacturer include these expected
new vehicle models. Thus, to the extent
that these new vehicles are expected to
change consumer demand, they should
be reflected in our reference case. While
we are projecting the characteristics of
the new vehicles with MY 2008
vehicles, the primary difference
between the new vehicles and 2008
vehicles in the same vehicle segment is
the use of additional CO2-reducing and
fuel-saving technology. Both the
NHTSA and EPA models add such
technology to facilitate compliance with
the proposed standards. Thus, our
future projections of the vehicle fleet
generally shift vehicle designs towards
those of these newer vehicles. The
advantage of our approach is that it
helps clarify the costs of this proposal,
as the cost of all fuel economy
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improvements beyond those required by
the MY 2011 CAFE standards are being
assigned to the proposal. In some cases,
the new vehicles being introduced by
manufacturers are actually in response
to their anticipation of this rulemaking.
Our approach prevents some of these
technological improvements and their
associated cost from being assumed in
the baseline. Thus, the added
technology will not be considered to be
free for the purposes of this rule.
We note that, as a result of these
issues, the market file may show sales
volumes for certain vehicles during MYs
2012–2016 even though they will be
discontinued before that time frame.
Although the agencies recognize that
these specific vehicles will be
discontinued, we continue to include
them in the market forecast because
they are useful for representing
successor vehicles that may appear in
the rulemaking time frame to replace the
discontinued vehicles in that market
segment.
Other market changes not captured by
today’s approach are broader. For
example, Chrysler Group LLC has
announced plans to offer small- and
medium-sized cars using Fiat
powertrains. The product plan
submitted by Chrysler includes vehicles
that appear to reflect these plans.
However, none of these specific vehicle
models are included in the market
forecast the agencies have developed
starting with MY 2008 CAFE
compliance data. The product plan
submitted by Chrysler is also more
optimistic with regard to Chrysler’s
market share during MYs 2012–2016
than the market forecast projected by
CSM and used by the agencies for this
proposal. Similarly, the agencies’
market forecast does not reflect Nissan’s
plans regarding electric vehicles.
Additionally, some technical
information that manufacturers have
provided in product plans regarding
specific vehicle models is, at least
insofar as NHTSA and EPA have been
able to determine, not available from
public or commercial sources. While
such gaps do not bear significantly on
the agencies’ analysis, the diversity of
pickup configurations necessitated
utilizing a sales-weighted average
footprint value 73 for many
73 A full-size pickup might be offered with
various combinations of cab style (e.g., regular,
extended, crew) and box length (e.g., 51⁄2′, 61⁄2′, 8′)
and, therefore, multiple footprint sizes. CAFE
compliance data for MY 2008 data does not contain
footprint information, and does not contain
information that can be used to reliably identify
which pickup entries correspond to footprint values
estimable from public or commercial sources.
Therefore, the agencies have used the known
production levels of average values to represent all
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manufacturers’ pickups. Since our
modeling only utilizes footprint in order
to estimate each manufacturer’s CO2 or
fuel economy standard and all the other
vehicle characteristics are available for
each pickup configuration, this
approximation has no practical impact
on the projected technology or cost
associated with compliance with the
various standards evaluated. The only
impact which could arise would be if
the relative sales of the various pickup
configurations changed, or if the
agencies were to explore standards with
a different shape. This would
necessitate recalculating the average
footprint value in order to maintain
accuracy.
The agencies have carefully
considered these advantages and
disadvantages of using a market forecast
derived from public and commercial
sources rather than from manufacturers’
product plans, and we believe that the
advantages outweigh the disadvantages
for the purpose of proposing standards
for model years 2012–2016. NHTSA’s
inability to release confidential market
inputs and corresponding detailed
outputs from the CAFE model has raised
serious concerns among many observers
regarding the transparency of NHTSA’s
analysis, as well as related concerns that
the lack of transparency might enable
manufacturers to provide unrealistic
information to try to influence NHTSA’s
determination of the maximum feasible
standards. Although NHTSA does not
agree with some observers’ assertions
that some manufacturers have
deliberately provided inaccurate or
otherwise misleading information,
today’s market forecast is fully open and
transparent, and is therefore not subject
to such concerns.
With respect to the disadvantages, the
agencies are hopeful that manufacturers
will, in the future, agree to make public
their plans regarding model years that
are very near, such as MY 2010 or
perhaps MY 2011, so that this
information can be considered for
purposes of the final rule analysis and
be available for the public. In any event,
because NHTSA and EPA are releasing
market inputs used in the agencies’
respective analyses, manufacturers,
variants of a given pickup line (e.g., all variants of
the F–150 and the Sierra/Silverado) in order to
calculate the sales-weighted average footprint value
for each pickup family. Again, this has no impact
on the results of our modeling effort, although it
would require re-estimation if we were to examine
light truck standards of a different shape. In the
extreme, one single footprint value could be used
for every vehicle sold by a single manufacturer as
long as the fuel economy standard associated with
this footprint value represented the sales-weighted,
harmonic average of the fuel economy standards
associated with each vehicle’s footprint values.
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suppliers, and other automobile
industry observers and participant can
submit comments on how these inputs
should be improved, as can all other
reviewers.
4. How Does Manufacturer Product Plan
Data Factor into the Baseline Used in
This Proposal?
In the Spring of 2009, many
manufacturers submitted product plans
in response to NHTSA’s request that
they do so.74 NHTSA and EPA both
have access to these plans, and both
agencies have reviewed them in detail.
A small amount of product plan data
was used in the development of the
baseline. The specific pieces of data are:
• Wheelbase;
• Track Width Front;
• Track Width Rear;
• EPS (Electric Power Steering);
• ROLL (Reduced Rolling Resistance);
• LUB (Advance Lubrication i.e., low
weight oil);
• IACC (Improved Electrical
Accessories);
• Curb Weight;
• GVWR (Gross Vehicle Weight
Rating)
The track widths, wheelbase, curb
weight, and GVWR could have been
looked up on the Internet (159 were),
but were taken from the product plans
when available for convenience. To
ensure accuracy, a sample from each
product plan was used as a check
against the numbers available from
Motortrend.com. These numbers will be
published in the baseline file since they
can be easily looked up on the Internet.
On the other hand, EPS, ROLL, LUB,
and IACC are difficult to determine
without using manufacturer’s product
plans. These items will not be published
in the baseline file, but the data has
been aggregated into the EPA baseline in
the technology effectiveness and cost
effectiveness for each vehicle in a way
that allows the baseline for the model to
be published without revealing the
manufacturers’ data.
Considering both the publiclyavailable baseline used in this proposal
and the product plans provided recently
by manufacturers, however, it is
possible that the latter could potentially
be used to develop a more realistic
forecast of product mix and vehicle
characteristics of the near-future lightduty fleet. At the core of concerns about
using company product plans are two
concerns about doing so: (a) Uncertainty
and possible inaccuracy in
manufacturers’ forecasts and (b) the
transparency of using product plan data.
With respect to the first concern, the
74 74
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agencies note that manufacturers’ nearterm forecasts (i.e., for model years two
or three years into the future) should be
less uncertain and more amenable to
eventual retrospective analysis (i.e.,
comparison to actual sales) than
manufacturers’ longer-term forecasts
(i.e., for model years more than five
years into the future). With respect to
the second concern, NHTSA has
consulted with most manufacturers and
believes that although few, if any,
manufacturers would be willing to make
public their longer-term plans, many
responding manufacturers may be
willing to make public their short-term
plans. In a companion notice, NHTSA is
seeking product plan information from
manufacturers for MYs 2008 to 2020,
and the agencies will also continue to
consult with manufacturers regarding
the possibility of releasing plans for MY
2010 and/or MY 2011 for purposes of
developing and analyzing the final GHG
and CAFE standards for MYs 2012–
2016. The agencies are hopeful that
manufacturers will agree to do so, and
that NHTSA and EPA would therefore
be able to use product plans in ways
that might aid in increasing the
accuracy of the baseline market forecast.
C. Development of Attribute-Based
Curve Shapes
NHTSA and EPA are setting attributebased CAFE and CO2 standards that are
defined by a mathematical function for
MYs 2012–2016 passenger cars and light
trucks. EPCA, as amended by EISA,
expressly requires that CAFE standards
for passenger cars and light trucks be
based on one or more vehicle attributes
related to fuel economy, and be
expressed in the form of a mathematical
function.75 The CAA has no such
requirement, though in past rules, EPA
has relied on both universal and
attribute-based standards (e.g., for
nonroad engines, EPA uses the attribute
of horsepower). However, given the
advantages of using attribute-based
standards and given the goal of
coordinating and harmonizing CO2
standards promulgated under the CAA
and CAFE standards promulgated under
EPCA, as expressed in the joint NOI,
EPA is also proposing to issue standards
that are attribute-based and defined by
mathematical functions.
Under an attribute-based standard,
every vehicle model has a performance
target (fuel economy and GHG
emissions for CAFE and GHG emissions
standards, respectively), the level of
which depends on the vehicle’s
TARGET =
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Because the format is linear on a
gallons-per-mile basis, not on a milesper-gallon basis, it is plotted as fuel
75 49
U.S.C. 32902(a)(3)(A).
for sale in the United States.
76 Production
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attribute (for this proposal, footprint).
The manufacturers’ fleet average
performance is determined by the
production-weighed 76 average (for
CAFE, harmonic average) of those
targets. NHTSA and EPA are proposing
CAFE and CO2 emissions standards
defined by constrained linear functions
and, equivalently, piecewise linear
functions.77 As a possible option for
future rulemakings, the constrained
linear form was introduced by NHTSA
in the 2007 NPRM proposing CAFE
standards for MY 2011–2015. Described
mathematically, the proposed
constrained linear function is defined
according to the following formula: 78
Where:
TARGET = the fuel economy target (in mpg)
applicable to vehicles of a given
footprint (FOOTPRINT, in square feet),
a = the function’s upper limit (in mpg),
b = the function’s lower limit (in mpg),
c = the slope (in gpm per square foot) of the
sloped portion of the function,
d = the intercept (in gpm) of the sloped
portion of the function (that is, the value
the sloped portion would take if
extended to a footprint of 0 square feet,
and the MIN and MAX functions take the
minimum and maximum, respectively,
of the included values; for example,
MIN(1,2) = 1, MAX(1,2) = 2, and
MIN[MAX(1,2),3)] = 2.
1
1 ⎞ 1⎤
⎡
⎛
MIN ⎢ MAX ⎜ c × FOOTPRINT + d , ⎟ , ⎥
a ⎠ b⎦
⎝
⎣
consumption below. Graphically, the
constrained linear form appears as
shown in Figure II.C.1–1.
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77 The equations are equivalent but are specified
differently due to differences in the agencies’
respective models.
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78 This function is linear in fuel consumption but
not in fuel economy.
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The specific form and stringency for
each fleet (passenger cars and light
trucks) and model year are defined
through specific values for the four
coefficients shown above.
EPA is proposing the equivalent
equation below for assigning CO2 targets
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to an individual vehicle’s footprint
value. Although the general model of
the equation is the same for each vehicle
category and each year, the parameters
of the equation differ for cars and
trucks. Each parameter also changes on
an annual basis, resulting in the yearly
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increases in stringency seen in the
tables above. Described mathematically,
EPA’s proposed piecewise linear
function is as follows:
Target = a, if x ≤ l
Target = cx + d, if l < x ≤ h
Target = b, if x > h
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In the constrained linear form applied
by NHTSA, this equation takes the
simplified form:
Target = MIN [MAX (c * x + d, a), b]
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Where:
Target = the CO2 target value for a given
footprint (in g/mi)
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a = the minimum target value (in g/mi CO2)
b = the maximum target value (in g/mi CO2)
c = the slope of the linear function (in g/mi
per sq ft CO2)
d = is the intercept or zero-offset for the line
(in g/mi CO2)
x = footprint of the vehicle model (in square
feet, rounded to the nearest tenth)
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l & h are the lower and higher footprint limits
or constraints or (‘‘kinks’’) or the
boundary between the flat regions and
the intermediate sloped line (in sq ft)
Graphically, piecewise linear form,
like the constrained linear form, appears
as shown in Figure II.C.1–2.
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As for the constrained linear form, the
specific form and stringency for each
fleet (passenger car and light trucks) and
model year are defined through specific
values for the four coefficients shown
above.
For purposes of this rule, NHTSA and
EPA developed the basic curve shapes
using methods similar to those applied
by NHTSA in fitting the curves defining
the MY 2011 standards. The first step is
defining the reference market inputs (in
the form used by NHTSA’s CAFE
model) described in Section II.B of this
preamble and in Chapter 1 of the joint
TSD. However, because the baseline
fleet is technologically heterogeneous,
NHTSA used the CAFE model to
develop a fleet to which nearly all the
technologies discussed in Chapter 3 of
the joint TSD 79 were applied, by taking
the following steps: (1) Treating all
manufacturers as unwilling to pay civil
penalties rather than applying
technology, (2) applying any technology
at any time, irrespective of scheduled
vehicle redesigns or freshening, and (3)
ignoring ‘‘phase-in caps’’ that constrain
the overall amount of technology that
can be applied by the model to a given
manufacturer’s fleet. These steps helped
to increase technological parity among
vehicle models, thereby providing a
better basis (than the baseline or
reference fleets) for estimating the
statistical relationship between vehicle
size and fuel economy.
In fitting the curves, NHTSA also
continued to apply constraints to limit
the function’s value for both the
smallest and largest vehicles. Without a
limit at the smallest footprints, the
function—whether logistic or linear—
can reach values that would be unfairly
burdensome for a manufacturer that
elects to focus on the market for small
vehicles; depending on the underlying
data, an unconstrained form could
apply to the smallest vehicles targets
that are simply unachievable. Limiting
the function’s value for the smallest
vehicles ensures that the function
remains technologically achievable at
small footprints, and that it does not
unduly burden manufacturers focusing
on small vehicles. On the other side of
the function, without a limit at the
largest footprints, the function may
provide no floor on required fuel
economy. Also, the safety
79 The agencies excluded diesel engines and
strong hybrid vehicle technologies from this
exercise (and only this exercise) because the
agencies expect that manufacturers would not need
to rely heavily on these technologies in order to
comply with the proposed standards. NHTSA and
EPA did include diesel engines and strong hybrid
vehicle technologies in all other portions of their
analyses.
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considerations that support the
provision of a disincentive for
downsizing as a compliance strategy
apply weakly—if at all—to the very
largest vehicles. Limiting the function’s
value for the largest vehicles leads to a
function with an inherent absolute
minimum level of performance, while
remaining consistent with safety
considerations.
Before fitting the sloped portion of the
constrained linear form, NHTSA
selected footprints above and below
which to apply constraints (i.e.,
minimum and maximum values) on the
function. For passenger cars, the agency
noted that several manufacturers offer
small and, in some cases, sporty coupes
below 41 square feet, examples
including the BMW Z4 and Mini, Saturn
Sky, Honda Fit and S2000, Hyundai
Tiburon, Mazda MX–5 Miata, Suzuki
SX4, Toyota Yaris, and Volkswagen
New Beetle. Because such vehicles
represent a small portion (less than 10
percent) of the passenger car market, yet
often have characteristics that could
make it infeasible to achieve the very
challenging targets that could apply in
the absence of a constraint, NHTSA is
proposing to ‘‘cut off’’ the linear portion
of the passenger car function at 41
square feet. For consistency, the agency
is proposing to do the same for the light
truck function, although no light trucks
are currently offered below 41 square
feet. The agency further noted that
above 56 square feet, the only passenger
car model present in the MY 2008 fleet
were four luxury vehicles with
extremely low sales volumes—the
Bentley Arnage and three versions of the
Rolls Royce Phantom. NHTSA is
therefore proposing to ‘‘cut off’’ the
linear portion of the passenger car
function at 56 square feet. Finally, the
agency noted that although public
information is limited regarding the
sales volumes of the many different
configurations (cab designs and bed
sizes) of pickup trucks, most of the
largest pickups (e.g., the Ford F–150,
GM Sierra/Silverado, Nissan Titan, and
Toyota Tundra) appear to fall just above
66 square feet in footprint. NHTSA is
therefore proposing to ‘‘cut off’’ the
linear portion of the light truck function
at 66 square feet.
NHTSA and EPA seek comment on
this approach to fitting the curves. We
note that final decisions on this issue
will play an important role in
determining the form and stringency of
the final CAFE and CO2 standards, the
incentives those standards will provide
(e.g., with respect to downsizing small
vehicles), and the relative compliance
burden faced by each manufacturer.
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For purposes of the CAFE and CO2
standards proposed in this NPRM,
NHTSA and EPA recognize that there is
some possibility that low fuel prices
during the years in which MY 2012–
2016 vehicles are in service might lead
to less than currently anticipated fuel
savings and emissions reductions. One
way to assure that emission reductions
are achieved in fact is through the use
of explicit backstops, fleet average
standards established at an absolute
level. For purposes of the CAFE
program, EISA requires a backstop for
domestically-manufactured passenger
cars—a universal minimum, nonattribute-based standard of either ‘‘27.5
mpg or 92 percent of the average fuel
economy projected by the Secretary of
Transportation for the combined
domestic and non-domestic passenger
automobile fleets manufactured for sale
in the United States by all
manufacturers in the model year
* * *,’’ whichever is greater.80 In the
MY 2011 final rule, the first rule setting
standards since EISA added the
backstop provision to EPCA, NHTSA
considered whether the statute
permitted the agency to set backstop
standards for the other regulated fleets
of imported passenger cars and light
trucks. Although commenters expressed
support both for and against a more
permissive reading of EISA, NHTSA
concluded in that rulemaking that its
authority was likely limited to setting
only the backstop standard that
Congress expressly provided, i.e., the
one for domestic passenger cars. A
backstop, however, could be adopted
under section 202(a) of the CAA
assuming it could be justified under the
relevant statutory criteria. EPA and
NHTSA also note that the flattened
portion of the car curve directionally
addresses the issue of a backstop (i.e., a
flat curve is itself a backstop). The
agencies seek comment on whether
backstop standards, or any other method
within the agencies’ statutory authority,
should and can be implemented in
order to guarantee a level of CO2
emissions reductions and fuel savings
under the attribute-based standards.
Having developed a set of baseline
data to which to fit the mathematical
fuel consumption function, the initial
values for parameters c and d were
determined for cars and trucks
separately. c and d were initially set at
the values for which the average
(equivalently, sum) of the absolute
values of the differences was minimized
between the ‘‘maximum technology’’
fleet fuel consumption (within the
footprints between the upper and lower
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limits) and the straight line the function
defined above at the same
corresponding vehicle footprints. That
is, c and d were determined by
minimizing the average absolute
residual, commonly known as the MAD
(Mean Absolute Deviation) approach, of
the corresponding straight line.
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Finally, NHTSA calculated the values
of the upper and lower values (a and b)
based on the corresponding footprints
discussed above (41 and 56 square feet
for passenger cars, and 41 and 66 square
feet for light trucks).
The result of this methodology is
shown below in Figures II.A.2–2 and
II.A.2–3 for passenger cars and light
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trucks, respectively. The fitted curves
are shown with the underlying
‘‘maximum technology’’ passenger car
and light truck fleets. For passenger
cars, the mean absolute deviation of the
sloped portion of the function was 14
percent. For trucks, the corresponding
MAD was 10 percent.
BILLING CODE 4910–59–P
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The agencies used these functional
forms as a starting point to develop
mathematical functions defining the
actual proposed standards as discussed
above. The agencies then transposed
these functions vertically (i.e., on a gpm
or CO2 basis, uniformly downward) to
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produce the relative car and light truck
standards described in the next section.
D. Relative Car-Truck Stringency
The agencies have determined, under
their respective statutory authorities,
that it is appropriate to propose
fleetwide standards with the projected
levels of stringency of 34.1 mpg or 250
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g/mi (as well as the corresponding
intermediate year fleetwide standards)
for NHTSA and EPA respectively. To
determine the relative stringency of
passenger car and light truck standards,
the agencies are concerned that
increasing the difference between the
car and truck standards (either by
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raising the car standards or lowering the
truck standards) could encourage
manufacturers to build fewer cars and
more trucks, likely to the detriment of
fuel economy and CO2 reductions.81 In
order to maintain consistent car/truck
standards, the agencies applied a
constant ratio between the estimated
average required performance under the
passenger car and light truck standards,
in order to maintain a stable set of
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81 For example, since many 2WD SUVs are
classified as passenger cars, manufacturers have
already warned that high car standards relative to
truck standards could create an incentive for them
to drop the 2WD version and sell only the 4WD
version.
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incentives regarding vehicle
classification.
To calculate relative car-truck
stringency in this proposal, the agencies
explored a number of possible
alternatives. In the interest of
harmonization, the agencies agree to use
the Volpe model in order to estimate
stringencies at which net benefits would
be maximized. Further details of the
development of this scenario approach
can be found in Section IV of this
preamble as well as in NHTSA’s PRIA
and DEIS. NHTSA examined passenger
car and light truck standards that would
produce the proposed combined average
fuel economy levels from Table I.B.2–2
above. NHTSA did so by shifting
downward the curves that maximize net
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benefits, holding the relative stringency
of passenger car and light truck
standards constant at the level
determined by maximizing net benefits,
such that the average fuel economy
required of passenger cars remains 34
percent higher than the average fuel
economy required of light trucks. This
methodology resulted in the average
fuel economy levels for passenger cars
and light trucks during MYs 2012–2016
as shown in Table I.D.2–1. The
following chart illustrates this
methodology of shifting the standards
from the levels maximizing net benefits
to the levels consistent with the
combined fuel economy standards in
this rule.
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After this analysis was completed,
EPA examined two alternative
approaches to determine whether they
would lead to significantly different
outcomes. First, EPA analyzed the
relative stringencies using a 10-year
payback analysis (with the OMEGA
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model). This analysis sets the relative
stringencies if increased technology cost
is to be paid back out of fuel savings
over a 10-year period (assuming a 3%
discount rate). Second, EPA also
conducted a technology maximized
analysis, which sets the relative
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stringencies if all technologies (with the
exception of strong hybrids and diesels)
are assumed to be utilized in the fleet.
(This is the same methodology that was
used to determine the curve shape as
explained in the section above and in
Chapter 2 of the joint TSD section).
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Compared to NHTSA’s approach based
on stringencies estimated to maximize
net benefits, EPA staff found that these
two other approaches produced very
similar results to NHTSA’s, i.e., similar
ratios of car-truck relative stringency
(the ratio being within a range of 1.34
to 1.37 relative stringency of the car to
the truck fuel economy standard). EPA
believes that this similarity supports the
proposed relative stringency of the two
standards.
The car and truck standards for EPA
(Table I.D. 2–4 above) were
subsequently determined by first
converting the average required fuel
49499
economy levels to average required CO2
emission rates, and then applying the
expected air conditioning credits for
2012–2016. These A/C credits are
shown in the following table. Further
details of the derivation of these factors
can be found in Section III of this
preamble or in the EPA RIA.
TABLE II.D.1–1 EXPECTED FLEET A/C CREDITS (IN CO2 EQUIVALENT G/MI) FROM 2012–2016
Average technology
penetration
(percent)
2012
2013
2014
2015
2016
.............................................................................................................
.............................................................................................................
.............................................................................................................
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The agencies seek comment on the
use of this methodology for
apportioning the fleet stringencies to
relative car and truck standards for
2012–2016.
E. Joint Vehicle Technology
Assumptions
Vehicle technology assumptions, i.e.,
assumptions about their cost,
effectiveness, and the rate at which they
can be incorporated into new vehicles,
are often very controversial as they have
a significant impact on the levels of the
standards. Agencies must, therefore,
take great care in developing and
justifying these assumptions. In
developing technology inputs for MY
2012–2016 standards, the agencies
reviewed the technology assumptions
that NHTSA used in setting the MY
2011 standards and the comments that
NHTSA received in response to its May
2008 Notice of Proposed Rulemaking.
This review is consistent with the
request by President Obama in his
January 26 memorandum to DOT. In
addition, the agencies reviewed the
technology input estimates identified in
EPA’s July 2008 Advanced Notice of
Proposed Rulemaking. The review of
these documents was supplemented
with updated information from more
current literature, new product plans
and from EPA certification testing.
As a general matter, the best way to
derive technology cost estimates is to
conduct real-world tear down studies.
These studies break down each
technology into its respective
components, evaluate the costs of each
component, and build up the costs of
the entire technology based on the
contribution of each component. As
such, tear down studies require a
significant amount of time and are very
costly. EPA has begun conducting tear
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25
40
55
75
85
down studies to assess the costs of 4–
5 technologies under a contract with
FEV. To date, only two technologies
(stoichiometeric gasoline direct
injection and turbo charging with
engine downsizing for a 4 cylinder
engine to a 4 cylinder engine) have been
evaluated. The agencies relied on the
findings of FEV for estimating the cost
of these technologies in this
rulemaking—directly for the 4 cylinder
engines, and extrapolated for the 6 and
8 cylinder engines. The agencies request
comment on the use of these estimated
costs from the FEV study. For the other
technologies, because tear down studies
were not yet available, the agencies
decided to pursue, to the extent
possible, the Bill of Materials (BOM)
approach as outlined in NHTSA’s MY
2011 final rule. A similar approach was
used by EPA in the EPA 2008 Staff
Technical Report. This approach was
recommended to NHTSA by Ricardo, an
international engineering consulting
firm retained by NHTSA to aid in the
analysis of public comments on its
proposed standards for MYs 2011–2015
because of its expertise in the area of
fuel economy technologies. A BOM
approach is one element of the process
used in tear down studies. The
difference is that under a BOM
approach, the build up of cost estimates
is conducted based on a review of cost
and effectiveness estimates for each
component from available literature,
while under a tear down study, the cost
estimates which go into the BOM come
from the tear down study itself. To the
extent that the agencies departed from
the MY 2011 CAFE final rule estimates,
the agencies explained the reasons and
provided supporting analyses. As tear
down studies are concluded by FEV
during the rulemaking process, the
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credit
for cars
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3.0
4.8
7.2
9.6
10.2
Average
credit for
trucks
3.4
5.4
8.1
10.8
11.5
Average
credit for
combined
fleet
3.1
5.0
7.5
10.0
10.6
agencies will make them available in the
joint rulemaking docket of this
rulemaking. The agencies will consider
these studies and any comments
received on them, as practicable and
appropriate, as well as any other new
information pertinent to the rulemaking
of which the agencies become aware, in
developing technology cost assumptions
for the final rule.
Similarly, the agencies followed a
BOM approach for developing its
effectiveness estimates, insofar as the
BOM developed for the cost estimates
helped to inform the appropriate
effectiveness values derived from the
literature review. The agencies
supplemented the information with
results from available simulation work
and real world EPA certification testing.
The agencies would also like to note
that per the Energy Independence and
Security Act (EISA), the National
Academies of Sciences is conducting an
updated study to update Chapter 3 of
the 2002 NAS Report, which outlines
technology estimates. The update will
take a fresh look at that list of
technologies and their associated cost
and effectiveness values.
The report is expected to be available
on September 30, 2009. As soon as the
update to the NAS Report is received, it
will be placed in the joint rulemaking
docket for the public’s review and
comment. Because this will occur
during the comment period, the public
is encouraged to check the docket
regularly and provide comments on the
updated NAS Report by the closing of
the comment period of this notice.
NHTSA and EPA will consider the
updated NAS Report and any comments
received, as practicable and appropriate,
on it when considering revisions to the
technology cost and effectiveness
estimates for the final rule.
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Consideration of this report is consistent
with the request by President Obama in
his January 26 memorandum to DOT.
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1. What Technologies Do the Agencies
Consider?
The agencies considered over 35
vehicle technologies that manufacturers
could use to improve the fuel economy
and reduce CO2 emissions of their
vehicles during MYs 2012–2016. The
majority of the technologies described
in this section are readily available, well
known, and could be incorporated into
vehicles once production decisions are
made. Other technologies considered
may not currently be in production, but
are beyond the research phase and
under development, and are expected to
be in production in the next few years.
These are technologies which can, for
the most part, be applied both to cars
and trucks, and which are capable of
achieving significant improvements in
fuel economy and reductions in CO2
emissions, at reasonable costs. The
agencies did not consider technologies
in the research stage because the
leadtime available for this rule is not
sufficient to move such technologies
from research to production.
The technologies considered in the
agencies’ analysis are briefly described
below. They fall into five broad
categories: engine technologies,
transmission technologies, vehicle
technologies, electrification/accessory
technologies, and hybrid technologies.
For a more detailed description of each
technology and their costs and
effectiveness, we refer the reader to
Chapter 3 of the joint TSD, Chapter III
of NHTSA’s PRIA, and Chapter 1 of
EPA’s DRIA. Technologies to reduce
CO2 and HFC emissions from air
conditioning systems are discussed in
Section III of this preamble and in EPA’s
DRIA.
Types of engine technologies that
improve fuel economy and reduce CO2
emissions include the following:
• Low-friction lubricants—low
viscosity and advanced low friction
lubricants oils are now available with
improved performance and better
lubrication. If manufacturers choose to
make use of these lubricants, they
would need to make engine changes and
possibly conduct durability testing to
accommodate the low-friction
lubricants.
• Reduction of engine friction
losses—can be achieved through lowtension piston rings, roller cam
followers, improved material coatings,
more optimal thermal management,
piston surface treatments, and other
improvements in the design of engine
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components and subsystems that
improve engine operation.
• Conversion to dual overhead cam
with dual cam phasing—as applied to
overhead valves designed to increase
the air flow with more than two valves
per cylinder and reduce pumping
losses.
• Cylinder deactivation—deactivates
the intake and exhaust valves and
prevents fuel injection into some
cylinders during light-load operation.
The engine runs temporarily as though
it were a smaller engine which
substantially reduces pumping losses.
• Variable valve timing—alters the
timing of the intake valve, exhaust
valve, or both, primarily to reduce
pumping losses, increase specific
power, and control residual gases.
• Discrete variable valve lift—
increases efficiency by optimizing air
flow over a broader range of engine
operation which reduces pumping
losses. Accomplished by controlled
switching between two or more cam
profile lobe heights.
• Continuous variable valve lift—is
an electromechanically controlled
system in which valve timing is
changed as lift height is controlled. This
yields a wide range of performance
optimization and volumetric efficiency,
including enabling the engine to be
valve throttled.
• Stoichiometric gasoline directinjection technology—injects fuel at
high pressure directly into the
combustion chamber to improve cooling
of the air/fuel charge within the
cylinder, which allows for higher
compression ratios and increased
thermodynamic efficiency.
• Combustion restart—can be used in
conjunction with gasoline directinjection systems to enable idle-off or
start-stop functionality. Similar to other
start-stop technologies, additional
enablers, such as electric power
steering, accessory drive components,
and auxiliary oil pump, might be
required.
• Turbocharging and downsizing—
increases the available airflow and
specific power level, allowing a reduced
engine size while maintaining
performance. This reduces pumping
losses at lighter loads in comparison to
a larger engine.
• Exhaust-gas recirculation boost—
increases the exhaust-gas recirculation
used in the combustion process to
increase thermal efficiency and reduce
pumping losses.
• Diesel engines—have several
characteristics that give superior fuel
efficiency, including reduced pumping
losses due to lack of (or greatly reduced)
throttling, and a combustion cycle that
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operates at a higher compression ratio,
with a very lean air/fuel mixture,
relative to an equivalent-performance
gasoline engine. This technology
requires additional enablers, such as
NOx trap catalyst after-treatment or
selective catalytic reduction NOx aftertreatment. The cost and effectiveness
estimates for the diesel engine and
aftertreatment system utilized in this
proposal have been revised from the
NHTSA MY 2011 CAFE final rule, and
the agencies request comment on these
diesel cost estimates.
Types of transmission technologies
considered include:
• Improved automatic transmission
controls—optimizes shift schedule to
maximize fuel efficiency under wide
ranging conditions, and minimizes
losses associated with torque converter
slip through lock-up or modulation.
• Six-, seven-, and eight-speed
automatic transmissions—the gear ratio
spacing and transmission ratio are
optimized for a broader range of engine
operating conditions.
• Dual clutch or automated shift
manual transmissions—are similar to
manual transmissions, but the vehicle
controls shifting and launch functions.
A dual-clutch automated shift manual
transmission uses separate clutches for
even-numbered and odd-numbered
gears, so the next expected gear is preselected, which allows for faster and
smoother shifting.
• Continuously variable
transmission—commonly uses Vshaped pulleys connected by a metal
belt rather than gears to provide ratios
for operation. Unlike manual and
automatic transmissions with fixed
transmission ratios, continuously
variable transmissions can provide fully
variable transmission ratios with an
infinite number of gears, enabling finer
optimization of transmission torque
multiplication under different operating
conditions so that the engine can
operate at higher efficiency.
• Manual 6-speed transmission—
offers an additional gear ratio, often
with a higher overdrive gear ratio, than
a 5-speed manual transmission.
Types of vehicle technologies
considered include:
• Low-rolling-resistance tires—have
characteristics that reduce frictional
losses associated with the energy
dissipated in the deformation of the
tires under load, therefore improving
fuel economy and reducing CO2
emissions.
• Low-drag brakes—reduce the
sliding friction of disc brake pads on
rotors when the brakes are not engaged
because the brake pads are pulled away
from the rotors.
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• Front or secondary axle disconnect
for four-wheel drive systems—provides
a torque distribution disconnect
between front and rear axles when
torque is not required for the nondriving axle. This results in the
reduction of associated parasitic energy
losses.
• Aerodynamic drag reduction—is
achieved by changing vehicle shape or
reducing frontal area, including skirts,
air dams, underbody covers, and more
aerodynamic side view mirrors.
• Mass reduction and material
substitution—Mass reduction
encompasses a variety of techniques
ranging from improved design and
better component integration to
application of lighter and higherstrength materials. Mass reduction is
further compounded by reductions in
engine power and ancillary systems
(transmission, steering, brakes,
suspension, etc.). The agencies
recognize there is a range of diversity
and complexity for mass reduction and
material substitution technologies and
there are many techniques that
automotive suppliers and manufacturers
are using to achieve the levels of this
technology that the agencies have
modeled in our analysis for this
proposal. The agencies seek comments
on the methods, costs, and effectiveness
estimates associated with mass
reduction and material substitution
techniques that manufacturers intend to
employ for reducing fuel consumption
and CO2 emissions during the
rulemaking time frame.
Types of electrification/accessory and
hybrid technologies considered include:
• Electric power steering (EPS)—is an
electrically-assisted steering system that
has advantages over traditional
hydraulic power steering because it
replaces a continuously operated
hydraulic pump, thereby reducing
parasitic losses from the accessory
drive.
• Improved accessories (IACC)—may
include high efficiency alternators,
electrically driven (i.e., on-demand)
water pumps and cooling fans. This
excludes other electrical accessories
such as electric oil pumps and
electrically driven air conditioner
compressors.
• Air Conditioner Systems—These
technologies include improved hoses,
connectors and seals for leakage control.
They also include improved
compressors, expansion valves, heat
exchangers and the control of these
components for the purposes of
improving tailpipe CO2 emissions as a
result of A/C use. These technologies
are covered separately in the EPA RIA.
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• 12-volt micro-hybrid (MHEV)—also
known as idle-stop or start stop and
commonly implemented as a 12-volt
belt-driven integrated starter-generator,
this is the most basic hybrid system that
facilitates idle-stop capability. Along
with other enablers, this system replaces
a common alternator with a belt-driven
enhanced power starter-alternator, and a
revised accessory drive system.
• Higher Voltage Stop-Start/Belt
Integrated Starter Generator (BISG)—
provides idle-stop capability and uses a
high voltage battery with increased
energy capacity over typical automotive
batteries. The higher system voltage
allows the use of a smaller, more
powerful electric motor. This system
replaces a standard alternator with an
enhanced power, higher voltage, higher
efficiency starter-alternator, that is belt
driven and that can recover braking
energy while the vehicle slows down
(regenerative braking).
• Integrated Motor Assist (IMA)/
Crank integrated starter generator
(CISG)—provides idle-stop capability
and uses a high voltage battery with
increased energy capacity over typical
automotive batteries. The higher system
voltage allows the use of a smaller, more
powerful electric motor and reduces the
weight of the wiring harness. This
system replaces a standard alternator
with an enhanced power, higher
voltage, higher efficiency starteralternator that is crankshaft mounted
and can recover braking energy while
the vehicle slows down (regenerative
braking).
• 2-mode hybrid (2MHEV)—is a
hybrid electric drive system that uses an
adaptation of a conventional steppedratio automatic transmission by
replacing some of the transmission
clutches with two electric motors that
control the ratio of engine speed to
vehicle speed, while clutches allow the
motors to be bypassed. This improves
both the transmission torque capacity
for heavy-duty applications and reduces
fuel consumption and CO2 emissions at
highway speeds relative to other types
of hybrid electric drive systems.
• Power-split hybrid (PSHEV)—a
hybrid electric drive system that
replaces the traditional transmission
with a single planetary gearset and a
motor/generator. This motor/generator
uses the engine to either charge the
battery or supply additional power to
the drive motor. A second, more
powerful motor/generator is
permanently connected to the vehicle’s
final drive and always turns with the
wheels. The planetary gear splits engine
power between the first motor/generator
and the drive motor to either charge the
battery or supply power to the wheels.
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• Plug-in hybrid electric vehicles
(PHEV)—are hybrid electric vehicles
with the means to charge their battery
packs from an outside source of
electricity (usually the electric grid).
These vehicles have larger battery packs
with more energy storage and a greater
capability to be discharged. They also
use a control system that allows the
battery pack to be substantially depleted
under electric-only or blended
mechanical/electric operation.
• Electric vehicles (EV)—are vehicles
with all-electric drive and with vehicle
systems powered by energy-optimized
batteries charged primarily from grid
electricity.
The cost estimates for the various
hybrid systems have been revised from
the estimates used in the MY 2011
CAFE final rule, in particular with
respect to estimated battery costs. The
agencies request comment on the hybrid
cost estimates detailed in the draft Joint
Technical Support Document.
2. How Did the Agencies Determine the
Costs and Effectiveness of Each of These
Technologies?
Building on NHTSA’s estimates
developed for the MY 2011 CAFE final
rule and EPA’s Advanced Notice of
Proposed Rulemaking, which relied on
the 2008 Staff Technical Report,82 the
agencies took a fresh look at technology
cost and effectiveness values for
purposes of the joint proposal under the
National Program. For costs, the
agencies reconsidered both the direct or
‘‘piece’’ costs and indirect costs of
individual components of technologies.
For the direct costs, the agencies
followed a bill of materials (BOM)
approach employed by NHTSA in
NHTSA’s MY 2011 final rule based on
recommendation from Ricardo, Inc. EPA
used a similar approach in the 2008
EPA Staff Technical Report. A bill of
materials, in a general sense, is a list of
components or sub-systems that make
up a system—in this case, an item of
fuel economy-improving technology. In
order to determine what a system costs,
one of the first steps is to determine its
components and what they cost.
NHTSA and EPA estimated these
components and their costs based on a
number of sources for cost-related
information. The objective was to use
those sources of information considered
to be most credible for projecting the
costs of individual vehicle technologies.
For example, while NHTSA and Ricardo
engineers had relied considerably in the
82 EPA Staff Technical Report: Cost and
Effectiveness Estimates of Technologies Used to
Reduce Light-Duty Vehicle Carbon Dioxide
Emissions. EPA420–R–08–008, March 2008.
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MY 2011 final rule on the 2008 Martec
Report for costing contents of some
technologies, upon further joint review
and for purposes of the MY 2012–2016
standards, the agencies decided that
some of the costing information in that
report was no longer accurate due to
downward trends in commodity prices
since the publication of that report. The
agencies reviewed, then revalidated or
updated cost estimates for individual
components based on new information.
Thus, while NHTSA and EPA found
that much of the cost information used
in NHTSA’s MY 2011 final rule and
EPA’s staff report was consistent to a
great extent, the agencies, in
reconsidering information from many
sources,83,84,85,86,87,88,89 revised several
component costs of several major
technologies: turbocharging with engine
downsizing, mild and strong hybrids,
diesels, stoichiometric gasoline direct
injection fuel systems, and valve train
lift technologies. These are discussed at
length in the joint TSD and in NHTSA’s
PRIA.
For two technologies (stoichiometric
gasoline direct injection and
turbocharging with engine downsizing),
the agencies relied, to the extent
possible, on the tear down data
available and scaling methodologies
used in EPA’s ongoing study with FEV.
This study consists of complete system
tear-down to evaluate technologies
down to the nuts and bolts to arrive at
very detailed estimates of the costs
associated with manufacturing them.90
83 National Research Council, ‘‘Effectiveness and
Impact of Corporate Average Fuel Economy (CAFE)
Standards,’’ National Academy Press, Washington,
DC (2002) (the ‘‘2002 NAS Report’’), available at
https://www.nap.edu/
openbook.php?isbn=0309076013 (last accessed
August 7, 2009).
84 Northeast States Center for a Clean Air Future
(NESCCAF), ‘‘Reducing Greenhouse Gas Emissions
from Light-Duty Motor Vehicles,’’ 2004 (the ‘‘2004
NESCCAF Report’’), available at https://www.
nesccaf.org/documents/rpt040923ghglightduty.pdf
(last accessed August 7, 2009).
85 ‘‘Staff Report: Initial Statement of Reasons for
Proposed Rulemaking, Public Hearing to Consider
Adoption of Regulations to Control Greenhouse Gas
Emissions from Motor Vehicles,’’ California
Environmental Protection Agency, Air Resources
Board, August 6, 2004.
86 Energy and Environmental Analysis, Inc.,
‘‘Technology to Improve the Fuel Economy of Light
Duty Trucks to 2015,’’ 2006 (the ‘‘2006 EEA
Report’’), Docket EPA–HQ–OAR–2009–0472.
87 Martec, ‘‘Variable Costs of Fuel Economy
Technologies,’’ June 1, 2008, (the ‘‘2008 Martec
Report’’) available at Docket No. NHTSA–2008–
0089–0169.1
88 Vehicle fuel economy certification data.
89 Confidential data submitted by manufacturers
in response to the March 2009 and other requests
for product plans.
90 U.S. Environmental Protection Agency, ‘‘Draft
Report—Light-Duty Technology Cost Analysis Pilot
Study,’’ Contract No. EP–C–07–069, Work
Assignment 1–3, September 3, 2009.
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The confidential information provided
by manufacturers as part of their
product plan submissions to the
agencies or discussed in meetings
between the agencies and the
manufacturers and suppliers served
largely as a check on publicly-available
data.
For the other technologies,
considering all sources of information
and using the BOM approach, the
agencies worked together intensively
during the summer of 2009 to determine
component costs for each of the
technologies and build up the costs
accordingly. Where estimates differ
between sources, we have used
engineering judgment to arrive at what
we believe to be the best cost estimate
available today, and explained the basis
for that exercise of judgment.
Once costs were determined, they
were adjusted to ensure that they were
all expressed in 2007 dollars using a
ratio of GDP values for the associated
calendar years,91 and indirect costs were
accounted for using the new approach
developed by EPA and explained in
Chapter 3 of the draft joint TSD, rather
than using the traditional Retail Price
Equivalent (RPE) multiplier approach. A
report explaining how EPA developed
this approach can be found in the
docket for this notice. NHTSA and EPA
also reconsidered how costs should be
adjusted by modifying or scaling
content assumptions to account for
differences across the range of vehicle
sizes and functional requirements, and
adjusted the associated material cost
impacts to account for the revised
content, although some of these
adjustments may be different for each
agency due to the different vehicle
subclasses used in their respective
models. In previous rulemakings,
NHTSA has used the Producer Price
Index (PPI) to adjust vehicle technology
costs to consistent price levels, since the
PPI measures the effects of cost changes
that are specific to the vehicle
manufacturing industry. For purposes of
this NPRM, NHTSA and EPA chose to
use the GDP deflator, which accounts
for the effect of economy-wide price
inflation on technology cost estimates,
in order to express those estimates in
comparable terms with forecasts of fuel
prices and other economic values used
in the analysis of costs and benefits
from the proposed standards. Because it
is specific to the automotive sector, the
PPI tends to be highly volatile from year
to year, reflecting rapidly changing
91 NHTSA examined the use of the CPI multiplier
instead of GDP for adjusting these dollar values, but
found the difference to be exceedingly small—only
$0.14 over $100.
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balances between supply and demand
for specific components, rather than
longer-term trends in the real cost of
producing a broad range of powertrain
components. NHTSA and EPA seek
comment on whether the agencies
should use a GDP deflator or a PPI
inflator for purposes of developing
technology cost estimates for the final
rule.
Regarding estimates for technology
effectiveness, NHTSA and EPA also
reexamined the estimates from
NHTSA’s MY 2011 final rule and EPA’s
ANPRM and 2008 Staff Technical
Report, which were largely consistent
with NHTSA’s 2008 NPRM estimates.
The agencies also reconsidered other
sources such as the 2002 NAS Report,
the 2004 NESCCAF report, recent CAFE
compliance data (by comparing similar
vehicles with different technologies
against each other in fuel economy
testing, such as a Honda Civic Hybrid
versus a directly comparable Honda
Civic conventional drive), and
confidential manufacturer estimates of
technology effectiveness. NHTSA and
EPA engineers reviewed effectiveness
information from the multiple sources
for each technology and ensured that
such effectiveness estimates were based
on technology hardware consistent with
the BOM components used to estimate
costs. Together, they compared the
multiple estimates and assessed their
validity, taking care to ensure that
common BOM definitions and other
vehicle attributes such as performance,
refinement, and drivability were taken
into account. However, because the
agencies’ respective models employ
different numbers of vehicle subclasses
and use different modeling techniques
to arrive at the standards, direct
comparison of BOMs was somewhat
more complicated. To address this and
to confirm that the outputs from the
different modeling techniques produced
the same result, NHTSA and EPA
developed mapping techniques,
devising technology packages and
mapping them to corresponding
incremental technology estimates. This
approach helped compare the outputs
from the incremental modeling
technique to those produced by the
technology packaging approach to
ensure results that are consistent and
could be translated into the respective
models of the agencies.
In general, most effectiveness
estimates used in both the MY 2011
final rule and the 2008 EPA staff report
were determined to be accurate and
were carried forward without significant
change into this proposal. When
NHTSA and EPA’s estimates for
effectiveness diverged slightly due to
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differences in how agencies apply
technologies to vehicles in their
respective models, we report the ranges
for the effectiveness values used in each
model. While the agencies believe that
the ideal estimates for the final rule
would be based on tear down studies or
BOM approach and subjected to a
transparent peer-reviewed process,
NHTSA and EPA are confident that the
thorough review conducted, led to the
best available conclusion regarding
technology costs and effectiveness
estimates for the current rulemaking and
resulted in excellent consistency
between the agencies’ respective
analyses for developing the CAFE and
CO2 standards.
The agencies note that the
effectiveness values estimated for the
technologies considered in the modeling
analyses may represent average values,
and do not reflect the potentiallylimitless spectrum of possible values
that could result from adding the
technology to different vehicles. For
example, while the agencies have
estimated an effectiveness of 0.5 percent
for low friction lubricants, each vehicle
could have a unique effectiveness
estimate depending on the baseline
vehicle’s oil viscosity rating. Similarly,
the reduction in rolling resistance (and
thus the improvement in fuel economy
and the reduction in CO2 emissions) due
to the application of low rolling
resistance tires depends not only on the
unique characteristics of the tires
originally on the vehicle, but on the
unique characteristics of the tires being
applied, characteristics which must be
balanced between fuel efficiency, safety,
and performance. Aerodynamic drag
reduction is much the same—it can
improve fuel economy and reduce CO2
emissions, but it is also highly
dependent on vehicle-specific
functional objectives. For purposes of
this NPRM, NHTSA and EPA believe
that employing average values for
technology effectiveness estimates, as
adjusted depending on vehicle subclass,
is an appropriate way of recognizing the
potential variation in the specific
benefits that individual manufacturers
(and individual vehicles) might obtain
from adding a fuel-saving technology.
However, the agencies seek comment on
whether additional levels of specificity
beyond that already provided would
improve the analysis for the final rule,
and if so, how those levels of specificity
should be analyzed.
Chapter 3 of the draft Joint Technical
Support Document contains a detailed
description of our assessment of vehicle
technology cost and effectiveness
estimates. The agencies note that the
technology costs included in this NPRM
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take into account only those associated
with the initial build of the vehicle. The
agencies seek comment on the
additional lifetime costs, if any,
associated with the implementation of
advanced technologies including
warranty costs, and maintenance and
replacement costs such as replacement
costs for low rolling resistance tires, low
friction lubricants, and hybrid batteries,
and maintenance on diesel
aftertreatment components.
F. Joint Economic Assumptions
The agencies’ preliminary analysis of
alternative CAFE and GHG standards for
the model years covered by this
proposed rulemaking rely on a range of
forecast information, economic
estimates, and input parameters. This
section briefly describes the agencies’
preliminary choices of specific
parameter values. These proposed
economic values play a significant role
in determining the benefits of both
CAFE and GHG standards.
In reviewing these variables and the
agency’s estimates of their values for
purposes of this NPRM, NHTSA and
EPA reconsidered previous comments
that NHTSA had received and reviewed
newly available literature. As a
consequence, the agencies elected to
revise some economic assumptions and
parameter estimates, while retaining
others. Some of the most important
changes, which are discussed in greater
detail in the agencies’ respective
sections below, as well as in Chapter 4
of the joint TSD and in Chapter VIII of
NHTSA’s PRIA and Chapter 8 of EPA’s
DRIA, include significant revisions to
the markup factors for technology costs;
reducing the rebound effect from 15 to
10 percent; and revising the value of
reducing CO2 emissions based on recent
interagency efforts to develop estimates
of this value for government-wide use.
The agencies seek comment on the
economic assumptions described below.
• Costs of fuel economy-improving
technologies—These estimates are
presented in summary form above and
in more detail in the agencies’
respective sections of this preamble, in
Chapter 3 of the joint TSD, and in the
agencies’ respective RIAs. The
technology cost estimates used in this
analysis are intended to represent
manufacturers’ direct costs for highvolume production of vehicles with
these technologies and sufficient
experience with their application so that
all cost reductions due to ‘‘learning
curve’’ effects have been fully realized.
Costs are then modified by applying
near-term indirect cost multipliers
ranging from 1.11 to 1.64 to the
estimates of vehicle manufacturers’
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direct costs for producing or acquiring
each technology to improve fuel
economy, depending on the complexity
of the technology and the time frame
over which costs are estimated.
• Potential opportunity costs of
improved fuel economy—This estimate
addresses the possibility that achieving
the fuel economy improvements
required by alternative CAFE or GHG
standards would require manufacturers
to compromise the performance,
carrying capacity, safety, or comfort of
their vehicle models. If it did so, the
resulting sacrifice in the value of these
attributes to consumers would represent
an additional cost of achieving the
required improvements, and thus of
manufacturers’ compliance with stricter
standards. Currently the agencies
assume that these vehicle attributes do
not change, and include the cost of
maintaining these attributes as part of
the cost estimates for technologies.
However, it is possible that the
technology cost estimates do not
include adequate allowance for the
necessary efforts by manufacturers to
maintain vehicle performance, carrying
capacity, and utility while improving
fuel economy and reducing GHG
emissions. While, in principle,
consumer vehicle demand models can
measure these effects, these models do
not appear to be robust across
specifications, since authors derive a
wide range of willingness-to-pay values
for fuel economy from these models,
and there is not clear guidance from the
literature on whether one specification
is clearly preferred over another. Thus,
the agencies seek comment on how to
estimate explicitly the changes in
vehicle buyers’ welfare from the
combination of higher prices for new
vehicle models, increases in their fuel
economy, and any accompanying
changes in vehicle attributes such as
performance, passenger- and cargocarrying capacity, or other dimensions
of utility.
• The on-road fuel economy ‘‘gap’’—
Actual fuel economy levels achieved by
light-duty vehicles in on-road driving
fall somewhat short of their levels
measured under the laboratory-like test
conditions used by NHTSA and EPA to
establish compliance with the proposed
CAFE and GHG standards. The agencies
use an on-road fuel economy gap for
light-duty vehicles of 20 percent lower
than published fuel economy levels. For
example, if the measured CAFE fuel
economy value of a light truck is 20
mpg, the on-road fuel economy actually
achieved by a typical driver of that
vehicle is expected to be 16 mpg
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(20*.80).92 NHTSA previously used this
estimate in its MY 2011 final rule, and
the agencies confirmed it based on
independent analysis for use in this
NPRM.
• Fuel prices and the value of saving
fuel—Projected future fuel prices are a
critical input into the preliminary
economic analysis of alternative
standards, because they determine the
value of fuel savings both to new
vehicle buyers and to society. The
agencies relied on the most recent fuel
price projections from the U.S. Energy
Information Administration’s (EIA)
Annual Energy Outlook (AEO) for this
analysis. Specifically, the agencies used
the AEO 2009 (April 2009 release)
Reference Case forecasts of inflationadjusted (constant-dollar) retail gasoline
and diesel fuel prices, which represent
the EIA’s most up-to-date estimate of the
most likely course of future prices for
petroleum products.93
EIA’s Updated Reference Case reflects
the effects of the American
Reinvestment and Recovery Act of 2009,
as well as the most recent revisions to
the U.S. and global economic outlook.
In addition, it also reflects the
provisions of the Energy Independence
and Security Act of 2007 (EISA),
including the requirement that the
combined mpg level of U.S. cars and
light trucks reach 35 miles per gallon by
model year 2020. Because this provision
would be expected to reduce future U.S.
demand for gasoline and other fuels,
there is some concern about whether the
AEO 2009 forecast of fuel prices already
partly reflects the increases in CAFE
standards considered in this rule, and
thus whether it is suitable for valuing
the projected reductions in fuel use. In
response to this concern, the agencies
note that EIA issued a revised version of
AEO 2008 in June 2008, which modified
its previous December 2007 Early
Release of AEO 2008 to reflect the
effects of the recently-passed EISA
legislation.94 The fuel price forecasts
reported in EIA’s Revised Release of
AEO 2008 differed by less than one cent
per gallon over the entire forecast period
(2008–230) from those previously issued
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92 U.S.
Environmental Protection Agency, Final
Technical Support Document, Fuel Economy
Labeling of Motor Vehicle Revisions to Improve
Calculation of Fuel Economy Estimates, EPA420–R–
06–017, December 2006.
93 Energy Information Administration, Annual
Energy Outlook 2009, Revised Updated Reference
Case (April 2009), Table 12. Available at https://
www.eia.doe.gov/oiaf/servicerpt/stimulus/excel/
aeostimtab_12.xls (last accessed July 26, 2009).
94 Energy Information Administration, Annual
Energy Outlook 2008, Revised Early Release (June
2008), Table 12. Available at https://
www.eia.doe.gov/oiaf/archive/aeo08/excel/
aeotab_12.xls (last accessed September 12, 2009).
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as part of its initial release of AEO 2008.
Thus, the agencies are reasonably
confident that the fuel price forecasts
presented in AEO 2009 and used to
analyze the value of fuel savings
projected to result from this rule are not
unduly affected by the CAFE provisions
of EISA, and therefore do not cause a
baseline problem. Nevertheless, the
agencies request comment on the use of
the AEO 2009 fuel price forecasts, and
particularly on the potential impact of
the EISA-mandated CAFE
improvements on these projections.
• Consumer valuation of fuel
economy and payback period—In
estimating the value of fuel economy
improvements that would result from
alternative CAFE and GHG standards to
potential vehicle buyers, the agencies
assume that buyers value the resulting
fuel savings over only part of the
expected lifetime of the vehicles they
purchase. Specifically, we assume that
buyers value fuel savings over the first
five years of a new vehicle’s lifetime,
and that buyers discount the value of
these future fuel savings using rates of
3% and 7%. The five-year figure
represents the current average term of
consumer loans to finance the purchase
of new vehicles.
• Vehicle sales assumptions—The
first step in estimating lifetime fuel
consumption by vehicles produced
during a model year is to calculate the
number that are expected to be
produced and sold.95 The agencies
relied on the AEO 2009 Reference Case
for forecasts of total vehicle sales, while
the baseline market forecast developed
by the agencies (see Section II.B)
divided total projected sales into sales
of cars and light trucks.
• Vehicle survival assumptions—We
then applied updated values of agespecific survival rates for cars and light
trucks to these adjusted forecasts of
passenger car and light truck sales to
determine the number of these vehicles
remaining in use during each year of
their expected lifetimes.
95 Vehicles are defined to be of age 1 during the
calendar year corresponding to the model year in
which they are produced; thus for example, model
year 2000 vehicles are considered to be of age 1
during calendar year 2000, age 2 during calendar
year 2001, and to reach their maximum age of 26
years during calendar year 2025. NHTSA considers
the maximum lifetime of vehicles to be the age after
which less than 2 percent of the vehicles originally
produced during a model year remain in service.
Applying these conventions to vehicle registration
data indicates that passenger cars have a maximum
age of 26 years, while light trucks have a maximum
lifetime of 36 years. See Lu, S., NHTSA, Regulatory
Analysis and Evaluation Division, ‘‘Vehicle
Survivability and Travel Mileage Schedules,’’ DOT
HS 809 952, 8–11 (January 2006). Available at
https://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf
(last accessed July 27, 2009).
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• Total vehicle use—We then
calculated the total number of miles that
cars and light trucks produced in each
model year will be driven during each
year of their lifetimes using estimates of
annual vehicle use by age tabulated
from the Federal Highway
Administration’s 2001 National
Household Transportation Survey
(NHTS),96 adjusted to account for the
effect on vehicle use of subsequent
increases in fuel prices. In order to
insure that the resulting mileage
schedules imply reasonable estimates of
future growth in total car and light truck
use, we calculated the rate of growth in
annual car and light truck mileage at
each age that is necessary for total car
and light truck travel to increase at the
rates forecast in the AEO 2009 Reference
Case. The growth rate in average annual
car and light truck use produced by this
calculation is approximately 1.1 percent
per year.97 This rate was applied to the
mileage figures derived from the 2001
NHTS to estimate annual mileage
during each year of the expected
lifetimes of MY 2012–2016 cars and
light trucks.98
• Accounting for the rebound effect of
higher fuel economy—The rebound
effect refers to the fraction of fuel
savings expected to result from an
increase in vehicle fuel economy—
particularly an increase required by the
adoption of higher CAFE and GHG
standards—that is offset by additional
vehicle use. The increase in vehicle use
occurs because higher fuel economy
reduces the fuel cost of driving,
typically the largest single component of
the monetary cost of operating a vehicle,
and vehicle owners respond to this
reduction in operating costs by driving
slightly more. For purposes of this
NPRM, the agencies have elected to use
a 10 percent rebound effect in their
analyses of fuel savings and other
benefits from higher standards.
• Benefits from increased vehicle
use—The increase in vehicle use from
the rebound effect provides additional
benefits to their owners, who may make
more frequent trips or travel farther to
reach more desirable destinations. This
96 For a description of the Survey, see https://
nhts.ornl.gov/quickStart.shtml (last accessed July
27, 2009).
97 It was not possible to estimate separate growth
rates in average annual use for cars and light trucks,
because of the significant reclassification of light
truck models as passenger cars discussed
previously.
98 While the adjustment for future fuel prices
reduces average mileage at each age from the values
derived from the 2001 NHTS, the adjustment for
expected future growth in average vehicle use
increases it. The net effect of these two adjustments
is to increase expected lifetime mileage by about 18
percent for passenger cars and about 16 percent for
light trucks.
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additional travel provides benefits to
drivers and their passengers by
improving their access to social and
economic opportunities away from
home. The benefits from increased
vehicle use include both the fuel
expenses associated with this additional
travel, and the consumer surplus it
provides. We estimate the economic
value of the consumer surplus provided
by added driving using the conventional
approximation, which is one half of the
product of the decline in vehicle
operating costs per vehicle-mile and the
resulting increase in the annual number
of miles driven. Because it depends on
the extent of improvement in fuel
economy, the value of benefits from
increased vehicle use changes by model
year and varies among alternative
standards.
• The value of increased driving
range—By reducing the frequency with
which drivers typically refuel their
vehicles, and by extending the upper
limit of the range they can travel before
requiring refueling, improving fuel
economy and reducing GHG emissions
thus provides some additional benefits
to their owners. No direct estimates of
the value of extended vehicle range are
readily available, so the agencies’
analysis calculates the reduction in the
annual number of required refueling
cycles that results from improved fuel
economy, and applies DOTrecommended values of travel time
savings to convert the resulting time
savings to their economic value.99 The
agencies invite comment on the
assumptions used in this analysis.
Please see the Chapter 4 of the draft
Joint TSD for details.
• Added costs from congestion,
crashes and noise—Although it
provides some benefits to drivers,
increased vehicle use associated with
the rebound effect also contributes to
increased traffic congestion, motor
vehicle accidents, and highway noise.
Depending on how the additional travel
is distributed over the day and on where
it takes place, additional vehicle use can
contribute to traffic congestion and
delays by increasing traffic volumes on
facilities that are already heavily
traveled during peak periods. These
added delays impose higher costs on
drivers and other vehicle occupants in
the form of increased travel time and
operating expenses, increased costs
99 Department of Transportation, Guidance
Memorandum, ‘‘The Value of Saving Travel Time:
Departmental Guidance for Conducting Economic
Evaluations,’’ Apr. 9, 1997. https://ostpxweb.dot.gov/
policy/Data/VOT97guid.pdf (last accessed October
20, 2007); update available at https://ostpxweb.dot.
gov/policy/Data/VOTrevision1_2-11-03.pdf (last
accessed October 20, 2007).
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associated with traffic accidents, and
increased traffic noise. The agencies rely
on estimates of congestion, accident,
and noise costs caused by automobiles
and light trucks developed by the
Federal Highway Administration to
estimate the increased external costs
caused by added driving due to the
rebound effect.100
• Petroleum consumption and import
externalities—U.S. consumption and
imports of petroleum products also
impose costs on the domestic economy
that are not reflected in the market price
for crude petroleum, or in the prices
paid by consumers of petroleum
products such as gasoline. In economics
literature on this subject, these costs
include (1) higher prices for petroleum
products resulting from the effect of
U.S. oil import demand on the world oil
price (‘‘monopsony costs’’); (2) the risk
of disruptions to the U.S. economy
caused by sudden reductions in the
supply of imported oil to the U.S.; and
(3) expenses for maintaining a U.S.
military presence to secure imported oil
supplies from unstable regions, and for
maintaining the strategic petroleum
reserve (SPR) to cushion against
resulting price increases.101 Reducing
U.S. imports of crude petroleum or
refined fuels can reduce the magnitude
of these external costs. Any reduction in
their total value that results from lower
fuel consumption and petroleum
imports represents an economic benefit
of setting more stringent standards over
and above the dollar value of fuel
savings itself. The agencies do not
include a value for monopsony costs in
order to be consistent with their use of
a global value for the social cost of
carbon. Based on a recently-updated
ORNL study, we estimate that each
gallon of fuel saved that results in a
reduction in U.S. petroleum imports
(either crude petroleum or refined fuel)
will reduce the expected costs of oil
supply disruptions to the U.S. economy
by $0.169 (2007$). The agencies do not
include savings in budgetary outlays to
support U.S. military activities among
the benefits of higher fuel economy and
the resulting fuel savings. Each gallon of
100 These estimates were developed by FHWA for
use in its 1997 Federal Highway Cost Allocation
Study; https://www.fhwa.dot.gov/policy/hcas/final/
index.htm (last accessed July 29, 2009).
101 See, e.g., Bohi, Douglas R. and W. David
Montgomery (1982). Oil Prices, Energy Security,
and Import Policy Washington, DC: Resources for
the Future, Johns Hopkins University Press; Bohi,
D. R., and M. A. Toman (1993). ‘‘Energy and
Security: Externalities and Policies,’’ Energy Policy
21:1093–1109; and Toman, M. A. (1993). ‘‘The
Economics of Energy Security: Theory, Evidence,
Policy,’’ in A. V. Kneese and J. L. Sweeney, eds.
(1993). Handbook of Natural Resource and Energy
Economics, Vol. III. Amsterdam: North-Holland, pp.
1167–1218.
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fuel saved as a consequence of higher
standards is anticipated to reduce total
U.S. imports of crude petroleum or
refined fuel by 0.95 gallons.102
• Air pollutant emissions
Æ Impacts on criteria air pollutant
emissions—While reductions in
domestic fuel refining and distribution
that result from lower fuel consumption
will reduce U.S. emissions of criteria
pollutants, additional vehicle use
associated with the rebound effect will
increase emissions of these pollutants.
Thus the net effect of stricter standards
on emissions of each criteria pollutant
depends on the relative magnitudes of
reduced emissions from fuel refining
and distribution, and increases in
emissions resulting from added vehicle
use. Criteria air pollutants emitted by
vehicles and during fuel production
include carbon monoxide (CO),
hydrocarbon compounds (usually
referred to as ‘‘volatile organic
compounds,’’ or VOC), nitrogen oxides
(NOX), fine particulate matter (PM2.5),
and sulfur oxides (SOX). It is assumed
that the emission rates (per mile) stay
constant for future year vehicles.
Æ EPA and NHTSA estimate the
economic value of the human health
benefits associated with reducing
exposure to PM2.5 using a ‘‘benefit-perton’’ method. These PM2.5-related
benefit-per-ton estimates provide the
total monetized benefits to human
health (the sum of reductions in
premature mortality and premature
morbidity) that result from eliminating
one ton of directly emitted PM2.5, or one
ton of a pollutant that contributes to
secondarily-formed PM2.5 (such as NOX,
SOX, and VOCs), from a specified
source. Chapter 4.2.9 of the Technical
Support Document that accompanies
this proposal includes a description of
these values.
Reductions in GHG emissions—
Emissions of carbon dioxide and other
greenhouse gases (GHGs) occur
throughout the process of producing
and distributing transportation fuels, as
well as from fuel combustion itself. By
reducing the volume of fuel consumed
by passenger cars and light trucks,
higher standards will thus reduce GHG
emissions generated by fuel use, as well
as throughout the fuel supply cycle. The
agencies estimated the increases of
GHGs other than CO2, including
102 Each gallon of fuel saved is assumed to reduce
imports of refined fuel by 0.5 gallons, and the
volume of fuel refined domestically by 0.5 gallons.
Domestic fuel refining is assumed to utilize 90%
imported crude petroleum and 10% domesticallyproduced crude petroleum as feedstocks. Together,
these assumptions imply that each gallon of fuel
saved will reduce imports of refined fuel and crude
petroleum by 0.50 gallons + 0.50 gallons*90% =
0.50 gallons + 0.45 gallons = 0.95 gallons.
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methane and nitrous oxide, from
additional vehicle use by multiplying
the increase in total miles driven by cars
and light trucks of each model year and
age by emission rates per vehicle-mile
for these GHGs. These emission rates,
which differ between cars and light
trucks as well as between gasoline and
diesel vehicles, were estimated by EPA
using its recently-developed Motor
Vehicle Emission Simulator (Draft
MOVES 2009).103 Increases in emissions
of non-CO2 GHGs are converted to
equivalent increases in CO2 emissions
using estimates of the Global Warming
Potential (GWP) of methane and nitrous
oxide.
Æ Economic value of reductions in
CO2 emissions—EPA and NHTSA
assigned a dollar value to reductions in
CO2 emissions using the marginal dollar
value (i.e., cost) of climate-related
damages resulting from carbon
emissions, also referred to as ‘‘social
cost of carbon’’ (SCC). The SCC is
intended to measure the monetary value
society places on impacts resulting from
increased GHGs, such as property
damage from sea level rise, forced
migration due to dry land loss, and
mortality changes associated with
vector-borne diseases. Published
estimates of the SCC vary widely as a
result of uncertainties about future
economic growth, climate sensitivity to
GHG emissions, procedures used to
model the economic impacts of climate
change, and the choice of discount rates.
EPA and NHTSA’s coordinated
proposals present a set of interim SCC
values reflecting a Federal interagency
group’s interpretation of the relevant
climate economics literature. Sections
III.H and IV.C.3 provide more detail
about SCC.
• Discounting future benefits and
costs—Discounting future fuel savings
and other benefits is intended to
account for the reduction in their value
to society when they are deferred until
some future date, rather than received
immediately. The discount rate
expresses the percent decline in the
value of these benefits—as viewed from
today’s perspective—for each year they
are deferred into the future. In
evaluating the non-climate related
benefits of the proposed standards, the
agencies have employed discount rates
of both 3 percent and 7 percent.
For the reader’s reference, Table
II.F.1–1 below summarizes the values
used to calculate the impacts of each
proposed standard. The values
presented in this table are summaries of
the inputs used for the models; specific
values used in the agencies’ respective
analyses may be aggregated, expanded,
or have other relevant adjustments. See
the respective RIAs for details. The
agencies seek comment on the economic
assumptions presented in the table and
discussed below.
In addition, the agencies have
conducted a range of sensitivities and
present them in their respective RIAs.
For example, NHTSA has conducted a
sensitivity analysis on several
assumptions including (1) forecasts of
future fuel prices, (2) the discount rate
applied to future benefits and costs, (3)
the magnitude of the rebound effect, (4)
the value to the U.S. economy of
reducing carbon dioxide emissions, (5)
the monopsony effect, and (6) the
reduction in external economic costs
resulting from lower U.S. oil imports.
This information is provided in
NHTSA’s PRIA. The agencies will
consider additional sensitivities for the
final rule as appropriate, including
sensitivities on the markup factors
applied to direct manufacturing costs to
account for indirect costs (i.e., the
Indirect Cost Markups (ICMs) which are
discussed in Sections III and IV), and
the learning curve estimates used in this
analysis.
TABLE II.F.1–1—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2007$)
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Fuel Economy Rebound Effect ............................................................................................................................................................
‘‘Gap’’ between test and on-road MPG ...............................................................................................................................................
Value of refueling time per ($ per vehicle-hour) .................................................................................................................................
Annual growth in average vehicle use ................................................................................................................................................
Fuel Prices (2012–50 average, $/gallon):
Retail gasoline price .....................................................................................................................................................................
Pre-tax gasoline price ...................................................................................................................................................................
Economic Benefits from Reducing Oil Imports ($/gallon):
‘‘Monopsony’’ Component ............................................................................................................................................................
Price Shock Component ...............................................................................................................................................................
Military Security Component ........................................................................................................................................................
Total Economic Costs ($/gallon) ..................................................................................................................................................
Emission Damage Costs (2020, $/ton or $/metric ton):
Carbon monoxide .........................................................................................................................................................................
Volatile organic compounds (VOC) ..............................................................................................................................................
Nitrogen oxides (NOX)—vehicle use ............................................................................................................................................
Nitrogen oxides (NOX)—fuel production and distribution ............................................................................................................
Particulate matter (PM2.5)—vehicle use .......................................................................................................................................
Particulate matter (PM2.5)—fuel production and distribution ........................................................................................................
Sulfur dioxide (SO2) ......................................................................................................................................................................
Carbon dioxide (CO2) ...................................................................................................................................................................
Annual Increase in CO2 Damage Cost ........................................................................................................................................
External Costs from Additional Automobile Use ($/vehicle-mile):
Congestion ....................................................................................................................................................................................
Accidents ......................................................................................................................................................................................
Noise .............................................................................................................................................................................................
Total External Costs .....................................................................................................................................................................
External Costs from Additional Light Truck Use ($/vehicle-mile):
103 The MOVES model assumes that the per-mile
rates at which cars and light trucks emit these GHGs
are determined by the efficiency of fuel combustion
during engine operation and chemical reactions that
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occur during catalytic after-treatment of engine
exhaust, and are thus independent of vehicles’ fuel
consumption rates. Thus MOVES’ emission factors
for these GHGs, which are expressed per mile of
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10%
20%
24.64
1.1%
3.77
3.40
0.00
0.17
0.00
0.17
0
1,283
5,116
5,339
238,432
292,180
30,896
5
10
20
34
56
3%
0.054
0.023
0.001
0.078
........................
vehicle travel, are assumed to be unaffected by
changes in fuel economy.
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TABLE II.F.1–1—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2007$)—Continued
Congestion ....................................................................................................................................................................................
Accidents ......................................................................................................................................................................................
Noise .............................................................................................................................................................................................
Total External Costs .....................................................................................................................................................................
Discount Rates Applied to Future Benefits .........................................................................................................................................
III. EPA Proposal for Greenhouse Gas
Vehicle Standards
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A. Executive Overview of EPA Proposal
1. Introduction
The Environmental Protection Agency
(EPA) is proposing to establish
greenhouse gas emissions standards for
the largest sources of transportation
greenhouse gases—light-duty vehicles,
light-duty trucks, and medium-duty
passenger vehicles (hereafter light
vehicles). These vehicle categories,
which include cars, sport utility
vehicles, minivans, and pickup trucks
used for personal transportation, are
responsible for almost 60% of all U.S.
transportation related greenhouse gas
emissions. This action represents the
first-ever proposal by EPA to regulate
vehicle greenhouse gas emissions under
the Clean Air Act (CAA) and would
establish standards for model years 2012
and later light vehicles sold in the U.S.
EPA is proposing three separate
standards. The first and most important
is a set of fleet-wide average carbon
dioxide (CO2) emission standards for
cars and trucks. These standards are
based on CO2 emissions-footprint
curves, where each vehicle has a
different CO2 emissions compliance
target depending on its footprint value.
Vehicle CO2 emissions would be
measured over the EPA city and
highway tests. The proposed standard
allows for credits based on
demonstrated improvements in vehicle
air conditioner systems, including both
efficiency and refrigerant leakage
improvement, which are not captured
by the EPA tests. The EPA projects that
the average light vehicle tailpipe CO2
level in model year 2011 will be 326
grams per mile while the average
vehicle tailpipe CO2 emissions
compliance level for the proposed
model year 2016 standard will be 250
grams per mile, an average reduction of
23 percent from today’s CO2 levels.
EPA is also proposing standards that
will cap tailpipe nitrous oxide (N2O)
and methane (CH4) emissions at 0.010
and 0.030 grams per mile, respectively.
Even after adjusting for the higher
relative global warming potencies of
these two compounds, nitrous oxide
and methane emissions represent less
than one percent of overall vehicle
greenhouse gas emissions from new
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vehicles. Accordingly, the goal of these
two proposed standards is to limit any
potential increases in the future and not
to force reductions relative to today’s
low levels.
This proposal represents the secondphase of EPA’s response to the Supreme
Court’s 2007 decision in Massachusetts
v. EPA 104 which found that greenhouse
gases were air pollutants for purposes of
the Clean Air Act. The Court held that
the Administrator must determine
whether or not emissions from new
motor vehicles cause or contribute to air
pollution which may reasonably be
anticipated to endanger public health or
welfare, or whether the science is too
uncertain to make a reasoned decision.
The Court further ruled that, in make
these decisions, the EPA Administrator
is required to follow the language of
section 202(a) of the CAA. The Court
remanded the case back to the Agency
for reconsideration in light of its
finding.
The Administrator responded to the
Court’s remand by issuing two proposed
findings under section 202(a) of the
Clean Air Act.105 First, the
Administrator proposed to find that the
science supports a positive
endangerment finding that a mix of
certain greenhouse gases in the
atmosphere endangers the public health
and welfare of current and future
generations. This is referred to as the
endangerment finding. Second, the
Administrator proposed to find that the
emissions of four of these gases—carbon
dioxide, methane, nitrous oxide, and
hydrofluorocarbons—from new motor
vehicles and new motor vehicle engines
contribute to the atmospheric
concentrations of these key greenhouse
gases and hence to the threat of climate
change. This is referred to as the cause
and contribute finding. Finalizing this
proposed light vehicle regulations is
contingent upon EPA finalizing both the
endangerment finding and cause or
104 549 U.S. 497 (2007). For further information
on Massachusetts v. EPA see the July 30, 2008
Advance Notice of Proposed Rulemaking,
‘‘Regulating Greenhouse Gas Emissions under the
Clean Air Act’’, 73 FR 44354 at 44397. There is a
comprehensive discussion of the litigation’s history,
the Supreme Court’s findings, and subsequent
actions undertaken by the Bush Administration and
the EPA from 2007–2008 in response to the
Supreme Court remand.
105 74 FR 18886, April 24, 2009.
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0.048
0.026
0.001
0.075
3%, 7%
contribute finding. Sections III.B.1
through III.B.4 below provide more
details on the legal and scientific bases
for this proposal.
As discussed in Section I, this GHG
proposal is part of a joint National
Program such that a large majority of the
projected benefits are achieved jointly
with NHTSA’s proposed CAFE rule
which is described in detail in Section
IV of this preamble. EPA’s proposal
projects total carbon dioxide emissions
savings of nearly 950 million metric
tons, and oil savings of 1.8 billion
barrels over the lifetimes of the vehicles
sold in model years 2012–2016. EPA
projects net societal benefits of $192
billion at a 3 percent discount rate for
these same vehicles, or $136 billion at
a 7 percent discount rate (both values
assume a $20/ton SCC value).
Accordingly, these proposed light
vehicle greenhouse gas emissions
standards would make an important
‘‘first step’’ contribution as part of the
National Program toward meeting longterm greenhouse gas emissions and
import oil reduction goals, while
providing important economic benefits
as well.
2. Why is EPA Proposing this Rule?
This proposal addresses only light
vehicles. EPA is addressing light
vehicles as a first step in control of
greenhouse gas emissions under the
Clean Air Act for four reasons. First,
light vehicles are responsible for almost
60% of all mobile source greenhouse gas
emissions, a share three times larger
than any other mobile source subsector,
and represent about one-sixth of all U.S.
greenhouse gas emissions. Second,
technology exists that can be readily
and cost-effectively applied to these
vehicles to reduce greenhouse gas
emissions in the near term. Third, EPA
already has an existing testing and
compliance program for these vehicles,
refined since the mid-1970s for
emissions certification and fuel
economy compliance, which would
require only minor modifications to
accommodate greenhouse gas emissions
regulations. Finally, this proposal is an
important first step in responding to the
Supreme Court’s ruling in
Massachusetts vs. EPA. In addition,
EPA is currently evaluating controls for
motor vehicles other than those covered
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by this proposal, and is reviewing seven
petitions submitted by various States
and organizations requesting that EPA
use its Clean Air Act authorities to take
action to reduce greenhouse gas
emissions from aircraft (under
§ 231(a)(2)), ocean-going vessels (under
§ 213(a)(4)), and other nonroad engines
and vehicle sources (also under
§ 213(a)(4)).
a. Light Vehicle Emissions Contribute to
Greenhouse Gases and the Threat of
Climate Change
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Greenhouse gases are gases in the
atmosphere that effectively trap some of
the Earth’s heat that would otherwise
escape to space. Greenhouse gases are
both naturally occurring and
anthropogenic. The primary greenhouse
gases of concern are directly emitted by
human activities and include carbon
dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons,
and sulfur hexafluoride.
These gases, once emitted, remain in
the atmosphere for decades to centuries.
Thus, they become well mixed globally
in the atmosphere and their
concentrations accumulate when
emissions exceed the rate at which
natural processes remove greenhouse
gases from the atmosphere. The heating
effect caused by the human-induced
buildup of greenhouse gases in the
atmosphere is very likely106 the cause of
most of the observed global warming
over the last 50 years. The key effects of
climate change observed to date and
projected to occur in the future include,
but are not limited to, more frequent
and intense heat waves, more severe
wildfires, degraded air quality, heavier
and more frequent downpours and
flooding, increased drought, greater sea
level rise, more intense storms, harm to
water resources, continued ocean
acidification, harm to agriculture, and
harm to wildlife and ecosystems. A
detailed explanation of observed and
projected changes in greenhouse gases
and climate change and its impact on
health, society, and the environment is
included in EPA’s technical support
document for the recently released
Proposed Endangerment and Cause or
Contribute Findings for Greenhouse
Gases Under Section 202(a) of the Clean
Air Act.107
106 According to Intergovernmental Panel on
Climate Change (IPCC) terminology, ‘‘very likely’’
conveys a 90 to 99 percent probability of
occurrence. ‘‘Virtually certain’’ conveys a greater
than 99 percent probability, ‘‘likely’’ conveys a 66
to 90 percent probability, and ‘‘about as likely as
not’’ conveys a 33 to 66 percent probability.
107 74 FR18886, April 24, 2009. Both the Federal
Register Notice and the Technical Support
Document for this rulemaking are found in the
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Transportation sources represent a
large and growing share of United States
greenhouse gases and include
automobiles, highway heavy duty
trucks, airplanes, railroads, marine
vessels and a variety of other sources. In
2006, all transportation sources emitted
31.5% of all U.S. greenhouse gases, and
were the fastest-growing source of
greenhouse gases in the U.S., accounting
for 47% of the net increase in total U.S.
greenhouse gas emissions from 1990–
2006.108 The only sector with larger
greenhouse gas emissions was
electricity generation which emitted
33.7% of all U.S. greenhouse gases.
