[Federal Register Volume 74, Number 186 (Monday, September 28, 2009)]
[Proposed Rules]
[Pages 49454-49789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-22516]
[[Page 49453]]
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Part II
Environmental Protection Agency
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40 CFR Parts 86 and 600
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Department of Transportation
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National Highway Traffic Safety Administration
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49 CFR Parts 531, 533, 537, et al.
Proposed Rulemaking To Establish Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate Average Fuel Economy Standards;
Proposed Rule
Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 /
Proposed Rules
[[Page 49454]]
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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
AGENCY: Environmental Protection Agency (EPA) and National Highway
Traffic Safety Administration (NHTSA).
ACTION: Proposed rule.
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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 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: [email protected].
Fax: EPA: (202) 566-1741; NHTSA: (202) 493-2251.
Mail:
[cir] 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.
[cir] 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:
[cir] 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.
[cir] 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 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: [email protected], or Assessment and Standards Division
Hotline; telephone number (734) 214-4636; e-mail address
[email protected]. 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\
[[Page 49455]]
and passenger automobiles (passenger cars) and non-passenger
automobiles (light trucks) as defined under NHTSA's CAFE
regulations.\2\ Regulated categories and entities include:
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\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 vehicle'' means a passenger car,
the term ``light-duty 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.
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NAICS Examples of potentially
Category codes \A\ regulated entities
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Industry............................ 336111 Motor vehicle
manufacturers.
336112
Industry............................ 811112 Commercial Importers of
Vehicles and Vehicle
Components.
811198
541514
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\A\ North American Industry Classification System (NAICS).
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.
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 http://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 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 http://www.whitehouse.gov/omb/fedreg/reproducible.html.
DOT's guidelines may be accessed at http://www.dot.gov/dataquality.htm.
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\3\ See 49 CFR 553.21.
\4\ Optical 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.
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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.
[[Page 49456]]
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.
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 http://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\
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\5\ See 49 CFR part 512.
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In addition, you should submit a copy from which you have deleted
the 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 http://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 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?
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 Non-GHG 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 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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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
I. Overview of Joint EPA/NHTSA National Program
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 medium-duty passenger vehicles (hereafter light-duty
vehicles), referred to as the National Program. The proposed rules 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
light-duty 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.
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\6\ President Obama Announces National Fuel Efficiency Policy,
The White House, May 19, 2009. Available at: http://www.whitehouse.gov/the_press_office/President-Obama-Announces-National-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: http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-on-national-fuel-efficiency-standards/ (Last accessed August 18, 2009).
\7\ 74 FR 24007 (May 22, 2009).
\8\ Available at: http://www.whitehouse.gov/the_press_office/Presidential_Memorandum_Fuel_Economy/ (last accessed on August
18, 2009).
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1. Building Blocks of the National Program
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 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.
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\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.
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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
[[Page 49459]]
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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\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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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\
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\12\ 549 U.S. 497 (2007).
\13\ 68 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 Bush Administration and the EPA from 2007-2008 in
response to the Supreme Court remand.
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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.
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\16\ 74 FR 18886 (Apr. 24, 2009).
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c. California Air Resources Board Greenhouse Gas Program
In 2004, the California Air Resources Board approved standards for
new light-duty 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
light-duty 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.
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\17\ 74 FR 32744 (July 8, 2009).
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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 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. Light-duty 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
[[Page 49460]]
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
medium-duty 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 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 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 light-duty vehicle GHG emissions and reduce the
country's dependence on fossil fuels by improving these vehicles' fuel
economy.
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\18\ These letters are available at http://www.epa.gov/otaq/climate/regulations.htm.
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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
light-duty 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
[[Page 49461]]
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\
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\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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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.
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 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 attribute-based 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.
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\20\ 67 FR 77015, 77021 (Dec. 16, 2002).
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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 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.
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\21\ CEI-I, 793 F.2d 1322, 1352 (D.C. Cir. 1986).
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(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.
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\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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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
[[Page 49462]]
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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\24\ 42 FR 63184, 63188 (1977).
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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 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.
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\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.
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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 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.
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\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).
\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).
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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 attribute-
based standards, there is still risk that manufacturers will rely on
downweighting to improve their fuel economy (for a given vehicle at a
given
[[Page 49463]]
footprint target) in ways that may reduce safety.
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\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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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.
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.
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\32\ 49 U.S.C. 32902(h).
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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 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 fleet-wide 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 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
[[Page 49464]]
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.
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\33\ EPCA does not provide authority for seeking to enjoin
violations of the CAFE standards.
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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 provisions\34\ 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.
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\34\ 49 U.S.C. 30120, Remedies for defects and noncompliance.
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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, 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.
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\35\ 42 U.S.C. 7521(a).
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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 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
[[Page 49465]]
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:
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\
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\36\ 70 FR 69664, 69676, November 17, 2005.
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).
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.
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\37\ See 49 U.S.C. 32904(c).
\38\ See 41 FR 38674 (Sept. 10, 1976), which is codified at 40
CFR part 600.
\39\ See 49 U.S.C. 32904(c).
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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 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.
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\40\ 74 FR 24009 (May 22, 2009).
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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
[[Page 49466]]
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 non-GHGs);
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 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 non-GHGs); 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 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
[[Page 49467]]
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 pre-production 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
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 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. Non-public (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
[[Page 49468]]
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.
---------------------------------------------------------------------------
\41\ There is no such statutory limitation with respect to light
trucks.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 sales-weighted harmonic average of the
targets applicable to each of the manufacturer's passenger cars and
light trucks. Under these proposed footprint-based 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.
---------------------------------------------------------------------------
\43\ See 49 CFR 523.2 for the exact definition of ``footprint.''
---------------------------------------------------------------------------
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, fleet-wide 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\
---------------------------------------------------------------------------
\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 passenger cars, 24.2 mpg for light trucks, and 27.6 mpg
for the combined fleet.
Table I.D.2-1--Average Required Fuel Economy (mpg) Under Proposed CAFE Standards
----------------------------------------------------------------------------------------------------------------
2011-base 2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars................................ 30.2 33.6 34.4 35.2 36.4 38.0
Light Trucks.................................. 24.1 25.0 25.6 26.2 27.1 28.3
Combined Cars & Trucks........................ 27.3 29.8 30.6 31.4 32.6 34.1
----------------------------------------------------------------------------------------------------------------
[[Page 49469]]
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\
---------------------------------------------------------------------------
\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.
Table I.D.2-2--Projected Fleet-Wide Achieved CAFE Levels Under the Proposed Footprint-Based CAFE Standards (mpg)
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars..................................................... 32.5 33.4 34.3 35.3 36.5
Light Trucks....................................................... 24.1 24.6 25.3 26.3 27.0
Combined Cars & Trucks............................................. 28.7 29.6 30.4 31.6 32.7
----------------------------------------------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\46\ 49 U.S.C. 32902(b)(4).
---------------------------------------------------------------------------
Based on NHTSA's current market forecast, the agency's estimates of
these minimum standards under the proposed MY 2012-2016 CAFE standards
(and, 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.
---------------------------------------------------------------------------
\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.
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 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
28.0............................................................... 30.9 31.6 32.4 33.5 34.9
----------------------------------------------------------------------------------------------------------------
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 include the projected use
of A/C credits by manufacturers.
---------------------------------------------------------------------------
\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.
Table I.D.2-4--Projected Fleet-Wide Emissions Compliance Levels Under the Proposed Footprint-Based CO2 Standards
(g/mi)
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars..................................................... 261 253 246 235 224
Light Trucks....................................................... 352 341 332 317 302
Combined Cars & Trucks............................................. 295 286 276 263 250
----------------------------------------------------------------------------------------------------------------
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
[[Page 49470]]
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 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars..................................................... 264 254 245 232 220
Light Trucks....................................................... 365 355 346 332 311
Combined Cars & Trucks............................................. 302 291 281 267 250
----------------------------------------------------------------------------------------------------------------
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 start-stop
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.
---------------------------------------------------------------------------
\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
---------------------------------------------------------------------------
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 light-duty 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 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 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 real-world 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
[[Page 49471]]
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.
---------------------------------------------------------------------------
\50\ 71 FR 17566 (Apr. 6, 2006).
\51\ 74 FR 14196 (Mar. 30, 2009).
---------------------------------------------------------------------------
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 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.
---------------------------------------------------------------------------
\52\ 74 FR 14407-14409 (Mar. 30, 2009).
---------------------------------------------------------------------------
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 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.
---------------------------------------------------------------------------
\53\ Production for sale in the United States.
\54\ The equations are equivalent but are specified differently
due to differences in the agencies' respective models.
---------------------------------------------------------------------------
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
[[Page 49472]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.000
[[Page 49473]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.001
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 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.3-3 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.
[[Page 49474]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.002
[[Page 49475]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.003
BILLING CODE 4910-59-C
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 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 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
[[Page 49476]]
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.
---------------------------------------------------------------------------
\55\ 49 CFR part 523.
---------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------
Example model
Vehicle type Example models footprint (sq. CO2 emissions Fuel economy
ft.) target (g/mi) target (mpg)
----------------------------------------------------------------------------------------------------------------
Example Passenger Cars
----------------------------------------------------------------------------------------------------------------
Compact car........................... Honda Fit............... 40 214 41.4
Midsize car........................... Ford Fusion............. 46 237 37.3
Fullsize car.......................... Chrysler 300............ 53 270 32.8
----------------------------------------------------------------------------------------------------------------
Example Light-Duty Trucks
----------------------------------------------------------------------------------------------------------------
Small SUV............................. 4WD Ford Escape......... 44 269 32.8
Midsize crossover..................... Nissan Murano........... 49 289 30.6
Minivan............................... Toyota Sienna........... 55 313 28.2
Large pickup truck.................... Chevy Silverado......... 67 358 24.7
----------------------------------------------------------------------------------------------------------------
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 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.
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-by-year analysis, manufacturers' likely credit transfers cannot be
reasonably estimated at this time.\56\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
[[Page 49477]]
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, $56).\58\ See Section II for a
more detailed discussion of the social cost of carbon. It is important
to note that NHTSA's CAFE standards and EPA's GHG standards will both
be in effect, and each will lead to increases in average fuel economy
and CO2 emissions reductions. The two agencies' standards
together comprise the National Program, and this discussion of costs
and benefits of NHTSA's CAFE standards does not change the fact that
both the CAFE and GHG standards, jointly, are the source of the
benefits and costs of the National Program.
---------------------------------------------------------------------------
\57\ We have developed two interim estimates of the global
social cost of carbon (SCC) ($/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%.
Table I.E.1-1--NHTSA Fuel Saved (Billion Gallons) and CO2 Emissions Avoided (mmt) Under Proposed CAFE Standards
(Without FFV Credits)
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Fuel (b. gal.)............................................ 4 9 13 16 19 62
CO2 (mmt)................................................. 44 96 137 173 206 656
----------------------------------------------------------------------------------------------------------------
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:
[[Page 49478]]
Table I.E.1-2--NHTSA Fuel Saved (Billion Gallons) and CO2 Emissions Avoided (mmt) Under Proposed CAFE Standards
(With FFV Credits)
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Fuel (b. gal.)............................................ 5 8 12 15 19 59
CO2 (mmt)................................................. 49 90 129 167 204 639
----------------------------------------------------------------------------------------------------------------
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'
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
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 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars............................................ 7.6 17.0 24.4 31.2 38.7 119.1
Light Trucks.............................................. 5.5 11.6 17.3 22.2 26.0 82.6
Combined.................................................. 13.1 28.7 41.8 53.4 64.7 201.7
----------------------------------------------------------------------------------------------------------------
Using a 7% discount rate, NHTSA estimates that the present value of
these 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 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars............................................ 6.0 13.6 19.5 25.0 31.1 95.3
Light Trucks.............................................. 4.3 9.1 13.5 17.4 20.4 64.6
Combined.................................................. 10.3 22.6 33.1 42.4 51.5 159.8
----------------------------------------------------------------------------------------------------------------
NHTSA estimates that FFV credits could reduce achieved benefits by
about 4.5%:
Table I.E.1-5a--NHTSA Discounted Benefits ($Billion) Under Proposed CAFE Standards (With FFV Credits, Using a 3
Percent Discount Rate)
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars............................................ 7.8 15.9 22.5 28.6 37.1 111.9
Light Trucks.............................................. 6.1 10.2 15.9 22.1 26.3 80.5
Combined.................................................. 13.9 26.1 38.4 50.7 63.3 192.5
----------------------------------------------------------------------------------------------------------------
Table I.E.1-5b--NHTSA Discounted Benefits ($Billion) Under Proposed CAFE Standards (With FFV Credits, Using a 7
Percent Discount Rate)
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars............................................ 6.2 12.7 18.0 23.0 29.8 89.6
Light Trucks.............................................. 4.7 7.9 12.4 17.3 20.6 63.0
Combined.................................................. 10.9 20.6 20.4 40.3 50.4 152.5
----------------------------------------------------------------------------------------------------------------
NHTSA attributes most of these benefits--about $158 billion (at a
3% discount rate and excluding consideration of FFV credits), as noted
above--to reductions in fuel consumption, valuing fuel (for societal
purposes) at the future pre-tax prices projected in the Energy
Information Administration's (EIA's) reference case forecast from
Annual Energy Outlook (AEO) 2009. The Preliminary Regulatory Impact
Analysis (PRIA) accompanying
[[Page 49479]]
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 7% Discount rate
----------------------------------------------------------------------------------------------------------------
Fuel savings......................... 61.6 billion gallons... $158.0 billion......... $125.3 billion.
CO2 emissions reductions............. 656 million metric tons $16.4 billion.......... $12.8 billion.
(mmt).
----------------------------------------------------------------------------------------------------------------
NHTSA estimates that the increases in technology application
necessary to achieve the projected improvements in fuel economy will
entail considerable monetary outlays. The agency estimates that
incremental costs for achieving its proposed standards--that is,
outlays by vehicle manufacturers over and above 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 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars............................................ 4.1 6.5 8.4 9.9 11.8 40.8
Light Trucks.............................................. 1.5 2.8 4.0 5.2 5.9 19.4
Combined.................................................. 5.7 9.3 12.5 15.1 17.6 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 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars............................................ 2.5 4.4 6.1 7.4 9.3 29.6
Light Trucks.............................................. 1.3 2.0 3.1 4.3 5.0 15.6
Combined.................................................. 3.7 6.3 9.2 11.7 14.2 45.2
----------------------------------------------------------------------------------------------------------------
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 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 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 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars..................................................... 591 735 877 979 1,127
Light Trucks....................................................... 283 460 678 882 1,020
Combined........................................................... 476 635 806 945 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 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars..................................................... 295 448 591 695 851
Light Trucks....................................................... 231 347 533 758 895
[[Page 49480]]
Combined........................................................... 271 411 571 716 866
----------------------------------------------------------------------------------------------------------------
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 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 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Cars............................ Fuel (billion 4 6 8 11 14 43
gallons).
Fuel (billion 0.1 0.1 0.2 0.3 0.3 1.0
barrels).
CO2 EQ (mmt)...... 51 74 98 137 179 539
Light Trucks.................... Fuel (billion 2 4 6 9 12 33
gallons).
Fuel (billion 0.1 0.1 0.1 0.2 0.3 0.8
barrels).
CO2 EQ (mmt)...... 30 51 77 107 143 408
Combined........................ Fuel (billion 7 10 14 19 26 76
gallons).
Fuel (billion 0.2 0.2 0.3 0.5 0.6 1.8
barrels).
CO2 EQ (mmt)...... 81 125 174 244 323 947
----------------------------------------------------------------------------------------------------------------
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 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. 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]
----------------------------------------------------------------------------------------------------------------
Model year
Discount rate -----------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
3%........................................................ $20.4 $31.7 $44.9 $63.7 $87.2 $248
7......................................................... 15.8 24.7 34.9 49.3 67.7 193
----------------------------------------------------------------------------------------------------------------
\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.
[[Page 49481]]
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]
------------------------------------------------------------------------
Amount $ value (billions)
------------------------------------------------------------------------
Fuel savings.................... 1.8 billion $193, 3% discount
barrels. rate.
$151, 7% discount
rate.
CO2 emission reductions (valued 947 MMT CO2e...... $21.0, 3% discount
assuming $20/ton CO2 in 2007). 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 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Cars...................................................... $3.5 $5.3 $7.0 $8.9 $10.7 $35.3
Trucks.................................................... 2.0 3.1 4.0 5.1 6.8 20.9
Combined.................................................. 5.4 8.4 10.9 13.9 17.5 56.1
----------------------------------------------------------------------------------------------------------------
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 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 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 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Cars............................................................... $374 $531 $663 $813 $968
Trucks............................................................. 358 539 682 886 1,213
Combined........................................................... 368 534 670 838 1,050
----------------------------------------------------------------------------------------------------------------
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 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 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,
[[Page 49482]]
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 pre-existing 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).
---------------------------------------------------------------------------
\59\ 49 U.S.C. 32903(a)(2).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\60\ 49 U.S.C. 32903(g)(4).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\61\ 49 U.S.C. 32903(f)(2).
---------------------------------------------------------------------------
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
cost-effective 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 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
[[Page 49483]]
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 lead-time 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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, on a national level,
to the California standards. Potentially, credits could be generated by
over-compliance with this baseline in one of two ways--over-compliance
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 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 fleet-average 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 vehicle-specific
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
[[Page 49484]]
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 light-duty 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
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 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
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
[[Page 49485]]
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 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 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 Light trucks Total
-----------------------------------------------------------------------------------
2008 MY 2016 MY 2008 MY 2016 MY 2008 MY 2016 MY
----------------------------------------------------------------------------------------------------------------
BMW......................... 291,796 380,804 61,324 134,805 353,120 515,609
Chrysler.................... 537,808 110,438 1,119,397 133,454 1,657,205 243,891
Daimler..................... 208,052 235,205 79,135 109,917 287,187 345,122
Ford........................ 641,281 990,700 1,227,107 1,713,376 1,868,388 2,704,075
General Motors.............. 1,370,280 1,562,791 1,749,227 1,571,037 3,119,507 3,133,827
Honda....................... 899,498 1,429,262 612,281 812,325 1,511,779 2,241,586
Hyundai..................... 270,293 437,329 120,734 287,694 391,027 725,024
Kia......................... 145,863 255,954 135,589 162,515 281,452 418,469
Mazda....................... 191,326 290,010 111,220 112,837 302,546 402,847
Mitsubishi.................. 76,701 49,697 24,028 10,872 100,729 60,569
Porsche..................... 18,909 37,064 18,797 17,175 37,706 54,240
Nissan...................... 653,121 985,668 370,294 571,748 1,023,415 1,557,416
Subaru...................... 149,370 128,885 49,211 75,841 198,581 204,726
Suzuki...................... 68,720 69,452 45,938 34,307 114,658 103,759
Tata........................ 9,596 41,584 55,584 47,105 65,180 88,689
Toyota...................... 1,143,696 1,986,824 1,067,804 1,218,223 2,211,500 3,205,048
Volkswagen.................. 290,385 476,699 26,999 99,459 317,384 576,158
-----------------------------------------------------------------------------------
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 2008 MY 2016 MY
----------------------------------------------------------------------------------------------------------------
Full-Size Car..................... 730,355 466,616 Full-Size Pickup.... 1,195,073 1,475,881
Mid-Size Car...................... 1,970,494 2,641,739 Mid-Size Pickup..... 598,197 510,580
Small/Compact Car................. 1,850,522 2,444,479 Full-Size Van....... 33,384 284,110
Mid-Size Van........ 719,529 615,349
Subcompact/Mini Car............... 599,643 1,459,138 Mid-Size MAV *...... 191,448 158,930
Small MAV........... 235,524 289,880
Luxury Car........................ 1,057,875 1,432,162 Full-Size SUV*...... 530,748 90,636
Specialty Car..................... 754,547 1,003,078 Mid-Size SUV........ 347,026 110,155
Others............................ 3,259 21,153 Small SUV........... 377,262 124,397
Full-Size CUV *..... 406,554 319,201
Mid-Size CUV........ 798,335 1,306,770
Small CUV........... 1,441,589 1,866,580
-----------------------------------------------------------------------------
Total Sales................... 6,966,695 9,468,365 .................... 6,874,669 7,152,470
----------------------------------------------------------------------------------------------------------------
* 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 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
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
[[Page 49486]]
increase in projected sales over the 2012-2015 time frame.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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
------------------------------------------------------------------------
------------------------------------------------------------------------
Full-size cars........................ 76,762 units.
Mid-size cars......................... 170,399 units.
Small/Compact cars.................... 180,249 units.
Subcompact/Mini cars.................. None.
Luxury cars........................... 100,065 units.
Specialty cars........................ 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, 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, mid-size, 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.
---------------------------------------------------------------------------
\67\ J.D. Power and Associates, Press Release, May 16, 2007.
``Rising Gas Prices Begin to Sway New-Vehicle Owners Toward Smaller
Versions of Trucks and Utility Vehicles.''
---------------------------------------------------------------------------
The same process was then applied to mid-size cars, with the change
in mid-size car sales being matched by an 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
[[Page 49487]]
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 manufacturer-segment 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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
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, 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
[[Page 49488]]
review every aspect of the agencies' analyses and comment accordingly.
---------------------------------------------------------------------------
\70\ See 49 CFR part 512.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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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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 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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 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
[[Page 49489]]
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 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.
---------------------------------------------------------------------------
\73\ A full-size pickup might be offered with various
combinations of cab style (e.g., regular, extended, crew) and box
length (e.g., 5\1/2\', 6\1/2\', 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 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.