Light vehicles emit four greenhouse
gases: carbon dioxide, methane, nitrous
oxide and hydrofluorocarbons. Carbon
dioxide (CO2) is the end product of
fossil fuel combustion. During
combustion, the carbon stored in the
fuels is oxidized and emitted as CO2 and
smaller amounts of other carbon
compounds.109 Methane (CH4)
emissions are a function of the methane
content of the motor fuel, the amount of
hydrocarbons passing uncombusted
through the engine, and any postcombustion control of hydrocarbon
emissions (such as catalytic
converters).110 Nitrous oxide (N2O) (and
nitrogen oxide (NOX)) emissions from
vehicles and their engines are closely
related to air-fuel ratios, combustion
temperatures, and the use of pollution
control equipment. For example, some
types of catalytic converters installed to
reduce motor vehicle NOX, carbon
monoxide (CO) and hydrocarbon
emissions can promote the formation of
N2O.111 Hydrofluorocarbons (HFC)
emissions are progressively replacing
chlorofluorocarbons (CFC) and
hydrochlorofluorocarbons (HCFC) in
these vehicles’ cooling and refrigeration
systems as CFCs and HCFCs are being
phased out under the Montreal Protocol
and Title VI of the CAA. There are
multiple emissions pathways for HFCs
with emissions occurring during
charging of cooling and refrigeration
public docket for this rulemaking. Docket is EPA–
OAR–2009–0171.
108 Inventory of U.S. Greenhouse Gases and Sinks:
1990–2006.
109 Mobile source carbon dioxide emissions in
2006 equaled 26 percent of total U.S. CO2
emissions.
110 In 2006, methane emissions equaled 0.32
percent of total U.S. methane emissions Nitrous
oxide is a product of the reaction that occurs
between nitrogen and oxygen during fuel
combustion.
111 In 2006, nitrous oxide emissions for these
sources accounted for 8 percent of total U.S. nitrous
oxide emissions.
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systems, during operations, and during
decommissioning and disposal.112
b. Basis for Action Under Clean Air Act
Section 202(a)(1) of the Clean Air Act
(CAA) states that ‘‘the Administrator
shall by regulation prescribe (and from
time to time revise) * * * standards
applicable to the emission of any air
pollutant from any class or classes of
new motor vehicles * * *, which in his
judgment cause, or contribute to, air
pollution which may reasonably be
anticipated to endanger public health or
welfare.’’ As noted above, the
Administrator has proposed to find that
the air pollution of elevated levels of
greenhouse gas concentrations may
reasonably be anticipated to endanger
public health and welfare.113 The
Administrator has proposed to define
the air pollution to be the elevated
concentrations of the mix of six GHGs:
carbon dioxide (CO2), methane (CH4),
nitrous oxide (N2O), hydrofluorocarbons
(HFCs), perfluorocarbons (PFCs), and
sulfur hexafluoride (SF6). The
Administrator has further proposed to
find under CAA section 202(a) that CO2,
methane, N2O and HFC emissions from
new motor vehicles and engines
contribute to this air pollution. This
preamble describes proposed standards
that would control emissions of CO2,
HFCs, nitrous oxide, and methane.
Standards for these GHGs would only be
finalized if EPA determines that the
criteria have been met for endangerment
by the air pollution, and that emissions
of GHGs from new motor vehicles or
engines ‘‘cause or contribute’’ to that air
pollution. In that case, section 202(a)
would authorize EPA to issue standards
applicable to emissions of those
pollutants. For further discussion of
EPA’s authority under section 202(a),
see Section I.C.2 of the proposal.
There are a variety of other CAA Title
II provisions that are relevant to
standards established under section
202(a). As noted above, the standards
are applicable to motor vehicles for their
useful life. EPA has the discretion in
determining what standard applies over
the useful life. For example, EPA may
set a single standard that applies both
when the vehicles are new and
throughout the useful life, or where
appropriate may set a standard that
varies during the term of useful life,
such as a standard that is more stringent
in the early years of the useful life and
less stringent in the later years.
112 In 2006 HFC from these source categories
equaled 56 percent of total U.S. HFC emissions,
making it the single largest source category of U.S.
HFC emissions.
113 74 FR18886, April 24, 2009.
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c. EPA’s Greenhouse Gas Proposal
Under Section 202(a) Concerning
Endangerment and Cause or Contribute
Findings
EPA’s Administrator recently signed a
proposed action with two distinct
findings regarding greenhouse gases
under section 202(a) of the Clean Air
Act. This action is called the Proposed
Endangerment and Cause or Contribute
Findings for Greenhouse Gases under
the Clean Air Act (Endangerment
Proposal).114 The Administrator
proposed an affirmative endangerment
finding that the current and projected
concentrations of a mix of six key
greenhouse gases—carbon dioxide
(CO2), methane (CH4), nitrous oxide
(N2O), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and sulfur
hexafluoride(SF6)—in the atmosphere
threaten the public health and welfare
of current and future generations. She
also proposed to find that the combined
emissions of four of the gases—carbon
dioxide, methane, nitrous oxide and
hydrofluorocarbons from new motor
vehicles and motor vehicle engines—
contribute to the atmospheric
concentrations of these greenhouse
gases and therefore to the climate
change problem.
Specifically, the Administrator
proposed, after a thorough examination
of the scientific evidence on the causes
and impact of current and future climate
change, to find that the science
FR 18886 (April 24, 2009).
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U.S. greenhouse gas emissions, and
more than 4% of total global greenhouse
gas emissions.116 The Administrator
also considered whether emissions of
each greenhouse gas individually, as a
separate air pollutant, would contribute
to this air pollution.
If the Administrator makes affirmative
findings under section 202(a) on both
endangerment and cause or contribute,
then EPA is to issue standards
‘‘applicable to emission’’ of the air
pollutant or pollutants that EPA finds
causes or contributes to the air pollution
that endangers public health and
welfare. The Endangerment Proposal
invited public comment on whether the
air pollutant should be considered the
group of GHGs, or whether each GHG
should be treated as a separate air
pollutant. Either way, the emissions
standards proposed today would satisfy
the requirements of section 202(a) as the
Administrator has significant discretion
in how to structure the standards that
apply to the emission of the air
pollutant or air pollutants at issue. For
example, under either approach EPA
would have the discretion under section
202(a) to adopt separate standards for
each GHG, a single composite standard
covering various gases, or any
combination of these. In this rulemaking
EPA is proposing separate standards for
nitrous oxide and methane, and a CO2
standard that provides for credits based
on reductions of HFCs, as the
appropriate way to issue standards
applicable to emissions of these GHGs.
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compellingly supports a positive finding
that atmospheric concentrations of these
greenhouse gases result in air pollution
which may reasonably be anticipated to
endanger both public health and
welfare. In her proposed finding, the
Administrator relied heavily upon the
major findings and conclusions from the
recent assessments of the U.S. Climate
Change Science Program and the U.N.
Intergovernmental Panel on Climate
Change.115 The Administrator proposed
a positive endangerment finding after
considering both observed and projected
future effects of climate change, key
uncertainties, and the full range of risks
and impacts to public health and
welfare occurring within the United
States. In addition, the proposed finding
noted that the evidence concerning risks
and impacts occurring outside the U.S.
provided further support for the
proposed finding.
The key scientific findings supporting
the proposed endangerment finding are
that:
—Concentrations of greenhouse gases
are at unprecedented levels compared
to recent and distant past. These high
concentrations are the unambiguous
result of anthropogenic emissions and
are very likely the cause of the
observed increase in average
temperatures and other climatic
changes.
—The effects of climate change
observed to date and projected to
occur in the future include more
frequent and intense heat waves, more
severe wildfires, degraded air quality,
heavier downpours and flooding,
increasing drought, greater sea level
rise, more intense storms, harm to
water resources, harm to agriculture,
and harm to wildlife and ecosystems.
These impacts are effects on public
health and welfare within the
meaning of the Clean Air Act.
With regard to new motor vehicles
and engines, the Administrator also
proposed a finding that the combined
emissions of four greenhouse gases—
carbon dioxide, methane, nitrous oxide
and hydrofluorocarbons—from new
motor vehicles and engines contributes
to this air pollution, i.e., the
atmospheric concentrations of the mix
of six greenhouse gases which create the
threat of climate change and its impacts.
Key facts supporting the proposed cause
and contribute finding for on-highway
vehicles regulated under section 202(a)
of the Clean Air Act are that these
sources are responsible for 24% of total
The CO2 emissions standards are by
far the most important of the three
standards and are the primary focus of
this summary. EPA is proposing an
attribute-based approach for the CO2
fleet-wide standard (one for cars and
one for trucks), based on vehicle
footprint as the attribute. These curves
establish different CO2 emissions targets
for each unique car and truck footprint.
Generally, the larger the vehicle
footprint, the higher the corresponding
vehicle CO2 emissions target. Table
III.A.3–1 shows the greenhouse gas
standards for light vehicles that EPA is
proposing for model years (MY) 2012
and later:
115 The U.S. Climate Change Science Program
(CCSP) is now called the U.S. Global Change
Research Program (GCRP).
The standards established under CAA
section 202(a) are implemented and
enforced through various mechanisms.
Manufacturers are required to obtain an
EPA certificate of conformity with the
section 202 regulations before they may
sell or introduce their new motor
vehicle into commerce, according to
CAA section 206(a). The introduction
into commerce of vehicles without a
certificate of conformity is a prohibited
act under CAA section 203 that may
subject a manufacturer to civil penalties
and injunctive actions (see CAA
sections 204 and 205). Under CAA
section 206(b), EPA may conduct testing
of new production vehicles to determine
compliance with the standards. For inuse vehicles, if EPA determines that a
substantial number of vehicles do not
conform to the applicable regulations
then the manufacturer must submit and
implement a remedial plan to address
the problem (see CAA section 207(c)).
There are also emissions-based
warranties that the manufacturer must
implement under CAA section 207(a).
114 74
49509
116 This figure includes the greenhouse gas
contributions of light vehicles, heavy duty vehicles,
and remaining on-highway mobile sources.
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3. What is EPA Proposing?
a. Proposed Light-Duty Vehicle, LightDuty Truck, and Medium-Duty
Passenger Vehicle Greenhouse Gas
Emission Standards and Projected
Compliance Levels
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TABLE III.A.3–1—PROPOSED INDUSTRY-WIDE GREENHOUSE GAS EMISSIONS STANDARDS
Standard/covered
pollutants
Form of
standard
Level of
standard
Credits
Test cycles
CO2 Standard 117: Tailpipe CO2 ................
Fleetwide average
footprint CO2-curves
for cars and trucks.
See footprint—CO2
curves in Figure I.C–
1 for cars and Figure
I.C–2 for trucks.
CO2-e credits 118 .........
N2O Standard: Tailpipe N2O .....................
CH4 Standard: Tailpipe CH4 ......................
Cap per vehicle ...........
Cap per vehicle ...........
0.010 g/mi ...................
0.030 g/mi ...................
None ...........................
None ...........................
EPA 2-cycle (FTP and
HFET test cycles),
with separate mechanisms for A/C credits.119
EPA FTP test.
EPA FTP test.
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One important flexibility associated
with the proposed CO2 standard is the
proposed option for manufacturers to
obtain credits associated with
improvements in their air conditioning
systems. As will be discussed in greater
detail in later sections, EPA is
establishing test procedures and design
criteria by which manufacturers can
demonstrate improvements in both air
conditioner efficiency (which reduces
vehicle tailpipe CO2 by reducing the
load on the engine) and air conditioner
refrigerants (using lower global warming
potency refrigerants and/or improving
system design to reduce GHG emissions
associated with leaks). Neither of these
strategies to reduce GHG emissions from
air conditioners would be reflected in
the EPA FTP or HFET tests. These
improvements would be translated to a
g/mi CO2-equivalent credit that can be
subtracted from the manufacturer’s
tailpipe CO2 compliance value. EPA
expects a high percentage of
manufacturers to take advantage of this
flexibility to earn air conditioningrelated credits for MY2012–2016
vehicles such that the average credit
earned is about 11 grams per mile CO2–
equivalent in 2016.
A second flexibility being proposed is
CO2 credits for flexible and dual fuel
vehicles, similar to the CAFE credits for
such vehicles which allow
manufacturers to gain up to 1.2 mpg in
their overall CAFE ratings. The Energy
Independence and Security Act of 2007
(EISA) mandated a phase-out of these
flexible fuel vehicle CAFE credits
beginning in 2015, and ending after
2019. EPA is proposing to allow
comparable CO2 credits for flexible fuel
vehicles through MY 2015, but for MY
2016 and beyond, EPA is proposing to
treat flexible and dual fuel vehicles on
a CO2-performance basis, calculating the
overall CO2 emissions for flexible and
dual fuel vehicles based on a fuel useweighted average of the CO2 levels on
gasoline and on a manufacturer’s
demonstrated actual usage of the
alternative fuel in its vehicle fleet.
Table III.A.3–2 summarizes EPA
projections of industry-wide 2-cycle
CO2 emissions and fuel economy levels
that would be achieved by manufacturer
compliance with the proposed GHG
standards for MY2012–2016.
For MY2011, Table III.A.3–2 uses the
projected NHTSA compliance values for
its MY2011 CAFE standards of 30.2 mpg
for cars and 24.1 mpg for trucks,
converted to an equivalent combined
car and truck CO2 level of 325 grams per
mile.120 EPA believes this is a
reasonable estimate with which to
compare the proposed MY2012–2016
CO2 emission standards. Identifying the
proper MY2011 estimate is complicated
for many reasons, among them being the
turmoil in the current automotive
market for consumers and
manufacturers, uncertain and volatile
oil and gasoline prices, the ability of
manufacturers to use flexible fuel
vehicle credits to meet MY2011 CAFE
standards, and the fact that most
manufacturers have been surpassing
CAFE standards (particularly the car
standard) in recent years. Taking all of
these considerations into account, EPA
believes that the MY2011 projected
CAFE compliance values, converted to
CO2 emissions levels, represent a
reasonable estimate.
Table III.A.3–2 shows projected
industry-wide average CO2 emissions
values. The Projected CO2 Emissions for
the Footprint-Based Standard column
shows the CO2 g/mi level corresponding
with the footprint standard that must be
met. It is based on the proposed CO2footprint curves and projected footprint
values, and will decrease each year to
250 grams per mile (g/mi) in MY2016.
For MY2012–2015, the emissions
impact of the projected utilization of
flexible fuel vehicle (FFV) credits and
the temporary lead-time allowance
alternative standard (TLAAS, discussed
below) are shown in the next two
columns. Neither of these programs is
proposed to be available in MY2016.
The Projected CO2 Emissions column
gives the CO2 emissions levels projected
to be achieved given use of the flexible
fuel credits and temporary lead-time
allowance program. This column shows
that, relative to the MY 2011 estimate,
EPA projects that MY2016 CO2
emissions will be reduced by 23 percent
over five years. The Projected A/C
Credit column represents the industry
wide average air conditioner credit
manufacturers are expected to earn on
an equivalent CO2 gram per mile basis
in a given model year. In MY2016, the
projected A/C credit of 10.6 g/mi
represents 14 percent of the 75 g/mi CO2
emissions reductions associated with
the proposed standards. The Projected
2-cycle CO2 Emissions column shows
the projected CO2 emissions as
measured over the EPA 2-cycle tests,
which would allow compliance with the
standard assuming utilization of the
projected FFV, TLAAS, and A/C credits.
117 While over 99 percent of the carbon in
automotive fuels is converted to CO2 in a properly
functioning engine, compliance with the CO2
standard will also account for the very small levels
of carbon associated with vehicle tailpipe
hydrocarbon (HC) and carbon monoxide (CO)
emissions, converted to CO2 on a mass basis, as
discussed further in section x.
118 CO -e refers to CO -equivalent, and is a metric
2
2
that allows non-CO2 greenhouse gases (such as
hydrofluorocarbons used as automotive air
conditioning refrigerants) to be expressed as an
equivalent mass (i.e., corrected for relative global
warming potency) of CO2 emissions.
119 FTP is the Federal Test Procedure which uses
what is commonly referred to as the ‘‘city’’ driving
schedule, and HFET is the Highway Fuel Economy
Test which uses the ‘‘highway’’ driving schedule.
Compliance with the CO2 standard will be based on
the same 2-cycle values that are currently used for
CAFE standards compliance; EPA projects that
fleet-wide in-use or real world CO2 emissions are
approximately 25 percent higher, on average, than
2-cycle CO2 values.
120 74 FR 14196.
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TABLE III.A.3–2—PROJECTED FLEETWIDE CO2 EMISSIONS VALUES (GRAMS PER MILE)
Projected
CO2 emissions for the
footprintbased
standard
Model year
2011
2012
2013
2014
2015
2016
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
.................................................................................
EPA is also proposing a series of
flexibilities for compliance with the CO2
standard which are not expected to
significantly affect the projected
compliance and achieved values shown
above, but which should significantly
reduce the costs of achieving those
reductions. These flexibilities include
the ability to earn: annual credits for a
manufacturer’s over-compliance with its
unique fleet-wide average standard,
early credits from MY2009–2011,
credits for early introduction of
advanced technology vehicles, credit for
‘‘off-cycle’’ CO2 reductions not reflected
in CO2/fuel economy tests, as well as
the carry-forward and carry-backward of
credits, the ability to transfer credits
between a manufacturer’s car and truck
fleets, and a temporary lead-time
allowance alternative standard
(included in the tables above) that will
permit manufacturers with less than
400,000 vehicles produced in MY 2009
to designate a fraction of their vehicles
to meet a 25% higher CO2 standard for
MY 2012–2015. All of these proposed
Projected
FFV credit
Projected
TLAAS
credit
....................
295
286
276
263
250
....................
6
5.7
5.4
4.1
0
....................
0.3
0.2
0.2
0.1
0
flexibilities are discussed in greater
detail in later sections.
EPA is also proposing caps on the
tailpipe emissions of nitrous oxide
(N2O) and methane (CH4)—0.010 g/mi
for N2O and 0.030 g/mi for CH4—over
the EPA FTP test. While N2O and CH4
can be potent greenhouse gases on a
relative mass basis, their emission levels
from modern vehicle designs are
extremely low and represent only about
1% of total light vehicle GHG emissions.
These cap standards are designed to
ensure that N2O and CH4 emissions
levels do not rise in the future, rather
than to force reductions in the already
low emissions levels. Accordingly, these
standards are not designed to require
automakers to make any changes in
current vehicle designs, and thus EPA is
not projecting any environmental or
economic impacts associated with these
proposed standards.
EPA has attempted to build on
existing practice wherever possible in
designing a compliance program for the
proposed GHG standards. In particular,
Projected
CO2 emissions
Projected
A/C credit
(325)
302
291
281
267
250
....................
3.1
5.0
7.5
10.0
10.6
Projected
2-cycle CO2
emissions
(325)
305
296
289
277
261
the program structure proposed will
streamline the compliance process for
both manufacturers and EPA by
enabling manufacturers to use a single
data set to satisfy both the new GHG and
CAFE testing and reporting
requirements. Timing of certification,
model-level testing, and other
compliance activities also follow
current practices established under the
Tier 2 and CAFE programs.
b. Environmental and Economic
Benefits and Costs of EPA’s Proposed
Standards
In Table III.A.3–3 EPA presents
estimated annual net benefits for the
indicated calendar years. The table also
shows the net present values of those
benefits for the calendar years 2012–
2050 using both a 3% and a 7%
discount rate. As discussed previously,
EPA recognizes that much of these same
costs and benefits are also attributed to
the proposed CAFE standard contained
in this joint proposal.
TABLE III.A.3–3—PROJECTED QUANTIFIABLE BENEFITS AND COSTS FOR PROPOSED CO2 STANDARD
[(In million 2007 $s) [Note: B = unquantified benefits]
2020
Quantified Annual
Costs a
........................
2030
2040
¥$25,100
¥$72,500
2050
NPV, 3%
NPV, 7%
¥$105,700
¥$146,100
¥$1,287,600
¥$529,500
Benefits from Reduced GHG Emissions at each assumed SCC value:
SCC
SCC
SCC
SCC
SCC
5% ............................................
5% Newell-Pizer .......................
from 3% and 5% ......................
3% ............................................
3% Newell-Pizer .......................
1,200
2,500
4,700
8,200
14,000
3,300
6,600
12,000
22,000
36,000
5,700
11,000
22,000
38,000
63,000
9,500
19,000
36,000
63,000
100,000
69,200
138,400
263,000
456,900
761,400
28,600
57,100
108,500
188,500
314,200
1,400
2,300
2,500
4,900
¥2,400
3,000
4,800
4,900
10,000
¥4,900
4,600
6,200
6,400
13,600
¥6,300
6,700
7,800
8,000
18,000
¥7,900
59,800
85,800
89,600
184,700
¥88,200
26,300
38,800
41,000
82,700
¥40,200
93,600
96,900
102,300
135,900
141,200
152,200
188,200
197,700
214,700
1,688,500
1,757,700
1,882,300
706,700
735,200
786,600
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Other Quantified Externalities
PM2.5 Related Benefits b c d ......................
Energy Security Impacts (price shock) ....
Reduced Refueling ..................................
Value of Increased Driving e ....................
Accidents, Noise, Congestion ..................
Quantified Net Benefits at each assumed SCC value:
SCC 5% ............................................
SCC 5% Newell-Pizer .......................
SCC from 3% and 5% ......................
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35,000
36,300
38,500
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TABLE III.A.3–3—PROJECTED QUANTIFIABLE BENEFITS AND COSTS FOR PROPOSED CO2 STANDARD—Continued
[(In million 2007 $s) [Note: B = unquantified benefits]
2020
SCC 3% ............................................
SCC 3% Newell-Pizer .......................
2030
42,000
47,800
2040
112,300
126,300
168,200
193,200
2050
NPV, 3%
241,700
278,700
2,076,200
2,380,700
NPV, 7%
866,600
992,300
a Quantified annual costs are negative because fuel savings are included as negative costs (i.e., positive savings). Since the fuel savings outweigh the vehicle technology costs, the costs of as presented here are actually negative (i.e., they represent savings).
b Note that the co-pollutant impacts associated with the standards presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. Instead, the co-pollutant benefits are based on benefitper-ton values that reflect only human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and environmental
benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale air quality modeling. However, EPA was unable to
conduct a full-scale air quality modeling analysis in time for the proposal. EPA does intend to more fully capture the co-pollutant benefits for the
analysis of the final standards.
c The PM
2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on the Six Cities study (Laden et al., 2006), the values
would be approximately 145% (nearly two-and-a-half times) larger.
d The PM
2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate had been used, the values would be approximately
9% lower.
e Calculated using pre-tax fuel prices.
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4. Basis for the Proposed GHG
Standards Under Section 202(a)
EPA statutory authority under section
202(a)(1) of the Clean Air Act (CAA) is
discussed in more detail in Section
I.C.2. The following is a summary of the
basis for the proposed standards under
section 202(a), which is discussed in
more detail in the following portions of
Section III.
With respect to CO2 and HFCs, EPA
is proposing attribute-based light-duty
car and truck standards that achieve
large and important emissions
reductions of GHGs. EPA has evaluated
the technological feasibility of the
proposed standards, and the
information and analysis performed by
EPA indicates that these standards are
feasible in the lead time provided. EPA
and NHTSA have carefully evaluated
the effectiveness of individual
technologies as well as the interactions
when technologies are combined. EPA’s
projection of the technology that would
be used to comply with the proposed
standards indicates that manufacturers
will be able to meet the proposed
standards by employing a wide variety
of technology that is already
commercially available and can be
incorporated into their vehicle at the
time of redesign. In addition to the use
of the manufacturers’ redesign cycle,
EPA’s analysis also takes into account
certain flexibilities that will facilitate
compliance especially in the early years
of the program when potential lead time
constraints are most challenging. These
flexibilities include averaging, banking,
and trading of various types of credits.
For the industry as a whole, EPA’s
projections indicate that the proposed
standards can be met using technology
that will be available in the lead-time
provided.
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To account for additional lead-time
concerns for various manufacturers of
typically higher performance vehicles,
EPA is proposing a Temporary Leadtime Allowance that will further
facilitate compliance for limited
volumes of such vehicles in the
program’s initial years. For a few very
small volume manufacturers, EPA
projects that manufacturers will likely
comply using a combination of credits
and technology.
EPA has also carefully considered the
cost to manufacturers of meeting the
standards, estimating piece costs for all
candidate technologies, direct
manufacturing costs, cost markups to
account for manufacturers’ indirect
costs, and manufacturer cost reductions
attributable to learning. In estimating
manufacturer costs, EPA took into
account manufacturers’ own standard
practices such as making major changes
to model technology packages during a
planned redesign cycle. EPA then
projected the average cost across the
industry to employ this technology, as
well as manufacturer-by-manufacturer
costs. EPA considers the per vehicle
costs estimated from this analysis to be
well within a reasonable range in light
of the emissions reductions and benefits
received. EPA projects, for example, that
the fuel savings over the life of the
vehicles will more than offset the
increase in cost associated with the
technology used to meet the standards.
EPA has also evaluated the impacts of
these standards with respect to
reductions in GHGs and reductions in
oil usage. For the lifetime of the model
year 2012–2016 vehicles we estimate
GHG reductions of approximately 950
million metric tons CO2 eq. and fuel
reductions of 1.8 billion barrels of oil.
These are important and significant
reductions that would be achieved by
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the proposed standards. EPA has also
analyzed a variety of other impacts of
the standards, ranging from the
standards’ effects on emissions of nonGHG pollutants, impacts on noise,
energy, safety and congestion. EPA has
also quantified the cost and benefits of
the proposed standards, to the extent
practicable. Our analysis to date
indicates that the overall quantified
benefits of the proposed standards far
outweigh the projected costs. Utilizing a
3% discount rate and a $20 per ton
social cost of carbon we estimate the
total net social benefits over the life of
the model year 2012–2016 vehicles is
$192 billion, and the net present value
of the net social benefits of the
standards through the year 2050 is $1.9
trillion dollars. These values are
estimated at $136 billion and $787
billion, respectively, using a 7%
discount rate and the $20 per ton SCC
value.
Under section 202(a) EPA is called
upon to set standards that provide
adequate lead-time for the development
and application of technology to meet
the standards. EPA’s proposed
standards satisfy this requirement, as
discussed above. In setting the
standards, EPA is called upon to weigh
and balance various factors, and to
exercise judgment in setting standards
that are a reasonable balance of the
relevant factors. In this case, EPA has
considered many factors, such as cost,
impacts on emissions (both GHG and
non-GHG), impacts on oil conservation,
impacts on noise, energy, safety, and
other factors, and has where practicable
quantified the costs and benefits of the
rule. In summary, given the technical
feasibility of the standard, the moderate
cost per vehicle in light of the savings
in fuel costs over the life time of the
vehicle, the very significant reductions
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in emissions and in oil usage, and the
significantly greater quantified benefits
compared to quantified costs, EPA is
confident that the proposed standards
are an appropriate and reasonable
balance of the factors to consider under
section 202(a). See Husqvarna AB v.
EPA, 254 F.3d 195, 200 (D.C. Cir. 2001)
(great discretion to balance statutory
factors in considering level of
technology-based standard, and
statutory requirement ‘‘to [give
appropriate] consideration to the cost of
applying * * * technology’’ does not
mandate a specific method of cost
analysis); see also Hercules Inc. v. EPA,
598 F.2d 91, 106 (D.C. Cir. 1978) (‘‘In
reviewing a numerical standard we
must ask whether the agency’s numbers
are within a zone of reasonableness, not
whether its numbers are precisely
right’’); Permian Basin Area Rate Cases,
390 U.S. 747, 797 (1968) (same); Federal
Power Commission v. Conway Corp.,
426 U.S. 271, 278 (1976) (same); Exxon
Mobil Gas Marketing Co. v. FERC, 297
F.3d 1071, 1084 (D.C. Cir. 2002) (same).
EPA recognizes that the vast majority
of technology which we are considering
for purposes of setting standards under
section 202(a) is commercially available
and already being utilized to a limited
extent across the fleet. The vast majority
of the emission reductions which would
result from this proposed rule would
result from the increased use of these
technologies. EPA also recognizes that
this proposed rule would enhance the
development and limited use of more
advanced technologies, such as PHEVs
and EVs. In this technological context,
there is no clear cut line that indicates
that only one projection of technology
penetration could potentially be
considered feasible for purposes of
section 202(a), or only one standard that
could potentially be considered a
reasonable balancing of the factors
relevant under section 202(a). EPA has
therefore evaluated two sets of
alternative standards, one more
stringent than the proposed standards
and one less stringent.
The alternatives are 4% per year
increase in standards which would be
less stringent than our proposal and a
6% per year increase in the standards
which would be more stringent than our
proposal. EPA is not proposing either of
these. As discussed in Section III.D.7,
the 4% per year compared to the
proposal forgoes CO2 reductions which
can be achieved at reasonable costs and
are achievable by the industry within
the rule’s timeframe. The 6% per year
alternative requires a significant
increase in the projected required
technology which may not be
achievable in this timeframe due to the
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limited available lead time and the
current difficult financial condition of
the automotive industry. (See Section
III.D.7 for a detailed discussion of why
EPA is not proposing either of the
alternatives.) EPA thus believes that it is
appropriate to propose the CO2
standards discussed above. EPA invites
comment on all aspects of this
judgment, as well as comment on the
alternative standards.
EPA is also proposing standards for
N2O and CH4. EPA has designed these
standards to act as emission rate (i.e.,
gram per mile) caps and to avoid future
increases in light duty vehicle
emissions. As discussed in Section
III.B.6, N2O and CH4 emissions are
already generally well controlled by
current emissions standards, and EPA
has not identified clear technological
steps available to manufacturers today
that would significantly reduce current
emission levels for the vast majority of
vehicles manufactured today (i.e.,
stoichiometric gasoline vehicles).
However, for both N2O and CH4, some
vehicle technologies (and, for CH4, use
of natural gas fuel) could potentially
increase emissions of these GHGs in the
future, and EPA believes it is important
that this be avoided. EPA expects that,
almost universally across current car
and truck designs, manufacturers will
be able to meet the ‘‘cap’’ standards
with little if any technological
improvements or cost. EPA has
designed the level of the N2O and CH4
standards with the intent that
manufacturers would be able to meet
them without the need for technological
improvement; in other words, these
emission standards are designed to be
‘‘anti-backsliding’’ standards.
B. Proposed GHG Standards for LightDuty Vehicles, Light-Duty Trucks, and
Medium-Duty Passenger Vehicles
EPA is proposing new emission
standards to control greenhouse gases
(GHGs) from light-duty vehicles. First,
EPA is proposing emission standards for
carbon dioxide (CO2) on a gram per mile
(g/mile) basis that would apply to a
manufacturer’s fleet of cars, and a
separate standard that would apply to a
manufacturer’s fleet of trucks. CO2 is the
primary pollutant resulting from the
combustion of vehicular fuels, and the
amount of CO2 emitted is directly
correlated to the amount of fuel
consumed. Second, EPA is providing
auto manufacturers with the
opportunity to earn credits toward the
fleet-wide average CO2 standards for
improvements to air conditioning
systems, including both
hydrofluorocarbon (HFC) refrigerant
losses (i.e., system leakage) and indirect
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CO2 emissions related to the increased
load on the engine. Third, EPA is
proposing separate emissions standards
for two other GHG pollutants: Methane
(CH4) and nitrous oxide (N2O). CH4 and
N2O emissions relate closely to the
design and efficient use of emission
control hardware (i.e., catalytic
converters). The standards for CH4 and
N2O would be set as a cap that would
limit emissions increases and prevent
backsliding from current emission
levels. The proposed standards
described below would apply to
passenger cars, light-duty trucks, and
medium-duty passenger vehicles
(MDPVs). As an overall group, they are
referred to in this preamble as light
vehicles or simply as vehicles. In this
preamble section passenger cars may be
referred to simply as ‘‘cars’’, and lightduty trucks and MDPVs as ‘‘light
trucks’’ or ‘‘trucks.’’ 121
EPA is establishing a system of
averaging, banking, and trading of
credits integral to the fleet averaging
approach, based on manufacturer fleet
average CO2 performance, as discussed
in Section III.B.4. This approach is
similar to averaging, banking, and
trading (ABT) programs EPA has
established in other programs and is
also similar to provisions in the CAFE
program. In addition to traditional ABT
credits based on the fleet emissions
average, EPA is also proposing to
include A/C credits as an aspect of the
standards, as mentioned above. EPA is
also proposing several additional credit
provisions that apply only in the initial
model years of the program. These
include flex fuel vehicle credits, credits
based on the use of advanced
technologies, and generation of credits
prior to model year 2012. The proposed
A/C credits and additional credit
opportunities are described in Section
III.C. These credit programs would
provide flexibility to manufacturers,
which may be especially important
during the early transition years of the
program. EPA is also proposing to allow
a manufacturer to carry a deficit into the
future for a limited number of model
years. A parallel provision, referred to
as credit carry-back, is proposed as part
of the CAFE program.
1. What Fleet-Wide Emissions Levels
Correspond to the CO2 Standards?
The proposed attribute-based CO2
standards, if made final, are projected to
achieve a national fleet-wide average,
covering both light cars and trucks, of
121 As described in Section III.B.2., EPA is
proposing for purposes of GHG emissions standards
to use the same vehicle category definitions as are
used in the CAFE program.
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250 grams/mile of CO2 in model year
(MY) 2016. This includes CO2equivalent emission reductions from
A/C improvements, reflected as credits
in the standard. The standards would
begin with MY 2012, with a generally
linear increase in stringency from MY
2012 through MY 2016. EPA is
proposing separate standards for cars
and light trucks. The tables in this
section below provide overall fleet
average levels that are projected for both
cars and light trucks over the phase-in
period which is estimated to correspond
with the proposed standards. The actual
fleet-wide average g/mi level that will
be achieved in any year for cars and
trucks will depend on the actual
production for that year, as well as the
use of the various credit and averaging,
banking, and trading provisions. For
example, in any year, manufacturers
may generate credits from cars and use
them for compliance with the truck
standard. Such transfer of credits
between cars and trucks is not reflected
in the table below. In Section III.F, the
year-by-year estimate of emissions
reductions that are projected to be
achieved by the proposed standards are
discussed.
In general, the proposed schedule of
standards acts as a phase-in to the MY
2016 standards, and reflects
consideration of the appropriate leadtime for each manufacturer to
implement the requisite emission
reductions technology across its product
line.122 Note that 2016 is the final model
year in which standards become more
stringent. The 2016 CO2 standards
would remain in place for 2017 and
later model years, until revised by EPA
in a future rulemaking.
EPA estimates that, on a combined
fleet-wide national basis, the proposed
2016 MY standards would achieve a
level of 250 g/mile CO2, including CO2equivalent credits from A/C related
reductions. The derivation of the 250 g/
mile estimate is described in Section
III.B.2.
EPA has estimated the overall fleetwide CO2-equivalent emission levels
that correspond with the proposed
attribute-based standards, based on the
projections of the composition of each
manufacturer’s fleet in each year of the
program. Tables III.B.1–1 and III.B.1–2
provide these estimates for each
manufacturer.123
TABLE III.B.1–1—ESTIMATED FLEET CO2-EQUIVALENT LEVELS CORRESPONDING TO THE PROPOSED STANDARDS FOR
CARS
Model year
Manufacturer
2012
BMW ..........................................................................................................................................................
Chrysler ......................................................................................................................................................
Daimler .......................................................................................................................................................
Ford ............................................................................................................................................................
General Motors ..........................................................................................................................................
Honda ........................................................................................................................................................
Hyundai ......................................................................................................................................................
Kia ..............................................................................................................................................................
Mazda ........................................................................................................................................................
Mitsubishi ...................................................................................................................................................
Nissan ........................................................................................................................................................
Porsche ......................................................................................................................................................
Subaru .......................................................................................................................................................
Suzuki ........................................................................................................................................................
Tata ............................................................................................................................................................
Toyota ........................................................................................................................................................
Volkswagen ................................................................................................................................................
2013
2014
2015
2016
265
266
270
266
266
259
260
262
258
255
263
242
252
244
286
257
254
257
259
263
259
258
251
252
253
250
247
255
234
244
236
278
250
246
249
251
257
251
250
244
244
246
243
240
247
227
237
229
271
242
239
238
242
245
239
239
232
233
235
231
228
236
215
225
217
259
231
228
227
231
234
228
228
221
221
223
220
217
225
204
214
206
248
220
217
TABLE III.B.1–2—ESTIMATED FLEET CO2-EQUIVALENT LEVELS CORRESPONDING TO THE PROPOSED STANDARDS FOR
LIGHT TRUCKS
Model year
Manufacturer
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2012
BMW ..........................................................................................................................................................
Chrysler ......................................................................................................................................................
Daimler .......................................................................................................................................................
Ford ............................................................................................................................................................
General Motors ..........................................................................................................................................
Honda ........................................................................................................................................................
Hyundai ......................................................................................................................................................
Kia ..............................................................................................................................................................
Mazda ........................................................................................................................................................
Mitsubishi ...................................................................................................................................................
Nissan ........................................................................................................................................................
Porsche ......................................................................................................................................................
Subaru .......................................................................................................................................................
Suzuki ........................................................................................................................................................
Tata ............................................................................................................................................................
Toyota ........................................................................................................................................................
122 See
CAA section 202(a)(2).
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123 These levels do not include the effect of
flexible fuel credits, transfer of credits between cars
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2013
2014
2015
2016
334
349
346
363
372
333
330
341
321
320
352
338
319
324
326
342
324
339
334
352
361
322
320
330
311
310
341
327
308
313
316
332
313
329
323
343
351
311
308
319
300
299
332
316
297
301
305
320
298
315
308
329
337
295
293
303
286
284
318
301
282
286
289
305
283
300
293
314
322
280
278
288
271
269
303
286
267
271
275
291
and trucks, temporary lead time allowance, or any
other credits.
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TABLE III.B.1–2—ESTIMATED FLEET CO2-EQUIVALENT LEVELS CORRESPONDING TO THE PROPOSED STANDARDS FOR
LIGHT TRUCKS—Continued
Model year
Manufacturer
2012
2013
2014
2015
2016
344
333
322
307
292
Volkswagen ................................................................................................................................................
These estimates were aggregated
based on projected production volumes
into the fleet-wide averages for cars and
trucks (Table III.B.1–3).124
TABLE III.B.1–3—ESTIMATED FLEETWIDE
CO2-EQUIVALENT
LEVELS
CORRESPONDING TO THE PROPOSED
STANDARDS
Cars
Model year
Trucks
CO2 (g/mi)
CO2 (g/mi)
2012 ..........
2013 ..........
2014 ..........
2015 ..........
2016 and
later .......
261
254
245
234
352
341
331
317
224
303
As shown in Table III.B.1–3, fleetwide CO2-equivalent emission levels for
cars under the proposed approach are
projected to decrease from 261 to 224
grams per mile between MY 2012 and
MY 2016. Similarly, fleet-wide CO2equivalent emission levels for trucks are
projected to decrease from 352 to 303
grams per mile. These numbers do not
include the effects of other flexibilities
and credits in the program. The
estimated achieved values can be found
in Chapter 5 of the Draft Regulatory
Impact Analysis (DRIA).
EPA has also estimated the average
fleet-wide levels for the combined car
and truck fleets. These levels are
provided in Table III.B.1–4. As shown,
the overall fleet average CO2 level is
expected to be 250 g/mile in 2016.
TABLE III.B.1–4—ESTIMATED FLEETWIDE COMBINED CO2-EQUIVALENT
LEVELS CORRESPONDING TO THE
PROPOSED STANDARDS
Combined car
and truck
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Model year
2012
2013
2014
2015
2016
CO2 (g/mi)
......................................
......................................
......................................
......................................
......................................
295
286
276
263
250
124 Due to rounding during calculations, the
estimated fleet-wide CO2-equivalent levels may
vary by plus or minus 1 gram.
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As noted above, EPA is proposing
standards that would result in
increasingly stringent levels of CO2
control from MY 2012 though MY
2016—applying the CO2 footprint
curves applicable in each model year to
the vehicles expected to be sold in each
model year produces fleet-wide annual
reductions in CO2 emissions. As
explained in Section III.D below and the
relevant support documents, EPA
believes that the proposed level of
improvement achieves important CO2
emissions reductions through the
application of feasible control
technology at reasonable cost,
considering the needed lead time for
this program. EPA further believes that
the proposed averaging, banking and
trading provisions, as well as other
credit-generating mechanisms, allow
manufacturers further flexibilities
which reduce the cost of the proposed
CO2 standards and help to provide
adequate lead time. EPA believes this
approach is justified under section
202(a) of the Clean Air Act.
EPA has analyzed the feasibility
under the CAA of achieving the
proposed CO2 standards, based on
projections of what actions
manufacturers are expected to take to
reduce emissions. The results of the
analysis are discussed in detail in
Section III.D below and in the DRIA.
EPA also presents the estimated costs
and benefits of the proposed car and
truck CO2 standards in Section III.H. In
developing the proposal, EPA has
evaluated the kinds of technologies that
could be utilized by the automobile
industry, as well as the associated costs
for the industry and fuel savings for the
consumer, the magnitude of the GHG
reductions that may be achieved, and
other factors relevant under the CAA.
With respect to the lead time and cost
of incorporating technology
improvements that reduce GHG
emissions, EPA and NHTSA place
important weight on the fact that during
MYs 2012–2016 manufacturers are
expected to redesign and upgrade their
light-duty vehicle products (and in
some cases introduce entirely new
vehicles not on the market today). Over
these five model years there would be
an opportunity for manufacturers to
evaluate almost every one of their
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vehicle model platforms and add
technology in a cost-effective way to
control GHG emissions and improve
fuel economy. This includes redesign of
the air conditioner systems in ways that
will further reduce GHG emissions. The
time-frame and levels for the proposed
standards, as well as the ability to
average, bank and trade credits and
carry a deficit forward for a limited
time, are expected to provide
manufacturers the time needed to
incorporate technology that will achieve
GHG reductions, and to do this as part
of the normal vehicle redesign process.
This is an important aspect of the
proposal, as it would avoid the much
higher costs that would occur if
manufacturers needed to add or change
technology at times other than these
scheduled redesigns. This time period
would also provide manufacturers the
opportunity to plan for compliance
using a multi-year time frame, again in
accord with their normal business
practice.
Consistent with the requirement of
CAA section 202(a)(1) that standards be
applicable to vehicles ‘‘for their useful
life,’’ EPA is proposing CO2 vehicle
standards that would apply for the
useful life of the vehicle. Under section
202(i) of the Act, which authorized the
Tier 2 standards, EPA established a
useful life period of 10 years or 120,000
miles, whichever first occurs, for all
Tier 2 light-duty vehicles and light-duty
trucks.125 Tier 2 refers to EPA’s
standards for criteria pollutants such as
NOX, HC, and CO. EPA is proposing
new CO2 standards for the same group
of vehicles, and therefore the Tier 2
useful life would apply for CO2
standards as well. The in-use emission
standard will be 10% higher than the
certification standard, to address issues
of production variability and test-to-test
variability. The in-use standard is
discussed in Section III.E.
EPA is proposing to measure CO2 for
certification and compliance purposes
using the same test procedures currently
used by EPA for measuring fuel
economy. These procedures are the
Federal Test Procedure (FTP or ‘‘city’’
test) and the Highway Fuel Economy
125 See
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Test (HFET or ‘‘highway’’ test).126 This
corresponds with the data used to
develop the footprint-based CO2
standards, since the data on control
technology efficiency was also
developed in reference to these test
procedures. Although EPA recently
updated the test procedures used for
fuel economy labeling, to better reflect
the actual in-use fuel economy achieved
by vehicles, EPA is not proposing to use
these test procedures for the CO2
standards proposed here, given the lack
of data on control technology
effectiveness under these procedures.127
As stated in Section I, EPA and NHTSA
invite comments on potential
amendments to the CAFE and GHG test
procedures, including but not limited to
air conditioner-related emissions, that
could be implemented beginning in MY
2017.
EPA proposes to include
hydrocarbons (HC) and carbon
monoxide (CO) in its CO2 emissions
calculations on a CO2-equivalent basis.
It is well accepted that HC and CO are
typically oxidized to CO2 in the
atmosphere in a relatively short period
of time and so are effectively part of the
CO2 emitted by a vehicle. In terms of
standard stringency, accounting for the
carbon content of tailpipe HC and CO
emissions and expressing it as CO2equivalent emissions would add less
than one percent to the overall CO2equivalent emissions level. This will
also ensure consistency with CAFE
calculations since HC and CO are
included in the ‘‘carbon balance’’
methodology that EPA uses to
determine fuel usage as part of
calculating vehicle fuel economy levels.
2. What Are the CO2 Attribute-Based
Standards?
EPA proposes to use the same vehicle
category definitions that are used in the
CAFE program for the 2011 model year
standards.128 The CAFE vehicle
category definitions differ slightly from
the EPA definitions for cars and light
trucks used for the Tier 2 program, as
well as other EPA vehicle programs.
Specifically, NHTSA’s reconsideration
of the CAFE program statutory language
has resulted in many two-wheel drive
SUVs under 6000 pounds gross vehicle
weight being reclassified as cars under
the CAFE program. The proposed
approach of using CAFE definitions
allows EPA’s proposed CO2 standards
and the proposed CAFE standards to be
harmonized across all vehicles. In other
words, vehicles would be subject to
either car standards or truck standards
under both programs, and not car
standards under one program and trucks
standards under the other.
EPA is proposing separate car and
truck standards, that is, vehicles defined
as cars have one set of footprint-based
curves for MY 2012–2016 and vehicles
defined as trucks have a different set for
MY 2012–2016. In general, for a given
footprint the CO2 g/mi target for trucks
is less stringent then for a car with the
same footprint.
EPA is not proposing a single fleet
standard where all cars and trucks are
measured against the same footprint
curve for several reasons. First, some
vehicles classified as trucks (such as
pick-up trucks) have certain attributes
not common on cars which attributes
contribute to higher CO2 emissions—
notably high load carrying capability
and/or high towing capability. Due to
these differences, it is reasonable to
separate the light-duty vehicle fleet into
two groups. Second, EPA would like to
harmonize key program design elements
of the GHG standards with NHTSA’s
CAFE program where it is reasonable to
do so. NHTSA is required by statute to
set separate standards for passenger cars
and for non-passenger cars.
Finally, most of the advantages of a
single standard for all light duty
vehicles are also present in the two-fleet
standards proposed here. Because EPA
is proposing to allow unlimited credit
transfer between a manufacturer’s car
and truck fleets, the two fleets can
essentially be viewed as a single fleet
when manufacturers consider
compliance strategies. Manufacturers
can thus choose on which vehicles
within their fleet to focus GHG reducing
technology and then use credit transfers
as needed to demonstrate compliance,
just as they would if there was a single
fleet standard. The one benefit of a
single light-duty fleet not captured by a
two-fleet approach is that a single fleet
prevents potential ‘‘gaming’’ of the car
and truck definitions to try and design
vehicles which are more similar to
passenger cars but which may meet the
regulatory definition of trucks. Although
this is of concern to EPA, we do not
believe at this time that concern is
sufficient to outweigh the other reasons
for proposing separate car and truck
fleet standards. EPA requests comment
on this approach.
For model years 2012 and later, EPA
is proposing a series of CO2 standards
that are described mathematically by a
family of piecewise linear functions
(with respect to vehicle footprint). The
form of the function is as follows:
CO2 = a, if x ≤ l
CO2 = cx + d, if l < x ≤ h
CO2 = b, if x > h
Where:
CO2 = the CO2 target value for a given
footprint (in g/mi)
a = the minimum CO2 target value (in g/mi)
b = the maximum CO2 target value (in g/mi)
c = the slope of the linear function (in g/mi
per sq ft)
d = is the zero-offset for the line (in g/mi CO2)
x = footprint of the vehicle model (in square
feet, rounded to the nearest tenth)
l & h are the lower and higher footprint
limits, constraints, or the boundary
(‘‘kinks’’) between the flat regions and
the intermediate sloped line.
EPA’s proposed parameter values that
define the family of functions for the
proposed CO2 fleetwide average car and
truck standards are as follows:
TABLE III.B.2–1—PARAMETER VALUES FOR CARS
[For CO2 gram per mile targets]
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Model year
2012
2013
2014
2015
2016
a
.........................................................
.........................................................
.........................................................
.........................................................
and later ..........................................
242
234
227
215
204
126 EPA established the FTP for emissions
measurement in the early 1970s. In 1976, in
response to the Energy Policy and Conservation Act
(EPCA) statute, EPA extended the use of the FTP
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b
c
313
305
297
286
275
4.72
4.72
4.72
4.72
4.72
to fuel economy measurement and added the
HFET.126 The provisions in the 1976 regulation,
effective with the 1977 model year, established
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Lower
constraint
d
48.8
40.8
33.2
22.0
10.9
Upper
constraint
41
41
41
41
41
procedures to calculate fuel economy values both
for labeling and for CAFE purposes.
127 See 71 FR 77872, December 27, 2006.
128 See 49 CFR part 523.
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TABLE III.B.2–2—PARAMETER VALUES FOR TRUCKS
[For CO2 gram per mile targets]
Model year
2012
2013
2014
2015
2016
a
.........................................................
.........................................................
.........................................................
.........................................................
and later ..........................................
298
287
276
261
246
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The equations can be shown
graphically for each vehicle category, as
shown in Figures III.B.2–1 and III.B.2–
2. These standards (or functions)
decrease from 2012–2016 with a vertical
shift. A more detailed description of the
development of the attribute based
standard can be found in Chapter 2 of
the Draft Joint TSD. More background
discussion on other alternative
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b
c
399
388
377
362
347
4.04
4.04
4.04
4.04
4.04
attributes and curves EPA explored can
be found in the EPA DRIA. EPA
recognizes that the CAA does not
mandate that EPA use an attribute based
standard, as compared to NHTSA’s
obligations under EPCA. The EPA
believes that proposing a footprintbased program will harmonize EPA’s
proposed program and the proposed
CAFE program as a single national
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Lower
constraint
d
132.6
121.6
110.3
95.2
80.4
Upper
constraint
41
41
41
41
41
66
66
66
66
66
program, resulting in reduced
compliance complexity for
manufacturers. EPA’s reasons for
proposing to use an attribute based
standard are discussed in more detail in
the Joint TSD. Comments are requested
on this proposal to use the attributebased approach for regulating tailpipe
CO2 emissions.
BILLING CODE 4910–59–P
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3. Overview of How EPA’s Proposed
CO2 Standards Would Be Implemented
for Individual Manufacturers
This section provides a brief overview
of how EPA proposes to implement the
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CO2 standards. Section III.E explains
EPA’s proposed approach for
certification and compliance in detail.
EPA is proposing two kinds of
standards—fleet average standards
determined by a manufacturer’s fleet
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profile of various models, and in-use
standards that would apply to the
various models that make up the
manufacturer’s fleet. Although this is
similar in concept to the current lightduty vehicle Tier 2 program, there are
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important differences. In explaining
EPA’s proposal for the CO2 standards, it
is useful to summarize how the Tier 2
program works.
Under Tier 2, manufacturers select a
test vehicle prior to certification and test
the vehicle and/or its emissions
hardware to determine both its
emissions performance when new and
the emissions performance expected at
the end of its useful life. Based on this
testing, the vehicle is assigned to one of
several specified bins of emissions
levels, identified in the Tier 2 rule, and
this bin level becomes the emissions
standard for the test group the test
vehicle represents. All of the vehicles in
the group must meet the emissions level
for that bin throughout their useful life.
The emissions level assigned to the bin
is also used in calculating the
manufacturer’s fleet average emissions
performance.
Since compliance with the Tier 2 fleet
average depends on actual test group
sales volumes and bin levels, it is not
possible to determine compliance at the
time the manufacturer applies for and
receives a certificate of conformity for a
test group. Instead, at certification, the
manufacturer demonstrates that the
vehicles in the test group are expected
to comply throughout their useful life
with the emissions bin assigned to that
test group, and makes a good faith
demonstration that its fleet is expected
to comply with the Tier 2 average when
the model year is over. EPA issues a
certificate for the vehicles covered by
the test group based on this
demonstration, and includes a condition
in the certificate that if the manufacturer
does not comply with the fleet average
then production vehicles from that test
group will be treated as not covered by
the certificate to the extent needed to
bring the manufacturer’s fleet average
into compliance with Tier 2.
EPA proposes to retain the Tier 2
approach of requiring manufacturers to
demonstrate in good faith at the time of
certification that models in a test group
will meet applicable standards
throughout useful life. EPA also
proposes to retain the practice of
conditioning certificates upon
attainment of the fleet average standard.
However, there are several important
differences between a Tier 2 type of
program and the CO2 standards program
EPA is proposing. These differences and
resulting modifications to certification
are summarized below and are
described in detail in Section III.E.
EPA is proposing to certify test groups
as it does for Tier 2, with the CO2
emission results for the test vehicle as
the initial or default standard for all of
the models in the test group. However,
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manufacturers would later substitute
test data for individual models in that
test group, based on the model level fuel
economy testing that typically occurs
through the course of the model year.
This model level data would then be
used to assign a distinct certification
level for that model, instead of the
initial test group level. These model
level results would then be used to
calculate the fleet average after the end
of production.129 The option to
substitute model level test data for the
test group data is at the manufacturer’s
discretion, except they are required as
under the CAFE test protocols to test, at
a minimum, enough models to represent
90 percent of their production. The test
group level would continue to apply for
any model that is not covered by model
level testing. A related difference is that
the fleet average calculation for Tier 2
is based on test group bin levels and test
group sales whereas under this proposal
the CO2 fleet level would be based on
a combination of test group and modellevel emissions and model-level
production. For the new CO2 standards,
EPA is proposing to use production
rather than sales in calculating the fleet
average in order to more closely
conform with CAFE, which is a
production-based program. EPA does
not expect any significant
environmental effect because there is
little difference between production and
sales, and this will reduce the
complexity of the program for
manufacturers.
4. Averaging, Banking, and Trading
Provisions for CO2 Standards
As explained above, a fleet average
CO2 program for passenger cars and
light trucks is proposed. EPA has
implemented similar averaging
programs for a range of motor vehicle
types and pollutants, from the Tier 2
fleet average for NOX to motorcycle
hydrocarbon (HC) plus oxides of
nitrogen (NOX) emissions to NOX and
particulate matter (PM) emissions from
heavy-duty engines.130 The proposed
program would operate much like EPA’s
existing averaging programs in that
manufacturers would calculate
129 The final in-use vehicle standards for each
model would also be based on the model-level fuel
economy testing. As discussed in Section III.E.4, an
in-use adjustment factor would be applied to the
model level results to determine the in-use standard
that would apply during the useful life of the
vehicle.
130 For example, see the Tier 2 light-duty vehicle
emission standards program (65 FR 6698, February
10, 2000), the 2010 and later model year motorcycle
emissions program (69 FR 2398, January 15, 2004),
and the 2007 and later model year heavy-duty
engine and vehicle standards program (66 FR 5001,
January 18, 2001).
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production-weighted fleet average
emissions at the end of the model year
and compare their fleet average with a
fleet average standard to determine
compliance. As in other EPA averaging
programs, the Agency is also proposing
a comprehensive program for averaging,
banking, and trading of credits which
together will help manufacturers in
planning and implementing the orderly
phase-in of emissions control
technology in their production, using
their typical redesign schedules.
Averaging, Banking, and Trading
(ABT) of emissions credits has been an
important part of many mobile source
programs under CAA Title II, both for
fuels programs as well as for engine and
vehicle programs. ABT is important
because it can help to address many
issues of technological feasibility and
lead-time, as well as considerations of
cost. ABT is an integral part of the
standard setting itself, and is not just an
add-on to help reduce costs. In many
cases, ABT resolves issues of lead-time
or technical feasibility, allowing EPA to
set a standard that is either numerically
more stringent or goes into effect earlier
than could have been justified
otherwise. This provides important
environmental benefits at the same time
it increases flexibility and reduces costs
for the regulated industry.
This section discusses generation of
credits by achieving a fleet average CO2
level that is lower than the
manufacturer’s CO2 fleet average
standard. EPA is proposing a variety of
additional ways credits may be
generated by manufacturers. Section
III.C describes these additional
opportunities to generate credits in
detail. EPA is proposing that credits
could be earned through A/C system
improvements beyond a specified
baseline. Credits can also be generated
by producing alternative fuel vehicles,
by producing advanced technology
vehicles including electric vehicles,
plug-in hybrids, and fuel cell vehicles,
and by using technologies that improve
off-cycle emissions. In addition, EPA is
proposing that early credits could be
generated prior to the proposed
program’s MY 2012 start date. The
credits would be used in calculating the
fleet averages at the end of the model
year, with the exception of early credits
which would be tracked separately.
These proposed credit generating
opportunities are described below in
Section III.C.
As explained earlier, manufacturers
would determine the fleet average
standard that would apply to their car
fleet and the standard for their truck
fleet from the applicable attribute-based
curve. A manufacturer’s credit or debit
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balance would be determined by
comparing their fleet average with the
manufacturer’s CO2 standard for that
model year. The standard would be
calculated from footprint values on the
attribute curve and actual production
levels of vehicles at each footprint. A
manufacturer would generate credits if
its car or truck fleet achieves a fleet
average CO2 level lower than its
standard and would generate debits if
its fleet average CO2 level is above that
standard. At the end of the model year,
each manufacturer would calculate a
production-weighted fleet average for
each averaging set, cars and trucks. A
manufacturer’s car or truck fleet that
achieves a fleet average CO2 level lower
than its standard would generate
credits, and if its fleet average CO2 level
is above that standard its fleet would
generate debits.
EPA is proposing to account for the
difference in expected lifetime vehicle
miles traveled (VMT) between cars and
trucks in order to preserve CO2
reductions when credits are transferred
between cars and trucks. As directed by
EISA, NHTSA accomplishes this in the
CAFE program by using an adjustment
factor that is applied to credits when
they are transferred between car and
truck compliance categories. The CAFE
adjustment factor accounts for two
different influences that can cause the
transfer of car and truck credits
(expressed in tenths of a mpg), if left
unadjusted, to potentially negate fuel
reductions. First, mpg is not linear with
fuel consumption, i.e., a 1 mpg
improvement above a standard will
imply a different amount of actual fuel
consumed depending on the level of the
standard. Second, NHTSA’s conversion
corrects for the fact that the typical
lifetime miles for cars is less than that
for trucks, meaning that credits earned
for cars and trucks are not necessarily
equal. NHTSA’s adjustment factor
essentially converts credits into vehicle
lifetime gallons to ensure preservation
of fuel savings and the transfer credits
on an equal basis, and then converts
back to the statutorily required credit
units of tenths of a mile per gallon. To
convert to gallons NHTSA’s conversion
must take into account the expected
lifetime mileage for cars and trucks.
Because EPA is proposing standards
that are expressed on a CO2 gram per
mile basis, which is linear with fuel
consumption, EPA’s credit calculations
do not need to account for the first issue
noted above. However, EPA is
proposing to account for the second
issue by expressing credits when they
are generated in total lifetime
megagrams (metric tons), rather than
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through the use of conversion factors
that would apply at certain times. In
this way credits could be freely
exchanged between car and truck
compliance categories without
adjustment. Additional detail regarding
this approach, including a discussion of
the vehicle lifetime mileage estimates
for cars and trucks can be found in
Section III.E.5. A discussion of the
estimated vehicle lifetime miles traveled
can be found in Chapter 4 of the draft
Joint Technical Support Document. EPA
requests comment on the proposed
approach.
A manufacturer that generates credits
in a given year and vehicle category
could use those credits in essentially
four ways, although with some
limitations. These provisions are very
similar to those of other EPA averaging,
banking, and trading programs. These
provisions have the potential to reduce
costs and compliance burden, and
support the feasibility of the standards
being proposed in terms of lead time
and orderly redesign by a manufacturer,
thus promoting and not reducing the
environmental benefits of the program.
First, the manufacturer would have to
offset any deficit that had accrued in
that averaging set in a prior model year
and had been carried over to the current
model year. In such a case, the
manufacturer would be obligated to use
any current model year credits to offset
that deficit. This is referred to in the
CAFE program as credit carry-back.
EPA’s proposed deficit carry-forward, or
credit carry-back provisions are
described further, below.
Second, after satisfying any needs to
offset pre-existing deficits within a
vehicle category, remaining credits
could be banked, or saved for use in
future years. EPA is proposing that
credits generated in this program be
available to the manufacturer for use in
any of the five years after the year in
which they were generated, consistent
with the CAFE program under EISA.
This is also referred to as a credit carryforward provision. For other new
emission control programs, EPA has
sometimes initially restricted credit life
to allow time for the Agency to assess
whether the credit program is
functioning as intended. When EPA first
offered averaging and banking
provisions in its light-duty emissions
control program (the National Low
Emission Vehicle Program), credit life
was restricted to three years. The same
is true of EPA’s early averaging and
banking program for heavy-duty
engines. As these programs matured and
were subsequently revised, EPA became
confident that the programs were
functioning as intended and that the
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49521
standards were sufficiently stringent to
remove the restrictions on credit life.
EPA is therefore acting consistently
with our past practice in proposing to
reasonably restrict credit life in this new
program. The Agency believes, subject
to consideration of public comment,
that a credit life of five years represents
an appropriate balance between
promoting orderly redesign and upgrade
of the emissions control technology in
the manufacturer’s fleet and the policy
goal of preventing large numbers of
credits accumulated early in the
program from interfering with the
incentive to develop and transition to
other more advanced emissions control
technologies. As discussed below in
Section III.C, EPA is proposing that any
early credits generated by a
manufacturer, beginning as soon as MY
2009, would also be subject to the fiveyear credit carry-forward restriction
based on the year in which they are
generated. This would limit the effect of
the early credits on the long-term
emissions reductions anticipated to
result from the proposed new standards.
Third, EPA is proposing to allow
manufacturers to transfer credits
between the two averaging sets,
passenger cars and trucks, within a
manufacturer. For example, credits
accrued by over-compliance with a
manufacturer’s car fleet average
standard could be used to offset debits
accrued due to that manufacturer’s not
meeting the truck fleet average standard
in a given year. EPA believes that such
cross-category use of credits by a
manufacturer would provide important
additional flexibility in the transition to
emissions control technology without
affecting overall emission reductions.
Finally, accumulated credits could be
traded to another vehicle manufacturer.
As with intra-company credit use, such
inter-company credit trading would
provide flexibility in the transition to
emissions control technology without
affecting overall emission reductions.
Trading credits to another vehicle
manufacturer would be a
straightforward process between the two
manufacturers, but could also involve
third parties that could serve as credit
brokers. Brokers would not own the
credits at any time. These sorts of
exchanges are typically allowed under
EPA’s current emission credit programs,
e.g., the Tier 2 light-duty vehicle NOX
fleet average standard and the heavyduty engine NOX fleet average
standards, although manufacturers have
seldom made such exchanges. EPA
seeks comment on enhanced reporting
requirements or other methods that
could help EPA assess validity of
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credits, especially those obtained from
third-party credit brokers
If a manufacturer had a deficit at the
end of a model year—that is, its fleet
average level failed to meet the required
fleet average standard—EPA proposes
that the manufacturer could carry that
deficit forward (also referred to credit
carry-back) for a total of three model
years after the model year in which that
deficit was generated. As noted above,
such a deficit carry-forward could only
occur after the manufacturer applied
any banked credits or credits from
another averaging set. If a deficit still
remained after the manufacturer had
applied all available credits, and the
manufacturer did not obtain credits
elsewhere, the deficit could be carried
over for up to three model years. No
deficit could be carried into the fourth
model year after the model year in
which the deficit occurred. Any deficit
from the first model year that remained
after the third model year would thus
constitute a violation of the condition
on the certificate, which would
constitute a violation of the Clean Air
Act and would be subject to
enforcement action.
In the Tier 2 rulemaking proposal,
EPA proposed to allow deficits to be
carried forward for one year. In their
comments on that proposal,
manufacturers argued persuasively that
by the time they can tabulate their
average emissions for a particular model
year, the next model year is likely to be
well underway and it is too late to make
calibration, marketing, or production
mix changes to adjust that year’s credit
generation. Based on those comments,
in the Tier 2 final rule EPA finalized
provisions that allowed the deficit to be
carried forward for a total of three years.
EPA continues to believe that three
years is an appropriate amount of time
that gives the manufacturers adequate
time to respond to a deficit situation but
does not create a lengthy period of
prolonged non-compliance with the
fleet average standards.131 Subsequent
EPA emission control programs that
incorporate ABT provisions (e.g., the
Mobile Source Air Toxics rule) have
provided this three-year deficit carryforward provision for this reason.132
The proposed averaging, banking, and
trading provisions are generally
consistent with those included in the
CAFE program, with a few notable
exceptions. As with EPA’s proposed
approach, CAFE allows five year carryforward of credits and three year carryback. Transfers of credits across a
manufacturer’s car and truck averaging
131 See
132 See
65 FR 6745 (February 10, 2000).
71 FR 8427 (February 26, 2007).
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sets are also allowed, but with limits
established by EISA on the use of
transferred credits. The amount of
transferred credits that can be used in a
year is limited, and transferred credits
may not be used to meet the CAFE
minimum domestic passenger car
standard. CAFE allows credit trading,
but again, traded credits cannot be used
to meet the minimum domestic
passenger car standard. EPA is not
proposing these constraints on the use
of transferred credits.
Additional details regarding the
averaging, banking, and trading
provisions and how EPA proposes to
implement these provisions can be
found in Section III.E.
5. CO2 Optional Temporary Lead-time
Allowance Alternative Standards
EPA is proposing a limited and
narrowly prescribed option, called the
Temporary Lead-time Allowance
Alternative Standards (TLAAS), to
provide additional lead time for a
certain subset of manufacturers. This
option is designed to address two
different situations where we project
that more lead time is needed, based on
the level of emissions control
technology and emissions control
performance currently exhibited by
certain vehicles. One situation involves
manufacturers who have traditionally
paid CAFE fines instead of complying
with the CAFE fleet average, and as a
result at least part of their vehicle
production currently has significantly
higher CO2 and lower fuel economy
levels than the industry average. More
lead time is needed in the program’s
initial years to upgrade these vehicles to
meet the aggressive CO2 emissions
performance levels required by the
proposal. The other situation involves
manufacturers who have a limited line
of vehicles and are unable to take
advantage of averaging of emissions
performance across a full line of
production. For example, some smaller
volume manufacturers focus on high
performance vehicles with higher CO2
emissions, above the CO2 emissions
target for that vehicle footprint, but do
not have other types of vehicles in their
production mix with which to average.
Often, these manufacturers also pay
fines under the CAFE program rather
than meeting the applicable CAFE
standard. Because voluntary noncompliance is impermissible for the
GHG standards proposed under the
CAA, both of these types of
manufacturers need additional lead time
to upgrade vehicles and meet the
proposed standards. EPA is proposing
an optional, temporary alternative
standard, which is only slightly less
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stringent, and limited to the first four
model years (2012—2015) of the
National Program, so that these
manufacturers can have sufficient lead
time to meet the tougher MY 2016 GHG
standards, while preserving consumer
choice of vehicles during this time.
In MY 2016, the TLAAS option ends,
and all manufacturers, regardless of
size, and domestic sales volume, must
comply with the same CO2 standards,
while under the CAFE program
companies would continue to be
allowed to pay civil penalties in lieu of
complying with the CAFE standards.
However, because companies must meet
both the CAFE standards and the EPA
CO2 standards, the National Program
will have the practical impact of
providing a level playing field for all
companies beginning in MY 2016—a
situation which has never existed under
the CAFE program. This option thereby
results in more fuel savings and CO2
reductions than would be the case
under the CAFE program.
EPA projects that the environmental
impact of the proposed TLAAS program
will be very small. If all companies
eligible to use the TLAAS use it to the
maximum extent allowed, total GHG
emissions from the proposal will
increase by less than 0.4% over the
lifetime of the MY 2012–2016 vehicles.
EPA believes the impact will be even
smaller, as we do not expect all of the
eligible companies to use this option,
and we do not expect all companies
who do use the program will use it to
the maximum extent allowed, as we
have included provisions which
discourage companies from using the
TLAAS any longer than it is needed.
EPA has structured the TLAAS option
to provide more lead time in these kinds
of situations, but to limit the program so
that it would only be used in situations
where these kinds of lead time concerns
arise. Based on historic data on sales,
EPA is using a specific historic U.S.
sales volume as the best way to identify
the subset of production that falls into
this situation. Under the TLAAS, these
manufacturers would be allowed to
produce up to but no more than 100,000
vehicles that would be subject to a
somewhat less stringent CO2 standard.
This 100,000 volume is not an annual
limit, but is an absolute limit for the
total number of vehicles which can use
the TLAAS program over the model
years 2012–2015. Any additional
production would be subject to the same
standards as any other manufacturer. In
addition, EPA is imposing a variety of
restrictions on the use of the TLAAS
program, discussed in more detail
below, to ensure that only
manufacturers who need more lead-time
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for the kinds of reasons noted above are
likely to use the program. Finally, the
program is temporary and expires at the
end of MY 2015. A more complete
discussion of the program is provided
below. EPA believes the proposed
program reasonably addresses a real
world lead time constraint, and does it
in a way that balances the need for more
lead time with the need to minimize any
resulting loss in potential emissions
reductions. EPA invites comment as to
whether its proposal is the best way to
balance these concerns.
EPA proposes to establish a TLAAS
for a specified subset of manufacturers.
There are two types of companies who
would make use of TLAAS—those
manufacturers who have paid CAFE
fines in recent years, and who need
additional lead-time to incorporate the
needed technology; and those
companies who are not full-line
manufacturers, who have a smaller
range of models and vehicle types, who
may need additional lead-time as well.
This alternative standard would apply
to manufacturers with total U.S. sales of
less than 400,000 vehicles per year,
using 2009 model year final sales
numbers to determine eligibility for
these alternative standards. EPA
reviewed the sales volumes of
manufacturers over the last few years,
and determined that manufacturers
below this level typically fit the
characteristics discussed above, and
manufacturers above this level did not.
Thus, EPA chose this level because it
functionally identifies the group of
manufacturers described above,
recognizing that there is nothing
intrinsic in the sales volume itself that
warrants this allowance. EPA was not
able to identify any other objective
criteria that would more appropriately
identify the manufacturers and vehicle
fleets described above.
EPA is proposing that manufacturers
qualifying for TLAAS would be allowed
to meet slightly less stringent standards
for a limited number of vehicles for
model years 2012–2015. Specifically, an
eligible manufacturer could have a total
of up to 100,000 units of cars and trucks
combined over model years 2012–2015,
and during those model years those
vehicles would be subject to a standard
1.25 times the standard that would
otherwise apply to those vehicles under
the primary program. In other words,
the footprint curves upon which the
individual manufacturer standards for
the TLAAS fleets are based would be
less stringent by a factor of 1.25 for up
to 100,000 of an eligible manufacturer’s
vehicles for model years 2012–2015. As
noted, this approach seeks to balance
the need to provide additional lead-time
without reducing the environmental
benefits of the proposed program. EPA
believes that 100,000 units over four
model years achieves an appropriate
balance as the emissions impact is quite
small, but does provide companies with
some flexibility during MY 2012–2015.
For example, for a manufacturer
producing 400,000 vehicles per year,
this would be a total of up to 100,000
vehicles out of a total production of up
to 1.6 million vehicles over the four year
period, or about 6 percent of total
production.
Manufacturers with no U.S. sales in
model year 2009 would not qualify for
49523
the TLAAS program. Manufacturers
meeting the cut-point of 400,000 for MY
2009 but with U.S. directed production
above 400,000 in any subsequent model
years would remain eligible for the
TLAAS program. Also, the total sales
number applies at the corporate level, so
if a corporation owns several vehicle
brands the aggregate sales for the
corporation would be used. These
provisions would help prevent gaming
of the provisions through corporate
restructuring. Corporate ownership or
control relationships would be based on
determinations made under CAFE for
model year 2009. In other words,
corporations grouped together for
purposes of meeting CAFE standards,
would be grouped together for
determining whether or not they are
eligible under the 400,000 vehicle cut
point.
EPA derived the 100,000 maximum
unit set aside number based on a
gradual phase-out schedule shown in
Table III.B.5–1, below. However,
individual manufacturers’ situations
will vary significantly and so EPA
believes a flexible approach that allows
manufacturers to use the allowance as
they see fit during these model years
would be most appropriate. As another
example, an eligible manufacturer could
also choose to apply the TLAAS
program to an average of 25,000 vehicles
per year, over the four-year period.
Therefore, EPA is proposing that a total
of 100,000 vehicles of an eligible
manufacturer, with any combination of
cars or trucks, could be subject to the
alternative standard over the four year
period without restrictions.
TABLE III.B.5–1—TLAAS EXAMPLE VEHICLE PRODUCTION VOLUMES
Model year
2012
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Sales Volume ...........................................................................
The TLAAS vehicles would be
separate car and truck fleets for that
model year and would be subject to the
less stringent footprint-based standards
of 1.25 times the primary fleet average
that would otherwise apply. The
manufacturer would determine what
vehicles are assigned to these separate
averaging sets for each model year. EPA
is proposing that credits from the
primary fleet average program can be
transferred and used in the TLAAS
program. Credits within the TLAAS
program may also be transferred
between the TLAAS car and truck
averaging sets for use through 2015
when the TLAAS would end. However,
credits generated under TLAAS would
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2013
40,000
30,000
not be allowed to be transferred or
traded to the primary program.
Therefore, any unused credits under
TLAAS would expire after model year
2015. EPA believes that this is necessary
to limit the program to situations where
it is needed and to prevent the
allowance from being inappropriately
transferred to the long-term primary
program.
EPA is concerned that some
manufacturers would be able to place
relatively clean vehicles in the TLAAS
to maximize TLAAS credits if credit use
was unrestricted. However, any credits
generated from the primary program
that are not needed for compliance in
the primary program, should be used to
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2014
2015
20,000
10,000
offset the TLAAS vehicles. EPA is thus
proposing to restrict the use of banking
and trading between companies of
credits in the primary program in years
in which the TLAAS is being used. For
example, manufacturers using the
TLAAS in MY 2012 could not bank
credits in the primary program during
MY 2012 for use in MY 2013 and later.
No such restriction would be in place
for years when the TLAAS is not being
used. EPA also believes this provision is
necessary to prevent credits from being
earned simply by removing some highemitting vehicles from the primary fleet.
Absent this restriction, manufacturers
would be able to choose to use the
TLAAS for these vehicles and also be
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able to earn credits under the primary
program that could be banked or traded
under the primary program without
restriction. EPA is proposing two
additional restrictions regarding the use
of the TLAAS by requiring that for any
of the 2012–2015 model years for which
an eligible manufacturer would like to
use the TLAAS, the manufacturer must
use two of the available flexibilities in
the GHG program first in order to try
and show compliance with the primary
standard before accessing the TLAAS.
Specifically, before using the TLAAS
the manufacturer must: (1) use any
banked emission credits from a previous
model year; and, (2) use any available
credits from the companies’ car or truck
fleet for the specific model year (i.e., use
credit transfer from cars to trucks or
from trucks to cars, that is, before using
the TLAAS for either the car fleet or the
truck fleet, make use of any available
credit transfers first). EPA is requesting
comments on all aspects of the proposed
TLAAS program including comments
on other provisions that might be
needed to ensure that the TLAAS
program is being used as intended and
to ensure no gaming occurs.
Finally, EPA recognizes that there
will be a wide range of companies
within the eligible manufacturers with
sales less than 400,000 vehicles in
model year 2009. Some of these
companies, while having relatively
small U.S. sales volumes, are large
global automotive firms, including
companies such as Mercedes and
Volkswagen. Other companies are
significantly smaller niche firms, with
sales volumes closer to 10,000 vehicles
per year worldwide; an example of this
type of firm is Aston Martin. EPA
anticipates that there are a small
number of such smaller volume
manufacturers, which have claimed that
they may face greater challenges in
meeting the proposed standards due to
their limited product lines across which
to average. EPA requests comment on
whether the proposed TLAAS program,
as described above, provides sufficient
lead-time for these smaller firms to
incorporate the technology needed to
comply with the proposed GHG
standards.
6. Proposed Nitrous Oxide and Methane
Standards
In addition to fleet-average CO2
standards, EPA is proposing separate
per-vehicle standards for nitrous oxide
(N2O) and methane (CH4) emissions.
Standards are being proposed that
would cap vehicle N2O and CH4
emissions at current levels. Our
intention is to set emissions standards
that act to cap emissions to ensure that
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future vehicles do not increase their
N2O and CH4 emissions above levels
that would be allowed under the
proposal.
EPA considered an approach of
expressing each of these standards in
common terms of CO2-equivalent
emissions and combining them into a
single standard along with CO2 and HFC
emissions. California’s ‘‘Pavley’’
program adopted such a CO2-equivalent
emissions standards approach to GHG
emissions in their program.133 However,
these pollutants are largely independent
of one another in terms of how they are
generated by the vehicle and how they
are tested for during implementation.
Potential control technologies and
strategies for each pollutant also differ.
Moreover, an approach that provided for
averaging of these pollutants could
undermine the stringency of the CO2
standards, as at this time we are
proposing standards which ‘‘cap’’ N2O
and CH4 emissions, rather then
proposing a level which is either at the
industry fleet-wide average or which
would result in reductions from these
pollutants. It is possible that once EPA
begins to receive more detailed
information on the N2O and CH4
performance of the new vehicle fleet as
a result of this proposed rule (if it were
to be finalized as proposed) that for a
future action for model years 2017 and
later EPA could consider a CO2equivalent standard which would not
result in any increases in GHG
emissions due to the current lack of
detailed data on N2O and CH4 emissions
performance. In addition, EPA seeks
comment on whether a CO2-equivalent
emissions standard should be
considered for model years 2012
through 2016, and whether there are
advantages or disadvantages to such an
approach, including potential impacts
on harmonization with CAFE standards.
Almost universally across current car
and truck designs, both gasoline- and
diesel-fueled, these emissions are
relatively low, and our intent is to not
require manufacturers to make
technological improvements in order to
reduce N2O and CH4 at this time.
However, it is important that future
vehicle technologies or fuels do not
result in increases in these emissions,
and this is the intent of the proposed
‘‘cap’’ standards.
EPA requests comments on our
approach to regulating N2O and CH4
emissions including the appropriateness
133 California Environmental Protection Agency
Air Resources Board, Staff Report: Initial Statement
of Reasons for Proposed Rulemaking Public Hearing
To Consider Adoption Of Regulations To Control
Greenhouse Gas Emissions From Motor Vehicles,
August 6, 2004.
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of ‘‘cap’’ standards as opposed to
‘‘technology-forcing’’ standards, the
technical bases for the proposed N2O
and CH4 standards, the proposed test
procedures, and timing. Specifically,
EPA seeks comment on the
appropriateness of the proposed levels
of the N2O and CH4 standards to
accomplish our stated intent. In
addition, EPA seeks comment on any
additional emissions data on N2O and
CH4 from current technology vehicles.
a. Nitrous Oxide (N2O) Exhaust
Emission Standard
N2O is a global warming gas with a
high global warming potential.134 It
accounts for about 2.7% of the current
greenhouse gas emissions from cars and
light trucks. EPA is proposing a pervehicle N2O emission standard of 0.010
g/mi, measured over the traditional FTP
vehicle laboratory test cycles. The
standard would become effective in
model year 2012 for all light-duty cars
and trucks. Averaging between vehicles
would not be allowed. The standard is
designed to prevent increases in N2O
emissions from current levels, i.e. a nobacksliding standard.
N2O is emitted from gasoline and
diesel vehicles mainly during specific
catalyst temperature conditions
conducive to N2O formation.
Specifically, N2O can be generated
during periods of emission hardware
warm-up when rising catalyst
temperatures pass through the
temperature window when N2O
formation potential is possible. For
current Tier 2 compatible gasoline
engines with conventional three-way
catalyst technology, N2O is not generally
produced in significant amounts
because the time the catalyst spends at
the critical temperatures during warmup is short. This is largely due to the
need to quickly reach the higher
temperatures necessary for high catalyst
efficiency to achieve emission
compliance of criteria pollutants. N2O is
a more significant concern with diesel
vehicles, and potentially future gasoline
lean-burn engines, equipped with
advanced catalytic NOX emissions
control systems. These systems can but
need not be designed in a way that
emphasizes efficient NOX control while
allowing the formation of significant
quantities of N2O. Excess oxygen
present in the exhaust during lean-burn
conditions in diesel or lean-burn
gasoline engines equipped with these
advanced systems can favor N2O
formation if catalyst temperatures are
not carefully controlled. Without
134 N O has a GWP of 310 according to the IPCC
2
Second Assessment Report (SAR).
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specific attention to controlling N2O
emissions in the development of such
new NOX control systems, vehicles
could have N2O emissions many times
greater than are emitted by current
gasoline vehicles.
EPA is proposing an N2O emission
standard that EPA believes would be
met by current-technology gasoline
vehicles at essentially no cost. As noted,
N2O formation in current catalyst
systems occurs, but the emission levels
are low, because the time the catalyst
spends at the critical temperatures
during warm-up when N2O can form is
short. At the same time, EPA believes
that the proposed standard would
ensure that the design of advanced NOX
control systems, especially for future
diesel and lean-burn gasoline vehicles,
would control N2O emission levels.