---------------------------------------------------------------------------
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, 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:
---------------------------------------------------------------------------
\74\ 74 FR 9185 (Mar. 3, 2009)
---------------------------------------------------------------------------
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 publicly-available 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 light-duty 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
[[Page 49490]]
agencies note that manufacturers' near-term 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 attribute-based 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.
---------------------------------------------------------------------------
\75\ 49 U.S.C. 32902(a)(3)(A).
---------------------------------------------------------------------------
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 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\
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\76\ Production for sale in the United States.
\77\ The equations are equivalent but are specified differently
due to differences in the agencies' respective models.
\78\ This function is linear in fuel consumption but not in fuel
economy.
---------------------------------------------------------------------------
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.
[GRAPHIC] [TIFF OMITTED] TP28SE09.004
Because the format is linear on a gallons-per-mile basis, not on a
miles-per-gallon basis, it is plotted as fuel consumption below.
Graphically, the constrained linear form appears as shown in Figure
II.C.1-1.
BILLING CODE 4910-59-P
[[Page 49491]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.005
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 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 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
[[Page 49492]]
In the constrained linear form applied by NHTSA, this equation
takes the simplified form:
Target = MIN [MAX (c * x + d, a), b]
Where:
Target = the CO2 target value for a given footprint (in
g/mi)
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)
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.
[GRAPHIC] [TIFF OMITTED] TP28SE09.006
[[Page 49493]]
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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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 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.
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, non-attribute-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.
---------------------------------------------------------------------------
\80\ 49 U.S.C. 32902(b)(4).
---------------------------------------------------------------------------
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
[[Page 49494]]
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.
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 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
[[Page 49495]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.007
[[Page 49496]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.008
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 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 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
[[Page 49497]]
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 incentives regarding vehicle classification.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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
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.
[[Page 49498]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.009
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 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 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).
[[Page 49499]]
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
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
Average technology Average Average credit for
penetration (percent) credit for credit for combined
cars trucks fleet
----------------------------------------------------------------------------------------------------------------
2012............................................ 25 3.0 3.4 3.1
2013............................................ 40 4.8 5.4 5.0
2014............................................ 55 7.2 8.1 7.5
2015............................................ 75 9.6 10.8 10.0
2016............................................ 85 10.2 11.5 10.6
----------------------------------------------------------------------------------------------------------------
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 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 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.
[[Page 49500]]
Consideration of this report is consistent with the request by
President Obama in his January 26 memorandum to DOT.
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 low-tension piston rings, roller cam followers, improved
material coatings, more optimal thermal management, piston surface
treatments, and other improvements in the design of engine 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 direct-injection 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 direct-injection 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
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 after-treatment. 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 pre-selected, which allows for faster and
smoother shifting.
Continuously variable transmission--commonly uses V-shaped
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.
[[Page 49501]]
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 non-driving 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 higher-
strength 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.
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 starter-alternator 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 stepped-ratio 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.
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.
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\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.
---------------------------------------------------------------------------
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
[[Page 49502]]
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.
---------------------------------------------------------------------------
\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
http://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 http://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.
---------------------------------------------------------------------------
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\ 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.
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\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.
---------------------------------------------------------------------------
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 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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
[[Page 49503]]
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 potentially-limitless 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 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 high-volume 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' 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 cargo-carrying 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
[[Page 49504]]
(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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 inflation-adjusted (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\
---------------------------------------------------------------------------
\93\ Energy Information Administration, Annual Energy Outlook
2009, Revised Updated Reference Case (April 2009), Table 12.
Available at http://www.eia.doe.gov/oiaf/servicerpt/stimulus/excel/aeostimtab_12.xls (last accessed July 26, 2009).
---------------------------------------------------------------------------
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 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.
---------------------------------------------------------------------------
\94\ Energy Information Administration, Annual Energy Outlook
2008, Revised Early Release (June 2008), Table 12. Available at
http://www.eia.doe.gov/oiaf/archive/aeo08/excel/aeotab_12.xls (last
accessed September 12, 2009).
---------------------------------------------------------------------------
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.
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\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 http://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf (last accessed July 27, 2009).
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Vehicle survival assumptions--We then applied updated
values of age-specific 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.
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\
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\96\ For a description of the Survey, see http://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.
---------------------------------------------------------------------------
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
[[Page 49505]]
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 DOT-recommended 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.
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\99\ Department of Transportation, Guidance Memorandum, ``The
Value of Saving Travel Time: Departmental Guidance for Conducting
Economic Evaluations,'' Apr. 9, 1997. http://ostpxweb.dot.gov/policy/Data/VOT97guid.pdf (last accessed October 20, 2007); update
available at http://ostpxweb.dot.gov/policy/Data/VOTrevision1_2-11-03.pdf (last accessed October 20, 2007).
---------------------------------------------------------------------------
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
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\
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\100\ These estimates were developed by FHWA for use in its 1997
Federal Highway Cost Allocation Study; http://www.fhwa.dot.gov/policy/hcas/final/index.htm (last accessed July 29, 2009).
---------------------------------------------------------------------------
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 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\
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\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.
\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% domestically-produced
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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Air pollutant emissions
[cir] 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.
[cir] EPA and NHTSA estimate the economic value of the human health
benefits associated with reducing exposure to PM2.5 using a
``benefit-per-ton'' 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
[[Page 49506]]
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.
---------------------------------------------------------------------------
\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 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 vehicle travel, are assumed to be unaffected
by changes in fuel economy.
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[cir] 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$)
------------------------------------------------------------------------
------------------------------------------------------------------------
Fuel Economy Rebound Effect............................. 10%
``Gap'' between test and on-road MPG.................... 20%
Value of refueling time per ($ per vehicle-hour)........ 24.64
Annual growth in average vehicle use.................... 1.1%
Fuel Prices (2012-50 average, $/gallon):
Retail gasoline price............................... 3.77
Pre-tax gasoline price.............................. 3.40
Economic Benefits from Reducing Oil Imports ($/gallon):
``Monopsony'' Component............................. 0.00
Price Shock Component............................... 0.17
Military Security Component......................... 0.00
Total Economic Costs ($/gallon)..................... 0.17
Emission Damage Costs (2020, $/ton or $/metric ton):
Carbon monoxide..................................... 0
Volatile organic compounds (VOC).................... 1,283
Nitrogen oxides (NOX)--vehicle use.................. 5,116
Nitrogen oxides (NOX)--fuel production and 5,339
distribution.......................................
Particulate matter (PM2.5)--vehicle use............. 238,432
Particulate matter (PM2.5)--fuel production and 292,180
distribution.......................................
Sulfur dioxide (SO2)................................ 30,896
5
10
20
34
Carbon dioxide (CO2)................................ 56
Annual Increase in CO2 Damage Cost.................. 3%
External Costs from Additional Automobile Use ($/vehicle-
mile):
Congestion.......................................... 0.054
Accidents........................................... 0.023
Noise............................................... 0.001
Total External Costs................................ 0.078
External Costs from Additional Light Truck Use ($/ ..............
vehicle-mile):
[[Page 49507]]
Congestion.......................................... 0.048
Accidents........................................... 0.026
Noise............................................... 0.001
Total External Costs................................ 0.075
Discount Rates Applied to Future Benefits............... 3%, 7%
------------------------------------------------------------------------
III. EPA Proposal for Greenhouse Gas Vehicle Standards
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 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 second-phase 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.
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\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.
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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 contribute finding. Sections
III.B.1 through III.B.4 below provide more details on the legal and
scientific bases for this proposal.
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\105\ 74 FR 18886, April 24, 2009.
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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 long-term 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
[[Page 49508]]
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 Sec. 231(a)(2)), ocean-going vessels (under Sec.
213(a)(4)), and other nonroad engines and vehicle sources (also under
Sec. 213(a)(4)).
a. Light Vehicle Emissions Contribute to Greenhouse Gases and the
Threat of Climate Change
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 likely\106\ 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\
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\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 public docket for this rulemaking. Docket is EPA-OAR-
2009-0171.
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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.
---------------------------------------------------------------------------
\108\ Inventory of U.S. Greenhouse Gases and Sinks: 1990-2006.
---------------------------------------------------------------------------
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 post-combustion 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 systems, during operations, and during
decommissioning and disposal.\112\
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\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.
\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.
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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.
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\113\ 74 FR18886, April 24, 2009.
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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.
[[Page 49509]]
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 in-use
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).
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.
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\114\ 74 FR 18886 (April 24, 2009).
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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
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.
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\115\ The U.S. Climate Change Science Program (CCSP) is now
called the U.S. Global Change Research Program (GCRP).
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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 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.
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\116\ This figure includes the greenhouse gas contributions of
light vehicles, heavy duty vehicles, and remaining on-highway mobile
sources.
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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.
3. What is EPA Proposing?
a. Proposed Light-Duty Vehicle, Light-Duty Truck, and Medium-Duty
Passenger Vehicle Greenhouse Gas Emission Standards and Projected
Compliance Levels
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:
[[Page 49510]]
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 See footprint--CO2 CO2-e credits EPA 2-cycle (FTP
footprint CO2- curves in Figure \118\. and HFET test
curves for cars I.C-1 for cars cycles), with
and trucks. and Figure I.C-2 separate
for trucks. mechanisms for A/
C credits.\119\
N2O Standard: Tailpipe N2O...... Cap per vehicle... 0.010 g/mi........ None.............. EPA FTP test.
CH4 Standard: Tailpipe CH4...... Cap per vehicle... 0.030 g/mi........ None.............. EPA FTP test.
----------------------------------------------------------------------------------------------------------------
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 conditioning-related credits for
MY2012-2016 vehicles such that the average credit earned is about 11
grams per mile CO2-equivalent in 2016.
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\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\ CO2-e refers to CO2-equivalent, and
is a metric 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.
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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 use-weighted 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.
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\120\ 74 FR 14196.
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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 CO2-footprint 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.
[[Page 49511]]
Table III.A.3-2--Projected Fleetwide CO[ihel2] Emissions Values (grams per mile)
----------------------------------------------------------------------------------------------------------------
Projected
CO[ihel2]
emissions Projected Projected Projected
Model year for the Projected TLAAS CO[ihel2] Projected A/ 2-cycle
footprint- FFV credit credit emissions C credit CO[ihel2]
based emissions
standard
----------------------------------------------------------------------------------------------------------------
2011.............................. ........... ........... ........... (325) ........... (325)
2012.............................. 295 6 0.3 302 3.1 305
2013.............................. 286 5.7 0.2 291 5.0 296
2014.............................. 276 5.4 0.2 281 7.5 289
2015.............................. 263 4.1 0.1 267 10.0 277
2016.............................. 250 0 0 250 10.6 261
----------------------------------------------------------------------------------------------------------------
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 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, 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 CO[ihel2] Standard
[(In million 2007 $s) [Note: B = unquantified benefits]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020 2030 2040 2050 NPV, 3% NPV, 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Quantified Annual Costs \a\............................. -$25,100 -$72,500 -$105,700 -$146,100 -$1,287,600 -$529,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits from Reduced GHG Emissions at each assumed SCC value:
--------------------------------------------------------------------------------------------------------------------------------------------------------
SCC 5%.............................................. 1,200 3,300 5,700 9,500 69,200 28,600
SCC 5% Newell-Pizer................................. 2,500 6,600 11,000 19,000 138,400 57,100
SCC from 3% and 5%.................................. 4,700 12,000 22,000 36,000 263,000 108,500
SCC 3%.............................................. 8,200 22,000 38,000 63,000 456,900 188,500
SCC 3% Newell-Pizer................................. 14,000 36,000 63,000 100,000 761,400 314,200
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Other Quantified Externalities
--------------------------------------------------------------------------------------------------------------------------------------------------------
PM[ihel2].[ihel5] Related Benefits \b\ \c\ \d\.......... 1,400 3,000 4,600 6,700 59,800 26,300
Energy Security Impacts (price shock)................... 2,300 4,800 6,200 7,800 85,800 38,800
Reduced Refueling....................................... 2,500 4,900 6,400 8,000 89,600 41,000
Value of Increased Driving \e\.......................... 4,900 10,000 13,600 18,000 184,700 82,700
Accidents, Noise, Congestion............................ -2,400 -4,900 -6,300 -7,900 -88,200 -40,200
--------------------------------------------------------------------------------------------------------------------------------------------------------
Quantified Net Benefits at each assumed SCC value:
--------------------------------------------------------------------------------------------------------------------------------------------------------
SCC 5%.............................................. 35,000 93,600 135,900 188,200 1,688,500 706,700
SCC 5% Newell-Pizer................................. 36,300 96,900 141,200 197,700 1,757,700 735,200
SCC from 3% and 5%.................................. 38,500 102,300 152,200 214,700 1,882,300 786,600
[[Page 49512]]
SCC 3%.............................................. 42,000 112,300 168,200 241,700 2,076,200 866,600
SCC 3% Newell-Pizer................................. 47,800 126,300 193,200 278,700 2,380,700 992,300
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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 benefit-per-ton
values that reflect only human health impacts associated with reductions in PM[ihel2].[ihel5] exposure. Ideally, human health and environmental
benefits would be based on changes in ambient PM[ihel2].[ihel5] 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[ihel2].[ihel5]-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[ihel2].[ihel5]-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.
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.
To account for additional lead-time concerns for various
manufacturers of typically higher performance vehicles, EPA is
proposing a Temporary Lead-time 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 the proposed
standards. EPA has also analyzed a variety of other impacts of the
standards, ranging from the standards' effects on emissions of non-GHG
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
[[Page 49513]]
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 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 Light-Duty 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 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 light-duty trucks and MDPVs as ``light trucks'' or
``trucks.'' \121\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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
[[Page 49514]]
250 grams/mile of CO2 in model year (MY) 2016. This includes
CO2-equivalent 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
lead-time 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.
---------------------------------------------------------------------------
\122\ See CAA section 202(a)(2).
---------------------------------------------------------------------------
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 CO2-equivalent 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 fleet-wide 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\
---------------------------------------------------------------------------
\123\ 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.
Table III.B.1-1--Estimated Fleet CO2-Equivalent Levels Corresponding to
the Proposed Standards for Cars
------------------------------------------------------------------------
Model year
Manufacturer ---------------------------------------
2012 2013 2014 2015 2016
------------------------------------------------------------------------
BMW............................. 265 257 249 238 227
Chrysler........................ 266 259 251 242 231
Daimler......................... 270 263 257 245 234
Ford............................ 266 259 251 239 228
General Motors.................. 266 258 250 239 228
Honda........................... 259 251 244 232 221
Hyundai......................... 260 252 244 233 221
Kia............................. 262 253 246 235 223
Mazda........................... 258 250 243 231 220
Mitsubishi...................... 255 247 240 228 217
Nissan.......................... 263 255 247 236 225
Porsche......................... 242 234 227 215 204
Subaru.......................... 252 244 237 225 214
Suzuki.......................... 244 236 229 217 206
Tata............................ 286 278 271 259 248
Toyota.......................... 257 250 242 231 220
Volkswagen...................... 254 246 239 228 217
------------------------------------------------------------------------
Table III.B.1-2--Estimated Fleet CO2-Equivalent Levels Corresponding to
the Proposed Standards for Light Trucks
------------------------------------------------------------------------
Model year
Manufacturer ---------------------------------------
2012 2013 2014 2015 2016
------------------------------------------------------------------------
BMW............................. 334 324 313 298 283
Chrysler........................ 349 339 329 315 300
Daimler......................... 346 334 323 308 293
Ford............................ 363 352 343 329 314
General Motors.................. 372 361 351 337 322
Honda........................... 333 322 311 295 280
Hyundai......................... 330 320 308 293 278
Kia............................. 341 330 319 303 288
Mazda........................... 321 311 300 286 271
Mitsubishi...................... 320 310 299 284 269
Nissan.......................... 352 341 332 318 303
Porsche......................... 338 327 316 301 286
Subaru.......................... 319 308 297 282 267
Suzuki.......................... 324 313 301 286 271
Tata............................ 326 316 305 289 275
Toyota.......................... 342 332 320 305 291
[[Page 49515]]
Volkswagen...................... 344 333 322 307 292
------------------------------------------------------------------------
These estimates were aggregated based on projected production
volumes into the fleet-wide averages for cars and trucks (Table
III.B.1-3).\124\
---------------------------------------------------------------------------
\124\ Due to rounding during calculations, the estimated fleet-
wide CO2-equivalent levels may vary by plus or minus 1
gram.
Table III.B.1-3--Estimated Fleet-wide CO2-Equivalent Levels
Corresponding to the Proposed Standards
------------------------------------------------------------------------
Cars Trucks
------------------------------------------------------------------------
Model year CO2 (g/mi) CO2 (g/mi)
------------------------------------------------------------------------
2012.................................... 261 352
2013.................................... 254 341
2014.................................... 245 331
2015.................................... 234 317
2016 and later.......................... 224 303
------------------------------------------------------------------------
As shown in Table III.B.1-3, fleet-wide 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 CO2-equivalent 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 Fleet-wide Combined CO2-Equivalent Levels
Corresponding to the Proposed Standards
------------------------------------------------------------------------
Combined car
--------------------------------------------------------- and truck
---------------
Model year CO2 (g/mi)
------------------------------------------------------------------------
2012.................................................... 295
2013.................................................... 286
2014.................................................... 276
2015.................................................... 263
2016.................................................... 250
------------------------------------------------------------------------
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 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.
---------------------------------------------------------------------------
\125\ See 65 FR 6698 (February 10, 2000).
---------------------------------------------------------------------------
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
[[Page 49516]]
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.
---------------------------------------------------------------------------
\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 to
fuel economy measurement and added the HFET.\126\ 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.
\127\ See 71 FR 77872, December 27, 2006.
---------------------------------------------------------------------------
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
CO2-equivalent emissions would add less than one percent to
the overall CO2-equivalent 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.
---------------------------------------------------------------------------
\128\ See 49 CFR part 523.
---------------------------------------------------------------------------
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]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lower Upper
Model year a b c d constraint constraint
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012.................................................... 242 313 4.72 48.8 41 56
2013.................................................... 234 305 4.72 40.8 41 56
2014.................................................... 227 297 4.72 33.2 41 56
2015.................................................... 215 286 4.72 22.0 41 56
2016 and later.......................................... 204 275 4.72 10.9 41 56
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 49517]]
Table III.B.2-2--Parameter Values for Trucks
[For CO2 gram per mile targets]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lower Upper
Model year a b c d constraint constraint
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012.................................................... 298 399 4.04 132.6 41 66
2013.................................................... 287 388 4.04 121.6 41 66
2014.................................................... 276 377 4.04 110.3 41 66
2015.................................................... 261 362 4.04 95.2 41 66
2016 and later.......................................... 246 347 4.04 80.4 41 66
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 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 footprint-
based program will harmonize EPA's proposed program and the proposed
CAFE program as a single national 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
attribute-based approach for regulating tailpipe CO2
emissions.
BILLING CODE 4910-59-P
[[Page 49518]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.010
[[Page 49519]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.011
BILLING CODE 4910-59-C
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 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 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 light-duty
vehicle Tier 2 program, there are
[[Page 49520]]
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,
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 model-level 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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
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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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
[[Page 49521]]
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 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
carry-forward 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
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 five-year 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 heavy-
duty 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
[[Page 49522]]
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 carry-forward provision for this
reason.\132\
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\131\ See 65 FR 6745 (February 10, 2000).
\132\ See 71 FR 8427 (February 26, 2007).
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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 carry-forward of credits and three year carry-back. Transfers
of credits across a manufacturer's car and truck averaging 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 non-compliance
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 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
[[Page 49523]]
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 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 2013 2014 2015
----------------------------------------------------------------------------------------------------------------
Sales Volume........................ 40,000 30,000 20,000 10,000
----------------------------------------------------------------------------------------------------------------
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 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 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 high-
emitting vehicles from the primary fleet. Absent this restriction,
manufacturers would be able to choose to use the TLAAS for these
vehicles and also be
[[Page 49524]]
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 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 CO2-
equivalent 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.
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\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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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 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 per-
vehicle 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 no-backsliding standard.
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\134\ N2O has a GWP of 310 according to the IPCC
Second Assessment Report (SAR).
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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 warm-up 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
[[Page 49525]]
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.
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\135\ Memo to docket ``Deriving the standard from EPA's MOVES
model emission factors, '' December 2007.
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While EPA believes that manufacturers will likely be able to
acquire and install N2O analytical 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.
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\136\ CH4 has a GWP of 21 according to the IPCC
Second Assessment Report (SAR).
---------------------------------------------------------------------------
EPA is proposing a CH4 emission standard of 0.030 g/mi
as measured on the FTP, to apply beginning with model 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.
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\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)).
---------------------------------------------------------------------------
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 light-duty 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
[[Page 49526]]
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.
---------------------------------------------------------------------------
\138\ Memo to docket ``Deriving the standard from EPA's MOVES
model emission factors, '' December 2007.
---------------------------------------------------------------------------
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.
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 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.
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
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
[[Page 49527]]
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.
---------------------------------------------------------------------------
\139\ See Chapter 2, section 2.2.1.2 of the 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
CO2-equivalent impact of 13.6 g/mi.\140\ Due 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 leak-tight 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\
---------------------------------------------------------------------------
\140\ The global warming potentials (GWP) used in the NPRM
analysis are consistent with 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).
---------------------------------------------------------------------------
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 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.
[[Page 49528]]
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 lower-GWP 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.
---------------------------------------------------------------------------
\143\ Team 1-Refrigerant Leakage Reduction: Final Report to
Sponsors, SAE, 2007.
---------------------------------------------------------------------------
EPA is proposing that a manufacturer wishing to earn A/C Leakage
Credits would compare the components of its A/C system with a set of
leakage-reduction 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 real-
world 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 grams-per-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 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.
---------------------------------------------------------------------------
\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 [hellip] indicate that use of CO2 and HFC
152a with risk mitigation technologies does not pose greater risks
compared to other substitutes'').
---------------------------------------------------------------------------
Within the timeframe of 2012-2016, EPA is not expecting the use of
low-GWP 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
[[Page 49529]]
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. Design-based 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 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 efficiency-related
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 A/C Efficiency
Technology description CO2 emissions credit (g/mi CO2)
(percent)
------------------------------------------------------------------------
Reduced reheat, with externally- 30 1.7
controlled, variable-displacement
compressor.......................
Reduced reheat, with externally- 20 1.1
controlled, fixed-displacement or
pneumatic variable-displacement
compressor.......................
Default to recirculated air 30 1.7
whenever ambient temperature is
greater than 75 [deg]F...........
Blower motor and cooling fan 15 0.9
controls which limit waste energy
(e.g. pulse width modulated power
controller)......................
Electronic expansion valve........ 20 1.1
Improved evaporators and 20 1.1
condensers (with system analysis
on each component indicating a
COP improvement greater than 10%,
when compared to previous design)
Oil Separator..................... 10 0.6
------------------------------------------------------------------------
[[Page 49530]]
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/C-related 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.
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/C-related 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[deg]F required by the SC03 would be appropriate. A cell temperature
of 85[deg]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
[[Page 49531]]
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 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 dual-fueled 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 (Sec.
600.510-12).
---------------------------------------------------------------------------
\146\ 49 U.S.C 32905.
\147\ See 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.
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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 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 flexible-fuel 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:
---------------------------------------------------------------------------
\149\ 49 U.S.C 32905 (b).
[GRAPHIC] [TIFF OMITTED] TP28SE09.012
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.
[[Page 49532]]
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.
---------------------------------------------------------------------------
\150\ 49 U.S.C 32905 (c).
\151\ 49 U.S.C 32905 (d).
\152\ 49 U.S.C section 32905 (c).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\153\ 49 U.S.C section 32906 (a).
Table III.C.2-1--FFV CO2 Standard Credit Limits (g/mile)
------------------------------------------------------------------------
Model year Cars Trucks
------------------------------------------------------------------------
2012.............................................. 9.8 17.9
2013.............................................. 9.3 17.1
2014.............................................. 8.9 16.3
2015.............................................. 6.9 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 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 x 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 x 0.10) + (350 x 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 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 top-down 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 on-board 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
[[Page 49533]]
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.
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 phase-
down 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 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.
---------------------------------------------------------------------------
\154\ See 65 FR 6746, February 10, 2000.
---------------------------------------------------------------------------
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
[[Page 49534]]
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 real-world 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 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 in-use 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.
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
high-speed 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.
---------------------------------------------------------------------------
\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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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,
[[Page 49535]]
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/C-related 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 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
5-cycle 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 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 on-road 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 model-specific 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
[[Page 49536]]
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
over-compliance 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------
Light trucks with a LVW
Passenger cars and of 3,751 or more and a
Model year light trucks with an GVWR of up to 8,500 lbs
LVW of 0-3,750 lbs plus medium-duty
passenger vehicles
----------------------------------------------------------------------------------------------------------------
2009.......................................................... 321 437
2010.......................................................... 299 418
2011.......................................................... 265 388
----------------------------------------------------------------------------------------------------------------
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 light-truck 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
[[Page 49537]]
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
EPA is also proposing two additional early credit pathways
manufacturers could select. Pathways 3 and 4 incorporate credits based
on over-compliance 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 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 CAFE-based 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.
---------------------------------------------------------------------------
\158\ 74 FR 14196, March 30, 2009.
Table III.C.5-2--CAFE Equivalent Baselines CO2 Emissions Levels for
Early Credit Generation
------------------------------------------------------------------------
Model year Cars Trucks
------------------------------------------------------------------------
2009............................ 323............... 381.*
2010............................ 323............... 376.*
2011............................ Footprint-based Footprint-based
standard. standard.
------------------------------------------------------------------------
* 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
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\
---------------------------------------------------------------------------
\159\ 62 FR 31211, June 6, 1997.
\160\ 62 FR 31212, June 6, 1997.
---------------------------------------------------------------------------
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
[[Page 49538]]
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................... --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.
Pathway 1: California-based --Manufacturers earn credits based
Credits for National Fleet.. 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.
Pathway 2: California-based --Same as Pathway 1, but
Credits for vehicles sold in manufacturers only includes
California plus CAA 177 States. vehicles sold in California and CAA
177 States in the fleet average
calculation.
Pathway 3: Pathway 2 plus CAFE- --Manufacturer earns credits as
based Credits outside of provided by Pathway 2: California-
California plus CAA 177 States. 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.
Pathway 4: Only CAFE-based Credits --Manufacturer elects to only earn
outside of California plus CAA CAFE-based credits for vehicles
177 States. 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.
------------------------------------------------------------------------
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 California-based pathway. For
example, the MY 2009 California-based program car 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
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,
[[Page 49539]]
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.
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,
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 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
[[Page 49540]]
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 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 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 light-duty 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
[[Page 49541]]
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 packages likely to be applied at the same time by a
manufacturer. In this section, the overall effectiveness of the
technology packages vis-[agrave]-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 6-percent-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 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.
[[Page 49542]]
Table III.D.1-1--Vehicle Groupings \a\
------------------------------------------------------------------------
Vehicle Vehicle Vehicle
Vehicle description type description type
------------------------------------------------------------------------
Large SUV (Car) V8+ OHV........ 13 Subcompact Auto 1
I4.
Large SUV (Car) V6 4v.......... 16 Large Pickup V8+ 19
DOHC.
Large SUV (Car) V6 OHV......... 12 Large Pickup V8+ 14
SOHC 3v.
Large SUV (Car) V6 2v SOHC..... 9 Large Pickup V8+ 13
OHV.
Large SUV (Car) I4 and I5...... 7 Large Pickup V8+ 10
SOHC.
Midsize SUV (Car) V6 2v SOHC... 8 Large Pickup V6 18
DOHC.
Midsize SUV (Car) V6 S/DOHC 4v. 5 Large Pickup V6 12
OHV.
Midsize SUV (Car) I4........... 7 Large Pickup V6 11
SOHC 2v.
Small SUV (Car) V6 OHV......... 12 Large Pickup I4 S/ 7
DOHC.
Small SUV (Car) V6 S/DOHC...... 4 Small Pickup V6 12
OHV.
Small SUV (Car) I4............. 3 Small Pickup V6 8
2v SOHC.
Large Auto V8+ OHV............. 13 Small Pickup I4.. 7
Large Auto V8+ SOHC............ 10 Large SUV V8+ 17
DOHC.
Large Auto V8+ DOHC, 4v SOHC... 6 Large SUV V8+ 14
SOHC 3v.
Large Auto V6 OHV.............. 12 Large SUV V8+ OHV 13
Large Auto V6 SOHC 2/3v........ 5 Large SUV V8+ 10
SOHC.
Midsize Auto V8+ OHV........... 13 Large SUV V6 S/ 16
DOHC 4v.
Midsize Auto V8+ SOHC.......... 10 Large SUV V6 OHV. 12
Midsize Auto V7+ DOHC, 4v SOHC. 6 Large SUV V6 SOHC 9
2v.
Midsize Auto V6 OHV............ 12 Large SUV I4/.... 7
Midsize Auto V6 2v SOHC........ 8 Midsize SUV V6 12
OHV.
Midsize Auto V6 S/DOHC 4v...... 5 Midsize SUV V6 2v 8
SOHC.
Midsize Auto I4................ 3 Midsize SUV V6 S/ 5
DOHC 4v.
Compact Auto V7+ S/DOHC........ 6 Midsize SUV I4 S/ 7
DOHC.
Compact Auto V6 OHV............ 12 Small SUV V6 OHV. 12
Compact Auto V6 S/DOHC 4v...... 4 Minivan V6 S/DOHC 16
Compact Auto I5................ 7 Minivan V6 OHV... 12
Compact Auto I4................ 2 Minivan I4....... 7
Subcompact Auto V8+ OHV........ 13 Cargo Van V8+ OHV 13
Subcompact Auto V8+ S/DOHC..... 6 Cargo Van V8+ 10
SOHC.
Subcompact Auto V6 2v SOHC..... 8 Cargo Van V6 OHV. 12
Subcompact Auto I5/V6 S/DOHC 4v 4 ................. .........
------------------------------------------------------------------------
\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 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 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
[[Page 49543]]
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 CO2-reducing 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 AC-related 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 cost-
effective 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 Incremental
potential compliance costs
------------------------------------------------------------------------
A/C refrigerant leakage 7.5 g/mi \161\....... $17
reduction.
A/C efficiency improvements... 5.7 g/mi............. 53
------------------------------------------------------------------------
Table III.D.2-2 A/C Related Tech- nology Penetration and Credit Levels
Expected To Be Earned
------------------------------------------------------------------------
Technology Average
penetration credit over
(Percent) entire fleet
------------------------------------------------------------------------
2012.................................... 25 3.1
2013.................................... 40 5.0
2014.................................... 60 7.5
2015.................................... 80 10.0
2016.................................... 85 10.6
------------------------------------------------------------------------
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 ``packages'' to capture synergistic aspects and
reflect progressively larger CO2 reductions with additions
or 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 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 sales-weighted 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
[[Page 49544]]
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 lumped-
parameter technique to determine these adjustment factors. The results
from this approach were then applied directly to the vehicle packages.
The lumped-parameter 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
------------------------------------------------------------------------
Reduction in
Transmission combined
Engine technology technology effectiveness
(percent)
------------------------------------------------------------------------
Intake cam phasing.............. 5 speed automatic.. 0.5
Coupled cam phasing............. 5 speed automatic.. 0.5
Coupled cam phasing............. Aggressive shift 0.5
logic.
Cylinder deactivation........... 5 speed automatic.. 1.0
Cylinder deactivation........... Aggressive shift 0.5
logic.
------------------------------------------------------------------------
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.
[[Page 49545]]
Table III.D.3-2--CO2 Reducing Technology Vehicle Packages for a Large Car Effectiveness and Costs in 2016
[Costs in 2007 dollars]
----------------------------------------------------------------------------------------------------------------
Transmission CO2 Package
Engine technology technology Additional technology reduction cost
----------------------------------------------------------------------------------------------------------------
3.3L V6............................. 4 speed automatic...... None................... Baseline
-------------------------
3.0L V6 + GDI + CCP................. 6 speed automatic...... 3% Mass Reduction...... 17.9% $1,022
3.0L V6 + GDI + CCP + Deac.......... 6 speed automatic...... 5% Mass Reduction...... 20.6 1,280
3.0L V6 + GDI + CCP + Deac.......... 6 speed DCT............ 10% Mass Reduction 34.2 2,108
Start-Stop.
2.2L I4 + GDI + Turbo + DCP......... 6 speed DCT............ 10% Mass Reduction 34.3 2,245
Start-Stop.
----------------------------------------------------------------------------------------------------------------
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 heavy-duty 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 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 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, 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, 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 emission-reducing 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
[[Page 49546]]
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, 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 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
[[Page 49547]]
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 over-
estimating 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 cost-effectiveness 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
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 cost-effectiveness 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 cost-effectiveness
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 cost-effectiveness 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:
[GRAPHIC] [TIFF OMITTED] TP28SE09.013
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 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 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 manufacturer-based net cost-
effectiveness in the analyses performed in support of this proposed
rule. Comments are requested on the benefit of including an increase
[[Page 49548]]
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 manufacturer-based net cost-
effectiveness for the various technology packages.
EPA requests comment on the use of manufacturer-based net cost-
effectiveness to rank CO2 emission reduction technologies in
the context of evaluating alternative fleet average standards for this
rule. EPA believes this manufacturer-based net cost-effectiveness
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 2-mode 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]
--------------------------------------------------------------------------------------------------------------------------------------------------------
6 Speed or Dual clutch
GDI GDI+ deac GDI+ turbo Diesel CV trans trans Start-stop Hybrid
--------------------------------------------------------------------------------------------------------------------------------------------------------
BMW............................................. 6.7 0.0 0.0 0.0 98.8 0.8 0.0 0.1
Chrysler........................................ 0.0 0.0 0.0 0.0 27.9 0.0 0.0 0.0
Daimler......................................... 6.2 0.0 0.0 6.2 74.7 11.4 0.0 0.0
Ford............................................ 0.6 0.0 0.0 0.0 28.1 0.0 0.0 0.0
General Motors.................................. 3.3 0.0 0.0 0.0 13.7 0.0 0.1 0.1
Honda........................................... 1.2 0.0 0.0 0.0 4.2 0.0 0.0 2.1
Hyundai......................................... 0.0 0.0 0.0 0.0 4.9 0.0 0.0 0.0
Kia............................................. 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0
Mazda........................................... 11.8 0.0 0.0 0.0 37.1 0.0 0.0 0.0
Mitsubishi...................................... 0.0 0.0 0.0 0.0 76.1 0.0 0.0 0.1
Nissan.......................................... 17.7 0.0 0.0 0.0 33.3 0.0 0.0 0.0
Porsche......................................... 0.0 0.0 0.0 0.0 3.9 0.0 0.0 0.0
Subaru.......................................... 0.0 0.0 0.0 0.0 29.0 0.0 0.0 0.0
Suzuki.......................................... 0.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0
Tata............................................ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Toyota.......................................... 7.5 0.0 0.0 0.0 30.6 0.0 0.0 12.8
Volkswagen...................................... 52.2 0.0 0.0 0.1 82.8 10.9 0.0 0.0
Overall......................................... 6.4 0.0 0.0 0.1 27.1 0.6 0.0 2.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 49549]]
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 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]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mass
GDI GDI+ deac GDI+ turbo 6 Speed or Dual clutch Start-stop Hybrid reduction
CV trans trans (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
BMW............................................. 7.3 11.1 0.0 86.3 11.1 11.1 0.1 0.5
Chrysler........................................ 0.0 0.0 0.0 27.9 0.0 0.0 0.0 0.0
Daimler......................................... 16.4 10.3 14.3 45.8 36.0 24.6 0.0 0.9
Ford............................................ 0.6 0.0 0.0 28.1 0.0 0.0 0.0 0.0
General Motors.................................. 3.3 0.0 0.0 13.7 0.0 0.1 0.1 0.0
Honda........................................... 1.2 0.0 0.0 4.2 0.0 0.0 2.1 0.0
Hyundai......................................... 0.0 0.0 0.0 4.9 0.0 0.0 0.0 0.0
Kia............................................. 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.0
Mazda........................................... 11.8 0.0 0.0 37.1 0.0 0.0 0.0 0.0
Mitsubishi...................................... 0.0 2.2 0.0 76.0 2.2 2.2 0.1 0.0
Nissan.......................................... 17.7 0.0 0.0 33.3 0.0 0.0 0.0 0.0
Porsche......................................... 0.0 25.0 23.2 0.0 48.2 37.1 0.0 1.2
Subaru.......................................... 0.0 0.0 0.0 29.0 0.0 0.0 0.0 0.0
Suzuki.......................................... 4.5 0.0 0.0 100.0 0.0 0.0 0.0 0.0
Tata............................................ 14.5 60.9 0.0 14.5 60.9 60.9 0.0 2.6
Toyota.......................................... 7.5 0.0 0.0 30.6 0.0 0.0 12.8 0.0
Volkswagen...................................... 51.2 6.9 11.8 60.8 29.6 18.7 0.0 0.3
Overall......................................... 6.7 1.2 0.8 25.4 2.6 2.0 2.8 0.1
Increase over 2008 MY........................... 0.3 1.2 0.8 -1.7 2.0 2.0 0.0 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 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.
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
[[Page 49550]]
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]
--------------------------------------------------------------------------------------------------------------------------------------------------------
6 Speed Dual clutch Mass
GDI GDI+ deac GDI+ turbo auto trans trans Start-stop Hybrid reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
BMW............................................. 4 35 47 15 71 71 14 5
Chrysler........................................ 51 28 3 37 51 51 0 6
Daimler......................................... 3 44 39 11 73 72 13 5
Ford............................................ 29 39 13 19 67 67 0 6
General Motors.................................. 34 26 7 13 55 55 0 5
Honda........................................... 24 1 2 10 22 22 2 2
Hyundai......................................... 28 3 14 3 43 43 0 3
Kia............................................. 37 0 5 7 35 35 0 3
Mazda........................................... 54 2 16 31 43 43 0 4
Mitsubishi...................................... 65 2 7 22 66 66 0 6
Nissan.......................................... 29 26 5 34 57 56 1 5
Porsche......................................... 7 36 49 10 70 70 15 4
Subaru.......................................... 46 4 14 0 64 51 0 4
Suzuki.......................................... 66 5 8 9 69 69 0 4
Tata............................................ 4 81 0 14 70 70 15 6
Toyota.......................................... 37 2 0 30 33 16 13 2
Volkswagen...................................... 9 26 58 12 72 70 15 4
Overall......................................... 30 18 10 19 49 45 4 4
Increase over 2011 CAFE......................... 24 17 9 -7 46 43 1 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 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,
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.
BILLING CODE 4910-59-P
[[Page 49551]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.014
[[Page 49552]]
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 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 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.
[[Page 49553]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.015
BILLING CODE 4910-59-C
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 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 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
[[Page 49554]]
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 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 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.
[[Page 49555]]
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 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 air-conditioning systems.\163\
---------------------------------------------------------------------------
\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 ($78x85%=$66).
Table III.D.6-4--Cost of Technology per Vehicle in 2016 ($2007)
----------------------------------------------------------------------------------------------------------------
2011 MY CAFE standards Proposed 2016 CO2 standards
-----------------------------------------------------------------------------
Cars Trucks All Cars Trucks All
----------------------------------------------------------------------------------------------------------------
BMW............................... $319 $479 $361 $1,701 $1,665 $1,691
Chrysler.......................... 7 125 59 1,331 1,505 1,408
Daimler........................... 431 632 495 1,631 1,357 1,543
Ford.............................. 28 211 109 1,435 1,485 1,457
General Motors.................... 28 136 73 969 1,782 1,311
Honda............................. 0 0 0 606 695 633
Hyundai........................... 0 76 14 739 1,680 907
Kia............................... 0 48 8 741 1,177 812
Mazda............................. 0 0 0 946 1,030 958
Mitsubishi........................ 96 322 123 1,067 1,263 1,090
Nissan............................ 0 19 6 1,013 1,194 1,064
Porsche........................... 535 1,074 706 1,549 666 1,268
Subaru............................ 64 100 77 903 1,329 1,057
Suzuki............................ 99 231 133 1,093 1,263 1,137
Tata.............................. 691 1,574 1,161 1,270 674 952
Toyota............................ 0 0 0 600 436 546
Volkswagen........................ 269 758 354 1,626 949 1,509
Overall........................... 47 141 78 968 1,214 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 could utilize the proposed debit carry-
forward 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?
Two alternative sets of CO2 standards were considered.