While current NOX control approaches
used on current Tier 2 diesel vehicles
do not tend to form N2O emissions, EPA
believes that the proposed standards
would discourage any new emission
control designs that achieve criteria
emissions compliance at the cost of
increased N2O emissions. Thus, the
proposed standard would cap N2O
emission levels, with the expectation
that current gasoline and diesel vehicle
control approaches that comply with the
Tier 2 vehicle emission standards for
NOX would not increase their emission
levels, and that the cap would ensure
that future vehicle designs would
appropriately control their emissions of
N2O. The proposed N2O level is
approximately two times the average
N2O level of current gasoline passenger
cars and light-duty trucks that meet the
Tier 2 NOX standards.135 Manufacturers
typically use design targets for NOX
emission levels of about 50% of the
standard, to account for in-use
emissions deterioration and normal
testing and production variability, and
manufacturers are expected to utilize a
similar approach for N2O emission
compliance. EPA is not proposing a
more stringent standard for current
gasoline and diesel vehicles because the
stringent Tier 2 program and the
associated NOX fleet average
requirement already result in significant
N2O control, and does not expect
current N2O levels to rise for these
vehicles. EPA requests comment on this
technical assessment of current and
potential future N2O formation in cars
and trucks.
While EPA believes that
manufacturers will likely be able to
acquire and install N2O analytical
135 Memo to docket ‘‘Deriving the standard from
EPA’s MOVES model emission factors, ’’ December
2007.
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equipment, the agency also recognizes
that some companies may face
challenges. Given the short lead-time for
this rule, EPA proposes that
manufacturers be able to apply for a
certificate of conformity with the N2O
standard for model year 2012 based on
a compliance statement based on good
engineering judgment. For 2013 and
later model years, manufacturers would
need to submit measurements of N2O for
compliance purposes.
Diesel cars and light trucks with
advanced emission control technology
are in the early stages of development
and commercialization. As this segment
of the vehicle market develops, the
proposed N2O standard would require
manufacturers to incorporate control
strategies that minimize N2O formation.
Available approaches include using
electronic controls to limit catalyst
conditions that might favor N2O
formation and consider different
catalyst formulations. While some of
these approaches may have modest
associated costs, EPA believes that they
will be small compared to the overall
costs of the advanced NOX control
technologies already required to meet
Tier 2 standards.
Vehicle emissions regulations do not
currently require testing for N2O, and
most test facilities do not have
equipment for its measurement.
Manufacturers without this capability
would need to acquire and install
appropriate measurement equipment.
However, EPA is proposing four N2O
measurement methods, all of which are
commercially available today. EPA
expects that most manufacturers would
use photo-acoustic measurement
equipment, which the Agency estimates
would result in a one-time cost of about
$50,000–$60,000 for each test cell that
would need to be upgraded.
Overall, EPA believes that
manufacturers of cars and light trucks,
both gasoline and diesel, would meet
the proposed standard without
implementing any significantly new
technologies, and there are not expected
to be any significant costs associated
with this proposed standard.
b. Methane (CH4) Exhaust Emission
Standard
CH4 (or methane) is greenhouse gas
with a high global warming potential.136
It accounts for about 0.2% of the
greenhouse gases from cars and light
trucks.
EPA is proposing a CH4 emission
standard of 0.030 g/mi as measured on
the FTP, to apply beginning with model
136 CH has a GWP of 21 according to the IPCC
4
Second Assessment Report (SAR).
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year 2012 for both cars and trucks. EPA
believes that this level for the standard
would be met by current gasoline and
diesel vehicles, and would prevent large
increases in future CH4 emissions in the
event that alternative fueled vehicles
with high methane emissions, like some
past dedicated compressed natural gas
(CNG) vehicles, become a significant
part of the vehicle fleet. Currently EPA
does not have separate CH4 standards
because unlike other hydrocarbons it
does not contribute significantly to
ozone formation,137 However CH4
emissions levels in the gasoline and
diesel car and light truck fleet have
nevertheless generally been controlled
by the Tier 2 non-methane organic gases
(NMOG) emission standards. However,
without an emission standard for CH4,
future emission levels of CH4 cannot be
guaranteed to remain at current levels as
vehicle technologies and fuels evolve.
The proposed standard would cap
CH4 emission levels, with the
expectation that current gasoline
vehicles meeting the Tier 2 emission
standards would not increase their
levels, and that it would ensure that
emissions would be addressed if in the
future there are increases in the use of
natural gas or any other alternative fuel.
The level of the standard would
generally be achievable through normal
emission control methods already
required to meet Tier 2 program
emission standards for NMOG and EPA
is therefore not attributing any cost to
this part of this proposal. Since CH4 is
produced in gasoline and diesel engines
similar to other hydrocarbon
components, controls targeted at
reducing overall NMOG levels generally
also work at reducing CH4 emissions.
Therefore, for gasoline and diesel
vehicles, the Tier 2 NMOG standards
will generally prevent increases in CH4
emissions levels from today. CH4 from
Tier 2 light-duty vehicles is relatively
low compared to other GHGs largely
due to the high effectiveness of previous
National Low Emission Vehicle (NLEV)
and current Tier 2 programs in
controlling overall HC emissions.
The level of the proposed standard is
approximately two times the average
Tier 2 gasoline passenger cars and lightduty trucks level.138 As with N2O, this
proposed level recognizes that
manufacturers typically set emission
design targets at about 50% of the
standard. Thus, EPA believes the
proposed standard would be met by
137 But see Ford Motor Co. v. EPA, 604 F. 2d 685
(D.C. Cir. 1979) (permissible for EPA to regulate
CH4 under CAA section 202 (b)).
138 Memo to docket ‘‘Deriving the standard from
EPA’s MOVES model emission factors, ’’ December
2007.
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current gasoline vehicles. Similarly,
since current diesel vehicles generally
have even lower CH4 emissions than
gasoline vehicles, EPA believes that
diesels would also meet the proposed
standard. However, EPA also believes
that to set a CH4 emission standard more
stringent than the proposed standard
could effectively make the Tier 2 NMOG
standard more stringent.
In recent model years, a small number
of cars and light trucks were sold that
were designed for dedicated use of
compressed natural gas (CNG) that met
Tier 2 emission standards. While
emission control designs on these recent
dedicated CNG-fueled vehicles
demonstrate CH4 control as effective as
gasoline or diesel equivalent vehicles,
CNG-fueled vehicles have historically
produced significantly higher CH4
emissions than gasoline or diesel
vehicles. This is because their CNG fuel
is essentially methane and any
unburned fuel that escapes combustion
and not oxidized by the catalyst is
emitted as methane. However, even if
these vehicles meet the Tier 2 NMOG
standard and appear to have effective
CH4 control by nature of the NMOG
controls, Tier 2 standards do not require
CH4 control. While the proposed CH4
cap standard should not require any
different emission control designs
beyond what is already required to meet
Tier 2 NMOG standards on a dedicated
CNG vehicle, the cap will ensure that
systems maintain the current level of
CH4 control. EPA is not proposing more
stringent CH4 standards because the
same controls that are used to meet Tier
2 NMOG standards should result in
effective CH4 control. Increased CH4
stringency beyond proposed levels
could inadvertently result in increased
Tier 2 NMOG stringency absent an
emission control technology unique to
CH4. Since CH4 is already measured
under the current Tier 2 regulations (so
that it may be subtracted to calculate
non-methane hydrocarbons), the
proposed standard would not result in
additional testing costs. EPA requests
comment on whether the proposed cap
standard would result in any significant
technological challenges for makers of
CNG vehicles.
for light-duty vehicles: small volume
manufacturers, independent commercial
importers (ICIs), and alternative fuel
vehicle converters. EPA has identified
about 13 entities that fit the Small
Business Administration (SBA) criterion
of a small business. EPA estimates there
are 2 small volume manufacturers, 8
ICIs, and 3 alternative fuel vehicle
converters currently in the light-duty
vehicle market. EPA estimates that these
small entities comprise less than 0.1
percent of the total light-duty vehicle
sales in the U.S., and therefore the
proposed deferment will have a
negligible impact on the GHG emissions
reductions from the proposed standards.
Further detail is provided in Section
III.I.3, below.
To ensure that EPA is aware of which
companies would be deferred, EPA is
proposing that such entities submit a
declaration to EPA containing a detailed
written description of how that
manufacturer qualifies as a small entity
under the provisions of 13 CFR 121.201.
Because such entities are not
automatically exempted from other EPA
regulations for light-duty vehicles and
light-duty trucks, absent such a
declaration, EPA would assume that the
entity was subject to the greenhouse gas
control requirements in this GHG
proposal. The declaration would need to
be submitted at time of vehicle
emissions certification under the EPA
Tier 2 program. Small entities are
currently covered by a number of EPA
motor vehicle emission regulations, and
they routinely submit information and
data on an annual basis as part of their
compliance responsibilities. EPA
expects that the additional paperwork
burden associated with completing and
submitting a small entity declaration to
gain deferral from the proposed GHG
standards would be negligible and
easily done in the context of other
routine submittals to EPA. However,
EPA has accounted for this cost with a
nominal estimate included in the
Information Collection Request
completed under the Paperwork
Reduction Act. Additional information
can be found in the Paperwork
Reduction Act discussion in Section
III.I.2.
7. Small Entity Deferment
EPA is proposing to defer setting GHG
emissions standards for small entities
meeting the Small Business
Administration (SBA) criteria of a small
business as described in 13 CFR
121.201. EPA would instead consider
appropriate GHG standards for these
entities as part of a future regulatory
action. This includes small entities in
three distinct categories of businesses
C. Additional Credit Opportunities for
CO2 Fleet Average Program
The standards being proposed
represent a significant multi-year
challenge for manufacturers, especially
in the early years of the program.
Section III.B.4 described EPA proposals
for how manufacturers could generate
credits by achieving fleet average CO2
emissions below the fleet average
standard, and also how manufacturers
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could use credits to comply with
standards. As described in Section
III.B.4, credits could be carried forward
five years, carried back three years,
transferred between vehicle categories,
and traded between manufacturers. The
credits provisions proposed below
would provide manufacturers with
additional ways to earn credits starting
in MY 2012. EPA is also proposing early
credits provisions for the 2009–2011
model years, as described below in
Section III.C.5.
The provisions proposed below
would provide additional flexibility,
especially in the early years of the
program. This flexibility helps to
address issues of lead-time or technical
feasibility for various manufacturers and
in several cases provides an incentive
for promotion of technology pathways
that warrant further development,
whether or not they are an important or
central technology on which critical
features of this program are premised.
EPA is proposing a variety of credit
opportunities because manufacturers are
not likely to be in a position to use
every credit provision. EPA expects that
manufacturers are likely to select the
credit opportunities that best fit their
future plans. EPA believes it is critical
that manufacturers have options to ease
the transition to the final MY 2016
standards. At the same time, EPA
believes these credit programs must be
designed in a way to ensure that they
achieve emission reductions that
achieve real-world reductions over the
full useful life of the vehicle (or, in the
case of FFV credits and Advanced
Technology credits, to incentivize the
introduction of those vehicle
technologies) and are verifiable. In
addition, EPA wants to ensure these
credit programs do not provide an
opportunity for manufacturers to earn
‘‘windfall’’ credits. EPA seeks comments
on how to best ensure these objectives
are achieved in the design of the credit
programs. EPA requests comment on all
aspects of these proposed credits
provisions.
1. Air Conditioning Related Credits
EPA proposes that manufacturers be
able to generate and use credits for
improved air conditioner (A/C) systems
in complying with the CO2 fleetwide
average standards described above. EPA
expects that most manufacturers will
choose to utilize the A/C provisions as
part of its compliance demonstration
(and for this reason cost of compliance
with A/C related emission reductions
are assumed in the cost analysis). The
A/C provisions are structured as credits,
unlike the CO2 standards for which
manufacturers will demonstrate
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compliance using 2-cycle tests (see
Sections III.B and III.E.). Those tests do
not measure either A/C leakage or
tailpipe CO2 emissions attributable to
A/C load (see Section III.C.1.b below
describing proposed alternative test
procedures for assessing tailpipe CO2
emission attributable to
A/C engine load). Thus, it is a
manufacturer’s option to include A/C
GHG emission reductions as an aspect
of its compliance demonstration. Since
this is an elective alternative, EPA is
referring to the A/C part of the proposal
as a credit.
EPA estimates that direct A/C GHG
emissions—emissions due to the leakage
of the hydrofluorocarbon refrigerant in
common use today—account for 4.3% of
CO2-equivalent GHGs from light-duty
cars and trucks. This includes the direct
leakage of refrigerant as well as the
subsequent leakage associated with
maintenance and servicing, and with
disposal at the end of the vehicle’s life.
The emissions that are impacted by
leakage reductions are the direct leakage
and the maintenance and servicing.
Together these are equivalent to CO2
emissions of approximately 13.6 g/mi
per vehicle (this is 14.9 g/mi if end of
life emissions are also included). EPA
also estimates that indirect GHG
emissions (additional CO2 emitted due
to the load of the A/C system on the
engine) account for another 3.9% of
light-duty GHGs.139 This is equivalent
to CO2 emissions of approximately 14.2
g/mi per vehicle. The derivation of these
figures can be found in the EPA DRIA.
EPA believes that it is important to
address A/C direct and indirect
emissions because the technologies that
manufacturers will employ to reduce
vehicle exhaust CO2 will have little or
no impact on A/C related emissions.
Without addressing A/C-related
emissions, as vehicles become more
efficient, the A/C related contribution
will become a much larger portion of
the overall vehicle GHG emissions.
Over 95% of the new cars and light
trucks in the United States are equipped
with A/C systems and, as noted, there
are two mechanisms by which A/C
systems contribute to the emissions of
greenhouse gases: through leakage of
refrigerant into the atmosphere and
through the consumption of fuel to
provide power to the A/C system. With
leakage, it is the high global warming
potential (GWP) of the current
automotive refrigerant—R134a, with a
GWP of 1430—that results in the CO2equivalent impact of 13.6 g/mi.140 Due
139 See
Chapter 2, section 2.2.1.2 of the DRIA.
global warming potentials (GWP) used in
the NPRM analysis are consistent with
140 The
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to the high GWP of this HFC, a small
leakage of the refrigerant has a much
greater global warming impact than a
similar amount of emissions of CO2 or
other mobile source GHGs.
Manufacturers can choose to reduce
A/C leakage emissions by using leaktight components. Also, manufacturers
can largely eliminate the global
warming impact of leakage emissions by
adopting systems that use an alternative,
low-GWP refrigerant.141 The A/C system
also contributes to increased CO2
emissions through the additional work
required to operate the compressor,
fans, and blowers. This additional work
typically is provided through the
engine’s crankshaft, and delivered via
belt drive to the alternator (which
provides electric energy for powering
the fans and blowers) and A/C
compressor (which pressurizes the
refrigerant during A/C operation). The
additional fuel used to supply the
power through the crankshaft necessary
to operate the A/C system is converted
into CO2 by the engine during
combustion. This incremental CO2
produced from A/C operation can thus
be reduced by increasing the overall
efficiency of the vehicle’s A/C system,
which in turn will reduce the additional
load on the engine from A/C
operation.142
Manufacturers can make very feasible
improvements to their
A/C systems to address A/C system
leakage and efficiency. EPA proposes
two separate credit approaches to
address leakage reductions and
efficiency improvements independently.
A proposed leakage reduction credit
would take into account the various
technologies that could be used to
reduce the GHG impact of refrigerant
leakage, including the use of an
alternative refrigerant with a lower
GWP. A proposed efficiency
improvement credit would account for
the various types of hardware and
control of that hardware available to
Intergovernmental Panel on Climate Change (IPCC)
Fourth Assessment Report (AR4). At this time, the
IPCC Second Assessment Report (SAR) global
warming potential values have been agreed upon as
the official U.S. framework for addressing climate
change. The IPCC SAR GWP values are used in the
official U.S. greenhouse gas inventory submission
to the climate change framework. When inventories
are recalculated for the final rule, changes in GWP
used may lead to adjustments.
141 Refrigerant emissions during maintenance and
at the end of the vehicle’s life (as well as emissions
during the initial charging of the system with
refrigerant) are also addressed by the CAA Title VI
stratospheric ozone program, as described below.
142 We will not be addressing changes to the
weight of the A/C system, since the issue of CO2
emissions from the fuel consumption of normal
(non-A/C) operation, including basic vehicle
weight, is inherently addressed with the primary
CO2 standards (See III.B above).
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increase the A/C system efficiency.
Manufacturers would be required to
attest the durability of the leakage
reduction and the efficiency
improvement technologies over the full
useful life of the vehicle.
EPA believes that both reducing A/C
system leakage and increasing efficiency
are highly cost-effective and
technologically feasible. EPA expects
most manufacturers will choose to use
these A/C credit provisions, although
some may not find it necessary to do so.
a. A/C Leakage Credits
The refrigerant used in vehicle A/C
systems can get into the atmosphere by
many different means. These refrigerant
emissions occur from the slow leakage
over time that all closed high pressure
systems will experience. Refrigerant loss
occurs from permeation through hoses
and leakage at connectors and other
parts where the containment of the
system is compromised. The rate of
leakage can increase due to
deterioration of parts and connections
as well. In addition, there are emissions
that occur during accidents and
maintenance and servicing events.
Finally, there are end-of-life emissions
if, at the time of vehicle scrappage,
refrigerant is not fully recovered.
Because the process of refrigerant
leakage has similar root causes as those
that cause fuel evaporative emissions
from the fuel system, some of the
control technologies are similar
(including hose materials and
connections). There are however, some
fundamental differences between the
systems that require a different
approach. The most notable difference
is that A/C systems are completely
closed systems, whereas the fuel system
is not. Fuel systems are meant to be
refilled as liquid fuel is consumed by
the engine, while the A/C system ideally
should never require ‘‘recharging’’ of the
contained refrigerant. Thus it is critical
that the A/C system leakages be kept to
an absolute minimum. These emissions
are typically too low to accurately
measure in most current SHED
chambers designed for fuel evaporative
emissions measurement, especially for
systems that are new or early in life.
Therefore, if leakage emissions were to
be measured directly, new measurement
facilities would need to be built by the
OEM manufacturers and very accurate
new test procedures would need to be
developed. Especially because there are
indications that much of the industry is
moving toward alternative refrigerants
(post-2016 for most manufacturers), EPA
is not proposing such a direct
measurement approach to addressing
refrigerant leakage.
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Instead, EPA proposes that
manufacturers demonstrate
improvements in their A/C system
designs and components through a
design-based method. Manufacturers
implementing systems expected to
result in reduced refrigerant leakage
would be eligible for credits that could
then be used to meet their CO2 emission
compliance requirements. The proposed
‘‘A/C Leakage Credit’’ provisions would
generally assign larger credits to system
designs that are expected to result in
greater leakage reduction. In addition,
EPA proposes that proportionately
larger A/C Leakage Credits be available
to manufacturers that substitute a lowerGWP refrigerant for the current R134a
refrigerant.
Our proposed method for calculating
A/C Leakage Credits is based closely on
an industry-consensus leakage scoring
method, described below. This leakage
scoring method is correlated to
experimentally-measured leakage rates
from a number of vehicles using the
different available A/C components.
Under the proposed approach,
manufacturers would choose from a
menu of A/C equipment and
components used in their vehicles in
order to establish leakage scores which
would characterize their A/C system
leakage performance. The leakage score
can be compared to expected fleetwide
leakage rates in order to quantify
improvements for a given A/C system.
Credits would be generated from leakage
reduction improvements that exceeded
average fleetwide leakage rates.
EPA believes that the design-based
approach would result in estimates of
likely leakage emissions reductions that
would be comparable to those that
would eventually result from
performance-based testing. At the same
time, comments are encouraged on all
developments that may lead to a robust,
practical, performance-based test for
measuring A/C refrigerant leakage
emissions.
The cooperative industry and
government Improved Mobile Air
Conditioning (IMAC) program 143 has
demonstrated that new-vehicle leakage
emissions can be reduced by 50%. This
program has shown that this level of
improvement can be accomplished by
reducing the number and improving the
quality of the components, fittings,
seals, and hoses of the A/C system. All
of these technologies are already in
commercial use and exist on some of
today’s systems.
EPA is proposing that a manufacturer
wishing to earn A/C Leakage Credits
143 Team 1–Refrigerant Leakage Reduction: Final
Report to Sponsors, SAE, 2007.
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would compare the components of its
A/C system with a set of leakagereduction technologies and actions that
is based closely on that being developed
through IMAC and the Society of
Automotive Engineers (as SAE Surface
Vehicle Standard J2727, August 2008
version). The J2727 approach is
developed from laboratory testing of a
variety of A/C related components, and
EPA believes that the J2727 leakage
scoring system generally represents a
reasonable correlation with average realworld leakage in new vehicles. Like the
IMAC approach, our proposed credit
approach would associate each
component with a specific leakage rate
in grams per year identical to the values
in J2727. A manufacturer choosing to
claim Leakage Credits would sum the
leakage values for an A/C system for a
total A/C leakage score. EPA is
proposing a formula for converting the
grams-per-year leakage score to a gramsper-mile CO2eq value, taking vehicle
miles traveled (VMT) and the GWP of
the refrigerant into account. This
formula is:
Credit = (MaxCredit) * [1 ¥ (LeakScore/
AvgImpact) * (GWPRefrigerant/
1430)]
Where:
MaxCredit is 12.6 and 15.7 g/mi CO2eq for
cars and trucks respectively. These
become 13.8 and 17.2 for cars and trucks
if alternative refrigerants are used since
they get additional credits for end-of-life
emissions reductions.
LeakScore is the leakage score of the A/C
system as measured according to
methods similar to the J2727 procedure
in units of g/yr. The minimum score
which is deemed feasible is fixed at 8.3
and 10.4 g/yr for cars and trucks
respectively.
AvgImpact is the average impact of A/C
leakage, which is 16.6 and 20.7 g/yr for
cars and trucks respectively.
GWPRefrigerant is the global warming
potential for direct radiative forcing of
the refrigerant as defined by EPA (or
IPCC).
All of the parameters and limits of the
equation are derived in the EPA DRIA.
For systems using the current
refrigerant, EPA proposes that these
emission rates could at most be feasibly
reduced by half, based on the
conclusions of the IMAC study, and
consideration of emission over the full
life of the vehicle. (This latter point is
discussed further in the DRIA.)
As discussed above, EPA recognizes
that substituting an alternative
refrigerant (one with a significantly
lower global warming potential, GWP),
would potentially be a very effective
way to reduce the impact of all forms of
refrigerant emissions, including
maintenance, accidents, and vehicle
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scrappage. To address future GHG
regulations in Europe and California,
systems using alternative refrigerants—
including HFO1234yf, with a GWP of
4—are under serious development and
have been demonstrated in prototypes
by A/C component suppliers. These
alternative refrigerants have remaining
cost, safety and feasibility hurdles for
commercial applications.144 However,
the European Union has enacted
regulations phasing in alternative
refrigerants with GWP less than 150
starting in 2010, and the State of
California proposed providing credits
for alternative refrigerant use in its GHG
rule.
Within the timeframe of 2012–2016,
EPA is not expecting the use of lowGWP refrigerants to be widespread.
However, EPA believes that these
developments are promising, and have
included in our proposed A/C Leakage
Credit system provisions to account for
the effective refrigerant reductions that
could be expected from refrigerant
substitution. The quantity of A/C
Leakage Credits that would be available
would be a function of the GWP of the
alternative refrigerant, with the largest
credits being available for refrigerants
approaching a GWP of zero.145 For a
hypothetical alternative refrigerant with
a GWP of 1, effectively eliminating
leakage as a GHG concern, our proposed
credit calculation method could result
in maximum credits equal total average
emissions, or credits of 13.4 and 17.8
g/mi CO2eq for cars and trucks,
respectively. This option is also
captured in the equation above.
It is possible that alternative
refrigerants could, without
compensating action by the
manufacturer, reduce the efficiency of
the A/C system (see discussion of the A/
C Efficiency Credit below.) However,
EPA believes that manufacturers will
have substantial incentives to design
their systems to maintain the efficiency
of the A/C system, therefore EPA is not
accounting for any potential efficiency
degradation.
EPA requests comment on all aspects
of our proposed A/C Leakage Credit
system.
144 Although see 71 FR 55140 (Sept. 21, 2006)
(proposal pursuant to section 612 of the CAA
finding CO2 and HFC 152a as acceptable refrigerant
substitutes as replacements for CFC–12 in motor
vehicle air conditioning systems, and stating (at
55142) that ‘‘data … indicate that use of CO2 and
HFC 152a with risk mitigation technologies does
not pose greater risks compared to other
substitutes’’).
145 For example, the GWP for R152a is 120, the
GWP of HFO–1234yf is 4, and the GWP of CO2 as
a refrigerant is 1.
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules
b. A/C Efficiency Credits
EPA is proposing that manufacturers
that make improvements in their A/C
systems to increase efficiency and thus
reduce CO2 emissions due to A/C
system operation be eligible for A/C
Efficiency Credits. As with A/C Leakage
Credits, manufacturers could apply A/C
Efficiency Credits toward compliance
with their overall CO2 standards.
As mentioned above, EPA estimates
that the CO2 emissions due to A/C
related loads on the engine account for
approximately 3.9% of total greenhouse
gas emissions from passenger vehicles
in the United States. Usage of A/C
systems is inherently higher in hotter
and more humid months and climates;
however, vehicle owners may use their
A/C systems all year round in all parts
of the nation. For example, people
commonly use A/C systems to cool and
dehumidify the cabin air for passenger
comfort on hot humid days, but they
also use the systems to de-humidify
cabin air to assist in defogging/de-icing
the front windshield and side glass in
cooler weather conditions for improved
visibility. A more detailed discussion of
seasonal and geographical A/C usage
rates can be found in the DRIA.
Most of the additional load on the
engine from A/C system operation
comes from the compressor, which
pumps the refrigerant around the system
loop. Significant additional load on the
engine may also come from electric or
hydraulic fans, which are used to move
air across the condenser, and from the
electric blower, which is used to move
air across the evaporator and into the
cabin. Manufacturers have several
currently-existing technology options
for improving efficiency, including
more efficient compressors, fans, and
motors, and systems controls that avoid
over-chilling the air (and subsequently
re-heating it to provide the desired air
temperature with an associated loss of
efficiency). For vehicles equipped with
automatic climate-control systems, real-
time adjustment of several aspects of the
overall system (such as engaging the full
capacity of the cooling system only
when it is needed, and maximizing the
use of recirculated air) can result in
improved efficiency. Table III.C.1–1
below lists some of these technologies
and their respective efficiency
improvements.
As with the A/C Leakage Credit
program, EPA is interested in
performance-based standards (or
credits) based on measurement
procedures whenever possible. While
design-based assessments of expected
emissions can be a reasonably robust
way of quantifying emission
improvements, these approaches have
inherent shortcomings, as discussed for
the case of A/C leakage above. Designbased approaches depend on the quality
of the data from which they are
calibrated, and it is possible that
apparently proper equipment may
function less effectively than expected.
Therefore, while the proposal uses a
design-based menu approach to quantify
improvements in A/C efficiency, it is
also proposed to begin requiring
manufacturers to confirm that
technologies applying for Efficiency
Credits are measurably improving
system efficiency.
EPA believes that there is a more
critical need for a test procedure to
quantify A/C Efficiency Credits than for
Leakage Credits, for two reasons. First,
the efficiency gains for various
technologies are more difficult to
quantify using a design-based program
(like the SAEJ2727-based procedure
used to generate Leakage Credits).
Second, while leakage may disappear as
a significant source of GHG emissions if
a shift toward alternate refrigerants
develops, no parallel factor exists in the
case of efficiency improvements. EPA is
thus proposing to phase-in a
performance-based test procedure over
time beginning in 2014, as discussed
below. In the interim, EPA proposes a
49529
design-based ‘‘menu’’ approach for
estimating efficiency improvements
and, thus, quantifying A/C Efficiency
Credits.
For model years 2012 and 2013, EPA
proposes that a manufacturer wishing to
generate A/C Efficiency Credits for a
group of its vehicles with similar A/C
systems would compare several of its
vehicle A/C-related components and
systems with a ‘‘menu’’ of efficiencyrelated technology improvements (see
Table III.C.1–1 below). Based on the
technologies the manufacturer chooses,
an A/C Efficiency Credit value would be
established. This design-based approach
would recognize the relationships and
synergies among efficiency-related
technologies. Manufacturers could
receive credit based on the technologies
they chose to incorporate in their A/C
systems and the associated credit value
for each technology. The total A/C
Efficiency Credit would be the total of
these values, up to a maximum feasible
credit of 5.7 g/mi CO2eq. This would be
the maximum improvement from
current average efficiencies for A/C
systems (see the DRIA for a full
discussion of our derivation of the
proposed reductions and credit values
for individual technologies and for the
maximum total credit available).
Although the total of the individual
technology credit values may exceed 5.7
g/mi CO2eq, synergies among the
technologies mean that the values are
not additive, and thus A/C Efficiency
credit could not exceed 5.7 g/mi CO2eq.
The EPA requests comment on
adjusting the A/C efficiency credit to
account for potential decreases (or
increases) in efficiency when using an
alternative refrigerant by using the
change in the coefficient of
performance. The effects may include
the impact of a secondary loop system
(including the incremental effect on
tailpipe CO2 emissions that the added
weight of such a system would incur).
TABLE III.C.1–1 EFFICIENCY-IMPROVING A/C TECHNOLOGIES AND CREDITS
Estimated reduction in A/C CO2
emissions
(percent)
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Technology description
Reduced reheat, with externally-controlled, variable-displacement compressor ........................................
Reduced reheat, with externally-controlled, fixed-displacement or pneumatic variable-displacement
compressor ...............................................................................................................................................
Default to recirculated air whenever ambient temperature is greater than 75 °F ......................................
Blower motor and cooling fan controls which limit waste energy (e.g. pulse width modulated power
controller) .................................................................................................................................................
Electronic expansion valve ..........................................................................................................................
Improved evaporators and condensers (with system analysis on each component indicating a COP improvement greater than 10%, when compared to previous design) .......................................................
Oil Separator ................................................................................................................................................
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E:\FR\FM\28SEP2.SGM
A/C Efficiency
credit
(g/mi CO2)
30
20
30
1.1
1.7
15
20
0.9
1.1
20
10
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1.1
0.6
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules
For model years 2014 and later, EPA
proposes that manufacturers seeking to
generate A/C Efficiency Credits would
need to use a specific performance test
to confirm that the design changes were
also improving A/C efficiency.
Manufacturers would need to perform
an A/C CO2 Idle Test for each A/C
system (family) for which it desired to
generate Efficiency Credits.
Manufacturers would need to
demonstrate at least a 30%
improvement over current average
efficiency levels to qualify for credits.
Upon qualifying on the Idle Test, the
manufacturer would be eligible to use
the menu approach above to quantify
the credits it would earn.
The proposed A/C CO2 Idle Test
procedure, which EPA has designed
specifically to measure A/C CO2
emissions, would be performed while
the vehicle engine is at idle. This
proposed laboratory idle test would be
similar to the idle carbon monoxide
(CO) test that was once a part of EPA
vehicle certification. The test would
determine the additional CO2 generated
at idle when the A/C system is operated.
The A/C CO2 Idle Test would be run
with and without the A/C system
cooling the interior cabin while the
vehicle’s engine is operating at idle and
with the system under complete control
of the engine and climate control system
The proposed A/C CO2 Idle Test is
similar to that proposed in April 2009
for the Mandatory GHG Reporting Rule,
with several improvements. These
improvements include tighter
restrictions on test cell temperatures
and humidity levels in order to more
closely control the loads from operation
of the A/C system. EPA also made
additional refinements to the required
in-vehicle blower fan settings for
manually controlled systems to more
closely represent ‘‘real world’’ usage
patterns. These details can be found in
the DRIA and the regulations.
The design of the A/C CO2 Idle Test
represents a balancing of the need for
performance tests whenever possible to
ensure the most accurate quantification
of efficiency improvements, with
practical concerns for testing burden
and facility requirements. EPA believes
that the proposed Idle Test adds to the
robust quantification of A/C credits that
will result in real-world efficiency
improvements and reductions in A/Crelated CO2 emissions. EPA is proposing
that the Idle Test be required in order
to qualify for A/C Efficiency Credits
beginning in 2014 to allow sufficient
time for manufacturers to make the
necessary facilities improvements and
to establish a comfort level with the test.
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EPA also considered a more
comprehensive testing approach to
quantifying A/C CO2 emissions that
could be somewhat more technically
robust, but would require more test time
and test facility improvements for many
manufacturers. This approach would be
to adapt an existing test procedure, the
Supplemental Federal Test Procedure
(SFTP) for A/C operation, called the
SC03, in specific ways for it to function
as a tool to evaluate A/C CO2 emissions.
The potential test method is described
in some detail here, and EPA
encourages comment on how this type
of test might or might not accomplish
the goals of robust performance-based
testing and reasonable test burdens.
EPA designed the SC03 test to
measure criteria pollutants under severe
air conditioning conditions not
represented in the FTP and Highway
Fuel Economy Tests. EPA did not
specifically design the SC03 to measure
incremental reductions in CO2
emissions from more efficient A/C
technologies. For example, due to the
severity of the SC03 test environmental
conditions and the relatively short
duration of the SC03 cycle, it is difficult
for the A/C system to achieve a
stabilized interior cabin condition that
reflects incremental improvements.
Many potential efficiency improvements
in the A/C components and controls
(i.e., automatic recirculation and heat
exchanger fan control) are specifically
measured only during stabilized
conditions, and therefore become
difficult or impossible to measure and
quantify during this test. In addition,
SC03 testing is also somewhat
constrained and costly due to limited
number of test facilities currently
capable of performing testing under the
required environmental conditions.
One value of using the SC03 as the
basis for a new test to quantify A/Crelated efficiency improvements would
be the significant degree of control of
test cell ambient conditions. The load
placed on an A/C system, and thus the
incremental CO2 emissions, are highly
dependent on the ambient conditions in
the test cell, especially temperature and
humidity, as well as simulated solar
load. Thus, as with the proposed Idle
Test, a new SC03-based test would need
to accurately and reliably control these
conditions. (This contrasts with FTP
testing for criteria pollutants, which
does not require precise control of cell
conditions because test results are
generally much less sensitive to changes
in cell temperature or humidity).
However, for the purpose of
quantifying A/C system efficiency
improvements, EPA believes a test cell
temperature less severe than the 95°F
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required by the SC03 would be
appropriate. A cell temperature of 85°F
would better align the initial cooling
phase (‘‘pull-down’’) as well as the
stabilized phase of A/C operation with
real-world driving conditions.
Another value of an SC03-based test
would be the opportunity to create
operating conditions for vehicle A/C
systems that in some ways would better
simulate ‘‘real world’’ operation than
either the proposed Idle Test or the
current SC03. The SC03 test cycle,
roughly 10 minutes in length, has a
similar average speed, maximum speed,
and percentage of time at idle as the
FTP. However, since the SC03 test cycle
was designed principally to measure
criteria pollutants under maximum A/C
load conditions, it is not long enough to
allow temperatures in the passenger
cabin to consistently stabilize. EPA
believes that once the pull-down phase
has occurred and cabin temperatures
have dropped dramatically to a suitable
interior comfort level, additional test
cycle time would be needed to measure
how efficiently the A/C system operates
under stabilized conditions.
To capture the A/C operation during
stabilized operation, EPA would
consider adding two phases to the SC03
test of roughly 10 minutes each. Each
additional phase would simply be
repeats of the SC03 drive cycle, with
two exceptions. During the second
phase, the A/C system would now be
operating at cabin temperature at or
approaching a stabilized condition.
During the third phase, the A/C system
would be turned off. The purpose of the
third phase would be to establish the
base CO2 emissions with no A/C loads
on the engine, which would provide a
baseline for the incremental CO2 due to
A/C use. EPA would likely weight the
CO2 g/mi results for the first and second
phases of the test as follows: 50% for
phase 1, and 50% for phase 2. From this
average CO2 the methodology would
subtract the CO2 result from phase 3,
yielding an incremental CO2 (in g/mi)
due to A/C use.
EPA expects to continue working with
industry, the California Air Resources
Board, and other stakeholders to move
toward increasingly robust performance
tests for A/C and may include such
changes in this final rule. EPA requests
comment on all aspects of our proposed
A/C Efficiency Credits program.
c. Interaction With Title VI Refrigerant
Regulations
Title VI of the Clean Air Act deals
with the protection of stratospheric
ozone. Section 608 establishes a
comprehensive program to limit
emissions of certain ozone-depleting
E:\FR\FM\28SEP2.SGM
28SEP2
substances (ODS). The rules
promulgated under section 608 regulate
the use and disposal of such substances
during the service, repair or disposal of
appliances and industrial process
refrigeration. In addition, section 608
and the regulations promulgated under
it, prohibit knowingly venting or
releasing ODS during the course of
maintaining, servicing, repairing or
disposing of an appliance or industrial
process refrigeration equipment. Section
609 governs the servicing of motor
vehicle air conditioners (MVACs). The
regulations promulgated under section
609 (40 CFR part 82, subpart B)
establish standards and requirements
regarding the servicing of MVACs.
These regulations include establishing
standards for equipment that recovers
and recycles or only recovers refrigerant
(CFC–12, HFC 134a, and for blends only
recovers) from MVACs; requiring
technician training and certification by
an EPA-approved organization;
establishing recordkeeping
requirements; imposing sales
restrictions; and prohibiting the venting
of refrigerants. Section 612 requires EPA
to review substitutes for class I and class
II ozone depleting substances and to
consider whether such substitutes will
cause an adverse effect to human health
or the environment as compared with
other substitutes that are currently or
potentially available. EPA promulgated
regulations for this program in 1992 and
those regulations are located at 40 CFR
part 82, subpart G. When reviewing
substitutes, in addition to finding them
acceptable or unacceptable, EPA may
also find them acceptable so long as the
user meets certain use conditions. For
example, all motor vehicle air
conditioning system must have unique
fittings and a uniquely colored label for
the refrigerant being used in the system.
EPA views this proposed rule as
complementing these Title VI programs,
and not conflicting with them. To the
extent that manufacturers choose to
reduce refrigerant leakage in order to
earn A/C Leakage Credits, this would
dovetail with the Title VI section 609
standards which apply to maintenance
events, and to end-of-vehicle life
disposal. In fact, as noted, a benefit of
the proposed A/C credit provisions is
that there should be fewer and less
impactive maintenance events for
MVACs, since there will be less leakage.
In addition, the credit provisions would
not conflict (or overlap) with the Title
VI section 609 standards. EPA also
believes the menu of leak control
technologies proposed today would
complement the section 612
requirements, because these control
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technologies would help ensure that
R134a (or other refrigerants) would be
used in a manner that further minimizes
potential adverse effects on human
health and the environment.
2. Flex Fuel and Alternative Fuel
Vehicle Credits
As described in this section, EPA is
proposing credits for flexible-fuel
vehicles (FFVs) and alternative fuel
vehicles starting in the 2012 model year.
FFVs are vehicles that can run both on
an alternative fuel and conventional
fuel. Most FFVs are E–85 vehicles,
which can run on a mixture of up to 85
percent ethanol and gasoline. Dedicated
alternative fuel vehicles are vehicles
that run exclusively on an alternative
fuel (e.g., compressed natural gas).
EPCA includes an incentive under the
CAFE program for production of dualfueled vehicles or FFVs, and dedicated
alternative fuel vehicles.146 EPCA’s
provisions were amended by the EISA
to extend the period of availability of
the FFV credits, but to begin phasing
them out by annually reducing the
amount of FFV credits that can be used
in demonstrating compliance with the
CAFE standards.147 EPCA does not
premise the availability of the FFV
credits on actual use of alternative fuel.
Under EPCA, after MY 2019 no FFV
credits will be available for CAFE
compliance.148 Under EPCA, for
dedicated alternative fuel vehicles, there
are no limits or phase-out. EPA is
proposing that FFV and Alternative Fuel
Vehicle Credits be calculated as a part
of the calculation of a manufacturer’s
overall fleet average fuel economy and
fleet average carbon-related exhaust
emissions (§ 600.510–12).
EPA is not proposing to include
electric vehicles (EVs) or plug-in hybrid
electric vehicles (PHEVs) in these flex
fuel and alternative fuel provisions.
These vehicles would be covered by the
proposed advanced technology vehicle
credits provisions described in Section
III.C.3, so including them here would
lead to a double counting of credits.
a. Model Year 2012—2015 Credits
i. FFVs
For the GHG program, EPA is
proposing to allow FFV credits
corresponding to the amounts allowed
by the amended EPCA only during the
146 49
U.S.C 32905.
49 U.S.C 32906. The mechanism by which
EPCA provides an incentive for production of FFVs
is by specifying that their fuel economy is
determined using a special calculation procedure
that results in those vehicles being assigned a
higher fuel economy level than would otherwise
occur. 49 U.S.C. section 32905(b). This is typically
referred to as an FFV credit.
148 49 U.S.C 32906.
147 See
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49531
period from MYs 2012 to 2015. (As
discussed below in Section III.E., EPA is
proposing that CAFE-based FFV credits
would not be permitted as part of the
early credits program.) Several
manufacturers have already taken the
availability of FFV credits into account
in their near-term future planning for
CAFE and this reliance indicates that
these credits need to be considered in
considering adequacy of lead time for
the CO2 standards. EPA thus believes
that allowing these credits, in the near
term, would help provide adequate lead
time for manufacturers to implement the
new multi-year standards, but that for
the longer term there is adequate lead
time without the use of such credits.
This will also tend to harmonize the
GHG and the CAFE program during
these interim years. As discussed below,
EPA is proposing for MY 2016 and later
that manufacturers would not receive
FFV credits unless they reliably
estimate the extent the alternative fuel
is actually being used by vehicles in
order to count the alternative fuel use in
the vehicle’s CO2 emissions level
determination.
As with the CAFE program, EPA
proposes to base credits on the
assumption that the vehicles would
operate 50% of the time on the
alternative fuel and 50% of the time on
conventional fuel, resulting in CO2
emissions that are based on an
arithmetic average of alternative fuel
and conventional fuel CO2 emissions.149
The measured CO2 emissions on the
alternative fuel would be multiplied by
a 0.15 volumetric conversion factor
which is included in the CAFE
calculation as provided by EPCA.
Through this mechanism a gallon of
alternative fuel is deemed to contain
0.15 gallons of fuel. EPA is proposing to
take the same approach for 2012–2015
model years. For example, for a flexiblefuel vehicle that emitted 330 g/mi CO2
operating on E–85 and 350 g/mi CO2
operating on gasoline, the resulting CO2
level to be used in the manufacturer’s
fleet average calculation would be:
⎡( 330 × 0.15 ) + 350 ⎤
⎦ = 199.8 g /mi
CO2 = ⎣
2
EPA understands that by using the
CAFE approach—including the 0.15
factor—the CO2 emissions value for the
vehicle is calculated to be significantly
lower than it actually would be
otherwise, even if the vehicle were
assumed to operate on the alternative
fuel at all times. This represents a
‘‘credit’’ being provided to FFVs.
149 49
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U.S.C 32905 (b).
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EPA notes also that the above
equation and example are based on an
FFV that is an E–85 vehicle. EPCA, as
amended by EISA, also establishes the
use of this approach, including the 0.15
factor, for all alternative fuels, not just
E–85.150 The 0.15 factor is used for B–
20 (20 percent biofuel and 80 percent
diesel) FFVs. EPCA also establishes this
approach, including the 0.15 factor, for
gaseous-fueled FFVs such as a vehicle
able to operate on gasoline and CNG.151
(For natural gas FFVs, EPCA establishes
a factor of 0.823 gallons of fuel for every
100 cubic feet a natural gas used to
calculate a gallons equivalent.) 152 The
EISA statute’s use of the 0.15 factor in
this way provides a similar regulatory
treatment across the various types of
alternative fuel vehicles. EPA also
proposes to use the 0.15 factor for all
FFVs in keeping with the goal of not
disrupting manufacturers’ near-term
compliance planning. EPA, in any case,
expects the vast majority of FFVs to be
E–85 vehicles, as is the case today.
The FFV credit limits for CAFE are
1.2 mpg for model years 2012–2014 and
1.0 mpg for model year 2015.153 In CO2
terms, these CAFE limits translate to
declining CO2 credit limits over the four
model years, as the CAFE standards
increase in stringency (as the CAFE
standard increases numerically, the
limit becomes a smaller fraction of the
standard). EPA proposes credit limits
shown in Table III.C.2–1 based on the
proposed average CO2 standards for cars
and trucks. These have been calculated
by comparing the average proposed
CAFE standards with and without the
FFV credits, converted to CO2. EPA
requests comments on this proposed
approach.
TABLE III.C.2–1—FFV CO2 STANDARD
CREDIT LIMITS (G/MILE)
Model year
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2012
2013
2014
2015
Cars
..........................
..........................
..........................
..........................
Trucks
9.8
9.3
8.9
6.9
17.9
17.1
16.3
12.6
EPA also requests comments on
basing the calculated CO2 credit limit on
the individual manufacturer standards
calculated from the footprint curves. For
example, if a manufacturer’s 2012 car
standard was 260 g/mile, the credit limit
in CO2 terms would be 9.5 g/mile and
if it were 270 g/mile the limit would be
10.2 g/mile. This approach would be
somewhat more complex and would
150 49
U.S.C 32905 (c).
U.S.C 32905 (d).
152 49 U.S.C section 32905 (c).
153 49 U.S.C section 32906 (a).
151 49
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mean that the FFV CO2 credit limits
would vary by manufacturer as their
footprint based standards vary.
However, it would more closely track
CAFE FFV credit limits.
ii. Dedicated Alternative Fuel
Vehicles
EPA proposes to calculate CO2
emissions from dedicated alternative
fuel vehicles for MY 2012—2015 by
measuring the CO2 emissions over the
test procedure and multiplying the
results by the 0.15 conversion factor
described above. For example, for a
dedicated alternative fuel vehicle that
would achieve 330 g/mi CO2 while
operating on alcohol (ethanol or
methanol), the effective CO2 emissions
of the vehicle for use in determining the
vehicle’s CO2) emissions would be
calculated as follows:
CO2 = 330 × 0.15 = 49.5 g/mi
b. Model Years 2016 and Later
i. FFVs
For 2016 and later model years, EPA
proposes to treat FFVs similarly to
conventional fueled vehicles in that
FFV emissions would be based on
actual CO2 results from emission testing
on the alternative fuel. The
manufacturer would also be required to
demonstrate that the alternative fuel is
actually being used in the vehicles. The
manufacturer would need to establish
the ratio of operation that is on the
alternative fuel compared to the
conventional fuel. The ratio would be
used to weight the CO2 emissions
performance over the 2-cycle test on the
two fuels. The 0.15 conversion factor
would no longer be included in the CO2
emissions calculation. For example, for
a flexible-fuel vehicle that emitted 300
g/mi CO2 operating on E–85 ten percent
of the time and 350 g/mi CO2 operating
on gasoline ninety percent of the time,
the CO2 emissions for the vehicles to be
used in the manufacturer’s fleet average
would be calculated as follows:
CO2 = (300 × 0.10) + (350 × 0.90)= 345
g/mi
The most complex part of this
approach is to establish what data are
needed for a manufacturer to accurately
demonstrate use of the alternative fuel.
One option EPA is considering is
establishing a rebuttable presumption
using a ‘‘top-down’’ approach based on
national E–85 fuel use to assign credits
to FFVs sold by manufacturers under
this program. For example, national E–
85 volumes and national FFV sales
could be used to prorate E–85 use by
manufacturer sales volumes and FFVs
already in-use. EPA would conduct an
analysis of vehicle miles travelled
(VMT) by year for all FFVs using its
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emissions inventory MOVES model.
Using the VMT ratios and the overall E–
85 sales, E–85 usage could be assigned
to each vehicle. This method would
account for the VMT of new FFVs and
FFVs already in the existing fleet using
VMT data in the model. The model
could then be used to determine the
ratio of E–85 and gasoline for new
vehicles being sold. Fluctuations in E–
85 sales and FFV sales would be taken
into account to adjust the credits
annually. EPA believes this is a
reasonable way to apportion E–85 use
across the fleet.
If manufacturers decided not to use
EPA’s assigned credits based on the topdown analysis, they would have a
second option of presenting their own
data for consideration as the basis for
credits. Manufacturers have suggested
demonstrations using vehicle on-board
data gathering through the use of onboard sensors and computers.
California’s program allows FFV credits
based on FFV use and envisioned
manufacturers collecting fuel use data
from vehicles in fleets with on-site
refueling. Any approach must
reasonably ensure that no CO2
emissions reductions anticipated under
the program are lost.
EPA proposes that manufacturers
would need to present a statistical
analysis of alternative fuel usage data
collected on actual vehicle operation.
EPA is not attempting to specify how
the data is collected or the amount of
data needed. However, the analysis
must be based on sound statistical
methodology. Uncertainty in the
analysis must be accounted for in a way
that provides reasonable certainty that
the program does not result in loss of
emissions reductions. EPA requests
comment on how this demonstration
could reasonably be made.
EPA recognizes that under EPCA FFV
credits are entirely phased-out of the
CAFE program by MY 2020, and apply
in the prior years with certain
limitations, but without a requirement
that the manufacturers demonstrate
actual use of the alternative fuel. Under
this proposal EPA would treat FFV
credits the same as under EPCA for
model years 2012–2015, but would
apply a different approach starting with
model year 2016. Unlike EPCA, CAA
section 202(a) does not mandate that
EPA treat FFVs in a specific way.
Instead EPA is required to exercise its
own judgment and determine an
appropriate approach that best promotes
the goals of this CAA section. Under
these circumstances, EPA proposes to
treat FFVs for model years 2012–2015
the same as under EPCA, for the lead
time reasons described above. Starting
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with model year 2016, EPA believes the
appropriate approach is to ensure that
emissions reduction credits are based
upon a demonstration that emissions
reductions have been achieved, to
ensure the credits are for real reductions
instead of reductions that have not
likely occurred. This will promote the
environmental goals of this proposal. At
the same time, the ability to generate
credits upon a demonstration of usage of
the alternative fuel will provide an
actual incentive to see that such fuels
are used. Under the EPCA credit
provision, there is an incentive to
produce FFVs but no actual incentive to
ensure that the alternative fuels are
used. GHG and energy security benefits
are only achieved if the alternative fuel
is actually used, and EPA’s approach
will now provide such an incentive.
This approach will promote greater use
of renewable fuels, as compared to a
situation where there is a credit but no
usage requirement. This is also
consistent with the agency’s overall
commitment to the expanded use of
renewable fuels. Therefore EPA is not
proposing to phase-out the FFV program
for MYs 2016 and later but instead to
base the program on real-world
reductions (i.e., actual vehicle CO2
emissions levels based on actual use of
the two fuels, without the 0.15
conversion factor specified under EISA).
Based on existing certification data, E–
85 FFV CO2 emissions are typically
about 5 percent lower on E–85 than CO2
emissions on 100 percent gasoline.
However, currently there is little
incentive to optimize CO2 performance
for vehicles when running on E–85. EPA
believes the above approach would
provide such an incentive to
manufacturers and that E–85 vehicles
could be optimized through engine
redesign and calibration to provide
additional CO2 reductions. EPA requests
comments on the above.
ii. Dedicated Alternative Fuel
Vehicles
EPA proposes that for model years
2016 and later dedicated alternative fuel
vehicles, CO2 would be measured over
the 2-cycle test in order to be included
in a manufacturer’s fleet average CO2
calculations. As noted above, this is
different than CAFE methodology which
provides a methodology for calculating
a petroleum-based mpg equivalent for
alternative fuel vehicles so they can be
included in CAFE. However, because
CO2 can be measured directly from
alternative fuel vehicles over the test
procedure, EPA believes this is the
simplest and best approach since it is
consistent with all other vehicle testing
under the proposed CO2 program.
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3. Advanced Technology Vehicle
Credits for Electric Vehicles, Plug-in
Hybrids, and Fuel Cells
EPA is proposing additional credit
opportunities to encourage the early
commercialization of advanced vehicle
powertrains, including electric vehicles
(EVs), plug-in hybrid electric vehicles
(PHEVs), and fuel cell vehicles. These
technologies have the potential for more
significant reductions of GHG emissions
than any technology currently in
commercial use, and EPA believes that
encouraging early introduction of such
technologies will help to enable their
wider use in the future, promoting the
technology-based emission reduction
goals of section 202(a)(1) of the Clean
Air Act.
EPA proposes that these advanced
technology credits would take the form
of a multiplier that would be applied to
the number of vehicles sold such that
they would count as more than one
vehicle in the manufacturer’s fleet
average. These advanced technology
vehicles would then count more heavily
when calculating fleet average CO2
levels. The multiplier would not be
applied when calculating the
manufacturer’s foot-print-based
standard, only when calculating the
manufacturer’s fleet average levels. EPA
proposes to use a multiplier in the range
of 1.2 to 2.0 for all EVs, PHEVs, and fuel
cell vehicles produced from MY 2012
through MY 2016. EPA proposes that
starting in MY 2017, the multiplier
would no longer be used. As described
in Section III.C.5, EPA is also proposing
to allow early advanced technology
vehicle credits to be generated for model
years 2009–2011. EPA requests
comment on the level of the multiplier
and whether it should be the same value
for each of these three technologies.
Further, if EPA determines that a
multiplier of 2.0, or another level near
the higher end of this range, is
appropriate for the final rule, EPA
requests comment on whether the
multiplier should be phased down over
time, such as: 2.0 for MY 2009 through
MY 2012, 1.8 in MY 2013, 1.6 in MY
2014, 1.4 in MY 2015, and 1.2 in MY
2016 (i.e., the multiplier could phasedown by 0.2 per year). In addition, EPA
requests comment on whether or not it
would be appropriate to differentiate
between EVs and PHEVs for advanced
technology credits. Under such an
approach, PHEVs could be provided a
lesser multiplier compare to EVs. Also,
the PHEV multiplier could be prorated
based on the equivalent electric range
(i.e., the extent to which the PHEV
operates on average as an EV) of the
vehicle in order to incentivize battery
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technology development. This approach
would give more credits to ‘‘stronger’’
PHEV technology.
EPA has provided this type of credit
previously, in the Tier 2 program. This
approach provides an incentive for
manufacturers to prove out ultra-clean
technology during the early years of the
program. In Tier 2, early credits for Tier
2 vehicles certified to the very cleanest
bins (equivalent to California’s
standards for super ultra low emissions
vehicles (SULEVs) and zero emissions
vehicles (ZEVs)) had a multiplier of 1.5
or 2.0.154 The multiplier range of 1.2 to
2.0 being proposed for GHGs is
consistent with the Tier 2 approach.
EPA believes it is appropriate to provide
incentives to manufacturers to produce
vehicles with very low emissions levels
and that these incentives may help pave
the way for greater and/or more cost
effective emission reductions from
future vehicles. EPA would like to
finalize an approach which
appropriately balances the benefits of
encouraging advanced technologies
with the overall environmental
reductions of the proposed standards as
a whole.
As with other vehicles, CO2 for these
vehicles would be determined as part of
vehicle certification, based on emissions
over the 2-cycle test procedures, to be
included in the fleet average CO2 levels.
For electric vehicles, EPA proposes
that manufacturers would include them
in the average with CO2 emissions of
zero grams/mile both for early credits,
and for the MY 2012–2016 time frame.
Similarly, EPA proposes to include as
zero grams/mile of CO2 the electric
portion of PHEVs (i.e., when PHEVs are
operating as electric vehicles) and fuel
cell vehicles. EPA recognizes that for
each EV that is sold, in reality the total
emissions off-set relative to the typical
gasoline or diesel powered vehicle is
not zero, as there is a corresponding
increase in upstream CO2 emissions due
to an increase in the requirements for
electric utility generation. However, for
the time frame of this proposed rule,
EPA is also interested in promoting very
advanced technologies such as EVs
which offer the future promise of
significant reductions in GHG
emissions, in particular when coupled
with a broader context which would
include reductions from the electricity
generation. For the California Paley 1
program, California assigned EVs a CO2
performance value of 130 g/mile, which
was intended to represent the average
CO2 emissions required to charge an EV
using representative CO2 values for the
California electric utility grid. For this
154 See
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65 FR 6746, February 10, 2000.
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proposal, EPA is assigning an EV a
value of zero g/mile, which should be
viewed as an interim solution for how
to account for the emission reduction
potential of this type of vehicle, and
may not be the appropriate long-term
approach. EPA requests comment on
this proposal and whether alternative
approaches to address EV emissions
should be considered, including
approaches for considering the lifecycle
emissions from such advanced vehicle
technologies.
The criteria and definitions for what
vehicles qualify for the multiplier are
provided in Section III.E. As described
in Section III.E, EPA is proposing
definitions for EVs, PHEVs, and fuel cell
vehicles to ensure that only credible
advanced technology vehicles are
provided credits.
EPA requests comments on the
proposed approach for advanced
technology vehicle credits.
4. Off-Cycle Technology Credits
EPA is proposing an optional credit
opportunity intended to apply to new
and innovative technologies that reduce
vehicle CO2 emissions, but for which
the CO2 reduction benefits are not
captured over the 2-cycle test procedure
used to determine compliance with the
fleet average standards (i.e., ‘‘off-cycle’’).
Eligible innovative technologies would
be those that are relatively newly
introduced in one or more vehicle
models, but that are not yet
implemented in widespread use in the
light-duty fleet. EPA will not approve
credits for technologies that are not
innovative or novel approaches to
reducing greenhouse gas emissions.
Further, any credits for these off-cycle
technologies must be based on realworld GHG reductions not captured on
the current 2-cycle tests and verifiable
test methods, and represent average U.S.
driving conditions.
Similar to the technologies used to
reduce A/C system indirect CO2
emissions such as compressor efficiency
improvements, eligible technologies
would not be active during the 2-cycle
test and therefore the associated
improvements in CO2 emissions would
not be captured. EPA will not consider
technologies to be eligible for these
credits if the technology has a
significant impact on CO2 emissions
over the FTP and HFET tests. Because
these technologies are not nearly so well
developed and understood, EPA is not
prepared to require their utilization to
meet the CO2 standards. However, EPA
is aware of some emerging and
innovative technologies and concepts in
various stages of development with CO2
reduction potential that might not be
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adequately captured on the FTP or
HFET, and that some of these
technologies might merit some
additional CO2 credit for the
manufacturer. Examples include solar
panels on hybrids or electric vehicles,
adaptive cruise control, and active
aerodynamics. EPA believes it would be
appropriate to provide an incentive to
encourage the introduction of these
types of technologies and that a credit
mechanism is an effective way to do
this. This optional credit opportunity
would be available through the 2016
model year.
EPA is proposing that manufacturers
quantify CO2 reductions associated with
the use of the off-cycle technologies
such that the credits could be applied
on a g/mile equivalent basis, as is
proposed for A/C system improvements.
Credits would have to be based on real
additional reductions of CO2 emissions
and would need to be quantifiable and
verifiable with a repeatable
methodology. Such submissions of data
should be submitted to EPA subject to
public scrutiny. EPA proposes that the
technologies upon which the credits are
based would be subject to full useful life
compliance provisions, as with other
emissions controls. Unless the
manufacturer can demonstrate that the
technology would not be subject to inuse deterioration over the useful life of
the vehicle, the manufacturer would
have to account for deterioration in the
estimation of the credits in order to
ensure that the credits are based on real
in-use emissions reductions over the life
of the vehicle.
As discussed below, EPA is proposing
a two-tiered process for demonstrating
the CO2 reductions of an innovative and
novel technology with benefits not
captured by the FTP and HFET test
procedures. First, a manufacturer would
determine whether the benefit of the
technology could be captured using the
5-cycle methodology currently used to
determine fuel economy label values.
EPA established the 5-cycle test
methods to better represent real-world
factors impacting fuel economy,
including higher speeds and more
aggressive driving, colder temperature
operation, and the use of air
conditioning. If this determination is
affirmative, the manufacturer would
follow the protocol laid out below and
in the proposed regulations. If the
manufacturer finds that the technology
is such that the benefit is not adequately
captured using the 5-cycle approach,
then the manufacturer would have to
develop a robust methodology, subject
to EPA approval, to demonstrate the
benefit and determine the appropriate
CO2 gram per mile credit.
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a. Technology Demonstration Using
EPA 5-Cycle Methodology
As noted above, the CO2 reduction
benefit of some innovative technologies
could be demonstrated using the 5-cycle
approach currently used for EPA’s fuel
economy labeling program. The 5-cycle
methodology was finalized in EPA’s
2006 fuel economy labeling rule,155
which provides a more accurate fuel
economy label estimate to consumers
starting with 2008 model year vehicles.
In addition to the FTP and HFET test
procedures, the 5-cycle approach folds
in the test results from three additional
test procedures to determine fuel
economy. The additional test cycles
include cold temperature operation,
high temperature, high humidity and
solar loading, and aggressive and highspeed driving; thus these tests could be
used to demonstrate the benefit of a
technology that reduces CO2 over these
types of driving and environmental
conditions. Using the test results from
these additional test cycles collectively
with the 2-cycle data provides a more
precise estimate of the average fuel
economy and CO2 emissions of a vehicle
for both the city and highway
independently. A significant benefit of
using the 5-cycle methodology to
measure and quantify the CO2
reductions is that the test cycles are
properly weighted for the expected
average U.S. operation, meaning that the
test results could be used without
further adjustments.
The use of these supplemental cycles
may provide a method by which
technologies not demonstrated on the
baseline 2-cycles can be quantified. The
cold temperature FTP can capture new
technologies that improve the CO2
performance of vehicles during colder
weather operation. These improvements
may be related to warm-up of the engine
or other operation during the colder
temperature. An example of such a new,
innovative technology is a waste heat
capture device that provides heat to the
cabin interior, enabling additional
engine-off operation during colder
weather not previously enabled due to
heating and defrosting requirements.
The additional engine-off time would
result in additional CO2 reductions that
otherwise would not have been realized
without the heat capture technology.
While A/C credits for efficiency
improvements will largely be captured
in the A/C credits proposal through the
credit menu of known efficiency
improving components and controls,
155 Fuel Economy Labeling of Motor Vehicles:
Revisions to Improve Calculation of Fuel Economy
Estimates; Final Rule (71 FR 77872, December 27,
2006).
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certain new technologies may be able to
use the high temperatures, humidity,
and solar load of the SC03 test cycle to
accurately measure their impact. An
example of a new technology may be a
refrigerant storage device that
accumulates pressurized refrigerant
during driving operation or uses
recovered vehicle kinetic energy during
deceleration to pressurize the
refrigerant. Much like the waste heat
capture device used in cold weather,
this device would also allow additional
engine-off operation while maintaining
appropriate vehicle interior occupant
comfort levels. SC03 test data measuring
the relative impact of innovative A/Crelated technologies could be applied to
the 5-cycle equation to quantify the CO2
reductions of the technology. Another
example is glazed windows. This
reflects sunlight away from the cabin so
that the energy required to stabilize the
cabin air to a comfortable level is
decreased. The impact of these windows
may be measureable on an SC03 test
(with and without the window option).
The US06 cycle may be used to
capture innovative technologies
designed to reduce CO2 emissions
during higher speed and more
aggressive acceleration conditions, but
not reflected on the 2-cycle tests. An
example of this is an active
aerodynamic technology. This
technology recognizes the benefits of
reduced aerodynamic drag at higher
speeds and makes changes to the
vehicle at those speeds. The changes
may include active front or grill air
deflection devices designed to redirect
frontal airflow. Certain active
suspension devices designed primarily
to reduce aerodynamic drag by lowering
the vehicle at higher speeds may also be
measured on the US06 cycle. To
properly measure these technologies on
the US06, the vehicle would require
unique load coefficients with and
without the technologies. The different
load coefficient (properly weighted for
the US06 cycle) could effectively result
in reduced vehicle loads at the higher
speeds when the technologies are active.
Similar to the previously discussed
cycles, the results from the US06 test
with and without the technology could
then use the 5-cycle methodology to
quantify CO2 reductions.
If the 5-cycle procedures can be used
to demonstrate the innovative
technology, then the process would be
relatively simple. The manufacturer
would simply test vehicles with and
without the technology installed or
operating and compare results. All
5-cycles would be tested with the
technology enabled and disabled, and
the test results would be used to
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calculate a combined city/highway CO2
value with the technology and without
the technology. These values would be
compared to determine the amount of
the credit; the combined city/highway
CO2 value with the technology operating
would be subtracted from the combined
city/highway CO2 value without the
technology operating to determine the
gram per mile CO2 credit. It is likely that
multiple tests of each of the five test
procedures would need to be performed
in order to achieve the necessary strong
degree of statistical significance of the
credit determination results. This would
have to be done for each model type for
which a credit was being sought, unless
the manufacturer could demonstrate
that the impact of the technology was
independent of the vehicle
configuration on which it was installed.
In this case, EPA may consider allowing
the test to be performed on an engine
family basis or other grouping. At the
end of the model year, the manufacturer
would determine the number of vehicles
produced subject to each credit amount
and report that to EPA in the final
model year report. The gram per mile
credit value determined with the 5-cycle
comparison testing would be multiplied
by the total production of vehicles
subject to that value to determine the
total number of credits.
b. Alternative Off-Cycle Credit
Methodologies
In cases where the benefit of a
technological approach to reducing CO2
emissions can not be adequately
represented using existing test cycles,
EPA will work with and advise
manufacturers in developing test
procedures and analytical approaches to
estimate the effectiveness of the
technology for the purpose of generating
credits. Clearly the first step should be
a thorough assessment of whether the 5cycle approach can be used, but if the
manufacturer finds that the 5-cycle
process is fundamentally inadequate for
the specific technology being
considered by the manufacturer, then an
alternative approach may be developed
and submitted to EPA for approval. The
demonstration program should be
robust, verifiable, and capable of
demonstrating the real-world emissions
benefit of the technology with strong
statistical significance.
The CO2 benefit of some technologies
may be able to be demonstrated with a
modeling approach, using engineering
principles. An example would be where
a roof solar panel is used to charge the
on-board vehicle battery. The amount of
potential electrical power that the panel
could supply could be modeled for
average U.S. conditions and the units of
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electrical power translated to equivalent
fuel energy or annualized CO2 emission
rate reduction from the captured solar
energy. The CO2 reductions from other
technologies may be more challenging
to quantify, especially if they are
interactive with the driver, geographic
location, environmental condition, or
other aspect related to operation on
actual roads. In these cases,
manufacturers might have to design
extensive on-road test programs. Any
such on-road testing programs would
need to be statistically robust and based
on average U.S. driving conditions,
factoring in differences in geography,
climate, and driving behavior across the
U.S.
Whether the approach involves onroad testing, modeling, or some other
analytical approach, the manufacturer
would be required to present a proposed
methodology to EPA. EPA would
approve the methodology and credits
only if certain criteria were met.
Baseline emissions and control
emissions would need to be clearly
demonstrated over a wide range of real
world driving conditions and over a
sufficient number of vehicles to address
issues of uncertainty with the data. Data
would need to be on a vehicle modelspecific basis unless a manufacturer
demonstrated model specific data was
not necessary. Approval of the approach
to determining a CO2 benefit would not
imply approval of the results of the
program or methodology; when the
testing, modeling, or analyses are
complete the results would likewise be
subject to EPA review and approval.
EPA believes that manufacturers could
work together to develop testing,
modeling, or analytical methods for
certain technologies, similar to the SAE
approach used for A/C refrigerant
leakage credits.
EPA requests comments on the
proposed approach for off-cycle
emissions credits, including comments
on how best to structure the program.
EPA particularly requests comments on
how the case-by-case approach to
assessing off-cycle innovative
technology credits could best be
designed, including ways to ensure the
verification of real-world emissions
benefits and to ensure transparency in
the process of reviewing manufacturer’s
proposed test methods.
5. Early Credit Options
EPA is proposing to allow
manufacturers to generate early credits
in model years 2009–2011. As described
below, credits could be generated
through early additional fleet average
CO2 reductions, early A/C system
improvements, early advanced
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technology vehicle credits, and early
off-cycle credits. As with other credits,
early credits would be subject to a five
year carry-forward limit based on the
model year in which they are generated.
Early credits could also be transferred
between vehicle categories (e.g.,
between the car and truck fleet) or
traded among manufacturers without
limits. The agencies note that CAFE
credits earned in MYs prior to MY 2011
will still be available to manufacturers
for use in the CAFE program in
accordance with applicable regulations.
EPA is not proposing certification,
compliance, or in-use requirements for
vehicles generating early credits. MY
2009 would be complete and MY 2010
would be well underway by the time the
rule is promulgated. This would make
certification, compliance, and in-use
requirements unworkable. As discussed
below, manufacturers would be required
to submit an early credits report to EPA
for approval no later than the time they
submit their final CAFE report for MY
2011. This report would need to include
details on all early credits the
manufacturer generates, why the credits
are bona fide, how they are quantified,
and how they can be verified.
As a general principle, EPA believes
these early credit programs must be
designed in a way to ensure that they
are capturing real-world reductions. In
addition, EPA wants to ensure these
credit programs do not provide an
opportunity for manufacturers to earn
‘‘windfall’’ credits that do not result in
actual, surplus CO2 emission
reductions. EPA seeks comments on
how to best ensure these objectives are
achieved in the design of the early
credit program options.
a. Credits Based on Early Fleet Average
CO2 Reductions
EPA is proposing opportunities for
early credit generation in MYs 2009–
2011 through over-compliance with a
fleet average CO2 baseline established
by EPA. EPA is proposing four
pathways for doing so. Manufacturers
would select one of the four paths for
credit generation for the entire three
year period and could not switch
between pathways for different model
years. For two pathways, the baseline
would be set by EPA to be equivalent to
the California standards for the relevant
model year. Generally, manufacturers
that over-comply with those CARB
standards would earn credits. Two
additional pathways, described below,
would include credits based on overcompliance with CAFE standards in
States that have not adopted the
California standards.
Pathway 1 would be to earn credits by
over-complying with the California
equivalent baseline over the
manufacturer’s fleet of vehicles sold
nationwide. Pathway 2 would be for
manufacturers to generate credits
against the baseline only for the fleet of
vehicles sold in California and the CAA
section 177 States.156 This approach
would include any CAA 177 States as of
the date of promulgation of the Final
Rule in this proceeding. Manufacturers
would be required to include both cars
and trucks in the program. Under
Pathways 1 and 2, EPA proposes that
manufacturers would be required to
cover any deficits incurred against the
baseline levels established by EPA
during the three year period 2009–2011
before credits could be carried forward
into the 2012 model year. For example,
a deficit in 2011 would have to be
subtracted from the sum of credits
earned in 2009 and 2010 before any
credits could be applied to 2012 (or
later) model year fleets. EPA is
proposing this provision to help ensure
the early credits generated under this
program are consistent with the credits
available under the California program
during these model years.
Table III.C.5–1 provides the California
equivalent baselines EPA proposes to
use as the basis for CO2 credit
generation under the California-based
pathways. These are the California GHG
standards for the model years shown,
with a 2.0 g/mile adjustment to account
for the exclusion of N2O and CH4, which
are included in the California GHG
standards, but not included in the
credits program. Manufacturers would
generate CO2 credits by achieving fleet
average CO2 levels below these
baselines. As shown in the table, the
California-based early credit pathways
are based on the California vehicle
categories. Also, the California-based
baseline levels are not footprint-based,
but universal levels that all
manufacturers would use.
Manufacturers would need to achieve
fleet levels below those shown in the
table in order to earn credits.
TABLE III.C.5–1—CALIFORNIA EQUIVALENT BASELINES CO2 EMISSIONS LEVELS FOR EARLY CREDIT GENERATION
Passenger cars and light
trucks with an LVW of
0–3,750 lbs
Model year
Light trucks with a LVW
of 3,751 or more and a
GVWR of up to 8,500
lbs plus medium-duty
passenger vehicles
321
299
265
437
418
388
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2009 .........................................................................................................................................
2010 .........................................................................................................................................
2011 .........................................................................................................................................
EPA proposes that manufacturers
using Pathways 1 or 2 above would use
year end car and truck sales in each
category. Although production data is
used for the program starting in 2012,
EPA is proposing to use sales data for
the early credits program in order to
apportion vehicles by State. This is
described further below. Manufacturers
would calculate actual fleet average
emissions over the appropriate vehicle
fleet, either for vehicles sold nationwide
for Pathway 1, or California plus 177
States sales for Pathway 2. Early CO2
credits would be based on the difference
between the baseline shown in the table
above and the actual fleet average
emissions level achieved. Any early
A/C credits generated by the
manufacturer, described below in
Section III.C.5.b, would be included in
the fleet average level determination. In
model year 2009, the California CO2
standards for cars (321 g/mi CO2) are
only slightly more stringent than the
2009 CAFE car standard of 27.5 mpg,
which is approximately equivalent to
323 g/mi CO2, and the California lighttruck standard (437 g/mi CO2) is less
stringent than the equivalent CAFE
standard, recognizing that there are
some differences between the way the
California program and the CAFE
156 CAA 177 States refers to States that have
adopted the California GHG standards. At present,
there are thirteen CAA 177 States including New
York, Massachusetts, Maryland, Vermont, Maine,
Connecticut, Arizona, New Jersey, New Mexico,
Oregon, Pennsylvania, Rhode Island, Washington,
and Washington, DC.
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program categorize vehicles. Under the
proposed option, manufacturers would
have to show that they over comply over
the entire three model year time period,
not just the 2009 model year, to generate
early credits under either Pathways 1, 2
or 3. A manufacturer cannot use credits
generated in model year 2009 unless
they offset any debits from model years
2010 and 2011. EPA expects that the
requirement to over comply over the
entire time period covering these three
model years should mean that the
credits that are generated are real and
are in excess of what would have
otherwise occurred. However, because
of the circumstances involving the 2009
model year, in particular for companies
with significant truck sales, there is
some concern that under Pathways 1, 2,
and 3, there is a potential for a large
number of credits generated in 2009
against the California standard, in
particular for a number of companies
who have significantly over-achieved on
CAFE in recent model years. EPA wants
to avoid a situation where, contrary to
expectation, some part of the early
credits generated by a manufacturer are
in fact not excess, where companies
could trade such credits to other
manufacturers, risking a delay in the
addition of new technology across the
industry from the 2012 and later EPA
CO2 standards. For this reason, EPA
requests comment on the merits of
prohibiting the trading of model year
2009 generated early credits between
firms.
In addition, for Pathways 1 and 2,
EPA proposes that manufacturers may
also include alternative compliance
credits earned per the California
alternative compliance program.157
These alternative compliance credits are
based on the demonstrated use of
alternative fuels in flex fuel vehicles. As
with the California program, the credits
would be available beginning in MY
2010. Therefore, these early alternative
compliance credits would be available
under EPA’s program for the 2010 and
2011 model years. FFVs would
otherwise be included in the early credit
fleet average based on their emissions
on the conventional fuel. This would
not apply to EVs and PHEVs. The
emissions of EVs and PHEVs would be
determined as described in Section III.E.
Manufacturers could choose to either
include their EVs and PHEVs in one of
the four pathways described in this
section or under the early advanced
technology emissions credits described
below, but not both due to issues of
credit double counting.
EPA is also proposing two additional
early credit pathways manufacturers
could select. Pathways 3 and 4
incorporate credits based on overcompliance with CAFE standards for
vehicles sold outside of California and
CAA 177 States in MY 2009–2011.
Pathway 3 would allow manufacturers
to earn credits as under Pathway 2, plus
earn CAFE-based credits in other States.
Credits would not be generated for cars
sold in California and CAA 177 States
49537
unless vehicle fleets in those States are
performing better than the standards
which otherwise would apply in those
States, i.e. the baselines shown in Table
III.C.5–1 above.
Pathway 4 would be for
manufacturers choosing to forego
California-based early credits entirely
and earn only CAFE-based credits
outside of California and CAA 177
States. EPA proposes that manufacturers
would not be able to include FFV
credits under the CAFE-based early
credit pathways since those credits do
not automatically reflect actual
reductions in CO2 emissions.
The proposed baselines for CAFEbased early pathways are provided in
Table III.C.5–2 below. They are based on
the CAFE standards for the 2009–2011
model years. For CAFE standards in
2009–2011 model years that are
footprint-based, the baseline would vary
by manufacturer. Footprint-based
standards are in effect for the 2011
model year CAFE standards.158
Additionally, for Reform CAFE truck
standards, footprint standards are
optional for the 2009–2010 model years.
Where CAFE footprint-based standards
are in effect, manufacturers would
calculate a baseline using the footprints
and sales of vehicles outside of
California and CAA 177 States. The
actual fleet CO2 performance calculation
would also only include the vehicles
sold outside of California and CAA 177
States, and as mentioned above, may not
include FFV credits.
TABLE III.C.5–2—CAFE EQUIVALENT BASELINES CO2 EMISSIONS LEVELS FOR EARLY CREDIT GENERATION
Model year
Cars
Trucks
2009 ...................................................................
2010 ...................................................................
2011 ...................................................................
323 ...................................................................
323 ...................................................................
Footprint-based standard .................................
381.*
376.*
Footprint-based standard.
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* Would be footprint-based standard for manufacturers selecting footprint option under CAFE.
For the CAFE-based pathways, EPA
proposes to use the NHTSA car and
truck definitions that are in place for the
model year in which credits are being
generated. EPA understands that the
NHTSA definitions change starting in
the 2011 model year, and would
therefore change part way through the
early credits program. EPA further
recognizes that MDPVs are not part of
the CAFE program until the 2011 model
year, and therefore would not be part of
the early credits calculations for 2009–
2010 under the CAFE-based pathways.
Pathways 2 through 4 involve
splitting the vehicle fleet into two
groups, vehicles sold in California and
CAA 177 States and vehicles sold
outside of these States. This approach
would require a clear accounting of
location of vehicle sales by the
manufacturer. EPA believes it will be
reasonable for manufacturers to
accurately track sales by State, based on
its experience with the National Low
Emissions Vehicle (NLEV) Program.
NLEV required manufacturers to meet
separate fleet average standards for
vehicles sold in two different regions of
157 See Section 6.6.E, California Environmental
Protection Agency Air Resources Board, Staff
Report: Initial Statement of Reasons For Proposed
Rulemaking, Public Hearing to Consider Adoption
of Regulations to Control Greenhouse Gas
Emissions From Motor Vehicles, August 6, 2004.
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the country.159 As with NLEV, the
determination would be based on where
the completed vehicles are delivered as
a point of first sale, which in most cases
would be the dealer.160
As noted above, EPA proposes that
manufacturers choosing to generate
early credits would select one of the
four pathways for the entire early
credits program and would not be able
to switch among them. EPA proposes
that manufacturers would submit their
early credits report when they submit
their final CAFE report for MY 2011
(which is required to be submitted no
158 74
FR 14196, March 30, 2009.
FR 31211, June 6, 1997.
160 62 FR 31212, June 6, 1997.
159 62
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later than 90 days after the end of the
model year). Manufacturers would have
until then to decide which pathway to
select. This would give manufacturers
enough time to determine which
pathway works best for them. This
timing may be necessary in cases where
manufacturers earn credits in MY 2011
and need time to assess data and
prepare an early credits submittal for
final EPA approval.
The table below provides a summary
of the four fleet average-based CO2 early
credit pathways EPA is proposing. As
noted above, EPA is concerned with
potential ‘‘windfall’’ credits and is
seeking comments on how to best
ensure the objective of achieving
surplus, real-world reductions is
achieved in the design of the credit
programs. In addition, EPA requests
comments on the merits of each of these
pathways. Specifically, EPA requests
comment on whether or not any of the
pathways could be eliminated to
simplify the program without
diminishing its overall flexibility. For
example, Pathway 2 may not be
particularly useful to manufacturers if
the California/177 State and overall
national fleets are projected to be
similar during these model years. EPA
also requests comment on proposed
program implementation structure and
provisions.
TABLE III.C.5–3—SUMMARY OF PROPOSED EARLY FLEET AVERAGE CO2 CREDIT PATHWAYS
Common Elements .............................................................
Pathway 1: California-based Credits for National Fleet. ...
Pathway 2: California-based Credits for vehicles sold in
California plus CAA 177 States.
Pathway 3: Pathway 2 plus CAFE-based Credits outside
of California plus CAA 177 States.
Pathway 4: Only CAFE-based Credits outside of California plus CAA 177 States.
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b. Early A/C Credits
EPA proposes that manufacturers
could earn early A/C credits in MYs
2009–2011 using the same A/C system
design-based EPA provisions being
proposed for MYs commencing in 2012,
as described in Section III.C.1, above.
Manufacturers would be able to earn
early A/C CO2-equivalent credits by
demonstrating improved A/C system
performance, for both direct and
indirect emissions. To earn credits for
vehicles sold in California and CAA 177
States, the vehicles would need to be
included in one of the California-based
early credit pathways described above
in III.C.5.a. EPA is proposing this
constraint in order to avoid credit
double counting with the California
program in place in those States, which
also allows A/C system credits in this
time frame. Manufacturers would fold
the A/C credits into the fleet average
CO2 calculations under the Californiabased pathway. For example, the MY
2009 California-based program car
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—Manufacturers would select a pathway. Once selected, may not switch among
pathways.
—All credits subject to 5 year carry-forward restrictions.
—For Pathways 2–4, vehicles apportioned by State based on point of first sale.
—Manufacturers earn credits based on fleet average emissions compared with California equivalent baseline set by EPA.
—Based on nationwide CO2 sales-weighted fleet average.
—Based on use of California vehicle categories.
—FFV alternative compliance credits per California program may be included.
—Once in the program, manufacturers must make up any deficits that are incurred
prior to 2012 in order to carry credits forward to 2012 and later.
—Same as Pathway 1, but manufacturers only includes vehicles sold in California
and CAA 177 States in the fleet average calculation.
—Manufacturer earns credits as provided by Pathway 2: California-based credits for
vehicles sold in California plus CAA 177 States, plus:
—CAFE-based credits allowed for vehicles sold outside of California and CAA 177
States.
—For CAFE-based credits, manufacturers earn credits based on fleet average emissions compared with baseline set by EPA.
—CAFE-based credits based on NHTSA car and truck definitions.
—FFV credits not allowed to be included for CAFE-based credits.
—Manufacturer elects to only earn CAFE-based credits for vehicles sold outside of
California and CAA 177 States. Earns no California and 177 State credits.
—For CAFE-based credits, manufacturers earn credits based on fleet average emissions compared with baseline set by EPA.
—CAFE-based credits based on NHTSA car and truck definitions.
—FFV credits not allowed to be included for CAFE-based credits.
baseline would be 321 g/mile (see Table
III.C.5–1). If a manufacturer under
Pathway 1 had a MY 2009 car fleet
average CO2 level of 320 g/mile and
then earned an additional 9 g/mile
CO2-equivalent A/C credit, the
manufacturers would earn a total of 10
g/mile of credit. Vehicles sold outside of
California and 177 States would be
eligible for the early A/C credits
whether or not the manufacturers
participate in other aspects of the early
credits program.
c. Early Advanced Technology Vehicle
Credits
EPA is proposing to allow early
advanced technology vehicle credits for
sales of EVs, PHEVs, and fuel cell
vehicles. To avoid double-counting,
manufacturers would not be allowed to
generate advanced technology credits
for vehicles they choose to include in
Pathways 1 through 4 described in
III.C.5.a, above. EPA proposes to use a
similar methodology to that proposed
for MYs 2012 and later, as described in
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Section III.C.3, above. EPA proposes to
use a multiplier in the range of 1.2 to
2.0 for all eligible vehicles (i.e., EVs,
PHEVs, and fuel cells). Manufacturers,
however, would track the number of
these vehicles sold in the model years
2009—2011, and the emissions level of
the vehicles, rather than a CO2 credit.
When a manufacturer chooses to use the
vehicle credits to comply with 2012 or
later standards, the vehicle counts
including the multiplier would be
folded into the CO2 fleet average. For
example, if a manufacturer sells 1,000
EVs in MY 2011, and if the final
multiplier level were 2.0, the
manufacturer would apply the
multiplier of 2.0 and then be able to
include 2,000 vehicles at 0 g/mile in
their MY 2012 fleet to decrease the fleet
average for that model year. As with
other early credits, these early advanced
technology vehicle credits would be
tracked by model year (2009, 2010, or
2011) and would be subject to 5 year
carry-forward restrictions. Again,
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manufacturers would not be allowed to
include the EVs, PHEVs, or fuel cell
vehicles in the early credit pathways
discussed above in Section III.C.5.a,
otherwise the vehicles would be double
counted. As discussed in Section III.C.3,
EPA is requesting comment on a
multiplier in the range of 1.2 to 2.0,
including a potential phase-down in the
multiplier by model year 2016, if a
multiplier near the higher end of this
range is determined for the final rule.
This request for comment also extends
to the potential for early advance
technology vehicle credits. EPA is also
requesting comment on the appropriate
gram/mile metric for EVs and fuel
cellvehicles, as well as for the EV-only
contribution for a PHEV.
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d. Early Off-Cycle Credits
EPA’s proposed off-cycle innovative
technology credit provisions are
provided in Section III.C.4. EPA
requests comment on beginning these
credits in the 2009–2011 time frame,
provided manufacturers are able to
make the necessary demonstrations
outlined in Section III.C.4, above.
D. Feasibility of the Proposed CO2
Standards
This proposal is based on the need to
obtain significant GHG emissions
reductions from the transportation
sector, and the recognition that there are
cost-effective technologies to achieve
such reductions in the 2012–2016 time
frame. As in many prior mobile source
rulemakings, the decision on what
standard to set is largely based on the
effectiveness of the emissions control
technology, the cost and other impacts
of implementing the technology, and the
lead time needed for manufacturers to
employ the control technology. The
standards derived from assessing these
issues are also evaluated in terms of the
need for reductions of greenhouse gases,
the degree of reductions achieved by the
standards, and the impacts of the
standards in terms of costs, quantified
benefits, and other impacts of the
standards. The availability of
technology to achieve reductions and
the cost and other aspects of this
technology are therefore a central focus
of this rulemaking.
EPA is taking the same basic approach
in this rulemaking, although the
technological problems and solutions
involved in this rulemaking differ in
some ways from prior mobile source
rulemakings. Here, the focus of the
emissions control technology is on
reducing CO2 and other greenhouse
gases. Vehicles combust fuel to perform
two basic functions: (1) Transport the
vehicle, its passengers and its contents,
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and (2) operate various accessories
during the operation of the vehicle such
as the air conditioner. Technology can
reduce CO2 emissions by either making
more efficient use of the energy that is
produced through combustion of the
fuel or reducing the energy needed to
perform either of these functions.
This focus on efficiency calls for
looking at the vehicle as an entire
system. In addition to fuel delivery,
combustion, and aftertreatment
technology, any aspect of the vehicle
that affects the need to produce energy
must also be considered. For example,
the efficiency of the transmission
system, which takes the energy
produced by the engine and transmits it
to the wheels, and the resistance of the
tires to rolling both have major impacts
on the amount of fuel that is combusted
while operating the vehicle. The braking
system, the aerodynamics of the vehicle,
and the efficiency of accessories, such
as the air conditioner, all affect how
much fuel is combusted.
In evaluating vehicle efficiency, we
have excluded fundamental changes in
vehicles’ size and utility. For example,
we did not evaluate converting
minivans and SUVs to station wagons,
converting vehicles with four wheel
drive to two wheel drive, or reducing
headroom in order to lower the roofline
and reduce aerodynamic drag. We have
limited our assessment of technical
feasibility and resultant vehicle cost to
technologies which maintain vehicle
utility as much as possible.
Manufacturers may decide to alter the
utility of the vehicles which they sell in
response to this rule. Assessing the
societal cost of such changes is very
difficult as it involves assessing
consumer preference for a wide range of
vehicle features.
This need to focus on the efficient use
of energy by the vehicle as a system
leads to a broad focus on a wide variety
of technologies that affect almost all the
systems in the design of a vehicle. As
discussed below, there are many
technologies that are currently available
which can reduce vehicle energy
consumption. These technologies are
already being commercially utilized to a
limited degree in the current light-duty
fleet. These technologies include hybrid
technologies that use higher efficiency
electric motors as the power source in
combination with or instead of internal
combustion engines. While already
commercialized, hybrid technology
continues to be developed and offers the
potential for even greater efficiency
improvements. Finally, there are other
advanced technologies under
development, such as lean burn gasoline
engines, which offer the potential of
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49539
improved energy generation through
improvements in the basic combustion
process. In addition, the available
technologies are not limited to
powertrain improvements but also
include mass reduction, electrical
system efficiencies, and aerodynamic
improvements.
The large number of possible
technologies to consider and the breadth
of vehicle systems that are affected
mean that consideration of the
manufacturer’s design and production
process plays a major role in developing
the proposed standards. Vehicle
manufacturers typically develop many
different models by basing them on a
limited number of vehicle platforms.
The platform typically consists of a
common vehicle architecture and
structural components. This allows for
efficient use of design and
manufacturing resources. Given the very
large investment put into designing and
producing each vehicle model,
manufacturers typically plan on a major
redesign for the models approximately
every 5 years. At the redesign stage, the
manufacturer will upgrade or add all of
the technology and make most other
changes supporting the manufacturer’s
plans for the next several years,
including plans related to emissions,
fuel economy, and safety regulations.
This redesign often involves a
package of changes designed to work
together to meet the various
requirements and plans for the model
for several model years after the
redesign. This often involves significant
engineering, development,
manufacturing, and marketing resources
to create a new product with multiple
new features. In order to leverage this
significant upfront investment,
manufacturers plan vehicle redesigns
with several model years of production
in mind. Vehicle models are not
completely static between redesigns as
limited changes are often incorporated
for each model year. This interim
process is called a refresh of the vehicle
and generally does not allow for major
technology changes although more
minor ones can be done (e.g., small
aerodynamic improvements, valve
timing improvements, etc). More major
technology upgrades that affect multiple
systems of the vehicle thus occur at the
vehicle redesign stage and not in the
time period between redesigns.
As discussed below, there are a wide
variety of CO2 reducing technologies
involving several different systems in
the vehicle that are available for
consideration. Many can involve major
changes to the vehicle, such as changes
to the engine block and cylinder heads,
redesign of the transmission and its
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packaging in the vehicle, changes in
vehicle shape to improve aerodynamic
efficiency and the application of
aluminum in body panels to reduce
mass. Logically, the incorporation of
emissions control technologies would
be during the periodic redesign process.
This approach would allow
manufacturers to develop appropriate
packages of technology upgrades that
combine technologies in ways that work
together and fit with the overall goals of
the redesign. It also allows the
manufacturer to fit the process of
upgrading emissions control technology
into its multi-year planning process, and
it avoids the large increase in resources
and costs that would occur if technology
had to be added outside of the redesign
process.
This proposed rule affects five years
of vehicle production, model years
2012–2016. Given the now-typical five
year redesign cycle, nearly all of a
manufacturer’s vehicles will be
redesigned over this period. However,
this assumes that a manufacturer has
sufficient lead time to redesign the first
model year affected by this proposed
rule with the requirements of this
proposed rule in mind. In fact, the lead
time available for model year 2012 is
relatively short. The time between a
likely final rule and the start of 2013
model year production is likely to be
just over two years. At the same time,
manufacturer product plans indicate
that they are planning on introducing
many of the technologies EPA projects
could be used to show compliance with
the proposed CO2 standards in both
2012 and 2013. In order to account for
the relatively short lead time available
prior to the 2012 and 2013 model years,
albeit mitigated by their existing plans,
EPA has factored this reality into how
the availability is modeled for much of
the technology being considered for
model years 2012–2016 as a whole. If
the technology to control greenhouse
gas emissions is efficiently folded into
this redesign process, then EPA projects
that 85 percent of each manufacturer’s
sales will be able to be redesigned with
many of the CO2 emission reducing
technologies by the 2016 model year,
and as discussed below, to reduce
emissions of HFCs from the air
conditioner.
In determining the level of this first
ever GHG emissions standard under the
CAA for light-duty vehicles, EPA
proposes to use an approach that
accounts for and builds on this redesign
process. This provides the opportunity
for several control technologies to be
incorporated into the vehicle during
redesign, achieving significant
emissions reductions from the model at
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one time. This is in contrast to what
would be a much more costly approach
of trying to achieve small increments of
reductions over multiple years by
adding technology to the vehicle piece
by piece outside of the redesign process.
As described below, the vast majority
of technology required by this proposal
is commercially available and already
being employed to a limited extent
across the fleet. The vast majority of the
emission reductions which would result
from this proposed rule would result
from the increased use of these
technologies. EPA also believes that this
proposed rule would encourage the
development and limited use of more
advanced technologies, such as PHEVs
and EVs.
In developing the proposed standard,
EPA built on the technical work
performed by the State of California
during its development of its statewide
GHG program. EPA began by evaluating
a nationwide CAA standard for MY
2016 that would require the levels of
technology upgrade, across the country,
which California standards would
require for the subset of vehicles sold in
California under Pavley 1. In essence,
EPA evaluated the stringency of the
California Pavley 1 program but for a
national standard. As mentioned above,
and as described in detail in Section II.C
of this preamble and Chapter 3 of the
Joint TSD, one of the important
technical documents included in EPA
and NHTSA’s assessment of vehicle
technology effectiveness and costs was
the 2004 NESCCAF report which was
the technical foundation for California’s
Pavley 1 standard. However, in order to
evaluate the impact of standards with
similar stringency on a national basis to
the California program EPA chose not to
evaluate the specific California
standards for several reasons. First,
California’s standards are universal
standards (one for cars and one for
trucks), while EPA is proposing
attribute-based standards using vehicle
footprint. Second, California’s
definitions of what vehicles are
classified as cars and which are
classified as trucks are different from
those used by NHTSA for CAFE
purposes and different from EPA’s
proposed classifications in this notice
(which harmonizes with the CAFE
definitions). In addition, there has been
progress in the refinement of the
estimation of the effectiveness and cost
estimation for technologies which can
be applied to cars and trucks since the
California analysis in 2004 which could
lead to different relative stringencies
between cars and trucks than what
California determined for its Pavley 1
program. There have also been
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improvements in the fuel economy and
CO2 performance of the actual new
vehicle fleet since California’s 2004
analysis which EPA wanted to reflect in
our current assessment. For these
reasons, EPA developed an assessment
of an equivalent national new vehicle
fleet-wide CO2 performance standards
for model year 2016 which would result
in the new vehicle fleet in the State of
California having CO2 performance
equal to the performance from the
California Pavley 1 standards. This
assessment is documented in Chapter
3.1 of the DRIA. The results of this
assessment predicts that a national
light-duty vehicle fleet which adopts
technology that achieves performance of
250 g/mile CO2 for model year 2016
would result in vehicles sold in
California that would achieve the CO2
performance equivalent to the Pavley 1
standards.
EPA then analyzed a level of 250
g/mi CO2 in 2016 using the OMEGA
model, and the car and truck footprint
curves relative stringency discussed in
Section II to determine what technology
would be needed to achieve a fleet wide
average of 250 g/mi CO2. As discussed
later in this section we believe this level
of technology application to the lightduty vehicle fleet can be achieved in
this time frame, that such standards will
produce significant reductions in GHG
emissions, and that the costs for both
the industry and the costs to the
consumer are reasonable. EPA also
developed standards for the model years
2012 through 2015 that lead up to the
2016 level.
EPA’s independent technical
assessment of the technical feasibility of
the proposed MY2012–2016 standards
is described below. EPA has also
evaluated a set of alternative standards
for these model years, one that is more
stringent than the proposed standards
and one that is less stringent. The
technical feasibility of these alternative
standards is discussed at the end of this
section.
Evaluating the feasibility of these
standards primarily includes identifying
available technologies and assessing
their effectiveness, cost, and impact on
relevant aspects of vehicle performance
and utility. The wide number of
technologies which are available and
likely to be used in combination
requires a more sophisticated
assessment of their combined cost and
effectiveness. An important factor is
also the degree that these technologies
are already being used in the current
vehicle fleet and thus, unavailable for
use to improve energy efficiency beyond
current levels. Finally, the challenge for
manufacturers to design the technology
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into their products, and the appropriate
lead time needed to employ the
technology over the product line of the
industry must be considered.
Applying these technologies
efficiently to the wide range of vehicles
produced by various manufacturers is a
challenging task. In order to assist in
this task, EPA has developed a
computerized model called the
Optimization Model for reducing
Emissions of Greenhouse gases from
Automobiles (OMEGA) model. Broadly,
the model starts with a description of
the future vehicle fleet, including
manufacturer, sales, base CO2
emissions, footprint and the extent to
which emission control technologies are
already employed. For the purpose of
this analysis, over 200 vehicle platforms
were used to capture the important
differences in vehicle and engine design
and utility of future vehicle sales of
roughly 16 million units in the 2016
timeframe. The model is then provided
with a list of technologies which are
applicable to various types of vehicles,
along with their cost and effectiveness
and the percentage of vehicle sales
which can receive each technology
during the redesign cycle of interest.
The model combines this information
with economic parameters, such as fuel
prices and a discount rate, to project
how various manufacturers would apply
the available technology in order to
meet various levels of emission control.
The result is a description of which
technologies are added to each vehicle
platform, along with the resulting cost.
While OMEGA can apply technologies
which reduce CO2 emissions and HFC
refrigerant emissions associated with air
conditioner use, this task is currently
handled outside of the OMEGA model.
The model can be set to account for
various types of compliance flexibilities,
such as FFV credits.
EPA invites comment on all aspects of
this feasibility assessment. Both the
OMEGA model and its inputs have been
placed in the docket to this proposed
rule and available for review.
The remainder of this section
describes the technical feasibility
analysis in greater detail. Section III.D.1
describes the development of our
projection of the MY 2012–2016 fleet in
the absence of this proposed rule.
Section III.D.2 describes our estimates of
the effectiveness and cost of the control
technologies available for application in
the 2012–2016 timeframe. Section
III.D.3 combines these technologies into
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packages likely to be applied at the
same time by a manufacturer. In this
section, the overall effectiveness of the
`
technology packages vis-a-vis their
effectiveness when combined
individually is described. Section III.D.4
describes the process which
manufacturers typically use to apply
new technology to their vehicles.
Section III.D.5 describes EPA’s OMEGA
model and its approach to estimating
how manufacturers would add
technology to their vehicles in order to
comply with CO2 emission standards.
Section III.D.6 presents the results of the
OMEGA modeling, namely the level of
technology added to manufacturers’
vehicles and its cost. Section III.D.7
discusses the feasibility of the
alternative 4-percent-per-year and 6percent-per-year standards. Further
detail on all of these issues can be found
in EPA and NHTSA’s draft Joint
Technical Support Document as well as
EPA’s draft Regulatory Impact Analysis.
1. How Did EPA Develop a Reference
Vehicle Fleet for Evaluating Further CO2
Reductions?
In order to calculate the impacts of
this proposed regulation, it is necessary
to project the GHG emissions
characteristics of the future vehicle fleet
absent this proposed regulation. This is
called the ‘‘reference’’ fleet. EPA
developed this reference fleet by
determining the characteristics of a
specific model year (in this case, 2008)
of vehicles, called the baseline fleet, and
then projecting what changes if any
would be made to these vehicles to
comply with the MY2011 CAFE
standards. Thus, the MY 2008 fleet is
our ‘‘baseline fleet,’’ and the projection
of the baseline to MY 2011–2016 is
called the ‘‘reference fleet.’’
EPA used 2008 model year vehicles as
the basis for its baseline fleet. 2008
model year is the most recent model
year for which data is publicly
available. Sources of data for the
baseline include the EPA vehicle
certification data, Ward’s Automotive
Group data, Motortrend.com,
Edmunds.com, manufacturer product
plans, and other sources to a lesser
extent (such as articles about specific
vehicles) revealed from Internet search
engine research. EPA then projects this
fleet out to the 2016 MY, taking into
account factors such as changes in
overall sales volume. Section II.B
describes the development of the EPA
reference fleet, and further details can
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49541
be found in Section II.B of this preamble
and Chapter 1 of the Draft Joint TSD.
The light-duty vehicle market is
currently in a state of flux due to the
volatility in fuel prices over the past
several years and the current economic
downturn. These factors have changed
the relative sales of the various types of
light-duty vehicles marketed, as well as
total sales volumes. EPA and NHTSA
desire to account for these changes to
the degree possible in our forecast of the
make-up of the future vehicle fleet. EPA
wants to include improvements in fuel
economy associated with the existing
CAFE program. It is possible that
manufacturers could increase fuel
economy beyond the level of the 2011
MY CAFE standards for marketing
purposes. However, it is difficult to
separate fuel economy improvements in
those years for marketing purposes from
those designed to facilitate compliance
with anticipated CAFE or CO2 emission
standards. Thus, EPA limits fuel
economy improvements in the reference
fleet to those projected to result from the
existing CAFE standards. The addition
of technology to the baseline fleet so
that it complies with the MY 2011 CAFE
standards is described later in Section
III.D.4, as this uses the same
methodology used to project compliance
with the proposed CO2 emission
standards. In summary, the reference
fleet represents vehicle characteristics
and sales in the 2012 and later model
years absent this proposed rule.
Technology is then added to these
vehicles in order to reduce CO2
emissions to achieve compliance with
the proposed CO2 standards. EPA did
not factor in any changes to vehicle
characteristics or sales in projecting
manufacturers’ compliance with this
proposal.
After the reference fleet is created, the
next step aggregates vehicle sales by a
combination of manufacturer, vehicle
platform, and engine design. As
discussed in Section III.D.4 below,
manufacturers implement major design
changes at vehicle redesign and tend to
implement these changes across a
vehicle platform. Because the cost of
modifying the engine depends on the
valve train design (such as SOHC,
DOHC, etc.), the number of cylinders
and in some cases head design, the
vehicle sales are broken down beyond
the platform level to reflect relevant
engine differences. The vehicle
groupings are shown in Table III.D.1–1.
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TABLE III.D.1–1—VEHICLE GROUPINGS a
Vehicle
type
Vehicle description
Large SUV (Car) V8+ OHV ..................................................
Large SUV (Car) V6 4v ........................................................
Large SUV (Car) V6 OHV ....................................................
Large SUV (Car) V6 2v SOHC .............................................
Large SUV (Car) I4 and I5 ...................................................
Midsize SUV (Car) V6 2v SOHC ..........................................
Midsize SUV (Car) V6 S/DOHC 4v ......................................
Midsize SUV (Car) I4 ............................................................
Small SUV (Car) V6 OHV .....................................................
Small SUV (Car) V6 S/DOHC ..............................................
Small SUV (Car) I4 ...............................................................
Large Auto V8+ OHV ............................................................
Large Auto V8+ SOHC .........................................................
Large Auto V8+ DOHC, 4v SOHC .......................................
Large Auto V6 OHV ..............................................................
Large Auto V6 SOHC 2/3v ...................................................
Midsize Auto V8+ OHV .........................................................
Midsize Auto V8+ SOHC ......................................................
Midsize Auto V7+ DOHC, 4v SOHC ....................................
Midsize Auto V6 OHV ...........................................................
Midsize Auto V6 2v SOHC ...................................................
Midsize Auto V6 S/DOHC 4v ................................................
Midsize Auto I4 .....................................................................
Compact Auto V7+ S/DOHC ................................................
Compact Auto V6 OHV .........................................................
Compact Auto V6 S/DOHC 4v .............................................
Compact Auto I5 ...................................................................
Compact Auto I4 ...................................................................
Subcompact Auto V8+ OHV .................................................
Subcompact Auto V8+ S/DOHC ...........................................
Subcompact Auto V6 2v SOHC ...........................................
Subcompact Auto I5/V6 S/DOHC 4v ....................................
13
16
12
9
7
8
5
7
12
4
3
13
10
6
12
5
13
10
6
12
8
5
3
6
12
4
7
2
13
6
8
4
Vehicle description
Vehicle
type
Subcompact Auto I4 .............................................................
Large Pickup V8+ DOHC .....................................................
Large Pickup V8+ SOHC 3v ................................................
Large Pickup V8+ OHV ........................................................
Large Pickup V8+ SOHC .....................................................
Large Pickup V6 DOHC .......................................................
Large Pickup V6 OHV ..........................................................
Large Pickup V6 SOHC 2v ..................................................
Large Pickup I4 S/DOHC .....................................................
Small Pickup V6 OHV ..........................................................
Small Pickup V6 2v SOHC ..................................................
Small Pickup I4 ....................................................................
Large SUV V8+ DOHC ........................................................
Large SUV V8+ SOHC 3v ...................................................
Large SUV V8+ OHV ...........................................................
Large SUV V8+ SOHC ........................................................
Large SUV V6 S/DOHC 4v ..................................................
Large SUV V6 OHV .............................................................
Large SUV V6 SOHC 2v .....................................................
Large SUV I4/ ......................................................................
Midsize SUV V6 OHV ..........................................................
Midsize SUV V6 2v SOHC ..................................................
Midsize SUV V6 S/DOHC 4v ...............................................
Midsize SUV I4 S/DOHC .....................................................
Small SUV V6 OHV .............................................................
Minivan V6 S/DOHC ............................................................
Minivan V6 OHV ..................................................................
Minivan I4 .............................................................................
Cargo Van V8+ OHV ...........................................................
Cargo Van V8+ SOHC .........................................................
Cargo Van V6 OHV .............................................................
...............................................................................................
1
19
14
13
10
18
12
11
7
12
8
7
17
14
13
10
16
12
9
7
12
8
5
7
12
16
12
7
13
10
12
................
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a I4 = 4 cylinder engine, I5 = 5 cylinder engine, V6, V7, and V8 = 6, 7, and 8 cylinder engines, respectively, DOHC = Double overhead cam,
SOHC = Single overhead cam, OHV = Overhead valve, v = number of valves per cylinder, ‘‘/’’ = and, ‘‘+’’ = or larger.
As mentioned above, the second
factor which needs to be considered in
developing a reference fleet against
which to evaluate the impacts of this
proposed rule is the impact of the 2011
MY CAFE standards, which were
published earlier this year. Since the
vehicles which comprise the above
reference fleet are those sold in the 2008
MY, when coupled with our sales
projections, they do not necessarily
meet the 2011 MY CAFE standards.
The levels of the 2011 MY CAFE
standards are straightforward to apply to
future sales fleets, as is the potential
fine-paying flexibility afforded by the
CAFE program (i.e., $55 per mpg of
shortfall). However, projecting some of
the compliance flexibilities afforded by
EISA and the CAFE program are less
clear. Two of these compliance
flexibilities are relevant to EPA’s
analysis: (1) The credit for FFVs, and (2)
the limit on the transferring of credits
between car and truck fleets. The FFV
credit is limited to 1.2 mpg in 2011 and
EISA gradually reduces this credit, to
1.0 mpg in 2015 and eventually to zero
in 2020. In contrast, the limit on car
truck transfer is limited to 1.0 mpg in
2011, and EISA increases this to 1.5
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mpg beginning in 2015 and then to 2.0
mpg beginning in 2020. The question
here is whether to hold the 2011 MY
CAFE provisions constant in the future
or incorporate the changes in the FFV
credit and car-truck credit trading limits
contained in EISA.
EPA decided to hold the 2011 MY
limits on FFV credit and car-truck credit
trading constant in projecting the fuel
economy and CO2 emission levels of
vehicles in our reference case. This
approach treats the changes in the FFV
credit and car-truck credit trading
provisions consistently with the other
EISA-mandated changes in the CAFE
standards themselves. All EISA
provisions relevant to 2011 MY vehicles
are reflected in our reference case fleet,
while all post-2011 MY provisions are
not. Practically, relative to the
alternative, this increases both the cost
and benefit of the proposed standards.
In our analysis of this proposed rule,
any quantified benefits from the
presence of FFVs in the fleet are not
considered. Thus, the only impact of the
FFV credit is to reduce onroad fuel
economy. By assuming that the FFV
credit stays at 1.2 mpg in the future
absent this rule, the assumed level of
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onroad fuel economy that would occur
absent this proposal is reduced. As this
proposal eliminates the FFV credit
starting in 2016, the net result is to
increase the projected level of fuel
savings from our proposed standards.
Similarly, the higher level of FFV credit
reduces projected compliance cost for
manufacturers to meet the 2011 MY
standards in our reference case. This
increases the projected cost of meeting
the proposed 2012 and later standards.
As just implied, EPA needs to project
the technology (and resultant costs)
required for the 2008 MY vehicles to
comply with the 2011 MY CAFE
standards in those cases where they do
not automatically do so. The technology
and costs are projected using the same
methodology that projects compliance
with the proposed 2012 and later CO2
standards. The description of this
process is described in the following
four sections.
A more detailed description of the
methodology used to develop these
sales projections can be found in the
Draft Joint TSD. Detailed sales
projections by model year and
manufacturer can also be found in the
TSD. EPA requests comments on both
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the methodology used to develop the
reference fleet, as well as the
characteristics of the reference fleet.
2. What Are the Effectiveness and Costs
of CO2-Reducing Technologies?
EPA and NHTSA worked together to
jointly develop information on the
effectiveness and cost of the CO2reducing technologies, and fuel
economy-improving technologies, other
than A/C related control technologies.
This joint work is reflected in Chapter
3 of the Draft Joint TSD and in Section
II of this preamble. A summary of the
effectiveness and cost of A/C related
technology is contained here. For more
detailed information on the
effectiveness and cost of A/C related
technology, please refer to Section III.C
of this preamble and Chapter 2 of EPA’s
DRIA.
A/C improvements are an integral part
of EPA’s technology analysis and have
been included in this section along with
the other technology options. While
discussed in Section III.C as a credit
opportunity, air conditioning-related
improvements are included in Table
III.D.2–1.because A/C improvements are
a very cost-effective technology at
reducing CO2 (or CO2-equivalent)
emissions. EPA expects most
manufacturers will choose to use AC
improvement credit opportunities as a
strategy for meeting compliance with
the CO2 standards. Note that the costs
shown in Table III.D.2–1 do not include
maintenance savings that would be
expected from the new AC systems.
Further, EPA does not include ACrelated maintenance savings in our cost
and benefit analysis presented in
Section III.H. EPA discusses the likely
maintenance savings in Chapter 2 of the
DRIA and requests comment on that
discussion because we may include
maintenance savings in the final rule
and would like to have the best
information available in order to do so.
The EPA approximates that the level of
the credits earned will increase from
2012 to 2016 as more vehicles in the
fleet are redesigned. The penetrations
and average levels of credit are
summarized in Table III.D.2–2, though
the derivation of these numbers (and the
breakdown of car vs. truck credits) is
described in the DRIA. As demonstrated
in the IMAC study (and described in
Section III.C as well as the DRIA), these
levels are feasible and achievable with
technologies that are available and costeffective today.
These improvements are categorized
as either leakage reduction, including
use of alternative refrigerants, or system
efficiency improvements. Unlike the
majority of the technologies described
in this section, A/C improvements will
not be demonstrated in the test cycles
used to quantify CO2 reductions in this
proposal. As described earlier, for this
analysis A/C-related CO2 reductions are
handled outside of OMEGA model and
therefore their CO2 reduction potential
is expressed in grams per mile rather
than a percentage used by the OMEGA
model. See Section III.C for the method
by which potential reductions are
calculated or measured. Further
discussion of the technological basis for
these improvements is included in
Chapter 2 of the DRIA.
TABLE III.D.2–1—TOTAL CO2 REDUCTION POTENTIAL AND 2016 COST FOR A/C RELATED TECHNOLOGIES
FOR ALL VEHICLE CLASSES
[Costs in 2007 dollars]
CO2 reduction
potential
A/C refrigerant leakage reduction ...................................................................................................................
A/C efficiency improvements ..........................................................................................................................
TABLE III.D.2–2 A/C RELATED TECH- ‘‘packages’’ to capture synergistic
NOLOGY PENETRATION AND CREDIT aspects and reflect progressively larger
CO2 reductions with additions or
LEVELS EXPECTED TO BE EARNED
Technology
penetration
(Percent)
2012
2013
2014
2015
2016
..........
..........
..........
..........
..........
Average
credit
over
entire
fleet
25
40
60
80
85
3.1
5.0
7.5
10.0
10.6
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3. How Can Technologies Be Combined
into ‘‘Packages’’ and What Is the Cost
and Effectiveness of Packages?
Individual technologies can be used
by manufacturers to achieve
incremental CO2 reductions. However,
as mentioned in Section III.D.1, EPA
believes that manufacturers are more
likely to bundle technologies into
161 This represents 50% improvement in leakage
and thus 50% of the A/C leakage impact potential
compared to a maximum of 15 g/mi credit that can
be achieved through the incorporation of a low very
GWP refrigerant.
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changes to any given package. In
addition, manufacturers would typically
apply new technologies in packages
during model redesigns—which occur
once roughly every five years—rather
than adding new technologies one at a
time on an annual or biennial basis.
This way, manufacturers can more
efficiently make use of their redesign
resources and more effectively plan for
changes necessary to meet future
standards.
Therefore, the approach taken here is
to group technologies into packages of
increasing cost and effectiveness. EPA
determined that 19 different vehicle
types provided adequate representation
to accurately model the entire fleet. This
was the result of analyzing the existing
light duty fleet with respect to vehicle
size and powertrain configurations. All
vehicles, including cars and trucks,
were first distributed based on their
relative size, starting from compact cars
and working upward to large trucks.
Next, each vehicle was evaluated for
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7.5 g/mi 161 .......
5.7 g/mi .............
Incremental
compliance costs
$17
53
powertrain, specifically the engine size,
I4, V6, and V8, and finally by the
number of valves per cylinder. Note that
each of these 19 vehicle types was
mapped into one of the five classes of
vehicles mentioned in Section III.D.2.
While the five classes provide adequate
representation for the cost basis
associated with most technology
application, they do not adequately
account for all existing vehicle
attributes such as base vehicle
powertrain configuration and mass
reduction. As an example, costs and
effectiveness estimates for engine
friction reduction for the small car class
were used to represent cost and
effectiveness for three vehicle types:
Subcompact cars, compact cars, and
small multi-purpose vehicles (MPV)
equipped with a 4-cylinder engine,
however the mass reduction associated
for each of these vehicle types was
based on the vehicle type salesweighted average. In another example, a
vehicle type for V8 single overhead cam
3-valve engines was created to properly
account for the incremental cost in
moving to a dual overhead cam 4-valve
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configuration. Note also that these 19
vehicle types span the range of vehicle
footprints—smaller footprints for
smaller vehicles and larger footprints for
larger vehicles—which serve as the
basis for the standards proposed in this
rule. A complete list of vehicles and
their associated vehicle types is shown
above in Table III.D.1–1.
Within each of the 19 vehicle types
multiple technology packages were
created in increasing technology content
and, hence, increasing effectiveness.
Important to note is that the effort in
creating the packages attempted to
maintain a constant utility for each
package as compared to the baseline
package. As such, each package is meant
to provide equivalent driver-perceived
performance to the baseline package.
The initial packages represent what a
manufacturer will most likely
implement on all vehicles, including
low rolling resistance tires, low friction
lubricants, engine friction reduction,
aggressive shift logic, early torque
converter lock-up, improved electrical
accessories, and low drag brakes.162
Subsequent packages include advanced
gasoline engine and transmission
technologies such as turbo/downsizing,
GDI, and dual-clutch transmission. The
most technologically advanced packages
within a segment included HEV, PHEV
and EV designs. The end result being a
list of several packages for each of 19
different vehicle types from which a
manufacturer could choose in order to
modify its fleet such that compliance
could be achieved.
Before using these technology
packages as inputs to the OMEGA
model, the cost and effectiveness for the
package was calculated. The first step—
mentioned briefly above—was to apply
the scaling class for each technology
package and vehicle type combination.
The scaling class establishes the cost
and effectiveness for each technology
with respect to the vehicle size or type.
The Large Car class was provided as an
example in Section III.D.2. Additional
classes include Small Car, Minivan,
Small Truck, and Large Truck and each
of the 19 vehicle types was mapped into
one of those five classes. In the next
step, the cost for a particular technology
package, was determined as the sum of
the costs of the applied technologies.
The final step, determination of
effectiveness, requires greater care due
to the synergistic effects mentioned in
Section III.D.2. This step is described
immediately below.
Usually, the benefits of the engine and
transmission technologies can be
combined multiplicatively. For
example, if an engine technology
reduces CO2 emissions by five percent
and a transmission technology reduces
CO2 emissions by four percent, the
benefit of applying both technologies is
8.8 percent (100%¥(100%¥4%) *
(100%¥5%)). In some cases, however,
the benefit of the transmission-related
technologies overlaps with many of the
engine technologies. This occurs
because the primary goal of most of the
transmission technologies is to shift
operation of the engine to more efficient
locations on the engine map. Some of
the engine technologies have the same
goal, such as cylinder deactivation. In
order to account for this overlap and
avoid over-estimating emissions
reduction effectiveness, EPA has
developed a set of adjustment factors
associated with specific pairs of engine
and transmission technologies.
The various transmission technologies
are generally mutually exclusive. As
such, the effectiveness of each
transmission technology generally
supersedes each other. For example, the
9.5–14.5 percent reduction in CO2
emissions associated with the
automated manual transmission
includes the 4.5–6.5 percent benefit of
a 6-speed automatic transmission.
Exceptions are aggressive shift logic and
early torque converter lock-up. The
former can be applied to any vehicle
and the latter can be applied to any
vehicle with an automatic transmission.
EPA has chosen to use an engineering
approach known as the lumpedparameter technique to determine these
adjustment factors. The results from this
approach were then applied directly to
the vehicle packages. The lumpedparameter technique is well
documented in the literature, and the
specific approach developed by EPA is
detailed in Chapter 3 of the Draft Joint
TSD.
Table III.D.3–1 presents several
examples of the reduction in the
effectiveness of technology pairs. A
complete list and detailed discussion of
these synergies is presented in Chapter
3 of the Draft Joint TSD.
TABLE III.D.3–1—REDUCTION IN EFFECTIVENESS FOR SELECTED TECHNOLOGY PAIRS
Engine technology
Transmission technology
Intake cam phasing ..................................................................
Coupled cam phasing ..............................................................
Coupled cam phasing ..............................................................
Cylinder deactivation ................................................................
Cylinder deactivation ................................................................
Reduction in
combined
effectiveness
(percent)
5 speed automatic ...................................................................
5 speed automatic ...................................................................
Aggressive shift logic ..............................................................
5 speed automatic ...................................................................
Aggressive shift logic ..............................................................
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Table III.D.3–2 presents several
examples of the CO2-reducing
technology vehicle packages used in the
OMEGA model for the large car class.
Similar packages were generated for
each of the 19 vehicle types and the
costs and effectiveness estimates for
each of those packages are discussed in
detail in Chapter 3 of the Draft Joint
TSD.
162 When making reference to low friction
lubricants, the technology being referred to is the
engine changes and possible durability testing that
would be done to accommodate the low friction
lubricants, not the lubricants themselves.
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0.5
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TABLE III.D.3–2—CO2 REDUCING TECHNOLOGY VEHICLE PACKAGES FOR A LARGE CAR EFFECTIVENESS AND COSTS IN
2016
[Costs in 2007 dollars]
Engine
technology
Transmission
technology
Additional
technology
3.3L V6 ..............................................
4 speed automatic ............................
None .................................................
3.0L
3.0L
3.0L
2.2L
6
6
6
6
3% Mass Reduction .........................
5% Mass Reduction .........................
10% Mass Reduction Start-Stop ......
10% Mass Reduction Start-Stop ......
V6 + GDI + CCP .......................
V6 + GDI + CCP + Deac ..........
V6 + GDI + CCP + Deac ..........
I4 + GDI + Turbo + DCP ..........
speed
speed
speed
speed
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4. Manufacturers’ Application of
Technology
Vehicle manufacturers often
introduce major product changes
together, as a package. In this manner
the manufacturers can optimize their
available resources, including
engineering, development,
manufacturing and marketing activities
to create a product with multiple new
features. In addition, manufacturers
recognize that a vehicle will need to
remain competitive over its intended
life, meet future regulatory
requirements, and contribute to a
manufacturer’s CAFE requirements.
Furthermore, automotive manufacturers
are largely focused on creating vehicle
platforms to limit the development of
entirely new vehicles and to realize
economies of scale with regard to
variable cost. In very limited cases,
manufacturers may implement an
individual technology outside of a
vehicle’s redesign cycle. In following
with these industry practices, EPA has
created a set of vehicle technology
packages that represent the entire light
duty fleet.
EPA has historically allowed
manufacturers of new vehicles or
nonroad equipment to phase in
available emission control technology
over a number of years. Examples of this
are EPA’s Tier 2 program for cars and
light trucks and its 2007 and later PM
and NOX emission standards for heavyduty vehicles. In both of these rules, the
major modifications expected from the
rules were the addition of exhaust
aftertreatment control technologies.
Some changes to the engine were
expected as well, but these were not
expected to affect engine size, packaging
or performance. The CO2 reduction
technologies described above
potentially involve much more
significant changes to car and light truck
designs. Many of the engine
technologies involve changes to the
engine block and heads. The
transmission technologies could change
the size and shape of the transmission
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automatic ............................
automatic ............................
DCT ....................................
DCT ....................................
and thus, packaging. Improvements to
aerodynamic drag could involve body
design and therefore, the dies used to
produce body panels. Changes of this
sort potentially involve new capital
investment and the obsolescence of
existing investment.
At the same time, vehicle designs are
not static, but change in major ways
periodically. The manufacturers’
product plans indicate that vehicles are
usually redesigned every 5 years on
average. Vehicles also tend to receive a
more modest ‘‘refresh’’ between major
redesigns, as discussed above. Because
manufacturers are already changing
their tooling, equipment and designs at
these times, further changes to vehicle
design at these times involve a
minimum of stranded capital
equipment. Thus, the timing of any
major technological changes is projected
to coincide with changes that
manufacturers would already tend to be
making to their vehicles. This approach
effectively avoids the need to quantify
any costs associated with discarding
equipment, tooling, emission and safety
certification, etc. when CO2-reducing
equipment is incorporated into a
vehicle.
This proposed rule affects five years
of vehicle production, model years
2012–2016. Given the now-typical fiveyear redesign cycle, nearly all of a
manufacturer’s vehicles will be
redesigned over this period. However,
this assumes that a manufacturer has
sufficient lead time to redesign the first
model year affected by this proposed
rule with the requirements of this
proposed rule in mind. In fact, the lead
time available for model year 2012 is
relatively short. The time between a
likely final rule and the start of 2013
model year production is likely to be
just over two years. At the same time,
the manufacturer product plans indicate
that they are planning on introducing
many of the technologies projected to be
required by this proposed rule in both
2012 and 2013. In order to account for
the relatively short lead time available
prior to the 2012 and 2013 model years,
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CO2
reduction
Package
cost
Baseline
17.9%
20.6
34.2
34.3
$1,022
1,280
2,108
2,245
albeit mitigated by their existing plans,
EPA projects that only 85 percent of
each manufacturer’s sales will be able to
be redesigned with major CO2 emissionreducing technologies by the 2016
model year. Less intrusive technologies
can be introduced into essentially all a
manufacturer’s sales. This resulted in
three levels of technology penetration
caps, by manufacturer. Common
technologies (e.g., low friction lubes,
aerodynamic improvements) had a
penetration cap of 100%. More
advanced powertrain technologies (e.g.,
stoichiometric GDI, turbocharging) had
a penetration cap of 85%. The most
advanced technologies considered in
this analysis (e.g., diesel engines, as
well as IMA, powersplit and 2-mode
hybrids) had a 15% penetration cap.
5. How Is EPA Projecting That a
Manufacturer Would Decide Between
Options To Improve CO2 Performance
To Meet a Fleet Average Standard?
There are many ways for a
manufacturer to reduce CO2-emissions
from its vehicles. A manufacturer can
choose from a myriad of CO2 reducing
technologies and can apply one or more
of these technologies to some or all of
its vehicles. Thus, for a variety of levels
of CO2 emission control, there are an
almost infinite number of technology
combinations which produce the
desired CO2 reduction. EPA has created
a new vehicle model, the Optimization
Model for Emissions of Greenhouse
gases from Automobiles (OMEGA) in
order to make a reasonable estimate of
how manufacturers will add
technologies to vehicles in order to meet
a fleet-wide CO2 emissions level. EPA
has described OMEGA’s specific
methodologies and algorithms in a
memo to the docket for this rulemaking
(Docket EPA–HQ–OAR–2009–0472).
The OMEGA model utilizes four basic
sets of input data. The first is a
description of the vehicle fleet. The key
pieces of data required for each vehicle
are its manufacturer, CO2 emission
level, fuel type, projected sales and
footprint. The model also requires that
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each vehicle be assigned to one of the
19 vehicle types, which tells the model
which set of technologies can be applied
to that vehicle. (For a description of
how the 19 vehicle types were created,
reference Section III.D.3.) In addition,
the degree to which each vehicle
already reflects the effectiveness and
cost of each available technology must
also be input. This avoids the situation,
for example, where the model might try
to add a basic engine improvement to a
current hybrid vehicle. Except for this
type of information, the development of
the required data regarding the reference
fleet was described in Section III.D.1
above and in Chapter 1 of the Draft Joint
TSD.
The second type of input data used by
the model is a description of the
technologies available to manufacturers,
primarily their cost and effectiveness.
Note that the five vehicle classes are not
explicitly used by the model, rather the
costs and effectiveness associated with
each vehicle package is based on the
associated class. This information was
described in Sections III.D.2 and III.D.3
above as well as Chapter 3 of the Draft
Joint TSD. In all cases, the order of the
technologies or technology packages for
a particular vehicle type is determined
by the model user prior to running the
model. Several criteria can be used to
develop a reasonable ordering of
technologies or packages. These are
described in the Draft Joint TSD.
The third type of input data describes
vehicle operational data, such as annual
scrap rates and mileage accumulation
rates, and economic data, such as fuel
prices and discount rates. These
estimates are described in Section II.F
above, Section III.H below and Chapter
4 of the Draft Joint TSD.
The fourth type of data describes the
CO2 emission standards being modeled.
These include the CO2 emission
equivalents of the 2011 MY CAFE
standards and the proposed CO2
standards for 2016. As described in
more detail below, the application of
A/C technology is evaluated in a
separate analysis from those
technologies which impact CO2
emissions over the 2-cycle test
procedure. Thus, for the percent of
vehicles that are projected to achieve
A/C related reductions, the CO2 credit
associated with the projected use of
improved A/C systems is used to adjust
the proposed CO2 standard which
would be applicable to each
manufacturer to develop a target for CO2
emissions over the 2-cycle test which is
assessed in our OMEGA modeling.
As mentioned above for the market
data input file utilized by OMEGA,
which characterizes the vehicle fleet,
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our modeling must and does account for
the fact that many 2008 MY vehicles are
already equipped with one or more of
the technologies discussed in Section
III.D.2 above. Because of the choice to
apply technologies in packages, and
2008 vehicles are equipped with
individual technologies in a wide
variety of combinations, accounting for
the presence of specific technologies in
terms of their proportion of package cost
and CO2 effectiveness requires careful,
detailed analysis. The first step in this
analysis is to develop a list of individual
technologies which are either contained
in each technology package, or would
supplant the addition of the relevant
portion of each technology package. An
example would be a 2008 MY vehicle
equipped with variable valve timing and
a 6-speed automatic transmission. The
cost and effectiveness of variable valve
timing would be considered to be
already present for any technology
packages which included the addition
of variable valve timing or technologies
which went beyond this technology in
terms of engine related CO2 control
efficiency. An example of a technology
which supplants several technologies
would be a 2008 MY vehicle which was
equipped with a diesel engine. The
effectiveness of this technology would
be considered to be present for
technology packages which included
improvements to a gasoline engine,
since the resultant gasoline engines
have a lower CO2 control efficiency than
the diesel engine. However, if these
packages which included improvements
also included improvements unrelated
to the engine, like transmission
improvements, only the engine related
portion of the package already present
on the vehicle would be considered.
The transmission related portion of the
package’s cost and effectiveness would
be allowed to be applied in order to
comply with future CO2 emission
standards.
The second step in this process is to
determine the total cost and CO2
effectiveness of the technologies already
present and relevant to each available
package. Determining the total cost
usually simply involves adding up the
costs of the individual technologies
present. In order to determine the total
effectiveness of the technologies already
present on each vehicle, the lumped
parameter model described above is
used. Because the specific technologies
present on each 2008 vehicle are
known, the applicable synergies and
dis-synergies can be fully accounted for.
The third step in this process is to
divide the total cost and CO2
effectiveness values determined in step
2 by the total cost and CO2 effectiveness
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of the relevant technology packages.
These fractions are capped at a value of
1.0 or less, since a value of 1.0 causes
the OMEGA model to not change either
the cost or CO2 emissions of a vehicle
when that technology package is added.
As described in Section III.D.3 above,
technology packages are applied to
groups of vehicles which generally
represent a single vehicle platform and
which are equipped with a single engine
size (e.g., compact cars with four
cylinder engine produced by Ford).
These groupings are described in Table
III.D.1–1. Thus, the fourth step is to
combine the fractions of the cost and
effectiveness of each technology
package already present on the
individual 2008 vehicles models for
each vehicle grouping. For cost,
percentages of each package already
present are combined using a simple
sales-weighting procedure, since the
cost of each package is the same for each
vehicle in a grouping. For effectiveness,
the individual percentages are
combined by weighting them by both
sales and base CO2 emission level. This
appropriately weights vehicle models
with either higher sales or CO2
emissions within a grouping. Once
again, this process prevents the model
from adding technology which is
already present on vehicles, and thus
ensures that the model does not double
count technology effectiveness and cost
associated with complying with the
2011 MY CAFE standards and the
proposed CO2 standards.
Conceptually, the OMEGA model
begins by determining the specific CO2
emission standard applicable for each
manufacturer and its vehicle class (i.e.,
car or truck). Since the proposed rule
allows for averaging across a
manufacturer’s cars and trucks, the
model determines the CO2 emission
standard applicable to each
manufacturer’s car and truck sales from
the two sets of coefficients describing
the piecewise linear standard functions
for cars and trucks in the inputs, and
creates a combined car-truck standard.
This combined standard considers the
difference in lifetime VMT of cars and
trucks, as indicated in the proposed
regulations which would govern credit
trading between these two vehicle
classes. For both the 2011 CAFE and
2016 CO2 standards, these standards are
a function of each manufacturer’s sales
of cars and trucks and their footprint
values. When evaluating the 2011 MY
CAFE standards, the car-truck trading
was limited to 1.2 mpg. When
evaluating the proposed CO2 standards,
the OMEGA model was run only for MY
2016. OMEGA is designed to evaluate
technology addition over a complete
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redesign cycle and 2016 represents the
final year of a redesign cycle starting
with the first year of the proposed CO2
standards, 2012. Estimates of the
technology and cost for the interim
model years are developed from the
model projections made for 2016. This
process is discussed in Chapter 6 of
EPA’s DRIA to this proposed rule. When
evaluating the 2016 standards using the
OMEGA model, the proposed CO2
standard which manufacturers would
otherwise have to meet to account for
the anticipated level of A/C credits
generated was adjusted. On an industry
wide basis, the projection shows that
manufacturers would generate 11 g/mi
of A/C credit in 2016. Thus, the 2016
CO2 target for the fleet evaluated using
OMEGA was 261 g/mi instead of 250
g/mi.
The cost of the improved A/C systems
required to generate the 11 g/mi credit
was estimated separately. This is
consistent with our proposed A/C credit
procedures, which would grant
manufacturers A/C credits based on
their total use of improved A/C systems,
and not on the increased use of such
systems relative to some base model
year fleet. Some manufacturers may
already be using improved A/C
technology. However, this represents a
small fraction of current vehicle sales.
To the degree that such systems are
already being used, EPA is overestimating both the cost and benefit of
the addition of improved A/C
technology relative to the true reference
fleet to a small degree.
The model then works with one
manufacturer at a time to add
technologies until that manufacturer
meets its applicable standard. The
OMEGA model can utilize several
approaches to determining the order in
which vehicles receive technologies. For
this analysis, EPA used a
‘‘manufacturer-based net costeffectiveness factor’’ to rank the
technology packages in the order in
which a manufacturer would likely
apply them. Conceptually, this
approach estimates the cost of adding
the technology from the manufacturer’s
perspective and divides it by the mass
of CO2 the technology will reduce. One
component of the cost of adding a
technology is its production cost, as
discussed above. However, it is
expected that new vehicle purchasers
value improved fuel economy since it
reduces the cost of operating the
vehicle. Typical vehicle purchasers are
assumed to value the fuel savings
accrued over the period of time which
they will own the vehicle, which is
estimated to be roughly five years. It is
also assumed that consumers discount
these savings at the same rate as that
PP
ManufCostEff =
TechCost − ∑ [ dFSi × VMTi ] ×
i =1
i + 35
49547
used in the rest of the analysis (3 or 7
percent). Any residual value of the
additional technology which might
remain when the vehicle is sold is not
considered. The CO2 emission reduction
is the change in CO2 emissions
multiplied by the percentage of vehicles
surviving after each year of use
multiplied by the annual miles travelled
by age, again discounted to the year of
vehicle purchase.
Given this definition, the higher
priority technologies are those with the
lowest manufacturer-based net costeffectiveness value (relatively low
technology cost or high fuel savings
leads to lower values). Because the
order of technology application is set for
each vehicle, the model uses the
manufacturer-based net costeffectiveness primarily to decide which
vehicle receives the next technology
addition. Initially, technology package
#1 is the only one available to any
particular vehicle. However, as soon as
a vehicle receives technology package
#1, the model considers the
manufacturer-based net costeffectiveness of technology package #2
for that vehicle and so on. In general
terms, the equation describing the
calculation of manufacturer-based cost
effectiveness is as follows:
1
(1 − Gap )
1
∑ ⎡[ dCO 2] ×VMT ⎤ × (1 − Gap)
⎣
⎦
i
Where:
ManufCostEff = Manufacturer-Based Cost
Effectiveness (in dollars per kilogram
CO2),
TechCost = Marked up cost of the technology
(dollars),
PP = Payback period, or the number of years
of vehicle use over which consumers
value fuel savings when evaluating the
value of a new vehicle at time of
purchase,
dFSi = Difference in fuel consumption due to
the addition of technology times fuel
price in year i,
dCO2 = Difference in CO2 emissions due to
the addition of technology
VMTi = product of annual VMT for a vehicle
of age i and the percentage of vehicles of
age i still on the road,
1- Gap = Ratio of onroad fuel economy to
two-cycle (FTP/HFET) fuel economy
EPA describes the technology ranking
methodology and manufacturer-based
cost effectiveness metric in greater
detail in a technical memo to the Docket
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for this proposed rule (Docket EPA–HQ–
OAR–2009–0472).
When calculating the fuel savings, the
full retail price of fuel, including taxes
is used. While taxes are not generally
included when calculating the cost or
benefits of a regulation, the net cost
component of the manufacturer-based
net cost-effectiveness equation is not a
measure of the social cost of this
proposal, but a measure of the private
cost, (i.e., a measure of the vehicle
purchaser’s willingness to pay more for
a vehicle with higher fuel efficiency).
Since vehicle operators pay the full
price of fuel, including taxes, they value
fuel costs or savings at this level, and
the manufacturers will consider this
when choosing among the technology
options.
This definition of manufacturer-based
net cost-effectiveness ignores any
change in the residual value of the
vehicle due to the additional technology
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when the vehicle is five years old. As
discussed in Chapter 1of the DRIA,
based on historic used car pricing,
applicable sales taxes, and insurance,
vehicles are worth roughly 23% of their
original cost after five years, discounted
to year of vehicle purchase at 7% per
annum. It is reasonable to estimate that
the added technology to improve CO2
level and fuel economy would retain
this same percentage of value when the
vehicle is five years old. However, it is
less clear whether first purchasers, and
thus, manufacturers would consider this
residual value when ranking
technologies and making vehicle
purchases, respectively. For this
proposal, this factor was not included in
our determination of manufacturerbased net cost-effectiveness in the
analyses performed in support of this
proposed rule. Comments are requested
on the benefit of including an increase
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in the vehicle’s residual value after five
years in the calculation of effective cost.
The values of manufacturer-based net
cost-effectiveness for specific
technologies will vary from vehicle to
vehicle, often substantially. This occurs
for three reasons. First, both the cost
and fuel-saving component cost,
ownership fuel-savings, and lifetime
CO2 effectiveness of a specific
technology all vary by the type of
vehicle or engine to which it is being
applied (e.g., small car versus large
truck, or 4-cylinder versus 8-cylinder
engine). Second, the effectiveness of a
specific technology often depends on
the presence of other technologies
already being used on the vehicle (i.e.,
the dis-synergies. Third, the absolute
fuel savings and CO2 reduction of a
percentage an incremental reduction in
fuel consumption depends on the CO2
level of the vehicle prior to adding the
technology. Chapter 1 of the DRIA of
this proposed rule contains further
detail on the values of manufacturerbased net cost-effectiveness for the
various technology packages.
EPA requests comment on the use of
manufacturer-based net costeffectiveness to rank CO2 emission
reduction technologies in the context of
evaluating alternative fleet average
standards for this rule. EPA believes this
manufacturer-based net costeffectiveness metric is appropriate for
ranking technology in this proposed
program because it considers
effectiveness values that may vary
widely among technology packages
when determining the order of
technology addition. Comments are
requested on this option and on any
others thought to be appropriate.
6. Why Are the Proposed CO2 Standards
Feasible?
The finding that the proposed
standards would be technically feasible
is based primarily on two factors. One
is the level of technology needed to
meet the proposed standards. The other
is the cost of this technology. The focus
is on the proposed standards for 2016,
as this is the most stringent standard
and requires the most extensive use of
technology.
With respect to the level of
technology required to meet the
standards, EPA established technology
penetration caps. As described in
Section III.D.4, EPA used two
constraints to limit the model’s
application of technology by
manufacturer. The first was the
application of common fuel economy
enablers such as low rolling resistance
tires and transmission logic changes.
These were allowed to be used on all
vehicles and hence had no penetration
cap. The second constraint was applied
to most other technologies and limited
their application to 85% with the
exception of the most advanced
technologies (e.g., powersplit and 2mode hybrids) whose application was
limited to 15%.
EPA used the OMEGA model to
project the technology (and resultant
cost) required for manufacturers to meet
the current 2011 MY CAFE standards
and the proposed 2016 MY CO2
emission standards. Both sets of
standards were evaluated using the
OMEGA model. The 2011 MY CAFE
standards were applied to cars and
trucks separately with the transfer of
credits from one category to the other
allowed up to an increase in fuel
economy of 1.0 mpg. Chrysler, Ford and
General Motors are assumed to utilize
FFV credits up to the maximum of 1.2
mpg for both their car and truck sales.
Nissan is assumed to utilize FFV credits
up to the maximum of 1.2 mpg for only
their truck sales. The use of any banked
credits from previous model years was
not considered. The modification of the
reference fleet to comply with the 2011
CAFE standards through the application
of technology by the OMEGA model is
the final step in creating the final
reference fleet. This final reference fleet
forms the basis for comparison for the
model year 2016 standards.
Table III.D.6–1 shows the usage level
of selected technologies in the 2008
vehicles coupled with 2016 sales prior
to projecting their compliance with the
2011 MY CAFE standards. These
technologies include converting port
fuel-injected gasoline engines to direct
injection (GDI), adding the ability to
deactivate certain engine cylinders
during low load operation (Deac),
adding a turbocharger and downsizing
the engine (Turbo), increasing the
number of transmission speeds to 6 or,
converting automatic transmissions to
dual-clutch automated manual
transmissions (Dual-Clutch Trans),
adding 42 volt start-stop capability
(Start-Stop), and converting a vehicle to
a intermediate or strong hybrid design.
This last category includes three current
hybrid designs: integrated motor assist
(IMA), power-split (PS) and 2-mode
hybrids.
TABLE III.D.6–1—PENETRATION OF TECHNOLOGY IN 2008 VEHICLES WITH 2016 SALES: CARS AND TRUCKS
[Percent of sales]
mstockstill on DSKH9S0YB1PROD with PROPOSALS
GDI
BMW ................................
Chrysler ............................
Daimler .............................
Ford ..................................
General Motors ................
Honda ...............................
Hyundai ............................
Kia ....................................
Mazda ..............................
Mitsubishi .........................
Nissan ..............................
Porsche ............................
Subaru ..............................
Suzuki ..............................
Tata ..................................
Toyota ..............................
Volkswagen ......................
Overall ..............................
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GDI+ deac
6.7
0.0
6.2
0.6
3.3
1.2
0.0
0.0
11.8
0.0
17.7
0.0
0.0
0.0
0.0
7.5
52.2
6.4
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GDI+ turbo
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
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0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Fmt 4701
6 Speed or
CV trans
Diesel
0.0
0.0
6.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.1
Sfmt 4702
Dual clutch
trans
98.8
27.9
74.7
28.1
13.7
4.2
4.9
0.9
37.1
76.1
33.3
3.9
29.0
100.0
0.0
30.6
82.8
27.1
0.8
0.0
11.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
10.9
0.6
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0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Hybrid
0.1
0.0
0.0
0.0
0.1
2.1
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.0
12.8
0.0
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As can be seen, all of these
technologies except for the direct
injection gasoline engines with either
cylinder deactivation or turbocharging
and downsizing, were already being
used on some 2008 MY vehicles. High
speed transmissions were the most
prevalent, with some manufacturers
(e.g., BMW, Suzuki) using them on
essentially all of their vehicles. Both
Daimler and VW equip many of their
vehicles with automated manual
transmissions, while VW makes
extensive use of direct injection gasoline
engine technology. Toyota has
converted a significant percentage of its
2008 vehicles to strong hybrid design.
Table III.D.6–2 shows the usage level
of the same technologies in the
reference case fleet after projecting their
compliance with the 2011 MY CAFE
standards. Except for mass reduction,
the figures shown represent the
percentages of each manufacturer’s sales
which are projected to be equipped with
the indicated technology. For mass
reduction, the overall mass reduction
projected for that manufacturer’s sales is
shown. The last row in Table III.D.6–2
shows the increase in projected
49549
technology penetration due to
compliance with the 2011 MY CAFE
standards. The results of DOT’s Volpe
Modeling were used to project that all
manufacturers would comply with the
2011 MY standards in 2016 without the
need to pay fines, with one exception.
This exception was Porsche in the case
of their car fleet. When projecting
Porsche’s compliance with the 2011 MY
CAFE standard for cars, the car fleet was
assumed to achieve a CO2 emission
level of 293.2 g/mi instead of the
required 285.2 g/mi level (30.3 mpg
instead of 31.2 mpg).
TABLE III.D.6–2—PENETRATION OF TECHNOLOGY UNDER 2011 MY CAFE STANDARDS IN 2016 SALES: CARS AND
TRUCKS
[Percent of sales]
GDI
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BMW ................................
Chrysler ............................
Daimler .............................
Ford ..................................
General Motors ................
Honda ...............................
Hyundai ............................
Kia ....................................
Mazda ..............................
Mitsubishi .........................
Nissan ..............................
Porsche ............................
Subaru ..............................
Suzuki ..............................
Tata ..................................
Toyota ..............................
Volkswagen ......................
Overall ..............................
Increase over 2008 MY ...
GDI+ deac
7.3
0.0
16.4
0.6
3.3
1.2
0.0
0.0
11.8
0.0
17.7
0.0
0.0
4.5
14.5
7.5
51.2
6.7
0.3
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CV trans
Dual clutch
trans
0.0
0.0
14.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
23.2
0.0
0.0
0.0
0.0
11.8
0.8
0.8
86.3
27.9
45.8
28.1
13.7
4.2
4.9
0.9
37.1
76.0
33.3
0.0
29.0
100.0
14.5
30.6
60.8
25.4
¥1.7
11.1
0.0
36.0
0.0
0.0
0.0
0.0
0.0
0.0
2.2
0.0
48.2
0.0
0.0
60.9
0.0
29.6
2.6
2.0
11.1
0.0
10.3
0.0
0.0
0.0
0.0
0.0
0.0
2.2
0.0
25.0
0.0
0.0
60.9
0.0
6.9
1.2
1.2
As can be seen, the 2011 MY CAFE
standards, when evaluated on an
industry wide basis, require only a
modest increase in the use of these
technologies. Higher speed automatic
transmission use actually decreases due
to conversion of these units to more
efficient designs such as automated
manual transmissions and hybrids.
However, the impact of the 2011 MY
CAFE standards is much greater on
selected manufacturers, particularly
BMW, Daimler, Porsche, Tata (Jaguar/
Land Rover) and VW. All of these
manufacturers are projected to increase
their use of advanced direct injection
gasoline engine technology, advanced
transmission technology, and start-stop
technology. It should be noted that these
manufacturers have traditionally paid
fines under the CAFE program.
However, with higher fuel prices and
the lead-time available by 2016, these
manufacturers would likely find it in
their best interest to improve their fuel
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economy levels instead of continuing to
pay fines (again with the exception of
Porsche cars). While not shown, no
gasoline engines were projected to be
converted to diesel technology.
This 2008 baseline fleet, modified to
meet 2011 standards, becomes our
‘‘reference’’ case. This is the fleet by
which the control program (or 2016
rule) will be compared. Thus, it is also
the fleet that would be assumed to exist
in the absence of this rule. No air
conditioning improvements are
assumed for model year 2011 vehicles.
The average CO2 emission levels of this
reference fleet vary slightly from 2012–
2016 due to small changes in the vehicle
sales by market segments and
manufacturer. CO2 emissions from cars
range from 282–284 g/mi, while those
from trucks range from 382–384 g/mi.
CO2 emissions from the combined fleet
range from 316–320. These estimates are
described in greater detail in Section
5.3.2.2 of the DRIA.
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11.1
0.0
24.6
0.0
0.1
0.0
0.0
0.0
0.0
2.2
0.0
37.1
0.0
0.0
60.9
0.0
18.7
2.0
2.0
Hybrid
0.1
0.0
0.0
0.0
0.1
2.1
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.0
12.8
0.0
2.8
0.0
Mass
reduction
(percent)
0.5
0.0
0.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.2
0.0
0.0
2.6
0.0
0.3
0.1
0.0
Conceptually, both EPA and NHTSA
perform the same projection in order to
develop their respective reference fleets.
However, because the two agencies use
two different models to modify the
baseline fleet to meet the 2011 CAFE
standards, the technology added will be
slightly different. The differences,
however, are small since most
manufacturers do not require a lot of
additional technology to meet the 2011
standards.
EPA then used the OMEGA model
once again to project the level of
technology needed to meet the proposed
2016 CO2 emission standards. Using the
results of the OMEGA model, every
manufacturer was projected to be able to
meet the proposed 2016 standards with
the technology described above except
for four: BMW, VW, Porsche and Tata
due to the OMEGA cap on technology
penetration by manufacturer. For these
manufacturers, the results presented
below are those with the fully allowable
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application of technology and not for
the technology projected to enable
compliance with the proposed
standards. Described below are a
number of potential feasible solutions
for how these companies can achieve
compliance. The overall level of
technology needed to meet the proposed
2016 standards is shown in Table
III.D.6–3. As discussed above, all
manufacturers are projected to improve
the air conditioning systems on 85% of
their 2016 sales.
TABLE III.D.6–3—PENETRATION OF TECHNOLOGY FOR PROPOSED 2016 CO2 STANDARDS: CARS AND TRUCKS
[Percent of sales]
GDI
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BMW ................................
Chrysler ............................
Daimler .............................
Ford ..................................
General Motors ................
Honda ...............................
Hyundai ............................
Kia ....................................
Mazda ..............................
Mitsubishi .........................
Nissan ..............................
Porsche ............................
Subaru ..............................
Suzuki ..............................
Tata ..................................
Toyota ..............................
Volkswagen ......................
Overall ..............................
Increase over 2011 CAFE
GDI+ deac
4
51
3
29
34
24
28
37
54
65
29
7
46
66
4
37
9
30
24
35
28
44
39
26
1
3
0
2
2
26
36
4
5
81
2
26
18
17
As can be seen, the overall average
reduction in vehicle weight is projected
to be 4%. This reduction varies across
the two vehicle classes and vehicle base
weight. For cars below 2,950 pounds
curb weight, the average reduction is
2.3% (62 pounds), while the average
was 4.4% (154 pounds) for cars above
2,950 curb weight. For trucks below
3,850 pounds curb weight, the average
reduction is 3.5% (119 pounds), while
it was 4.5% (215 pounds) for trucks
above 3,850 curb weight. Splitting
trucks at a higher weight, for trucks
below 5,000 pounds curb weight, the
average reduction is 3.3% (140 pounds),
while it was 6.7% (352 pounds) for
trucks above 5,000 curb weight.
The levels of requisite technologies
differ significantly across the various
manufacturers. Therefore, several
analyses were performed to ascertain
the cause. Because the baseline case
fleet consists of 2008 MY vehicle
designs, these analyses were focused on
these vehicles, their technology and
their CO2 emission levels.
Comparing CO2 emissions across
manufacturers is not a simple task. In
addition to widely varying vehicle
styles, designs, and sizes, manufacturers
have implemented fuel efficient
technologies to varying degrees, as
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3
39
13
7
2
14
5
16
7
5
49
14
8
0
0
58
10
9
6 Speed
auto trans
Dual clutch
trans
15
37
11
19
13
10
3
7
31
22
34
10
0
9
14
30
12
19
¥7
indicated in Table III.D.6–1. The
projected levels of requisite technology
to enable compliance with the proposed
2016 standards shown in Table III.D.6–
3 account for two of the major factors
which can affect CO2 emissions: (1)
Level of technology already being
utilized and (2) vehicle size, as
represented by footprint.
For example, the fuel economy of a
manufacturer’s 2008 vehicles may be
relatively high because of the use of
advanced technology. This is the case
with Toyota’s high sales of their Prius
hybrid. However, the presence of this
technology in a 2008 vehicle eliminates
the ability to significantly reduce CO2
further through the use of this
technology. In the extreme, if a
manufacturer were to hybridize a high
level of its sales in 2016, it doesn’t
matter whether this technology was
present in 2008 or whether it would be
added in order to comply with the
standards. The final level of hybrid
technology would be the same. Thus,
the level at which technology is present
in 2008 vehicles does not explain the
difference in requisite technology levels
shown in Table III.D.6–3.
Similarly, the proposed CO2 emission
standards adjust the required CO2 level
according to a vehicle’s footprint,
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71
51
73
67
55
22
43
35
43
66
57
70
64
69
70
33
72
49
46
71
51
72
67
55
22
43
35
43
66
56
70
51
69
70
16
70
45
43
Mass
reduction
Hybrid
14
0
13
0
0
2
0
0
0
0
1
15
0
0
15
13
15
4
1
5
6
5
6
5
2
3
3
4
6
5
4
4
4
6
2
4
4
4
requiring lower absolute emission levels
from smaller vehicles. Thus, just
because a manufacturer produces larger
vehicles than another manufacturer
does not explain the differences seen in
Table III.D.6–3.
In order to remove these two factors
from our comparison, the EPA lumped
parameter model described above was
used to estimate the degree to which
technology present on each 2008 MY
vehicle in our reference fleet was
improving fuel efficiency. The effect of
this technology was removed and each
vehicle’s CO2 emissions were estimated
as if it utilized no additional fuel
efficiency technology beyond the
baseline. The differences in vehicle size
were accounted for by determining the
difference between the sales-weighted
average of each manufacturer’s ‘‘no
technology’’ CO2 levels to their required
CO2 emission level under the proposed
2016 standards. The industry-wide
difference was subtracted from each
manufacturer’s value to highlight which
manufacturers had lower and higher
than average ‘‘no technology’’
emissions. The results are shown in
Figure III.D.6–1.
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As can be seen in Table III.D.6–3 the
manufacturers projected to require the
greatest levels of technology also show
the highest offsets relative to the
industry. The greatest offset shown in
Figure III.D.6–1 is for Tata’s trucks
(Land Rover). These vehicles are
estimated to have 100 g/mi greater CO2
emissions than the average 2008 MY
truck after accounting for differences in
the use of fuel saving technology and
footprint. The lowest adjustment is for
Subaru’s trucks, which have 50 g/mi
CO2 lower emissions than the average
truck.
While this comparison confirms the
differences in the technology
penetrations shown in Table III.D.6–3, it
does not yet explain why these
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differences exist. Two well known
factors affecting vehicle fuel efficiency
are vehicle weight and performance.
The footprint-based form of the
proposed CO2 standard accounts for
most of the difference in vehicle weight
seen in the 2008 MY fleet. However,
even at the same footprint, vehicles can
have varying weights. Higher
performing vehicles also tend to have
higher CO2 emissions over the two-cycle
test procedure. So manufacturers with
higher average performance levels will
tend to have higher average CO2
emissions for any given footprint.
The impact of these two factors on
each manufacturer’s ‘‘no technology’’
CO2 emissions was estimated. First, the
‘‘no technology’’ CO2 emissions levels
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were statistically analyzed to determine
the average impact of weight and the
ratio of horsepower to weight on CO2
emissions. Both factors were found to be
statistically significant at the 95 percent
confidence level. Together, they
explained over 80 percent of the
variability in vehicles’ CO2 emissions
for cars and over 70 percent for trucks.
These relationships were then used to
adjust each vehicle’s ‘‘no technology’’
CO2 emissions to the average weight for
its footprint value and to the average
horsepower to weight ratio of either the
car or truck fleet. The comparison was
repeated as shown in Figure III.D.6–1.
The results are shown in Figure
III.D.6–2.
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First, note that the scale in Figure
III.D.6–2 is much smaller by a factor of
3 than that in Figure III.D.6–1. In other
words, accounting for differences in
vehicle weight (at constant footprint)
and performance dramatically reduces
the differences in various
manufacturers’ CO2 emissions. Most of
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the manufacturers with high offsets in
Figure III.D.6–1 now show low or
negative offsets. For example, BMW’s
and VW’s trucks show very low CO2
emissions. Tata’s emissions are very
close to the industry average. Daimler’s
vehicles are no more than 10 g/mi above
the average for the industry. This
analysis indicates that the primary
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reasons for the differences in technology
penetrations shown for the various
manufacturers in Table III.D.6–3 are
weight and performance. EPA has not
determined why some manufacturers’
vehicle weight is relatively high for its
footprint value, or whether this weight
provides additional utility for the
consumer. Performance is more
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straightforward. Some consumers desire
high performance and some
manufacturers orient their sales towards
these consumers. However, the cost in
terms of CO2 emissions is clear.
Producing relatively heavy or high
performance vehicles increases CO2
emissions and will require greater levels
of technology in order to meet the
proposed CO2 standards.
As can be seen from Table III.D.6–3
above, widespread use of several
technologies is projected due to the
proposed standards. The vast majority
of engines are projected to be converted
to direct injection, with some of these
engines including cylinder deactivation
or turbocharging and downsizing. More
than 60 percent of all transmissions are
projected to be either high speed
automatic transmissions or dual-clutch
automated manual transmissions. More
than one third of the fleet is projected
to be equipped with 42 volt start-stop
capability. This technology was not
utilized in 2008 vehicles, but as
discussed above, promises significant
fuel efficiency improvement at a
moderate cost.
EPA foresees no significant technical
or engineering issues with the projected
deployment of these technologies across
the fleet, with their incorporation being
folded into the vehicle redesign process.
All of these technologies are
commercially available now. The
automotive industry has already begun
to convert its port fuel-injected gasoline
engines to direct injection. Cylinder
deactivation and turbocharging
technologies are already commercially
available. As indicated in Table III.D.6–
1, high speed transmissions are already
widely used. However, while more
common in Europe, automated manual
transmissions are not currently used
extensively in the U.S. Widespread use
of this technology would require
significant capital investment but does
not present any significant technical or
engineering issues. Start-stop systems
also represent a significant challenge
because of the complications involved
in a changeover to a higher voltage
electrical architecture. However, with
appropriate capital investments (which
are captured in the costs), these
technology penetration rates are
achievable within the timeframe of this
rule. While most manufacturers have
some plans for these systems, our
projections indicate that their use may
exceed 35 percent of sales, with some
manufacturers requiring higher levels.
Most manufacturers would not have
to hybridize any vehicles due to the
proposed standards. The hybrids shown
for Toyota are projected to be sold even
in the absence of the proposed
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standards. However the relatively high
hybrid penetrations (15%) projected for
BMW, Daimler, Porsche, Tata and
Volkswagen deserve further discussion.
These manufacturers are all projected by
the OMEGA model to utilize the
maximum application of full hybrids
allowed by our model in this time
frame, which is 15 percent.
As discussed in the EPA DRIA, a 2016
technology penetration rate of 85% is
projected for the vast majority of
available technologies, however, for full
hybrid systems the projection shows
that given the available lead-time full
hybrids can only be applied to
approximately 15% of a manufacturer’s
fleet. This number of course can vary by
manufacturer.
While the hybridization levels of
BMW, Daimler, Porsche, Tata and
Volkswagen are relatively high, the sales
levels of these five manufacturers are
relatively low. Thus, industry-wide,
hybridization reaches only 8 percent,
compared with 3 percent in the
reference case. This 8 percent level is
believed to be well within the capability
of the hybrid component industry by
2016. Thus, the primary challenge for
these five companies would be at the
manufacturer level, redesigning a
relatively large percentage of sales to
include hybrid technology. The
proposed TLAAS provisions will
provide significant aid to these
manufacturers in pre-2016 compliance,
since all qualified companies are
expected to be able to take advantage of
these provisions. By 2016, it is likely
that these manufacturers would also be
able to change vehicle characteristics
which currently cause their vehicles to
emit much more CO2 than similar sized
vehicles produced by other
manufacturers. These factors may
include changes in model mix, further
lightweighting, downpowering, electric
and/or plug-in hybrid vehicles, or
downsizing (our current baseline fleet
assumes very little change in footprint
from 2012–2016), as well as
technologies that may not be included
in our packages. Also, companies may
have technology penetration rates of less
costly technologies (listed in the above
tables) greater than 85%, and they may
also be able to apply hybrid technology
to more than 15 percent of their fleet (as
the 15% for hybrid technology is an
industry average). For example, a switch
to a low GWP alternative refrigerant in
a large fraction of a fleet can replace
many other much more costly
technologies, but this option is not
captured in the modeling. In addition,
these manufacturers can also take
advantage of flexibilities, such as early
credits for air conditioning and trading
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with other manufacturers. The EPA
expects that there will be certain high
volume manufacturers that will earn a
significant amount of early GHG credits
starting in 2009 and 2010 that will
expire 5 years later, by 2014 and 2015,
unused. The EPA believes that these
manufacturers will be willing to sell
these expiring credits to manufacturers
with whom there is no direct
competition. Furthermore, some of these
manufacturers have also stated either
publicly or in confidential discussions
with EPA that they will be able to
comply with 2016 standards. Because of
the confidential nature of this
information sharing, EPA is unable to
capture these packages specifically in
our modeling. The following companies
have all submitted letters in support of
the national program, including the
2016 MY levels discussed above: BMW,
Chrysler, Daimler, Ford, GM, Honda,
Mazda, Toyota, and Volkswagen. This
supports the view that the emissions
reductions needed to achieve the
standards are technically and
economically feasible for all these
companies, and that EPA’s projection of
non-compliance for four of the
companies is based on an inability of
our model to fully account for the full
flexibilities of the EPA program as well
as the potentially unique technology
approaches or new product offerings
which these manufactures are likely to
employ.
In addition, manufacturers do not
need to apply technology exactly
according to our projections. Our
projections simply indicate one path
which would achieve compliance.
Those manufacturers whose vehicles are
heavier and higher performing than
average in particular have additional
options to facilitate compliance and
reduce their technological burden closer
to the industry average. These options
include decreasing the mass of the
vehicles and/or decreasing the power
output of the engines. Finally, EPA
allows compliance to be shown through
the use of emission credits obtained
from other manufacturers. Especially for
the lower volume sales of some
manufacturers that could be one
component of an effective compliance
strategy, reducing the technology that
needs to be employed on their vehicles.
For the vast majority of light-duty cars
and trucks, manufacturers have
available to them a range of technologies
that are currently commercially
available and can feasibly be employed
in their vehicles by MY 2016. Our
modeling projects widespread use of
these technologies as a technologically
feasible approach to complying with the
proposed standards.
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In sum, EPA believes that the
emissions reductions called for by the
proposed standards are technologically
feasible, based on projections of
widespread use of commercially
available technology, as well as use by
some manufacturers of other technology
approaches and compliance flexibilities
not fully reflected in our modeling.
EPA also projected the cost associated
with these projections of technology
penetration. Table III.D.6–4 shows the
cost of technology in order for
manufacturers to comply with the 2011
MY CAFE standards, as well as those
49555
associated with the proposed 2016 CO2
emission standards. The latter costs are
incremental to those associated with the
2011 MY standards and also include
$60 per vehicle, on average, for the cost
of projected use of improved airconditioning systems.163
TABLE III.D.6–4—COST OF TECHNOLOGY PER VEHICLE IN 2016 ($2007)
2011 MY CAFE standards
Cars
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BMW ................................................................................
Chrysler ............................................................................
Daimler .............................................................................
Ford ..................................................................................
General Motors ................................................................
Honda ...............................................................................
Hyundai ............................................................................
Kia ....................................................................................
Mazda ..............................................................................
Mitsubishi .........................................................................
Nissan ..............................................................................
Porsche ............................................................................
Subaru ..............................................................................
Suzuki ..............................................................................
Tata ..................................................................................
Toyota ..............................................................................
Volkswagen ......................................................................
Overall ..............................................................................
$319
7
431
28
28
0
0
0
0
96
0
535
64
99
691
0
269
47
Trucks
Proposed 2016 CO2 standards
All
$479
125
632
211
136
0
76
48
0
322
19
1,074
100
231
1,574
0
758
141
Cars
$361
59
495
109
73
0
14
8
0
123
6
706
77
133
1,161
0
354
78
$1,701
1,331
1,631
1,435
969
606
739
741
946
1,067
1,013
1,549
903
1,093
1,270
600
1,626
968
Trucks
$1,665
1,505
1,357
1,485
1,782
695
1,680
1,177
1,030
1,263
1,194
666
1,329
1,263
674
436
949
1,214
All
$1,691
1,408
1,543
1,457
1,311
633
907
812
958
1,090
1,064
1,268
1,057
1,137
952
546
1,509
1,051
As can be seen, the industry average
cost of complying with the 2011 MY
CAFE standards is quite low, $78 per
vehicle. The range of costs across
manufacturers is quite large, however.