One set would reduce
[[Page 49556]]
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 6% per
year Proposed year
------------------------------------------------------------------------
BMW.................................... 245 241 222
Chrysler............................... 266 262 241
Daimler................................ 257 253 233
Ford................................... 270 266 245
General Motors......................... 272 268 247
Honda.................................. 243 239 219
Hyundai................................ 235 231 212
Kia.................................... 237 234 215
Mazda.................................. 231 227 208
Mitsubishi............................. 226 223 204
Nissan................................. 251 247 227
Porsche................................ 234 230 210
Subaru................................. 237 233 213
Suzuki................................. 227 223 203
Tata................................... 267 263 241
Toyota................................. 247 243 223
Volkswagen............................. 233 230 211
Overall................................ 254 250 230
------------------------------------------------------------------------
Tables III.D.7-2 and III.D.7-3 show the technology penetration
levels for the 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mass
GDI GDI+ deac GDI+ turbo 6 Speed Dual clutch Start-stop Hybrid reduction
auto trans trans (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
BMW............................................. 4% 35% 47% 15% 71% 71% 14% 5
Chrysler........................................ 47 25 3 33 48 48 0 5
Daimler......................................... 3 44 39 11 73 72 13 5
Ford............................................ 33 32 13 23 61 61 0 5
General Motors.................................. 33 25 7 19 48 48 0 5
Honda........................................... 20 1 0 6 19 19 2 2
Hyundai......................................... 27 2 12 2 39 39 0 3
Kia............................................. 31 0 4 1 34 34 0 2
Mazda........................................... 34 2 16 10 43 43 0 3
Mitsubishi...................................... 65 2 7 28 60 60 0 6
Nissan.......................................... 34 22 2 40 51 51 1 5
Porsche......................................... 7 36 49 10 70 70 15 4
Subaru.......................................... 46 4 14 10 54 46 0 3
Suzuki.......................................... 72 5 2 15 63 63 0 4
Tata............................................ 4 81 0 14 70 70 15 6
Toyota.......................................... 25 2 0 30 33 5 13 1
Volkswagen...................................... 9 26 58 12 72 70 15 4
Overall......................................... 28 17 9 20 45 40 4 4
Increase over 2011 CAFE......................... 21 15 9 -5 42 38 1 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table III.D.7-3--Technology Penetration--6% per Year Alternative Standards in 2016: Cars and Trucks Combined
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weight
GDI GDI+ deac GDI+ turbo 6 Speed Dual clutch Start-stop Hybrid reduction
auto trans trans (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
BMW............................................. 4% 35% 47% 15% 71% 71% 14% 5
Chrysler........................................ 29 50 6 4 85 85 0 8
Daimler......................................... 3 44 39 11 73 72 13 5
Ford............................................ 8 37 40 4 74 74 11 7
General Motors.................................. 24 54 8 6 81 81 0 8
Honda........................................... 38 1 15 8 50 50 2 4
Hyundai......................................... 36 9 28 7 66 66 0 5
Kia............................................. 48 0 25 18 55 55 0 4
Mazda........................................... 65 2 16 4 81 76 0 6
[[Page 49557]]
Mitsubishi...................................... 59 7 19 7 80 80 5 8
Nissan.......................................... 34 17 35 9 76 76 10 7
Porsche......................................... 7 36 49 10 70 70 15 4
Subaru.......................................... 66 4 14 0 85 80 0 6
Suzuki.......................................... 2 12 71 0 80 80 5 7
Tata............................................ 4 81 0 14 70 70 15 6
Toyota.......................................... 40 7 11 25 50 50 13 3
Volkswagen...................................... 9 26 58 12 72 70 15 4
Overall......................................... 28 24 23 11 67 67 7 6
Increase over 2011 CAFE......................... 22 23 22 -15 65 65 4 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 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 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 6 Percent per year standards
-----------------------------------------------------------------------------
Cars Trucks All Cars Trucks All
----------------------------------------------------------------------------------------------------------------
BMW............................... $1,701 $1,665 $1,691 $1,701 $1,665 $1,691
Chrysler.......................... 1,340 1,211 1,283 1,642 2,211 1,893
Daimler........................... 1,631 1,357 1,543 1,631 1,357 1,543
Ford.............................. 1,429 1,305 1,374 2,175 2,396 2,273
General Motors.................... 969 1,567 1,221 1,722 2,154 1,904
Honda............................. 633 402 564 777 1,580 1,016
Hyundai........................... 685 1,505 832 1,275 1,680 1,347
Kia............................... 741 738 741 1,104 1,772 1,213
Mazda............................. 851 914 860 1,369 1,030 1,320
Mitsubishi........................ 1,132 247 1,028 1,495 2,065 1,563
Nissan............................ 910 1,194 991 1,654 2,274 1,830
Porsche........................... 1,549 666 1,268 1,549 666 1,268
Subaru............................ 903 1,131 985 1,440 1,615 1,503
Suzuki............................ 1,093 1,026 1,076 1,718 2,219 1,846
Tata.............................. 1,270 674 952 1,270 674 952
Toyota............................ 518 366 468 762 1,165 895
Volkswagen........................ 1,626 949 1,509 1,626 949 1,509
Overall........................... 940 1,054 978 1,385 1,859 1,544
----------------------------------------------------------------------------------------------------------------
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 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 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
[[Page 49558]]
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 turbo-downsize
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 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.
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
[[Page 49559]]
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 in-use 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 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 carry-back
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
dissemination of GHG compliance information
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\164\ 2007 Progress Report Vehicle and Engine Compliance
Activities; EPA-420-R-08-011; October 2008. This document is
available electronically at http://www.epa.gov/otaq/about/420r08011.pdf.
\165\ Light-Duty Automotive Technology and Fuel-Economy Trends:
1975 Through 2008; EPA-420-S-08-003; September 2008. This document
is available electronically at http://www.epa.gov/otaq/fetrends.htm.
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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.
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\166\ See 40 CFR 600.010-08(d).
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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
[[Page 49560]]
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 fleet-average
CO2 levels.
---------------------------------------------------------------------------
\167\ 40 CFR 600.006-08(e).
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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.
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\
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\168\ CAA section 206(a)(1).
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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\
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\169\ The 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.
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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 footprint-based 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 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).
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\171\ 40 CFR 86.1827-01.
\172\ EPA 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).
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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
[[Page 49561]]
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.
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\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).
---------------------------------------------------------------------------
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 pre-production
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 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 CO2-specific 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 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
[[Page 49562]]
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
carbon-related 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 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 in-use 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 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 whole-vehicle 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,
[[Page 49563]]
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 in-use 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.
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\174\ 64 FR 23906, May 4, 1999.
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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 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 in-use 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. In-use 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
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 over-comply 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 pre-production technology that is
[[Page 49564]]
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 in-use 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 in-use 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 model-level in-use standard.
If the in-use emission result for the vehicle exceeds the model-
level CO2 certification result multiplied by the in-use
compliance factor of 10%, then the vehicle would have exceeded the in-
use emission standard. The in-use compliance factor would apply to all
in-use 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 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.
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\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 http://epa.gov/otaq/about/420r08011.pdf.
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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 in-use
standard; is 10% the appropriate factor; can EPA expect variability to
decrease as manufacturing experience 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 within-company 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
[[Page 49565]]
(separate standards are calculated for cars and trucks) using the
footprint-based equations described in Section III.B. A manufacturer's
actual end-of-year 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 carbon-containing 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
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.
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.
BILLING CODE 4910-59-P
[[Page 49566]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.016
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 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.
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
[[Page 49567]]
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:
[cir] (1) Recharge energy must be drawn from a source off the
vehicle, such as residential electric service; and
[cir] (2) The vehicle must be certified to the emission standards
of Bin 1 of Table S04-1 in paragraph (c)(6) of Sec. 86.1811.
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.
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.
[[Page 49568]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.017
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 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 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 + 260x0.15) / 2 = 160 g/mi
[[Page 49569]]
Including these FFVs with the applicable credit in Manufacturer A's
fleet average, as shown below in Figure 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.
[GRAPHIC] [TIFF OMITTED] TP28SE09.018
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
[[Page 49570]]
that the alternative fuel is used in real-world 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
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):
(W1xCO2conv)+(W2xCO2alt),
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 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 x 0.15).
[[Page 49571]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.019
BILLING CODE 4910-59-C
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.
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 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
[[Page 49572]]
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 x [1--(12/16.6 x 850/1430)] = 7.9 g/mi.
Total megagrams of credits would then be:
[ 7.9 x 250,000 x 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 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 x 250,000 x 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
CO2-reducing impact of the technology, the manufacturer
could propose and use, with EPA approval, a different analytical
approach to determining the 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 x 175,000 x 190971] / 1,000,000 = 133,680 Mg.
[[Page 49573]]
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-of-year 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 end-of-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-of-year 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
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 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 non-compliant 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
[[Page 49574]]
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.
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\176\ 42 U.S.C. 7524(a), Civil Monetary Penalty Inflation
Adjustment, 69 FR 7121 (Feb. 13, 2004) and Civil Monetary Penalty
Inflation Adjustment Rule, 73 FR 75340 (Dec. 11, 2008).
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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\
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\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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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 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 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 light-duty 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 emission-
related 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
[[Page 49575]]
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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\179\ 40 CFR 86.1806-04.
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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.
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\180\ See CAA 206(f).
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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, medium-duty 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 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. 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 x SG x 3781.8)/((CWFexHCx HC) + (0.429 x CO) +
(0.273 x CO2) + (0.375 x CH3OH) + (0.400 x
HCHO) + (0.521 x C2H5OH) + (0.545 x
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 = (CWFexHCx HC) + (0.429 x CO) + (0.375
x CH3OH) + (0.400 x HCHO) + (0.521 x
C2H5OH) + (0.545 x
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.
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\181\ 45 FR 49256, July 24, 1980.
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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
[[Page 49576]]
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.
d. Miscellaneous Conforming Regulatory Amendments
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.
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\
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\182\ 40 CFR 85.2102(14).
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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 reporting provisions under this proposal.
11. Light Duty Vehicles and Fuel Economy Labeling
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 fuel-economy 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\
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\183\ ``Fuel economy'' per the statute is miles per gallon of
gasoline (or equivalent amount of other fuel).
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The estimated annual fuel cost of operating the vehicle;
[[Page 49577]]
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
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\184\ EPA and DOE jointly publish the annual Fuel Economy Guide
and distribute it to dealers.
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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 conventionally-fueled 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. 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.
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\185\ 49 U.S.C. 32904 and 10 CFR 474.3.
\186\ 49 U.S.C. 32905.
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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 gasoline-equivalent
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 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.
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\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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During the 2006 label rulemaking process EPA requested comments on
[[Page 49578]]
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.
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 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.
[[Page 49579]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.020
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.
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 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
[[Page 49580]]
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 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:
[GRAPHIC] [TIFF OMITTED] TP28SE09.021
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:
[GRAPHIC] [TIFF OMITTED] TP28SE09.074
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 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.
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\188\ 49 U.S.C. 3290(b)(F).
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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.
[[Page 49581]]
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
CO2-equivalent 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. 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 2020 2030 2040 2050
----------------------------------------------------------------------------------------------------------------
All Sectors (Worldwide) a................................ 41,016 48,059 52,870 56,940 60,209
All Sectors (U.S. Only) a................................ 7,118 7,390 7,765 8,101 8,379
U.S. Cars/Light Truck Only b............................. 1,359 1,332 1,516 1,828 2,261
----------------------------------------------------------------------------------------------------------------
a ADAGE model projections, U.S. EPA.\189\
b MOVES (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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 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[deg]C by 2100, and global mean sea level rise
is projected to be reduced by approximately 0.06-0.15 cm by 2100.
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 post-control 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
[[Page 49582]]
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 post-control 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 2030 2040 2050
----------------------------------------------------------------------------------------------------------------
Net Reduction Due to Tailpipe Standards *....... 165.2 324.6 417.5 518.5
Tailpipe Standards.............................. 107.7 211.4 274.1 344.0
A/C--indirect CO2............................... 11.0 21.1 27.3 34.2
A/C--direct HFCs................................ 13.5 27.2 32.1 34.9
Upstream........................................ 33.1 64.9 84.1 105.5
Percent reduction relative to U.S. reference 12.4% 21.4% 22.8% 22.9%
(cars + light trucks)..........................
Percent reduction relative to U.S. reference 2.2% 4.2% 5.2% 6.2%
(all sectors)..................................
Percent reduction relative to worldwide 0.3% 0.6% 0.7% 0.9%
reference......................................
----------------------------------------------------------------------------------------------------------------
* 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.
---------------------------------------------------------------------------
\191\ As detailed in the DRIA, for this analysis the full life
of the vehicle is represented by average lifetime mileages for cars
(190,000 miles) and trucks (221,000 miles) averaged over calendar
years 2012 through 2030, a function of how far vehicles drive per
year and scrappage rates.
Table III.F.1-2--Projected Net GHG Reductions
[MMTCO2 Eq per year]
------------------------------------------------------------------------
Lifetime GHG Lifetime fuel
Model year reduction (MMT savings (billion
CO2 EQ) gallons)
------------------------------------------------------------------------
2012................................ 81.4 6.6
2013................................ 125.0 10.0
2014................................ 174.1 13.9
2015................................ 243.2 19.5
2016................................ 323.6 26.3
-----------------------------------
Total Program Benefit........... 947.4 76.2
------------------------------------------------------------------------
[[Page 49583]]
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 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 2030 2040 2050
----------------------------------------------------------------------------------------------------------------
Total GHG Increase.............................. 13.6 26.4 34.2 42.9
Tailpipe & Indirect A/C CO2..................... 10.6 20.6 26.6 33.4
Upstream GHGs b................................. 2.95 5.74 7.43 9.32
Tailpipe N2O.................................... 0.040 0.085 0.113 0.142
Tailpipe CH4.................................... 0.008 0.016 0.021 0.027
----------------------------------------------------------------------------------------------------------------
a These impacts are included in the reductions shown in Table III.F.1-1 and III.F.1-2.
b Upstream rebound impact calculated as upstream total CO2 effect times ratio of downstream tailpipe rebound CO2
effect to downstream tailpipe total CO2 effect.
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 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.
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.
Table III.F.1-4--Calendar Year Impacts of Alternative Scenarios
----------------------------------------------------------------------------------------------------------------
Calendar year
-----------------------------------------------------------------------------------------------------------------
Scenario CY 2020 CY 2030 CY 2040 CY 2050
----------------------------------------------------------------------------------------------------------------
Total GHG Reductions (MMT CO2EQ).... Primary............... 165.2 324.6 417.5 518.5
4%.................... 152.8 305.9 394.1 489.3
6%.................... 215.2 426.2 549.3 683.9
Fuel Savings (Billion Gallons Primary............... 13.4 26.2 33.9 42.6
Gasoline Equivalent).
4%.................... 12.2 24.5 31.8 39.9
6%.................... 17.8 35.1 45.5 57.1
----------------------------------------------------------------------------------------------------------------
Table III.F.1-5--Model Year Impacts of Alternative Scenarios
--------------------------------------------------------------------------------------------------------------------------------------------------------
Model year lifetime
---------------------------------------------------------------------------------------------------------------------------------------------------------
Scenario MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total GHG Reductions (MMT CO2EQ)........... Primary...................... 81.4 125.0 174.1 243.2 323.6 947.4
4%........................... 41.8 93.5 160.8 231.0 305.2 832.3
6%........................... 60.2 146.4 239.9 333.3 424.9 1,204.7
Fuel Savings (Billion Gallons Gasoline Primary...................... 6.6 10.0 13.9 19.5 26.3 76.2
Equivalent).
4%........................... 3.1 7.2 12.7 18.4 24.7 66.1
6%........................... 4.7 11.9 19.7 27.4 35.2 99.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
2. Overview of Climate Change Impacts From GHG Emissions
Once emitted, greenhouse gases (GHG) that are the subject of this
regulation can remain in the atmosphere for decades to centuries,
meaning that (1) their concentrations become well-mixed throughout the
global atmosphere regardless of emission origin, and (2) 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
[[Page 49584]]
forests and agricultural activities. The transportation sector accounts
for a portion, 28%, of US GHG emissions.\192\
---------------------------------------------------------------------------
\192\ U.S. EPA (2008) Inventory of U.S. Greenhouse Gas Emissions
and Sinks: 1990-2006. EPA-430-R-08-005, Washington, DC. http://www.epa.gov/climatechange/emissions/usgginv_archive.html.
---------------------------------------------------------------------------
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, peer- reviewed 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 policy-relevant 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.
---------------------------------------------------------------------------
\193\ Global Climate Change Impacts in the United States, Thomas
R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). Cambridge
University Press, 2009. http://www.globalchange.gov/publications/reports/scientific-assessments/us-impacts.
---------------------------------------------------------------------------
The source document for the section below is the draft endangerment
Technical Support Document (TSD). In 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\ 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.
---------------------------------------------------------------------------
\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. http://www.epa.gov/climatechange/emissions/usgginv_archive.html.
\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.
---------------------------------------------------------------------------
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 [deg]C (1.5 [deg]F) +/-
0.18 [deg]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.
---------------------------------------------------------------------------
\199\ Surface temperature is calculated by processing data from
thousands of world-wide observation sites on land and sea.
---------------------------------------------------------------------------
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[deg]C (1.25[deg]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 [deg]F.\200\ Some of these changes have been
faster than previous assessments had suggested.
---------------------------------------------------------------------------
\200\ Global Climate Change Impacts in the United States, Thomas
R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.) Cambridge
University Press, 2009.
---------------------------------------------------------------------------
For additional information, please see Section 4 of the proposed
Endangerment
[[Page 49585]]
TSD, IPCC WGI AR4,\201\ and the report ``Global Climate Change Impacts
in the United States''.\202\
---------------------------------------------------------------------------
\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. http://www.globalchange.gov/publications/reports/scientific-assessments/us-impacts.
---------------------------------------------------------------------------
ii. Precipitation
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 [deg]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 USGCRP report ``Global
Climate Change Impacts in the United States''.\204\
---------------------------------------------------------------------------
\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.
\204\ Global Climate Change Impacts in the United States, Thomas
R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). Cambridge
University Press, 2009. http://www.globalchange.gov/publications/reports/scientific-assessments/us-impacts.
---------------------------------------------------------------------------
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. Pacific Islands'',\205\ IPCC WGI AR4,\206\ and the report
``Global Climate Change Impacts in the United States''.\207\
---------------------------------------------------------------------------
\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. http://www.globalchange.gov/publications/reports/scientific-assessments/us-impacts.
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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 bio-physical
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.
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\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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[[Page 49586]]
For additional information, please see Section 4 of the proposed
Endangerment TSD and IPCC WGI AR4.\209\
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\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.
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c. Projected Changes in Climate
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.
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\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.
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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.
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\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. http://www.globalchange.gov/publications/reports/scientific-assessments/us-impacts.
\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 [deg]C to 4.0 [deg]C
(3.2 [deg]F to 7.2 [deg]F) with an uncertainty range of 1.1 [deg]C to
6.4 [deg]C (2.0 [deg]F to 11.5 [deg]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 [deg]C (3.6 [deg]F) for all scenarios, with 5
out of 21 models projecting average warming in excess of 4 [deg]C (7.2
[deg]F) for the mid-range emissions scenario. The number of days with
high temperatures above 90 [deg]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 heat-trapping 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 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 heat-related 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 [deg]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.
[[Page 49587]]
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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\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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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 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.
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\216\ EPA (2009) Assessment of the Impacts of Global Change on
Regional U.S. Air Quality: A Synthesis of Climate Change Impacts on
Ground-Level 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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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 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, year-to-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,
[[Page 49588]]
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 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.
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\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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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 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.
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\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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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.
[[Page 49589]]
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.
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\222\ Using the Model for the Assessment of Greenhouse Gas
Induced Climate Change (MAGICC, http://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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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
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 [deg]C to 6.0 [deg]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.
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\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 [deg]C to 4.5 [deg]C, ``very
unlikely'' to be less than 1.5 [deg]C, and ``values substantially
higher than 4.5 [deg]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, http://www.ipcc.ch/.
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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
[deg]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 [deg]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 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
[[Page 49590]]
modeling analysis that the manufacturers could reduce vehicle mass
without reducing vehicle footprint as one way to respond to the
proposed rule.\226\
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\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.
\226\ See Chapter 1 of the joint TSD for a description of
potential footprint changes in the 2016 reference fleet.
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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 safety-related 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
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.
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\227\ We note that since these MY 2009 F150s have only begun to
enter the fleet, there is little real-world crash data available to
evaluate the safety impacts of this new design.
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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 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:
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\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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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.
[[Page 49591]]
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, 2-door 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 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 2-door
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.
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\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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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 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 non-GHG 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 non-
GHG 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
[[Page 49592]]
ethanol and gasoline volume scenarios is being prepared as part of
EPA's RFS2 rulemaking package.\233\
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\233\ 74 FR 24904. See also Docket EPA-HQ-OAR-2005-0161.
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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 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 non-GHG 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 non-GHG emission rates per
mile.
The potential for increased market penetration of diesel
vehicles; because 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.
BILLING CODE 4910-59-P
[[Page 49593]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.022
BILLING CODE 4910-59-C
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 by 15 tons, acrolein by 2 tons,
and 1,3-butadiene 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 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
[[Page 49594]]
formaldehyde. The development of these emission factors is detailed in
DRIA Chapter 5.
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\234\ Greenhouse Gas, Regulated Emissions, and Energy Use in
Transportation model (GREET), U.S. Department of Energy, Argonne
National Laboratory, http://www.transportation.anl.gov/modeling_simulation/GREET/.
\235\ EPA. 2002 National Emissions Inventory (NEI) Data and
Documentation, http://www.epa.gov/ttn/chief/net/2002inventory.html.
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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.
3. Health Effects of Non-GHG Pollutants
a. Particulate Matter
i. Background
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 [micro]m), and use PM10 as the indicator for purposes
of regulating the coarse fraction of PM10 (referred to as
thoracic coarse particles or coarse-fraction particles; generally
including particles with a nominal mean aerodynamic diameter greater
than 2.5 [micro]m and less than or equal to 10 [micro]m, or
PM10-2.5). Ultrafine particles are a subset of fine
particles, generally less than 100 nanometers (0.1 [mu]m) 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
of health effects associated with PM can also be found in the DRIA for
this rule.
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\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
http://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 http://www.epa.gov/ttn/naaqs/standards/pm/data/pmstaffpaper_20051221.pdf.
\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 http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=210586.
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Health effects associated with short-term 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
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\239\ U.S. EPA. (2006). National Ambient Air Quality Standards
for Particulate Matter; Proposed Rule. 71 FR 2620, January 17, 2006.
\240\ K[uuml]nzli, 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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Studies examining populations exposed over the long term (one or
more years) to different levels of air pollution, including the Harvard
Six Cities Study
[[Page 49595]]
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\
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\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
http://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 http://es.epa.gov/ncer/science/pm/hei/Rean-ExecSumm.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.
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b. Ozone
i. Background
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 high-temperature day. Ozone can be transported
hundreds of miles downwind of precursor emissions, resulting in
elevated ozone levels even in areas with low local VOC or
NOX emissions.
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\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 http://www.regulations.gov/.
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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 non-
accidental 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 ozone-related
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 outdoor workers), are of particular
concern.
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\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 http://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 http://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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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
[[Page 49596]]
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 allergen-induced 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.
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\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 http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=194645.
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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
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 short-term 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.
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\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 http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=198843.
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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
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\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
http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=203935.
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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 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).
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\255\ U. S. EPA. 2002 National-Scale Air Toxics Assessment.
http://www.epa.gov/ttn/atw/nata12002/risksum.html.
\256\ U.S. EPA. 2009. National-Scale Air Toxics Assessment for
2002. http://www.epa.gov/ttn/atw/nata2002/.
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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
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\257\ U.S. EPA. 2000. Integrated Risk Information System File
for Benzene. This material is available electronically at http://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 http://www.ntp.niehs.nih.gov/go/16183.