Honda, Mazda and Toyota are projected
to face no cost, while Daimler, Porsche
and Tata face costs of at least $495 per
vehicle. As described above, these last
three manufacturers face such high costs
to meet even the 2011 MY CAFE
standards due to both their vehicles’
weight per unit footprint and
performance. Also, these cost estimates
apply to sales in the 2016 MY. These
three manufacturers, as well as others
like Volkswagen, may choose to pay
CAFE fines prior to this or even in 2016.
As shown in the last row of Table
III.D.6–4, the average cost of technology
to meet the proposed 2016 standards for
cars and trucks combined relative to the
2011 MY CAFE standards is $1051 per
vehicle. The projection shows that the
average cost for cars would be slightly
lower than that for trucks. Toyota and
Honda show projected costs
significantly below the average, while
BMW, Porsche, Tata and Volkswagen
show significantly higher costs. On
average, the $1051 per vehicle cost is
significant, representing roughly 5% of
the total cost of a new vehicle. However,
as discussed below, the fuel savings
associated with the proposed standards
exceeds this cost significantly.
While the CO2 emission compliance
modeling using the OMEGA model
focused on the proposed 2016 MY
standards, EPA believes that the
proposed standards for 2012–2015
would also be feasible. As discussed
above, EPA believes that manufacturers
develop their vehicle designs with
several model years in view. Generally,
the technology estimated above for 2016
MY vehicles represents the technology
which would be added to those vehicles
which are being redesigned in 2012–
2015. The proposed CO2 standards for
2012–2016 reduce CO2 emissions at a
fairly steady rate. Thus, manufacturers
which redesign their vehicles at a fairly
steady rate will automatically comply
with the interim standard as they plan
for compliance in 2016.
Manufacturers which redesign much
fewer than 20% of their sales in the
early years of the proposed program
would face a more difficult challenge, as
simply implementing the ‘‘2016 MY’’
technology as vehicles are redesigned
may not enable compliance in the early
years. However, even in this case,
manufacturers would have several
options to enable compliance. One, they
Two alternative sets of CO2 standards
were considered. One set would reduce
163 Note that the actual cost of the A/C technology
is estimated at $78 per vehicle as shown in Table
III.D.2–3. However, we expect only 85 percent of
the fleet to add that technology. Therefore, the cost
of the technology when spread across the entire
fleet is $66 per vehicle ($78×85%=$66).
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could utilize the proposed debit carryforward provisions described above.
This may be sufficient alone to enable
compliance through the 2012–2016 MY
time period, if their redesign schedule
exceeds 20% per year prior to 2016. If
not, at some point, the manufacturer
might need to increase their use of
technology beyond that projected above
in order to generate the credits
necessary to balance the accrued debits.
For most manufacturers representing the
vast majority of U.S. sales, this would
simply mean extending the same
technology to a greater percentage of
sales. The added cost of this in the later
years of the program would be balanced
by lower costs in the earlier years. Two,
the manufacturer could buy credits from
another manufacturer. As indicated
above, several manufacturers are
projected to require less stringent
technology than the average. These
manufacturers would be in a position to
provide credits at a reasonable
technology cost. Thus, EPA believes the
proposed standards for 2012–2016
would be feasible.
7. What Other Fleet-Wide CO2 Levels
Were Considered?
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CO2 emissions at a rate of 4 percent per
year. The second set would reduce CO2
emissions at a rate of 6 percent per year.
The analysis of these standards followed
the exact same process as described
above for the proposed standards. The
only difference was the level of CO2
emission standards. The footprint-based
standard coefficients of the car and
truck curves for these two alternative
control scenarios were discussed above.
The resultant CO2 standards in 2016 for
each manufacturer under these two
alternative scenarios and under the
proposal are shown in Table III.D.7–1.
TABLE III.D.7–1—OVERALL AVERAGE CO2 EMISSION STANDARDS BY MANUFACTURER IN 2016
4% per
year
BMW ....................................................................................................................................................................
Chrysler ................................................................................................................................................................
Daimler .................................................................................................................................................................
Ford ......................................................................................................................................................................
General Motors ....................................................................................................................................................
Honda ..................................................................................................................................................................
Hyundai ................................................................................................................................................................
Kia ........................................................................................................................................................................
Mazda ..................................................................................................................................................................
Mitsubishi .............................................................................................................................................................
Nissan ..................................................................................................................................................................
Porsche ................................................................................................................................................................
Subaru .................................................................................................................................................................
Suzuki ..................................................................................................................................................................
Tata ......................................................................................................................................................................
Toyota ..................................................................................................................................................................
Volkswagen ..........................................................................................................................................................
Overall ..................................................................................................................................................................
Tables III.D.7–2 and III.D.7–3 show
the technology penetration levels for the
6% per
year
Proposed
245
266
257
270
272
243
235
237
231
226
251
234
237
227
267
247
233
254
241
262
253
266
268
239
231
234
227
223
247
230
233
223
263
243
230
250
222
241
233
245
247
219
212
215
208
204
227
210
213
203
241
223
211
230
4 percent per year and 6 percent per
year standards in 2016.
TABLE III.D.7–2—TECHNOLOGY PENETRATION—4% PER YEAR CO2 STANDARDS IN 2016: CARS AND TRUCKS COMBINED
GDI
BMW ................................
Chrysler ............................
Daimler .............................
Ford ..................................
General Motors ................
Honda ...............................
Hyundai ............................
Kia ....................................
Mazda ..............................
Mitsubishi .........................
Nissan ..............................
Porsche ............................
Subaru ..............................
Suzuki ..............................
Tata ..................................
Toyota ..............................
Volkswagen ......................
Overall ..............................
Increase over 2011 CAFE
GDI+ deac
4%
47
3
33
33
20
27
31
34
65
34
7
46
72
4
25
9
28
21
GDI+ turbo
35%
25
44
32
25
1
2
0
2
2
22
36
4
5
81
2
26
17
15
47%
3
39
13
7
0
12
4
16
7
2
49
14
2
0
0
58
9
9
6 Speed
auto trans
15%
33
11
23
19
6
2
1
10
28
40
10
10
15
14
30
12
20
¥5
Dual clutch
trans
71%
48
73
61
48
19
39
34
43
60
51
70
54
63
70
33
72
45
42
Start-stop
71%
48
72
61
48
19
39
34
43
60
51
70
46
63
70
5
70
40
38
Hybrid
Mass reduction (%)
14%
0
13
0
0
2
0
0
0
0
1
15
0
0
15
13
15
4
1
5
5
5
5
5
2
3
2
3
6
5
4
3
4
6
1
4
4
4
TABLE III.D.7–3—TECHNOLOGY PENETRATION—6% PER YEAR ALTERNATIVE STANDARDS IN 2016: CARS AND TRUCKS
COMBINED
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GDI
BMW ................................
Chrysler ............................
Daimler .............................
Ford ..................................
General Motors ................
Honda ...............................
Hyundai ............................
Kia ....................................
Mazda ..............................
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4%
29
3
8
24
38
36
48
65
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35%
50
44
37
54
1
9
0
2
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6
39
40
8
15
28
25
16
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auto trans
15%
4
11
4
6
8
7
18
4
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trans
71%
85
73
74
81
50
66
55
81
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71%
85
72
74
81
50
66
55
76
28SEP2
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14%
0
13
11
0
2
0
0
0
Weight reduction (%)
5
8
5
7
8
4
5
4
6
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TABLE III.D.7–3—TECHNOLOGY PENETRATION—6% PER YEAR ALTERNATIVE STANDARDS IN 2016: CARS AND TRUCKS
COMBINED—Continued
GDI
Mitsubishi .........................
Nissan ..............................
Porsche ............................
Subaru ..............................
Suzuki ..............................
Tata ..................................
Toyota ..............................
Volkswagen ......................
Overall ..............................
Increase over 2011 CAFE
GDI+ deac
59
34
7
66
2
4
40
9
28
22
GDI+ turbo
7
17
36
4
12
81
7
26
24
23
With respect to the 4 percent per year
standards, the levels of requisite control
technology decreased relative to those
under the proposed standards, as would
be expected. Industry-wide, the largest
decrease was a 2 percent decrease in the
application of start-stop technology. On
a manufacturer specific basis, the most
significant decreases were a 6 percent
decrease in hybrid penetration for BMW
and a 2 percent drop for Daimler. These
are relatively small changes and are due
to the fact that the 4 percent per year
standards only require 4 g/mi CO2 less
control than the proposed standards in
19
35
49
14
71
0
11
58
23
22
6 Speed
auto trans
Dual clutch
trans
7
9
10
0
0
14
25
12
11
¥15
Start-stop
80
76
70
85
80
70
50
72
67
65
2016. Porsche, Tata and Volkswagen
continue to be unable to comply with
the CO2 standards in 2016.
With respect to the 6 percent per year
standards, the levels of requisite control
technology increased relative to those
under the proposed standards, as again
would be expected. Industry-wide, the
largest increase was an 8 percent
increase in the application of start-stop
technology. On a manufacturer specific
basis, the most significant increases
were a 42 percent increase in hybrid
penetration for BMW and a 38 percent
increase for Daimler. These are more
Weight reduction (%)
Hybrid
80
76
70
80
80
70
50
70
67
65
5
10
15
0
5
15
13
15
7
4
8
7
4
6
7
6
3
4
6
6
significant changes and are due to the
fact that the 6 percent per year
standards require 20 g/mi CO2 more
control than the proposed standards in
2016. Porsche, Tata and Volkswagen
continue to be unable to comply with
the CO2 standards in 2016. However,
BMW joins this list, as well, though just
by 1 g/mi. Most manufacturers
experience the increase in start-stop
technology application, with the
increase ranging from 5 to 17 percent.
Table III.D.7–4 shows the projected
cost of the two alternative sets of
standards.
TABLE III.D.7–4—TECHNOLOGY COST PER VEHICLE IN 2016—ALTERNATIVE STANDARDS ($2007)
4 Percent per year standards
Cars
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BMW ................................................................................
Chrysler ............................................................................
Daimler .............................................................................
Ford ..................................................................................
General Motors ................................................................
Honda ...............................................................................
Hyundai ............................................................................
Kia ....................................................................................
Mazda ..............................................................................
Mitsubishi .........................................................................
Nissan ..............................................................................
Porsche ............................................................................
Subaru ..............................................................................
Suzuki ..............................................................................
Tata ..................................................................................
Toyota ..............................................................................
Volkswagen ......................................................................
Overall ..............................................................................
As can be seen, the average cost of the
4 percent per year standards is only $73
per vehicle less than that for the
proposed standards. In contrast, the
average cost of the 6 percent per year
standards is nearly $500 per vehicle
more than that for the proposed
standards. Compliance costs are
entering the region of non-linearity. The
$73 cost savings of the 4 percent per
year standards relative to the proposal
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$1,701
1,340
1,631
1,429
969
633
685
741
851
1,132
910
1,549
903
1,093
1,270
518
1,626
940
Trucks
All
$1,665
1,211
1,357
1,305
1,567
402
1,505
738
914
247
1,194
666
1,131
1,026
674
366
949
1,054
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Cars
$1,691
1,283
1,543
1,374
1,221
564
832
741
860
1,028
991
1,268
985
1,076
952
468
1,509
978
represents $18 per g/mi CO2 increase.
The $493 cost increase of the 6 percent
per year standards relative to the
proposal represents $25 per g/mi CO2
increase.
EPA does not believe the 4% per year
alternative is an appropriate standard
for the MY2012–2016 time frame. As
discussed above, the 250 g/mi proposal
is technologically feasible in this time
frame at reasonable costs, and provides
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6 Percent per year standards
$1,701
1,642
1,631
2,175
1,722
777
1,275
1,104
1,369
1,495
1,654
1,549
1,440
1,718
1,270
762
1,626
1,385
Trucks
$1,665
2,211
1,357
2,396
2,154
1,580
1,680
1,772
1,030
2,065
2,274
666
1,615
2,219
674
1,165
949
1,859
All
$1,691
1,893
1,543
2,273
1,904
1,016
1,347
1,213
1,320
1,563
1,830
1,268
1,503
1,846
952
895
1,509
1,544
higher GHG emission reductions at a
modest cost increase over the 4% per
year alternative (less than $100 per
vehicle). In addition, the 4% per year
alternative does not result in a
harmonized National Program for the
country. Based on California’s letter of
May 18, 2009, the emission standards
under this alternative would not result
in the State of California revising its
regulations such that compliance with
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EPA’s GHG standards would be deemed
to be in compliance with California’s
GHG standards for these model years.
Thus, the consequence of promulgating
a 4% per year standard would be to
require manufacturers to produce two
vehicle fleets: a fleet meeting the 4% per
year Federal standard, and a separate
fleet meeting the more stringent
California standard for sale in California
and the section 177 States. This further
increases the costs of the 4% per year
standard and could lead to additional
difficulties for the already stressed
automotive industry.
EPA also does not believe the 6% per
year alternative is an appropriate
standard for the MY 2012–2016 time
frame. As shown in Tables III.D.7–3 and
III.D.7–4, the 6% per year alternative
represents a significant increase in both
the technology required and the overall
costs compared to the proposed
standards. In absolute percent increases
in the technology penetration, compared
to the proposed standards the 6% per
year alternative requires for the industry
as a whole: an 18% increase in GDI fuel
systems, an 11% increase in turbodownsize systems, a 6% increase in
dual-clutch automated manual
transmissions (DCT), and a 9% increase
in start-stop systems. For a number of
manufacturers the expected increase in
technology is greater: for GM, a 15%
increase in both DCTs and start-stop
systems, for Nissan a 9% increase in full
hybrid systems, for Ford an 11%
increase in full hybrid systems, for
Chrysler a 34% increase in both DCT
and start-stop systems and for Hyundai
a 23% increase in the overall
penetration of DCT and start-stop
systems. For the industry as a whole,
the per-vehicle cost increase for the 6%
per year alternative is nearly $500. On
average this is a 50% increase in costs
compared to the proposed standards. At
the same time, CO2 emissions would be
reduced by about 8%, compared to the
250 g/mi target level.
These technology and cost increases
are significant, given the amount of
lead-time between now and model years
2012–2016. In order to achieve the
levels of technology penetration for the
proposed standards, the industry needs
to invest significant capital and product
development resources right away, in
particular for the 2012 and 2013 model
year, which is only 2–3 years from now.
For the 2014–2016 time frame,
significant product development and
capital investments will need to occur
over the next 2–3 year in order to be
ready for launching these new products
for those model years. Thus a major part
of the required capital and resource
investment will need to occur in the
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next few years, under the proposed
standards. EPA believes that the
proposal (a target of 250 gram/mile in
2016) already requires significant
investment and product development
costs for the industry, focused on the
next few years.
It is important to note, and as
discussed later in this preamble, as well
as in the draft Joint Technical Support
Document and the draft EPA Regulatory
Impact Analysis document, the average
model year 2016 per-vehicle cost
increase of nearly $500 includes an
estimate of both the increase in capital
investments by the auto companies and
the suppliers as well as the increase in
product development costs. These costs
can be significant, especially as they
must occur over the next 2–3 years.
Both the domestic and transplant auto
firms, as well as the domestic and
world-wide automotive supplier base, is
experiencing one of the most difficult
markets in the U.S. and internationally
that has been seen in the past 30 years.
One major impact of the global
downturn in the automotive industry
and certainly in the U.S. is the
significant reductions in product
development engineers and staffs, as
well as a tightening of the credit markets
which allow auto firms and suppliers to
make the near-term capital investments
necessary to bring new technology into
production. EPA is concerned that the
significantly increased pressure on
capital and other resources from the 6%
per year alternative may be too stringent
for this time frame, given both the
relatively limited amount of lead-time
between now and model years 2012–
2016, the need for much of these
resources over the next few years, as
well the current financial and related
circumstances of the automotive
industry. EPA is not concluding that the
6% per year alternative standards are
technologically infeasible, but EPA
believes such standards for this time
frame would be overly stringent given
the significant strain it would place on
the resources of the industry under
current conditions. EPA believes this
degree of stringency is not warranted at
this time. Therefore EPA does not
believe the 6% per year alternative
would be an appropriate balance of
various relevant factors for model years
2012–1016.
These alternative standards represent
two possibilities out of many. The EPA
believes that the current proposed
standards represent an appropriate
balance of the factors relevant under
section 202(a). For further discussion of
this issue, see Chapter 4 of the DRIA.
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E. Certification, Compliance, and
Enforcement
1. Compliance Program Overview
This section of the preamble describes
EPA’s proposal for a comprehensive
program to ensure compliance with
EPA’s proposed emission standards for
carbon dioxide (CO2), nitrous oxide
(N2O), and methane (CH4), as described
in Section III.B. An effective compliance
program is essential to achieving the
environmental and public health
benefits promised by these mobile
source GHG standards. EPA’s proposal
for a GHG compliance program is
designed around two overarching
priorities: (1) To address Clean Air Act
(CAA) requirements and policy
objectives; and (2) to streamline the
compliance process for both
manufacturers and EPA by building on
existing practice wherever possible, and
by structuring the program such that
manufacturers can use a single data set
to satisfy both the new GHG and
Corporate Average Fuel Economy
(CAFE) testing and reporting
requirements. The program proposed by
EPA and NHTSA recognizes, and
replicates as closely as possible, the
compliance protocols associated with
the existing CAA Tier 2 vehicle
emission standards, and with CAFE
standards. The certification, testing,
reporting, and associated compliance
activities closely track current practices
and are thus familiar to manufacturers.
EPA already oversees testing, collects
and processes test data, and performs
calculations to determine compliance
with both CAFE and CAA standards.
Under this proposed coordinated
approach, the compliance mechanisms
for both programs are consistent and
non-duplicative.
Vehicle emission standards
established under the CAA apply
throughout a vehicle’s full useful life. In
this case EPA is proposing fleet average
standards where compliance with the
fleet average is determined based on the
testing performed at time of production,
as with the current CAFE fleet average.
EPA is also proposing in-use standards
that apply throughout a vehicle’s useful
life, with the standard determined by
adding a 10% adjustment factor to the
model-level emission results used to
calculate the fleet average. Therefore,
EPA’s proposed program must not only
assess compliance with the fleet average
standards described in Section III.B, but
must also assess compliance with the
in-use standards. As it does now, EPA
would use a variety of compliance
mechanisms to conduct these
assessments, including pre-production
certification and post-production, in-use
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monitoring once vehicles enter
customer service. Specifically, EPA is
proposing a compliance program for the
fleet average that utilizes CAFE program
protocols with respect to testing, a
certification procedure that operates in
conjunction with the existing CAA Tier
2 certification procedures, and
assessment of compliance with the inuse standards concurrent with existing
EPA and manufacturer Tier 2 emission
compliance testing programs. Under the
proposed compliance program
manufacturers would also be afforded
numerous flexibilities to help achieve
compliance, both stemming from the
program design itself in the form of a
manufacturer-specific CO2 fleet average
standard, as well as in various credit
banking and trading opportunities, as
described in Section III.C. EPA’s
proposed compliance program is
outlined in further detail below. EPA
requests comment on all aspects of the
compliance program design including
comments about whether differences
between the proposed compliance
scheme for GHG and the existing
compliance scheme for other regulated
pollutants are appropriate.
2. Compliance With Fleet-Average CO2
Standards
Fleet average emission levels can only
be determined when a complete fleet
profile becomes available at the close of
the model year. Therefore, EPA is
proposing to determine compliance
with the fleet average CO2 standards
when the model year closes out, as is
currently the protocol under EPA’s Tier
2 program as well as under the current
CAFE program. The compliance
determination would be based on actual
production figures for each model and
on model-level emissions data collected
through testing over the course of the
model year. Manufacturers would
submit this information to EPA in an
end-of-year report which is discussed in
detail in Section III.E.5.h below.
Manufacturers currently conduct their
CAFE testing over an entire model year
to maximize efficient use of testing and
engineering resources. Manufacturers
submit their CAFE test results to EPA
and EPA conducts confirmatory fuel
economy testing at its laboratory on a
subset of these vehicles under EPA’s
Part 600 regulations. EPA is proposing
that manufacturers continue to perform
the model level testing currently
required for CAFE fuel economy
performance and measure and report the
CO2 values for all tests conducted. Thus,
manufacturers will submit one data set
in satisfaction of both CAFE and GHG
requirements such that EPA’s proposed
program would not impose additional
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timing or testing requirements on
manufacturers beyond that required by
the CAFE program. For example,
manufacturers currently submit fuel
economy test results at the
subconfiguration and configuration
levels to satisfy CAFE requirements.
Under this proposal manufacturers
would also submit CO2 values for the
same vehicles. Section III.E.3 discusses
how this will be implemented in the
certification process.
a. Compliance Determinations
As described in Section III.B above,
the fleet average standards would be
determined on a manufacturer by
manufacturer basis, separately for cars
and trucks, using the proposed footprint
attribute curves. Under this proposal,
EPA would calculate the fleet average
emission level using actual production
figures and, for each model type, CO2
emission test values generated at the
time of a manufacturer’s CAFE testing.
EPA would then compare the actual
fleet average to the manufacturer’s
footprint standard to determine
compliance, taking into consideration
use of averaging and/or other types of
credits.
Final determination of compliance
with fleet average CO2 standards may
not occur until several years after the
close of the model year due to the
flexibilities of carry-forward and carryback credits and the remediation of
deficits (see Section III.C). A failure to
meet the fleet average standard after
credit opportunities have been
exhausted could ultimately result in
penalties and injunctive orders under
the CAA as described in Section III.E.6
below.
EPA periodically provides mobile
source emissions and fuel economy
information to the public, for example
through the annual Compliance
Report 164 and Fuel Economy Trends
Report.165 EPA plans to expand these
reports to include GHG performance
and compliance trends information,
such as annual status of credit balances
or debits, use of various credit
programs, attained versus projected fleet
average emission levels, and final
compliance status for a model year after
credit reconciliation occurs. We seek
comment on all aspects of public
164 2007 Progress Report Vehicle and Engine
Compliance Activities; EPA–420–R–08–011;
October 2008. This document is available
electronically at https://www.epa.gov/otaq/about/
420r08011.pdf.
165 Light-Duty Automotive Technology and FuelEconomy Trends: 1975 Through 2008; EPA–420–S–
08–003; September 2008. This document is
available electronically at https://www.epa.gov/otaq/
fetrends.htm.
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49559
dissemination of GHG compliance
information
b. Required Minimum Testing for Fleet
Average CO2
As noted, EPA is proposing that the
same test data required for determining
a manufacturer’s compliance with the
CAFE standard also be used to
determine the manufacturer’s
compliance with the fleet average CO2
emissions standard. CAFE requires
manufacturers to submit test data
representing at least 90% of the
manufacturer’s model year production,
by configuration.166 The CAFE testing
covers the vast majority of models in a
manufacturer’s fleet. Manufacturers
industry-wide currently test more than
1,000 vehicles each year to meet this
requirement. EPA believes this
minimum testing requirement is
necessary and applicable for calculating
accurate CO2 fleet average emissions.
Manufacturers may test additional
vehicles, at their option. As described
above, EPA would use the emissions
results from the model-level testing to
calculate a manufacturer’s fleet average
CO2 emissions and to determine
compliance with the CO2 standard.
EPA is proposing to continue to allow
certain testing flexibilities that exist
under the CAFE program. EPA has
always permitted manufacturers some
ability to reduce their test burden in
tradeoff for lower fuel economy
numbers. Specifically the practice of
‘‘data substitution’’ enables
manufacturers to apply fuel economy
test values from a ‘‘worst case’’
configuration to other configurations in
lieu of testing them. The substituted
values may only be applied to
configurations that would be expected
to have better fuel economy and for
which no actual test data exist.
Substituted data would only be
accepted for the GHG program if it is
also used for CAFE purposes.
EPA’s regulations for CAFE fuel
economy testing permit the use of
analytically derived fuel economy data
in lieu of an actual fuel economy test in
certain situations.167 Analytically
derived data is generated
mathematically using expressions
determined by EPA and is allowed on
a limited basis when a manufacturer has
not tested a specific vehicle
configuration. This has been done as a
means to reduce some of the testing
burden on manufacturers without
sacrificing accuracy in fuel economy
measurement. EPA has issued guidance
that provides details on analytically
166 See
167 40
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derived data and that specifies the
conditions when analytically derived
fuel economy may be used. EPA would
also apply the same guidance to the
GHG program and would allow any
analytically derived data used for CAFE
to also satisfy the GHG data reporting
requirements. EPA would, however,
need to revise the terms in the current
equations for analytically derived fuel
economy to specify them in terms of
CO2. Analytically derived CO2 data
would not be permitted for the Emission
Data Vehicle representing a test group
for pre-production certification, only for
the determination of the model level test
results used to determine actual fleetaverage CO2 levels.
EPA is retaining the definitions
needed to determine CO2 levels of each
model type (such as ‘‘subconfiguration,’’
‘‘configuration,’’ ‘‘base level,’’ etc.) as
they are currently defined in EPA’s fuel
economy regulations.
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3. Vehicle Certification
CAA section 203(a)(1) prohibits
manufacturers from introducing a new
motor vehicle into commerce unless the
vehicle is covered by an EPA-issued
certificate of conformity. Section
206(a)(1) of the CAA describes the
requirements for EPA issuance of a
certificate of conformity, based on a
demonstration of compliance with the
emission standards established by EPA
under section 202 of the Act. The
certification demonstration requires
emission testing, and must be done for
each model year.168
Under Tier 2 and other EPA emission
standard programs, vehicle
manufacturers certify a group of
vehicles called a test group. A test group
typically includes multiple vehicle car
lines and model types that share critical
emissions-related features.169 The
manufacturer generally selects and tests
one vehicle to represent the entire test
group for certification purposes. The
test vehicle is the one expected to be the
worst case for the emission standard at
issue. Emission results from the test
vehicle are used to assign the test group
to one of several specified bins of
emissions levels, identified in the Tier
2 rule, and this bin level becomes the
in-use emissions standard for that test
group.170
168 CAA
section 206(a)(1).
specific test group criteria are described
in 40 CFR 86.1827–01, car lines and model types
have the meaning given in 40 CFR 86.1803–01.
170 Initially in-use standards were different from
the bin level determined at certification as the
useful life level. The current in-use standards,
however, are the same as the bin levels. In all cases,
the bin level, reflecting useful life levels, has been
used for determining compliance with the fleet
average.
169 The
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Since compliance with the Tier 2 fleet
average depends on actual test group
sales volumes and bin levels, it is not
possible to determine compliance at the
time the manufacturer applies for and
receives a certificate of conformity for a
test group. Instead, EPA requires the
manufacturer to make a good faith
demonstration in the certification
application that vehicles in the test
group will both (1) comply throughout
their useful life with the emissions bin
assigned, and (2) contribute to fleetwide
compliance with the Tier 2 average
when the year is over. EPA issues a
certificate for the vehicles included in
the test group based on this
demonstration, and includes a condition
in the certificate that if the manufacturer
does not comply with the fleet average,
then production vehicles from that test
group will be treated as not covered by
the certificate to the extent needed to
bring the manufacturer’s fleet average
into compliance with Tier 2.
The certification process often occurs
several months prior to production and
manufacturer testing may occur months
before the certificate is issued. The
certification process for the Tier 2
program is an efficient way for
manufacturers to conduct the needed
testing well in advance of certification,
and to receive the needed certificates in
a time frame which allows for the
orderly production of vehicles. The use
of a condition on the certificate has been
an effective way to ensure compliance
with the Tier 2 fleet average.
EPA is proposing to similarly
condition each certificate of conformity
for the GHG program upon a
manufacturer’s good faith
demonstration of compliance with the
manufacturer’s fleetwide average CO2
standard. The following discussion
explains how EPA proposes to integrate
the proposed vehicle certification
program into the existing certification
program.
a. Compliance Plans
EPA is proposing that manufacturers
submit a compliance plan to EPA prior
to the beginning of the model year and
prior to the certification of any test
group. This plan would include the
manufacturer’s estimate of its footprintbased standard (Section III.B), along
with a demonstration of compliance
with the standard based on projected
model-level CO2 emissions, and
production estimates. Manufacturers
would submit the same information to
NHTSA in the pre-model year report
required for CAFE compliance.
However, the GHG compliance plan
could also include additional
information relevant only to the EPA
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program. For example, manufacturers
seeking to take advantage of air
conditioning or other credit flexibilities
(Section III.C) would include these in
their compliance demonstration.
Similarly, the compliance
demonstration would need to include a
credible plan for addressing deficits
accrued in prior model years. EPA
would review the compliance plan for
technical viability and conduct a
certification preview discussion with
the manufacturer. EPA would view the
compliance plan as part of the
manufacturer’s good faith
demonstration, but understands that
initial projections can vary considerably
from the reality of final production and
emission results. EPA requests comment
on the proposal to evaluate
manufacturer compliance plans prior to
the beginning of model year
certification. EPA also requests
comment on what criteria the agency
should use to evaluate the sufficiency of
the plan and on what steps EPA should
take if it determines that a plan is
unlikely to offset a deficit.
b. Certification Test Groups and Test
Vehicle Selection
Manufacturers currently divide their
fleet into ‘‘test groups’’ for certification
purposes. The test group is EPA’s unit
of certification; one certificate is issued
per test group. These groupings cover
vehicles with similar emission control
system designs expected to have similar
emissions performance.171 The factors
considered for determining test groups
include combustion cycle, engine type,
engine displacement, number of
cylinders and cylinder arrangement,
fuel type, fuel metering system, catalyst
construction and precious metal
composition, among others. Vehicles
having these features in common are
generally placed in the same test
group.172 Cars and trucks may be
included in the same test group as long
as they have similar emissions
performance (manufacturers frequently
produce cars and trucks that have
identical engine designs and emission
controls).
EPA is proposing to retain the current
Tier 2 test group structure for cars and
light trucks in the certification
requirements for CO2. At the time of
certification, manufacturers would use
the CO2 emission level from the Tier 2
Emission Data Vehicle as a surrogate to
represent all of the models in the test
group. However, following certification
171 40
CFR 86.1827–01.
provides for other groupings in certain
circumstances, and can establish its own test groups
in cases where the criteria do not apply. 40 CFR
86.1827–01(b), (c) and (d).
172 EPA
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further testing would generally be
required for compliance with the fleet
average CO2 standard as described
below. EPA’s issuance of a certificate
would be conditioned upon the
manufacturer’s subsequent model level
testing and attainment of the actual fleet
average. Further discussion of these
requirements is presented in Section
III.E.6.
EPA recognizes that the Tier 2 test
group criteria do not necessarily relate
to CO2 emission levels. For instance,
while some of the criteria, such as
combustion cycle, engine type and
displacement, and fuel metering, may
have a relationship to CO2 emissions,
others, such as those pertaining to the
catalyst, may not. In fact, there are many
vehicle design factors that impact CO2
generation and emission but are not
included in EPA’s test group criteria.173
Most important among these may be
vehicle weight, horsepower,
aerodynamics, vehicle size, and
performance features.
EPA considered, but is not proposing,
a requirement for separate CO2 test
groups established around criteria more
directly related to CO2 emissions.
Although CO2-specific test groups might
more consistently predict CO2 emissions
of all vehicles in the test group, the
addition of a CO2 test group requirement
would greatly increase the preproduction certification burden for both
manufacturers and EPA. For example, a
current Tier 2 test group would need to
be split into two groups if automatic and
manual transmissions models had been
included in the same group. Two- and
four-wheel drive vehicles in a current
test group would similarly require
separation, as would weight differences
among vehicles. This would at least
triple the number of test groups. EPA
believes that the added burden of
creating separate CO2 test groups is not
warranted or necessary to maintain an
appropriately rigorous certification
program because the test group data are
later replaced by model specific data
which are used as the basis for
determining compliance with a
manufacturer’s fleet average standard.
EPA believes that the current test
group concept is appropriate for N2O
and CH4 because the technologies that
would be employed to control N2O and
CH4 emissions would generally be the
same as those used to control the
criteria pollutants.
As just discussed, the ‘‘worst case’’
vehicle a manufacturer selects as the
173 EPA noted this potential lack of connection
between fuel economy testing and testing for
emissions standard purposes when it first adopted
fuel economy test procedures. See 41 FR at 38677
(Sept. 10, 1976).
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Emissions Data Vehicle to represent a
test group under Tier 2 (40 CFR
86.1828–01) may not have the highest
levels of CO2 in that group. For instance,
there may be a heavier, more powerful
configuration that would have higher
CO2, but may, due to the way the
catalytic converter has been matched to
the engine, actually have lower NOX,
CO, PM or HC.
Therefore, in lieu of a separate CO2specific test group, EPA considered
requiring manufacturers to select a CO2
test vehicle from within the Tier 2 test
group that would be expected, based on
good engineering judgment, to have the
highest CO2 emissions within that test
group. The CO2 emissions results from
this vehicle would be used to establish
an in-use CO2 emission standard for the
test group. The requirement for a
separate, worst case CO2 vehicle would
provide EPA with some assurance that
all vehicles within the test group would
have CO2 emission levels at or below
those of the selected vehicle, even if
there is some variation in the CO2
control strategies within the test group
(such as different transmission types).
Under this approach, the test vehicle
might or might not be the same one that
would be selected as worst case for
criteria pollutants. Thus, manufacturers
might be required to test two vehicles in
each test group, rather than a single
vehicle. This would represent an added
timing burden to manufacturers because
they might need to build additional test
vehicles at the time of certification that
previously weren’t required to be tested.
Instead, EPA is proposing to require a
single Emission Data Vehicle that would
represent the test group for both Tier 2
and CO2 certification. The manufacturer
would be allowed to initially apply the
Emission Data Vehicle’s CO2 emissions
value to all models in the test group,
even if other models in the test group
are expected to have higher CO2
emissions. However, as a condition of
the certificate, this surrogate CO2
emissions value would generally be
replaced with actual, model-level CO2
values based on results from CAFE
testing that occurs later in the model
year. This model level data would
become the official certification test
results (as per the conditioned
certificate) and would be used to
determine compliance with the fleet
average. Only if the test vehicle is in fact
the worst case CO2 vehicle for the test
group could the manufacturer elect to
apply the Emission Data Vehicle
emission levels to all models in the test
group for purposes of calculating fleet
average emissions. Manufacturers
would be unlikely to make this choice,
because doing so would ignore the
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emissions performance of vehicle
models in their fleet with lower CO2
emissions and would unnecessarily
inflate their CO2 fleet average. Testing at
the model level already occurs and data
are already being submitted to EPA for
CAFE and labeling purposes, so it
would be an unusual situation that
would cause a manufacturer to ignore
these data and choose to accept a higher
CO2 fleet average.
EPA requests comment regarding
whether the Tier 2 test group can
adequately represent CO2 emissions for
certification purposes, and whether the
Emission Data Vehicle’s CO2 emission
level is an appropriate surrogate for all
vehicles in a test group at the time of
certification, given that the certificate
would be conditioned upon additional
model level testing occurring during the
year (see Section III.E.6) and that the
surrogate CO2 emission values would be
replaced with model-level emissions
data from those tests. Comments should
also address EPA’s desire to minimize
the up-front pre-production testing
burden and whether the proposed
efficiencies would be balanced by the
requirement to test all model types in
the fleet by the conclusion of the model
year in order to establish the fleet
average CO2 levels.
There are two standards that the
manufacturer would be subject to, the
fleet average standard and the in-use
standard for the useful life of the
vehicle. Compliance with the fleet
average standard is based on
production-weighted averaging of the
test data that applies for each model.
For each model, the in-use standard is
set at 10% higher than the level used for
that model in calculating the fleet
average. The certificate would cover
both of these standards, and the
manufacturer would have to
demonstrate compliance with both of
these standards for purposes of
receiving a certificate of conformity. The
certification process for the in-use
standard is discussed below in Section
III.E.4.
c. Certification Testing Protocols and
Procedures
To be consistent with CAFE, EPA
proposes to combine the CO2 emissions
results from the FTP and HFET tests
using the same calculation method used
to determine fuel economy for CAFE
purposes. This approach is appropriate
for CO2 because CO2 and fuel economy
are so closely related. Other than the
fact that fuel economy is calculated
using a harmonic average and CO2
emissions can be calculated using a
conventional average, the calculation
methods are very similar. The FTP CO2
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data will be weighted at 55%, and the
highway CO2 data at 45%, and then
averaged to determine the combined
number. See Section III.B.1 for more
detailed information on CO2 test
procedures, Section III.C.1 on Air
Conditioning Emissions, and Section
III.B.6 for N2O and CH4 test procedures.
For the purposes of compliance with
the fleet average and in-use standards,
the emissions measured from each test
vehicle will include hydrocarbons (HC)
and carbon monoxide (CO), in addition
to CO2. All three of these exhaust
constituents are currently measured and
used to determine the amount of fuel
burned over a given test cycle using a
‘‘carbon balance equation’’ defined in
the regulations, and thus measurement
of these is an integral part of current
fuel economy testing. As explained in
Section III.C, it is important to account
for the total carbon content of the fuel.
Therefore the carbon-related
combustion products HC and CO must
be included in the calculations along
with CO2. CO emissions are adjusted by
a coefficient that reflects the carbon
weight fraction (CWF) of the CO
molecule, and HC emissions are
adjusted by a coefficient that reflects the
CWF of the fuel being burned (the
molecular weight approach doesn’t
work since there are many different
hydrocarbons being accounted for).
Thus, EPA is proposing that the carbonrelated exhaust emissions of each test
vehicle be calculated according to the
following formula, where HC, CO, and
CO2 are in units of grams per mile:
Carbon-related exhaust emissions
(grams/mile) = CWF*HC +
1.571*CO + CO2
As part of the current CAFE and Tier
2 compliance programs, EPA selects a
subset of vehicles for confirmatory
testing at its National Vehicle and Fuel
Emissions Laboratory. The purpose of
confirmatory testing is to validate the
manufacturer’s emissions and/or fuel
economy data. Under this proposal, EPA
would add CO2, N2O, and CH4 to the
emissions measured in the course of
Tier 2 and CAFE confirmatory testing.
The emission values measured at the
EPA laboratory would continue to stand
as official, as under existing regulatory
programs.
As is the current practice with fuel
economy testing, if during EPA’s
confirmatory testing the EPA CO2 value
differs from the manufacturer’s value by
more than 3%, manufacturers could
request a re-test. Also as with current
practice, the results of the re-test would
stand as official, even if they differ from
the manufacturer value by more than
3%. EPA is proposing to allow a re-test
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request based on a 3% or greater
disparity since a manufacturer’s fleet
average emissions level would be
established on the basis of model level
testing only (unlike Tier 2 for which a
fixed bin standard structure provides
the opportunity for a compliance
buffer). EPA requests comment on
whether the 3% value currently used
during CAFE confirmatory testing is
appropriate and should be retained
under the proposed GHG program.
4. Useful Life Compliance
Section 202(a)(1) of the CAA requires
emission standards to apply to vehicles
throughout their statutory useful life, as
further described in Section III.A. For
emission programs that have fleet
average standards, such as Tier 2 and
the proposed CO2 standards, the useful
life requirement applies to individual
vehicles rather than to the fleet average
standard. For example, in Tier 2 the
useful life requirements apply to the
individual emission standard levels or
‘‘bins’’ that the vehicles are certified to,
not the fleet average standard. For Tier
2, the useful life requirement is 10 years
or 120,000 miles with an optional 15
year or 150,000 mile provision. For each
model, the proposed CO2 standards inuse are the model specific levels used in
calculating the fleet average, adjusted to
be 10% higher. EPA is proposing the
10% adjustment factor to provide some
margin for production and test-to-test
variability that could result in
differences between initial model-level
emission results used in calculating the
fleet average and any subsequent in-use
testing. EPA requests comment on
whether a separate in-use standard is an
appropriate means of addressing issues
of variability and whether 10% is an
appropriate adjustment.
This in-use standard would apply for
the same useful life period as in Tier 2.
Section 202(i)(3)(D) of the CAA allows
EPA to adopt useful life periods for
light-duty vehicles and light-duty trucks
which differ from those in section
202(d). Similar to Tier 2, the useful life
requirements would be applicable to the
model-level CO2 certification values
(similar to the Tier 2 bins), not to the
fleet average standard.
EPA believes that the useful life
period established for criteria pollutants
under Tier 2 is also appropriate for CO2.
Data from EPA’s current in-use
compliance test program indicate that
CO2 emissions from current technology
vehicles increase very little with age
and in some cases may actually improve
slightly. The stable CO2 levels are
expected because unlike criteria
pollutants, CO2 emissions in current
technology vehicles are not controlled
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by after treatment systems that may fail
with age. Rather, vehicle CO2 emission
levels depend primarily on fundamental
vehicle design characteristics that do
not change over time. Therefore,
vehicles designed for a given CO2
emissions level would be expected to
sustain the same emissions profile over
their full useful life.
The CAA requires emission standards
to be applicable for the vehicle’s full
useful life. Under Tier 2 and other
vehicle emission standard programs,
EPA requires manufacturers to
demonstrate at the time of certification
that the new vehicles being certified
will continue to meet emission
standards throughout their useful life.
EPA allows manufacturers several
options for predicting in-use
deterioration, including full vehicle
testing, bench-aging specific
components, and application of a
deterioration factor based on data and/
or engineering judgment.
In the specific case of CO2, EPA does
not currently anticipate notable
deterioration and is therefore proposing
that an assigned deterioration factor be
applied at the time of certification. EPA
is further proposing an additive
assigned deterioration factor of zero, or
a multiplicative factor of one. EPA
anticipates that the deterioration factor
would be updated from time to time, as
new data regarding emissions
deterioration for CO2 are obtained and
analyzed. Additionally, EPA may
consider technology-specific
deterioration factors, should data
indicate that certain CO2 control
technologies deteriorate differently than
others.
During compliance plan discussions
prior to the beginning of the
certification process, EPA would
explore with each manufacturer any
new technologies that could warrant use
of a different deterioration factor.
Manufacturers would not be allowed to
use the assigned deterioration factor but
rather would be required to establish an
appropriate factor for any vehicle model
determined likely to experience
increases in CO2 emissions over the
vehicle’s useful life. If such an instance
were to occur, EPA is also proposing to
allow manufacturers to use the wholevehicle mileage accumulation method
currently offered in EPA’s regulations.
EPA requests comments on the
proposal to allow manufacturers to use
an EPA-assigned deterioration factor for
CO2 useful life compliance, and to set
that factor at zero (additive) or one
(multiplicative). Particularly helpful
would be data from in-use vehicles that
demonstrate the rate of change in CO2
emissions over a vehicle’s useful life,
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separated according to vehicle
technology.
N2O and CH4 emissions are directly
affected by vehicle emission control
systems. Any of the durability options
offered under EPA’s current compliance
program can be used to determine how
emissions of N2O and CH4 change over
time.
a. Ensuring Useful Life Compliance
The CAA requires a vehicle to comply
with emission standards over its
regulatory useful life and affords EPA
broad authority for the implementation
of this requirement. As such, EPA has
authority to require a manufacturer to
remedy any noncompliance issues. The
remedy can range from the voluntary or
mandatory recall of any noncompliant
vehicles to the recalculation of a
manufacturers fleet average emissions
level. This provides manufacturers with
a strong incentive to design and build
complying vehicles.
Currently, EPA regulations require
manufacturers to conduct in-use testing
as a condition of certification.
Specifically, manufacturers must
commit to later procure and test
privately-owned vehicles that have been
normally used and maintained. The
vehicles are tested to determine the inuse levels of criteria pollutants when
they are in their first and third years of
service. This testing is referred to as the
In-Use Verification Program (IUVP)
testing, which was first implemented as
part of EPA’s CAP 2000 certification
program.174 The emissions data
collected from IUVP serves several
purposes. It provides EPA with annual
real-world in-use data representing the
majority of certified vehicles. EPA uses
IUVP data to identify in-use problems,
validate the accuracy of the certification
program, verify the manufacturer’s
durability processes, and support
emission modeling efforts.
Manufacturers are required to test low
mileage and high mileage vehicles over
the FTP and US06 test cycles. They are
also required to provide evaporative
emissions and on-board diagnostics
(OBD) data.
Manufacturers are required to provide
data for all regulated criteria pollutants.
Some manufacturers voluntarily submit
CO2 data as part of IUVP. EPA is
proposing that for IUVP testing, all
manufacturers will provide emission
data for CO2 and also for N2O and CH4.
EPA is also proposing that
manufacturers perform the highway test
cycle as part of IUVP. Since the
proposed CO2 standard reflects a
combined value of FTP and highway
174 64
FR 23906, May 4, 1999.
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results, it is necessary to include the
highway emission test in IUVP to enable
EPA to compare an in-use CO2 level
with a vehicle’s in-use standard. EPA
requests comments on adding the
highway test cycle as part of the IUVP
requirements.
Another component of the CAP 2000
certification program is the In-Use
Confirmatory Program (IUCP). This is a
manufacturer-conducted recall quality
in-use test program that can be used as
the basis for EPA to order an emission
recall. In order to qualify for IUCP, there
is a threshold of 1.30 times the
certification emission standard and an
additional requirement that at least 50%
of the test vehicles for the test group fail
for the same pollutant. EPA is proposing
to exclude IUVP data for CO2, N2O, and
CH4 emissions from the IUCP
thresholds. At this time, EPA does not
have sufficient data to determine if the
existing thresholds are appropriate or
even applicable to those emissions.
Once EPA can gather more data from the
IUVP program and from EPA’s internal
surveillance program described below,
EPA will reassess the need to exclude
IUCP thresholds, and if warranted,
propose a separate rulemaking
establishing IUCP threshold criteria
which may include CO2, N2O, and CH4
emissions. EPA requests comment on
the proposal to exclude CO2, N2O, and
CH4 from the IUCP threshold.
EPA has also administered its own inuse testing program for light-duty
vehicles under authority of section
207(c) of the CAA for more than 30
years. In this program, EPA procures
and tests representative privately owned
vehicles to determine whether they are
complying with emission standards.
When testing indicates noncompliance,
EPA works with the manufacturer to
determine the cause of the problem and
to conduct appropriate additional
testing to determine its extent or the
effectiveness of identified remedies.
This program operates in conjunction
with the IUVP program and other
sources of information to provide a
comprehensive picture of the
compliance profile for the entire fleet
and address compliance problems that
are identified. EPA proposes to add CO2,
N2O, and CH4 to the emissions
measurements it collects during
surveillance testing.
b. In-Use Compliance Standard
For Tier 2, the in-use standard and the
certification standard are the same. Inuse compliance for an individual
vehicle is determined by comparing the
vehicle’s in-use emission results with
the emission standard levels or ‘‘bin’’ to
which the vehicle is certified rather
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than to the Tier 2 fleet average standard
for the manufacturer. This is because as
part of a fleet average standard,
individual vehicles can be certified to
various emission standard levels, which
could be higher or lower than the fleet
average standard. Thus, comparing an
individual vehicle to the fleet average,
where that vehicle was certified to an
emission level that could be different
than the fleet average level, would be
inappropriate.
This would also be true for the
proposed CO2 fleet average standard.
Therefore, to ensure that an individual
vehicle complies with the proposed CO2
standards in-use, it is necessary to
compare the vehicle’s in-use CO2
emission result with the appropriate
model-level certification CO2 level used
in determining the manufacturer’s fleet
average result.
There is a fundamental difference
between the proposed CO2 standards
and Tier 2 standards. For Tier 2, the
certification standard is one of eight
different emission levels, or ‘‘bins,’’
whereas for the proposed CO2 fleet
average standard, the certification
standard is the model-level certification
CO2 result. The Tier 2 fleet average
standard is calculated using the ‘‘bin’’
emission level or standard, not the
actual certification emission level of the
certification test vehicle. So no matter
how low a manufacturer’s actual
certification emission results are, the
fleet average is still calculated based on
the ‘‘bin’’ level rather than the lower
certification result. In contrast, EPA is
proposing that the CO2 fleet average
standard would be calculated using the
actual vehicle model-level CO2 values
from the certification test vehicles. With
a known certification emission
standard, such as the Tier 2 ‘‘bins,’’
manufacturers typically attempt to overcomply with the standard to give
themselves some cushion for potentially
higher in-use testing results due to
emissions performance deterioration
and/or variability that could result in
higher emission levels during
subsequent in-use testing. For our
proposed CO2 standards, the
certification standard is the actual
certification vehicle test result, thus
manufacturers cannot over comply since
the certification test vehicle result will
always be the value used in determining
the CO2 fleet average. If the
manufacturer attempted to design the
vehicle to achieve a lower CO2 value,
similar to Tier 2 for in-use purposes, the
new lower CO2 value would simply
become the new certification standard.
The CO2 fleet average standard is
based on the performance of preproduction technology that is
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representative of the point of
production, and while there is expected
to be limited if any deterioration in
effectiveness for any vehicle during the
useful life, the fleet average standard
does not take into account the test to
test variability or production variability
that can affect in-use levels. Therefore,
EPA believes that unlike Tier 2, it is
necessary to have a different in-use
standard for CO2 to account for these
variabilities. EPA is proposing to set the
in-use standard at 10% higher than the
appropriate model-level certification
CO2 level used in determining the
manufacturer’s fleet average result.
As described above, manufacturers
typically design their vehicles to emit at
emission levels considerably below the
standards. This intentional difference
between the actual emission level and
the emission standard is referred to as
‘‘certification margin,’’ since it is
typically the difference between the
certification emission level and the
emission standard. The certification
margin can provide manufacturers with
some protection from exceeding
emission standards in-use, since the inuse standards are typically the same as
the certification standards. For Tier 2,
the certification margin is the delta
between the specific emission standard
level, or ‘‘bin,’’ to which the vehicle is
certified, and the vehicle’s certification
emission level.
Since the level of the fleet average
standard does not reflect this kind of
variability, EPA believes it is
appropriate to set an in-use standard
that provides manufacturers with an inuse compliance factor of 10% that will
act as a surrogate for a certification
margin. The factor would only be
applicable to CO2 emissions, and would
be applied to the model-level test results
that are used to establish the modellevel in-use standard.
If the in-use emission result for the
vehicle exceeds the model-level CO2
certification result multiplied by the inuse compliance factor of 10%, then the
vehicle would have exceeded the in-use
emission standard. The in-use
compliance factor would apply to all inuse compliance testing including IUVP,
selective enforcement audits, and EPA’s
internal test program.
The intent of the separate in-use
standard, based on a 10% compliance
factor adjustment, is to provide a
reasonable margin such that vehicles are
not automatically deemed as exceeding
standards simply because of normal
variability in test results. EPA has some
concerns however that this in-use
compliance factor could be perceived as
providing manufacturers with the
ability to design their fleets to generate
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CO2 emissions up to 10% higher than
the actual values they use to certify and
to calculate the year end fleet average
value that determines compliance with
the fleet average standard. This concern
provides additional rationale for
requiring FTP and HFET IUVP data for
CO2 emissions to ensure that in-use
values are not regularly 10% higher
than the values used in the fleet average
calculation. If in the course of reviewing
a manufacturer’s IUVP data it becomes
apparent that a manufacturer’s CO2
results are consistently higher than the
values used for certification, EPA would
discuss the matter with the
manufacturer and consider possible
resolutions such as changes to ensure
that the emissions test data more
accurately reflects the emissions level of
vehicles at the time of production,
increased EPA confirmatory testing, and
other similar measures.
EPA selected a value of 10% for the
in-use standard based on a review of
EPA’s fuel economy labeling and CAFE
confirmatory test results for the past
several vehicle model years. The EPA
data indicate that it is common for test
variability to range between three to six
percent and only on rare occasions to
exceed 10%. EPA believes that a value
of 10% should be sufficient to account
for testing variability and any
production variability that a
manufacturer may encounter. EPA
considered both higher and lower
values. The Tier 2 fleet as a whole, for
example, has a certification margin
approaching 50%.175 However, there are
some fundamental differences between
CO2 emissions and other criteria
pollutants in the magnitude of the
pollutants. Tier 2 NMOG and NOX
emission standards are hundredths of a
gram per mile (e.g., 0.07 g/mi NOX &
0.09 g/mi NMOG), whereas the CO2
standards are four orders of magnitude
greater (e.g., 250 g/mi). Thus EPA does
not believe it is appropriate to consider
a value on the order of 50 percent. In
addition, little deterioration in
emissions control is expected in-use.
The adjustment factor addresses only
one element of what is usually built into
a compliance margin.
EPA requests comments regarding a
proposed in-use standard that uses an
in-use compliance factor. Specifically, is
a factor the best way to address the
technical and other feasibility of the inuse standard; is 10% the appropriate
factor; can EPA expect variability to
decrease as manufacturing experience
175 See
pages 39–41 of EPA’s Vehicle and Engine
Compliance Activities 2007 Progress Report (EPA–
420–R–08–011) published in October 2008. This
document is available electronically at https://
epa.gov/otaq/about/420r08011.pdf.
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increases, in which case would it be
appropriate for the in-use compliance
factor of 10% to decrease over time?
EPA especially requests any data to
support such comments.
5. Credit Program Implementation
As described in Section III.E.2 above,
for each manufacturer’s model year
production, EPA is proposing that the
manufacturer would average the CO2
emissions within each of the two
averaging sets (passenger cars and
trucks) and compare that with its
respective fleet average CO2 standards
(which in turn would have been
determined from the appropriate
footprint curve applicable to that model
year). In addition to this withincompany averaging, EPA is proposing
that when a manufacturer’s fleet average
CO2 emissions of vehicles produced in
an averaging set over-complies
compared to the applicable fleet average
standard, the manufacturer could
generate credits that it could save for
later use (banking) or could transfer to
another manufacturer (trading). Section
III.C discusses opportunities that EPA is
proposing for manufacturers to earn
additional credits, beyond those simply
calculated by ‘‘over-achieving’’ their
applicable standard. Implementation of
the credit program generally involves
two steps: calculation of the credit
amount and reporting the amount and
the associated data and calculations to
EPA.
Of the various credit programs being
proposed by EPA, there are two broad
types. One type of credit directly lowers
a manufacturer’s actual fleet average by
virtue of being applied to the
methodology for calculating the fleet
average emissions. Examples of this
type of credit include the credits
available for alternative fuel vehicles
and for advanced technology vehicles.
The second type of credit is
independent of the calculation of a
manufacturer’s fleet average. Rather
than giving credit by lowering a
manufacturer’s fleet average via a credit
mechanism, these credits (in
megagrams) are calculated separately
and are simply added to the
manufacturer’s overall ‘‘bank’’ of credits
(or debits). Using a fictional example,
the remainder of this section will step
through the different types of credits
and show where and how they are
calculated and how they impact a
manufacturer’s available credits.
a. Basic Credits for a Fleet With Average
CO2 Emissions Below the Standard
Basic credits are earned by doing
better than the applicable standard.
Manufacturers calculate their standards
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(separate standards are calculated for
cars and trucks) using the footprintbased equations described in Section
III.B. A manufacturer’s actual end-ofyear fleet average CO2 is calculated
similarly to the way in which CAFE
values are currently calculated; in fact,
the regulations are essentially identical.
The current CAFE calculation methods
are in 40 CFR Part 600. EPA is
proposing to amend key subparts and
sections of Part 600 to require that fleet
average CO2 be calculated in a manner
parallel to the way CAFE values are
calculated. First manufacturers would
determine a CO2-equivalent value for
each model type. The CO2-equivalent
value is a summation of the carboncontaining constituents of the exhaust
emissions, with each weighted by a
coefficient that reflects the carbon
weight fraction of that constituent. For
gasoline and diesel vehicles this simply
involves measurement of total
hydrocarbons and carbon monoxide in
addition to CO2, but becomes somewhat
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more complex for alternative fuel
vehicles due to the different nature of
their exhaust emissions. For example,
for ethanol-fueled vehicles, the emission
tests must measure ethanol, methanol,
formaldehyde, and acetaldehyde in
addition to CO2. However, all these
measurements are necessary to
determine fuel economy and thus no
new testing or data collection would be
required. Second, manufacturers would
calculate a fleet average by weighting
the CO2-equivalent value for each model
type by the production of that model
type, as they currently do for the CAFE
program. Again, this would be done
separately for cars and trucks. Finally,
the manufacturer would compare the
calculated standard with the average
that is actually achieved to determine
the credits (or debits). Both the
determination of the applicable
standard and the actual fleet average
would be done after the model year is
complete and using final model year
production data.
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Consider a basic example where
Manufacturer ‘‘A’’ has calculated a car
standard of 300 grams/mile and a fleet
average of 290 grams/mile (Figure
III.E.5–1). Further assume that the
manufacturer produced 500,000 cars.
The credit is calculated by taking the
difference between the standard and the
fleet average (300–290=10) and
multiplying it by the production of
500,000. This result is then multiplied
by the lifetime vehicle miles travelled
(for cars this is 190,971 miles), then
finally divided by 1,000,000 to convert
from grams to total megagrams. The
result is the number of CO2 megagrams
of credit (or deficit, if the manufacturer
was not able to comply with the fleet
average standard) generated by the
manufacturer’s car fleet. In this
example, the result is 954,855
megagrams.
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b. Advanced Technology Credits
Advanced technology credits directly
impact a manufacturer’s fleet average,
thus increasing the amount of credits
they earn (or reducing the amount of
debits that would otherwise accrue). To
earn these credits, manufacturers that
produce electric vehicles, plug-in
hybrid electric vehicles, or fuel cell
electric vehicles would include these
vehicles in the fleet average calculation
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with their model type emission values
(0 g/m for electric vehicles and fuel cell
electric vehicles, and a measured CO2
value for plug-in hybrid electric
vehicles), but would apply the proposed
multiplier of 2.0 to the production
volume of each of these vehicles. This
approach would thus enhance the
impact that each of these low-CO2
advanced technology vehicles has on
the manufacturer’s fleet average.
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EPA is proposing to limit availability
of advanced technology credits to the
technologies noted above, with the
additional limitation that the vehicles
must be certified to Tier 2 Bin 5
emission standards or cleaner (this
obviously applies primarily to plug-in
hybrid electric vehicles). EPA is
proposing to use the following
definitions to determine which vehicles
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are eligible for the advanced technology
credits:
• Electric vehicle means a motor
vehicle that is powered solely by an
electric motor drawing current from a
rechargeable energy storage system,
such as from storage batteries or other
portable electrical energy storage
devices, including hydrogen fuel cells,
provided that:
Æ (1) Recharge energy must be drawn
from a source off the vehicle, such as
residential electric service; and
Æ (2) The vehicle must be certified to
the emission standards of Bin #1 of
Table S04–1 in paragraph (c)(6) of
§ 86.1811.
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• Fuel cell electric vehicle means a
motor vehicle propelled solely by an
electric motor where energy for the
motor is supplied by a fuel cell.
• Fuel cell means an electrochemical
cell that produces electricity via the
reaction of a consumable fuel on the
anode with an oxidant on the cathode
in the presence of an electrolyte.
• Plug-in hybrid electric vehicle
(PHEV) means a hybrid electric vehicle
that: (1) Has the capability to charge the
battery from an off-vehicle electric
source, such that the off-vehicle source
cannot be connected to the vehicle
while the vehicle is in motion, and (2)
has an equivalent all-electric range of no
less than 10 miles.
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With some simplifying assumptions,
assume that 25,000 of Manufacturer A’s
fleet are now plug-in hybrid electric
vehicles with CO2 emissions of 100
g/mi, and the remaining 475,000 are
conventional technology vehicles with
average CO2 emissions of 290 grams/
mile. By applying the factor of 2.0 to the
electric vehicle production numbers in
the appropriate places in the fleet
average calculation formula
Manufacturer A now has more than 2.6
million credits (Figure III.E.5–2).
Without the use of the multiplier
Manufacturer A’s fleet average would be
281 instead of 272, which would
generate about 1.8 million credits.
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c. Flexible-Fuel Vehicle Credits
As noted in Section III.C, treatment of
flexible-fuel vehicle (FFV) credits differs
between 2012 to 2015 and 2016 and
later. For the 2012 through 2015 model
years the FFV credits will be calculated
as they are in the CAFE program for the
same model years, except that formulae
in the regulations would be modified as
needed to do the calculations in terms
of grams per mile of CO2 rather than
miles per gallon. Like the advanced
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technology vehicle credits, these credits
are integral to the fleet average
calculation, but rather than crediting the
vehicles with an artificially inflated
quantity as in the advanced technology
credit program described above, the FFV
credit program allows the vehicles to be
represented by artificially reduced
emissions. To use this credit program,
the CO2 emissions of FFVs will be
represented by the average of two
things: the CO2 emissions while
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operating on gasoline, and the CO2
emissions operating on the alternative
fuel multiplied by 0.15.
For example, Manufacturer A now
makes 30,000 FFVs with CO2 emissions
of 280 g/mi using gasoline and 260
g/mi using ethanol. The CO2 emissions
that would represent the FFVs in the
fleet average calculation would be
calculated as follows:
FFV emissions = (280 + 260×0.15) ÷ 2
= 160 g/mi
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III.E.5–3, further reduces the fleet
average to 256 grams/mile and increases
the manufacturer’s credits to about 4.2
million megagrams.
In the 2016 and later model years the
calculation of FFV emissions would be
much the same except that the
determination of the CO2 value to
represent an FFV model type would be
based upon the actual use of the
alternative fuel and on actual CO2
emissions while operating on that fuel.
EPA’s default assumption in the
regulations is that the alternative fuel is
used negligibly, and the CO2 value that
would apply to an FFV by default
would be the value determined for
operation on conventional fuel.
However, if the manufacturer believes
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Including these FFVs with the
applicable credit in Manufacturer A’s
fleet average, as shown below in Figure
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that the alternative fuel is used in realworld driving and that accounting for
this use could improve the fleet average,
the manufacturer would have two
options. First, the regulations would
allow a manufacturer to request that
EPA determine an appropriate
weighting value for an alternative fuel to
reflect the degree of use of that fuel in
FFVs relative to real-world use of the
conventional fuel. Section III.C
describes how EPA might make this
determination. Any value determined
by EPA would be published via
guidance letter to manufacturers, and
that weighting value would be available
for all manufacturers to use for that fuel.
A second option proposed in the
regulations would allow a manufacturer
to determine the degree of alternative
fuel use for their own vehicle(s), using
a variety of potential methods. Both the
method and the use of the final results
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would have to be approved by EPA
before their use would be allowed. In
either case, whether EPA supplies the
weighting factors or the manufacturer
determines them, the CO2 emissions of
an FFV in 2016 and later would be as
follows (assuming non-zero use of the
alternative fuel):
(W1×CO2conv)+(W2×CO2alt),
Where,
W1 and W2 are the proportion of miles
driven using conventional fuel and
alternative fuel, respectively, CO2conv is the
CO2 value while using conventional fuel, and
CO2alt is the CO2 value while using the
alternative fuel.
d. Dedicated Alternative Fuel Vehicle
Credits
Like the FFV credit program
described above, these credits would be
treated differently in the first years of
the program than in the 2016 and later
model years. In fact, these credits are
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essentially identical to the FFV credits
except for two things: (1) There is no
need to average CO2 values for gasoline
and alternative fuel, and (2) in 2016 and
later there is no demonstration needed
to get a benefit from the alternative fuel.
The CO2 values are essentially
determined the same way they are for
FFVs operating on the alternative fuel.
For the 2012 through 2015 model years
the CO2 test results are multiplied by
the credit adjustment factor of 0.15, and
the result is production-weighted in the
fleet average calculation. For example,
assume that Manufacturer A now
produces 20,000 dedicated CNG
vehicles with CO2 emissions of 220
grams/mile, in addition to the FFVs and
PHEVs already included in their fleet
(Figure III.E.5–4). Prior to the 2016
model year the CO2 emissions
representing these CNG vehicles would
be 33 grams/mile (220 × 0.15).
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The calculation for 2016 and later
would be exactly the same except the
0.15 credit adjustment factor would be
removed from the equation, and the
CNG vehicles would simply be
production-weighted in the equation
using their actual emissions value of
220 grams/mile instead of the
‘‘credited’’ value of 33 grams/mile.
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e. Air Conditioning Leakage Credits
Unlike the credit programs described
above, air conditioning-related credits
do not affect the overall calculation of
the fleet average. Whether a
manufacturer generates zero air
conditioning credits or many, the
calculated fleet average remains the
same. Air conditioning credits are
calculated and added to any credits (or
deficit) that results from the fleet
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49571
average calculation. Thus, these credits
can increase a manufacturer’s credit
balance or offset a deficit, but their
calculation is external to the fleet
average calculation. As noted in Section
III.C, manufacturers could generate
credits for reducing the leakage of
refrigerant from their air conditioning
systems. To do this the manufacturer
would identify an air conditioning
system improvement, indicate that they
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intend to use the improvement to
generate credits, and then calculate an
annual leakage rate (grams/year) for that
system based on the method defined by
the proposed regulations. Air
conditioning credits would be
determined separately for cars and
trucks using the car and truck-specific
equations described in Section III.C.
In order to put these credits on the
same basis as the basic and other credits
describe above, the air conditioning
leakage credits would need to be
calculated separately for cars and
trucks. Thus, the resulting grams per
mile credit determined from the
appropriate car or truck equation would
be multiplied by the lifetime VMT
(190,971 for cars; 221,199 for trucks),
and then divided by 1,000,000 to get the
total megagrams of CO2 credits
generated by the improved air
conditioning system. Although the
calculations are done separately for cars
and trucks, the total megagrams would
be summed and then added to the
overall credit balance maintained by the
manufacturer.
For example, assume that
Manufacturer A has improved an air
conditioning system that is installed in
250,000 cars and that the calculated
leakage rate is 12 grams/year. Assume
that the manufacturer has also
implemented a new refrigerant with a
Global Warming Potential of 850. In this
case the credit per air conditioning unit,
rounded to the nearest gram per mile
would be:
[13.8 × [1—(12/16.6 × 850/1430)] = 7.9
g/mi.
Total megagrams of credits would
then be:
[ 7.9 × 250,000 × 190971 ] ÷ 1,000,000
= 377,168 Mg.
These credits would be added directly
to a manufacturer’s total balance; thus
in this example Manufacturer A would
now have, after consideration of all the
above credits, a total of 5,437,900
Megagrams of credits.
f. Air Conditioning Efficiency Credits
As noted in Section III.C.1.b,
manufacturers could earn credits for
improvements in air conditioning
efficiency that reduce the impact of the
air conditioning system on fuel
consumption. These credits are similar
to the air conditioning leakage credits
described above, in that these credits are
determined independently from the
manufacturer’s fleet average calculation,
and the resulting credits are added to
the manufacturer’s overall balance for
the respective model year. Like the air
conditioning leakage credits, these
credits can increase a manufacturer’s
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credit balance or offset a deficit, but
their calculation is external to the fleet
average calculation.
In order to put these credits on the
same basis as the basic and other credits
describe above, the air conditioning
leakage credits would need to be
calculated separately for cars and
trucks. Thus, the resulting grams per
mile credit determined in the above
equation would be multiplied by the
lifetime VMT (190,971 for cars; 221,199
for trucks), and then divided by
1,000,000 to get the total megagrams of
CO2 credits generated by the improved
air conditioning system. Although the
calculations are done separately for cars
and trucks, the total megagrams can be
summed and then added to the overall
credit balance maintained by the
manufacturer.
As described in Section III.C,
manufacturers would determine their
credit based on selections from a menu
of technologies, each of which provides
a gram per mile credit amount. The
credits would be summed for all the
technologies implemented by the
manufacturer, but could not exceed 5.7
grams per mile. Once this is done, the
calculation is a straightforward
translation of a gram per mile credit to
total car or truck megagrams, using the
same methodology described above. For
example, if Manufacturer A implements
enough technologies to get the
maximum 5.7 grams per mile for an air
conditioning system that sells 250,000
units in cars, the calculation of total
credits would be as follows:
[5.7 × 250,000 × 190971] ÷ 1,000,000 =
272,134 Mg.
These credits would be added directly
to a manufacturer’s total balance; thus
in this example Manufacturer A would
now have, after consideration of all the
above credits, a total of 5,710,034
Megagrams of credits.
g. Off-Cycle Technology Credits
As described in Section III.C, these
credits would be available for certain
technologies that achieve real-world
CO2 reductions that aren’t adequately
captured on the city or highway test
cycles used to determine compliance
with the fleet average standards. Like
the air conditioning credits, these
credits are independent of the fleet
average calculation. Section III.C.4
describes two options for generating
these credits: either using EPA’s 5-cycle
fuel economy labeling methodology, or
if that method fails to capture the CO2reducing impact of the technology, the
manufacturer could propose and use,
with EPA approval, a different
analytical approach to determining the
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credit amount. Like the air conditioning
credits above, these credits would have
to be determined separately for cars and
trucks because of the differing lifetime
mileage assumptions between cars and
trucks.
Using the 5-cycle approach would be
relatively straightforward, and because
the 5-cycle formulae account for
nationwide variations in driving
conditions, no additional adjustments to
the test results would be necessary. The
manufacturer would simply calculate a
5-cycle CO2 value with the technology
installed and operating and compare it
with a 5-cycle CO2 value determined
without the technology installed and/or
operating. Existing regulations describe
how to calculate 5-cycle fuel economy
values, and the proposed regulations
contain provisions that describe how to
calculate 5-cycle CO2 values. The
manufacturer would have to design a
test program that accounts for vehicle
differences if the technology is installed
in different vehicle types, and enough
data would have to be collected to
address data uncertainty issues. A
description of such a test program and
the results would be submitted to EPA
for approval.
As noted in Section III.C.4, a
manufacturer-developed testing, data
collection and analysis program would
require some additional EPA approval
and oversight. Once the demonstration
of the CO2 reduction of an off-cycle
technology is complete, however, and
the resulting value accounts for
variations in driving, climate and other
conditions across the country, the two
approaches are treated fundamentally
the same way and in a way that parallels
the approach for determining the air
conditioning credits described above.
Once a gram per mile value is approved
by the EPA, the manufacturer would
determine the total credit value by
multiplying the gram per mile per
vehicle credit by the volume of vehicles
with that technology and approved for
use of the credit. This would then be
multiplied by the lifetime vehicle miles
for cars or trucks, whichever applies,
and divided by 1,000,000 to obtain total
Megagrams of CO2 credits. These credits
would then be added to the
manufacturer’s total balance for the
given model year. Just like the above air
conditioning case, an off-cycle
technology that is demonstrated to
achieve an average CO2 reduction of 4
grams/mile and that is installed in
175,000 cars would generate credits as
follows:
[4 × 175,000 × 190971] ÷ 1,000,000 =
133,680 Mg.
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h. End-of-Year Reporting
In general, implementation of the
averaging, banking, and trading (ABT)
program, including the calculation of
credits and deficits, would be
accomplished via existing reporting
mechanisms. EPA’s existing regulations
define how manufacturers calculate
fleet average miles per gallon for CAFE
compliance purposes, and EPA is
proposing to modify these regulations to
also require the parallel calculation of
fleet average CO2 levels for car and light
truck compliance categories. These
regulations already require an end-ofyear report for each model year,
submitted to EPA, which details the test
results and calculations that determine
each manufacturer’s CAFE levels. EPA
is proposing to require that this report
also include fleet average CO2 levels. In
addition to requiring reporting of the
actual fleet average achieved, this endof-year report would also contain the
calculations and data determining the
manufacturer’s applicable fleet average
standard for that model year. As under
the existing Tier 2 program, the report
would be required to contain the fleet
average standard, all values required to
calculate the fleet average standard, the
actual fleet average CO2 that was
achieved, all values required to
calculate the actual fleet average, the
number of credits generated or debits
incurred, all the values required to
calculate the credits or debits, and the
resulting balance of credits or debits.
Because of the multitude of credit
programs that are available, the end-ofyear report will be required to have
more data and a more defined and
specific structure than the CAFE end–
of-year report does today. Although
requiring ‘‘all the data required’’ to
calculate a given value should be
inclusive, the proposed report would
contain some requirements specific to
certain types of credits.
For advanced technology credits that
apply to vehicles like electric vehicles
and plug-in hybrid electric vehicles,
manufacturers would be required to
identify the number and type of these
vehicles and the effect of these credits
on their fleet average. The same would
be true for credits due to flexible-fuel
and alternative-fuel vehicles, although
for 2016 and later flexible-fuel credits
manufacturers would also have to
provide a demonstration of the actual
use of the alternative fuel in-use and the
resulting calculations of CO2 values for
such vehicles. For air conditioning
leakage credits manufacturers would
have to include a summary of their use
of such credits that would include
which air conditioning systems were
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subject to such credits, information
regarding the vehicle models which
were equipped with credit-earning air
conditioning systems, the production
volume of these air conditioning
systems, the leakage score of each air
conditioning system generating credits,
and the resulting calculation of leakage
credits. Air conditioning efficiency
reporting will be somewhat more
complicated given the phase-in of the
efficiency test, and reporting would
have to detail compliance with the
phase-in as well as the test results and
the resulting efficiency credits
generated. Similar reporting
requirements would also apply to the
variety of possible off-cycle credit
options, where manufacturers would
have to report the applicable
technology, the amount of credit per
unit, the production volume of the
technology, and the total credits from
that technology.
Although it is the final end-of-year
report, when final production numbers
are known, that will determine the
degree of compliance and the actual
values of any credits being generated by
manufacturers, EPA is also proposing
that manufacturers be prepared to
discuss their compliance approach and
their potential use of the variety of
credit options in pre-certification
meetings that EPA routinely has with
manufacturers. In addition, and in
conjunction with a pre-model year
report required under the CAFE
program, the manufacturer would be
required to submit projections of all of
the elements described above.
Finally, to the extent that there are
any credit transactions, the
manufacturer would have to detail in
the end-of-year report documentation on
all credit transactions that the
manufacturer has engaged in.
Information for each transaction would
include: The name of the credit
provider, the name of the credit
recipient, the date the transfer occurred,
the quantity of credits transferred, and
the model year in which the credits
were earned. Failure by the
manufacturer to submit the annual
report in the specified time period
would be considered to be a violation of
section 203(a)(1) of the Clean Air Act.
6. Enforcement
As discussed above in Section III.E.5
under the proposed program,
manufacturers would report to EPA
their fleet average standard for a given
model year (reporting separately for
each of the car and truck averaging sets),
the credits or deficits generated in the
current year, the balance of credit
balances or deficits (taking into account
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banked credits, deficit carry-forward,
etc. see Section III.E.5), and whether
they were in compliance with the fleet
average standard under the terms of the
regulations. EPA would review the
annual reports, figures, and calculations
submitted by the manufacturer to
determine any nonconformance. EPA
requests comments on the above
approach for monitoring and
enforcement of the fleet average
standard.
Each certificate, required prior to
introduction into commerce, would be
conditioned upon the manufacturer
attaining the CO2 fleet average standard.
If a manufacturer failed to meet this
condition and had not generated or
purchased enough credits to cover the
fleet average exceedance following the
three year deficit carry-forward (Section
III.B.4, then EPA would review the
manufacturer’s sales for the most recent
model year and designate which
vehicles caused the fleet average
standard to be exceeded. EPA would
designate as nonconforming those
vehicles with the highest emission
values first, continuing until a number
of vehicles equal to the calculated
number of non-complying vehicles as
determined above is reached and those
vehicles would be considered to be not
covered by the certificates of conformity
covering those model types. In a test
group where only a portion of vehicles
would be deemed nonconforming, EPA
would determine the actual
nonconforming vehicles by counting
backwards from the last vehicle sold in
that model type. A manufacturer would
be subject to penalties and injunctive
orders on an individual vehicle basis for
sale of vehicles not covered by a
certificate. This is the same general
mechanism used for the National LEV
and Tier 2 corporate average standards,
except that these programs operate
slightly differently in that the noncompliant vehicles would be designated
not in the most recent model year, but
in the model year in which the deficit
originated. EPA requests comment on
which approach is most appropriate; the
Tier 2 approach of penalizing vehicles
from the year in which the deficit was
generated, or the proposed approach
that would penalize vehicles from the
year in which the manufacturer failed to
make up the deficit as required.
Section 205 of the CAA authorizes
EPA to assess penalties of up to $37,500
per vehicle for violations of the
requirements or prohibitions of this
proposed rule.176 This section of the
176 42 U.S.C. 7524(a), Civil Monetary Penalty
Inflation Adjustment, 69 FR 7121 (Feb. 13, 2004)
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CAA provides that the agency shall take
the following penalty factors into
consideration in determining the
appropriate penalty for any specific
case: The gravity of the violation, the
economic benefit or savings (if any)
resulting from the violation, the size of
the violator’s business, the violator’s
history of compliance with this title,
action taken to remedy the violation, the
effect of the penalty on the violator’s
ability to continue in business, and such
other matters as justice may require.
EPA recognizes that it may be
appropriate, should a manufacturer fail
to comply with the NHTSA fuel
economy standards as well as the CO2
standard proposed today in a case
arising out of the same facts and
circumstances, to take into account the
civil penalties that NHTSA has assessed
for violations of the CAFE standards
when determining the appropriate
penalty amount for violations of the CO2
emissions standards. This approach is
consistent with EPA’s broad discretion
to consider ‘‘such other matters as
justice may require,’’ and will allow
EPA to exercise its discretion to prevent
injustice and ensure that penalties for
violations of the CO2 rule are assessed
in a fair and reasonable manner.
The statutory penalty factor that
allows EPA to consider ‘‘such other
matters as justice may require’’ vests
EPA with broad discretion to reduce the
penalty when other adjustment factors
prove insufficient or inappropriate to
achieve justice.177 The underlying
principle of this penalty factor is to
operate as a safety mechanism when
necessary to prevent injustice.178
In other environmental statutes,
Congress has specifically required EPA
to consider penalties assessed by other
government agencies where violations
arise from the same set of facts. For
instance, section 311(b)(8) of the Clean
Water Act, 33 U.S.C. 1321(b)(8)
authorizes EPA to consider any other
penalty for the same incident when
determining the appropriate Clean
Water Act penalty. Likewise, section
113(e) of the CAA authorizes EPA to
consider ‘‘payment by the violator of
penalties previously assessed for the
same violation’’ when assessing
penalties for certain violations of Title
I of the Act.
7. Prohibited Acts in the CAA
Section 203 of the Clean Air Act
describes acts that are prohibited by
and Civil Monetary Penalty Inflation Adjustment
Rule, 73 FR 75340 (Dec. 11, 2008).
177 In re Spang & Co., 6 E.A.D. 226, 249 (EAB
1995).
178 B.J. Carney Industries, 7 E.A.D. 171, 232, n. 82
(EAB 1997).
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law. This section and associated
regulations apply equally to the
greenhouse standards proposed today as
to any other regulated pollutant.
8. Other Certification Issues
a. Carryover/Carry Across Certification
Test Data
EPA’s certification program for
vehicles allows manufacturers to carry
certification test data over and across
certification testing from one model year
to the next, when no significant changes
to models are made. EPA expects that
this policy could also apply to CO2, N2O
and CH4 certification test data. A
manufacturer may also be eligible to use
carryover and carry across data to
demonstrate CO2 fleet average
compliance if they had done so for
CAFE purposes.
b. Compliance Fees
The CAA allows EPA to collect fees
to cover the costs of issuing certificates
of conformity for the classes of vehicles
and engines covered by this proposal.
On May 11, 2004, EPA updated its fees
regulation based on a study of the costs
associated with its motor vehicle and
engine compliance program (69 FR
51402). At the time that cost study was
conducted the current rulemaking was
not considered.
At this time the extent of any added
costs to EPA as a result of this proposal
is not known. EPA will assess its
compliance testing and other activities
associated with the proposed rule and
may amend its fees regulations in the
future to include any warranted new
costs.
c. Small Entity Deferment
EPA is proposing to defer CO2
standards for certain small entities, and
these entities (necessarily) would not be
subject to the certification requirements
of this proposal.