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A number of adverse noncancer health effects including blood
disorders, such as preleukemia and aplastic anemia, have also been
associated with
[[Page 49597]]
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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\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 http://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.
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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 are
numerous studies consistently demonstrating that 1,3-butadiene is
metabolized into genotoxic metabolites by experimental animals and
humans. The specific mechanisms of 1,3-butadiene-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\
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\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 http://www.epa.gov/iris/supdocs/buta-sup.pdf.
\271\ U.S. EPA (2002) Full IRIS Summary for 1,3-butadiene (CASRN
106-99-0). Environmental Protection Agency, Integrated Risk
Information System (IRIS), Research and Development, National Center
for Environmental Assessment, Washington, DC http://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.
\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=32BA9724-F1F6-975E-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.
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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 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\
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\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.
\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.
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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
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\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.
http://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.
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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
[[Page 49598]]
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 short-term (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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\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 http://www.epa.gov/iris/subst/0290.htm.
\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-F1F6-975E-7FCE50709CB4C932.
\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 http://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.
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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, 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\
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\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.
\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.
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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\
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\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 http://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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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 three.297 298
EPA has not yet evaluated these recent studies.
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\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.
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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 non-cancer effects in animals, including
[[Page 49599]]
abnormal cell changes and growth in respiratory and nasal tissues.\303\
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\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 http://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. http://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: http://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.
\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 http://www.epa.gov/iris/subst/0436.htm.
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viii. Other Air Toxics
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\
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\304\ U.S. EPA Integrated Risk Information System (IRIS)
database is available at: www.epa.gov/iris.
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4. Environmental Effects of Non-GHG Pollutants
a. Visibility
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
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\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 http://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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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 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.
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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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b. Plant and Ecosystem Effects of Ozone
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 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\
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\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.
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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
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\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 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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[[Page 49600]]
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 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\
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\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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Research suggests an adverse impact of vehicle exhaust on plants,
which has in some cases been attributed to aromatic compounds and in
other cases 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.
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\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.
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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.
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\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. http://epa.gov/airtrends/2008/index.html.
\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. http://www.epa.gov/otaq/toxics.htm.
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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
[[Page 49601]]
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\
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\322\ Carbon Monoxide Nonattainment Area Summary: http://www.epa.gov/air/oaqps/greenbk/cnsum.html.
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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\
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\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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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 national-scale 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 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 grid-based 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 well-
established 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 peer-reviewed 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\
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\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 Models-3 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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CMAQ includes many science modules that simulate the emission,
production, decay, deposition and transport of organic and inorganic
gas-phase and particle-phase pollutants in the atmosphere. EPA intends
to use the most recent CMAQ version (version 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 in-cloud 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 non-GHG 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
[[Page 49602]]
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 cost-effectiveness 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 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.
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\330\ See Memorandum to Docket, ``Economy-Wide Impacts of
Proposed Greenhouse Gas Tailpipe Standards,'' September 14, 2009
(Docket EPA-HQ-OAR-2009-0472).
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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.
1. Conceptual Framework for Evaluating Consumer Impacts
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 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
long-term; 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\
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\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.
\332\ For an overview, see id.
\333\ 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.
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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.
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\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.
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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
[[Page 49603]]
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, 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.
---------------------------------------------------------------------------
\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. http://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,'' http://
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,'' http://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).
---------------------------------------------------------------------------
Whether consumers and producers will benefit from improved fuel
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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,'' http://www.econ.yale.edu/seminars/apmicro/am08/gramlich-081216.pdf,
accessed 5/11/09 (Docket EPA-HQ-OAR-2009-0472).
---------------------------------------------------------------------------
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
[[Page 49604]]
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\
---------------------------------------------------------------------------
\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 http://www.econ.ucdavis.edu/faculty/knittel/papers/gaspaper_latest.pdf (Docket EPA-HQ-OAR-2009-
0472).
---------------------------------------------------------------------------
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
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.
---------------------------------------------------------------------------
\343\ Energy Information Administration, U.S. Department of
Energy (1996). Issues in Midterm Analysis and Forecasting 1996, DOE/
EIA-0607(96), Washington, DC., http://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.
---------------------------------------------------------------------------
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' 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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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
[[Page 49605]]
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
The estimates of vehicle compliance costs cover the years of
implementation 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).
---------------------------------------------------------------------------
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
[[Page 49606]]
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]
----------------------------------------------------------------------------------------------------------------
$/vehicle (car
Calendar year $/car $/truck & truck
combined)
----------------------------------------------------------------------------------------------------------------
2012............................................................ 374 358 368
2013............................................................ 531 539 534
2014............................................................ 663 682 670
2015............................................................ 813 886 838
2016............................................................ 968 1,213 1,050
2017............................................................ 968 1,213 1,047
2018............................................................ 968 1,213 1,044
2019............................................................ 968 1,213 1,042
2020............................................................ 968 1,213 1,040
2021............................................................ 968 1,213 1,039
2022............................................................ 890 1,116 955
2030............................................................ 890 1,116 953
2040............................................................ 890 1,116 953
2050............................................................ 890 1,116 953
----------------------------------------------------------------------------------------------------------------
b. Annual Costs of the Proposed Vehicle Program
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.
Table III.H.2-2--Quantified Annual Costs Associated With the Proposed
Vehicle Program
[$Millions of 2007 dollars]
------------------------------------------------------------------------
Quantified
Year annual costs
------------------------------------------------------------------------
2012.................................................... $5,400
2013.................................................... $8,400
2014.................................................... $10,900
2015.................................................... $13,900
2016.................................................... $17,500
2020.................................................... $18,000
2030.................................................... $17,900
2040.................................................... $19,300
2050.................................................... $20,900
NPV, 3%................................................. $390,000
NPV, 7%................................................. $216,600
------------------------------------------------------------------------
3. Cost per Ton of Emissions Reduced
EPA has calculated the cost per ton of GHG (CO2-
equivalent, or CO2e) 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
[[Page 49607]]
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 $2007 Dollars
----------------------------------------------------------------------------------------------------------------
CO2e Reduced
Year Cost \a\ (million Cost per ton
($millions) metric tons)
----------------------------------------------------------------------------------------------------------------
2020............................................................ $18,000 170 $110
2030............................................................ 17,900 320 60
2040............................................................ 19,300 420 50
2050............................................................ 20,900 520 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?
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
[Million gallons]
------------------------------------------------------------------------
Year Total
------------------------------------------------------------------------
2012......................................................... 530
2013......................................................... 1,320
2014......................................................... 2,410
2015......................................................... 3,910
2016......................................................... 5,930
2020......................................................... 13,350
2030......................................................... 26,180
2040......................................................... 33,930
2050......................................................... 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 monetized fuel savings using pre-tax fuel prices in
Section III.H.10. The fuel savings based on pre-tax fuel prices reflect
the societal savings in contrast to the consumer savings presented in
Table III.H.4-2. Also in Section III.H.10, 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.
---------------------------------------------------------------------------
\350\ Energy Information Administration, Supplemental tables to
the Annual Energy Outlook 2009, Updated Reference Case with American
Recovery and Reinvestment Act. Available http://www.eia.doe.gov/oiaf/aeo/supplement/stimulus/regionalarra.html. April 2009.
Table III.H.4-2--Estimated Fuel Consumption Savings to the Consumer \a\
[Millions of 2007 dollars]
------------------------------------------------------------------------
Calendar year Total
------------------------------------------------------------------------
2012.................................................... $1,400
2013.................................................... 3,800
2014.................................................... 7,200
2015.................................................... 12,400
2016.................................................... 19,400
2020.................................................... 48,400
2030.................................................... 100,000
2040.................................................... 136,800
2050.................................................... 181,000
NPV, 3%................................................. 1,850,200
NPV, 7%................................................. 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
[[Page 49608]]
on their personal preferences. This issue is discussed further in
Section III.H.5 and in Chapter 8 of the DRIA.
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 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 that we have not
used these estimated sales impacts in the OMEGA Model.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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
light-duty 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
[[Page 49609]]
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, 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 Change in truck
sales Percent change sales Percent change
----------------------------------------------------------------------------------------------------------------
2012.................................... 66,600 0.7 27,300 0.5
2013.................................... 93,300 0.9 161,300 2.8
2014.................................... 134,400 1.3 254,400 4.4
2015.................................... 236,300 2.2 368,400 6.5
2016.................................... 375,400 3.4 519,000 9.4
----------------------------------------------------------------------------------------------------------------
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 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 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 Change in truck
sales Percent change sales Percent change
----------------------------------------------------------------------------------------------------------------
2012.................................. 61,900 0.7 25,300 0.5
2013.................................. 86,600 0.9 60,000 1
2014.................................. 125,200 1.2 122,900 2.1
2015.................................. 221,400 2 198,100 3.5
2016.................................. 353,100 3.2 291,500 5.3
----------------------------------------------------------------------------------------------------------------
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 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.
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
[[Page 49610]]
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]
----------------------------------------------------------------------------------------------------------------
Cumulative Cumulative
Year of ownership Increased Annual fuel discounted fuel discounted fuel
vehicle cost \a\ savings \b\ savings at 3% savings at 7%
----------------------------------------------------------------------------------------------------------------
1....................................... $1,128 $443 $436 $428
2....................................... ................ 444 860 829
3....................................... ................ 443 1,272 1,203
4....................................... ................ 434 1,663 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]
----------------------------------------------------------------------------------------------------------------
Annual Annual
Year of ownership Increased Annual fuel discounted net discounted net
vehicle cost \a\ savings \b\ savings at 3% savings at 7%
----------------------------------------------------------------------------------------------------------------
1....................................... $278 $443 $162 $159
2....................................... 278 444 158 150
3....................................... 278 443 153 139
4....................................... 278 434 141 123
5....................................... 278 423 127 107
6....................................... 0 403 343 278
----------------------------------------------------------------------------------------------------------------
\a\ This 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.
\b\ Calculated using AEO 2009 reference case fuel price including taxes.
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 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 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.
[[Page 49611]]
Table III.H.5-5--Lifetime Discounted Net Savings on a 2016 MY New Vehicle Purchase
[2007 dollars]
----------------------------------------------------------------------------------------------------------------
Increased Lifetime Lifetime
Purchase option discounted discounted fuel discounted net
vehicle cost savings \b\ savings
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Cash...................................................... $1,128 $4,558 $3,446
Credit \a\................................................ 1,293 4,558 3,265
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Cash...................................................... 1,128 3,586 2,495
Credit \a\................................................ 1,180 3,586 2,406
----------------------------------------------------------------------------------------------------------------
\a\ Assumes a 5 year loan at 7.41 percent.
\b\ Fuel 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.
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 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\
---------------------------------------------------------------------------
\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.''
---------------------------------------------------------------------------
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 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 non-quantifiable
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).
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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\
[[Page 49612]]
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\
---------------------------------------------------------------------------
\362\ For the purposes of this discussion, we present all values
of the SCC as the cost per metric 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.
---------------------------------------------------------------------------
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 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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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
country-specific 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 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 peer-reviewed 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.
---------------------------------------------------------------------------
\366\ Richard Tol, The Social Cost of Carbon: Trends, Outliers,
and Catastrophes, Economics: The Open-Access, Open-Assessment E-
Journal, Vol. 2, 2008-25. http://www.economics-ejournal.org/economics/journalarticles/2008-25 (2008). See also EPA Docket, EPA-
HQ-OAR-2009-0472.
---------------------------------------------------------------------------
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
[[Page 49613]]
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
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 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, Washington, DC. See EPA Docket, EPA-HQ-
OAR-2009-0472.
---------------------------------------------------------------------------
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 benefit-cost 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
[[Page 49614]]
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\
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
Second, 5%, and not 3%, is roughly consistent with estimates
implied by 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\
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
It is recognized that the arguments above--for use of market
behavior and 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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
Some critics contend that using observed interest rates for inter-
generational 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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
Additionally, some analyses attempt to deal with uncertainty with
respect to interest rates over time. We explore below how this might be
done.\374\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
(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 $5 per tCO2 with a
5% discount rate.
[[Page 49615]]
Table III.H.6-1--Global Social Cost of Carbon (SCC) Estimates ($/tCO2 in 2007 (2007$)), Based on 3% and 5%
Discount Rates \a\
----------------------------------------------------------------------------------------------------------------
Model Study \b\ Climate Scenario 3% 5%
----------------------------------------------------------------------------------------------------------------
1........................ FUND............. Anthoff et al. 2009 FUND default....... 6 -1
2........................ FUND............. Anthoff et al. 2009 SRES A1b........... 1 -1
3........................ FUND............. Anthoff et al. 2009 SRES A2............ 9 -1
4........................ FUND............. Link and Tol 2004.. No THC............. 12 3
5........................ FUND............. Link and Tol 2004.. THC continues...... 12 2
6........................ FUND............. Guo et al. 2006.... Constant PRTP...... 5 -1
7........................ FUND............. Guo et al. 2006.... Gollier discount 1. 14 0
8........................ FUND............. Guo et al. 2006.... Gollier discount 2. 7 -1
FUND Mean.......... 8.47 0
9........................ PAGE............. Wahba & Hope 2006.. A2-scen............ 59 7
10....................... PAGE............. Hope 2006.......... ................... ........... 7
11....................... DICE............. Nordhaus 2008...... ................... ........... 8
Summary.................. Model-weighted Mean 34 5
----------------------------------------------------------------------------------------------------------------
\a\ The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus
(2008), Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of FUND,
PAGE, or DICE and use business-as-usual climate scenarios.375 376 All values are based on the best available
information from the underlying studies about the base year and year dollars, rather than the Tol (2008)
assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007
using a 3% annual growth rate in the SCC, and adjusted for inflation using GDP deflator.
\b\ See EPA Docket, EPA-HQ-OAR-2009-0472, for each study.
In this proposal, benefits of reducing GHG emissions have been
estimated using global SCC values of $34 and $5 as these represent the
estimates associated with the 3% and 5% discount rates,
respectively.\377\ 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 $20. (Based on the $20 global value, the
approximate domestic fraction of these benefits would be $1.20 per ton
of CO2 assuming that domestic benefits are 6% of the global
benefits.)
---------------------------------------------------------------------------
\375\ Most of the estimates in Table 1 rely on climate scenarios
developed by the Intergovernmental Panel on Climate Change (IPCC).
The IPCC published a new set of scenarios in 2000 for use in the
Third Assessment Report (Special Report on Emissions Scenarios--
SRES). The SRES scenarios define four narrative storylines: A1, A2,
B1 and B2, describing the relationships between the forces driving
greenhouse gas and aerosol emissions and their evolution during the
21st century for large world regions and globally. Each storyline
represents different demographic, social, economic, technological,
and environmental developments that diverge in increasingly
irreversible ways. The storylines are summarized in the SRES report
(Nakicenovic et al., 2000; see also http://sedac.ciesin.columbia.edu/ddc/sres/) (see EPA Docket, EPA-HQ-OAR-
2009-0472). Although they were intended to represent BAU scenarios,
at this point in time the B1 and B2 storylines are widely viewed as
representing policy cases rather than business-as-usual projections,
estimates derived from these scenarios to be less appropriate for
use in benefit-cost analysis. They are therefore excluded.
\376\ Guo et al. (2006) report estimates based on two Gollier
discounting schemes. The Gollier discounting assumes complex
specifications about individual utility functions and risk
preferences. After various conditions are satisfied, declining
social discount rates emerge. Gollier Discounting Scheme 1 employs a
certainty-equivalent social rate of time preference (SRTP) derived
by assuming the regional growth rate is equally likely to be 1%
above or below the original forecast growth rate. Gollier
Discounting Scheme 2 calculates a certainty-equivalent social rate
of time preference (SRTP) using five possible growth rates, and
applies the new SRTP instead of the original. Hope (2008) conducts
Monte Carlo analysis on the PRTP component of the discount rate. The
PRTP is modeled as a triangular distribution with a min value of 1%/
yr, a most likely value of 2%/yr, and a max value of 3%/yr. See EPA
Docket, EPA-HQ-OAR-2009-0472 for the studies.
\377\ It should be noted that reported discount rates may not be
consistently derived across models or specific applications of
models: While the discount rate may be identical, it may reflect
different assumptions about the individual components of the Ramsey
equation identified earlier.
---------------------------------------------------------------------------
The distinctions between sets of estimates generated using
different discount rates are due only in part to discount rate
differences, because the models and parameters used to generate the
estimates in the sets associated with different discount rates also
vary.
It is true that there is uncertainty about interest rates over long
time horizons. Recognizing that point, Newell and Pizer (2003) have
made a careful effort to adjust for that uncertainty (see EPA Docket,
EPA-HQ-OAR-2009-0472). The Newell-Pizer approach models discount rate
uncertainty as something that evolves over time.\378\ This is a
different way to model discount rate uncertainty than the approach
outlined above, which assumes there is a single discount rate with
equal probability of 3% and 5%. Since Newell and Pizer (2003) is a
relatively recent contribution to the literature, estimates based on
this method are included with the aim of soliciting comment.
---------------------------------------------------------------------------
\378\ In contrast, an alternative approach based on Weitzman
(2001) would assume that there is a constant discount rate that is
uncertain and represented by a probability distribution. The Newell
and Pizer, and Weitzman approaches are relatively recent
contributions and we invite comment on the advantages and
disadvantages of each. See EPA Docket, EPA-HQ-OAR-2009-0472.
---------------------------------------------------------------------------
Table III.H.6-2 reports on the application of the Newell-Pizer
adjustments. The precise numbers depend on the assumptions about the
data generating process that governs interest rates. Columns (1a) and
(1b) assume that ``random walk'' model best describes the data and uses
3% and 5% discount rates, respectively. Columns (2a) and (2b) repeat
this, except that it assumes a ``mean-reverting'' process. While the
empirical evidence does not rule out a mean-reverting model, Newell and
Pizer find stronger empirical support for the random walk model. EPA
solicits comment on these and other models for representing the
variation in interest rates over time.
[[Page 49616]]
Table III.H.6-2--Global Social Cost of Carbon (SCC) Estimates ($ per metric ton CO2 in 2007 (2007$)) a, Using
Newell & Pizer (2003) Adjustment for Future Discount Rate Uncertainty b
----------------------------------------------------------------------------------------------------------------
Random-walk Mean-reverting
model model
Model Study \c\ Climate scenario -----------------------------------
3% (1a) 5% (1b) 3% (2a) 5% (2b)
----------------------------------------------------------------------------------------------------------------
1..................... FUND.......... Anthoff et al. FUND default..... 10 0 7 -1
2009.
2..................... FUND.......... Anthoff et al. SRES A1b......... 2 0 1 -1
2009.
3..................... FUND.......... Anthoff et al. SRES A2.......... 15 0 10 -1
2009.
4..................... FUND.......... Link and Tol 2004 No THC........... 21 6 13 4
5..................... FUND.......... Link and Tol 2004 THC continues.... 21 4 13 2
6..................... FUND.......... Guo et al. 2006.. Constant PRTP.... 9 0 6 -1
7..................... FUND.......... Guo et al. 2006.. Gollier discount 14 0 14 0
1.
8..................... FUND.......... Guo et al. 2006.. Gollier discount 7 -1 7 -1
2.
FUND Mean........ 12 1 9 0
9..................... PAGE.......... Wahba & Hope 2006 A2-scen.......... 100 13 65 8
10.................... PAGE.......... Hope 2006........ ................. ....... 13 ....... 8
11.................... DICE.......... Nordhaus 2008.... ................. ....... 15 ....... 9
Summary............... Model-weighted 56 10 37 6
Mean.
----------------------------------------------------------------------------------------------------------------
\a\ The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus
(2008), Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of FUND,
PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the best available
information from the underlying studies about the base year and year dollars, rather than the Tol (2008)
assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007
using a 3% annual growth rate in the SCC, and adjusted for inflation using GDP deflator. See the Notes to
Table III.H.6-1 for further details.
\b\ Assumes a starting discount rate of 3% or 5%. Newell and Pizer (2003) based adjustment factors are not
applied to estimates from Guo et al. (2006) that use a different approach to account for discount rate
uncertainty (rows 7-8).
Note that the correction factor from Newell and Pizer is based on the DICE model. The proper adjustment may
differ for other integrated assessment models that produce different time schedules of marginal damages. We
would expect this difference to be minor.
\c\ See EPA Docket, EPA-HQ-OAR-2009-0472, for each study.
The resulting estimates of the social cost of carbon are
necessarily greater. When the adjustments from the random walk model
are applied, the estimates of the social cost of carbon are $10 and $56
per ton of CO2, with the 5% and 3% discount rates,
respectively. The application of the mean-reverting adjustment yields
estimates of $6 and $37. Relying on the random walk model, analyses are
also conducted with the value of the SCC set at $10 and $56.
(3) Caveats
There are at least four caveats to the approach outlined above.
First, and as noted, the existing IAMs do not currently
individually account for and assign value to all of the important
physical and other impacts of climate change that are recognized in the
climate change literature.\379\ The impacts of climate change are
expected to be widespread, diverse, and heterogeneous. In addition, the
exact magnitude of these impacts is uncertain, because of the inherent
randomness in the Earth's atmospheric processes, the U.S. and global
economies, and the behaviors of current and future populations. To this
extent, as emphasized by the IPCC, SCC estimates are ``very likely''
underestimated.\380\ In addition, the SCC approach also likely
underestimates the value of GHG reductions because the marginal values
apply only to CO2 emissions, which have different impacts
than non-CO2 emissions because of variances in atmospheric
lifetimes and radiative forcing.\381\ Although it is likely that our
capability to quantify and monetize impacts will improve with time, it
is also likely that even in future applications, a number of
potentially significant benefits categories will remain unmonetized. In
order to capture the benefits of mitigation these non-monetized
benefits should be discussed along with monetized benefits based on the
SCC.
---------------------------------------------------------------------------
\379\ Examples of impacts that are difficult to monetize, and
have generally not been included in SCC estimates, include risks
from extreme weather (death, disease, agricultural damage, and other
economic damage from droughts, floods and wildfires) and possible
long-term catastrophic events, such as collapse of the West
Antarctic ice sheet or the release of large amounts of methane from
melting permafrost.
\380\ 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.
\381\ Radiative forcing is the change in the balance between
solar radiation entering the atmosphere and the Earth's radiation
going out. On average, a positive radiative forcing tends to warm
the surface of the Earth while negative forcing tends to cool the
surface. Greenhouse gases have a positive radiative forcing because
they absorb and emit heat. See http://www.epa.gov/climatechange/science/recentac.html for more general information about GHGs and
climate science. See EPA Docket, EPA-HQ-OAR-2009-0472.
---------------------------------------------------------------------------
Second, in the opposite direction, it is unlikely that the damage
estimates adequately account for the directed technological change that
climate change will cause. In particular, climate change will increase
the return on investment to develop technologies that allow individuals
to cope with climate change. For example, it is likely that scientists
will develop crops that are better able to withstand high temperatures.
In this respect, the current estimates may overstate the likely
quantified damages, though the costs associated with the investments in
adaptive technologies must also be considered (technologies must also
be included in the calculations, as the benefits should reflect net
welfare changes to society).
Third, there has been considerable recent discussion of the risk of
catastrophic impacts and of how best to account for worst-case
scenarios. Recent work by Weitzman (2009) specifies some conditions
under which the possibility of catastrophe would undermine the use of
IAMs and conventional cost-benefit analysis.\382\ This research
requires further exploration before its generality is known and the
proper way to incorporate it into regulatory reviews is understood. We
also request comments on approaches for measuring the premium
associated with reductions in
[[Page 49617]]
climate-related risks such as catastrophic events.
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\382\ Weitzman, Martin, 2009. On Modeling and Interpreting the
Economics of Catastrophic Climate Change. Review of Economics and
Statistics 9(1): 1-19. See EPA Docket, EPA-HQ-OAR-2009-0472.
---------------------------------------------------------------------------
Fourth, it is also worth noting that the SCC estimates are only
relevant for incremental policies relative to the projected baselines,
which capture business-as-usual scenarios. To evaluate non-marginal
changes, such as might occur if the U.S. acts in tandem with other
nations, it might be necessary to go beyond the simple expedient of
using the SCC along the BAU path. This approach would require
explicitly calculating the total benefits in a move from the BAU
scenario to the policy scenario, without imposing the restriction that
the marginal benefit remains constant over this range.
(4) Other options
The Administration considered other interim SCC options in addition
to the approach described above; we request comment on each of them.
One alternative option was to bring in SCC estimates in studies
published after 1995, rather than limiting the estimates to those in
studies relying on the most recent published version of each of the
three major integrated assessment models: PAGE, FUND, and DICE.
Although some older model versions (and old versions of other models)
were used to produce estimates between 1996 and 2001, it appears that
there have been no significant modeling paradigm changes since 1996.
Another option was to select a range of SCC values for separate
discount rates. For example, sensitivity analysis could be conducted at
the lowest and highest SCC values reported in the filtered set of
estimates for each discount rate considered. If considering SCC
estimates from studies published after 1995 and a discount rate of 2
percent, this option would result in a range of SCC values of $5/t-
CO2 to $260/t-CO2 (2007 emissions in 2007
dollars); at a 3 percent discount rate, the range would be $0 to $58/t-
CO2.
Finally, we considered the possibility that different assumptions
under the Ramsey framework, such as placing approximately equal weight
on the welfare of current and future generations, would imply a lower
discount rate, such as 2%. The Newell and Pizer (2003) method applied
to recent long-term risk free rates would likewise be approximately
consistent with a certainty equivalent rate of 2%.\383\
---------------------------------------------------------------------------
\383\ Specifically, Newell and Pizer (2003) found that modeling
of uncertainty in economic growth causes the effective discount rate
to decline over time. When starting at a 4% discount rate, the
effective discount rate is 2% at 100 years and 1% at 200 years. See
EPA Docket, EPA-HQ-OAR-2009-0472.
---------------------------------------------------------------------------
(5) Ongoing SCC Development
As noted, this is an emphatically interim SCC value. The judgments
described here will be subject to further scrutiny and exploration.
c. Application of Interim SCC Estimates to GHG Emissions Reductions
From This Proposed Rule
The strategy underlying these joint proposals--to coordinate
Federal efforts to reduce GHGs--warrants consideration when assessing
the benefits. To be sure, while no single rule or action can
independently achieve the deep worldwide emissions reductions necessary
to halt and reverse the growth of GHGs. But the combined effects of
multiple strategies to reduce GHG emissions domestically and abroad
could make a major difference in the climate change impacts experienced
by future generations.\384\
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\384\ The Supreme Court recognized in Massachusetts v. EPA that
a single action will not on its own achieve all needed GHG
reductions, noting that ``[a]gencies, like legislatures, do not
generally resolve massive problems in one fell regulatory swoop.''
See Massachusetts v. EPA, 549 U.S. at 524 (2007). See EPA Docket,
EPA-HQ-OAR-2009-0472.
---------------------------------------------------------------------------
The projected net GHG emissions reductions associated with the
proposal reflect an incremental change to projected total global
emissions. Therefore, as shown in Section III.F.3, the projected global
climate signal will be small but discernible--an incrementally lower
projected distribution of global mean surface temperatures.
Given that the climate response is projected to be a marginal
change relative to the baseline climate, we estimate the marginal value
of changes in climate change impacts over time and use this value to
measure the monetized marginal benefits of the GHG emissions reductions
projected for this proposal.
Accordingly, EPA and NHTSA have used the set of interim, global SCC
values described above to estimate the benefits of these coordinated
proposals. The interim SCC values, which reflect the Administration's
interim interpretation of the current literature, are $5 (based on a 5%
discount rate), $10 (5% using Newell-Pizer adjustment), $20 (average
SCC value from the average SCC estimates based on 5% and 3%), $34 (3%),
and $56 (3% using Newell-Pizer adjustment), in 2007 dollars, and are
based on a CO2 emissions change of 1 metric ton in 2007.
Table III.H.6-3 presents the interim SCC values in other years in 2007
dollars. These values are presented as one of many considerations that
will inform the Administration's action on this proposed rule.
Table III.H.6-3--Interim SCC Schedule
--------------------------------------------------------------------------------------------------------------------------------------------------------
Interim SCC schedule (2007$) \a\
---------------------------------------------------------------------------------------------------------------------------------------------------------
Discount rate assumption 2007 2015 2020 2030 2040 2050
--------------------------------------------------------------------------------------------------------------------------------------------------------
5%...................................................... $5 $7 $8 $10 $14 $18
5% (Newell-Pizer) \b\................................... 10 13 15 20 27 37
Average SCC Values from 3% and 5%....................... 20 25 29 39 52 70
3%...................................................... 34 43 50 67 90 120
3% (Newell-Pizer) \b\................................... 56 72 83 110 150 200
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The SCC values are dollar-year and emissions-year specific. These values are presented in 2007$, for individual year of emissions. To determine
values for years not presented in the table, use a 3% growth rate. SCC values represent only a partial accounting for climate impacts.
\b\ SCC values are adjusted based on Newell and Pizer (2003) to account to future uncertainty in discount rates. See EPA Docket, EPA-HQ-OAR-2009-0472.
Tables III.H.6-4 to III.H.6-6 provide the annual benefits for each
year impacted by the proposed rule. As discussed above, marginal
benefits of GHG reductions are projected to grow over time. The tables
below summarize the total benefits for the lifetime of the rule, which
are calculated by using the five interim SCC values.
Total monetized benefits in each specific year are calculated by
[[Page 49618]]
multiplying the marginal benefits estimates per metric ton of
CO2 (the SCC) from Table III.H.6-3 by the reductions in
CO2 for that year. Table III.H.6-5 approximates the total
monetized benefits for non-CO2 GHGs by multiplying the SCC
value by the reductions in non-CO2 GHGs for that year.
Marginal benefit estimates per metric ton of non-CO2 GHGs
are currently unavailable, but work is on-going to monetize benefits
related to the mitigation of other non-CO2 GHGs. Inclusion
of these benefits is planned for the final rule.
Table III.H.6-4--Monetized GHG Benefits of Vehicle Program, CO2 Emissions
[Million 2007$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emissions Discount rate
reduction -------------------------------------------------------------------------------
Year (million 3% (Newell- Average SCC 5% (Newell-
metric tons) 3% Pizer) from 3% and 5% 5% Pizer)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015.................................................... 43.2 $1,900 $3,100 $1,100 $280 $560
2020.................................................... 146 7,300 12,000 4,200 1,100 2,200
2030.................................................... 289 19,000 32,000 11,000 2,900 5,900
2040.................................................... 375 34,000 56,000 19,000 5,100 10,000
2050.................................................... 470 57,000 95,000 33,000 8,600 17,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table III.H.6-5--Monetized GHG Benefits of Vehicle Program, Non-CO2 Emissions in CO2-equivalents
[Million 2007$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emissions Discount rate
reduction -------------------------------------------------------------------------------
Year (million 3% (Newell- Average SCC 5% (Newell-
metric tons) 3% Pizer) from 3% and 5% 5% Pizer)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015.................................................... 5.86 $250 $400 $150 $38 $76
2020.................................................... 17.7 880 1,500 510 130 270
2030.................................................... 35.3 2,400 3,900 1,400 360 700
2040.................................................... 42.7 3,800 6,400 2,200 580 1,200
2050.................................................... 48.2 5,800 9,700 3,400 880 1,800
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table III.H.6-6--Monetized GHG Benefits of Vehicle Program, Total CO2 and Non-CO2 Emissions in CO2-equivalents
[Million 2007$] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emissions Discount rate
reduction -------------------------------------------------------------------------------
Year (million 3% (Newell- Average SCC 5% (Newell-
metric tons) 3% Pizer) from 3% and 5% 5% Pizer)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015.................................................... 49.1 $2,100 $3,500 $1,200 $320 $640
2020.................................................... 165 8,200 14,000 4,700 1,200 2,500
2030.................................................... 325 22,000 36,000 12,000 3,300 6,600
2040.................................................... 417 38,000 63,000 22,000 5,700 11,000
2050.................................................... 518 63,000 100,000 36,000 9,500 19,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Numbers may not add exactly from Tables III.H.6-4 and III.H.6-5 due to rounding.
7. Non-Greenhouse Gas Health and Environmental Impacts
This section presents EPA's analysis of the non-GHG health and
environmental impacts that can be expected to occur as a result of the
proposed light-duty vehicle GHG rule. GHG emissions are predominantly
the byproduct of fossil fuel combustion processes that also produce
criteria and hazardous air pollutants. The vehicles that are subject to
the proposed standards are also significant sources of mobile source
air pollution such as direct PM, NOX, VOCs and air toxics.
The proposed standards would affect exhaust emissions of these
pollutants from vehicles. They would also affect emissions from
upstream sources related to changes in fuel consumption. Changes in
ambient ozone, PM2.5, and air toxics that would result from
the proposed standards are expected to affect human health in the form
of premature deaths and other serious human health effects, as well as
other important public health and welfare effects.
It is important to quantify the health and environmental impacts
associated with the proposed standard because a failure to adequately
consider these ancillary co-pollutant impacts could lead to an
incorrect assessment of their net costs and benefits. Moreover, co-
pollutant impacts tend to accrue in the near term, while any effects
from reduced climate change mostly accrue over a time frame of several
decades or longer.
EPA typically quantifies and monetizes the health and environmental
impacts related to both PM and ozone in its regulatory impact analyses
(RIAs), when possible. However, EPA was unable to do so in time for
this proposal. EPA attempts to make emissions and air quality modeling
decisions early in the analytical process so that we can complete the
photochemical air quality
[[Page 49619]]
modeling and use that data to inform the health and environmental
impacts analysis. Resource and time constraints precluded the Agency
from completing this work in time for the proposal. Instead, EPA is
using PM-related benefits-per-ton values as an interim approach to
estimating the PM-related benefits of the proposal. EPA also provides a
complete characterization of the health and environmental impacts that
will be quantified and monetized for the final rulemaking.
This section is split into two sub-sections: the first presents the
PM-related benefits-per-ton values used to monetize the PM-related co-
benefits associated with the proposal; the second explains what PM- and
ozone-related health and environmental impacts EPA will quantify and
monetize in the analysis for the final rule. EPA bases its analyses on
peer-reviewed studies of air quality and health and welfare effects and
peer-reviewed studies of the monetary values of public health and
welfare improvements, and is generally consistent with benefits
analyses performed for the analysis of the final Ozone National Ambient
Air Quality Standard (NAAQS) and the final PM NAAQS analysis, as well
as the recent Portland Cement National Emissions Standards for
Hazardous Air Pollutants (NESHAP) RIA (U.S. EPA, 2009a), and
NO2 NAAQS (U.S.> EPA, 2009b).385 386 387 388
---------------------------------------------------------------------------
\385\ U.S. Environmental Protection Agency. (2008). Final Ozone
NAAQS Regulatory Impact Analysis. Prepared by: Office of Air and
Radiation, Office of Air Quality Planning and Standards. March.
\386\ U.S. Environmental Protection Agency. October 2006. Final
Regulatory Impact Analysis (RIA) for the Proposed National Ambient
Air Quality Standards for Particulate Matter. Prepared by: Office of
Air and Radiation.
\387\ U.S. Environmental Protection Agency (U.S. EPA). 2009a.
Regulatory Impact Analysis: National Emission Standards for
Hazardous Air Pollutants from the Portland Cement Manufacturing
Industry. Office of Air Quality Planning and Standards, Research
Triangle Park, NC. April. Available on the Internet at http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementria_4-20-09.pdf.
\388\ U.S. Environmental Protection Agency (U.S. EPA). 2009b.
Proposed NO2 NAAQS Regulatory Impact Analysis (RIA).
Office of Air Quality Planning and Standards, Research Triangle
Park, NC. April. Available on the Internet at http://www.epa.gov/ttn/ecas/regdata/RIAs/proposedno2ria.pdf.
---------------------------------------------------------------------------
Though EPA is characterizing the changes in emissions associated
with toxic pollutants, we will not be able to quantify or monetize the
human health effects associated with air toxic pollutants for either
the proposal or the final rule analyses. Please refer to Section III.G
for more information about the air toxics emissions impacts associated
with the proposed standards.
a. Economic Value of Reductions in Criteria Pollutants
As described in Section III.G, the proposed standards would reduce
emissions of several criteria and toxic pollutants and precursors. In
this analysis, EPA estimates the economic value of the human health
benefits associated with reducing PM2.5 exposure. Due to
analytical limitations, this analysis does not estimate benefits
related to other criteria pollutants (such as ozone, NO2 or
SO2) or toxics pollutants, nor does it monetize all of the
potential health and welfare effects associated with PM2.5.
This analysis uses a ``benefit-per-ton'' method to estimate a
selected suite of PM2.5-related health benefits described
below. These PM2.5 benefit-per-ton estimates provide the
total monetized human health benefits (the sum of premature mortality
and premature morbidity) of reducing one ton of directly emitted
PM2.5, or its precursors (such as NOX,
SOX, and VOCs), from a specified source. Ideally, the human
health benefits would be estimated based on changes in ambient
PM2.5 as determined by full-scale air quality modeling.
However, this modeling was not possible in the timeframe for this
proposal.
The dollar-per-ton estimates used in this analysis are provided in
Table III.H.7-1. In the summary of costs and benefits, Section III.H.10
of this preamble, EPA presents the monetized value of PM-related
improvements associated with the proposal.
Table III.H.7-1--Benefits-per-ton Values (2007$) Derived Using the ACS Cohort Study for PM-related Premature
Mortality (Pope et al., 2002) \a\ and a 3% Discount Rate \b\
----------------------------------------------------------------------------------------------------------------
All sources \d\ Stationary (non-EGU) Mobile sources
-------------------------- sources -------------------------
Year \c\ --------------------------
SOX VOC Direct NOX Direct
NOX PM2.5 PM2.5
----------------------------------------------------------------------------------------------------------------
2015.............................. $28,000 $1,200 $4,700 $220,000 $4,900 $270,000
2020.............................. 31,000 1,300 5,100 240,000 5,300 290,000
2030.............................. 36,000 1,500 6,100 280,000 6,400 350,000
2040.............................. 43,000 1,800 7,200 330,000 7,600 420,000
----------------------------------------------------------------------------------------------------------------
\a\ The benefit-per-ton estimates 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.
\b\ The benefit-per-ton estimates 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.
\c\ Benefit-per-ton values were estimated for the years 2015, 2020, and 2030. For 2040, EPA and NHTSA
extrapolated exponentially based on the growth between 2020 and 2030.
\d\ Note that the benefit-per-ton value for SOX is based on the value for Stationary (Non-EGU) sources; no SOX
value was estimated for mobile sources. The benefit-per-ton value for VOCs was estimated across all sources.
The benefit per-ton technique has been used in previous analyses,
including EPA's recent Ozone National Ambient Air Quality Standards
(NAAQS) RIA (U.S. EPA, 2008a),\389\ Portland Cement National Emissions
Standards for Hazardous Air Pollutants (NESHAP) RIA (U.S. EPA,
2009a),\390\ and NO2 NAAQS (U.S. EPA, 2009b).\391\
[[Page 49620]]
Table III.H.7-2 shows the quantified and unquantified PM2.5-
related co-benefits captured in those benefit-per-ton estimates.
---------------------------------------------------------------------------
\389\ U.S. Environmental Protection Agency (U.S. EPA). 2008a.
Regulatory Impact Analysis, 2008 National Ambient Air Quality
Standards for Ground-level Ozone, Chapter 6. Office of Air Quality
Planning and Standards, Research Triangle Park, NC. March. Available
at http://www.epa.gov/ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf.
\390\ U.S. Environmental Protection Agency (U.S. EPA). 2009a.
Regulatory Impact Analysis: National Emission Standards for
Hazardous Air Pollutants from the Portland Cement Manufacturing
Industry. Office of Air Quality Planning and Standards, Research
Triangle Park, NC. April. Available on the Internet at http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementria_4-20-09.pdf.
\391\ U.S. Environmental Protection Agency (U.S. EPA). 2009b.
Proposed NO2 NAAQS Regulatory Impact Analysis (RIA).
Office of Air Quality Planning and Standards, Research Triangle
Park, NC. April. Available on the Internet at http://www.epa.gov/ttn/ecas/regdata/RIAs/proposedno2ria.pdf.
Table III.H.7-2--Human Health and Welfare Effects of PM2.5
------------------------------------------------------------------------
Quantified and
Pollutant/ effect monetized in primary Unquantified effects
estimates changes in
------------------------------------------------------------------------
PM2.5.................. Adult premature Subchronic bronchitis
mortality cases
Bronchitis: chronic and Low birth weight
acute Pulmonary function
Hospital admissions: Chronic respiratory
respiratory and diseases other than
cardiovascular chronic bronchitis
Emergency room visits Non-asthma respiratory
for asthma emergency room visits
Nonfatal heart attacks Visibility
(myocardial Household soiling
infarction)
Lower and upper
respiratory illness
Minor restricted-
activity days
Work loss days
Asthma exacerbations
(asthmatic population)
Infant mortality
------------------------------------------------------------------------
Consistent with the NO2 NAAQS,\392\ the benefits
estimates utilize the concentration-response functions as reported in
the epidemiology literature. To calculate the total monetized impacts
associated with quantified health impacts, EPA applies values derived
from a number of sources. For premature mortality, EPA applies a value
of a statistical life (VSL) derived from the mortality valuation
literature. For certain health impacts, such as chronic bronchitis and
a number of respiratory-related ailments, EPA applies willingness-to-
pay estimates derived from the valuation literature. For the remaining
health impacts, EPA applies values derived from current cost-of-illness
and/or wage estimates.
---------------------------------------------------------------------------
\392\ Although we summarize the main issues in this chapter, we
encourage interested readers to see benefits chapter of the
NO2 NAAQS for a more detailed description of recent
changes to the PM benefits presentation and preference for the no-
threshold model.
---------------------------------------------------------------------------
Readers interested in reviewing the complete methodology for
creating the benefit-per-ton estimates used in this analysis can
consult the Technical Support Document (TSD) \393\ accompanying the
recent final ozone NAAQS RIA (U.S. EPA, 2008a). Readers can also refer
to Fann et al. (2009) \394\ for a detailed description of the benefit-
per-ton methodology.\395\ A more detailed description of the benefit-
per-ton estimates is also provided in the Draft Joint TSD that
accompanies this rulemaking.
---------------------------------------------------------------------------
\393\ U.S. Environmental Protection Agency (U.S. EPA). 2008b.
Technical Support Document: Calculating Benefit Per-Ton estimates,
Ozone NAAQS Docket EPA-HQ-OAR-2007-0225-0284. Office of Air
Quality Planning and Standards, Research Triangle Park, NC. March.
Available on the Internet at http://www.regulations.gov.
\394\ Fann, N. et al. (2009). The influence of location, source,
and emission type in estimates of the human health benefits of
reducing a ton of air pollution. Air Qual Atmos Health. Published
online: 09 June, 2009.