As discussed in Section III.B.7,
businesses meeting the Small Business
Administration (SBA) criterion of a
small business as described in 13 CFR
121.201 would not be subject to the
proposed GHG requirements, pending
future regulatory action. EPA is
proposing that such entities submit a
declaration to EPA containing a detailed
written description of how that
manufacturer qualifies as a small entity
under the provisions of 13 CFR 121.201
in order to ensure EPA is aware of the
deferred companies. This declaration
would have to be signed by a chief
officer of the company, and would have
to be made at least 30 days prior to the
introduction into commerce of any
vehicles for each model year for which
the small entity status is requested, but
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not later than December of the calendar
year prior to the model year for which
deferral is requested. For example, if a
manufacturer will be introducing model
year 2012 vehicles in October of 2011,
then the small entity declaration would
be due in September of 2011. If 2012
model year vehicles are not planned for
introduction until March of 2012, then
the declaration would have to be
submitted in December of 2011. Such
entities are not automatically exempted
from other EPA regulations for lightduty vehicles and light-duty trucks;
therefore, absent this annual declaration
EPA would assume that each entity was
not deferred from compliance with the
proposed greenhouse gas standards.
d. Onboard Diagnostics (OBD) and CO2
Regulations
The light-duty on-board diagnostics
(OBD) regulations require manufacturers
to detect and identify malfunctions in
all monitored emission-related
powertrain systems or components.179
Specifically, the OBD system is required
to monitor catalysts, oxygen sensors,
engine misfire, evaporative system
leaks, and any other emission control
systems directly intended to control
emissions, such as exhaust gas
recirculation (EGR), secondary air, and
fuel control systems. The monitoring
threshold for all of these systems or
components is 1.5 times the applicable
standards, which typically include
NMHC, CO, NOX, and PM. EPA is
confident that many of the emissionrelated systems and components
currently monitored would effectively
catch any malfunctions related to CO2
emissions. For example, malfunctions
resulting from engine misfire, oxygen
sensors, the EGR system, the secondary
air system, and the fuel control system
would all have an impact on CO2
emissions. Thus, repairs made to any of
these systems or components should
also result in an improvement in CO2
emissions. In addition, EPA does not
have data on the feasibility or
effectiveness of monitoring various
emission systems and components for
CO2 emissions and does not believe it
would be prudent to include CO2
emissions without such information.
Therefore, at this time, EPA does not
plan to require CO2 emissions as one of
the applicable standards required for the
OBD monitoring threshold. EPA plans
to evaluate OBD monitoring technology,
with regard to monitoring CO2
emissions-related systems and
components, and may choose to propose
to include CO2 emissions as part of the
OBD requirements in a future regulatory
179 40
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CFR 86.1806–04.
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action. EPA requests comment as to
whether this is appropriate at this time,
and specifically requests any data that
would support the need for CO2-related
components that could or should be
monitored via an OBD system.
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e. Applicability of Current High
Altitude Provisions to Greenhouse
Gases
EPA is proposing that vehicles
covered by this proposal meet the CO2,
N2O and CH4 standard at altitude. The
CAA requires emission standards under
section 202 to apply at all altitudes.180
EPA does not expect vehicle CO2, CH4,
or N2O emissions to be significantly
different at high altitudes based on
vehicle calibrations commonly used at
all altitudes. Therefore, EPA is
proposing to retain its current high
altitude regulations so manufacturers
would not normally be required to
submit vehicle CO2 test data for high
altitude. Instead, they would submit an
engineering evaluation indicating that
common calibration approaches will be
utilized at high altitude. Any deviation
in emission control practices employed
only at altitude would need to be
included in the auxiliary emission
control device (AECD) descriptions
submitted by manufacturers at
certification. In addition, any AECD
specific to high altitude would be
required to include emissions data to
allow EPA evaluate and quantify any
emission impact and validity of the
AECD. EPA requests comment on this
approach, and specifically requests data
on impact of altitude on FTP and HFET
CO2 emissions.
f. Applicability of Standards to
Aftermarket Conversions
With the exception of the small entity
deferment option EPA is proposing,
EPA’s emission standards, including the
proposed greenhouse gas standards,
would continue to apply as stated in the
applicability sections of the relevant
regulations. The proposed greenhouse
gas standards are being incorporated
into 40 CFR part 86, subpart S, the
provisions of which include exhaust
and evaporative emission standards for
criteria pollutants. Subpart S includes
requirements for new light-duty
vehicles, light-duty trucks, mediumduty passenger vehicles, Otto-cycle
complete heavy-duty vehicles, and some
incomplete light-duty trucks. Subpart S
is currently specifically applicable to
aftermarket conversion systems,
aftermarket conversion installers, and
aftermarket conversion certifiers, as
those terms are defined in 40 CFR
180 See
CAA 206(f).
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85.502. EPA expects that some
aftermarket conversion companies
would qualify for and seek the small
entity deferment, but those that do not
qualify would be required to meet the
applicable emission standards,
including the proposed greenhouse gas
standards.
9. Miscellaneous Revisions to Existing
Regulations
a. Revisions and Additions to
Definitions
EPA is proposing to amend its
definitions of ‘‘engine code,’’
‘‘transmission class,’’ and ‘‘transmission
configuration’’ in its vehicle
certification regulations (Part 86) to
conform with the definitions for those
terms in its fuel economy regulations
(Part 600). The exact terms in Part 86 are
used for reporting purposes and are not
used for any compliance purpose (e.g.,
an engine code would not determine
which vehicle was selected for emission
testing). However, the terms are used for
this purpose in Part 600 (e.g., engine
codes, transmission class, and
transmission configurations are all
criteria used to determine which
vehicles are to be tested for the purposes
of establishing corporate average fuel
economy). Here, EPA is proposing that
the same vehicles tested to determine
corporate average fuel economy also be
tested to determine fleet average CO2, so
the same definitions should apply. Thus
EPA is proposing to amend its Part 86
definitions of the above terms to
conform to the definitions in Part 600.
To bring EPA’s fuel economy
regulations in Part 600 into conformity
with this proposal for fleet average CO2
and NHTSA’s reform truck regulations
two amendments are proposed. First,
the definition of ‘‘footprint’’ that is
proposed in this rule is also being
proposed for addition to EPA’s Part 86
and 600 regulations. This definition is
based on the definition promulgated by
NHTSA at 49 CFR 523.2. Second, EPA
is proposing to amend its model year
CAFE reporting regulations to include
the footprint information necessary for
EPA to determine the reformed truck
standards and the corporate average fuel
economy. This same information is
proposed to be included in this proposal
for fleet average CO2 and fuel economy
compliance.
b. Addition of Ethanol Fuel Economy
Calculation Procedures
EPA is proposing to add calculation
procedures to part 600 for determining
the carbon-related exhaust emissions
and calculating the fuel economy of
vehicles operating on ethanol fuel.
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Manufacturers have been using these
procedures as needed, but the regulatory
language—which specifies how to
determine the fuel economy of gasoline,
diesel, compressed natural gas, and
methanol fueled vehicles—has not
previously been brought up-to-date to
provide procedures for vehicles
operating on ethanol. Thus EPA is
proposing a carbon balance approach
similar to other fuels for the
determination of carbon-related exhaust
emissions for the purpose of
determining fuel economy and for
compliance with the proposed fleet
average CO2 standards. The carbon
balance formula is similar to that for
methanol, except that ethanol-fueled
vehicles must also measure the
emissions of ethanol and acetaldehyde.
The proposed carbon balance equation
for determining fuel economy is as
follows, where CWF is the carbon
weight fraction of the fuel and CWFexHC
is the carbon weight fraction of the
exhaust hydrocarbons:
mpg = (CWF × SG × 3781.8)/((CWFexHC× HC)
+ (0.429 × CO) + (0.273 × CO2) + (0.375
× CH3OH) + (0.400 × HCHO) + (0.521 ×
C2H5OH) + (0.545 × C2H4O))
The proposed equation for
determining the total carbon-related
exhaust emissions for compliance with
the CO2 fleet average standards is the
following, where CWFexHC is the carbon
weight fraction of the exhaust
hydrocarbons:
CO2-eq = (CWFexHC× HC) + (0.429 × CO) +
(0.375 × CH3OH) + (0.400 × HCHO) +
(0.521 × C2H5OH) + (0.545 × C2H4O) +
CO2.
EPA requests comment on the use of
these formulae to determine fuel
economy and carbon emissions.
c. Revision of Electric Vehicle
Applicability Provisions
In 1980 EPA issued a rule that
provided for the inclusion of electric
vehicles in the CAFE program.181 EPA
now believes that certain provisions of
the regulations should be updated to
reflect the current state of motor vehicle
emission and fuel economy regulations.
In particular, EPA believes that the
exemption of electric vehicles in certain
cases from fuel economy labeling and
CAFE requirements should be
reevaluated and revised.
The rule created an exemption for
electric vehicles from fuel economy
labeling in the following cases: (1) If the
electric vehicles are produced by a
company that produces only electric
vehicles; and (2) if the electric vehicles
are produced by a company that
181 45
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FR 49256, July 24, 1980.
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produces fewer than 10,000 vehicles of
all kinds worldwide. EPA believes that
this exemption language is no longer
appropriate and proposes to delete it
from the affected regulations. First,
since 1980 many regulatory provisions
have been put in place to address the
concerns of small manufacturers and
enable them to comply with fuel
economy and emission programs with
reduced burden. EPA believes that all
small volume manufacturers should
compete on a fair and level regulatory
playing field and that there is no longer
a need to treat small volume electric
vehicles any differently than small
volume manufacturers of other types of
vehicles. Current regulations contain
streamlined certification procedures for
small companies, and because electric
vehicles emit no direct pollution there
is effectively no certification emission
testing burden. For example, the
proposed greenhouse gas regulations
contain a provision allowing the
exemption of certain small entities.
Meeting the requirements for fuel
economy labeling and CAFE will entail
a testing, reporting, and labeling burden,
but these burdens are not extraordinary
and should be applied equally to all
small volume manufacturers, regardless
of the fuel that moves their vehicles.
EPA has been working with existing
electric vehicle manufacturers on fuel
economy labeling, and EPA believes it
is important for the consumer to have
impartial, accurate, and useful label
information regarding the energy
consumption of these vehicles. Second,
EPCA does not provide for an
exemption of electric vehicles from
NHTSA’s CAFE program, and NHTSA
regulations regarding the applicability
of the CAFE program do not provide an
exemption for electric vehicles. Third,
the blanket exemption for any
manufacturer of only electric vehicles
assumed at the time that these
companies would all be small, but the
exemption language inappropriately did
not account for size and would allow
large manufacturers to be exempt as
well. Finally, because of growth
expected in the electric vehicle market
in the future, EPA believes that the
labeling and CAFE regulations need to
be designed to more specifically
accommodate electric vehicles and to
require that consumers be provided
with appropriate information regarding
these vehicles. For these reasons EPA is
proposing revisions to 40 CFR Part 600
applicability regulations such that these
electric vehicle exemptions are deleted
starting with the 2012 model year.
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d. Miscellaneous Conforming
Regulatory Amendments
reporting provisions under this
proposal.
Throughout the regulations EPA has
made a number of minor amendments to
update the regulations as needed or to
conform with amendments discussed in
this preamble. For example, for
consistency with the ethanol fuel
economy calculation procedures
discussed above, EPA has amended
regulations where necessary to require
the collection of emissions of ethanol
and acetaldehyde. Other changes are
made to applicability sections to remove
obsolete regulatory requirements such
as phase-ins related to EPA’s Tier 2
emission standards program, and still
other changes are made to better
accommodate electric vehicles in EPA
emission control regulations. Not all of
these minor amendments are noted in
this preamble, thus the reader should
carefully evaluate the proposed
regulatory text to ensure a complete
understanding of the regulatory changes
being proposed by EPA.
11. Light Duty Vehicles and Fuel
Economy Labeling
10. Warranty, Defect Reporting, and
Other Emission-Related Components
Provisions
Under section 207(a) of the CAA,
manufacturers must warrant that a
vehicle is designed to comply with the
standards and will be free from defects
that may cause it to not comply over the
specified period which is 2 years/24,000
miles (whichever is first) or, for major
emission control components, 8 years/
80,000 miles. Under certain conditions,
manufacturers may be liable to replace
failed emission components at no
expense to the owner. EPA regulations
define ‘‘emission related parts’’ for the
purpose of warranty. This definition
includes parts which must function
properly to assure continued
compliance with the emission
standards.182
The air conditioning system and its
components have not previously been
covered under the CAA warranty
provisions. However, the proposed A/C
leakage and A/C-related CO2 emission
standards are dependent upon the
proper functioning of a number of
components on the A/C system, such as
rings, fittings, compressors, and hoses.
Therefore, EPA is proposing that these
components be included under the CAA
section 207(a) emission warranty
provisions, with a warranty of 2 years/
24,000 miles.
EPA requests comment as to whether
any other parts or components should
be designated as ‘‘emission related
parts’’ subject to warranty and defect
182 40
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American consumers need accurate
and meaningful information about the
environmental and fuel economy
performance of new light vehicles. EPA
believes it is important that the fueleconomy label affixed to the new
vehicles provide consumers with the
critical information they need to make
smart purchase decisions. This is a
special challenge in light of the
expected increase in market share of
electric and other advanced technology
vehicles. Consumers may need new and
different information than today’s
vehicle labels provide in order to help
them understand the energy use and
associated cost of owning these electric
and advanced technology vehicles. As
discussed below, these two issues are
key to determining whether the current
MPG-based fuel-economy label is
adequate.
Therefore, as part of this action, EPA
seeks comments on issues surrounding
consumer vehicle labeling in general,
and labeling of advanced technology
vehicles in particular. EPA also plans to
initiate a separate rulemaking to explore
in detail the information displayed on
the fuel economy label and the
methodology for deriving that
information. The purposes of this new
rulemaking would be to ensure that
American consumers continue to have
the most accurate, meaningful, and
useful information available to them
when purchasing new vehicles, and that
the information is presented to them in
clear and understandable terms.
a. Background
EPA has considerable experience in
providing vehicle information to
consumers through its fuel-economy
labeling activities and related web-based
programs. Under 49 U.S.C. 32908(b)
EPA is responsible for developing the
fuel economy labels that are posted on
window stickers of all new light duty
cars and trucks sold in the U.S. and,
beginning with the 2011 model year, on
all new medium-duty passenger
vehicles (a category that includes large
sport-utility vehicles and passenger
vans). The statutory requirements
established by EPCA require that the
label contain the following:
• The fuel economy of the vehicle; 183
• The estimated annual fuel cost of
operating the vehicle;
183 ‘‘Fuel economy’’ per the statute is miles per
gallon of gasoline (or equivalent amount of other
fuel).
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• The range of fuel economy of
comparable vehicles among all
manufacturers;
• A statement that a fuel economy
booklet is available from the dealer; 184
and
• The amount of the ‘‘gas guzzler’’ tax
imposed on the vehicle by the Internal
Revenue Service.
• Other information required or
authorized by EPA that is related to the
information required above.
Fuel economy is defined as the
number of miles traveled by an
automobile for each gallon of gasoline
(or equivalent amount of other fuel). It
is relatively easy to determine the miles
per gallon (MPG) for vehicles that use
liquid fuels (e.g., gasoline or diesel), but
an expression that uses gallons—
whether miles per gallon or gallons per
mile—may not be a useful metric for
vehicles that have limited to no
operation on liquid fuel such as electric
or compressed natural gas vehicles. The
mpg metric is the one generally used
today to provide comparative fuel
economy information to consumers.
As part of its vehicle certification,
CAFE, and fuel economy labeling
authorities, EPA works with
stakeholders on the testing and other
regulatory requirements necessary to
bring advanced technology vehicles to
market. With increasing numbers of
advanced technology vehicles beginning
to be sold, EPA believes it is now
appropriate to address potential
regulatory and certification issues
associated with these technologies
including how best to provide relevant
consumer information about their
environmental impact, energy
consumption, and cost.
b. Test Procedures
As discussed in this notice, there are
explicit and very long-standing test
procedures and calculation
methodologies associated with CAFE
that EPA uses to test conventionallyfueled vehicles and to calculate their
fuel economy. These test procedures
and calculations also generally apply to
advanced technology vehicles (e.g., an
electric (EV) or plug-in hybrid vehicle
(PHEV)).
The basic test procedure for an
electric vehicle follows a standardized
practice—an EV is fully charged and
then driven over the city cycle (Urban
Dynamometer Drive Schedule) until the
vehicle can no longer maintain the
required drive cycle vehicle speed. For
some vehicles, this could require
operation over multiple drive cycles.
184 EPA and DOE jointly publish the annual Fuel
Economy Guide and distribute it to dealers.
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The EV is then fully recharged and the
AC energy to the charger is recorded.
To derive the CAFE value for electric
vehicles, the amount of AC energy
needed to recharge the battery is
divided by the range the vehicle reached
in the repeated city drive cycle. This
calculation provides a raw CAFE energy
consumption value expressed in
kilowatt hours per 100 miles. The raw
CAFE number is then converted to miles
per gallon of equivalent gasoline using
a Department of Energy (DOE)
conversion factor of 82,700 Kwhr/gallon
of gasoline.185 The DOE conversion
factor combines several adjustments
including: an adjustment similar to the
statutory 6.67 multiplier credit 186 used
in deriving the final CAFE value for
alternative fueled vehicles; a factor
representing the gasoline-equivalent
energy content of electricity; and
various adjustments to account for the
relative efficiency of producing and
transporting the electricity. The
resulting value after the DOE conversion
factor is applied becomes the final
CAFE city value.
The label value calculation for an EV
uses a different conversion factor than
the CAFE value calculation. To come up
with the final city fuel economy label
value for an EV, a conversion factor of
33,705 Kwhr/gallon of gasoline
equivalent is applied to the raw
consumption number instead of the
82,700 Kwhr/gallon used for CAFE. The
conversion factor used for labeling
purposes represents only the gasolineequivalent energy content of electricity,
without the multiplier credit and other
adjustments used in the CAFE
calculation. The consumption, now
expressed as a fuel economy in miles
per gallon equivalent, is then applied to
the derived 5-cycle equation required
under EPA’s fuel economy labeling
regulations. The above process is then
repeated for the EV highway fuel
economy label number. Finally, the
combined city/highway numbers for the
EV use the same 55/45 weighting as
conventional vehicles to determine the
final fuel economy label values. CAFE
numbers end up being significantly
higher for EVs than the associated fuel
economy label values, both because a
higher adjustment factor applies under
CAFE regulations and also because
other real-world adjustments such as the
5-cycle test are not applied to the CAFE
values.
For PHEVs, a similar process would
be followed, except that PHEVs require
testing in both charge sustain (CS) and
charge depleting (CD) modes to capture
185 49
186 49
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U.S.C. 32905.
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how these vehicles operate. For charge
sustain modes, PHEVs essentially
operate as conventional Hybrid Electric
Vehicles (HEVs). PHEVs therefore test in
all 5-cycles (for further information on
these test cycles, see Section III.C.4) just
as HEVs do for CS fuel economy. For CD
fuel economy, PHEVs are only required
to test on the Urban Dynamometer Drive
Schedule and Highway Fuel Economy
cycles just like other alternative fueled
vehicles—the 5-cycle fuel economy
testing is optional in the CD mode.
There are additional processes that
address different PHEV modes, such as
for PHEVs that operate solely on
electricity throughout the CD mode.
As this discussion shows, the CAFE
and fuel economy labeling test
procedures and calculations for
advanced technology vehicles such as
EVs and PHEVs can be very
complicated. EPA is interested in
comments on these processes, including
views on the appropriate use of
adjustment factors. Currently in
guidance, EPA references SAE J1634 for
EV range and consumption test
procedures. EPA currently includes the
‘‘California Exhaust Emission Standards
and Test Procedures for 2003 and
Subsequent Model Zero-Emission
Vehicles, in the Passenger Car, Light
Truck, and Medium-duty Vehicle
Classes’’ by reference in 40 CFR 86.1. As
California requirements and SAE test
procedures are updated these may be
included by reference in the future.
c. Current Fuel Economy Label
In 2006 EPA redesigned the window
stickers to make them more informative
for consumers. More particular, the
redesigned stickers more prominently
feature annual fuel cost information, to
provide contemporary and easy-to-use
graphics for comparing the fuel
economy of different vehicles, to use
clearer text, and to include a Web site
reference to www.fueleconomy.gov
which provides additional information.
In addition, EPA updated how the city
and highway fuel economy values were
calculated, to reflect typical real-world
driving patterns.187 This rulemaking
involved significant stakeholder
outreach in determining how best to
calculate and display this new
information. The feedback EPA has
received to date on the new label design
and values has been generally very
positive.
During the 2006 label rulemaking
process EPA requested comments on
187 71 FR 77872 (December 27, 2006). Fuel
Economy Labeling of Motor Vehicles: Revisions to
Improve Calculations of Fuel Economy Estimates.
U.S. EPA.
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how a fuel consumption metric (such as
gallons per 100 miles) could be used
and represented to the public, including
presentation in the annual Fuel
Economy Guide. EPA received a number
of comments from both vehicle
manufacturers and consumer
organizations, suggesting that the MPG
measures can be misleading and that a
fuel consumption metric might be more
meaningful to consumers than the
established MPG metric found on fuel
economy labels. The reason is that fuel
consumption metric, directly measures
the amount of fuel used and is thus
directly related to cost that consumers
incur when filling up.
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The problem with the MPG metric is
that it is inversely related to fuel
consumption and cost. As higher MPG
values are reached, the relative impact
of these higher values on fuel
consumption and fuel costs decreases.
For example, a 25 percent increase in
gallons per 100 miles will always lead
to a 25 percent increase in the fuel cost,
but a similar 25 percent increase in
MPG will have varying impacts on
actual fuel cost depending on whether
the percent increase occurs to a low or
high MPG value. Many consumers do
not understand this nonlinear
relationship between MPG and fuel
costs. Evidence suggest that people tend
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to see the MPG as being linear with fuel
cost, which will lead to erroneous
decisions regarding vehicle purchases.
Figure III.E.11–1 below illustrates the
issue; one can see that changes in MPG
at low MPG levels can result in large
changes in the fuel cost, while changes
in MPG values at high MPG levels result
in small changes in the fuel cost. For
example, a change from 10 to 15 MPG
will reduce the 10-mile fuel cost from
$2.50 to $1.60, but a similar increase in
MPG from 20 to 25 MPG will only
reduce the 10-mile fuel cost by less than
$0.30.
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Because of the potential for
consumers to misunderstand this MPG/
cost relationship, commenters on the
2006 labeling rule universally agreed
that any change to the label metric
should involve a significant public
education campaign directed toward
both dealers and consumers.
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In 2006, EPA did not include a
consumption-based metric on the
redesigned fuel economy label in 2006.
It was concerned about potential
confusion associated with introducing a
second metric on the label (MPG is a
required element, as noted above). EPA
has developed an interactive feature on
www.fueleconomy.gov which allows
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49579
consumers, while viewing data on a
specific vehicle, to switch units between
the MPG and gallons per 100 miles
metrics. The tool also displays the cost
and the amount of fuel needed to drive
25 miles. As indicated above, however,
EPA is alert to the problems with the
MPG measure and the importance of
providing consumers with a clear sense
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of the consequences of their purchasing
decisions; a gallon-per mile measure
would have significant advantages. EPA
plans to seek comment and engage in
extensive public debate about fuel
consumption and other appropriate
consumer information metrics as part of
a new labeling rule initiative. EPA also
welcomes comments on this topic in
response to this GHG proposal.
d. Labeling for Advanced Technology
Vehicles
Even though a fuel consumption
metric may more directly represent
likely fuel costs than a fuel economy
metric, any expression that uses
gallons—whether miles per gallon or
gallons per mile—is not a useful metric
for vehicles that have limited to no
operation on liquid fuel (e.g., electricity
or compressed natural gas). For
example, PHEVs and extended range
electric vehicles (EREVs) can use two
types of energy sources: (1) An onboard
battery, charged by plugging the vehicle
into the electrical grid via a
conventional wall outlet, to power an
electric motor, as well as (2) a gas or
diesel-powered engine to propel the
vehicle or power a generator used to
provide electricity to the electric motor.
Depending on how these vehicles are
operated, they can use electricity
exclusively, never use electricity and
operate like a conventional hybrid, or
operate in some combination of these
two modes. The use of a MPG figure
alone would not account for the
electricity used to propel the vehicle.
EPA has worked closely with
numerous stakeholders including
vehicle manufacturers, the Society of
Automotive Engineers (SAE), the State
of California, the Department of Energy
(DOE) and others to develop possible
approaches for both estimating fuel
economy and labeling vehicles that can
operate using more than one energy
source. At the present time, EPA
believes the appropriate method for
estimating fuel economy of PHEVs and
EREVs would be a weighted average of
fuel economy for the two modes of
operation. A methodology developed by
SAE and DOE to predict the fractions of
total distance driven in each mode of
operation (electricity and gas) uses a
term known as a utility factor (UF). By
using a utility factor, it is possible to
determine a weighted average for fuel
economy of the electric and gasoline
modes. For example, a UF of 0.8 would
indicate that a PHEV or EREV operates
in an all electric mode 80% of the time
and uses the gasoline engine the other
20% of the time. In this example, the
weighted average fuel economy value
would be influenced more by the
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electrical operation than the gasoline
operation.
Under this approach, a UF could be
assigned to each successive fuel
economy test until the battery charge
was depleted and the PHEV or EREV
needed power from the gasoline engine
to propel the vehicle or to recharge the
battery. One minus the sum of all the
utility factors would then represent the
fraction of driving performed in this
‘‘gasoline mode.’’ Fuel economy could
then be expressed as:
FEMPG =
UFi
∑ FE
+
1
1 − ∑ UFi
i
FEgasoline
Likewise, the electrical consumption
would be expressed by adding the fuel
consumption from each mode. Since
there is no electrical consumption in
hybrid mode, the equation for electricity
consumption would be as follows:
Utility factors could be cycle specific
not only due to different battery ranges
on different test cycles but also due to
the fact that ‘‘highway’’ type driving
may imply longer trips than urban
driving. That is to say that the average
city trip could be shorter than the
average highway trip.
e. Request for Comments
EPA is interested in comments on
both topics raised in this section. For
the methodology, we are interested in
comments addressing how the utility
factor is calculated and which data
should be used in establishing the UF.
Additionally, commenters should
address: The appropriateness of this
approach for estimating fuel economy
for PHEVs and EREVs, including the
concept of using a UF to determine the
fuel economy for vehicles operated in
multiple modes; the appropriate form
and value of the factor, including the
type of data that would be necessary to
confidently develop it accurately; and
availability of other potential
methodologies for determining fuel
economy for vehicles that can operate in
multiple modes, such as ‘‘all electric’’
and ‘‘hybrid,’’ including the use of fuel
consumption, cost, GHG emissions, or
other metrics in addition to miles per
gallon.
EPA is also requesting comment on
how the agency can satisfy statutory
labeling requirements while providing
relevant information to consumers. For
example, the statute indicates that EPA
may provide other related items on the
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label beyond those that are required.188
EPA is interested in receiving comments
on the potential approaches and
supporting data we might consider for
adding additional information regarding
fuel economics while maintaining our
statutory obligation to report MPG on
the label.
There are a number of different
metrics that are available that could be
useful in this regard. Two possible
options would be to show consumption
in fuel use per distance (e.g., gallons/
100 miles) or in cost per distance (e.g.,
$/100 miles). As discussed above, these
two metrics have benefits over a straight
mpg value in showing a more direct
relationship between fuel consumption
and cost. The cost/distance metric has
an added potential benefit of providing
a common basis for comparing
differently fueled or powered vehicles,
for example being able to show the cost
of gasoline used over a specified
distance or time for a conventional
gasoline-powered vehicle in comparison
to the gasoline and electricity used over
the same period for a plug-in hybrid
vehicle. Another approach would be to
use a metric that provides information
about a vehicle’s greenhouse gas
emissions per unit of travel, such as
carbon dioxide equivalent grams per
mile (g CO2e/mi). This type of metric
would allow consumers to directly
compare among vehicles on the basis of
their overall greenhouse gas impact. A
total annual energy cost would be
another way to look at this information,
and is currently used on the fuel
economy label. As is currently done,
EPA would need to determine and show
a common set of fuel costs used to
calculate such values, recognizing that
energy costs vary across the country.
The Agency is also interested in
comments on the usefulness of adding
other types of information, such as an
estimated driving range for electric
vehicles. The label design is also an
important issue to consider and any
changes to the existing label would need
to show information in a technologically
accurate, meaningful and
understandable manner, while ensuring
that the label does not become
overcrowded and difficult for
consumers to comprehend. EPA is also
interested in what and how other
information paths, such as web-based
programs, could be used to enhance the
consumer education process.
188 49
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F. How Would This Proposal Reduce
GHG Emissions and Their Associated
Effects?
This action is an important step
towards curbing steady growth of GHG
emissions from cars and light trucks. In
the absence of control, GHG emissions
worldwide and in the U.S. are projected
to continue steady growth; Table
III.F–1 shows emissions of CO2,
methane, nitrous oxide and air
conditioning refrigerants on a CO2equivalent basis for calendar years 2010,
2020, 2030, 2040 and 2050. U.S. GHGs
are estimated to make up roughly 15
percent of total worldwide emissions,
and the contribution of direct emissions
from cars and light trucks to this U.S.
49581
share is growing over time, reaching an
estimated 20 percent of U.S. emissions
by 2030 in the absence of control. As
discussed later in this section, this
steady rise in GHG emissions is
associated with numerous adverse
impacts on human health, food and
agriculture, air quality, and water and
forestry resources.
TABLE III.F–1—REFERENCE CASE GHG EMISSIONS BY CALENDAR YEAR
[MMTCO2 Eq]
2010
All Sectors (Worldwide) a .............................................................................................
All Sectors (U.S. Only) a ...............................................................................................
U.S. Cars/Light Truck Only b ........................................................................................
a ADAGE
b MOVES
2030
2040
2050
41,016
7,118
1,359
48,059
7,390
1,332
52,870
7,765
1,516
56,940
8,101
1,828
60,209
8,379
2,261
model projections, U.S. EPA.189
(2010), OMEGA Model (2020–50) U.S. EPA. See DRIA Chapter 5.3 for modeling details.
EPA’s proposed GHG rule, if
finalized, will result in significant
reductions as newer, cleaner vehicles
come into the fleet, and the rule is
estimated to have a measurable impact
on world global temperatures. As
discussed in Section I, this GHG
proposal is part of a joint National
Program such that a large majority of the
projected benefits would be achieved
jointly with NHTSA’s proposed CAFE
standards which are described in detail
in Section IV of this preamble. EPA
estimates the reductions attributable to
the GHG program over time assuming
the proposed 2016 standards continue
indefinitely post-2016,190 compared to a
baseline scenario in which the 2011
model year fuel economy standards
continue beyond 2011.
Using this approach, EPA estimates
these standards would cut annual
fleetwide car and light truck tailpipe
CO2 emissions 21 percent by 2030,
when 90 percent of car and light truck
miles will be travelled by vehicles
meeting the new standards. Roughly 20
percent of these reductions are due to
emission reductions from gasoline
extraction, production and distribution
processes as a result of reduced gasoline
demand associated with this proposal.
Some of the overall emission reductions
also come from projected improvements
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2020
189 U.S. EPA (2009). ‘‘EPA Analysis of the
American Clean Energy and Security Act of 2009:
H.R. 2454 in the 111th Congress.’’ U.S.
Environmental Protection Agency, Washington, DC,
USA. (www.epa.gov/climatechange/economics/
economicanalyses.html)
190 This analysis does not include the EISA
requirement for 35 MPG through 2020 or
California’s Pavley 1 GHG standards. The proposed
standards are intended to supersede these
requirements, and the baseline case for comparison
is the emissions that would result without further
action above the currently promulgated fuel
economy standards.
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in the efficiency of vehicle air
conditioning systems, which will
substantially reduce direct emissions of
HFCs, one of the most potent
greenhouse gases, as well as indirect
emissions of tailpipe CO2 emissions
attributable to reduced engine load from
air conditioning. In total, EPA estimates
that compared to a baseline of indefinite
2011 model year standards, net GHG
emission reductions from the proposed
program would be 325 million metric
tons CO2-equivalent (MMTCO2eq)
annually by 2030, which represents a
reduction of 4 percent of total U.S. GHG
emissions and 0.6 percent of total
worldwide GHG emissions projected in
that year. This estimate accounts for all
upstream fuel production and
distribution emission reductions,
vehicle tailpipe emission reductions
including air conditioning benefits, as
well as increased vehicle miles travelled
(VMT) due to the ‘‘rebound’’ effect
discussed in Section III.H. EPA
estimates this would be the equivalent
of removing nearly 60 million cars and
light trucks from the road in this
timeframe.
EPA projects the total reduction of the
program over the full life of model year
2012–2016 vehicles is about 950
MMTCO2eq, with fuel savings of 76
billion gallons (1.8 billion barrels) of
gasoline over the life of these vehicles,
assuming that some manufacturers take
advantage of low-cost HFC reduction
strategies to help meet these proposed
standards.
These reductions are projected to
reduce global mean temperature by
approximately 0.007–0.016°C by 2100,
and global mean sea level rise is
projected to be reduced by
approximately 0.06–0.15 cm by 2100.
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1. Impact on GHG Emissions
a. Calendar Year Reductions Due to
GHG Standards
This action, if finalized, will reduce
GHG emissions emitted directly from
vehicles due to reduced fuel use and
more efficient air conditioning systems.
In addition to these ‘‘downstream’’
emissions, reducing CO2 emissions
translates directly to reductions in the
emissions associated with the processes
involved in getting petroleum to the
pump, including the extraction and
transportation of crude oil, and the
production and distribution of finished
gasoline (termed ‘‘upstream’’
emissions). Reductions from tailpipe
GHG standards grow over time as the
fleet turns over to vehicles affected by
the standards, meaning the benefit of
the program will continue as long as the
oldest vehicles in the fleet are replaced
by newer, lower CO2 emitting vehicles.
EPA is not projecting any reductions
in tailpipe CH4 or N2O emissions as a
result of these proposed emission caps,
which are meant to prevent emission
backsliding and to bring diesel vehicles
equipped with advanced technology
aftertreatment into alignment with
current gasoline vehicle emissions.
As detailed in the DRIA, EPA
estimated calendar year tailpipe CO2
reductions based on pre- and postcontrol CO2 gram per mile levels from
EPA’s OMEGA model and assumed to
continue indefinitely into the future,
coupled with VMT projections from
AEO2009. These estimates reflect the
real-world CO2 emissions reductions
projected for the entire U.S. vehicle fleet
in a specified calendar year, including
the projected effect of air conditioning
credits, TLAASP credits and FFV
credits. EPA also estimated full lifetime
reductions for model years 2012–2016
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using pre- and post-control CO2 levels
projected by the OMEGA model,
coupled with projected vehicle sales
and lifetime mileage estimates. These
estimates reflect the real-world CO2
emissions reductions projected for
model years 2012 through 2016 vehicles
over their entire life.
This proposal would allow
manufacturers to earn credits for
improved vehicle air conditioning
efficiency. Since these improvements
are relatively low cost, EPA projects that
manufacturers will take advantage of
this flexibility, leading to reductions
from emissions associated with vehicle
air conditioning systems. As explained
above, these reductions will come from
both direct emissions of air conditioning
refrigerant over the life of the vehicle
and tailpipe CO2 emissions produced by
the increased load of the A/C system on
the engine. In particular, EPA estimates
that direct emissions of HFCs, one of the
most potent greenhouse gases, would be
reduced 40 percent from light-duty
vehicles when the fleet has turned over
to more efficient vehicles. The fuel
savings derived from lower tailpipe CO2
would also lead to reductions in
upstream emissions. Our estimated
reductions from the A/C credits program
are based on our analysis of how
manufacturers are expected to take
advantage of this credit opportunity in
complying with the CO2 fleetwide
average tailpipe standards.
Upstream emission reductions
associated with the production and
distribution of fuel were estimated using
emission factors from DOE’s GREET1.8
model, with some modifications as
detailed in the DRIA. These estimates
include both international and domestic
emission reductions, since reductions in
foreign exports of finished gasoline and/
or crude would make up a significant
share of the fuel savings resulting from
the proposed GHG standards. Thus,
significant portions of the upstream
GHG emission reductions will occur
outside of the U.S.; a breakdown of
projected international versus domestic
reductions is included in the DRIA.
Table III.F.1–1 shows reductions
estimated from these proposed GHG
standards assuming a pre-control case of
2011 MY standards continuing
indefinitely beyond 2011, and a postcontrol case in which 2016 MY
standards continue indefinitely beyond
2016. These reductions are broken down
by upstream and downstream
components, including air conditioning
improvements, and also account for the
offset from a 10 percent VMT ‘‘rebound’’
effect as discussed in Section III.H.
Including the reductions from upstream
emissions, total reductions are
estimated to reach 325 MMTCO2eq
annually by 2030 (a 21 percent
reduction in U.S. car and light truck
emissions), and grow to over 500
MMTCO2eq in 2050 as cleaner vehicles
continue to come into the fleet (a 23
percent reduction in U.S. car and light
truck emissions).
TABLE III.F.1–1—PROJECTED NET GHG REDUCTIONS
[MMTCO2 Eq per year]
Calendar year
2020
Net Reduction Due to Tailpipe Standards * .....................................................
Tailpipe Standards ...........................................................................................
A/C—indirect CO2 ............................................................................................
A/C—direct HFCs ............................................................................................
Upstream .........................................................................................................
Percent reduction relative to U.S. reference (cars + light trucks) ...................
Percent reduction relative to U.S. reference (all sectors) ...............................
Percent reduction relative to worldwide reference ..........................................
2030
165.2
107.7
11.0
13.5
33.1
12.4%
2.2%
0.3%
2040
324.6
211.4
21.1
27.2
64.9
21.4%
4.2%
0.6%
417.5
274.1
27.3
32.1
84.1
22.8%
5.2%
0.7%
2050
518.5
344.0
34.2
34.9
105.5
22.9%
6.2%
0.9%
* Includes impacts of 10% VMT rebound rate presented in Table III.F.1–3.
b. Lifetime Reductions for 2012–2016
Model Years
EPA also analyzed the emission
reductions over the full life of the 2012–
2016 model year cars and trucks
affected by this proposal.191 These
results, including both upstream and
downstream GHG contributions, are
presented in Table III.F.1–2, showing
lifetime reductions of nearly 950
MMTCO2eq, with fuel savings of 76
billion gallons (1.8 billion barrels) of
gasoline.
TABLE III.F.1–2—PROJECTED NET GHG REDUCTIONS
[MMTCO2 Eq per year]
Lifetime GHG
reduction
(MMT CO2 EQ)
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Model year
2012
2013
2014
2015
2016
Lifetime fuel
savings
(billion gallons)
.................................................................................................................................................................
.................................................................................................................................................................
.................................................................................................................................................................
.................................................................................................................................................................
.................................................................................................................................................................
81.4
125.0
174.1
243.2
323.6
6.6
10.0
13.9
19.5
26.3
Total Program Benefit ..............................................................................................................................
947.4
76.2
191 As detailed in the DRIA, for this analysis the
full life of the vehicle is represented by average
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lifetime mileages for cars (190,000 miles) and trucks
(221,000 miles) averaged over calendar years 2012
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through 2030, a function of how far vehicles drive
per year and scrappage rates.
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c. Impacts of VMT Rebound Effect
As noted above and discussed more
fully in Section III.H., the effect of fuel
cost on VMT (‘‘rebound’’) was
accounted for in our assessment of
economic and environmental impacts of
this proposed rule. A 10 percent
rebound case was used for this analysis,
meaning that VMT for affected model
years is modeled as increasing by 10
percent as much as the increase in fuel
economy; i.e., a 10 percent increase in
fuel economy would yield a 1.0 percent
increase in VMT. Results are shown in
Table III.F.1–3; using the 10 percent
rebound rate results in an overall
emission increase of 26.4 MMTCO2eq
annually in 2030 (this increase is
accounted for in the reductions
presented in Tables III.F.1–1 and III.F.1–
2). Our estimated changes in CH4 or N2O
emissions as a result of these proposed
vehicle GHG standards are attributed
solely to this rebound effect.
As discussed in Section III.H, EPA
will be reassessing the appropriate rate
49583
of VMT rebound for the final rule.
Although EPA has not directly
quantified the GHG emissions effect of
using a lower rebound rate for this
analysis, lowering the rebound rate
would reduce the emission increases in
Tables III.F.1–1 and III.F.1–2 in
proportion (i.e., zero rebound equals
zero emissions effect), and, thus, would
increase our estimates of emission
reductions due to these proposed
standards.
TABLE III.F.1–3—GHG IMPACT OF 10% VMT REBOUND a
[MMTCO2 Eq per year]
2020
Total GHG Increase .................................................................................
Tailpipe & Indirect A/C CO2 .....................................................................
Upstream GHGs b ....................................................................................
Tailpipe N2O ............................................................................................
Tailpipe CH4 .............................................................................................
2030
13.6
10.6
2.95
0.040
0.008
2040
26.4
20.6
5.74
0.085
0.016
2050
34.2
26.6
7.43
0.113
0.021
42.9
33.4
9.32
0.142
0.027
a These
impacts are included in the reductions shown in Table III.F.1–1 and III.F.1–2.
rebound impact calculated as upstream total CO2 effect times ratio of downstream tailpipe rebound CO2 effect to downstream tailpipe total CO2 effect.
b Upstream
d. Analysis of Alternatives
EPA analyzed two alternative
scenarios, including 4% and 6% annual
increases in 2 cycle (CAFE) fuel
economy. In addition to this annual
increase, EPA assumed that
As in the primary scenario, EPA
assumed that the fleet complied with
the standards. For full details on
modeling assumptions, please refer to
DRIA Chapter 5.
manufacturers would use air
conditioning improvements in identical
penetrations as in the primary scenario.
Under these assumptions, EPA expects
achieved fleetwide average emission
levels of 254 g/mile CO2 EQ (4%), and
230 g/mile CO2 EQ (6%) in 2016.
TABLE III.F.1–4—CALENDAR YEAR IMPACTS OF ALTERNATIVE SCENARIOS
Calendar year
Scenario
Total GHG Reductions (MMT CO2EQ) ...........................
Fuel Savings (Billion Gallons Gasoline Equivalent) .......
CY 2020
Primary ...............................
4% ......................................
6% ......................................
Primary ...............................
4% ......................................
6% ......................................
165.2
152.8
215.2
13.4
12.2
17.8
CY 2030
324.6
305.9
426.2
26.2
24.5
35.1
CY 2040
417.5
394.1
549.3
33.9
31.8
45.5
CY 2050
518.5
489.3
683.9
42.6
39.9
57.1
TABLE III.F.1–5—MODEL YEAR IMPACTS OF ALTERNATIVE SCENARIOS
Model year lifetime
Scenario
Total GHG
CO2EQ).
Reductions
(MMT
MY 2013
MY 2014
MY 2015
MY 2016
Total
Primary ...............
81.4
125.0
174.1
243.2
323.6
947.4
4% ......................
6% ......................
Primary ...............
41.8
60.2
6.6
93.5
146.4
10.0
160.8
239.9
13.9
231.0
333.3
19.5
305.2
424.9
26.3
832.3
1,204.7
76.2
4% ......................
6% ......................
Fuel Savings (Billion Gallons Gasoline Equivalent).
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MY 2012
3.1
4.7
7.2
11.9
12.7
19.7
18.4
27.4
24.7
35.2
66.1
99.0
2. Overview of Climate Change Impacts
From GHG Emissions
Once emitted, greenhouse gases
(GHG) that are the subject of this
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regulation can remain in the atmosphere
for decades to centuries, meaning that
(1) their concentrations become wellmixed throughout the global atmosphere
regardless of emission origin, and (2)
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their effects on climate are long lasting.
Greenhouse gas emissions come mainly
from the combustion of fossil fuels
(coal, oil, and gas), with additional
contributions from the clearing of
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forests and agricultural activities. The
transportation sector accounts for a
portion, 28%, of US GHG emissions.192
This section provides a broad
overview of some of the impacts of GHG
emissions. The best sources of
information include the major
assessment reports of both the
Intergovernmental Panel on Climate
Change (IPCC) and the U.S. Global
Change Research Program (USGCRP,
formerly referred to as the U.S. Climate
Change Science Program). The IPCC and
USGCRP assessments base their findings
on the large body of individual, peerreviewed studies in the literature, and
then the IPCC and USGCRP assessments
themselves go through a transparent
peer-reviewed process. The USGCRP
reports, where possible, are specific to
impacts in the U.S. and therefore
represent the best available syntheses of
relevant impacts.
Most recently, the USGCRP released a
report entitled ‘‘Global Climate Change
Impacts in the United States’’.193 The
report summarizes the science and the
impacts of climate change on the United
States, now and in the future. It focuses
on climate change impacts in different
regions of the U.S. and on various
aspects of society and the economy such
as energy, water, agriculture, and
human health. It’s also a report written
in plain language, with the goal of better
informing public and private decision
making at all levels. The foundation of
this report is a set of 21 Synthesis and
Assessment Products (SAPs), which
were designed to address key policyrelevant issues in climate science. The
report was extensively reviewed and
revised based on comments from
experts and the public. The report was
approved by its lead USGCRP Agency,
the National Oceanic and Atmospheric
Administration, the other USGCRP
agencies, and the Committee on the
Environment and Natural Resources on
behalf of the National Science and
Technology Council. This report meets
all Federal requirements associated with
the Information Quality Act, including
those pertaining to public comment and
transparency. Readers are encouraged to
review this report.
The source document for the section
below is the draft endangerment
Technical Support Document (TSD). In
192 U.S. EPA (2008) Inventory of U.S. Greenhouse
Gas Emissions and Sinks: 1990–2006. EPA–430–R–
08–005, Washington, DC. https://www.epa.gov/
climatechange/emissions/usgginv_archive.html.
193 Global Climate Change Impacts in the United
States, Thomas R. Karl, Jerry M. Melillo, and
Thomas C. Peterson, (eds.). Cambridge University
Press, 2009. https://www.globalchange.gov/
publications/reports/scientific-assessments/usimpacts.
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EPA’s Proposed Endangerment and
Cause or Contribute Findings Under the
Clean Air Act,194 EPA provides a
summary of the USGCRP and IPCC
reports in a draft TSD. The draft TSD
reviews observed and projected changes
in climate based on current and
projected atmospheric GHG
concentrations and emissions, as well as
the related impacts and risks from
climate change that are projected in the
absence of GHG mitigation actions,
including this proposal and other U.S.
and global actions. The TSD serves as an
important support document to EPA’s
proposed Endangerment Finding;
however, the document is a draft and is
still undergoing comment and review as
part of EPA’s rulemaking process, and is
subject to change based upon comments
to the final endangerment finding.
a. Changes in Atmospheric
Concentrations of GHGs From Global
and U.S. Emissions
Concentrations of six key GHGs
(carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons
and sulfur hexafluoride) are at
unprecedented levels compared to the
recent and distant past. The global
atmospheric CO2 concentration has
increased about 38% from pre-industrial
levels to 2009, and almost all of the
increase is due to anthropogenic
emissions.
Based on data from the most recent
Inventory of U.S. Greenhouse Gas
Emissions and Sinks (2008),195 total
U.S. GHG emissions increased by 905.9
teragrams of CO2-equivalent (Tg CO2
Eq), or 14.7%, between 1990 and 2006.
U.S. transportation sources subject to
control under section 202(a) of the
Clean Air Act (passenger cars, light duty
trucks, other trucks and buses,
motorcycles, and cooling 196) emitted
1665 Tg CO2 Eq in 2006, representing
almost 24% of the total U.S. GHG
emissions. Total global emissions,
calculated by summing emissions of the
six greenhouse gases by country, for
2005 was 38,725.9 Tg CO2 Eq. This
represents an increase of 26% from the
1990 level. See the EPA report
‘‘Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990–2006’’,197
194 See Federal Register/Vol. 74, No. 78/Friday,
April 24, 2009/Proposed Rules; also Docket Number
EPA–HQ–OAR–2009–0171; FRL–8895–5.
195 U.S. EPA (2008) Inventory of U.S. Greenhouse
Gas Emissions and Sinks: 1990–2006. EPA–430–R–
08–005, Washington, DC.
196 Cooling refers to refrigerants/air conditioning
from all transportation sources and is related to
HFCs.
197 U.S. EPA (2008) Inventory of U.S. Greenhouse
Gas Emissions and Sinks: 1990–2006. EPA–430–R–
08–005, Washington, DC. https://www.epa.gov/
climatechange/emissions/usgginv_archive.html.
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Section 2 of the proposed Endangerment
TSD, and IPCC’s Working Group I (WGI)
Fourth Assessment Report (AR4) 198 for
a more complete discussion of GHG
emissions and concentrations.
b. Observed Changes in Climate
i. Temperature
The warming of the climate system is
unequivocal, as is now evident from
observations of increases in global air
and ocean temperatures, widespread
melting of snow and ice, and rising
global average sea level. The global
average net effect of the increase in
atmospheric GHG concentrations, plus
other human activities (e.g., land use
change and aerosol emissions), on the
global energy balance since 1750 has
been one of warming. The global mean
surface temperature 199 over the last 100
years (1906–2005) has risen by about
0.74 °C (1.5 °F) +/¥ 0.18 °C, and climate
model simulations suggest that natural
variation alone (e.g., changes in solar
irradiance) cannot explain the observed
warming. The rate of warming over the
last 50 years is almost double that over
the last 100 years. Most of the observed
increase in global mean surface
temperature since the mid-20th century
is very likely due to the observed
increase in anthropogenic GHG
concentrations.
It can be stated with confidence that
global mean surface temperature was
higher during the last few decades of the
20th century than during any
comparable period during the preceding
four centuries. Like global mean surface
temperatures, U.S. surface temperatures
also warmed during the 20th and into
the 21st century. U.S. average annual
temperatures are now approximately
0.69°C (1.25°F) warmer than at the start
of the 20th century, with an increased
rate of warming over the past 30 years.
Temperatures in winter have risen more
than any other season, with winters in
the Midwest and northern Great Plains
increasing more than 7 °F.200 Some of
these changes have been faster than
previous assessments had suggested.
For additional information, please see
Section 4 of the proposed Endangerment
198 Climate Change 2007: The Physical Science
Basis. Contribution of Working Group I to the
Fourth Assessment Report of the Intergovernmental
Panel on Climate Change [Solomon, S., D. Qin, M.
Manning, Z. Chen, M. Marquis, K.B. Averyt,
M.Tignor and H.L. Miller (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA.
199 Surface temperature is calculated by
processing data from thousands of world-wide
observation sites on land and sea.
200 Global Climate Change Impacts in the United
States, Thomas R. Karl, Jerry M. Melillo, and
Thomas C. Peterson, (eds.) Cambridge University
Press, 2009.
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules
TSD, IPCC WGI AR4,201 and the report
‘‘Global Climate Change Impacts in the
United States’’.202
ii. Precipitation
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Observations show that changes are
occurring in the amount, intensity,
frequency and type of precipitation.
Global, long-term trends from 1900 to
2005 have been observed in the amount
of precipitation over many large regions.
Patterns in precipitation change are
more spatially and seasonally variable
than temperature change, but where
significant precipitation changes do
occur they are consistent with measured
changes in stream flow. Significantly
increased precipitation has been
observed in eastern parts of North and
South America, northern Europe and
northern and central Asia.200 More
intense and longer droughts have been
observed over wider areas since the
1970s, particularly in the tropics and
subtropics. It is likely there has been an
increase in heavy precipitation events
(e.g., 95th percentile) within many land
regions, even in those where there has
been a reduction in total precipitation
amount, consistent with a warming
climate and observed significant
increasing amounts of water vapor in
the atmosphere. Rising temperatures
have generally resulted in rain rather
than snow in locations and seasons such
as in northern and mountainous regions
where the average (1961–1990)
temperatures were close to 0 °C. Over
the contiguous U.S., total annual
precipitation increased at an average
rate of 6.5% from 1901–2006, with the
greatest increases in precipitation in the
East and North Central climate regions
(11.2% per century).
For additional information, please see
Section 4 of the proposed Endangerment
TSD, IPCC WGI AR4,203 and the
201 Climate Change 2007: The Physical Science
Basis. Contribution of Working Group I to the
Fourth Assessment Report of the Intergovernmental
Panel on Climate Change [Solomon, S., D. Qin, M.
Manning, Z. Chen, M. Marquis, K.B. Averyt,
M.Tignor and H.L. Miller (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA.
202 Global Climate Change Impacts in the United
States, Thomas R. Karl, Jerry M. Melillo, and
Thomas C. Peterson, (eds.). Cambridge University
Press, 2009. https://www.globalchange.gov/
publications/reports/scientific-assessments/usimpacts.
203 Climate Change 2007: The Physical Science
Basis. Contribution of Working Group I to the
Fourth Assessment Report of the Intergovernmental
Panel on Climate Change [Solomon, S., D. Qin, M.
Manning, Z. Chen, M. Marquis, K.B. Averyt,
M.Tignor and H.L. Miller (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA.
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USGCRP report ‘‘Global Climate Change
Impacts in the United States’’.204
iii. Extreme Events
Changes in climate extremes have
been observed related to temperature,
precipitation, tropical cyclones, and sea
level. In the last 50 years, there have
been widespread changes in extreme
temperatures observed across the globe.
For example, cold days, cold nights, and
frost have become less frequent, while
hot days, hot nights, and heat waves
have become more frequent. Globally, a
reduction in the number of daily cold
extremes has been observed in 70 to
75% of the land regions where data is
available. Cold nights (lowest or coldest
10% of nights, based on the period
1961–1990) have become rarer over the
last 50 years.
Observational evidence indicates an
increase in intense tropical cyclone (i.e.,
tropical storms and/or hurricanes)
activity in the North Atlantic. Since
about 1970, increases in cyclone
developments that affect the U.S. East
and Gulf Coasts have been correlated
with increases of tropical sea surface
temperatures In the contiguous U.S.,
studies find statistically significant
increases in heavy precipitation (the
heaviest 5%) and very heavy
precipitation (the heaviest 1%) of 14
and 20%, respectively. Much of this
increase occurred during the last three
decades of the 20th century and is most
apparent over the eastern parts of the
country. Trends in drought also have
strong regional variations. In much of
the Southeast and large parts of the
western U.S., the frequency of drought
has increased coincident with rising
temperatures over the past 50 years.
Although there has been an overall
increase in precipitation and no clear
trend in drought for the nation as a
whole, increasing temperatures have
made droughts more severe and
widespread than they would have
otherwise been.
For additional information, please see
Section 4 of the proposed Endangerment
TSD, the CCSP report ‘‘Weather and
Climate Extremes in a Changing
Climate. Regions of Focus: North
America, Hawaii, Caribbean, and U.S.
204 Global Climate Change Impacts in the United
States, Thomas R. Karl, Jerry M. Melillo, and
Thomas C. Peterson, (eds.). Cambridge University
Press, 2009. https://www.globalchange.gov/
publications/reports/scientific-assessments/usimpacts.
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49585
Pacific Islands’’,205 IPCC WGI AR4,206
and the report ‘‘Global Climate Change
Impacts in the United States’’.207
iv. Physical and Biological Changes
Observations show that climate
change is currently affecting U.S.
physical and biological systems in
significant ways. Observations of the
cryosphere (the ‘‘frozen’’ component of
the climate system) have revealed
changes in sea ice, glaciers and snow
cover, freezing and thawing, and
permafrost. Satellite data since 1978
show that annual average Arctic sea ice
extent has shrunk by 2.7% (+/¥ 0.6%)
per decade, with larger decreases in
summer. Subtropical and tropical corals
in shallow waters have already suffered
major bleaching events that are
primarily driven by increases in sea
surface temperatures. Heat stress from
warmer ocean water can cause corals to
expel the microscopic algae that live
inside them which are essential to their
survival. Another stressor on coral
populations is ocean acidification
which occurs as CO2 is absorbed from
the atmosphere by the oceans. About
one-third of the carbon dioxide emitted
by human activities has been absorbed
by the ocean, resulting in a decrease in
the ocean’s pH. A lower pH affects the
ability of living things to create and
maintain shells or skeletons of calcium
carbonate. Other documented biophysical impacts include a significant
lengthening of the growing season and
increase in net primary productivity 208
in higher latitudes of North America.
Over the last 19 years, global satellite
data indicate an earlier onset of spring
across the temperate latitudes by 10 to
14 days.
205 Weather and Climate Extremes in a Changing
Climate. Regions of Focus: North America, Hawaii,
Caribbean, and U.S. Pacific Islands. A Report by
the U.S. Climate Change Science Program and the
Subcommittee on Global Change Research. [Thomas
R. Karl, Gerald A. Meehl, Christopher D. Miller,
Susan J. Hassol, Anne M. Waple, and William L.
Murray (eds.)]. Department of Commerce, NOAA’s
National Climatic Data Center, Washington, D.C.,
USA, 164 pp.
206 Climate Change 2007: The Physical Science
Basis. Contribution of Working Group I to the
Fourth Assessment Report of the Intergovernmental
Panel on Climate Change [Solomon, S., D. Qin, M.
Manning, Z. Chen, M. Marquis, K.B. Averyt,
M.Tignor and H.L. Miller (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA.
207 Global Climate Change Impacts in the United
States, Thomas R. Karl, Jerry M. Melillo, and
Thomas C. Peterson, (eds.). Cambridge University
Press, 2009. https://www.globalchange.gov/
publications/reports/scientific-assessments/usimpacts.
208 Net primary productivity is the rate at which
an ecosystem accumulates energy or biomass,
excluding the energy it uses for the process of
respiration.
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For additional information, please see
Section 4 of the proposed Endangerment
TSD and IPCC WGI AR4.209
c. Projected Changes in Climate
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Most future scenarios that assume no
explicit GHG mitigation actions (beyond
those already enacted) project
increasing global GHG emissions over
the century, with corresponding
climbing GHG concentrations. Carbon
dioxide is expected to remain the
dominant anthropogenic GHG over the
course of the 21st century. The radiative
forcing 210 associated with the non-CO2
GHGs is still significant and increasing
over time. As a result, warming over this
century is projected to be considerably
greater than over the last century and
climate related changes are expected to
continue while new ones develop.
Described below are projected changes
in climate for the U.S.
See Section 6 of the proposed
Endangerment TSD, IPCC WGI AR4,211
the USGCRP report ‘‘Global Climate
Change Impacts in the United
States’’,212 and the CCSP report
‘‘Weather and Climate Extremes in a
Changing Climate, Regions of Focus:
North America, Hawaii, Caribbean, and
U.S. Pacific Islands’’ 213 for a more
complete discussion of projected
changes in climate.
209 IPCC (2007a) Climate Change 2007: The
Physical Science Basis. Contribution of Working
Group I to the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change
[Solomon, S., D. Qin, M. Manning, Z. Chen, M.
Marquis, K.B. Averyt, M. Tignor and H.L. Miller
(eds.)]. Cambridge University Press, Cambridge,
United Kingdom and New York, NY, USA.
210 Radiative forcing is a measure of the change
that a factor causes in altering the balance of
incoming (solar) and outgoing (infrared and
reflected shortwave) energy in the Earth-atmosphere
system and thus shows the relative importance of
different factors in terms of their contribution to
climate change.
211 Climate Change 2007: The Physical Science
Basis. Contribution of Working Group I to the
Fourth Assessment Report of the Intergovernmental
Panel on Climate Change [Solomon, S., D. Qin, M.
Manning, Z. Chen, M. Marquis, K.B. Averyt,
M.Tignor and H.L. Miller (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA.
212 Global Climate Change Impacts in the United
States, Thomas R. Karl, Jerry M. Melillo, and
Thomas C. Peterson, (eds.). Cambridge University
Press, 2009. https://www.globalchange.gov/
publications/reports/scientific-assessments/usimpacts.
213 Weather and Climate Extremes in a Changing
Climate. Regions of Focus: North America, Hawaii,
Caribbean, and U.S. Pacific Islands. A Report by
the U.S. Climate Change Science Program and the
Subcommittee on Global Change Research. [Thomas
R. Karl, Gerald A. Meehl, Christopher D. Miller,
Susan J. Hassol, Anne M. Waple, and William L.
Murray (eds.)]. Department of Commerce, NOAA’s
National Climatic Data Center, Washington, DC,
USA, 164 pp.
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i. Temperature
Future warming over the course of the
21st century, even under scenarios of
low emissions growth, is very likely to
be greater than observed warming over
the past century. The range of IPCC
SRES scenarios provides a global
warming range of 1.8 °C to 4.0 °C (3.2
°F to 7.2 °F) with an uncertainty range
of 1.1 °C to 6.4 °C (2.0 °F to 11.5 °F).
All of the U.S. is very likely to warm
during this century, and most areas of
the U.S. are expected to warm by more
than the global average. The average
warming in the U.S. through 2100 is
projected by nearly all the models used
in the IPCC assessment to exceed 2 °C
(3.6 °F) for all scenarios, with 5 out of
21 models projecting average warming
in excess of 4 °C (7.2 °F) for the midrange emissions scenario. The number
of days with high temperatures above 90
°F is projected to increase throughout
the U.S. Temperature increases in the
next couple of decades will be primarily
determined by past emissions of heattrapping gases. As a result, there is less
difference in projected temperature
scenarios in the near-term (around 2020)
than in the middle (2050) and end of the
century, which will be determined more
by future emissions.
ii. Precipitation
Increases in the amount of
precipitation are very likely in higher
latitudes, while decreases are likely in
most subtropical latitudes and the
southwestern U.S., continuing observed
patterns. The mid-continental area is
expected to experience drying during
the summer, indicating a greater risk of
drought. Climate models project
continued increases in the heaviest
downpours during this century, while
the lightest precipitation is projected to
decrease. With more intense
precipitation expected to increase, the
risk of flooding and greater runoff and
erosion will also increase. In contrast,
droughts are likely to become more
frequent and severe in some regions.
The Southwest, in particular, is
expected to experience increasing
drought as changes in atmospheric
circulation patterns cause the dry zone
just outside the tropics to expand farther
northward into the United States.
iii. Extreme Events
It is likely that hurricanes will
become more intense, especially along
the Gulf and Atlantic coasts, with
stronger peak winds and more heavy
precipitation associated with ongoing
increases of tropical sea surface
temperatures. Heavy rainfall events are
expected to increase, increasing the risk
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of flooding, greater runoff and erosion,
and thus the potential for adverse water
quality effects. These projected trends
can increase the number of people at
risk from suffering disease and injury
due to floods, storms, droughts, and
fires. Severe heat waves are projected to
intensify, which can increase heatrelated mortality and sickness.
iv. Physical and Biological Changes
IPCC projects a six-inch to two-foot
rise in sea level during the 21st century
from processes such as thermal
expansion of sea water and the melting
of land-based polar ice sheets. Ocean
acidification is projected to continue,
resulting in the reduced biological
production of marine calcifiers,
including corals. In addition to ocean
acidification, coastal waters are very
likely to continue to warm by as much
as 4 to 8 °F in this century, both in
summer and winter. This will result in
a northward shift in the geographic
distribution of marine life along the
coasts. Warmer ocean temperatures will
also contribute to increased coral
bleaching.
d. Key Climate Change Impacts and
Risks
The effects of climate changes
observed to date and/or projected to
occur in the future include: More
frequent and intense heat waves, more
wildfires, degraded air quality, more
heavy downpours and flooding,
increased drought, greater sea level rise,
more intense storms, water quantity and
quality problems, and negative impacts
to human health, water supply,
agriculture, forestry, coastal areas,
wildlife and ecosystems, and many
other aspects of society and the natural
environment.
i. Human Health
Warm temperatures and extreme
weather already cause and contribute to
adverse human health outcomes
through heat-related mortality and
morbidity, storm-related fatalities and
injuries, and disease. In the absence of
effective adaptation, these effects are
likely to increase with climate change.
Health effects related to climate change
include increased deaths, injuries,
infectious diseases, and stress-related
disorders and other adverse effects
associated with social disruption and
migration from more frequent extreme
weather. Severe heat waves are
projected to intensify in magnitude and
duration over the portions of the U.S.
where these events already occur, with
potential increases in mortality and
morbidity, especially among the elderly,
young and other sensitive populations.
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However, reduced human mortality
from cold exposure is projected through
2100. It is not clear whether reduced
mortality from cold will be greater or
less than increased heat-related
mortality, especially among the elderly,
young and frail. Public health effects
from climate change will likely
disproportionately impact the health of
certain segments of the population, such
as the poor, the very young, the elderly,
those already in poor health, the
disabled, those living alone and/or
indigenous populations dependent on
one or a few resources. Increases are
expected in potential ranges and
exposure of certain diseases affected by
temperature and precipitation changes,
including vector and waterborne
diseases (i.e., malaria, dengue fever,
West Nile virus). See the CCSP Report
‘‘Analyses of the effects of global change
on human health and welfare and
human systems’’,214 IPCC’s Working
Group II (WG2) AR4,215 and Section 7
of the proposed Endangerment TSD for
a more complete discussion regarding
climate change and impacts on human
health.
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ii. Air Quality
Climate change can be expected to
influence the concentration and
distribution of air pollutants through a
variety of direct and indirect processes,
including the modification of biogenic
emissions, the change of chemical
reaction rates, wash-out of pollutants by
precipitation, and modification of
weather patterns that influence
pollutant build-up. Higher temperatures
and weaker circulation patterns
associated with climate change are
expected to worsen regional ozone
pollution in the U.S., with associated
risks in respiratory infection,
aggravation of asthma, and premature
death. In addition to human health
effects, elevated levels of tropospheric
ozone have significant adverse effects
on crop yields, pasture and forest
growth, and species composition. See
Section 8 of the proposed Endangerment
TSD, EPA’s report ‘‘Assessment of the
Impacts of Global Change on Regional
U.S. Air Quality: A Synthesis of Climate
214 Analyses of the effects of global change on
human health and welfare and human systems. A
Report by the U.S. Climate Change Science Program
and the Subcommittee on Global Change Research.
[Gamble, J.L. (ed.), K.L. Ebi, F.G. Sussman, T.J.
Wilbanks, (Authors)]. U.S. Environmental
Protection Agency, Washington, DC, USA.
215 Climate Change 2007: Impacts, Adaptation
and Vulnerability. Contribution of Working Group
II to the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change [M.L.
Parry, O.F. Canziani, J.P. Palutikof, P.J. van der
Linden and C.E. Hanson (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA.
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Change Impacts on Ground-Level
Ozone’’, 216 the CCSP report ‘‘Analyses
of the effects of global change on human
health and welfare and human
systems’’ 217 and IPCC WGII AR4 218 for
a more complete discussion regarding
human health impacts resulting from
climate change effects on air quality.
iii. Food and Agriculture
The CCSP concluded that, with
increased CO2 and temperature, the life
cycle of grain and oilseed crops will
likely progress more rapidly. But, as
temperature rises, these crops will
increasingly begin to experience failure,
especially if climate variability
increases and precipitation lessens or
becomes more variable. Furthermore,
the marketable yield of many
horticultural crops (e.g., tomatoes,
onions, fruits) is very likely to be more
sensitive to climate change than grain
and oilseed crops. Higher temperatures
will very likely reduce livestock
production during the summer season,
but these losses will very likely be
partially offset by warmer temperatures
during the winter season. Cold water
fisheries will likely be negatively
affected; warm-water fisheries will
generally benefit; and the results for
cool-water fisheries will be mixed, with
gains in the northern and losses in the
southern portions of ranges. See Section
9 of the proposed Endangerment TSD,
the CCSP report ‘‘The Effects of Climate
Change on Agriculture, Land Resources,
Water Resources, and Biodiversity in
the United States’’, and the USGCRP
report ‘‘Global Climate Change Impacts
in the United States’’ for a more
complete discussion regarding climate
science and impacts to food production
and agriculture.
iv. Forestry
Climate change has very likely
increased the size and number of forest
fires, insect outbreaks, and tree
216 EPA (2009) Assessment of the Impacts of
Global Change on Regional U.S. Air Quality: A
Synthesis of Climate Change Impacts on GroundLevel Ozone. An Interim Report of the U.S. EPA
Global Change Research Program. U.S.
Environmental Protection Agency, Washington, DC,
EPA/600/R–07/094.
217 Analyses of the effects of global change on
human health and welfare and human systems. A
Report by the U.S. Climate Change Science Program
and the Subcommittee on Global Change Research.
[Gamble, J.L. (ed.), K.L. Ebi, F.G. Sussman, T.J.
Wilbanks, (Authors)]. U.S. Environmental
Protection Agency, Washington, DC, USA.
218 Climate Change 2007: Impacts, Adaptation
and Vulnerability. Contribution of Working Group
II to the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change [M.L.
Parry, O.F. Canziani, J.P. Palutikof, P.J. van der
Linden and C.E. Hanson (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA.
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mortality in the interior west, the
Southwest, and Alaska, and will
continue to do so. Disturbances like
wildfire and insect outbreaks are
increasing and are likely to intensify in
a warmer future with drier soils and
longer growing seasons. Although recent
climate trends have increased vegetation
growth, continuing increases in
disturbances are likely to limit carbon
storage, facilitate invasive species, and
disrupt ecosystem services. Overall
forest growth for North America as a
whole will likely increase modestly (10–
20%) as a result of extended growing
seasons and elevated CO2 over the next
century, but with important spatial and
temporal variation. Forest growth is
slowing in areas subject to drought and
has been subject to significant loss due
insect infestations such as the spruce
bark beetle in Alaska. See Section 10 of
the proposed Endangerment TSD, the
CCSP report ‘‘The Effects of Climate
Change on Agriculture, Land Resources,
Water Resources, and Biodiversity in
the United States’’, IPCC WGII, and the
USGCRP report ‘‘Global Climate Change
Impacts in the United States’’ for a more
complete discussion regarding climate
science and impacts to forestry.
v. Water Resources
The vulnerability of freshwater
resources in the United States to climate
change varies from region to region.
Climate change will likely further
constrain already over-allocated water
resources in some sections of the U.S.,
increasing competition among
agricultural, municipal, industrial, and
ecological uses. Although water
management practices in the U.S. are
generally advanced, particularly in the
western U.S climate change may
increasingly create conditions well
outside of historic observations
impacting managed water systems.
Rising temperatures will diminish
snowpack and increase evaporation,
affecting seasonal availability of water.
Groundwater systems generally respond
more slowly to climate change than
surface water systems. In semi-arid and
arid areas, groundwater resources are
particularly vulnerable because of
precipitation and stream flow are
concentrated over a few months, yearto-year variability is high, and deep
groundwater wells or reservoirs
generally do not exist. Availability of
groundwater is likely to be influenced
by changes in withdrawals (reflecting
development, demand, and availability
of other sources).
In the Great Lakes and major river
systems, lower levels are likely to
exacerbate challenges relating to water
quality, navigation, recreation,
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hydropower generation, water transfers,
and bi-national relationships. Decreased
water supply and lower water levels are
likely to exacerbate challenges relating
to aquatic navigation. Higher water
temperatures, increased precipitation
intensity, and longer periods of low
flows will exacerbate many forms of
water pollution, potentially making
attainment of water quality goals more
difficult. As waters become warmer, the
aquatic life they now support will be
replaced by other species better adapted
to warmer water. In the long-term,
warmer water and changing flow may
result in deterioration of aquatic
ecosystems. See Section 11 of the
proposed Endangerment TSD, the CCSP
report ‘‘The Effects of Climate Change
on Agriculture, Land Resources, Water
Resources, and Biodiversity in the
United States’’, IPCC WGII, and the
USGCRP report ‘‘Global Change Impacts
in the United States’’ for a more
complete discussion regarding climate
science and impacts to water resources.
vi. Sea Level Rise and Coastal Areas
Warmer temperatures raise sea level
by expanding ocean water, melting
glaciers, and possibly increasing the rate
at which ice sheets discharge ice and
water into the oceans. Rising sea level
and the potential for stronger storms
pose an increasing threat to coastal
cities, residential communities,
infrastructure, beaches, wetlands, and
ecosystems. Coastal communities and
habitats will be increasingly stressed by
climate change effects interacting with
development and pollution. Sea level is
rising along much of the U.S. coast, and
the rate of change will increase in the
future, exacerbating the impacts of
progressive inundation, storm-surge
flooding, and shoreline erosion. Studies
find 75% of the shoreline removed from
the influence of spits, tidal inlets and
engineering structures is eroding along
the U.S. East Coast probably due to sea
level rise. Storm impacts are likely to be
more severe, especially along the Gulf
and Atlantic coasts. Salt marshes,
estuaries, other coastal habitats, and
dependent species will be further
threatened by sea level rise. The
interaction with coastal zone
development and climate change effects
such as sea level rise will further stress
coastal communities and habitats.
Population growth and rising value of
infrastructure in coastal areas increases
vulnerability and risk of climate
variability and future climate change.
Sea level rise and high rates of water
withdrawal promote the intrusion of
saline water in to groundwater supplies,
which adversely affects water quality.
See Section 12 of the proposed
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Endangerment TSD, the CCSP report
‘‘Coastal Sensitivity to Sea Level Rise: A
Focus on the Mid-Atlantic Region’’,219
the USGCRP report ‘‘Global Change
Impacts in the United States’’, and IPCC
WGII for a more complete discussion
regarding climate science and impacts
to sea level rise and coastal areas.
vii. Energy, Infrastructure and
Settlements
Most of the effects of climate change
on the U.S. energy sector will be related
to energy use and production. The
research evidence is relatively clear that
climate warming will mean reductions
in total U.S. heating requirements and
increases in total cooling requirements
for building. These changes will vary by
region and by season and will affect
household and business energy costs.
Studies project that temperature
increases due to global warming are
very likely to increase peak demand for
electricity in most regions of the country
as rising temperatures are expected to
increase energy requirements for cooling
residential and commercial buildings.
An increase in peak demand for
electricity can lead to a disproportionate
increase in energy infrastructure
investment. Extreme weather events can
threaten coastal energy infrastructures
and electricity transmission and
distribution in the U.S. Increases in
hurricane intensity are likely to cause
further disruptions to oil and gas
operations in the Gulf, like those
experienced in 2005 with Hurricane
Katrina. Climate change is likely to
affect some renewable energy sources
across the nation, such as hydropower
production in regions subject to
changing patterns of precipitation or
snowmelt. The U.S. energy sector,
which relies heavily on water for both
hydropower and cooling capacity, may
be adversely impacted by changes to
water supply and quality in reservoirs
and other water bodies.
Water infrastructure, including
drinking water and wastewater
treatment plants, and sewer and storm
water management systems, will be at
greater risk of flooding, sea level rise
and storm surge, low flows, and other
factors that could impair performance.
In addition, as water supply is
constrained and demand increases it
will become more likely that water will
219 CCSP (2009) Coastal Sensitivity to Sea-Level
Rise: A Focus on the Mid-Atlantic Region. A report
by the U.S. Climate Change Science Program and
the Subcommittee on Global Change Research.
[James G. Titus (Coordinating Lead Author), K. Eric
Anderson, Donald R. Cahoon, Dean B. Gesch,
Stephen K. Gill, Benjamin T. Gutierrez, E. Robert
Thieler, and S. Jeffress Williams (Lead Authors)],
U.S. Environmental Protection Agency, Washington
DC, USA, 320 pp.
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have to be transported and moved
which will require additional energy
capacity. See Section 13 of the proposed
Endangerment TSD, the CCSP reports
‘‘the Effects of Climate Change on
Energy Production in the United
States’’ 220 and ‘‘Impacts of Climate
Change and Variability on
Transportation Systems and
Infrastructure’’,221 and the USGCRP
report ‘‘Global Change Impacts in the
United States’’ for a more complete
discussion regarding climate science
and impacts to energy, infrastructure
and settlements.
viii. Ecosystems and Wildlife
Disturbances such as wildfires and
insect outbreaks are increasing in the
U.S. and are likely to intensify in a
warmer future with drier soils and
longer growing seasons. Although recent
climate trends have increased vegetation
growth, continuing increases in
disturbances are likely to limit carbon
storage, facilitate invasive species, and
disrupt ecosystem services. Over the
21st century, changes in climate will
cause species to shift north and to
higher elevations and fundamentally
rearrange U.S. ecosystems. Differential
capacities for range shifts are
constrained by development, habitat
fragmentation, invasive species, and
broken ecological connections. IPCC
consequently predicts significant
disruption of ecosystem structure,
function, and services. See Section 14 of
the proposed Endangerment TSD, IPCC
WGII, the CCSP report ‘‘The Effects of
Climate Change on Agriculture, Land
Resources, Water Resources, and
Biodiversity in the United States’’, and
the USGCRP report ‘‘Global Change
Impacts in the United States’’ for a more
complete discussion regarding climate
science and impacts to ecosystems and
wildlife.
220 CCSP (2007): Effects of Climate Change on
Energy Production and Use in the United States. A
Report by the U.S. Climate Change Science Program
and the subcommittee on Global Change Research.
Thomas J. Wilbanks, Vatsal Bhatt, Daniel E. Bilello,
Stanley R. Bull, James Ekmann, William C. Horak,
Y. Joe Huang, Mark D. Levine, Michael J. Sale,
David K. Schmalzer, and Michael J. Scott).
Department of Energy, Office of Biological &
Environmental Research, Washington, DC, USA,
160 pp.
221 CCSP (2008) Impacts of Climate Change and
Variability on Transportation Systems and
Infrastructure: Gulf Coast Study, Phase I. A Report
by the U.S. Climate Change Science Program and
the Subcommittee on Global Change Research
[Savonis, M.J., V.R. Burkett, and J.R. Potter (eds.)].
Department of Transportation, Washington, DC,
USA, 445 pp.
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3. Changes in Global Mean Temperature
and Sea Level Rise Associated With the
Proposal’s GHG Emissions Reductions
EPA examined 222 the reductions in
CO2 and other GHGs associated with the
proposal and analyzed the projected
effects on global mean surface
temperature and sea level, two common
indicators of climate change. The
analysis projects that the proposal will
reduce climate warming and sea level
rise. Although the projected reductions
are small in overall magnitude by
themselves, they are quantifiable and
would contribute to reducing climate
change risks.
a. Estimated Projected Reductions in
Global Mean Surface Temperatures and
Sea Level Rise
EPA estimated changes in the
atmospheric CO2 concentration, global
mean surface temperature and sea level
to 2100 resulting from the emissions
reductions in this proposal using the
Model for the Assessment of
Greenhouse Gas Induced Climate
Change (MAGICC, version 5.3). This
widely used, peer reviewed modeling
tool was also used to project
temperature and sea level rise under
different emissions scenarios in the
Third and Fourth Assessments of the
Intergovernmental Panel on Climate
Change (IPCC).
GHG emissions reductions from
Section III.F.1a were applied as net
reductions to a peer reviewed global
reference case (or baseline) emissions
scenario to generate an emissions
scenario specific to this proposal. For
the proposal scenario, all emissions
reductions were assumed to begin in
2012, with zero emissions change in
2011 (from the reference case) followed
by emissions linearly increasing to
equal the value supplied in Section
III.F.1.a for 2020 and then continuing to
2100. Details about the reference case
scenario and how the emissions
reductions were applied to generate the
proposal scenario can be found in the
DRIA Chapter 7.
The atmospheric CO2 concentration,
temperature, and sea-level increases for
both the reference case and the proposal
emissions scenarios were computed
using MAGICC. To compute the
reductions in the atmospheric CO2
concentrations as well as in temperature
and sea level resulting from the
proposal, the output from the proposal
222 Using the Model for the Assessment of
Greenhouse Gas Induced Climate Change (MAGICC,
https://www.cgd.ucar.edu/cas/wigley/magicc/), EPA
estimated the effects of this action’s greenhouse gas
emissions reductions on global mean temperature
and sea level. Please refer to Chapter 7.4 of the
DRIA for additional information.
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scenario was subtracted from an existing
MiniCAM emission scenario. To capture
some key uncertainties in the climate
system with the MAGICC model,
changes in temperature and sea-level
rise were projected across the most
current IPCC range for climate
sensitivities which ranges from 1.5 °C to
6.0 °C (representing the 90% confidence
interval).223 This wide range reflects the
uncertainty in this measure of how
much the global mean temperature
would rise if the concentration of
carbon dioxide in the atmosphere were
to double. Details about this modeling
analysis can be found in the DRIA
Chapter 7.4.
The results of this modeling show
small, but quantifiable, reductions in
the atmospheric CO2 concentration, the
projected global mean surface
temperature and sea level resulting from
this proposal (assuming it is finalized),
across all climate sensitivities. As a
result of this proposal’s emission
reductions, the atmospheric CO2
concentration is projected to be reduced
by approximately 2.9 to 3.2 parts per
million (ppm), the global mean
temperature is projected to be reduced
by approximately 0.007–0.016 °C by
2100, and global mean sea level rise is
projected to be reduced by
approximately 0.06–0.15cm by 2100.
The reductions are small relative to the
IPCC’s 2100 ‘‘best estimates’’ for global
mean temperature increases (1.8–4.0 °C)
and sea level rise (0.20–0.59m) for all
global GHG emissions sources for a
range of emissions scenarios. EPA used
a peer reviewed model, the MAGICC
model, to do this analysis. This analysis
is specific to the proposed rule and
therefore cannot come from some
previously published work. The Agency
welcomes comment on the use of the
MAGICC model for these purposes.
Further discussion of EPA’s modeling
analysis is found in Chapter 7 of the
Draft RIA.
As a substantial portion of CO2
emitted into the atmosphere is not
removed by natural processes for
millennia, each unit of CO2 not emitted
into the atmosphere avoids essentially
permanent climate change on centennial
time scales. Though the magnitude of
the avoided climate change projected
223 In IPCC reports, equilibrium climate
sensitivity refers to the equilibrium change in the
annual mean global surface temperature following
a doubling of the atmospheric equivalent carbon
dioxide concentration. The IPCC states that climate
sensitivity is ‘‘likely’’ to be in the range of 2 °C to
4.5 °C, ‘‘very unlikely’’ to be less than 1.5 °C, and
‘‘values substantially higher than 4.5 °C cannot be
excluded.’’ IPCC WGI, 2007, Climate Change
2007—The Physical Science Basis, Contribution of
Working Group I to the Fourth Assessment Report
of the IPCC, https://www.ipcc.ch/.