\395\ The values included in this report are different from
those presented in the article cited above. Benefits methods change
to reflect new information and evaluation of the science. Since
publication of the June 2009 article, EPA has made two significant
changes to its benefits methods: (1) We no longer assume that a
threshold exists in PM-related models of health impacts; and (2) We
have revised the Value of a Statistical Life to equal $6.3 million
(year 2000$), up from an estimate of $5.5 million (year 2000$) used
in the June 2009 report. Please refer to the following Web site for
updates to the dollar-per-ton estimates: http://www.epa.gov/air/benmap/bpt.html.
---------------------------------------------------------------------------
As described in the documentation for the benefit per-ton estimates
cited above, national per-ton estimates were developed for selected
pollutant/source category combinations. The per-ton values calculated
therefore apply only to tons reduced from those specific pollutant/
source combinations (e.g., NO2 emitted from mobile sources;
direct PM emitted from stationary sources). Our estimate of
PM2.5 benefits is therefore based on the total direct
PM2.5 and PM-related precursor emissions controlled by
sector and multiplied by each per-ton value.
The benefit-per-ton estimates are subject to a number of
assumptions and uncertainties.
They do not reflect local variability in population
density, meteorology, exposure, baseline health incidence rates, or
other local factors that might lead to an overestimate or underestimate
of the actual benefits of controlling fine particulates. EPA will
conduct full-scale air quality modeling for the final rulemaking in an
effort to capture this variability.
This analysis assumes that all fine particles, regardless
of their chemical composition, are equally potent in causing premature
mortality. This is an important assumption, because PM2.5
produced via transported precursors emitted from stationary sources may
differ significantly from direct PM2.5 released from diesel
engines and other industrial sources, but no clear scientific grounds
exist for supporting differential effects estimates by particle type.
This analysis assumes that the health impact function for
fine particles is linear within the range of ambient concentrations
under consideration. Thus, the estimates include health benefits from
reducing fine particles in areas with varied concentrations of
PM2.5, including both regions that are in attainment with
fine particle standard and those that do not meet the standard down to
the lowest modeled concentrations.
There are several health benefits categories that EPA was
unable to quantify due to limitations associated with using benefits-
per-ton estimates, several of which could be substantial. Because the
NOX and VOC emission reductions associated with this
proposal are also precursors to ozone, reductions in NOX and
VOC would also reduce ozone formation and the health effects associated
with ozone exposure. Unfortunately, benefits-per-ton estimates do not
exist due to issues associated with the complexity of the atmospheric
air chemistry and nonlinearities associated with ozone formation. The
PM-related benefits-per-ton estimates also do not include any human
welfare or ecological benefits. Please refer to Chapter 7.3 of the RIA
that accompanies this proposal for a description of the quantification
and monetization of health impact for the FRM and a description of the
unquantified co-pollutant benefits associated with this rulemaking.
There are many uncertainties associated with the health
impact functions used in this modeling effort. These include: Within-
study variability (the precision with which a given study estimates the
relationship between air quality changes and health effects); across-
study variation (different published studies of the same pollutant/
[[Page 49621]]
health effect relationship typically do not report identical findings
and in some instances the differences are substantial); the application
of concentration-response functions nationwide (does not account for
any relationship between region and health effect, to the extent that
such a relationship exists); extrapolation of impact functions across
population (we assumed that certain health impact functions applied to
age ranges broader than that considered in the original epidemiological
study); and various uncertainties in the concentration-response
function, including causality and thresholds. These uncertainties may
under- or over-estimate benefits.
EPA has investigated methods to characterize uncertainty
in the relationship between PM2.5 exposure and premature
mortality. EPA's final PM2.5 NAAQS analysis provides a more
complete picture about the overall uncertainty in PM2.5
benefits estimates. For more information, please consult the
PM2.5 NAAQS RIA (Table 5.5).
The benefit-per-ton estimates used in this analysis
incorporate projections of key variables, including atmospheric
conditions, source level emissions, population, health baselines and
incomes, technology. These projections introduce some uncertainties to
the benefit per ton estimates.
As described above, using the benefit-per-ton value
derived from the ACS study (Pope et al., 2002) alone provides an
incomplete characterization of PM2.5 benefits. When placed
in the context of the Expert Elicitation results, this estimate falls
toward the lower end of the distribution. By contrast, the estimated
PM2.5 benefits using the coefficient reported by Laden in
that author's reanalysis of the Harvard Six Cities cohort fall toward
the upper end of the Expert Elicitation distribution results.
As mentioned above, emissions changes and benefits-per-ton
estimates alone are not a good indication of local or regional air
quality and health impacts, as there may be localized impacts
associated with the proposed rulemaking. Additionally, the atmospheric
chemistry related to ambient concentrations of PM2.5, ozone
and air toxics is very complex. Full-scale photochemical modeling is
therefore necessary to provide the needed spatial and temporal detail
to more completely and accurately estimate the changes in ambient
levels of these pollutants and their associated health and welfare
impacts. As discussed above, timing and resource constraints precluded
from conducting a full-scale photochemical air quality modeling
analysis in time for the NPRM. For the final rule, however, a national-
scale air quality modeling analysis will be performed to analyze the
impacts of the standards on PM2.5, ozone, and selected air
toxics. The benefits analysis plan for the final rulemaking is
discussed in the next section.
b. Human Health and Environmental Benefits for the Final Rule
i. Human Health and Environmental Impacts
To model the ozone and PM air quality benefits of the final rule,
EPA will use the Community Multiscale Air Quality (CMAQ) model (see
Section III.G.5.b for a description of the CMAQ model). The modeled
ambient air quality data will serve as an input to the Environmental
Benefits Mapping and Analysis Program (BenMAP).\396\ BenMAP is a
computer program developed by EPA that integrates a number of the
modeling elements used in previous RIAs (e.g., interpolation functions,
population projections, health impact functions, valuation functions,
analysis and pooling methods) to translate modeled air concentration
estimates into health effects incidence estimates and monetized
benefits estimates.
---------------------------------------------------------------------------
\396\ Information on BenMAP, including downloads of the
software, can be found at http://www.epa.gov/ttn/ecas/benmodels.html.
---------------------------------------------------------------------------
Chapter 7.3 in the DRIA that accompanies this proposal lists the
co-pollutant health effect exposure-response functions EPA will use to
quantify the co-pollutant incidence impacts associated with the final
light-duty vehicles standard. These include PM- and ozone-related
premature mortality, chronic bronchitis, nonfatal heart attacks,
hospital admissions (respiratory and cardiovascular), emergency room
visits, acute bronchitis, minor restricted activity days, and days of
work and school lost.
ii. Monetized Impacts
To calculate the total monetized impacts associated with quantified
health impacts, EPA applies values derived from a number of sources.
For premature mortality, EPA applies a value of a statistical life
(VSL) derived from the mortality valuation literature. For certain
health impacts, such as chronic bronchitis and a number of respiratory-
related ailments, EPA applies willingness-to-pay estimates derived from
the valuation literature. For the remaining health impacts, EPA applies
values derived from current cost-of-illness and/or wage estimates.
Chapter 7.3 in the DRIA that accompanies this proposal presents the
monetary values EPA will apply to changes in the incidence of health
and welfare effects associated with reductions in non-GHG pollutants
that will occur when these GHG control strategies are finalized.
iii. Other Unquantified Health and Environmental Impacts
In addition to the co-pollutant health and environmental impacts
EPA will quantify for the analysis of the final standard, there are a
number of other health and human welfare endpoints that EPA will not be
able to quantify or monetize because of current limitations in the
methods or available data. These impacts are associated with emissions
of air toxics (including benzene, 1,3-butadiene, formaldehyde,
acetaldehyde, acrolein, and ethanol), ambient ozone, and ambient
PM2.5 exposures. Chapter 7.3 of the DRIA lists these
unquantified health and environmental impacts.
While there will be impacts associated with air toxic pollutant
emission changes that result from the final standard, EPA will not
attempt to monetize those impacts. This is primarily because currently
available tools and methods to assess air toxics risk from mobile
sources at the national scale are not adequate for extrapolation to
incidence estimations or benefits assessment. The best suite of tools
and methods currently available for assessment at the national scale
are those used in the National-Scale Air Toxics Assessment (NATA). The
EPA Science Advisory Board specifically commented in their review of
the 1996 NATA that these tools were not yet ready for use in a
national-scale benefits analysis, because they did not consider the
full distribution of exposure and risk, or address sub-chronic health
effects.\397\ While EPA has since improved the tools, there remain
critical limitations for estimating incidence and assessing benefits of
reducing mobile source air toxics. EPA continues to work to address
these limitations; however, EPA does not anticipate having methods and
tools available for national-scale application in time for the analysis
of the final rules.\398\
---------------------------------------------------------------------------
\397\ Science Advisory Board. 2001. NATA--Evaluating the
National-Scale Air Toxics Assessment for 1996--an SAB Advisory.
http://www.epa.gov/ttn/atw/sab/sabrev.html.
\398\ In April, 2009, EPA hosted a workshop on estimating the
benefits of reducing hazardous air pollutants. This workshop built
upon the work accomplished in the June 2000 Science Advisory Board/
EPA Workshop on the Benefits of Reductions in Exposure to Hazardous
Air Pollutants, which generated thoughtful discussion on approaches
to estimating human health benefits from reductions in air toxics
exposure, but no consensus was reached on methods that could be
implemented in the near term for a broad selection of air toxics.
Please visit http://epa.gov/air/toxicair/2009workshop.html for more
information about the workshop and its associated materials.
---------------------------------------------------------------------------
[[Page 49622]]
8. Energy Security Impacts
This proposal to reduce GHG emissions in light-duty vehicles
results in improved fuel efficiency which, in turn, helps to reduce
U.S. petroleum imports. A reduction of U.S. petroleum imports reduces
both financial and strategic risks associated with a potential
disruption in supply or a spike in cost of a particular energy source.
This reduction in risk is a measure of improved U.S. energy security.
This section summarizes our estimate of the monetary value of the
energy security benefits of the proposed GHG vehicle standards against
the reference case by estimating the impact of the expanded use of
lower-GHG vehicle technologies on U.S. oil imports and avoided U.S. oil
import expenditures. Additional discussion of this issue can be found
in Chapter 5.1 of EPA's RIA and Section 4.2.8 of the TSD.
a. Implications of Reduced Petroleum Use on U.S. Imports
In 2008, U.S. petroleum import expenditures represented 21% of
total U.S. imports of all goods and services.\399\ In 2008, the U.S.
imported 66% of the petroleum it consumed, and the transportation
sector accounted for 70% of total U.S. petroleum consumption. This
compares to approximately 37% of petroleum from imports and 55%
consumption of petroleum in the transportation sector in 1975.\400\ It
is clear that petroleum imports have a significant impact on the U.S.
economy. Requiring lower-GHG vehicle technology in the U.S. is expected
to lower U.S. petroleum imports.
---------------------------------------------------------------------------
\399\ Source: U.S. Bureau of Economic Analysis, U.S.
International Transactions Accounts Data, as shown on June 24, 2009.
\400\ Source: U.S. Department of Energy, Annual Energy Review
2008, Report No. DOE/EIA-0384(2008), Tables 5.1 and 5.13c, June 26,
2009.
---------------------------------------------------------------------------
b. Energy Security Implications
In order to understand the energy security implications of reducing
U.S. petroleum imports, EPA has worked with Oak Ridge National
Laboratory (ORNL), which has developed approaches for evaluating the
economic costs and energy security implications of oil use. The energy
security estimates provide below are based upon a methodology developed
in a peer-reviewed study entitled, ``The Energy Security Benefits of
Reduced Oil Use, 2006-2015,'' completed in March 2008. This recent
study is included as part of the docket for this
rulemaking.401 402
---------------------------------------------------------------------------
\401\ Leiby, Paul N. ``Estimating the Energy Security Benefits
of Reduced U.S. Oil Imports,'' Oak Ridge National Laboratory, ORNL/
TM-2007/028, Final Report, 2008. (Docket EPA-HQ-OAR-2009-0472)
\402\ The ORNL study ``The Energy Security Benefits of Reduced
Oil Use, 2006-2015,'' completed in March 2008, is an update version
of the approach used for estimating the energy security benefits of
U.S. oil import reductions developed in an ORNL 1997 Report by
Leiby, Paul N., Donald W. Jones, T. Randall Curlee, and Russell Lee,
entitled ``Oil Imports: An Assessment of Benefits and Costs.''
(Docket EPA-HQ-OAR-2009-0472).
---------------------------------------------------------------------------
When conducting this recent analysis, ORNL considered the economic
cost of importing petroleum into the U.S. The economic cost of
importing petroleum into the U.S. is defined to include two components
in addition to the purchase price of petroleum itself. These are: (1)
The higher costs for oil imports resulting from the effect of
increasing U.S. import demand on the world oil price and on OPEC market
power (i.e., the ``demand'' or ``monopsony'' costs); and (2) the risk
of reductions in U.S. economic output and disruption of the U.S.
economy caused by sudden disruptions in the supply of imported
petroleum to the U.S. (i.e., macroeconomic disruption/adjustment
costs). Maintaining a U.S. military presence to help secure stable oil
supply from potentially vulnerable regions of the world was not
included in this analysis because its attribution to particular
missions or activities is difficult.
For this proposal, ORNL further updated the energy security premium
by incorporating the most recent oil price forecast in the in the
Energy Information Administration's 2009 Annual Energy Outlook into its
model. In order for the energy security premium estimated to be used in
EPA's OMEGA model, ORNL developed energy security estimates for a
number of different years; please refer to Table III.H.8-1 for this
information for years 2015, 2020, 2030 and 2040,\403\ as well as a
breakdown of the components of the energy security premium for each of
these years. The components of the energy security premium and their
values are discussed in detail in the TSD, Chapter 4.2.8.
---------------------------------------------------------------------------
\403\ AEO 2009 forecasts energy market trends and values only to
2030. The energy security premium estimates post-2030 were assumed
to be the 2030 estimate.
Table III.H.8-1--Energy Security Premium in 2015, 2020, 2030 and 2040 (2007$/Barrel)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Macroeconomic disruption/
Year (range) Monopsony adjustment costs Total mid-point
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015.......................................................... $11.79 ($4.26-$21.37) $6.70 ($3.11-$10.67) $18.49 ($9.80-$28.08)
2020.......................................................... $12.31 ($4.46-$22.53) $7.62 ($3.77-$12.46) $19.94 ($10.58-$30.47)
2030.......................................................... $10.57 ($3.84-$18.94) $8.12 ($3.90-$13.04) $18.69 ($10.52-$27.89)
2040.......................................................... $10.57 ($3.84-$18.94) $8.12 ($3.90-$13.04) $18.69 ($10.52-$27.89)
--------------------------------------------------------------------------------------------------------------------------------------------------------
The literature on the energy security for the last two decades has
routinely combined the monopsony and the macroeconomic disruption
components when calculating the total value of the energy security
premium. However, in the context of using a global value for the Social
Cost of Carbon (SCC) the question arises: How should the energy
security premium be used when some benefits from the proposed rule,
such as the benefits of reducing greenhouse gas emissions, are
calculated at a global level? Monopsony benefits represent avoided
payments by the U.S. to oil producers in foreign countries that result
from a decrease in the world oil price as the U.S. decreases its
consumption of imported oil. Although there is clearly a benefit to the
U.S. when considered from the domestic perspective, the decrease in
price due to decreased demand in the U.S. also represents a loss of
income to oil-producing countries. Given the redistributive nature of
this effect, do the negative effects on other countries ``net out'' the
positive impacts to the U.S.? If this is the case, then, the monopsony
portion of the energy security premium should be excluded from the net
benefits calculation for the rule.
Based on this reasoning, EPA's estimates of net benefits for this
proposal exclude the portion of energy
[[Page 49623]]
security benefits stemming from the U.S. exercising its monopsony power
in oil markets. Thus, EPA only includes the macroeconomic disruption/
adjustment cost portion of the energy security premium.
EPA invites comments on whether, when the global value for
greenhouse gas reduction benefits is used, it may still be appropriate
to include the monopsony benefits in net benefits calculation for the
proposed rule. From one perspective, the global SCC is used in these
calculations, not because the global net benefits of the rule are being
computed (they are not), but rather because in the context of a global
public good, the global marginal benefit is the correct domestic
benefit against which domestic costs are to be compared. Similarly,
energy security is inherently a domestic benefit. Thus, should the two
benefits, if they are both viewed from this domestic perspective, be
counted in the net benefits estimates for this rulemaking and more
generally what are the overall implications of this approach to
justifying regulation? If the monopsony benefits were included in this
case, they could be significant.
Total annual energy security benefits are derived from the
estimated reductions in U.S. imports of finished petroleum products and
crude oil using only the macroeconomic disruption/adjustment portion of
the energy security premium. These values are shown in Table III.H.8-
2.\404\ The reduced oil estimates were derived from the OMEGA model, as
explained in Section VI of this preamble. EPA used the same assumption
that NHTSA used in its Corporate Average Fuel Economy and CAFE Reform
for MY 2008-2011 Light Trucks proposal, which assumed each gallon of
fuel saved reduces total U.S. imports of crude oil or refined products
by 0.95 gallons.\405\
---------------------------------------------------------------------------
\404\ Estimated reductions in U.S. imports of finished petroleum
products and crude oil are 95% of 88 million barrels (MMB) in 2015,
302 MMB in 2020, 592 MMB in 2030, and 767 MMB in 2040.
\405\ Preliminary Regulatory Impacts Analysis, April 2008. Based
on a detailed analysis of differences in fuel consumption, petroleum
imports, and imports of refined petroleum products among the
Reference Case, High Economic Growth, and Low Economic Growth
Scenarios presented in the Energy Information Administration's
Annual Energy Outlook 2007, NHTSA estimated that approximately 50
percent of the reduction in fuel consumption is likely to be
reflected in reduced U.S. imports of refined fuel, while the
remaining 50 percent would be expected to be reflected in reduced
domestic fuel refining. Of this latter figure, 90 percent is
anticipated to reduce U.S. imports of crude petroleum for use as a
refinery feedstock, while the remaining 10 percent is expected to
reduce U.S. domestic production of crude petroleum. Thus on balance,
each gallon of fuel saved is anticipated to reduce total U.S.
imports of crude petroleum or refined fuel by 0.95 gallons.
Table III.H.8-2--Total Annual Energy Security Benefits Using Only the
Macroeconomic Disruption/Adjustment Component of the Energy Security
Premium in 2015, 2020, 2030 and 2040
[Billions of 2007$]
------------------------------------------------------------------------
Year Benefits
------------------------------------------------------------------------
2015.................................................... $0.59
2020.................................................... 2.30
2030.................................................... 4.81
2040.................................................... 6.23
------------------------------------------------------------------------
9. Other Impacts
There are other impacts associated with the proposed CO2
emissions standards and associated reduced fuel consumption that vary
with miles driven. Lower fuel consumption would, presumably, result in
fewer trips to the filling station to refuel and, thus, time saved. The
rebound effect, discussed in detail in Section III.H.4.c, produces
additional benefits to vehicle owners in the form of consumer surplus
from the increase in vehicle-miles driven, but may also increase the
societal costs associated with traffic congestion, motor vehicle
crashes, and noise. These effects are likely to be relatively small in
comparison to the value of fuel saved as a result of the proposed
standards, but they are nevertheless important to include. Table
III.H.9-1 summarizes the other economic impacts. Please refer to
Preamble Section II.F and the Draft Joint TSD that accompanies this
proposal for more information about these impacts and how EPA and NHTSA
use them in their analyses.
Table III.H.9-1--Estimated Economic Externalities Associated With the Proposed Light-Duty Vehicle GHG Program
[Millions of 2007 dollars]
----------------------------------------------------------------------------------------------------------------
Economic externalities 2020 2030 2040 2050 NPV, 3% NPV, 7%
----------------------------------------------------------------------------------------------------------------
Value of Less Frequent Refueling.. $2,500 $4,900 $6,400 $8,000 $89,600 $41,000
Value of Increased Driving \a\.... 4,900 10,000 13,600 18,000 184,700 82,700
Accidents, Noise, Congestion...... -2,400 -4,900 -6,300 -7,900 -88,200 -40,200
-----------------------------------------------------------------------------
Annual Quantified Benefits.... 5,000 10,000 13,700 18,100 186,100 83,500
----------------------------------------------------------------------------------------------------------------
\a\ Calculated using post-tax fuel prices.
10. Summary of Costs and Benefits
In this section EPA presents a summary of costs, benefits, and net
benefits of the proposal. EPA presents fuel consumption impacts as
negative costs of the vehicle program.
Table III.H.10-1 shows the estimated annual societal costs of the
vehicle program for the indicated calendar years. The table also shows
the net present values of those costs for the calendar years 2012-2050
using both a 3 percent and a seven percent discount rate. In this
table, fuel savings are calculated using pre-tax fuel prices and are
presented as negative costs associated with the vehicle program (rather
than positive savings).
Consumers are expected to receive the fuel savings presented here.
The cost estimates for the fuel-saving technology are based on the
assumptions that, to comply with the rule, no vehicle attributes will
change except fuel economy and technology cost; that consumers will
consider reduced fuel costs as a substitute for increased purchase
price; and that consumers will not change the vehicles that they
purchase. Instead, automakers are likely to redesign vehicles as part
of their compliance strategies. If so, the redesigns may make the
vehicles either less or more attractive to consumers. In
[[Page 49624]]
addition, consumers may choose to purchase different vehicles than they
would in the absence of this rule. These changes may affect the
satisfaction that consumers receive from their vehicles. Because of the
unsettled state of the modeling of consumer choices (discussed in
Section III.H.1 and in DRIA Section 8.1.2), this analysis does not
measure these effects. To the extent that consumer satisfaction with
vehicles may decline due to changes in vehicles other than fuel
economy, or that consumers may take some of these fuel savings into
account when they purchase their vehicles, the fuel savings may
overstate the benefits of improved fuel economy to consumers.