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here is small, these reductions would
represent a reduction in the adverse
risks associated with climate change
(though these risks were not formally
estimated for this proposal) across all
climate sensitivities.
4. Weight Reduction and Potential
Safety Impacts
In this section, EPA will discuss
potential safety impacts of the proposed
standards. In the joint technology
analysis, EPA and NHTSA agree that
automakers could reduce weight as one
part of the industry’s strategy for
meeting the proposed standards. As
shown in table III.D.6–3, of this
Preamble, EPA’s modeling projects that
vehicle manufacturers will reduce the
weight of their vehicles by 4% on
average between 2011 and 2016
although individual vehicles may have
greater or smaller weight reduction
(NHTSA’s results are similar using the
Volpe model). The penetration and
magnitude of these modeled changes are
consistent with the public
announcements made by many
manufacturers since early 2008 and are
consistent with meetings that EPA has
had with senior engineers and technical
leadership at many of the automotive
companies during 2008 and 2009.
EPA also projects that automakers
will not reduce footprint in order to
meet the proposed CO2 standards in our
modeling analysis. NHTSA and EPA
have taken two measures to help ensure
that the proposed rules provide no
incentive for mass reduction to be
accompanied by a corresponding
decrease in the footprint of the vehicle
(with its concomitant decrease in crush
and crumple zones). The first design
feature of the proposed rule is that the
CO2 or fuel economy targets are based
on the attribute of footprint (which is a
surrogate for vehicle size).224 The
second design feature is that the shape
of the footprint curve (or function) has
been carefully chosen such that it
neither encourages manufacturers to
increase, nor decrease the footprint of
their fleet. Thus, the standard curves are
designed to be approximately ‘‘footprint
neutral’’ within the sloped portion of
the function.225 For further discussion
on this, refer to Section II.C of the
preamble, or Chapter 2 of the joint TSD.
Thus the agencies are assuming in their
224 As the footprint attribute is defined as
wheelbase times track width, the footprint target
curves do not discourage manufacturers from
reducing vehicle size by reducing front, rear, or side
overhang, which can impact safety by resulting in
less crush space.
225 This neutrality with respect to footprint does
not extend to the smallest and largest vehicles,
because the function is limited, or flattened, in
these footprint ranges.
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modeling analysis that the
manufacturers could reduce vehicle
mass without reducing vehicle footprint
as one way to respond to the proposed
rule.226
In Section IV of this preamble,
NHTSA presents a safety analysis of the
proposed CAFE standards based on the
2003 Kahane analysis. As discussed in
Section IV, NHTSA has developed a
worse case estimate of the impact of
weight reductions on fatalities. The
underlying data used for that analysis
does not allow NHTSA to analyze the
specific impact of weight reduction at
constant footprint because historically
there have not been a large number of
vehicles produced that relied
substantially on material substitution.
Rather, the data set includes vehicles
that were either smaller and lighter or
larger and heavier. The numbers in the
NHTSA analysis predict the safetyrelated fatality consequences that would
occur in the unlikely event that weight
reduction for model years 2012–2016 is
accomplished by reducing mass and
reducing footprint. EPA concurs with
NHTSA that the safety analysis
conducted by NHTSA and presented in
Section IV is a worst case analysis for
fatalities, and that the actual impacts on
vehicle safety could be much less.
However, EPA and NHTSA are not able
to quantify the lower-bound potential
impacts at this time.
The agencies believe that reducing
vehicle mass without reducing the size
of the vehicle or the structural integrity
is technically feasible in the rulemaking
time frame. Many of the technical
options for doing so are outlined in
Chapter 3 of the joint TSD and in EPA’s
DRIA. Weight reduction can be
accomplished by the proven methods
described below. Every manufacturer
will employ these methodologies to
some degree, the magnitude to which
each will be used will depend on
opportunities within individual vehicle
design.
• Material Substitution: Substitution
of lower density and/or higher strength
materials in a manner that preserves or
improves the function of the
component. This includes substitution
of high-strength steels, aluminum,
magnesium or composite materials for
components currently fabricated from
mild steel (e.g., the magnesium-alloy
front structure used on the 2009 Ford
F150 pickups).227 Light-weight
226 See Chapter 1 of the joint TSD for a
description of potential footprint changes in the
2016 reference fleet.
227 We note that since these MY 2009 F150s have
only begun to enter the fleet, there is little realworld crash data available to evaluate the safety
impacts of this new design.
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materials with acceptable energy
absorption properties can maintain
structural integrity and absorption of
crash energy relative to previous designs
while providing a net decrease in
component weight.
• Smart Design: Computer aided
engineering (CAE) tools can be used to
better optimize load paths within
structures by reducing stresses and
bending moments without adversely
affecting structural integrity. This
allows better optimization of the
sectional thicknesses of structural
components to reduce mass while
maintaining or improving the function
of the component. Smart designs also
integrate separate parts in a manner that
reduces mass by combining functions or
the reduced use of separate fasteners. In
addition, some ‘‘body on frame’’
vehicles are redesigned with a lighter
‘‘unibody’’ construction with little
compromise in vehicle functionality.
• Reduced Powertrain Requirements:
Reducing vehicle weight sufficiently
can allow for the use of a smaller,
lighter and more efficient engine while
maintaining or even increasing
performance. Approximately half of the
reduction is due to these reduced
powertrain output requirements from
reduced engine power output and/or
displacement, lighter weight
transmission and final drive gear ratios.
The subsequent reduced rotating mass
(e.g. transmission, driveshafts/
halfshafts, wheels and tires) via weight
and/or size reduction of components are
made possible by reduced torque output
requirements.
• Mass Compounding: Following
from the point above, the compounded
weight reductions of the body, engine
and drivetrain can reduce stresses on
the suspension components, steering
components, brakes, and thus allow
further reductions in the weight of these
subsystems. The reductions in weight
for unsprung masses such as brakes,
control arms, wheels and tires can
further reduce stresses in the
suspension mounting points which can
allow still further reductions in weight.
For example, lightweighting can allow
for the reduction in the size of the
vehicle brake system, while maintaining
the same stopping distance.
Therefore, EPA believes it is both
technically feasible to reduce weight
without reducing vehicle size, footprint
or structural strength and manufacturers
have indicated to the agencies that they
will use these approaches to accomplish
these tasks. We request written
comment on this assessment and this
projection, including up-to-date plans
regarding the extent of use by each
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manufacturer of each of the
methodologies described above.
For this proposed rule, as noted
earlier, EPA’s modeling analysis
projects that weight reduction by model
year 2016 on the order of 4% on average
for the fleet will occur (see Section
III.D.6 for details on our estimated mass
reduction). EPA believes that such
modeled changes in the fleet could
result in much smaller fatality impacts
than those in the worst case scenario
presented in Section IV by NHTSA,
since manufacturers have many safer
options for reducing vehicle weight than
doing so by simultaneously reducing
footprint. The NHTSA analysis, based
solely on 4-door vehicles, does not
independently differentiate between
weight reduction which comes from
vehicle downsizing (a physically
smaller vehicle) and vehicle weight
reduction solely through design and
material changes (i.e., making a vehicle
weigh less without changing the size of
the vehicle or reducing structural
integrity).
Dynamic Research Incorporated (DRI)
has assessed the independent effects of
vehicle weight and size on safety in
order to determine if there are tradeoffs
between improving vehicle safety and
fuel consumption. In their 2005
studies 228 229 one of which was
published as a Society of Automotive
Engineers Technical Paper and received
peer review through that body, DRI
presented results that indicate that
vehicle weight reduction tends to
decrease fatalities, but vehicle
wheelbase and track reduction tends to
increase fatalities. The DRI work
focused on four major points, with #1
and #4 being discussed with additional
detail below:
1. 2–Door vehicles represented a
significant portion of the light duty fleet
and should not be ignored.
2. Directional control and therefore
crash avoidance improves with a
reduction in curb weight.
3. The occupants of the impacted
vehicle, or ‘‘collision partner’’ benefit
from being impacted by a lighter
vehicle.
4. Rollover fatalities are reduced by a
reduction in curb weight due to lower
centers of gravity and lower loads on the
roof structures.
228 ‘‘Supplemental Results on the Independent
Effects of Curb Weight, Wheelbase and Track on
Fatality Risk’’, Dynamic Research, Inc., DRI–TR–
05–01, May 2005.
229 ‘‘An Assessment of the Effects of Vehicle
Weight and Size on Fatality Risk in 1985 to 1998
Model Year Passenger Cars and 1985 to 1997 Model
Year’’, M. Van Auken and J. Zellner, Dynamic
Research Inc., Society of Automotive Engineers
Technical Paper 2005–01–1354.
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The data used for the DRI analysis
was similar to NHTSA’s 2003 Kahane
study, using Fatality Analysis Reporting
System (FARS) data for vehicle model
years 1985 through 1998 for cars, and
1985 through 1997 trucks. This data
overlaps Kahane’s FARS data on model
year 1991 to 1999 vehicles. However,
DRI included 2-door passenger cars,
whereas the Kahane study excluded all
2-door vehicles. The 2003 Kahane study
excluded 2-door passenger cars because
it found that for MY 1991–1999
vehicles, sports and muscle cars
constituted a significant proportion of
those vehicles. These vehicles have
relatively high weight relative to their
wheelbase, and are also
disproportionately involved in crashes.
Thus, Kahane concluded that including
these vehicles in the analysis
excessively skewed the regression
results. However, as of July 1, 1999, 2door passenger cars represented 29% of
the registered cars in the United States.
DRI’s position was that this is a
significant portion of the light duty
fleet, too large to be ignored, and
conclusions regarding the effects of
weight and safety should be based on
data for all cars, not just 4-doors. DRI
did state in their conclusions that the
results are sensitive to removing data for
2-doors and wagons, and that the results
for 4-door cars with respect to the
effects of wheelbase and track width
were no longer statistically significant
when 2-door cars were removed. EPA
and NHTSA recognize that it is
important to properly account for 2-door
cars in a regression analysis evaluating
the impacts of vehicle weight on safety.
Thus, the agencies seek comment on
how to ensure that any analysis
supporting the final rule accounts as
fully as possible for the range of safety
impacts due to weight reduction on the
variety of vehicles regulated under these
proposed standards.
The DRI and Kahane studies also
differ with respect to the impact of
vehicle weight on rollover fatalities. The
Kahane study treated curb weight as a
surrogate for size and weight and
analyzed them as a single variable.
Using this method, the 2003 Kahane
analysis indicates that curb weight
reductions would increase fatalities due
to rollovers. The DRI study differed by
analyzing curb weight, wheelbase, and
track as multiple variables and
concluded that curb weight reduction
would decrease rollover fatalities, and
wheelbase and track reduction would
increase rollover fatalities. DRI offers
two potential root causes for higher curb
weight resulting in higher rollover
fatalities. The first is that a taller vehicle
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tends to be heavier than a shorter
vehicle; therefore heavier vehicles may
be more likely to rollover because the
vehicle height and weight are correlated
with vehicle center of gravity height.
The second is that FMVSS 216 for roof
crush strength requirements for
passenger cars of model years 1995
through 1999 were proportional to the
unloaded vehicle weight if the weight is
less than 3,333 lbs, however they were
a constant if the weight is greater than
3,333 lbs. Therefore heavier vehicles
may have had relatively less rollover
crashworthiness.
NHTSA has rejected the DRI analysis,
and has not relied on it for its
evaluation of safety impact changes in
CAFE standards. See Section IV.G.6 of
this Notice, as well as NHTSA’s March
2009 Final Rulemaking for MY2011
CAFE standards (see 74 FR at 14402–
05).
The DRI and Kahane analyses of the
FARS data appear similar in one respect
because the results are reproducible
between the two studies when using
aggregated vehicle attributes for 4-door
cars.230 231 232 However, when DRI and
NHTSA separately analyzed individual
vehicle attributes of mass, wheelbase
and track width, DRI and NHTSA
obtained different results for passenger
cars. NHTSA has raised this as a
concern with the DRI study. When 2door vehicles are removed from the data
set EPA is concerned that the results
may no longer be statistically significant
with respect to independent vehicle
attributes due to the small remaining
data set, as DRI stated in the 2005 study.
The DRI analysis concluded that there
would be a small reduction in fatalities
for cars and for trucks for a 100 pound
reduction in curb weight without
accompanied vehicle footprint or size
changes. EPA notes that if DRI’s results
were to be applied using the curb
weight reductions predicted by the
OMEGA model, an overall reduction in
fatalities would be predicted. EPA
invites comment on all aspects of the
issue of the impact of this kind of
weight reduction on safety, including
the usefulness of the DRI study in
evaluating this issue.
The agencies are committed to
continuing to analyze vehicle safety
issues so a more informed evaluation
230 ‘‘Supplemental Results on the Independent
Effects of Curb Weight, Wheelbase and Track on
Fatality Risk’’, Dynamic Research, Inc., DRI–TR–
05–01, May 2005.
231 ‘‘An Assessment of the Effects of Vehicle
Weight and Size on Fatality Risk in 1985 to 1998
Model Year Passenger Cars and 1985 to 1997 Model
Year’’, M. Van Auken and J. Zellner, Dynamic
Research Inc., Society of Automotive Engineers
Technical Paper 2005–01–1354.
232 FR Vol. 74, No. 59, beginning on pg. 14402.
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can be made. We request comment on
this issue. These comments should
include not only further discussion and
analysis of the relevant studies but data
and analysis which can allow the
agencies to more accurately quantify
any potential safety issues with the
proposed standards.
G. How Would the Proposal Impact
Non-GHG Emissions and Their
Associated Effects?
In addition to reducing the emissions
of greenhouse gases, this proposal
would influence the emissions of
‘‘criteria’’ air pollutants and air toxics
(i.e., hazardous air pollutants). The
criteria air pollutants include carbon
monoxide (CO), fine particulate matter
(PM2.5), sulfur dioxide (SOX) and the
ozone precursors hydrocarbons (VOC)
and oxides of nitrogen (NOX); the air
toxics include benzene, 1,3-butadiene,
formaldehyde, acetaldehyde, and
acrolein. Our estimates of these nonGHG emission impacts from the
proposed program are shown by
pollutant in Table III.G–1 and Table
III.G–2 in total, and broken down by the
two drivers of these changes: (a)
‘‘Upstream’’ emission reductions due to
decreased extraction, production and
distribution of motor gasoline; and (b)
‘‘downstream’’ emission increases,
reflecting the effects of VMT rebound
(discussed in Sections III.F and III.H).
Total program impacts on criteria and
toxics emissions are discussed below,
followed by individual discussions of
the upstream and downstream impacts.
Those are followed by discussions of the
effects on air quality, health, and other
environmental concerns.
As discussed in Chapter 5 of the
DRIA, the impacts presented here are
only from petroleum (i.e., EPA assumes
that total volumes of ethanol and other
renewable fuels will remain unchanged
due to this program). Ethanol use was
modeled at the volumes projected in
AEO2007 for the reference and control
case; thus no changes are projected in
upstream emissions related to ethanol
production and distribution. However,
due to the decreased gasoline volume
associated with this proposal, a greater
market share of E10 is expected relative
to E0, which would be expected to have
some effect on fleetwide average nonGHG emission rates. This effect, which
is likely small relative to the other
effects considered here, has not been
accounted for in the downstream
emission modeling conducted for this
proposal, but EPA does plan to address
it in the final rule air quality analysis,
for which localized impacts could be
more significant. A more comprehensive
analysis of the impacts of different
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ethanol and gasoline volume scenarios
is being prepared as part of EPA’s RFS2
rulemaking package.233
As shown in Table III.G–1, EPA
estimates that this program would result
in reductions of NOX, VOC, PM and
SOX, but would increase CO emissions.
For NOX, VOC, PM and SOX, we
estimate net reductions in criteria
pollutant emissions because the
emissions reductions from upstream
sources are larger than the emission
increases due to additional driving (i.e.,
the ‘‘rebound effect’’). In the case of CO,
we estimate slight emission increases,
because there are relatively small
reductions in upstream emissions, and
thus the projected emission increases
due to additional driving are greater
than the projected emission decreases
due to reduced fuel production. EPA
estimates that the proposed program
would result in small changes for toxic
emissions compared to total U.S.
inventories across all sectors. For all
pollutants the overall impact of the
program would be relatively small
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233 74 FR 24904. See also Docket EPA–HQ–OAR–
2005–0161.
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compared to total U.S. inventories
across all sectors. In 2030 EPA estimates
the proposed program would reduce
these total NOX, PM and SOX
inventories by 0.2 to 0.3 percent and
reduce the VOC inventory by 1.2
percent, while increasing the total
national CO inventory by 0.4 percent.
As shown in Table III.G–2, EPA
estimates that the proposed program
would result in small changes for toxic
emissions compared to total U.S.
inventories across all sectors. In 2030
EPA estimates the program would
reduce total benzene and formaldehyde
by 0.04 percent. Total acrolein,
acetaldehyde, and 1,3-butadiene would
increase by 0.03 to 0.2 percent.
Other factors which may impact nonGHG emissions, but are not estimated in
this analysis, include:
• Vehicle technologies used to reduce
tailpipe CO2 emissions; because the
regulatory standards for non-GHG
emissions are the primary driver for
these emissions, EPA expects the impact
of this program to be negligible on nonGHG emission rates per mile.
• The potential for increased market
penetration of diesel vehicles; because
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these vehicles would be held to the
same certification and in-use standards
for criteria pollutants as their gasoline
counterparts, EPA expects their impact
to be negligible on criteria pollutants
and other non-GHG emissions.
• Early introduction of electric
vehicles and plug-in hybrid electric
vehicles, which would reduce criteria
emissions in cases where they are able
to certify to lower certification
standards. It would also likely reduce
gaseous air toxics.
• Reduced refueling emissions due to
less frequent refueling events and
reduced annual refueling volumes
resulting from the GHG standards.
• Increased hot soak evaporative
emissions due to the likely increase in
number of trips associated with VMT
rebound modeled in this proposal.
• Increased market share of E10
relative to E0 due to the decreased
overall gasoline consumption of this
proposal combined with an unchanged
fuel ethanol volume.
EPA invites comments on the possible
contribution of these factors to non-GHG
emissions.
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1. Upstream Impacts of Program
Reducing tailpipe CO2 emissions from
light-duty cars and trucks through
tailpipe standards and improved A/C
efficiency will result in reduced fuel
demand and reductions in the emissions
associated with all of the processes
involved in getting petroleum to the
pump. These upstream emission
impacts on criteria pollutants are
summarized in Table III.G–1. The
upstream reductions grow over time as
the fleet turns over to cleaner CO2
vehicles, so that by 2030 VOC would
decrease by 148,000 tons, NOX by
43,000 tons, and PM2.5 by 6,000 tons.
Table III.G–2 shows the corresponding
impacts on upstream air toxic emissions
in 2030. Formaldehyde decreases by 112
tons, benzene by 320 tons, acetaldehyde
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by 15 tons, acrolein by 2 tons, and 1,3butadiene by 3 tons.
To determine these impacts, EPA
estimated the impact of reduced
petroleum volumes on the extraction
and transportation of crude oil as well
as the production and distribution of
finished gasoline. For the purpose of
assessing domestic-only emission
reductions it was necessary to estimate
the fraction of fuel savings attributable
to domestic finished gasoline, and of
this gasoline what fraction is produced
from domestic crude. For this analysis
EPA estimated that 50 percent of fuel
savings is attributable to domestic
finished gasoline and that 90 percent of
this gasoline originated from imported
crude. Emission factors for most
upstream emission sources are based on
the GREET1.8 model, developed by
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DOE’s Argonne National Laboratory,234
but in some cases the GREET values
were modified or updated by EPA to be
consistent with the National Emission
Inventory (NEI).235 The primary updates
for this analysis were to incorporate
newer information on gasoline
distribution emissions for VOC from the
NEI, which were significantly higher
than GREET estimates; and the
incorporation of upstream emission
factors for the air toxics estimated in
this analysis: benzene, 1,3-butadiene,
acetaldehyde, acrolein, and
234 Greenhouse Gas, Regulated Emissions, and
Energy Use in Transportation model (GREET), U.S.
Department of Energy, Argonne National
Laboratory, https://www.transportation.anl.gov/
modeling_simulation/GREET/.
235 EPA. 2002 National Emissions Inventory (NEI)
Data and Documentation, https://www.epa.gov/ttn/
chief/net/2002inventory.html.
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formaldehyde. The development of
these emission factors is detailed in
DRIA Chapter 5.
3. Health Effects of Non-GHG Pollutants
a. Particulate Matter
i. Background
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2. Downstream Impacts of Program
As discussed in more detail in Section
III.H, the effect of fuel cost on VMT
(‘‘rebound’’) was accounted for in our
assessment of economic and
environmental impacts of this proposed
rule. A 10 percent rebound case was
used for this analysis, meaning that
VMT for affected model years is
modeled as increasing by 10 percent as
much as the increase in fuel economy;
i.e., a 10 percent increase in fuel
economy would yield a 1.0 percent
increase in VMT.
Downstream emission impacts of the
rebound effect are summarized in Table
III.G–1 for criteria pollutants and
precursors and Table III.G–2 for air
toxics. The emission increases from the
rebound effect grow over time as the
fleet turns over to cleaner CO2 vehicles,
so that by 2030 VOC would increase by
5,500 tons, NOX by 16,000 tons, and
PM2.5 by 570 tons. Table III.G–2 shows
the corresponding impacts on air toxic
emissions. The most noteworthy of
these impacts in 2030 are 40 additional
tons of 1,3-butadiene, 75 tons of
acetaldehyde, 240 tons of benzene, 96
tons of formaldehyde, and 4 tons of
acrolein.
For this analysis the reference case
non-GHG emissions for light duty
vehicles and trucks were derived using
EPA’s MOtor Vehicle Emission
Simulator (MOVES) model for VOC, CO,
NOX, PM and air toxics. PM2.5 emission
estimates include additional
adjustments for low temperatures,
discussed in detail in the DRIA. Because
this modeling was based on calendar
year estimates, estimating the rebound
effect required a fleet-weighted rebound
factor to be calculated for calendar years
2020 and 2030; these factors are
presented in DRIA Chapter 5.
As discussed in Section III.H, EPA
will be taking comment on the
appropriate level of rebound rate for this
analysis. The sensitivity of the
downstream emission increases shown
in Tables III.G–1 and III.G–2 to the level
of rebound would be in direct
proportion to the rebound rate itself;
since zero rebound would result in zero
emission increase, the downstream
results presented in Table III.G–1 and
Table III.G–2 can be directly scaled to
estimate the effect of lower rebound
rates.
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Particulate matter is a generic term for
a broad class of chemically and
physically diverse substances. It can be
principally characterized as discrete
particles that exist in the condensed
(liquid or solid) phase spanning several
orders of magnitude in size. Since 1987,
EPA has delineated that subset of
inhalable particles small enough to
penetrate to the thoracic region
(including the tracheobronchial and
alveolar regions) of the respiratory tract
(referred to as thoracic particles).
Current NAAQS use PM2.5 as the
indicator for fine particles (with PM2.5
referring to particles with a nominal
mean aerodynamic diameter less than or
equal to 2.5 μm), and use PM10 as the
indicator for purposes of regulating the
coarse fraction of PM10 (referred to as
thoracic coarse particles or coarsefraction particles; generally including
particles with a nominal mean
aerodynamic diameter greater than 2.5
μm and less than or equal to 10 μm, or
PM10–2.5). Ultrafine particles are a subset
of fine particles, generally less than 100
nanometers (0.1 μm) in aerodynamic
diameter.
Fine particles are produced primarily
by combustion processes and by
transformations of gaseous emissions
(e.g., SOX, NOX and VOC) in the
atmosphere. The chemical and physical
properties of PM2.5 may vary greatly
with time, region, meteorology, and
source category. Thus, PM2.5 may
include a complex mixture of different
pollutants including sulfates, nitrates,
organic compounds, elemental carbon
and metal compounds. These particles
can remain in the atmosphere for days
to weeks and travel hundreds to
thousands of kilometers.
ii. Health Effects of PM
Scientific studies show ambient PM is
associated with a series of adverse
health effects. These health effects are
discussed in detail in EPA’s 2004
Particulate Matter Air Quality Criteria
Document (PM AQCD) and the 2005 PM
Staff Paper. 236 237 238 Further discussion
236 U.S. EPA (2004). Air Quality Criteria for
Particulate Matter. Volume I EPA600/P–99/002aF
and Volume II EPA600/P–99/002bF. Retrieved on
March 19, 2009 from Docket EPA–HQ–OAR–2003–
0190 at https://www.regulations.gov/.
237 U.S. EPA. (2005). Review of the National
Ambient Air Quality Standard for Particulate
Matter: Policy Assessment of Scientific and
Technical Information, OAQPS Staff Paper. EPA–
452/R–05–005a. Retrieved March 19, 2009 from
https://www.epa.gov/ttn/naaqs/standards/pm/data/
pmstaffpaper_20051221.pdf.
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of health effects associated with PM can
also be found in the DRIA for this rule.
Health effects associated with shortterm exposures (hours to days) to
ambient PM include premature
mortality, aggravation of cardiovascular
and lung disease (as indicated by
increased hospital admissions and
emergency department visits), increased
respiratory symptoms including cough
and difficulty breathing, decrements in
lung function, altered heart rate rhythm,
and other more subtle changes in blood
markers related to cardiovascular
health.239 Long-term exposure to PM2.5
and sulfates has also been associated
with mortality from cardiopulmonary
disease and lung cancer, and effects on
the respiratory system such as reduced
lung function growth or development of
respiratory disease. A new analysis
shows an association between long-term
PM2.5 exposure and a measure of
atherosclerosis development.240 241
Studies examining populations
exposed over the long term (one or more
years) to different levels of air pollution,
including the Harvard Six Cities Study
238 The PM NAAQS is currently under review and
the EPA is considering all available science on PM
health effects, including information which has
been published since 2004, in the development of
the upcoming PM Integrated Science Assessment
Document (ISA). A second draft of the PM ISA was
completed in July 2009 and was submitted for
review by the Clean Air Scientific Advisory
Committee (CASAC) of EPA’s Science Advisory
Board. Comments from the general public have also
been requested. For more information, see https://
cfpub.epa.gov/ncea/cfm/
recordisplay.cfm?deid=210586.
239 U.S. EPA. (2006). National Ambient Air
Quality Standards for Particulate Matter; Proposed
Rule. 71 FR 2620, January 17, 2006.
240 Kunzli, N., Jerrett, M., Mack, W.J., et al.
¨
(2004). Ambient air pollution and atherosclerosis in
Los Angeles. Environ Health Perspect., 113, 201–
206.
241 This study is included in the 2006 Provisional
Assessment of Recent Studies on Health Effects of
Particulate Matter Exposure. The provisional
assessment did not and could not (given a very
short timeframe) undergo the extensive critical
review by CASAC and the public, as did the PM
AQCD. The provisional assessment found that the
‘‘new’’ studies expand the scientific information
and provide important insights on the relationship
between PM exposure and health effects of PM. The
provisional assessment also found that ‘‘new’’
studies generally strengthen the evidence that acute
and chronic exposure to fine particles and acute
exposure to thoracic coarse particles are associated
with health effects. Further, the provisional science
assessment found that the results reported in the
studies did not dramatically diverge from previous
findings, and taken in context with the findings of
the AQCD, the new information and findings did
not materially change any of the broad scientific
conclusions regarding the health effects of PM
exposure made in the AQCD. However, it is
important to note that this assessment was limited
to screening, surveying, and preparing a provisional
assessment of these studies. For reasons outlined in
Section I.C of the preamble for the final PM NAAQS
rulemaking in 2006 (see 71 FR 61148–49, October
17, 2006), EPA based its NAAQS decision on the
science presented in the 2004 AQCD.
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and the American Cancer Society Study,
show associations between long-term
exposure to ambient PM2.5 and both
total and cardiopulmonary premature
mortality.242 243 244 In addition, an
extension of the American Cancer
Society Study shows an association
between PM2.5 and sulfate
concentrations and lung cancer
mortality.245
b. Ozone
i. Background
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Ground-level ozone pollution is
typically formed by the reaction of VOC
and NOX in the lower atmosphere in the
presence of heat and sunlight. These
pollutants, often referred to as ozone
precursors, are emitted by many types of
pollution sources, such as highway and
nonroad motor vehicles and engines,
power plants, chemical plants,
refineries, makers of consumer and
commercial products, industrial
facilities, and smaller area sources.
The science of ozone formation,
transport, and accumulation is
complex.246 Ground-level ozone is
produced and destroyed in a cyclical set
of chemical reactions, many of which
are sensitive to temperature and
sunlight. When ambient temperatures
and sunlight levels remain high for
several days and the air is relatively
stagnant, ozone and its precursors can
build up and result in more ozone than
typically occurs on a single hightemperature day. Ozone can be
transported hundreds of miles
downwind of precursor emissions,
resulting in elevated ozone levels even
242 Dockery, D.W., Pope, C.A. III, Xu, X, et al.
(1993). An association between air pollution and
mortality in six U.S. cities. N Engl J Med, 329,
1753–1759. Retrieved on March 19, 2009 from
https://content.nejm.org/cgi/content/full/329/24/
1753.
243 Pope, C.A., III, Thun, M.J., Namboodiri, M.M.,
Dockery, D.W., Evans, J.S., Speizer, F.E., and Heath,
C.W., Jr. (1995). Particulate air pollution as a
predictor of mortality in a prospective study of U.S.
adults. Am. J. Respir. Crit. Care Med, 151, 669–674.
244 Krewski, D., Burnett, R.T., Goldberg, M.S., et
al. (2000). Reanalysis of the Harvard Six Cities
study and the American Cancer Society study of
particulate air pollution and mortality. A special
report of the Institute’s Particle Epidemiology
Reanalysis Project. Cambridge, MA: Health Effects
Institute. Retrieved on March 19, 2009 from
https://es.epa.gov/ncer/science/pm/hei/ReanExecSumm.pdf.
245 Pope, C.A., III, Burnett, R.T., Thun, M. J.,
Calle, E.E., Krewski, D., Ito, K., Thurston, G.D.,
(2002). Lung cancer, cardiopulmonary mortality,
and long-term exposure to fine particulate air
pollution. J. Am. Med. Assoc., 287, 1132–1141.
246 U.S. EPA. (2006). Air Quality Criteria for
Ozone and Related Photochemical Oxidants (Final).
EPA/600/R–05/004aF-cF. Washington, DC: U.S.
EPA. Retrieved on March 19, 2009 from Docket
EPA–HQ–OAR–2003–0190 at https://
www.regulations.gov/.
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in areas with low local VOC or NOX
emissions.
ii. Health Effects of Ozone
The health and welfare effects of
ozone are well documented and are
assessed in EPA’s 2006 Air Quality
Criteria Document (ozone AQCD) and
2007 Staff Paper.247 248 Ozone can
irritate the respiratory system, causing
coughing, throat irritation, and/or
uncomfortable sensation in the chest.
Ozone can reduce lung function and
make it more difficult to breathe deeply;
breathing may also become more rapid
and shallow than normal, thereby
limiting a person’s activity. Ozone can
also aggravate asthma, leading to more
asthma attacks that require medical
attention and/or the use of additional
medication. In addition, there is
suggestive evidence of a contribution of
ozone to cardiovascular-related
morbidity and highly suggestive
evidence that short-term ozone exposure
directly or indirectly contributes to nonaccidental and cardiopulmonary-related
mortality, but additional research is
needed to clarify the underlying
mechanisms causing these effects. In a
recent report on the estimation of ozonerelated premature mortality published
by the National Research Council (NRC),
a panel of experts and reviewers
concluded that short-term exposure to
ambient ozone is likely to contribute to
premature deaths and that ozone-related
mortality should be included in
estimates of the health benefits of
reducing ozone exposure.249 Animal
toxicological evidence indicates that
with repeated exposure, ozone can
inflame and damage the lining of the
lungs, which may lead to permanent
changes in lung tissue and irreversible
reductions in lung function. People who
are more susceptible to effects
associated with exposure to ozone can
include children, the elderly, and
individuals with respiratory disease
such as asthma. Those with greater
exposures to ozone, for instance due to
time spent outdoors (e.g., children and
247 U.S. EPA. (2006). Air Quality Criteria for
Ozone and Related Photochemical Oxidants (Final).
EPA/600/R–05/004aF–cF. Washington, DC: U.S.
EPA. Retrieved on March 19, 2009 from Docket
EPA–HQ–OAR–2003–0190 at https://
www.regulations.gov/.
248 U.S. EPA. (2007). Review of the National
Ambient Air Quality Standards for Ozone: Policy
Assessment of Scientific and Technical
Information, OAQPS Staff Paper. EPA–452/R–07–
003. Washington, DC. U.S. EPA. Retrieved on
March 19, 2009 from Docket EPA–HQ–OAR–2003–
0190 at https://www.regulations.gov/.
249 National Research Council (NRC), 2008.
Estimating Mortality Risk Reduction and Economic
Benefits from Controlling Ozone Air Pollution. The
National Academies Press: Washington, DC.
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outdoor workers), are of particular
concern.
The 2006 ozone AQCD also examined
relevant new scientific information that
has emerged in the past decade,
including the impact of ozone exposure
on such health effects as changes in
lung structure and biochemistry,
inflammation of the lungs, exacerbation
and causation of asthma, respiratory
illness-related school absence, hospital
admissions and premature mortality.
Animal toxicological studies have
suggested potential interactions between
ozone and PM with increased responses
observed to mixtures of the two
pollutants compared to either ozone or
PM alone. The respiratory morbidity
observed in animal studies along with
the evidence from epidemiologic studies
supports a causal relationship between
acute ambient ozone exposures and
increased respiratory-related emergency
room visits and hospitalizations in the
warm season. In addition, there is
suggestive evidence of a contribution of
ozone to cardiovascular-related
morbidity and non-accidental and
cardiopulmonary mortality.
c. NOX and SOX
i. Background
Nitrogen dioxide (NO2) is a member of
the NOX family of gases. Most NO2 is
formed in the air through the oxidation
of nitric oxide (NO) emitted when fuel
is burned at a high temperature. SO2, a
member of the sulfur oxide (SOX) family
of gases, is formed from burning fuels
containing sulfur (e.g., coal or oil
derived), extracting gasoline from oil, or
extracting metals from ore.
SO2 and NO2 can dissolve in water
vapor and further oxidize to form
sulfuric and nitric acid which react with
ammonia to form sulfates and nitrates,
both of which are important
components of ambient PM. The health
effects of ambient PM are discussed in
Section III.G.3.a of this preamble. NOX
along with non-methane hydrocarbon
(NMHC) are the two major precursors of
ozone. The health effects of ozone are
covered in Section III.G.3.b.
ii. Health Effects of NO2
Information on the health effects of
NO2 can be found in the U.S.
Environmental Protection Agency
Integrated Science Assessment (ISA) for
Nitrogen Oxides.250 The U.S. EPA has
concluded that the findings of
epidemiologic, controlled human
250 U.S. EPA (2008). Integrated Science
Assessment for Oxides of Nitrogen—Health Criteria
(Final Report). EPA/600/R–08/071. Washington,
DC: U.S. EPA. Retrieved on March 19, 2009 from
https://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?
deid=194645.
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exposure, and animal toxicological
studies provide evidence that is
sufficient to infer a likely causal
relationship between respiratory effects
and short-term NO2 exposure. The ISA
concludes that the strongest evidence
for such a relationship comes from
epidemiologic studies of respiratory
effects including symptoms, emergency
department visits, and hospital
admissions. The ISA also draws two
broad conclusions regarding airway
responsiveness following NO2 exposure.
First, the ISA concludes that NO2
exposure may enhance the sensitivity to
allergen-induced decrements in lung
function and increase the allergeninduced airway inflammatory response
at exposures as low as 0.26 ppm NO2 for
30 minutes. Second, exposure to NO2
has been found to enhance the inherent
responsiveness of the airway to
subsequent nonspecific challenges in
controlled human exposure studies of
asthmatic subjects. Enhanced airway
responsiveness could have important
clinical implications for asthmatics
since transient increases in airway
responsiveness following NO2 exposure
have the potential to increase symptoms
and worsen asthma control. Together,
the epidemiologic and experimental
data sets form a plausible, consistent,
and coherent description of a
relationship between NO2 exposures
and an array of adverse health effects
that range from the onset of respiratory
symptoms to hospital admission.
Although the weight of evidence
supporting a causal relationship is
somewhat less certain than that
associated with respiratory morbidity,
NO2 has also been linked to other health
endpoints. These include all-cause
(nonaccidental) mortality, hospital
admissions or emergency department
visits for cardiovascular disease, and
decrements in lung function growth
associated with chronic exposure.
iii. Health Effects of SO2
Information on the health effects of
SO2 can be found in the U.S.
Environmental Protection Agency
Integrated Science Assessment for
Sulfur Oxides.251 SO2 has long been
known to cause adverse respiratory
health effects, particularly among
individuals with asthma. Other
potentially sensitive groups include
children and the elderly. During periods
of elevated ventilation, asthmatics may
251 U.S. EPA. (2008). Integrated Science
Assessment (ISA) for Sulfur Oxides—Health
Criteria (Final Report). EPA/600/R–08/047F.
Washington, DC: U.S. Environmental Protection
Agency. Retrieved on March 18, 2009 from https://
cfpub.epa.gov/ncea/cfm/recordisplay.
cfm?deid=198843.
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experience symptomatic
bronchoconstriction within minutes of
exposure. Following an extensive
evaluation of health evidence from
epidemiologic and laboratory studies,
the EPA has concluded that there is a
causal relationship between respiratory
health effects and short-term exposure
to SO2. Separately, based on an
evaluation of the epidemiologic
evidence of associations between shortterm exposure to SO2 and mortality, the
EPA has concluded that the overall
evidence is suggestive of a causal
relationship between short-term
exposure to SO2 and mortality.
d. Carbon Monoxide
Carbon monoxide (CO) forms as a
result of incomplete fuel combustion.
CO enters the bloodstream through the
lungs, forming carboxyhemoglobin and
reducing the delivery of oxygen to the
body’s organs and tissues. The health
threat from CO is most serious for those
who suffer from cardiovascular disease,
particularly those with angina or
peripheral vascular disease. Healthy
individuals also are affected, but only at
higher CO levels. Exposure to elevated
CO levels is associated with impairment
of visual perception, work capacity,
manual dexterity, learning ability and
performance of complex tasks. Carbon
monoxide also contributes to ozone
nonattainment since carbon monoxide
reacts photochemically in the
atmosphere to form ozone.252
Additional information on CO related
health effects can be found in the
Carbon Monoxide Air Quality Criteria
Document (CO AQCD).253 254
exposure to air toxics. 255 These
compounds include, but are not limited
to, benzene, 1,3-butadiene,
formaldehyde, acetaldehyde, acrolein,
polycyclic organic matter (POM), and
naphthalene. These compounds, except
acetaldehyde, were identified as
national or regional risk drivers in the
2002 National-scale Air Toxics
Assessment (NATA) and have
significant inventory contributions from
mobile sources.256 Emissions and
ambient concentrations of compounds
are discussed in the DRIA chapter on
emission inventories and air quality
(Chapters 5 and 7, respectively).
i. Benzene
The EPA’s IRIS database lists benzene
as a known human carcinogen (causing
leukemia) by all routes of exposure, and
concludes that exposure is associated
with additional health effects, including
genetic changes in both humans and
animals and increased proliferation of
bone marrow cells in mice.257 258 259 EPA
states in its IRIS database that data
indicate a causal relationship between
benzene exposure and acute
lymphocytic leukemia and suggest a
relationship between benzene exposure
and chronic non-lymphocytic leukemia
and chronic lymphocytic leukemia. The
International Agency for Research on
Carcinogens (IARC) has determined that
benzene is a human carcinogen and the
U.S. Department of Health and Human
Services (DHHS) has characterized
benzene as a known human
carcinogen.260 261
A number of adverse noncancer
health effects including blood disorders,
such as preleukemia and aplastic
anemia, have also been associated with
e. Air Toxics
Motor vehicle emissions contribute to
ambient levels of air toxics known or
suspected as human or animal
carcinogens, or that have noncancer
health effects. The population
experiences an elevated risk of cancer
and other noncancer health effects from
252 U.S. EPA (2000). Air Quality Criteria for
Carbon Monoxide, EPA/600/P–99/001F. This
document is available in Docket EPA–HQ–OAR–
2004–0008.
253 U.S. EPA (2000). Air Quality Criteria for
Carbon Monoxide, EPA/600/P–99/001F. This
document is available in Docket EPA–HQ–OAR–
2004–0008.
254 The CO NAAQS is currently under review and
the EPA is considering all available science on CO
health effects, including information which has
been published since 2000, in the development of
the upcoming CO Integrated Science Assessment
Document (ISA). A first draft of the CO ISA was
completed in March 2009 and was submitted for
review by the Clean Air Scientific Advisory
Committee (CASAC) of EPA’s Science Advisory
Board. For more information, see https://
cfpub.epa.gov/ncea/cfm/
recordisplay.cfm?deid=203935.
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255 U. S. EPA. 2002 National-Scale Air Toxics
Assessment. https://www.epa.gov/ttn/atw/
nata12002/risksum.html.
256 U.S. EPA. 2009. National-Scale Air Toxics
Assessment for 2002. https://www.epa.gov/ttn/atw/
nata2002/.
257 U.S. EPA. 2000. Integrated Risk Information
System File for Benzene. This material is available
electronically at https://www.epa.gov/iris/subst/
0276.htm.
258 International Agency for Research on Cancer
(IARC). 1982. Monographs on the evaluation of
carcinogenic risk of chemicals to humans, Volume
29. Some industrial chemicals and dyestuffs, World
Health Organization, Lyon, France, p. 345–389.
259 Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.;
Henry, V.A. 1992. Synergistic action of the benzene
metabolite hydroquinone on myelopoietic
stimulating activity of granulocyte/macrophage
colony-stimulating factor in vitro, Proc. Natl. Acad.
Sci. 89:3691–3695.
260 International Agency for Research on Cancer
(IARC). 1987. Monographs on the evaluation of
carcinogenic risk of chemicals to humans, Volume
29. Supplement 7, Some industrial chemicals and
dyestuffs, World Health Organization, Lyon, France.
261 U.S. Department of Health and Human
Services National Toxicology Program 11th Report
on Carcinogens available at https://
www.ntp.niehs.nih.gov/go/16183.
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long-term exposure to benzene.262 263
The most sensitive noncancer effect
observed in humans, based on current
data, is the depression of the absolute
lymphocyte count in blood.264 265 In
addition, recent work, including studies
sponsored by the Health Effects Institute
(HEI), provides evidence that
biochemical responses are occurring at
lower levels of benzene exposure than
previously know 266 267 268 269 EPA’s IRIS
program has not yet evaluated these
new data.
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ii. 1,3-Butadiene
EPA has characterized 1,3-butadiene
as carcinogenic to humans by
inhalation.270 271 The IARC has
determined that 1,3-butadiene is a
human carcinogen and the U.S. DHHS
has characterized 1,3-butadiene as a
known human carcinogen.272 273 There
262 Aksoy, M. (1989). Hematotoxicity and
carcinogenicity of benzene. Environ. Health
Perspect. 82: 193–197.
263 Goldstein, B.D. (1988). Benzene toxicity.
Occupational medicine. State of the Art Reviews. 3:
541–554.
264 Rothman, N., G.L. Li, M. Dosemeci, W.E.
Bechtold, G.E. Marti, Y.Z. Wang, M. Linet, L.Q. Xi,
W. Lu, M.T. Smith, N. Titenko-Holland, L.P. Zhang,
W. Blot, S.N. Yin, and R.B. Hayes (1996)
Hematotoxicity among Chinese workers heavily
exposed to benzene. Am. J. Ind. Med. 29: 236–246.
265 U.S. EPA (2002) Toxicological Review of
Benzene (Noncancer Effects). Environmental
Protection Agency, Integrated Risk Information
System (IRIS), Research and Development, National
Center for Environmental Assessment, Washington
DC. This material is available electronically at
https://www.epa.gov/iris/subst/0276.htm.
266 Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.;
Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport,
S.; Li, H.; Rupa, D.; Suramaya, R.; Songnian, W.;
Huifant, Y.; Meng, M.; Winnik, M.; Kwok, E.; Li, Y.;
Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003) HEI Report
115, Validation & Evaluation of Biomarkers in
Workers Exposed to Benzene in China.
267 Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B.
Cohen, et al. (2002) Hematological changes among
Chinese workers with a broad range of benzene
exposures. Am. J. Industr. Med. 42: 275–285.
268 Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et
al. (2004) Hematotoxically in Workers Exposed to
Low Levels of Benzene. Science 306: 1774–1776.
269 Turtletaub, K.W. and Mani, C. (2003) Benzene
metabolism in rodents at doses relevant to human
exposure from Urban Air. Research Reports Health
Effect Inst. Report No.113.
270 U.S. EPA (2002) Health Assessment of 1,3–
Butadiene. Office of Research and Development,
National Center for Environmental Assessment,
Washington Office, Washington, DC. Report No.
EPA600–P–98–001F. This document is available
electronically at https://www.epa.gov/iris/supdocs/
buta-sup.pdf.
271 U.S. EPA (2002) Full IRIS Summary for 1,3butadiene (CASRN 106–99–0). Environmental
Protection Agency, Integrated Risk Information
System (IRIS), Research and Development, National
Center for Environmental Assessment, Washington,
DC https://www.epa.gov/iris/subst/0139.htm.
272 International Agency for Research on Cancer
(IARC) (1999) Monographs on the evaluation of
carcinogenic risk of chemicals to humans, Volume
71, Re-evaluation of some organic chemicals,
hydrazine and hydrogen peroxide and Volume 97
(in preparation), World Health Organization, Lyon,
France.
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are numerous studies consistently
demonstrating that 1,3-butadiene is
metabolized into genotoxic metabolites
by experimental animals and humans.
The specific mechanisms of 1,3butadiene-induced carcinogenesis are
unknown; however, the scientific
evidence strongly suggests that the
carcinogenic effects are mediated by
genotoxic metabolites. Animal data
suggest that females may be more
sensitive than males for cancer effects
associated with 1,3-butadiene exposure;
there are insufficient data in humans
from which to draw conclusions about
sensitive subpopulations. 1,3-butadiene
also causes a variety of reproductive and
developmental effects in mice; no
human data on these effects are
available. The most sensitive effect was
ovarian atrophy observed in a lifetime
bioassay of female mice.274
iii. Formaldehyde
Since 1987, EPA has classified
formaldehyde as a probable human
carcinogen based on evidence in
humans and in rats, mice, hamsters, and
monkeys.275 EPA is currently reviewing
recently published epidemiological
data. For instance, research conducted
by the National Cancer Institute (NCI)
found an increased risk of
nasopharyngeal cancer and
lymphohematopoietic malignancies
such as leukemia among workers
exposed to formaldehyde.276 277 In an
analysis of the lymphohematopoietic
cancer mortality from an extended
follow-up of these workers, NCI
confirmed an association between
lymphohematopoietic cancer risk and
peak exposures.278 A recent National
Institute of Occupational Safety and
273 U.S. Department of Health and Human
Services (2005) National Toxicology Program 11th
Report on Carcinogens available at:
ntp.niehs.nih.gov/index.cfm?objectid=32BA9724F1F6-975E-7FCE50709CB4C932.
274 Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al.
(1996) Subchronic toxicity of 4-vinylcyclohexene in
rats and mice by inhalation. Fundam. Appl.
Toxicol. 32:1–10.
275 U.S. EPA (1987) Assessment of Health Risks
to Garment Workers and Certain Home Residents
from Exposure to Formaldehyde, Office of
Pesticides and Toxic Substances, April 1987.
276 Hauptmann, M.; Lubin, J. H.; Stewart, P. A.;
Hayes, R. B.; Blair, A. 2003. Mortality from
lymphohematopeotic malignancies among workers
in formaldehyde industries. Journal of the National
Cancer Institute 95: 1615–1623.
277 Hauptmann, M.; Lubin, J. H.; Stewart, P. A.;
Hayes, R. B.; Blair, A. 2004. Mortality from solid
cancers among workers in formaldehyde industries.
American Journal of Epidemiology 159: 1117–1130.
278 Beane Freeman, L. E.; Blair, A.; Lubin, J. H.;
Stewart, P. A.; Hayes, R. B.; Hoover, R. N.;
Hauptmann, M. 2009. Mortality from
lymphohematopoietic malignancies among workers
in formaldehyde industries: The National Cancer
Institute cohort. J. National Cancer Inst. 101: 751–
761.
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Health (NIOSH) study of garment
workers also found increased risk of
death due to leukemia among workers
exposed to formaldehyde.279 Extended
follow-up of a cohort of British chemical
workers did not find evidence of an
increase in nasopharyngeal or
lymphohematopoietic cancers, but a
continuing statistically significant
excess in lung cancers was reported.280
Recently, the IARC re-classified
formaldehyde as a human carcinogen
(Group 1).281
Formaldehyde exposure also causes a
range of noncancer health effects,
including irritation of the eyes (burning
and watering of the eyes), nose and
throat. Effects from repeated exposure in
humans include respiratory tract
irritation, chronic bronchitis and nasal
epithelial lesions such as metaplasia
and loss of cilia. Animal studies suggest
that formaldehyde may also cause
airway inflammation—including
eosinophil infiltration into the airways.
There are several studies that suggest
that formaldehyde may increase the risk
of asthma—particularly in the
young.282 283
iv. Acetaldehyde
Acetaldehyde is classified in EPA’s
IRIS database as a probable human
carcinogen, based on nasal tumors in
rats, and is considered toxic by the
inhalation, oral, and intravenous
routes.284 Acetaldehyde is reasonably
anticipated to be a human carcinogen by
the U.S. DHHS in the 11th Report on
Carcinogens and is classified as possibly
carcinogenic to humans (Group 2B) by
279 Pinkerton, L. E. 2004. Mortality among a
cohort of garment workers exposed to
formaldehyde: an update. Occup. Environ. Med. 61:
193–200.
280 Coggon, D, EC Harris, J Poole, KT Palmer.
2003. Extended follow-up of a cohort of British
chemical workers exposed to formaldehyde. J
National Cancer Inst. 95:1608–1615.
281 International Agency for Research on Cancer
(IARC). 2006. Formaldehyde, 2–Butoxyethanol and
1-tert-Butoxypropan-2-ol. Volume 88. (in
preparation), World Health Organization, Lyon,
France.
282 Agency for Toxic Substances and Disease
Registry (ATSDR). 1999. Toxicological profile for
Formaldehyde. Atlanta, GA: U.S. Department of
Health and Human Services, Public Health Service.
https://www.atsdr.cdc.gov/toxprofiles/tp111.html.
283 WHO (2002) Concise International Chemical
Assessment Document 40: Formaldehyde.
Published under the joint sponsorship of the United
Nations Environment Programme, the International
Labour Organization, and the World Health
Organization, and produced within the framework
of the Inter-Organization Programme for the Sound
Management of Chemicals. Geneva.
284 U.S. EPA. 1991. Integrated Risk Information
System File of Acetaldehyde. Research and
Development, National Center for Environmental
Assessment, Washington, DC. This material is
available electronically at https://www.epa.gov/iris/
subst/0290.htm.
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the IARC.285 286 EPA is currently
conducting a reassessment of cancer risk
from inhalation exposure to
acetaldehyde. The primary noncancer
effects of exposure to acetaldehyde
vapors include irritation of the eyes,
skin, and respiratory tract.287 In shortterm (4 week) rat studies, degeneration
of olfactory epithelium was observed at
various concentration levels of
acetaldehyde exposure.288 289 Data from
these studies were used by EPA to
develop an inhalation reference
concentration. Some asthmatics have
been shown to be a sensitive
subpopulation to decrements in
functional expiratory volume (FEV1
test) and bronchoconstriction upon
acetaldehyde inhalation.290 The agency
is currently conducting a reassessment
of the health hazards from inhalation
exposure to acetaldehyde.
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v. Acrolein
Acrolein is extremely acrid and
irritating to humans when inhaled, with
acute exposure resulting in upper
respiratory tract irritation, mucus
hypersecretion and congestion. Levels
considerably lower than 1 ppm (2.3 mg/
m3) elicit subjective complaints of eye
and nasal irritation and a decrease in
the respiratory rate.291 292 Lesions to the
lungs and upper respiratory tract of rats,
rabbits, and hamsters have been
observed after subchronic exposure to
acrolein. Based on animal data,
individuals with compromised
respiratory function (e.g., emphysema,
285 U.S. Department of Health and Human
Services National Toxicology Program 11th Report
on Carcinogens available at: ntp.niehs.nih.gov/
index.cfm?objectid=32BA9724-F1F6-975E7FCE50709CB4C932.
286 International Agency for Research on Cancer
(IARC). 1999. Re-evaluation of some organic
chemicals, hydrazine, and hydrogen peroxide. IARC
Monographs on the Evaluation of Carcinogenic Risk
of Chemical to Humans, Vol. 71. Lyon, France.
287 U.S. EPA. 1991. Integrated Risk Information
System File of Acetaldehyde. This material is
available electronically at https://www.epa.gov/iris/
subst/0290.htm.
288 Appleman, L. M., R. A. Woutersen, V. J. Feron,
R. N. Hooftman, and W. R. F. Notten. 1986. Effects
of the variable versus fixed exposure levels on the
toxicity of acetaldehyde in rats. J. Appl. Toxicol. 6:
331–336.
289 Appleman, L.M., R.A. Woutersen, and V.J.
Feron. 1982. Inhalation toxicity of acetaldehyde in
rats. I. Acute and subacute studies. Toxicology. 23:
293–297.
290 Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.;
and Matsuda, T. 1993. Aerosolized acetaldehyde
induces histamine-mediated bronchoconstriction in
asthmatics. Am. Rev. Respir. Dis.148(4 Pt 1): 940–
3.
291 Weber-Tschopp, A; Fischer, T; Gierer, R; et al.
(1977) Experimentelle reizwirkungen von Acrolein
auf den Menschen. Int Arch Occup Environ Hlth
40(2):117–130. In German
292 Sim, VM; Pattle, RE. (1957) Effect of possible
smog irritants on human subjects. J Am Med Assoc
165(15):1908–1913.
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asthma) are expected to be at increased
risk of developing adverse responses to
strong respiratory irritants such as
acrolein. This was demonstrated in mice
with allergic airway-disease by
comparison to non-diseased mice in a
study of the acute respiratory irritant
effects of acrolein.293 The intense
irritancy of this carbonyl has been
demonstrated during controlled tests in
human subjects, who suffer intolerable
eye and nasal mucosal sensory reactions
within minutes of exposure.294
EPA determined in 2003 that the
human carcinogenic potential of
acrolein could not be determined
because the available data were
inadequate. No information was
available on the carcinogenic effects of
acrolein in humans and the animal data
provided inadequate evidence of
carcinogenicity.295 The IARC
determined in 1995 that acrolein was
not classifiable as to its carcinogenicity
in humans.296
vi. Polycyclic Organic Matter (POM)
POM is generally defined as a large
class of organic compounds which have
multiple benzene rings and a boiling
point greater than 100 degrees Celsius.
Many of the compounds included in the
class of compounds known as POM are
classified by EPA as probable human
carcinogens based on animal data. One
of these compounds, naphthalene, is
discussed separately below. Polycyclic
aromatic hydrocarbons (PAHs) are a
subset of POM that contain only
hydrogen and carbon atoms. A number
of PAHs are known or suspected
carcinogens. Recent studies have found
that maternal exposures to PAHs (a
subclass of POM) in a population of
pregnant women were associated with
several adverse birth outcomes,
including low birth weight and reduced
length at birth, as well as impaired
cognitive development at age
293 Morris JB, Symanowicz PT, Olsen JE, et al.
2003. Immediate sensory nerve-mediated
respiratory responses to irritants in healthy and
allergic airway-diseased mice. J Appl Physiol
94(4):1563–1571.
294 Sim VM, Pattle RE. Effect of possible smog
irritants on human subjects JAMA165: 1980–2010,
1957.
295 U.S. EPA. 2003. Integrated Risk Information
System File of Acrolein. Research and
Development, National Center for Environmental
Assessment, Washington, DC. This material is
available at https://www.epa.gov/iris/subst/
0364.htm.
296 International Agency for Research on Cancer
(IARC). 1995. Monographs on the evaluation of
carcinogenic risk of chemicals to humans, Volume
63, Dry cleaning, some chlorinated solvents and
other industrial chemicals, World Health
Organization, Lyon, France.
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three.297 298 EPA has not yet evaluated
these recent studies.
vii. Naphthalene
Naphthalene is found in small
quantities in gasoline and diesel fuels.
Naphthalene emissions have been
measured in larger quantities in both
gasoline and diesel exhaust compared
with evaporative emissions from mobile
sources, indicating it is primarily a
product of combustion. EPA released an
external review draft of a reassessment
of the inhalation carcinogenicity of
naphthalene based on a number of
recent animal carcinogenicity
studies.299 The draft reassessment
completed external peer review.300
Based on external peer review
comments received, additional analyses
are being undertaken. This external
review draft does not represent official
agency opinion and was released solely
for the purposes of external peer review
and public comment. Once EPA
evaluates public and peer reviewer
comments, the document will be
revised. The National Toxicology
Program listed naphthalene as
‘‘reasonably anticipated to be a human
carcinogen’’ in 2004 on the basis of
bioassays reporting clear evidence of
carcinogenicity in rats and some
evidence of carcinogenicity in mice.301
California EPA has released a new risk
assessment for naphthalene, and the
IARC has reevaluated naphthalene and
re-classified it as Group 2B: possibly
carcinogenic to humans.302 Naphthalene
also causes a number of chronic noncancer effects in animals, including
297 Perera, F.P.; Rauh, V.; Tsai, W–Y.; et al. (2002)
Effect of transplacental exposure to environmental
pollutants on birth outcomes in a multiethnic
population. Environ Health Perspect. 111: 201–205.
298 Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai,
W.Y.; Tang, D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu,
Y.H.; Camann, D.; Kinney, P. (2006) Effect of
prenatal exposure to airborne polycyclic aromatic
hydrocarbons on neurodevelopment in the first 3
years of life among inner-city children. Environ
Health Perspect 114: 1287–1292.
299 U. S. EPA. 2004. Toxicological Review of
Naphthalene (Reassessment of the Inhalation
Cancer Risk), Environmental Protection Agency,
Integrated Risk Information System, Research and
Development, National Center for Environmental
Assessment, Washington, DC. This material is
available electronically at https://www.epa.gov/iris/
subst/0436.htm.
300 Oak Ridge Institute for Science and Education.
(2004). External Peer Review for the IRIS
Reassessment of the Inhalation Carcinogenicity of
Naphthalene. August 2004. https://cfpub.epa.gov/
ncea/cfm/recordisplay.cfm?deid=84403.
301 National Toxicology Program (NTP). (2004).
11th Report on Carcinogens. Public Health Service,
U.S. Department of Health and Human Services,
Research Triangle Park, NC. Available from:
https://ntp-server.niehs.nih.gov.
302 International Agency for Research on Cancer
(IARC). (2002). Monographs on the Evaluation of
the Carcinogenic Risk of Chemicals for Humans.
Vol. 82. Lyon, France.
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abnormal cell changes and growth in
respiratory and nasal tissues.303
4. Environmental Effects of Non-GHG
Pollutants
various locations, depending on PM
concentrations and factors such as
chemical composition and average
relative humidity. Second, section 169
of the Clean Air Act provides additional
authority to address existing visibility
impairment and prevent future visibility
impairment in the 156 national parks,
forests and wilderness areas categorized
as mandatory class I Federal areas (62
FR 38680–81, July 18, 1997).307 In July
1999, the regional haze rule (64 FR
35714) was put in place to protect the
visibility in mandatory class I Federal
areas. Visibility can be said to be
impaired in both PM2.5 nonattainment
areas and mandatory class I Federal
areas.
a. Visibility
b. Plant and Ecosystem Effects of Ozone
Visibility can be defined as the degree
to which the atmosphere is transparent
to visible light. Airborne particles
degrade visibility by scattering and
absorbing light. Visibility is important
because it has direct significance to
people’s enjoyment of daily activities in
all parts of the country. Individuals
value good visibility for the well-being
it provides them directly, where they
live and work and in places where they
enjoy recreational opportunities.
Visibility is also highly valued in
significant natural areas such as
national parks and wilderness areas and
special emphasis is given to protecting
visibility in these areas. For more
information on visibility, see the final
2004 PM AQCD as well as the 2005 PM
Staff Paper.305 306
EPA is pursuing a two-part strategy to
address visibility. First, to address the
welfare effects of PM on visibility, EPA
has set secondary PM2.5 standards
which act in conjunction with the
establishment of a regional haze
program. In setting this secondary
standard, EPA has concluded that PM2.5
causes adverse effects on visibility in
Elevated ozone levels contribute to
environmental effects, with impacts to
plants and ecosystems being of most
concern. Ozone can produce both acute
and chronic injury in sensitive species
depending on the concentration level
and the duration of the exposure. Ozone
effects also tend to accumulate over the
growing season of the plant, so that even
low concentrations experienced for a
longer duration have the potential to
create chronic stress on vegetation.
Ozone damage to plants includes visible
injury to leaves and impaired
photosynthesis, both of which can lead
to reduced plant growth and
reproduction, resulting in reduced crop
yields, forestry production, and use of
sensitive ornamentals in landscaping. In
addition, the impairment of
photosynthesis, the process by which
the plant makes carbohydrates (its
source of energy and food), can lead to
a subsequent reduction in root growth
and carbohydrate storage below ground,
resulting in other, more subtle plant and
ecosystems impacts.
These latter impacts include
increased susceptibility of plants to
insect attack, disease, harsh weather,
interspecies competition and overall
decreased plant vigor. The adverse
effects of ozone on forest and other
natural vegetation can potentially lead
to species shifts and loss from the
affected ecosystems, resulting in a loss
or reduction in associated ecosystem
goods and services. Lastly, visible ozone
injury to leaves can result in a loss of
aesthetic value in areas of special scenic
significance like national parks and
wilderness areas. The final 2006 ozone
AQCD presents more detailed
viii. Other Air Toxics
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In addition to the compounds
described above, other compounds in
gaseous hydrocarbon and PM emissions
from vehicles will be affected by this
proposed action. Mobile source air toxic
compounds that would potentially be
impacted include ethylbenzene,
polycyclic organic matter,
propionaldehyde, toluene, and xylene.
Information regarding the health effects
of these compounds can be found in
EPA’s IRIS database.304
303 U. S. EPA. 1998. Toxicological Review of
Naphthalene, Environmental Protection Agency,
Integrated Risk Information System, Research and
Development, National Center for Environmental
Assessment, Washington, DC. This material is
available electronically at https://www.epa.gov/iris/
subst/0436.htm.
304 U.S. EPA Integrated Risk Information System
(IRIS) database is available at: www.epa.gov/iris.
305 U.S. EPA. (2004). Air Quality Criteria for
Particulate Matter (AQCD). Volume I Document No.
EPA600/P–99/002aF and Volume II Document No.
EPA600/P–99/002bF. Washington, DC: U.S.
Environmental Protection Agency. Retrieved on
March 18, 2009 from https://cfpub.epa.gov/ncea/
cfm/recordisplay.cfm?deid=87903.
306 U.S. EPA. (2005). Review of the National
Ambient Air Quality Standard for Particulate
Matter: Policy Assessment of Scientific and
Technical Information, OAQPS Staff Paper. EPA–
452/R–05–005. Washington, DC: U.S.
Environmental Protection Agency.
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307 These areas are defined in section 162 of the
Act as those national parks exceeding 6,000 acres,
wilderness areas and memorial parks exceeding
5,000 acres, and all international parks which were
in existence on August 7, 1977.
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information on ozone effects on
vegetation and ecosystems.
c. Atmospheric Deposition
Wet and dry deposition of ambient
particulate matter delivers a complex
mixture of metals (e.g., mercury, zinc,
lead, nickel, aluminum, cadmium),
organic compounds (e.g., POM, dioxins,
furans) and inorganic compounds (e.g.,
nitrate, sulfate) to terrestrial and aquatic
ecosystems. The chemical form of the
compounds deposited depends on a
variety of factors including ambient
conditions (e.g., temperature, humidity,
oxidant levels) and the sources of the
material. Chemical and physical
transformations of the compounds occur
in the atmosphere as well as the media
onto which they deposit. These
transformations in turn influence the
fate, bioavailability and potential
toxicity of these compounds.
Atmospheric deposition has been
identified as a key component of the
environmental and human health
hazard posed by several pollutants
including mercury, dioxin and PCBs.308
Adverse impacts on water quality can
occur when atmospheric contaminants
deposit to the water surface or when
material deposited on the land enters a
water body through runoff. Potential
impacts of atmospheric deposition to
water bodies include those related to
both nutrient and toxic inputs. Adverse
effects to human health and welfare can
occur from the addition of excess
nitrogen via atmospheric deposition.
The nitrogen-nutrient enrichment
contributes to toxic algae blooms and
zones of depleted oxygen, which can
lead to fish kills, frequently in coastal
waters. Deposition of heavy metals or
other toxins may lead to the human
ingestion of contaminated fish, human
ingestion of contaminated water,
damage to the marine ecology, and
limits to recreational uses. Several
studies have been conducted in U.S.
coastal waters and in the Great Lakes
Region in which the role of ambient PM
deposition and runoff is
investigated.309 310 311 312 313
308 U.S. EPA (2000) Deposition of Air Pollutants
to the Great Waters: Third Report to Congress.
Office of Air Quality Planning and Standards. EPA–
453/R–00–0005. This document is available in
Docket EPA–HQ–OAR–2003–0190.
309 U.S. EPA (2004) National Coastal Condition
Report II. Office of Research and Development/
Office of Water. EPA–620/R–03/002. This document
is available in Docket EPA–HQ–OAR–2003–0190.
310 Gao, Y., E.D. Nelson, M.P. Field, et al. 2002.
Characterization of atmospheric trace elements on
PM2.5 particulate matter over the New York-New
Jersey harbor estuary. Atmos. Environ. 36: 1077–
1086.
311 Kim, G., N. Hussain, J.R. Scudlark, and T.M.
Church. 2000. Factors influencing the atmospheric
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Atmospheric deposition of nitrogen
and sulfur contributes to acidification,
altering biogeochemistry and affecting
animal and plant life in terrestrial and
aquatic ecosystems across the U.S. The
sensitivity of terrestrial and aquatic
ecosystems to acidification from
nitrogen and sulfur deposition is
predominantly governed by geology.
Prolonged exposure to excess nitrogen
and sulfur deposition in sensitive areas
acidifies lakes, rivers and soils.
Increased acidity in surface waters
creates inhospitable conditions for biota
and affects the abundance and
nutritional value of preferred prey
species, threatening biodiversity and
ecosystem function. Over time,
acidifying deposition also removes
essential nutrients from forest soils,
depleting the capacity of soils to
neutralize future acid loadings and
negatively affecting forest sustainability.
Major effects include a decline in
sensitive forest tree species, such as red
spruce (Picea rubens) and sugar maple
(Acer saccharum), and a loss of
biodiversity of fishes, zooplankton, and
macro invertebrates.
In addition to the role nitrogen
deposition plays in acidification,
nitrogen deposition also causes
ecosystem nutrient enrichment leading
to eutrophication that alters
biogeochemical cycles. Excess nitrogen
also leads to the loss of nitrogen
sensitive lichen species as they are
outcompeted by invasive grasses as well
as altering the biodiversity of terrestrial
ecosystems, such as grasslands and
meadows. For a broader explanation of
the topics treated here, refer to the
description in Chapter 7 of the DRIA.
Adverse impacts on soil chemistry
and plant life have been observed for
areas heavily influenced by atmospheric
deposition of nutrients, metals and acid
species, resulting in species shifts, loss
of biodiversity, forest decline and
damage to forest productivity. Potential
impacts also include adverse effects to
human health through ingestion of
contaminated vegetation or livestock (as
in the case for dioxin deposition),
reduction in crop yield, and limited use
of land due to contamination.
Atmospheric deposition of pollutants
can reduce the aesthetic appeal of
buildings and culturally important
depositional fluxes of stable Pb, 210Pb, and 7Be
into Chesapeake Bay. J. Atmos. Chem. 36: 65–79.
312 Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003.
Dry deposition of airborne trace metals on the Los
Angeles Basin and adjacent coastal waters. J.
Geophys. Res. 108(D2, 4074): AAC 11–1 to 11–24.
313 Marvin, C.H., M.N. Charlton, E.J. Reiner, et al.
2002. Surficial sediment contamination in Lakes
Erie and Ontario: A comparative analysis. J. Great
Lakes Res. 28(3): 437–450.
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articles through soiling, and can
contribute directly (or in conjunction
with other pollutants) to structural
damage by means of corrosion or
erosion. Atmospheric deposition may
affect materials principally by
promoting and accelerating the
corrosion of metals, by degrading paints,
and by deteriorating building materials
such as concrete and limestone.
Particles contribute to these effects
because of their electrolytic,
hygroscopic, and acidic properties, and
their ability to adsorb corrosive gases
(principally sulfur dioxide). The rate of
metal corrosion depends on a number of
factors, including the deposition rate
and nature of the pollutant; the
influence of the metal protective
corrosion film; the amount of moisture
present; variability in the
electrochemical reactions; the presence
and concentration of other surface
electrolytes; and the orientation of the
metal surface.
d. Environmental Effects of Air Toxics
Fuel combustion emissions contribute
to ambient levels of pollutants that
contribute to adverse effects on
vegetation. Volatile organic compounds
(VOCs), some of which are considered
air toxics, have long been suspected to
play a role in vegetation damage.314 In
laboratory experiments, a wide range of
tolerance to VOCs has been observed.315
Decreases in harvested seed pod weight
have been reported for the more
sensitive plants, and some studies have
reported effects on seed germination,
flowering and fruit ripening. Effects of
individual VOCs or their role in
conjunction with other stressors (e.g.,
acidification, drought, temperature
extremes) have not been well studied. In
a recent study of a mixture of VOCs
including ethanol and toluene on
herbaceous plants, significant effects on
seed production, leaf water content and
photosynthetic efficiency were reported
for some plant species.316
Research suggests an adverse impact
of vehicle exhaust on plants, which has
in some cases been attributed to
aromatic compounds and in other cases
314 U.S. EPA. 1991. Effects of organic chemicals
in the atmosphere on terrestrial plants. EPA/600/3–
91/001.
315 Cape JN, ID Leith, J Binnie, J Content, M
Donkin, M Skewes, DN Price AR Brown, AD
Sharpe. 2003. Effects of VOCs on herbaceous plants
in an open-top chamber experiment. Environ.
Pollut. 124:341–343.
316 Cape JN, ID Leith, J Binnie, J Content, M
Donkin, M Skewes, DN Price AR Brown, AD
Sharpe. 2003. Effects of VOCs on herbaceous plants
in an open-top chamber experiment. Environ.
Pollut. 124:341–343.
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to nitrogen oxides.317 318 319 The impacts
of VOCs on plant reproduction may
have long-term implications for
biodiversity and survival of native
species near major roadways. Most of
the studies of the impacts of VOCs on
vegetation have focused on short-term
exposure and few studies have focused
on long-term effects of VOCs on
vegetation and the potential for
metabolites of these compounds to
affect herbivores or insects.
5. Air Quality Impacts of Non-GHG
Pollutants
a. Current Levels of PM2.5, Ozone, CO
and Air Toxics
This proposal may have impacts on
levels of PM2.5, ozone, CO and air toxics.
Nationally, levels of PM2.5, ozone, CO
and air toxics are declining.320 321
However, in 2005 EPA designated 39
nonattainment areas for the 1997 PM2.5
National Ambient Air Quality Standard
(NAAQS) (70 FR 943, January 5, 2005).
These areas are composed of 208 full or
partial counties with a total population
exceeding 88 million. The 1997 PM2.5
NAAQS was recently revised and the
2006 24-hour PM2.5 NAAQS became
effective on December 18, 2006. The
numbers above likely underestimate the
number of counties that are not meeting
the PM2.5 NAAQS because the
nonattainment areas associated with the
more stringent 2006 24-hour PM2.5
NAAQS have not yet been designated.
Area designations for the 2006 24-hour
PM2.5 NAAQS are expected to be
promulgated in 2009 and become
effective 90 days after publication in the
Federal Register.
In addition, the U.S. EPA has recently
amended the ozone NAAQS (73 FR
16436, March 27, 2008). That final 2008
ozone NAAQS rule set forth revisions to
the previous 1997 NAAQS for ozone to
provide increased protection of public
health and welfare. As of June 5, 2009,
there are 55 areas designated as
317 Viskari E-L. 2000. Epicuticular wax of Norway
spruce needles as indicator of traffic pollutant
deposition. Water, Air, and Soil Pollut. 121:327–
337.
318 Ugrekhelidze D, F Korte, G Kvesitadze. 1997.
Uptake and transformation of benzene and toluene
by plant leaves. Ecotox. Environ. Safety 37:24–29.
319 Kammerbauer H, H Selinger, R Rommelt, A
Ziegler-Jons, D Knoppik, B Hock. 1987. Toxic
components of motor vehicle emissions for the
spruce Pciea abies. Environ. Pollut. 48:235–243.
320 U.S. EPA (2008) National Air Quality Status
and Trends through 2007. Office of Air Quality
Planning and Standards, Research Triangle Park,
NC. Publication No. EPA 454/R–08–006. https://
epa.gov/airtrends/2008/.
321 U.S. EPA (2007) Final Regulatory Impact
Analysis: Control of Hazardous Air Pollutants from
Mobile Sources, Office of Transportation and Air
Quality, Ann Arbor, MI, Publication No. EPA420–
R–07–002. https://www.epa.gov/otaq/toxics.htm.
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nonattainment for the 1997 8-hour
ozone NAAQS, comprising 290 full or
partial counties with a total population
of approximately 132 million people.
These numbers do not include the
people living in areas where there is a
future risk of failing to maintain or
attain the 1997 8-hour ozone NAAQS.
The numbers above likely
underestimate the number of counties
that are not meeting the ozone NAAQS
because the nonattainment areas
associated with the more stringent 2008
8-hour ozone NAAQS have not yet been
designated.
The proposed vehicle standards may
also impact levels of ambient CO, a
criteria pollutant (see Table III.G–1
above for co-pollutant emission
impacts). As of June 5, 2009 there are
approximately 479,000 people living in
a portion of Clark Co., NV which is
currently the only area in the country
that is designated as nonattainment for
CO.322
Further, the majority of Americans
continue to be exposed to ambient
concentrations of air toxics at levels
which have the potential to cause
adverse health effects.323 The levels of
air toxics to which people are exposed
vary depending on where people live
and work and the kinds of activities in
which they engage, as discussed in
detail in U.S. EPA’s recent mobile
source air toxics rule.324
b. Impacts of Proposed Standards on
Future Ambient PM2.5, Ozone, CO and
Air Toxics
Full-scale photochemical air quality
modeling is necessary to accurately
project levels of PM2.5, ozone, CO and
air toxics. For the final rule, a nationalscale air quality modeling analysis will
be performed to analyze the impacts of
the vehicle standards on PM2.5, ozone,
and selected air toxics (i.e., benzene,
formaldehyde, acetaldehyde, acrolein
and 1,3-butadiene). The length of time
needed to prepare the necessary
emissions inventories, in addition to the
processing time associated with the
modeling itself, has precluded us from
performing air quality modeling for this
proposal.
Section III.G.1 of the preamble
presents projections of the changes in
criteria pollutant and air toxics
emissions due to the proposed vehicle
322 Carbon Monoxide Nonattainment Area
Summary: https://www.epa.gov/air/oaqps/greenbk/
cnsum.html.
323 U.S. Environmental Protection Agency (2007).
Control of Hazardous Air Pollutants from Mobile
Sources; Final Rule. 72 FR 8434, February 26, 2007.
324 U.S. Environmental Protection Agency (2007).
Control of Hazardous Air Pollutants from Mobile
Sources; Final Rule. 72 FR 8434, February 26, 2007.
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standards; the basis for those estimates
is set out in Chapter 5 of the DRIA. The
atmospheric chemistry related to
ambient concentrations of PM2.5, ozone
and air toxics is very complex, and
making predictions based solely on
emissions changes is extremely difficult.
However, based on the magnitude of the
emissions changes predicted to result
from the proposed vehicle standards,
EPA expects that there will be an
improvement in ambient air quality,
pending a more comprehensive analysis
for the final rule.
For the final rule, EPA intends to use
a 2005-based Community Multi-scale
Air Quality (CMAQ) modeling platform
as the tool for the air quality modeling.
The CMAQ modeling system is a
comprehensive three-dimensional gridbased Eulerian air quality model
designed to estimate the formation and
fate of oxidant precursors, primary and
secondary PM concentrations and
deposition, and air toxics, over regional
and urban spatial scales (e.g. over the
contiguous U.S.).325 326 327 The CMAQ
model is a well-known and wellestablished tool and is commonly used
by EPA for regulatory analyses, for
instance the recent ozone NAAQS
proposal, and by States in developing
attainment demonstrations for their
State Implementation Plans.328 The
CMAQ model (version 4.6) was peerreviewed in February of 2007 for EPA as
reported in ‘‘Third Peer Review of
CMAQ Model,’’ and the EPA Office of
Research and Development (ORD) peer
review report which includes version
4.7 is currently being finalized.329
CMAQ includes many science
modules that simulate the emission,
production, decay, deposition and
transport of organic and inorganic gasphase and particle-phase pollutants in
the atmosphere. EPA intends to use the
most recent CMAQ version (version
325 U.S. Environmental Protection Agency, Byun,
D.W., and Ching, J.K.S., Eds, 1999. Science
algorithms of EPA Models-3 Community Multiscale
Air Quality (CMAQ modeling system, EPA/600/R–
99/030, Office of Research and Development).
326 Byun, D.W., and Schere, K.L., 2006. Review of
the Governing Equations, Computational
Algorithms, and Other Components of the Models3 Community Multiscale Air Quality (CMAQ)
Modeling System, J. Applied Mechanics Reviews,
59 (2), 51–77.
327 Dennis, R.L., Byun, D.W., Novak, J.H.,
Galluppi, K.J., Coats, C.J., and Vouk, M.A., 1996.
The next generation of integrated air quality
modeling: EPA’s Models-3, Atmospheric
Environment, 30, 1925–1938.
328 U.S. EPA (2007). Regulatory Impact Analysis
of the Proposed Revisions to the National Ambient
Air Quality Standards for Ground-Level Ozone.
EPA document number 442/R–07–008, July 2007.
329 Aiyyer, A., Cohan, D., Russell, A., Stockwell,
W., Tanrikulu, S., Vizuete, W., Wilczak, J., 2007.
Final Report: Third Peer Review of the CMAQ
Model. p. 23.
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4.7), which was officially released by
EPA’s Office of Research and
Development (ORD) in December 2008
and reflects updates to earlier versions
in a number of areas to improve the
underlying science. These include (1)
enhanced secondary organic aerosol
(SOA) mechanism to include chemistry
of isoprene, sesquiterpene, and aged incloud biogenic SOA in addition to
terpene; (2) improved vertical
convective mixing; (3) improved
heterogeneous reaction involving nitrate
formation; and (4) an updated gas-phase
chemistry mechanism, Carbon Bond 05
(CB05), with extensions to model
explicit concentrations of air toxic
species as well as chlorine and mercury.
This mechanism, CB05-toxics, also
computes concentrations of species that
are involved in aqueous chemistry and
that are precursors to aerosols.
H. What Are the Estimated Cost,
Economic, and Other Impacts of the
Proposal?
In this section, EPA presents the costs
and impacts of EPA’s proposed GHG
program. It is important to note that
NHTSA’s CAFE standards and EPA’s
GHG standards will both be in effect,
and each will lead to increases in
average fuel economy and CO2
emissions reductions. The two agencies’
standards comprise the National
Program, and this discussion of costs
and benefits of EPA’s GHG standard
does not change the fact that both the
CAFE and GHG standards, jointly, are
the source of the benefits and costs of
the National Program.
This section outlines the basis for
assessing the benefits and costs of these
standards and provides estimates of
these costs and benefits. Some of these
effects are private, meaning that they
affect consumers and producers directly
in their sales, purchases, and use of
vehicles. These private effects include
the costs of the technology, fuel savings,
and the benefits of additional driving
and reduced refueling. Other costs and
benefits affect people outside the
markets for vehicles and their use; these
effects are termed external costs,
because they affect people external to
the market. The external effects include
the climate impacts, the effects on nonGHG pollutants, and the effects on
traffic, accidents, and noise due to
additional driving. The sum of the
private and external benefits and costs
is the net social benefits of the program.
There is some debate about the role of
private benefits in assessing the benefits
and costs of the program: If consumers
have full information and perfect
foresight in their vehicle purchase
decisions, it is possible that they have
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vehicle fuel economy as a result of the
proposal. Section III.H.1 discusses the
underlying distinctions and
implications of the role of consumer
response in economic impacts.
Further information on these and
other aspects of the economic impacts of
our proposed rule are summarized in
the following sections and are presented
in more detail in the DRIA for this
rulemaking. EPA requests comment on
all aspects of the cost, savings, and
benefits analysis presented here and in
the DRIA. EPA also requests comment
on the inputs used in these analyses as
described in the Draft Joint TSD.
already considered these benefits in
their vehicle purchase decisions. If so,
then the inclusion of private benefits in
the net benefits calculation may be
inappropriate. If these conditions do not
hold, then the private benefits may be
a part of the net benefits. Section III.H.1
discusses this issue more fully.
EPA’s proposed program costs consist
of the vehicle program costs (costs of
complying with the vehicle CO2
standards, taking into account FFV
credits through 2015, the temporary
lead-time alternative allowance
standard program (TLAASP), full car/
truck trading, and the A/C credit
program), along with the fuel savings
associated with reduced fuel usage
resulting from the proposed program.
These proposed program costs also
include external costs associated with
noise, congestion, accidents, time spent
refueling vehicles, and energy security
impacts. EPA also presents the costeffectiveness of the proposed standards
and our analysis of the expected
economy-wide impacts. The projected
monetized benefits of reducing GHG
emissions and co-pollutant health and
environmental impacts are also
presented. EPA also presents our
estimates of the impact on vehicle miles
traveled and the impacts associated
with those miles as well as other
societal impacts of the proposed
program, including energy security
impacts.
The total monetized benefits
(excluding fuel savings) under the
proposed program are projected to be
$21 to $54 billion in 2030, assuming a
3 percent discount rate and depending
on the value used for the social cost of
carbon. The costs of the proposed
program in 2030 are estimated to be
approximately $18 billion for new
vehicle technology less $90 billion in
savings realized by consumers through
fewer fuel expenditures (calculated
using pre-tax fuel prices).
EPA has undertaken an analysis of the
economy-wide impacts of the proposed
GHG tailpipe standards as an
exploratory exercise that EPA believes
could provide additional insights into
the potential impacts of the proposal.330
These results were not a factor regarding
the appropriateness of the proposed
GHG tailpipe standards. It is important
to note that the results of this modeling
exercise are dependent on the
assumptions associated with how
consumers will respond to increases in
higher vehicle costs and improved
For this proposed rule, EPA projects
significant private gains to consumers in
three major areas: (1) Reductions in
spending on fuel, (2) time saved due to
less refueling, and (3) welfare gains from
additional driving that results from the
rebound effect. In combination, these
private savings, mostly from fuel
savings, appear to outweigh by a large
margin the costs of the program, even
without accounting for externalities.
Admittedly, these findings pose a
conundrum. On the one hand,
consumers are expected to gain
significantly from the proposed rules, as
the increased cost of fuel efficient cars
appears to be far smaller than the fuel
savings (assuming modest discount
rates). Yet fuel efficient cars are
currently offered for sale, and
consumers’ purchasing decisions may
suggest a preference for lower fuel
economy than the proposed rule
mandates. Assuming full information
and perfect foresight, standard
economic theory suggests that the
private gains to consumers, large as they
are, must therefore be accompanied by
a consumer welfare loss. This
calculation assumes that consumers
accurately predict all the benefits they
will get from a new vehicle, even if they
underestimated fuel savings at the time
of purchase. Even if there is some such
loss, EPA believes that under realistic
assumptions, the private gains from the
proposed rule, together with the social
gains (in the form of reduction of
externalities), significantly outweigh the
costs. But EPA seeks comments on the
underlying issue.
The central conundrum has been
referred to as the Energy Paradox in this
setting (and in several others).331 In
short, the problem is that consumers
330 See Memorandum to Docket, ‘‘Economy-Wide
Impacts of Proposed Greenhouse Gas Tailpipe
Standards,’’ September 14, 2009 (Docket EPA–HQ–
OAR–2009–0472).
331 Jaffe, A.B., & Stavins, R.N. (1994). The Energy
Paradox and the Diffusion of Conservation
Technology. Resource and Energy Economics, 16(2),
91–122.
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1. Conceptual Framework for Evaluating
Consumer Impacts
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appear not to purchase products that are
in their economic self-interest. There are
strong theoretical reasons why this
might be so.332 Consumers might be
myopic and hence undervalue the longterm; they might lack information or a
full appreciation of information even
when it is presented; they might be
especially averse to the short-term
losses associated with energy efficient
products (the behavioral phenomenon
of ‘‘loss aversion’’); even if consumers
have relevant knowledge, the benefits of
energy efficient vehicles might not be
sufficiently salient to them at the time
of purchase. A great deal of work in
behavioral economics identifies factors
of this sort, which help account for the
Energy Paradox.333 This point holds in
the context of fuel savings (the main
focus here), but it applies equally to the
other private benefits, including
reductions in refueling time and
additional driving.334
Considerable research suggests that
the Energy Paradox is real and
significant due to consumers’ inability
to value future fuel savings
appropriately. For example, Sanstad and
Howarth (1994) argue that consumers
optimize behavior without full
information by resorting to imprecise
but convenient rules of thumb. Larrick
and Soll (2008) find evidence that
consumers do not understand how to
translate changes in miles-per-gallon
into fuel savings (a concern that EPA is
continuing to attempt to address).335 If
these arguments are valid, then there
will be significant gains to consumers of
the government mandating additional
fuel economy.
The evidence from consumer vehicle
choice models indicates a huge range of
estimates for consumers’ willingness to
pay for additional fuel economy.
Because consumer surplus estimates
from consumer vehicle choice models
depend critically on this value, EPA
would consider any consumer surplus
estimates of the effect of our rule from
such models to be unreliable. In
addition, the predictive ability of
consumer vehicle choice models may be
limited. While vehicle choice models
332 For
an overview, see id.
Thaler, Richard. Quasi-Rational
Economics. New York: Russell Sage, 1993.
334 For example, it might be maintained that at
the time of purchase, consumers take full account
of the time potentially saved by fuel-efficient cars,
but it might also be questioned whether they have
adequate information to do so, or whether that
factor is sufficiently salient to play the proper role
in purchasing decisions.
335 Sanstad, A., and R. Howarth (1994). ‘‘ ‘Normal’
Markets, Market Imperfections, and Energy
Efficiency.’’ Energy Policy 22(10): 811–818; Larrick,
R.P., and J.B. Soll (2008). ‘‘The MPG illusion.’’
Science 320: 1593–1594.
333 Id.;
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are based on sales of existing vehicles,
vehicle models are likely to change,
both independently and in response to
this proposed rule; the models may not
predict well in response to these
changes. Instead, EPA compares the
value of the fuel savings associated with
this rule with the increase in technology
costs. EPA will continue its efforts to
review the literature, but, given the
known difficulties, EPA has not
conducted an analysis using these
models for this proposal.
Consumer vehicle choice models
(referred to as ‘‘market shift’’ models by
NHTSA in Section IV.C.4.c) are a tool
that attempts to estimate how
consumers decide what vehicles they
buy. The models typically take into
consideration both household
characteristics (such as income, family
size, and age) and vehicle characteristics
(including a vehicle’s power, price, and
fuel economy). These models are often
used to examine how a consumer’s
vehicle purchase decision is affected by
a change in vehicle or personal
characteristics. Although these models
focus on the consumer, some have also
linked consumer choice models with
information on vehicle technologies and
costs, to estimate an integrated system
of consumer and auto maker response.
The outputs from consumer vehicle
choice models typically include the
market shares of each category of
vehicle in the model. In addition,
consumer vehicle choice models are
often used to estimate the effect of
market or regulatory changes on
consumer surplus. Consumer surplus is
the benefit that a consumer gets over
and above the market price paid for the
good. For instance, if a consumer is
willing to pay up to $30,000 for a car
but is able to negotiate a price of
$25,000, the $5,000 difference is
consumer surplus. Information on
consumer surplus can be used in
benefit-cost analysis to measure whether
consumers are likely to consider
themselves better or worse off due to the
changes.
Consumer vehicle choice modeling
has not previously been applied in
Federal regulatory analysis of fuel
economy, and EPA has not used a
consumer vehicle choice model in its
analysis of the effects of this proposed
rule. EPA has not done so, to this point,
due to concern over the wide variation
in the methods and results of existing
models, as well as some of the
limitations of existing applications of
consumer choice modeling. Our
preliminary review of the literature
indicates that these models vary in a
number of dimensions, including data
sources used, modeling methods,
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vehicle characteristics included in the
analysis, and the research questions for
which they were designed. These
dimensions are likely to affect the
models’ results and their interpretation.
In addition, their ability to incorporate
major changes in the vehicle fleet
appears unproven.
One problem for this rule is the
variation in the value that consumers
place on fuel economy in their vehicle
purchase decisions. A number of
consumer vehicle choice models make
the assumption that auto producers
provide as much fuel economy in their
vehicles as consumers are willing to
purchase, and consumers are satisfied
with the current combinations of
vehicle fuel economy and price in the
marketplace.336 If this assumption is
true, then consumers will not benefit
from required improvements in fuel
economy, even if the fuel savings that
they receive exceed the additional costs
from the fuel-saving technology. Other
vehicle choice models, in contrast, find
that consumers are willing to pay more
for additional fuel economy than the
costs to auto producers of installing that
technology.337 If this result is true, then
both consumers and producers would
benefit from increased fuel economy.
This result leaves open the question
why auto producers do not follow the
market incentive to provide more fuel
economy, and why consumers do not
seek out more fuel-efficient vehicles.
Whether consumers and producers
will benefit from improved fuel
336 E.g., Kleit, Andrew N. (2004). ‘‘Impacts of
Long-Range Increases in the Fuel Economy (CAFE)
Standard.’’ Economic Inquiry 42(2): 279–294
(Docket EPA–HQ–OAR–2009–0472); Austin, David,
and Terry Dinan (2005). ‘‘Clearing the Air: The
Costs and Consequences of Higher CAFE Standards
and Increased Gasoline Taxes.’’ Journal of
Environmental Economics and Management 50:
562–582 (Docket EPA–HQ–OAR–2009–0472); Klier,
Thomas, and Joshua Linn (2008). ‘‘New Vehicle
Characteristics and the Cost of the Corporate
Average Fuel Economy Standard,’’ working paper.
https://www.chicagofed.org/publications/
workingpapers/wp2008_13.pdf (Docket EPA–HQ–
OAR–2009–0472); Jacobsen, Mark. ‘‘Evaluating U.S.
Fuel Economy Standards In a Model with Producer
and Household Heterogeneity,’’ https://
www.econ.ucsd.edu/∼m3jacobs/Jacobsen_
CAFE.pdf, accessed 5/11/09 (Docket EPA–HQ–
OAR–2009–0472).
337 E.g., Gramlich, Jacob (2008). ‘‘Gas Prices and
Endogenous Product Selection in the U.S.
Automobile Industry,’’ https://www.econ.yale.edu/
seminars/apmicro/am08/gramlich-081216.pdf,
accessed 5/11/09 (Docket EPA–HQ–OAR–2009–
0472); McManus, Walter M. (2007). ‘‘The Impact of
Attribute-Based Corporate Average Fuel Economy
(CAFE) Standards: Preliminary Findings.’’
University of Michigan Transportation Research
Institute paper UMTRI–2007–31 (Docket EPA–HQ–
OAR–2009–0472); McManus, W. and R. Kleinbaum
(2009). ‘‘Fixing Detroit: How Far, How Fast, How
Fuel Efficient.’’ Working Paper, Transportation
Research Institute, University of Michigan (Docket
EPA–HQ–OAR–2009–0472).
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economy depends on the value of
improved fuel economy to consumers.
There may be a difference between the
fuel savings that consumers would
receive from improved fuel economy,
and the amount that consumers would
be willing to spend on a vehicle to get
improved fuel economy. A 1988 review
of consumers’ willingness to pay for
improved fuel economy found estimates
that varied by more than an order of
magnitude: for a $1 per year reduction
in vehicle operating costs, consumers
would be willing to spend between
$0.74 and $25.97 in increased vehicle
price.338 For comparison, the present
value of saving $1 per year on fuel for
15 years at a 3% discount rate is $11.94,
while a 7% discount rate produces a
present value of $8.78. Thus, this study
finds that consumers may be willing to
pay either far too much or far too little
for the fuel savings they will receive.
Although EPA has not found an
updated survey of these values, a few
examples suggest that the existing
consumer vehicle choice models still
demonstrate wide variation in estimates
of how much people are willing to pay
for fuel savings. For instance, Espey and
Nair (2005) and McManus (2006) find
that consumers are willing to pay
around $600 for one additional mile per
gallon.339 In contrast, Gramlich (2008)
finds that consumers’ willingness to pay
for an increase from 25 mpg to 30 mpg
varies between $4,100 (for luxury cars
when gasoline costs $2/gallon) to
$20,560 (for SUVs when gasoline costs
$3.50/gallon).340
As noted, lack of information is one
possible reason for the variation.
Consumers face difficulty in predicting
the fuel savings that they are likely to
get from a vehicle, for a number of
reasons. For instance, the calculation of
fuel savings is complex, and consumers
338 Greene, David L., and Jin-Tan Liu (1988).
‘‘Automotive Fuel Economy Improvements and
Consumers’ Surplus.’’ Transportation Research Part
A 22A(3): 203–218 (Docket EPA–HQ–OAR–2009–
0472). The study actually calculated the willingness
to pay for reduced vehicle operating costs, of which
vehicle fuel economy is a major component.
339 Espey, Molly, and Santosh Nair (2005).
‘‘Automobile Fuel Economy: What is it Worth?’’
Contemporary Economic Policy 23(3): 317–323
(Docket EPA–HQ–OAR–2009–0472); McManus,
Walter M. (2006). ‘‘Can Proactive Fuel Economy
Strategies Help Automakers Mitigate Fuel-Price
Risks?’’ University of Michigan Transportation
Research Institute (Docket EPA–HQ–OAR–2009–
0472).
340 Gramlich, Jacob (2008). ‘‘Gas Prices and
Endogenous Product Selection in the U.S.
Automobile Industry,’’ https://www.econ.yale.edu/
seminars/apmicro/am08/gramlich-081216.pdf,
accessed 5/11/09 (Docket EPA–HQ–OAR–2009–
0472).
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may not make it correctly.341 In
addition, future fuel price (a major
component of fuel savings) is highly
uncertain. Consumer fuel savings also
vary across individuals, who travel
different amounts and have different
driving styles. Studies regularly show
that fuel economy plays a role in
consumers’ vehicle purchases, but
modeling that role may still be in
development.342
If there is a difference between fuel
savings and consumers’ willingness to
pay for fuel savings, the next question
is, which is the appropriate measure of
consumer benefit? Fuel savings measure
the actual monetary value that
consumers will receive after purchasing
a vehicle; the willingness to pay for fuel
economy measures the value that, before
a purchase, consumers place on
additional fuel economy. As noted,
there are a number of reasons that
consumers may incorrectly estimate the
benefits that they get from improved
fuel economy, including risk or loss
aversion, poor ability to estimate
savings, and a lack of salience of fuel
economy savings.
Considerable evidence suggests that
consumers discount future benefits
more than the government when
evaluating energy efficiency gains. The
Energy Information Agency (1996) has
used discount rates as high as 111
percent for water heaters and 120
percent for electric clothes dryers.343 In
the transportation sector, evidence also
points to high private discount rates:
Kubik (2006) conducts a representative
survey that finds consumers are
impatient or myopic (e.g., use a high
discount rate) with regard to vehicle
fuel savings.344 On average, consumers
indicated that fuel savings would have
to pay back the additional cost in only
2.9 years to persuade them to buy a
higher fuel-economy vehicle. EPA also
incorporate a relatively short ‘‘payback
341 Turrentine, T. and K. Kurani (2007). ‘‘Car
Buyers and Fuel Economy?’’ Energy Policy 35:
1213–1223 (Docket EPA–HQ–OAR–2009–0472);
Larrick, R.P., and J.B. Soll (2008). ‘‘The MPG
illusion.’’ Science 320: 1593–1594 (Docket EPA–
HQ–OAR–2009–0472).
342 Busse, Meghan R., Christopher R. Knittel, and
Florian Zettelmeyer (2009). ‘‘Pain at the Pump: How
Gasoline Prices Affect Automobile Purchasing in
New and Used Markets,’’ Working paper (accessed
6/30/09), available at https://www.econ.ucdavis.edu/
faculty/knittel/papers/gaspaper_latest.pdf (Docket
EPA–HQ–OAR–2009–0472).
343 Energy Information Administration, U.S.
Department of Energy (1996). Issues in Midterm
Analysis and Forecasting 1996, DOE/EIA–0607(96),
Washington, DC., https://www.osti.gov/bridge/
purl.cover.jsp?purl=/366567-BvCFp0/webviewable/,
accessed 7/7/09.
344 Kubik, M. (2006). Consumer Views on
Transportation and Energy. Second Edition.
Technical Report: National Renewable Energy
Laboratory.
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period’’ into OMEGA to evaluate and
order technologies that can be used to
increase fuel economy, assuming that
buyers value the resulting fuel savings
over the first five years of a new
vehicle’s lifetime. This assumption is
based on the current average term of
consumer loans to finance the purchase
of new vehicles. That said, there is no
consensus in the literature on what the
private discount rate is or should be in
this context.
One possibility is that the discounting
framework may not be a good model for
consumer decision-making and for
determining consumer welfare regarding
fuel economy. Buying a vehicle involves
trading off among dozens of vehicle
characteristics, including price, vehicle
class, safety, performance, and even
audio systems and cupholders. Fuel
economy is only one of these attributes,
and its role in consumer vehicle
purchase decisions is not well
understood (see DRIA Section 8.1.2 for
further discussion). As noted above, if
consumers do not fully consider fuel
economy at the time of vehicle
purchase, then the fuel savings from this
rule provide a realized benefit to
consumers after purchase. There are two
distinct ideas at work here: one is that
efficiency improvements change the
nature of the cost of the car, requiring
higher up-front vehicle costs while
enabling lower long-run fuel costs; the
other is that while consumers may
benefit from the lower long-run fuel
costs, they may also experience some
loss in welfare on account of the
possible change in vehicle mix.
A second problem with use of
consumer vehicle choice models, as
they now stand, is that they are even
less reliable in the face of significant
changes otherwise occurring in fleet
composition. One attempt to analyze the
effect of the oil shock of 1973 on
consumer vehicle choice found that,
after two years, the particular model did
not predict well due to changes in the
vehicle fleet.345 It is likely that, in the
next few years, many of the vehicles
that will be offered for sale will change.
In coming years, new vehicles will be
developed, and existing vehicles will be
redesigned. For instance, over the next
few years, new vehicles that have both
high fuel economy and high safety
factors, in combinations that consumers
have not previously been offered, are
likely to appear in the market. Models
based on the existing vehicle fleet may
not do well in predicting consumers’
345 Berry, Steven, James Levinsohn, and Ariel
Pakes (July 1995). ‘‘Automobile Prices in Market
Equilibrium,’’ Econometrica 63(4): 841–940 (Docket
EPA–HQ–OAR–2009–0472).
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choices among the new vehicles offered.
Given that consumer vehicle choice
models appear to be less effective in
predicting vehicle choices when the
vehicles are likely to change, EPA is
reluctant to use the models for this
proposed rulemaking.
In sum, the estimates of consumer
surplus from consumer vehicle choice
models depend heavily on the value to
consumers of improved fuel economy, a
value for which estimates are highly
varied. In addition, the predictive
ability of consumer vehicle choice
models may be limited as consumers
face new vehicle choices that they
previously did not have.
Nonetheless, because there are
potential advantages to using consumer
vehicle choice models if these
difficulties can be addressed, EPA plans
to continue our investigation and
evaluation of consumer vehicle choice
models. This effort includes further
review of existing consumer vehicle
choice models and the estimates of
consumers’ willingness to pay for
increased fuel economy. In addition,
EPA is developing capacity to examine
the factors that may affect the results of
consumer vehicle choice models, and to
explore their impact on analysis of
regulatory scenarios.
A detailed discussion of the state of
the art of consumer choice modeling is
provided in the DRIA. For this
rulemaking, EPA is not able to estimate
the consumer welfare loss which may
accompany the actual fuel savings from
the proposal, and so any such loss must
remain unquantified. EPA seeks
comments on how to assess these
difficult questions in the future.
2. Costs Associated With the Vehicle
Program
In this section EPA presents our
estimate of the costs associated with the
proposed vehicle program. The
presentation here summarizes the costs
associated with the new vehicle
technology expected to be added to
meet the proposed GHG standards,
including hardware costs to comply
with the proposed A/C credit program.
The analysis summarized here provides
our estimate of incremental costs on a
per vehicle basis and on an annual total
basis.
The presentation here summarizes the
outputs of the OMEGA model that was
discussed in some detail in Section III.D
of this preamble. For details behind the
analysis such as the OMEGA model
inputs and the estimates of costs
associated with individual technologies,
the reader is directed to Chapters 1 and
2 of the DRIA, and Chapter 3 of the Draft
Joint TSD. For more detail on the
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outputs of the OMEGA model and the
overall vehicle program costs
summarized here, the reader is directed
to Chapters 4 and 7 of the DRIA.
With respect to the cost estimates for
vehicle technologies, EPA notes that,
because these estimates relate to
technologies which are in most cases
already available, these cost estimates
are technically robust. EPA notes further
that, in all instances, its estimates are
within the range of estimates in the
most widely-utilized sources and
studies. In that way, EPA believes that
we have been conservative in estimating
the vehicle hardware costs associated
with this proposal.
With respect to the aggregate cost
estimations presented in Section
III.H.2.b, EPA notes that there are a
number of areas where the results of our
analysis may be conservative and, in
general, EPA believes we have
directionally overestimated the costs of
compliance with these proposed
standards, especially in not accounting
for the full range of credit opportunities
available to manufacturers. For
example, some cost saving programs are
considered in our analysis, such as full
car/truck trading, while others are not,
such as cross-manufacturer trading and
advanced technology credits.
a. Vehicle Compliance Costs Associated
With the Proposed CO2 Standards
For the technology and vehicle
package costs associated with adding
new CO2-reducing technology to
vehicles, EPA began with EPA’s 2008
Staff Report and NHTSA’s 2011 CAFE
FRM both of which presented costs
generated using existing literature,
meetings with manufacturers and parts
suppliers, and meetings with other
experts in the field of automotive cost
estimation.346 EPA has updated some of
those technology costs with new
information from our contract with FEV,
through further discussion with
NHTSA, and by converting from 2006
dollars to 2007 dollars using the GDP
price deflator. The estimated costs
presented here represent the
incremental costs associated with this
proposal relative to what the future
vehicle fleet would be expected to look
like absent this proposed rule. A more
detailed description of the factors
considered in our reference case is
presented in Section III.D.
The estimates of vehicle compliance
costs cover the years of implementation
346 ‘‘EPA Staff Technical Report: Cost and
Effectiveness Estimates of Technologies Used to
Reduce Light-duty Vehicle Carbon Dioxide
Emissions,’’ EPA 420–R–08–008; NHTSA 2011
CAFE FRM is at 74 FR 14196; both documents are
contained in Docket EPA–HQ–OAR–2009–0472.
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of the program—2012 through 2016.
EPA has also estimated compliance
costs for the years following
implementation so that we can shed
light on the long term—2022 and later—
cost impacts of the proposal.347 EPA
used the year 2022 here because our
short-term and long-term markup factors
described shortly below are applied in
five year increments with the 2012
through 2016 implementation span and
the 2017 through 2021 span both
representing the short-term. Some of the
individual technology cost estimates are
presented in brief in Section III.D, and
account for both the direct and indirect
costs incurred in the automobile
manufacturing and dealer industries (for
a complete presentation of technology
costs, please refer to Chapter 3 of the
Draft Joint TSD). To account for the
indirect costs, EPA has applied an
indirect cost markup (ICM) factor to all
of our direct costs to arrive at the
estimated technology cost.348 The ICM
factors used range from 1.11 to 1.64 in
the short-term (2012 through 2021),
depending on the complexity of the
given technology, to account for
differences in the levels of R&D, tooling,
and other indirect costs that would be
incurred. Once the program has been
fully implemented, some of the indirect
costs would no longer be attributable to
these proposed standards and, as such,
a lower ICM factor is applied to direct
costs in years following full
implementation. The ICM factors used
range from 1.07 to 1.39 in the long-term
(2022 and later) depending on the
complexity of the given technology.349
Note that the short-term ICMs are used
in the 2012 through 2016 years of
implementation and continue through
2021. EPA does this since the proposed
standards are still being implemented
during the 2012 through 2016 model
years. Therefore, EPA considers the five
year period following full
implementation also to be short-term.
347 Note that the assumption made here is that the
standards proposed would continue to apply for
years beyond 2016 so that new vehicles sold in
model years 2017 and later would continue to incur
costs as a result of this rule. Those costs are
estimated to get lower in 2022 because some of the
indirect costs attributable to this proposal in the
years prior to 2022 would be eliminated in 2022
and later.
348 Alex Rogozhin et al., Automobile Industry
Retail Price Equivalent and Indirect Cost
Multipliers. Prepared for EPA by RTI International
and Transportation Research Institute, University of
Michigan. EPA–420–R–09–003, February 2009
(Docket EPA–HQ–OAR–2009–0472).
349 Gloria Helfand and Todd Sherwood,
‘‘Documentation of the Development of Indirect
Cost Multipliers for Three Automotive
Technologies,’’ Office of Transportation and Air
Quality, USEPA, August 2009 (Docket EPA–HQ–
OAR–2009–0472).
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The argument has been made that the
ICM approach may be more appropriate
for regulatory cost estimation than the
more traditional retail price equivalent,
or RPE, markup. The RPE is based on
the historical relationship between
direct costs and consumer prices; it is
intended to reflect the average markup
over time required to sustain the
industry as a viable operation. Unlike
the RPE approach, the ICM focuses more
narrowly on the changes that are
required in direct response to
regulation-induced vehicle design
changes which may not directly
influence all of the indirect costs that
are incurred in the normal course of
business. For example, an RPE markup
captures all indirect costs including
costs such as the retirement benefits of
retired employees. However, the
retirement benefits for retired
employees are not expected to change as
a result of a new GHG regulation and,
therefore, those indirect costs should
not increase in relation to newly added
hardware in response to a regulation.
So, under the ICM approach, if a newly
added piece of technology has an
incremental direct cost of $1, its direct
plus indirect costs should not be $1
multiplied by an RPE markup of say 1.5,
or $1.50, but rather something less since
the manufacturer is not paying more for
retired-employee retirement benefits as
a direct result of adding the new piece
of technology. Further, as noted above,
the indirect cost multiplier can be
adjusted for different levels of
technological complexity. For example,
a move to low rolling resistance tires is
less complex than converting a gasoline
vehicle to a plug-in hybrid. Therefore,
the incremental indirect costs for the
tires should be lower in magnitude than
those for the plug-in hybrid. For the
analysis underlying these proposed
standards, the agencies have based our
estimates on the ICM approach, but EPA
notes that discussion continues about
the use of the RPE approach and the
ICM approach for safety and
environmental regulations. We discuss
our ICM factors and the complexity
levels used in our analysis in more
detail in Chapter 3 of the Draft Joint
TSD and EPA requests comment on the
approach described there as well as the
general concepts of both the ICM and
RPE approaches.
EPA has also considered the impacts
of manufacturer learning on the
technology cost estimates. Consistent
with past EPA rulemakings, EPA has
estimated that some costs would decline
by 20 percent with each of the first two
doublings of production beginning with
the first year of implementation. These
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volume-based cost declines—which
EPA calls ‘‘volume’’ based learning—
take place after manufacturers have had
the opportunity to find ways to improve
upon their manufacturing processes or
otherwise manufacture these
technologies in a more efficient way.
After two 20 percent cost reduction
steps, the cost reduction learning curve
flattens out considerably as only minor
improvements in manufacturing
techniques and efficiencies remain to be
had. By then, costs decline roughly
three percent per year as manufacturers
and suppliers continually strive to
reduce costs. These time-based cost
declines—which EPA calls ‘‘time’’
based learning—take place at a rate of
three percent per year. EPA has
considered learning impacts on most
but not all of the technologies expected
to be used because some of the expected
technologies are already used rather
widely in the industry and, presumably,
learning impacts have already occurred.
EPA has considered volume-based
learning for only a handful of
technologies that EPA considers to be
new or emerging technologies such as
the hybrids and electric vehicles. For
most technologies, EPA has considered
them to be more established given their
current use in the fleet and, hence, we
have applied the lower time based
learning. We have more discussion of
our learning approach and the
technologies to which we have applied
which type of learning in the Draft Joint
TSD.
The technology cost estimates
discussed in Section III.D and detailed
in Chapter 3 of the Draft Joint TSD are
used to build up package cost estimates
which are then used as inputs to the
OMEGA model. EPA discusses our
packages and package costs in Chapter
1 of the DRIA. The model determines
what level of CO2 improvement is
required considering the reference case
for each manufacturer’s fleet. The
vehicle compliance costs are the outputs
of the model and take into account FFV
credits through 2015, TLAASP, full car/
truck trading, and the A/C credit
program. Table III.H.2–1 presents the
fleet average incremental vehicle
compliance costs for this proposal. As
the table indicates, 2012–2016 costs
increase every year as the standards
become more stringent. Costs per car
and per truck then remain stable
through 2021 while cost per vehicle
(car/truck combined) decline slightly as
the fleet mix trends slowly to increasing
car sales. In 2022, costs per car and per
truck decline as the long-term ICM kicks
in because some indirect costs are no
longer considered attributable to the
proposed program. Costs per car and per
truck remain constant thereafter while
the cost per vehicle declines slightly as
the fleet continues to trend toward cars.
By 2030, projections of fleet mix
changes become static and the cost per
vehicle remains constant. EPA has a
more detailed presentation of vehicle
compliance costs on a manufacturer by
manufacturer basis in the DRIA.
TABLE III.H.2–1—INDUSTRY AVERAGE VEHICLE COMPLIANCE COSTS ASSOCIATED WITH THE PROPOSED TAILPIPE CO2
STANDARDS
[$/vehicle in 2007 dollars]
Calendar year
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2030
2040
2050
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
b. Annual Costs of the Proposed Vehicle
Program
mstockstill on DSKH9S0YB1PROD with PROPOSALS
$/car
The costs presented here represent the
incremental costs for newly added
technology to comply with the proposed
program. Together with the projected
increases in car and light-truck sales,
the increases in per-vehicle average
costs shown in Table III.H.2–1 above
result in the total annual costs reported
in Table III.H.2–2 below. Note that the
costs presented in Table III.H.2–2 do not
include the savings that would occur as
a result of the improvements to fuel
consumption. Those impacts are
presented in Section III.H.4.
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$/truck
374
531
663
813
968
968
968
968
968
968
890
890
890
890
$/vehicle
(car & truck
combined)
358
539
682
886
1,213
1,213
1,213
1,213
1,213
1,213
1,116
1,116
1,116
1,116
368
534
670
838
1,050
1,047
1,044
1,042
1,040
1,039
955
953
953
953
TABLE III.H.2–2—QUANTIFIED ANNUAL 3. Cost per Ton of Emissions Reduced
COSTS ASSOCIATED WITH THE PROEPA has calculated the cost per ton of
POSED VEHICLE PROGRAM
GHG (CO -equivalent, or CO e)
2
[$Millions of 2007 dollars]
Quantified
annual costs
Year
2012 ......................................
2013 ......................................
2014 ......................................
2015 ......................................
2016 ......................................
2020 ......................................
2030 ......................................
2040 ......................................
2050 ......................................
NPV, 3% ...............................
NPV, 7% ...............................
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$5,400
$8,400
$10,900
$13,900
$17,500
$18,000
$17,900
$19,300
$20,900
$390,000
$216,600
2
reductions associated with this proposal
using the above costs and the emissions
reductions described in Section III.F.
More detail on the costs, emission
reductions, and the cost per ton can be
found in the DRIA and Draft Joint TSD.
EPA has calculated the cost per metric
ton of GHG emissions reductions in the
years 2020, 2030, 2040, and 2050 using
the annual vehicle compliance costs and
emission reductions for each of those
years. The value in 2050 represents the
long-term cost per ton of the emissions
reduced. Note that EPA has not
included the savings associated with
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reduced fuel consumption, nor any of
the other benefits of this proposal in the
cost per ton calculations. If EPA were to
include fuel savings in the cost
estimates, the cost per ton would be less
than $0, since the estimated value of
fuel savings outweighs these costs. With
regard to the proposed CH4 and N2O
standards, since these standards would
be emissions caps designed to ensure
manufacturers do not backslide from
current levels, EPA has not estimated
costs associated with the standards
(since the standards would not require
any change from current practices nor
does EPA estimate they would result in
emissions reductions).
The results for CO2e costs per ton
under the proposed vehicle program are
shown in Table III.H.3–1.
TABLE III.H.3–1—ANNUAL COST PER METRIC TON OF CO2e REDUCED, IN $2007 DOLLARS
2020
2030
2040
2050
CO2e
Reduced
(million metric
tons)
Cost a
($millions)
Year
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
$18,000
17,900
19,300
20,900
Cost per ton
170
320
420
520
$110
60
50
40
a Costs here include vehicle compliance costs and do not include any fuel savings (discussed in Section III.H.4) or other benefits of this proposal (discussed in Sections III.H.6 through III.H 10).
4. Reduction in Fuel Consumption and
Its Impacts
a. What Are the Projected Changes in
Fuel Consumption?
mstockstill on DSKH9S0YB1PROD with PROPOSALS
The proposed CO2 standards would
result in significant improvements in
the fuel efficiency of affected vehicles.
Drivers of those vehicles would see
corresponding savings associated with
reduced fuel expenditures. EPA has
estimated the impacts on fuel
consumption for both the proposed
tailpipe CO2 standards and the proposed
A/C credit program. To do this, fuel
consumption is calculated using both
current CO2 emission levels and the
proposed CO2 standards. The difference
between these estimates represents the
net savings from the proposed CO2
standards. Note that the total number of
miles that vehicles are driven each year
is different under each of the control
case scenarios than in the reference case
due to the ‘‘rebound effect,’’ which is
discussed in Section III.H.4.c.
The expected impacts on fuel
consumption are shown in Table
III.H.4–1. The gallons shown in the
tables reflect impacts from the proposed
CO2 standards, including the proposed
A/C credit program, and include
increased consumption resulting from
the rebound effect.
TABLE III.H.4–1—FUEL CONSUMPTION
IMPACTS OF THE PROPOSED VEHICLE STANDARDS AND A/C CREDIT
PROGRAMS—Continued
[Million gallons]
Year
2016
2020
2030
2040
2050
Total
..............................................
..............................................
..............................................
..............................................
..............................................
5,930
13,350
26,180
33,930
42,570
b. What Are the Fuel Savings to the
Consumer?
Using the fuel consumption estimates
presented in Section III.H.4.a, EPA can
calculate the monetized fuel savings
associated with the proposed CO2
standards. To do this, we multiply
reduced fuel consumption in each year
by the corresponding estimated average
fuel price in that year, using the
reference case taken from the AEO
2009.350 AEO is the government
consensus estimate used by NHTSA and
many other government agencies to
estimate the projected price of fuel. EPA
has included all fuel taxes in these
estimates since these are the prices paid
by consumers. As such, the savings
shown reflect savings to the consumer.
These results are shown in Table
III.H.4–2. Note that EPA presents the
TABLE III.H.4–1—FUEL CONSUMPTION monetized fuel savings using pre-tax
IMPACTS OF THE PROPOSED VEHI- fuel prices in Section III.H.10. The fuel
CLE STANDARDS AND A/C CREDIT savings based on pre-tax fuel prices
reflect the societal savings in contrast to
PROGRAMS
the consumer savings presented in
[Million gallons]
Table III.H.4–2. Also in Section III.H.10,
Year
2012
2013
2014
2015
Total
..............................................
..............................................
..............................................
..............................................
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530
1,320
2,410
3,910
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350 Energy Information Administration,
Supplemental tables to the Annual Energy Outlook
2009, Updated Reference Case with American
Recovery and Reinvestment Act. Available https://
www.eia.doe.gov/oiaf/aeo/supplement/stimulus/
regionalarra.html. April 2009.
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EPA presents the benefit-cost of the
proposal and, for that reason, present
the fuel impacts as negative costs of the
program while here EPA presents them
as positive savings.
TABLE III.H.4–2—ESTIMATED FUEL
CONSUMPTION SAVINGS TO THE
CONSUMER a
[Millions of 2007 dollars]
Calendar year
2012 ......................................
2013 ......................................
2014 ......................................
2015 ......................................
2016 ......................................
2020 ......................................
2030 ......................................
2040 ......................................
2050 ......................................
NPV, 3% ...............................
NPV, 7% ...............................
Total
$1,400
3,800
7,200
12,400
19,400
48,400
100,000
136,800
181,000
1,850,200
826,900
a Fuel consumption savings calculated using
taxed fuel prices. Fuel consumption impacts
using pre-tax fuel prices are presented in Section III.H.10 as negative costs of the vehicle
program
As shown in Table III.H.4–2, EPA is
projecting that consumers would realize
very large fuel savings as a result of the
standards contained in this proposal.
There are several ways to view this
value. Some, as demonstrated below in
Section III.H.5, view these fuel savings
as a reduction in the cost of owning a
vehicle, whose full benefits consumers
realize. This approach assumes that,
regardless how consumers in fact make
their decisions on how much fuel
economy to purchase, they will gain
these fuel savings. Another view says
that consumers do not necessarily value
fuel savings as equal to the results of
this calculation. Instead, consumers
may either undervalue or overvalue fuel
economy relative to these savings, based
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on their personal preferences. This issue
is discussed further in Section III.H.5
and in Chapter 8 of the DRIA.
mstockstill on DSKH9S0YB1PROD with PROPOSALS
c. VMT Rebound Effect
The fuel economy rebound effect
refers to the fraction of fuel savings
expected to result from an increase in
vehicle fuel economy—particularly one
required by higher fuel efficiency
standards—that is offset by additional
vehicle use. The increase in vehicle use
occurs because higher fuel economy
reduces the fuel cost of driving, which
is typically the largest single component
of the monetary cost of operating a
vehicle, and vehicle owners respond to
this reduction in operating costs by
driving slightly more.
For this proposal, EPA is using an
estimate of 10% for the rebound effect.
This value is based on the most recent
time period analyzed in the Small and
Van Dender 2007 paper,351 and falls
within the range of the larger body of
historical work on the rebound effect.352
Recent work by David Greene on the
rebound effect for light-duty vehicles in
the U.S. further supports the hypothesis
that the rebound effect is decreasing
over time.353 If we were to use a
dynamic estimate of the future rebound
effect, our analysis shows that the
rebound effect could be in the range of
5% or lower.354 The rebound effect is
also discussed in Section II.F of the
preamble; the TSD, Section 4.2.5,
reviews the relevant literature and
discusses in more depth the reasoning
for the rebound values used here.
EPA also invites comments on other
alternatives for estimating the rebound
effect. As one illustration, variation in
the price per gallon of gasoline directly
affects the per-mile cost of driving, and
drivers may respond just as they would
to a change in the cost of driving
resulting from a change in fuel
economy, by varying the number of
miles they drive. Because vehicles’ fuel
351 Small, K. and K. Van Dender, 2007a. ‘‘Fuel
Efficiency and Motor Vehicle Travel: The Declining
Rebound Effect’’, The Energy Journal, vol. 28, no.
1, pp. 25–51 (Docket EPA–HQ–OAR–2009–0472).
352 Sorrell, S. and J. Dimitropoulos, 2007.
‘‘UKERC Review of Evidence for the Rebound
Effect, Technical Report 2: Econometric Studies’’,
UKERC/WP/TPA/2007/010, UK Energy Research
Centre, London, October (Docket EPA–HQ–OAR–
2009–0472).
353 Report by Kenneth A. Small of University of
California at Irvine to EPA, ‘‘The Rebound Effect
from Fuel Efficiency Standards: Measurement and
Projection to 2030’’, June 12, 2009 (Docket EPA–
HQ–OAR–2009–0472).
354 Report by David Greene of Oak Ridge National
Laboratory to EPA, ‘‘Rebound 2007: Analysis of
National Light-Duty Vehicle Travel Statistics,’’
March 24, 2009 (Docket EPA–HQ–OAR–2009–
0472). Note, this report has been submitted for peer
review. Completion of the peer review process is
expected prior to the final rule.
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economy is fixed in the short run,
variation in the number of miles driven
in response to changes in fuel prices
will be reflected in changes in gasoline
consumption. Under the assumption
that drivers respond similarly to
changes in the cost of driving whether
they are caused by variation in fuel
prices or fuel economy, the short-run
price elasticity of demand for gasoline—
which measures the sensitivity of
gasoline consumption to changes in its
price per gallon—may provide some
indication about the magnitude of the
rebound effect itself. EPA invites
comment on the extent to which the
short run elasticity of demand for
gasoline with respect to its price can
provide useful information about the
size of the rebound effect. Specifically,
we seek comment on whether it would
be appropriate to use the price elasticity
of demand for gasoline, or other
alternative approaches, to guide the
choice of a value for the rebound effect.
5. Impacts on U.S. Vehicle Sales and
Payback Period
a. Vehicle Sales Impacts
The methodology EPA used for
estimating the impact on vehicle sales is
relatively straightforward, but makes a
number of simplifying assumptions.
According to the literature, the price
elasticity of demand for vehicles is
commonly estimated to be ¥1.0.355 In
other words, a one percent increase in
the price of a vehicle would be expected
to decrease sales by one percent,
holding all other factors constant. For
our estimates, EPA calculated the effect
of an increase in vehicle costs due to the
proposed standards and assume that
consumers will face the full increase in
costs, not an actual (estimated) change
in vehicle price. (The estimated
increases in vehicle cost due to the rule
are discussed in Section III.H.2) This is
a conservative methodology, since an
increase in cost may not pass fully into
an increase in market price in an
oligopolistic industry such as the
automotive sector.356 EPA also notes
355 Kleit A.N., 1990. ‘‘The Effect of Annual
Changes in Automobile Fuel Economy Standards.’’
Journal of Regulatory Economics 2: 151–172
(Docket EPA–HQ–OAR–2009–0472); McCarthy,
Patrick S., 1996. ‘‘Market Price and Income
Elasticities of New Vehicle Demands.’’ Review of
Economics and Statistics 78: 543–547 (Docket EPA–
HQ–OAR–2009–0472); Goldberg, Pinelopi K., 1998.
‘‘The Effects of the Corporate Average Fuel
Efficiency Standards in the U.S.,’’ Journal of
Industrial Economics 46(1): 1–33 (Docket EPA–HQ–
OAR–2009–0472).
356 See, for instance, Gron, Ann, and Deborah
Swenson, 2000. ‘‘Cost Pass-Through in the U.S.
Automobile Market,’’ Review of Economics and
Statistics 82: 316–324 (Docket EPA–HQ–OAR–
2009–0472).
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that we have not used these estimated
sales impacts in the OMEGA Model.
Although EPA uses the one percent
price elasticity of demand for vehicles
as the basis for our vehicle sales impact
estimates, we assumed that the
consumer would take into account both
the higher vehicle purchasing costs as
well as some of the fuel savings benefits
when deciding whether to purchase a
new vehicle. Therefore, the incremental
cost increase of a new vehicle would be
offset by reduced fuel expenditures over
a certain period of time (i.e., the
‘‘payback period’’). For the purposes of
this rulemaking, EPA used a five-year
payback period, which is consistent
with the length of a typical new lightduty vehicle loan.357 This approach may
not accurately reflect the role of fuel
savings in consumers’ purchase
decisions, as the discussion in Section
III.H.1 suggests. If consumers consider
fuel savings in a different fashion than
modeled here, then this approach will
not accurately reflect the impact of this
rule on vehicle sales.
This increase in costs has other effects
on consumers as well: If vehicle prices
increase, consumers will face higher
insurance costs and sales tax, and
additional finance costs if the vehicle is
bought on credit. In addition, the resale
value of the vehicles will increase. EPA
estimates that, with corrections for these
factors, the effect on consumer
expenditures of the cost of the new
technology should be 0.932 times the
cost of the technology at a 3% discount
rate, and 0.892 times the cost of the
technology at a 7% discount rate. The
details of this calculation are in the
DRIA, Chapter 8.l.
Once the cost estimates are adjusted
for these additional factors, the fuel cost
savings associated with the rule,
discussed in Section III.H.4, are
subtracted to get the net effect on
consumer expenditures for a new
vehicle. With the assumed elasticity of
demand of ¥1, the percent change in
this ‘‘effective price,’’ estimated as the
adjusted increase in cost, is equal to the
negative of the percent change in
vehicle purchases. The net effect of this
calculation is in Table III.H.5–1 and
Table III.H.5–2.
357 There is not a consensus in the literature on
how consumers consider fuel economy in their
vehicle purchases. Results are inconsistent,
possibly due to fuel economy not being a major
focus of many of the studies. Espey, Molly, and
Santosh Nair (1995, ‘‘Automobile Fuel Economy:
What Is It Worth?’’ Contemporary Economic Policy
23: 317–323, (Docket EPA–HQ–OAR–2009–0472)
find that their results are consistent with consumers
using the lifetime of the vehicle, not just the first
five years, in their fuel economy purchase
decisions. This result suggests that the five-year
time horizon used here may be an underestimate.
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The estimates provided in Table
III.H.5–1 and Table III.H.5–2 are meant
to be illustrative rather than a definitive
prediction. When viewed at the
industry-wide level, they give a general
indication of the potential impact on
vehicle sales. As shown below, the
overall impact is positive and growing
over time for both cars and trucks,
because the estimated value of fuel
savings exceeds the costs of meeting the
higher standards. If, however,
49609
consumers do not take fuel savings and
other costs into account as modeled
here when they purchase vehicles, the
results presented here may not reflect
actual impacts on vehicle sales.
TABLE III.H.5–1—VEHICLE SALES IMPACTS USING A 3% DISCOUNT RATE
Change in car
sales
2012
2013
2014
2015
2016
.................................................................................................
.................................................................................................
.................................................................................................
.................................................................................................
.................................................................................................
Table III.H.5–1 shows the impacts on
new vehicle sales using a 3% discount
rate. The fuel savings are always higher
than the technology costs. Although
both cars and trucks show very small
Percent change
66,600
93,300
134,400
236,300
375,400
Change in truck
sales
0.7
0.9
1.3
2.2
3.4
effects initially, over time vehicle sales
become increasingly positive, as
increased fuel prices make improved
fuel economy more desirable. The
increases in sales for trucks are larger
27,300
161,300
254,400
368,400
519,000
Percent change
0.5
2.8
4.4
6.5
9.4
than the increases for trucks (except in
2012) in both absolute numbers and
percentage terms.
TABLE III.H.5–2—NEW VEHICLE SALES IMPACTS USING A 7% DISCOUNT RATE
Change in car
sales
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2012
2013
2014
2015
2016
.............................................................................................
.............................................................................................
.............................................................................................
.............................................................................................
.............................................................................................
Table III.H.5–2 shows the impacts on
new vehicle sales using a 7% interest
rate. While a 7% interest rate shows
slightly lower impacts than using a 3%
discount rate, the results are
qualitatively similar to those using a 3%
discount rate. Sales increase for every
year. For both cars and trucks, sales
become increasingly positive over time,
as higher fuel prices make improved
fuel economy more valuable. The car
market grows more than the truck
market in absolute numbers, but less on
a percentage basis.
The effect of this rule on the use and
scrappage of older vehicles will be
related to its effects on new vehicle
prices, the fuel efficiency of new vehicle
models, and the total sales of new
vehicles. If the value of fuel savings
resulting from improved fuel efficiency
to the typical potential buyer of a new
vehicle outweighs the average increase
in new models’ prices, sales of new
vehicles will rise, while scrappage rates
of used vehicles will increase slightly.
This will cause the ‘‘turnover’’ of the
vehicle fleet—that is, the retirement of
used vehicles and their replacement by
new models—to accelerate slightly, thus
accentuating the anticipated effect of the
rule on fleet-wide fuel consumption and
CO2 emissions. However, if potential
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Percent change
61,900
86,600
125,200
221,400
353,100
0.7
0.9
1.2
2
3.2
buyers value future fuel savings
resulting from the increased fuel
efficiency of new models at less than the
increase in their average selling price,
sales of new vehicles will decline, as
will the rate at which used vehicles are
retired from service. This effect will
slow the replacement of used vehicles
by new models, and thus partly offset
the anticipated effects of the proposed
rules on fuel use and emissions.
Because the agencies are uncertain
about how the value of projected fuel
savings from the proposed rules to
potential buyers will compare to their
estimates of increases in new vehicle
prices, we have not attempted to
estimate explicitly the effects of the rule
on scrappage of older vehicles and the
turnover of the vehicle fleet. We seek
comment on the methods that might be
used to estimate the effect of the
proposed rule on the scrappage and use
of older vehicles as part of the analysis
to be conducted for the final rule.
A detailed discussion of the vehicle
sales impacts methodology is provided
in the DRIA. EPA invites comments on
this approach to estimating the vehicle
sales impacts of this proposal.
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Change in truck
sales
25,300
60,000
122,900
198,100
291,500
Percent change
0.5
1
2.1
3.5
5.3
b. Consumer Payback Period and
Lifetime Savings on New Vehicle
Purchases
Another factor of interest is the
payback period on the purchase of a
new vehicle that complies with the
proposed standards. In other words,
how long would it take for the expected
fuel savings to outweigh the increased
cost of a new vehicle? For example, a
new 2016 MY vehicle is estimated to
cost $1,050 more (on average, and
relative to the reference case vehicle)
due to the addition of new GHG
reducing technology (see Section III.D.6
for details on this cost estimate). This
new technology will result in lower fuel
consumption and, therefore, savings in
fuel expenditures (see Section III.F.1 for
details on fuel savings). But how many
months or years would pass before the
fuel savings exceed the upfront cost of
$1,050?
Table III.H.5–3 provides the answer to
this question for a vehicle purchaser
who pays for the new vehicle upfront in
cash (we discuss later in this section the
payback period for consumers who
finance the new vehicle purchase with
a loan). The table uses annual miles
driven (vehicle miles traveled, or VMT)
and survival rates consistent with the
emission and benefits analyses
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presented in Chapter 4 of the draft joint
TSD. The control case includes rebound
VMT but the reference case does not,
consistent with other parts of the
analysis. Also included are fuel savings
associated with A/C controls (in the
control case only), but the expected
A/C-related maintenance savings are not
included. The likely A/C-related
maintenance savings are discussed in
Chapter 2 of EPA’s draft RIA. Further,
this analysis does not include other
societal impacts such as the value of
increased driving, or noise, congestion
and accidents since the focus is meant
to be on those factors consumers
consider most while in the showroom
considering a new car purchase. Car/
truck fleet weighting is handled as
described in Chapter 1 of the draft joint
TSD. As can be seen in the table, it will
take under 3 years (2 years and 8
months at a 3% discount rate, 2 years
and 10 months at a 7% discount rate)
for the cumulative discounted fuel
savings to exceed the upfront increase
in vehicle cost. More detail on this
analysis can be found in Chapter 8 of
EPA’s draft RIA.
TABLE III.H.5–3—PAYBACK PERIOD ON A 2016 MY NEW VEHICLE PURCHASE VIA CASH
[2007 dollars]
Increased vehicle
cost a
Year of ownership
1
2
3
4
.......................................................................................................
.......................................................................................................
.......................................................................................................
.......................................................................................................
Annual fuel
savings b
$1,128
............................
............................
............................
Cumulative
discounted fuel
savings at 3%
$443
444
443
434
Cumulative
discounted fuel
savings at 7%
$436
860
1,272
1,663
$428
829
1,203
1,546
a Increased cost of the proposed rule is $1,050; the value here includes nationwide average sales tax of 5.3% and increased insurance premiums of 1.98%; both of these percentages are discussed in Section 8.1.1 of EPA’s draft RIA.
b Calculated using AEO 2009 reference case fuel price including taxes.
However, most people purchase a
new vehicle using credit rather than
paying cash up front. The typical car
loan today is a five year, 60 month loan.
As of August 24, 2009, the national
average interest rate for a 5 year new car
loan was 7.41 percent. If the increased
vehicle cost is spread out over 5 years
at 7.41 percent, the analysis would look
like that shown in Table III.H.5–4. As
can be seen in this table, the fuel
savings immediately outweigh the
increased payments on the car loan,
amounting to $162 in discounted net
savings (3% discount rate) saved in the
first year and similar savings for the
next two years before reduced VMT
starts to cause the fuel savings to fall.
Results are similar using a 7% discount
rate. This means that for every month
that the average owner is making a
payment for the financing of the average
new vehicle their monthly fuel savings
would be greater than the increase in
the loan payments. This amounts to a
savings on the order of $9 to $14 per
month throughout the duration of the 5
year loan. Note that in year six when the
car loan is paid off, the net savings
equal the fuel savings (as would be the
case for the remaining years of
ownership).
TABLE III.H.5–4—PAYBACK PERIOD ON A 2016 MY NEW VEHICLE PURCHASE VIA CREDIT
[2007 dollars]
Increased vehicle
cost a
Year of ownership
1
2
3
4
5
6
.......................................................................................................
.......................................................................................................
.......................................................................................................
.......................................................................................................
.......................................................................................................
.......................................................................................................
a This
Annual fuel
savings b
$278
278
278
278
278
0
Annual
discounted net
savings at 3%
$443
444
443
434
423
403
Annual
discounted net
savings at 7%
$162
158
153
141
127
343
$159
150
139
123
107
278
uses the same increased cost as Table III.H.4–3 but spreads it out over 5 years assuming a 5 year car loan at 7.41 percent.
using AEO 2009 reference case fuel price including taxes.
b Calculated
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The lifetime fuel savings and net
savings can also be calculated for those
who purchase the vehicle using cash
and for those who purchase the vehicle
with credit. This calculation applies to
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the vehicle owner who retains the
vehicle for its entire life and drives the
vehicle each year at the rate equal to the
national projected average. The results
are shown in Table III.H.5–5. In either
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case, the present value of the lifetime
net savings is greater than $3,200 at a
3% discount rate, or $2,400 at a 7%
discount rate.
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TABLE III.H.5–5—LIFETIME DISCOUNTED NET SAVINGS ON A 2016 MY NEW VEHICLE PURCHASE
[2007 dollars]
Increased
discounted
vehicle cost
Purchase option
Lifetime
discounted fuel
savings b
Lifetime
discounted net
savings
3% discount rate
Cash .................................................................................................................................
Credit a .............................................................................................................................
$1,128
1,293
$4,558
4,558
$3,446
3,265
1,128
1,180
3,586
3,586
2,495
2,406
7% discount rate
Cash .................................................................................................................................
Credit a .............................................................................................................................
a Assumes
b Fuel
a 5 year loan at 7.41 percent.
savings here were calculated using AEO 2009 reference case fuel price including taxes.
Note that throughout this consumer
payback discussion, the average number
of vehicle miles traveled per year has
been used. Drivers who drive more
miles than the average would incur fuel
related savings more quickly and,
therefore, the payback would come
sooner. Drivers who drive fewer miles
than the average would incur fuel
related savings more slowly and,
therefore, the payback would come
later.
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6. Benefits of Reducing GHG Emissions
a. Introduction
This proposal is designed to reduce
greenhouse gas (GHG) emissions from
light-duty vehicles. This section
provides monetized estimates of some of
the economic benefits of this proposal’s
projected GHG emissions reductions.358
The total benefit estimates were
calculated by multiplying a marginal
dollar value (i.e., cost per ton) of carbon
emissions, also referred to as ‘‘social
cost of carbon’’ (SCC), by the anticipated
level of emissions reductions in tons.
We request comment on the approach
used to estimate the set of SCC values
used for this coordinated proposal as
well as the other options considered.
The estimates presented here are
interim values. EPA and other agencies
will continue to explore the underlying
assumptions and issues.
As discussed below, the interim
dollar estimates of the SCC represent a
partial accounting of climate change
impacts. The quantitative account
presented here is accompanied by a
qualitative appraisal of climate-related
impacts presented elsewhere in this
proposal. For example, Section III.F.2 of
358 The marginal and total benefit estimates
presented in this section are limited to the impacts
that can be monetized. Section III.F.2 of this
preamble discusses the physical impacts of climate
change, some of which are not monetized and are
therefore omitted from the monetized benefits
discussed here.
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the preamble presents a summary of the
impacts and risks of climate change
projected in the absence of actions to
mitigate GHG emissions. Section III.F.2
is based on EPA documents that
synthesize major findings from the best
available scientific assessments of the
scientific literature that have gone
through rigorous and transparent peer
review, including the major assessment
reports of both the Intergovernmental
Panel on Climate Change (IPCC) and the
U.S. Climate Change Science
Program.359
The rest of this preamble section will
provide the basis for the interim SCC
values, and the estimates of the total
climate-related benefits of the proposed
rule that follow from these interim
values.
b. Derivation of Interim Social Cost of
Carbon Values
The ‘‘social cost of carbon’’ (SCC) is
intended to be a monetary measure of
the incremental damage resulting from
carbon dioxide (CO2) emissions,
including (but not limited to) net
agricultural productivity loss, human
health effects, property damages from
sea level rise, and changes in ecosystem
services. Any effort to quantify and to
monetize the consequences associated
with climate change will raise serious
questions of science, economics, and
ethics. But with full regard for the limits
of both quantification and monetization,
the SCC can be used to provide an
estimate of the social benefits of
reductions in GHG emissions.
For at least three reasons, any
particular figure will be contestable.
First, scientific and economic
359 U.S. Environmental Protection Agency,
‘‘Advance Notice of Proposed Rulemaking for
Greenhouse Gases Under the Clean Air Act,
Technical Support Document on Benefits of
Reducing GHG Emissions,’’ June 2008. See
www.regulations.gov and search for ID ‘‘EPA–HQ–
OAR–2008–0138–0078.’’
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knowledge about the impacts of climate
change continues to grow. With new
and better information about relevant
questions, including the cost, burdens,
and possibility of adaptation, current
estimates will inevitably change over
time. Second, some of the likely and
potential damages from climate
change—for example, the loss of
endangered species—are generally not
included in current SCC estimates.
These omissions may turn out to be
significant, in the sense that they may
mean that the best current estimates are
too low. As noted by the IPCC Fourth
Assessment Report, ‘‘It is very likely that
globally aggregated figures
underestimate the damage costs because
they cannot include many nonquantifiable impacts.’’ 360 Third, when
economic efficiency criteria, under
specific assumptions, are juxtaposed
with ethical considerations, the
outcome may be controversial.361 These
ethical considerations, including those
involving the treatment of future
generations, should and will also play a
role in judgments about the SCC (see in
particular the discussion of the discount
rate, below).
To date, SCC estimates presented in
recent regulatory documents have
varied within and among agencies,
including DOT, DOE, and EPA. For
example, a regulation proposed by DOT
in 2008 assumed a value of $7 per
metric ton CO2 (2006$) for 2011
emission reductions (with a range of
$0–14 for sensitivity analysis; see EPA
Docket, EPA–HQ–OAR–2009–0472).362
360 IPCC WGII. 2007. Climate Change 2007—
Impacts, Adaptation and Vulnerability Contribution
of Working Group II to the Fourth Assessment
Report of the IPCC. See EPA Docket, EPA–HQ–
OAR–2009–0472.
361 See, e.g., Discounting and Intergenerational
Equity (Paul Portney and John P. Weyant eds.
1999).
362 For the purposes of this discussion, we
present all values of the SCC as the cost per metric
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A regulation proposed by DOE in 2009
used a range of $0–$20 (2007$). Both of
these ranges were designed to reflect the
value of damages to the United States
resulting from carbon emissions, or the
‘‘domestic’’ SCC. In the final MY2011
CAFE EIS, DOT used both a domestic
SCC value of $2/tCO2 and a global SCC
value of $33/tCO2 (with sensitivity
analysis at $80/tCO2) (in 2006 dollars
for 2007 emissions), increasing at 2.4%
per year thereafter. The final MY2011
CAFE rule also presented a range from
$2 to $80/tCO2 (see EPA Docket, EPA–
HQ–OAR–2009–0472, for the MY2011
EIS and final rule). EPA’s Advance
Notice of Proposed Rulemaking for
Greenhouse Gases discussed the
benefits of reducing GHG emissions and
identified what it described as ‘‘very
preliminary’’ SCC estimates ‘‘subject to
revision’’ that spanned three orders of
magnitude. EPA’s global mean values
were $68 and $40/tCO2 for discount
rates of 2% and 3% respectively (in
2006 real dollars for 2007 emissions).363
The current Administration has
worked to develop a transparent
methodology for selecting a set of
interim SCC estimates to use in
regulatory analyses until a more
comprehensive characterization of the
SCC is developed. This discussion
proposes a set of values for the interim
social cost of carbon resulting from this
methodology. It should be emphasized
that the analysis here is preliminary.
This proposed joint rulemaking presents
SCC estimates that reflect the
Administration’s current understanding
of the relevant literature and will be
used for the short-term while an
interagency group develops a more
comprehensive characterization of the
distribution of SCC values for future
economic and regulatory analyses. The
interim values should not be viewed as
an expectation about the results of the
longer-term process. The
Administration is seeking comment in
this proposed rule on all of the
scientific, economic, and ethical issues
before establishing improved estimates
for use in future rulemakings.
The outcomes of the Administration’s
process to develop interim values are
ton of CO2 emissions. Some discussions of the SCC
in the literature use an alternative presentation of
a dollar per metric ton of carbon. The standard
adjustment factor is 3.67, which means, for
example, that a SCC of $10 per ton of CO2 would
be equivalent to a cost of $36.70 for a ton of carbon
emitted. Unless otherwise indicated, a ‘‘ton’’ refers
to a metric ton.
363 73 FR 44416 (July 30, 2008). EPA, ‘‘Advance
Notice of Proposed Rulemaking for Greenhouse
Gases Under the Clean Air Act, Technical Support
Document on Benefits of Reducing GHG
Emissions,’’ June 2008. www.regulations.gov.
Search for ID ‘‘EPA–HQ–OAR–2008–0318–0078.
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judgments in favor of (a) global rather
than domestic values, (b) an annual
growth rate of 3%, and (c) interim global
SCC estimates for 2007 (in 2007 dollars)
of $56, $34, $20, $10, and $5 per ton of
CO2. The proposed figures are based on
the following judgments.
i. Global and Domestic Measures
Because of the distinctive nature of
the climate change problem, we present
both a global SCC and a fraction of that
value that represents impacts that may
occur within the borders of the U.S.
alone, or a ‘‘domestic’’ SCC, but fix our
attention on the global measure. This
approach represents a departure from
past practices, which relied, for the
most part, on domestic measures. As a
matter of law, both global and domestic
values are permissible; the relevant
statutory provisions are ambiguous and
allow selection of either measure.364
It is true that under OMB guidance,
analysis from the domestic perspective
is required, while analysis from the
international perspective is optional.
The domestic decisions of one nation
are not typically based on a judgment
about the effects of those decisions on
other nations. But the climate change
problem is highly unusual in the sense
that it involves (a) a global public good
in which (b) the emissions of one nation
may inflict significant damages on other
nations and (c) the United States is
actively engaged in promoting an
international agreement to reduce
worldwide emissions.
In these circumstances, we believe
that the global measure is preferred. Use
of a global measure reflects the reality
of the problem and is consistent with
the continuing efforts of the United
States to ensure that emissions
reductions occur in many nations.
Domestic SCC values are also
presented. The development of a
domestic SCC is greatly complicated by
the relatively few region- or countryspecific estimates of the SCC in the
literature. One potential source of
estimates comes from EPA’s ANPR
Benefits TSD, using the Climate
Framework for Uncertainty, Negotiation
and Distribution (FUND) model.365 The
resulting estimates suggest that the ratio
364 It is true that Federal statutes are presumed
not to have extraterritorial effect, in part to ensure
that the laws of the United States respect the
interests of foreign sovereigns. But use of a global
measure for the SCC does not give extraterritorial
effect to Federal law and hence does not intrude on
such interests.
365 73 FR 44416 (July 30, 2008). EPA, ‘‘Advance
Notice of Proposed Rulemaking for Greenhouse
Gases Under the Clean Air Act, Technical Support
Document on Benefits of Reducing GHG
Emissions,’’ June 2008. www.regulations.gov.
Search for ID ‘‘EPA–HQ–OAR–2008–0318–0078.
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of domestic to global benefits varies
with key parameter assumptions. With a
3% discount rate, for example, the U.S.
benefit is about 6% of the global benefit
of GHG reductions for the ‘‘central’’
(mean) FUND results, while, for the
corresponding ‘‘high’’ estimates
associated with a higher climate
sensitivity and lower global economic
growth, the U.S. benefit is less than 4%
of the global benefit. With a 2%
discount rate, the U.S. share is about
2–5% of the global estimate. Comments
are requested on whether the share of
U.S. SCC is correlated with the discount
rate.
Based on this available evidence, an
interim domestic SCC value equal to 6%
of the global damages is proposed. This
figure is around the middle of the range
of available estimates cited above. It is
recognized that the 6% figure is
approximate and highly speculative.
Alternative approaches will be explored
before establishing improved values for
future rulemakings. However, it should
be noted that it is difficult to apportion
global benefits to different regions. For
example, impacts outside the U.S.
border can have significant welfare
implications for U.S. populations (e.g.
tourism, disaster relief) and if not
included, these omissions will lead to
an underestimation of the ‘‘domestic’’
SCC. We request comment on this issue.
ii. Filtering Existing Analyses
There are numerous SCC estimates in
the existing literature, and it is
reasonable to make use of those
estimates in order to produce a figure
for current use. A starting point is
provided by the meta-analysis in
Richard Tol, 2008.366 With that starting
point, the Administration proposes to
‘‘filter’’ existing SCC estimates by using
those that (1) are derived from peerreviewed studies; (2) do not weight the
monetized damages to one country more
than those in other countries; (3) use a
‘‘business as usual’’ climate scenario;
and (4) are based on the most recent
published version of each of the three
major integrated assessment models
(IAMs): FUND, Policy Analysis for the
Greenhouse Effect (PAGE), and DICE.
Proposal (1) is based on the view that
those studies that have been subject to
peer review are more likely to be
reliable than those that have not.
Proposal (2) avoids treating the citizens
of one nation (or different citizens
within the U.S.) differently on the basis
366 Richard Tol, The Social Cost of Carbon:
Trends, Outliers, and Catastrophes, Economics: The
Open-Access, Open-Assessment E-Journal, Vol. 2,
2008–25. https://www.economics-ejournal.org/
economics/journalarticles/2008-25 (2008). See also
EPA Docket, EPA–HQ–OAR–2009–0472.
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of income considerations, which some
may find controversial and in any event
would significantly complicate that
analysis. In addition, that approach is
consistent with the potential
compensation tests of Kaldor (1939) and
Hicks (1940), which form the
conceptual foundations of benefit-cost
analysis and use unweighted sums of
willingness to pay. Finally, this is the
approach used in rulemakings across a
variety of settings and consequently
keeps USG policy consistent across
contexts.
Proposal (3) stems from the judgment
that as a general rule, the proper way to
assess a policy decision is by comparing
the implementation of the policy against
a counterfactual state where the policy
is not implemented. In addition, our
expectation is that most policies to be
evaluated using these interim SCC
estimates will constitute sufficiently
small changes to the larger economy to
make it safe to assume that the marginal
benefits of emissions reductions will not
change between the baseline and policy
scenarios.
Proposal (4) is based on four
complementary judgments. First, the
FUND, PAGE, and DICE models now
stand as the most comprehensive and
reliable efforts to measure the economic
damages from climate change. Second,
the latest versions of the three IAMs are
likely to reflect the most recent evidence
and learning, and hence they are
presumed to be superior to those that
preceded them.367
Third, any effort to choose among
them, or to reject one in favor of the
others, would be difficult to defend at
the present time. In the absence of a
clear reason to choose among them, it is
reasonable to base the SCC on all of
them. Fourth, in light of the
uncertainties associated with the SCC, a
range of values is more representative
and the additional information offered
by different models should be taken into
account.
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iii. Use a Model-Weighted Average of
the Estimates at Each Discount Rate
We have just noted that at this time,
a strong reason to prefer any of the three
major IAMs (FUND, PAGE, and DICE)
over the others has not been identified.
To address the concern that certain
models not be given unequal weight
367 However, it is acknowledged that the most
recently published results do not necessarily repeat
prior modeling exercises with an updated model, so
valuable information may be lost, for instance,
estimates of the SCC using specific climate
sensitivities or economic scenarios. In addition,
although some older model versions were used to
produce estimates between 1996 and 2001, there
have been no significant modeling paradigm
changes since 1996.
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relative to the others, the estimates are
based on an equal weighting of the
means of the estimates from each of the
models. Among estimates that remain
after applying the filter, we begin by
taking the average of all estimates
within a model. The estimated SCC is
then calculated as the average of the
three model-specific averages. This
approach is used to ensure that models
with a greater number of published
results do not exert unequal weight on
the interim SCC estimates.
It should be noted, however, that the
resulting set of SCC estimates does not
provide information about variability
among or within models except in so far
as they have different discounting
assumptions. Comment is sought on
whether model-weighting averaging of
published estimates is appropriate for
developing interim SCC estimates.
iv. Apply a 3% Annual Growth Rate to
the Chosen SCC Values
SCC is expected to increase over time,
because future emissions are expected
to produce larger incremental damages
as physical and economic systems
become more stressed as the magnitude
of climate change increases. Indeed, an
implied growth rate in the SCC can be
produced by most of the models that
estimate economic damages caused by
increased GHG emissions in future
years. But neither the rate itself nor the
information necessary to derive its
implied value is commonly reported. In
light of the limited amount of debate
thus far about the appropriate growth
rate of the SCC, applying a rate of 3%
per year seems appropriate at this stage.
This value is consistent with the range
recommended by IPCC (2007) and close
to the latest published estimate (Hope
2008) (see EPA Docket, EPA–HQ–OAR–
2009–0472, for both citations).
(1) Discount Rates
For estimation of the benefits
associated with the mitigation of climate
change, one of the most complex issues
involves the appropriate discount rate.
OMB’s current guidance offers a
detailed discussion of the relevant
issues and calls for discount rates of 3%
and 7%. It also permits a sensitivity
analysis with low rates (1–3%) for
intergenerational problems: ‘‘If your rule
will have important intergenerational
benefits or costs you might consider a
further sensitivity analysis using a lower
but positive discount rate in addition to
calculating net benefits using discount
rates of 3 and 7 percent.’’ 368
368 See OMB Circular A–4, pp. 35–36, citing
Portney and Weyant, eds. (1999), Discounting and
Intergenerational Equity, Resources for the Future,
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49613
The choice of a discount rate,
especially over long periods of time,
raises highly contested and exceedingly
difficult questions of science,
economics, philosophy, and law. See,
e.g., William Nordhaus, The Challenge
of Global Warming (2008); Nicholas
Stern, The Economics of Climate
Change (2008); Discounting and
Intergenerational Equity (Paul Portney
and John Weyant eds. 1999), in the EPA
Docket, EPA–HQ–OAR–2009–0472.
Under imaginable assumptions,
decisions based on cost-benefit analysis
with high discount rates might harm
future generations—at least if
investments are not made for the benefit
of those generations. See Robert Lind,
Analysis for Intergenerational
Discounting, id. at 173, 176–177 (1999),
in the EPA Docket, EPA–HQ–OAR–
2009–0472. It is not clear that future
generations would be willing to trade
environmental quality for consumption
at the same rate as the current
generations. It is also possible that the
use of low discount rates for particular
projects might itself harm future
generations, by diverting resources from
private or public sector investments
with higher rates of return for future
generations. In the context of climate
change, questions of intergenerational
equity are especially important.
Because of the substantial length of
time in which CO2 and other GHG
emissions reside in the atmosphere,
choosing a high discount rate could
result in irreversible changes in CO2
concentrations, and possibly irreversible
climate changes (unless substantial
reductions in short-lived climate forcing
emissions are achieved). Even if these
changes are reversible, delaying
mitigation efforts could result in
substantially higher costs of stabilizing
CO2 concentrations. On the other hand,
using too low a discount rate in benefitcost analysis may suggest some
potentially economically unwarranted
investments in mitigation. It is also
possible that the use of low discount
rates for particular projects might itself
harm future generations, by ensuring
that resources are not used in a way that
would greatly benefit them. We invite
comment on the methods used to select
discount rates for application in
deriving SCC values, and in particular,
application of the Newell and Pizer
work on uncertainty in discount rates in
developing the SCC used in evaluating
the climate-related benefits of this
proposal. Comments are requested on
the use of the rates discussed in this
preamble and on alternative rates. We
Washington, DC. See EPA Docket, EPA–HQ–OAR–
2009–0472.
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also invite comment on how to best
address the ethical and policy concerns
in the context of selecting the
appropriate discount rate.
Reasonable arguments support the use
of a 3% discount rate. First, that rate is
among the two figures suggested by
OMB guidance, and hence it fits with
existing national policy. Second, it is
standard to base the discount rate on the
compensation that people receive for
delaying consumption, and the 3% is
close to the risk-free rate of return,
proxied by the return on long term
inflation-adjusted U.S. Treasury Bonds,
as of this writing. Although these rates
are currently closer to 2.5%, the use of
3% provides an adjustment for the
liquidity premium that is reflected in
these bonds’ returns. However, this
approach does not adjust for the
significantly longer time horizon
associated with climate change impacts.
It could also be argued that the discount
rate should be lower than 3% if the
benefits of climate mitigation policies
tend to be higher than expected in time
periods when the returns to investments
in rest of the economy are lower than
normal.
At the same time, others would argue
that a 5% discount rate can be
supported. The argument relies on
several assumptions. First, this rate can
be justified by reference to the level of
compensation for delaying
consumption, because it fits with
market behavior with respect to
individuals’ willingness to trade-off
consumption across periods as
measured by the estimated post-tax
average real returns to risky private
investments (e.g., the S&P 500). In the
climate setting, the 5% discount rate
may be preferable to the riskless rate
because the benefits to mitigation are
not known with certainty. In principal,
the correct discount rate would reflect
the variance in payoff from climate
mitigation policy and the correlation
between the payoffs of the policy and
the broader economy.369
Second, 5%, and not 3%, is roughly
consistent with estimates implied by
369 Specifically, if the benefits of the policy are
highly correlated with the returns from the broader
economy, then the market rate should be used to
discount the benefits. If the benefits are
uncorrelated with the broader economy the long
term government bond rate should be applied.
Furthermore, if the benefits are negatively
correlated with the broader economy, a rate less
than that on long term government bonds should be
used (Lind, 1982 pp. 89–90).
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inputs to the theoretically derived
Ramsey equation presented below,
which specifies the optimal time path
for consumption. That equation
specifies the optimal discount rate as
the sum of two components. The first
term (the product of the elasticity of the
marginal utility of consumption and the
growth rate of consumption) reflects the
fact that consumption in the future is
likely to be higher than consumption
today, so diminishing marginal utility
implies that the same monetary damage
will cause a smaller reduction of utility
in the future. Standard estimates of this
term from the economics literature are
in the range of 3%–5%.370 The second
component reflects the possibility that a
lower weight should be placed on utility
in the future, to account for social
impatience or extinction risk, which is
specified by a pure rate of time
preference (PRTP). A common estimate
of the PRTP is 2%, though some
observers believe that a principle of
intergenerational equity suggests that
the PRTP should be close to zero. It
follows that discount rate of 5% is near
the middle of the range of values that
are able to be derived from the Ramsey
equation.371
It is recognized that the arguments
above—for use of market behavior and
370 For example, see: Arrow KJ, Cline WR, Maler
K–G, Munasinghe M, Squitieri R, Stiglitz JE. 1996.
Intertemporal equity, discounting, and economic
efficiency. Chapter 4 in Economic and Social
Dimensions of Climate Change: Contribution of
Working Group III to the Second Assessment
Report, Summary for Policy Makers. Cambridge:
Cambridge University Press; Dasgupta P. 2008.
Discounting climate change. Journal of Risk and
Uncertainty 37:141–169; Hoel M, Sterner T. 2007.
Discounting and relative prices. Climatic Change
84:265–280; Nordhaus WD. 2008. A Question of
Balance: Weighing the Options on Global Warming
Policies. New Haven, CT: Yale University Press;
Stern N. 2008. The economics of climate change.
The American Economic Review 98(2):1–37. See
EPA Docket, EPA–HQ–OAR–2009–0472.
371 Sterner and Persson (2008) note that a
consistent treatment of the marginal utility of
consumption would require that if higher discount
rates are justified by the diminishing marginal
utility of consumption, e.g., a dollar of damages is
worth less to future generations because they have
greater income, then so-called equity weights
should be used to account for the higher value that
countries with lower income would place on a
dollar of damages relative to the U.S. This is a
consistent and logical outcome of application of the
Ramsey framework. Because the distribution of
climate change related damages is expected to be
skewed towards developing nations with lower
incomes, this can have significant implications for
estimates of total global SCC if the Ramsey
framework is used to derive discount rates. See EPA
Docket, EPA–HQ–OAR–2009–0472 for Sterner and
Persson (2008).
PO 00000
Frm 00162
Fmt 4701
Sfmt 4702
the Ramsey equation—face objections in
the context of climate change, and of
course there are alternative approaches.
In light of climate change, it is possible
that consumption in the future will not
be higher than consumption today, and
if so, the Ramsey equation will suggest
a lower figure. The historical evidence
is consistent with rising consumption
over time.372
Some critics contend that using
observed interest rates for intergenerational decisions imposes current
preferences on future generations. For
intergenerational equity, they argue that
the discount rate should be below
market rates to correct for market
distortions and inefficiencies in
intergenerational transfers of wealth
(which are presumed to compensate
future generations for damage), and to
treat generations equitably based on
ethical principles (see Broome 2008 in
the EPA Docket, EPA–HQ–OAR–2009–
0472).373
Additionally, some analyses attempt
to deal with uncertainty with respect to
interest rates over time. We explore
below how this might be done.374
(2) Proposed Interim Estimates
The application of the methodology
outlined above yields interim estimates
of the SCC that are reported in Table
III.H.6–1. These estimates are reported
separately using 3% and 5% discount
rates. The cells are empty in rows 10
and 11, because these studies did not
report estimates of the SCC at a 3%
discount rate. The model-weighted
means are reported in the final or
summary row; they are $34 per tCO2 at
a 3% discount rate and $5 per tCO2 with
a 5% discount rate.
372 However, because climate change impacts may
be outside the bounds of historical evidence,
predictions about future growth in consumption
based on past experience may be inaccurate.
373 For relevant discussion, see Arrow, K.J., W.R.
Cline, K–G Maler, M. Munasinghe, R. Squiteri,
J.E.Stiglitz, 1996. ‘‘Intertemporal equity,
discounting and economic efficiency,’’ in Climate
Change 1995: Economic and Social Dimensions of
Climate Change, Contribution of Working Group III
to the Second Assessment Report of the
Intergovernmental Panel on Climate Change. See
also Weitzman, M.L., 1999, in Portney P.R. and
Weyant J.P. (eds.), Discounting and
Intergenerational Equity, Resources for the Future,
Washington, DC. See EPA Docket, EPA–HQ–OAR–
2009–0472.
374 Richard Newell and William Pizer,
Discounting the distant future: how much do
uncertain rates increase valuations? J. Environ.
Econ. Manage. 46 (2003) 52–71. See EPA Docket,
EPA–HQ–OAR–2009–0472.
E:\FR\FM\28SEP2.SGM
28SEP2
Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules
49615
TABLE III.H.6–1—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/tCO2 IN 2007 (2007$)), BASED ON 3% AND
5% DISCOUNT RATES a
Study b
Climate Scenario
3%
.....
.....
.....
.....
.....
.....
.....
.....
Anthoff et al. 2009 ..................................
Anthoff et al. 2009 ..................................
Anthoff et al. 2009 ..................................
Link and Tol 2004 ...................................
Link and Tol 2004 ...................................
Guo et al. 2006 .......................................
Guo et al. 2006 .......................................
Guo et al. 2006 .......................................
PAGE .....
PAGE .....
DICE ......
Wahba & Hope 2006 ..............................
Hope 2006 ..............................................
Nordhaus 2008 .......................................
FUND default ..........................................
SRES A1b ...............................................
SRES A2 .................................................
No THC ...................................................
THC continues ........................................
Constant PRTP .......................................
Gollier discount 1 ....................................
Gollier discount 2 ....................................
FUND Mean ............................................
A2-scen ...................................................
.................................................................
.................................................................
Model-weighted Mean .............................
6
1
9
12
12
5
14
7
8.47
59
....................
....................
34
Model
1
2
3
4
5
6
7
8
........................
........................
........................
........................
........................
........................
........................
........................
9 ........................
10 ......................
11 ......................
Summary ..........
FUND
FUND
FUND
FUND
FUND
FUND
FUND
FUND
5%
¥1
¥1
¥1
3
2
¥1
0
¥1
0
7
7
8
5
a The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (200