Table III.H.10-1--Estimated Societal Costs of the Light-Duty Vehicle GHG Program
[Millions of 2007 dollars]
----------------------------------------------------------------------------------------------------------------
Social costs 2020 2030 2040 2050 NPV, 3% NPV, 7%
----------------------------------------------------------------------------------------------------------------
Vehicle Compliance Costs.......... $18,000 $17,900 $19,300 $20,900 $390,000 $216,600
Fuel Savings \a\.................. -43,100 -90,400 -125,000 -167,000 -1,677,600 -746,100
-----------------------------------------------------------------------------
Quantified Annual Costs....... -25,100 -72,500 -105,700 -146,100 -1,287,600 -529,500
----------------------------------------------------------------------------------------------------------------
\a\ Calculated using pre-tax fuel prices.
Table III.H.10-2 presents estimated annual societal 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 percent and a 7 percent discount rate. The table shows the benefits
of reduced GHG emissions--and consequently the annual quantified
benefits (i.e., total benefits)--for each of five interim SCC values
considered by EPA. As discussed in Section III.H.6, there is a very
high probability (very likely according to the IPCC) that the benefit
estimates from GHG reductions are underestimates. One of the primary
reasons is that models used to calculate SCC values do not include
information about impacts that have not been quantified.
In addition, the total GHG reduction benefits presented below
likely underestimate the value of GHG reductions because they were
calculated using the marginal values for CO2 emissions. The
impacts of non-CO2 emissions vary from those of
CO2 emissions because of differences in atmospheric
lifetimes and radiative forcing.\406\ As a result, the marginal benefit
values of non-CO2 GHG reductions and their growth rates over
time will not be the same as the marginal benefits measured on a
CO2-equivalent scale.\407\ Marginal benefit estimates per
metric ton of non-CO2 GHGs are currently unavailable, but
work is on-going to monetize benefits related to the mitigation of
other non-CO2 GHGs.
---------------------------------------------------------------------------
\406\ Radiative forcing is the change in the balance between
solar radiation entering the atmosphere and the Earth's radiation
going out. On average, a positive radiative forcing tends to warm
the surface of the Earth while negative forcing tends to cool the
surface. Greenhouse gases have a positive radiative forcing because
they absorb and emit heat. See http://www.epa.gov/climatechange/science/recentac.html for more general information about GHGs and
climate science.
\407\ See IPCC WGII, 2007 for discussion about implications of
different marginal impacts among the GHGs.
Table III.H.10-2--Estimated Societal Benefits Associated With the Proposed Light-Duty Vehicle GHG Program
[Millions of 2007 dollars]
----------------------------------------------------------------------------------------------------------------
Benefits 2020 2030 2040 2050 NPV, 3% NPV, 7%
----------------------------------------------------------------------------------------------------------------
Reduced GHG Emissions at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%.................. $1,200 $3,300 $5,700 $9,500 $69,200 $28,600
SCC 5% Newell-Pizer..... 2,500 6,600 11,000 19,000 138,400 57,100
SCC from 3% and 5%...... 4,700 12,000 22,000 36,000 263,000 108,500
SCC 3%.................. 8,200 22,000 38,000 63,000 456,900 188,500
SCC 3% Newell-Pizer..... 14,000 36,000 63,000 100,000 761,400 314,200
PM2.5 Related Benefits a b c 1,400 3,000 4,600 6,700 59,800 26,300
Energy Security Impacts 2,300 4,800 6,200 7,800 85,800 38,800
(price shock)..............
Reduced Refueling........... 2,500 4,900 6,400 8,000 89,600 41,000
Value of Increased Driving 4,900 10,000 13,600 18,000 184,700 82,700
\d\........................
Accidents, Noise, Congestion -2,400 -4,900 -6,300 -7,900 -88,200 -40,200
----------------------------------------------------------------------------------------------------------------
Quantified Annual Benefits at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%.................. $9,900 $21,100 $30,200 $42,100 $400,900 $177,200
SCC 5% Newell-Pizer..... 11,200 24,400 35,500 51,600 470,100 205,700
SCC from 3% and 5%...... 13,400 29,800 46,500 68,600 594,700 257,100
SCC 3%.................. 16,900 39,800 62,500 95,600 788,600 337,100
SCC 3% Newell-Pizer..... 22,700 53,800 87,500 132,600 1,093,100 462,800
----------------------------------------------------------------------------------------------------------------
\a\ 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 benefit-per-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. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards.
[[Page 49625]]
\b\ The PM2.5-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.
\c\ The PM2.5-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.
\d\ Calculated using pre-tax fuel prices.
Table III.H.10-3 presents estimated annual net benefits for the
indicated calendar years. The table also shows the net present values
of those net benefits for the calendar years 2012-2050 using both a 3
percent and a 7 percent discount rate. The table includes the benefits
of reduced GHG emissions--and consequently the annual net benefits--for
each of five interim SCC values considered by EPA. As noted above,
there is a very high probability (very likely according to the IPCC)
that the benefit estimates from GHG reductions are underestimates
because, in part, models used to calculate SCC values do not include
information about impacts that have not been quantified.
Table III.H.10-3--Quantified Net Benefits Associated With the Proposed Light-Duty Vehicle GHG Program a b
[Millions of 2007 dollars]
----------------------------------------------------------------------------------------------------------------
2020 2030 2040 2050 NPV, 3% NPV, 7%
----------------------------------------------------------------------------------------------------------------
Quantified Annual Costs..... -$25,100 -$72,500 -$105,700 -$146,100 -$1,287,600 -$529,500
----------------------------------------------------------------------------------------------------------------
Quantified Annual Benefits at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%.................. $9,900 $21,100 $30,200 $42,100 $400,900 $177,200
SCC 5% Newell-Pizer..... 11,200 24,400 35,500 51,600 470,100 205,700
SCC from 3% and 5%...... 13,400 29,800 46,500 68,600 594,700 257,100
SCC 3%.................. 16,900 39,800 62,500 95,600 788,600 337,100
SCC 3% Newell-Pizer..... 22,700 53,800 87,500 132,600 1,093,100 462,800
----------------------------------------------------------------------------------------------------------------
Quantified Net Benefits at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%.................. $35,000 $93,600 $135,900 $188,200 $1,688,500 $706,700
SCC 5% Newell-Pizer..... 36,300 96,900 141,200 197,700 1,757,700 735,200
SCC from 3% and 5%...... 38,500 102,300 152,200 214,700 1,882,300 786,600
SCC 3%.................. 42,000 112,300 168,200 241,700 2,076,200 866,600
SCC 3% Newell-Pizer..... 47,800 126,300 193,200 278,700 2,380,700 992,300
----------------------------------------------------------------------------------------------------------------
\a\ 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 benefit-per-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. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards.
\b\ Fuel impacts were calculated using pre-tax fuel prices.
EPA also conducted a separate analysis of the total benefits over
the model year lifetimes of the 2012 through 2016 model year vehicles.
In contrast to the calendar year analysis, the model year lifetime
analysis shows the lifetime impacts of the program on each of these MY
fleets over the course of its lifetime. Full details of the inputs to
this analysis can be found in DRIA Chapter 5. The societal benefits of
the full life of each of the five model years from 2012 through 2016
are shown in Tables III.H.10-4 and III.H.10-5 at both a 3 percent and a
7 percent discount rate, respectively. The net benefits are shown in
Tables III.H.10-6 and III.H.10-7 for both a 3 percent and a 7 percent
discount rate. Note that the quantified annual benefits shown in Table
III.H.10-4 and Table III.H.10-5 include fuel savings as a positive
benefit. As such, the quantified annual costs as shown in Table
III.H.10-6 and Table III.H.10-7 do not include fuel savings since those
are included as benefits. Also note that each of the Tables III.H.10-4
through Table III.H.10-7 include the benefits of reduced CO2
emissions--and consequently the total benefits--for each of five
interim SCC values considered by EPA. As noted above, there is a very
high probability (very likely according to the IPCC) that the benefit
estimates from GHG reductions are underestimates because, in part,
models used to calculate SCC values do not include information about
impacts that have not been quantified.
Table III.H.10-4--Estimated Societal Benefits Associated With the Proposed Light-Duty Vehicle GHG Program, Model
Year Analysis
[Millions of 2007 dollars; 3% discount rate]
----------------------------------------------------------------------------------------------------------------
Monetized values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum
----------------------------------------------------------------------------------------------------------------
Cost of Noise, Accident, -$900 -$1,400 -$1,900 -$2,800 -$3,900 -$11,000
Congestion ($)...................
Pretax Fuel Savings ($)........... $15,600 $24,400 $34,800 $49,800 $68,500 $193,300
Energy Security (price shock) ($). $400 $600 $900 $1,200 $1,600 $4,700
Change in no. of Refuelings 500 700 1,000 1,300 1,800 5,300
()......................
Change in Refueling Time (hours).. 0 100 100 100 200 400
[[Page 49626]]
Value of Reduced Refueling Time $900 $1,400 $1,900 $2,700 $3,700 $10,500
($)..............................
Value of Additional Driving ($)... $2,000 $3,000 $4,100 $5,700 $7,900 $22,700
Value of PM2.5-related Health $600 $900 $1,200 $1,700 $2,200 $6,600
Impacts ($) a b c................
----------------------------------------------------------------------------------------------------------------
Social Cost of Carbon (SCC) at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%........................ $500 $700 $1,000 $1,400 $1,900 $5,600
SCC 5% Newell-Pizer........... 1,000 1,500 2,000 2,900 3,800 11,000
SCC from 3% and 5%............ 1,800 2,800 3,900 5,400 7,200 21,000
SCC 3%........................ 3,200 4,800 6,700 9,400 13,000 37,000
SCC 3% Newell-Pizer........... 5,300 8,100 11,000 16,000 21,000 61,000
----------------------------------------------------------------------------------------------------------------
Total Benefits at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%........................ $19,100 $29,600 $42,000 $59,700 $81,900 $232,400
SCC 5% Newell-Pizer........... 19,600 30,400 43,000 61,200 83,800 237,800
SCC from 3% and 5%............ 20,400 31,700 44,900 63,700 87,200 247,800
SCC 3%........................ 21,800 33,700 47,700 67,700 93,000 263,800
SCC 3% Newell-Pizer........... 23,900 37,000 52,000 74,300 101,000 287,800
----------------------------------------------------------------------------------------------------------------
\a\ 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 benefit-per-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. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards.
\b\ The PM2.5-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.
\c\ The PM2.5-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.
Table III.H.10-5--Estimated Societal Benefits Associated With the Proposed Light-Duty Vehicle GHG Program, Model
Year Analysis
[Millions of 2007 dollars; 7% discount rate]
----------------------------------------------------------------------------------------------------------------
Monetized values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum
----------------------------------------------------------------------------------------------------------------
Cost of Noise, Accident, -$700 -$1,100 -$1,500 -$2,200 -$3,100 -$8,700
Congestion ($)...................
Pretax Fuel Savings ($)........... $12,100 $19,000 $27,200 $39,000 $53,700 $150,900
Energy Security (price shock) ($). $300 $500 $700 $900 $1,300 $3,700
Change in no. of Refuelings 400 500 800 1,100 1,500 4,200
()......................
Change in Refueling Time (hours).. 0 0 100 100 100 300
Value of Reduced Refueling Time $700 $1,100 $1,500 $2,100 $2,900 $8,300
($)..............................
Value of Additional Driving ($)... $1,500 $2,400 $3,200 $4,500 $6,300 $18,000
Value of PM2.5-related Health $500 $700 $1,000 $1,300 $1,800 $5,300
Impacts ($)a b c.................
----------------------------------------------------------------------------------------------------------------
Social Cost of Carbon (SCC) at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%........................ $400 $500 $700 $1,000 $1,300 $3,900
SCC 5% Newell-Pizer........... 700 1,100 1,500 2,000 2,500 7,700
SCC from 3% and 5%............ 1,400 2,100 2,800 3,700 4,800 15,000
SCC 3%........................ 2,400 3,600 4,800 6,500 8,300 26,000
SCC 3% Newell-Pizer........... 4,000 6,000 8,000 11,000 14,000 43,000
----------------------------------------------------------------------------------------------------------------
Total Benefits at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%........................ $14,800 $23,100 $32,800 $46,600 $64,200 $181,400
SCC 5% Newell-Pizer........... 15,100 23,700 33,600 47,600 65,400 185,200
SCC from 3% and 5%............ 15,800 24,700 34,900 49,300 67,700 192,500
SCC 3%........................ 16,800 26,200 36,900 52,100 71,200 203,500
SCC 3% Newell-Pizer........... 18,400 28,600 40,100 56,600 76,900 220,500
----------------------------------------------------------------------------------------------------------------
\a\ 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 benefit-per-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. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards.
[[Page 49627]]
\b\ The PM2.5-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.
\c\ The PM2.5-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.
Table III.H.10-6--Quantified Net Benefits Associated With the Proposed Light-Duty Vehicle GHG Program, Model
Year Analysis \a\
[millions of 2007 dollars; 3% discount rate]
----------------------------------------------------------------------------------------------------------------
Monetized values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum
----------------------------------------------------------------------------------------------------------------
Quantified Annual Costs (excluding $5,400 $8,400 $10,900 $13,900 $17,500 $56,100
fuel savings) \b\................
----------------------------------------------------------------------------------------------------------------
Quantified Annual Benefits at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%........................ $19,100 $29,600 $42,000 $59,700 $81,900 $232,400
SCC 5% Newell-Pizer........... 19,600 30,400 43,000 61,200 83,800 237,800
SCC from 3% and 5%............ 20,400 31,700 44,900 63,700 87,200 247,800
SCC 3%........................ 21,800 33,700 47,700 67,700 93,000 263,800
SCC 3% Newell-Pizer........... 23,900 37,000 52,000 74,300 101,000 287,800
----------------------------------------------------------------------------------------------------------------
Quantified Net Benefits at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%........................ $13,700 $21,200 $31,100 $45,800 $64,400 $176,300
SCC 5% Newell-Pizer........... 14,200 22,000 32,100 47,300 66,300 181,700
SCC from 3% and 5%............ 15,000 23,300 34,000 49,800 69,700 191,700
SCC 3%........................ 16,400 25,300 36,800 53,800 75,500 207,700
SCC 3% Newell-Pizer........... 18,500 28,600 41,100 60,400 83,500 231,700
----------------------------------------------------------------------------------------------------------------
\a\ 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 benefit-per-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. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards.
\b\ Quantified annual costs as shown here are the increased costs for new vehicles in each given model year.
Since those costs are assumed to occur in the given model year (i.e., not over a several year time span), the
discount rate does not affect the costs.
Table III.H.10-7--Quantified Net Benefits Associated With the Proposed Light-Duty Vehicle GHG Program, Model
Year Analysis \a\
[millions of 2007 dollars; 7% Discount Rate]
----------------------------------------------------------------------------------------------------------------
Monetized values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum
----------------------------------------------------------------------------------------------------------------
Quantified Annual Costs (excluding $5,400 $8,400 $10,900 $13,900 $17,500 $56,100
fuel savings) \b\................
----------------------------------------------------------------------------------------------------------------
Quantified Annual Benefits at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%........................ $14,800 $23,100 $32,800 $46,600 $64,200 $181,400
SCC 5% Newell-Pizer........... 15,100 23,700 33,600 47,600 65,400 185,200
SCC from 3% and 5%............ 15,800 24,700 34,900 49,300 67,700 192,500
SCC 3%........................ 16,800 26,200 36,900 52,100 71,200 203,500
SCC 3% Newell-Pizer........... 18,400 28,600 40,100 56,600 76,900 220,500
----------------------------------------------------------------------------------------------------------------
Quantified Net Benefits at each assumed SCC value
----------------------------------------------------------------------------------------------------------------
SCC 5%........................ $9,400 $14,700 $21,900 $32,700 $46,700 $125,300
SCC 5% Newell-Pizer........... 9,700 15,300 22,700 33,700 47,900 129,100
SCC from 3% and 5%............ 10,400 16,300 24,000 35,400 50,200 136,400
SCC 3%........................ 11,400 17,800 26,000 38,200 53,700 147,400
SCC 3% Newell-Pizer........... 13,000 20,200 29,200 42,700 59,400 164,400
----------------------------------------------------------------------------------------------------------------
\a\ 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 benefit-per-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. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards.
\b\ Quantified annual costs as shown here are the increased costs for new vehicles in each given model year.
Since those costs are assumed to occur in the given model year (i.e., not over a several year time span), the
discount rate does not affect the costs.
[[Page 49628]]
I. Statutory and Executive Order Reviews
1. Executive Order 12866: Regulatory Planning and Review
Under section 3(f)(1) of Executive Order (EO) 12866 (58 FR 51735,
October 4, 1993), this action is an ``economically significant
regulatory action'' because it is likely to have an annual effect on
the economy of $100 million or more. Accordingly, EPA submitted this
action to the Office of Management and Budget (OMB) for review under EO
12866 and any changes made in response to OMB recommendations have been
documented in the docket for this action.
In addition, EPA prepared an analysis of the potential costs and
benefits associated with this action. This analysis is contained in the
Draft Regulatory Impact Analysis, which is available in the docket for
this rulemaking and at the docket Internet address listed under
ADDRESSES above.
2. Paperwork Reduction Act
The information collection requirements in this proposed rule have
been submitted for approval to the Office of Management and Budget
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The
Information Collection Request (ICR) document prepared by EPA has been
assigned EPA ICR number 0783.56.
The Agency proposes to collect information to ensure compliance
with the provisions in this rule. This includes a variety of
requirements for vehicle manufacturers. Section 208(a) of the Clean Air
Act requires that vehicle manufacturers provide information the
Administrator may reasonably require to determine compliance with the
regulations; submission of the information is therefore mandatory. We
will consider confidential all information meeting the requirements of
section 208(c) of the Clean Air Act.
As shown in Table III.J.2-1, the total annual burden associated
with this proposal is about 39,900 hours and $5 million, based on a
projection of 33 respondents. The estimated burden for vehicle
manufacturers is a total estimate for both new and existing reporting
requirements. Burden means the total time, effort, or financial
resources expended by persons to generate, maintain, retain, or
disclose or provide information to or for a Federal agency. This
includes the time needed to review instructions; develop, acquire,
install, and utilize technology and systems for the purposes of
collecting, validating, and verifying information, processing and
maintaining information, and disclosing and providing information;
adjust the existing ways to comply with any previously applicable
instructions and requirements; train personnel to be able to respond to
a collection of information; search data sources; complete and review
the collection of information; and transmit or otherwise disclose the
information.
Table III.J.2-1 Estimated Burden for Reporting and Recordkeeping
Requirements
------------------------------------------------------------------------
Annual burden
Number of respondents hours Annual costs
------------------------------------------------------------------------
33...................................... 39,940 $5,001,000
------------------------------------------------------------------------
An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.
To comment on the Agency's need for this information, the accuracy
of the provided burden estimates, and any suggested methods for
minimizing respondent burden, including the use of automated collection
techniques, EPA has established a public docket for this rule, which
includes this ICR, under Docket ID number EPA-HQ-OAR-2007-0491. Submit
any comments related to the ICR for this proposed rule to EPA and OMB.
See ADDRESSES section at the beginning of this notice for where to
submit comments to EPA. Send comments to OMB at the Office of
Information and Regulatory Affairs, Office of Management and Budget,
725 17th Street, NW., Washington, DC 20503, Attention: Desk Office for
EPA. Since OMB is required to make a decision concerning the ICR
between 30 and 60 days after September 28, 2009, a comment to OMB is
best assured of having its full effect if OMB receives it by October
28, 2009. The final rule will respond to any OMB or public comments on
the information collection requirements contained in this proposal.
3. Regulatory Flexibility Act
a. Overview
The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of this rule on small
entities, small entity is defined as: (1) A small business as defined
by the Small Business Administration's (SBA) regulations at 13 CFR
121.201 (see table below); (2) a small governmental jurisdiction that
is a government of a city, county, town, school district or special
district with a population of less than 50,000; and (3) a small
organization that is any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.
Table III.J.3-1 provides an overview of the primary SBA small
business categories included in the light-duty vehicle sector:
Table III.J.3--1 Primary SBA Small Business Categories in the Light-Duty
Vehicle Sector
------------------------------------------------------------------------
Defined as small
Industry a entity by SBA if less NAICS codes b
than or equal to:
------------------------------------------------------------------------
Light-duty vehicles:
--Vehicle manufacturers 1,000 employees....... 336111
(including small volume
manufacturers).
[[Page 49629]]
--Independent commercial $7 million annual 811111, 811112,
importers. sales. 811198
$23 million annual 441120
sales.
100 employees......... 423110, 424990
--Alternative fuel vehicle 750 employees......... 336312, 336322,
converters. 336399
1,000 employees....... 335312
$7 million annual 454312, 485310,
sales. 811198
------------------------------------------------------------------------
Notes:
\a\ Light-duty vehicle entities that qualify as small businesses would
not be subject to this proposed rule. We are deferring action on small
vehicle entities, and we intend to address these entities in a future
rule.
\b\ North American Industrial Classification System.
b. Summary of Potentially Affected Small Entities
EPA has not conducted a Regulatory Flexibility Analysis or a SBREFA
SBAR Panel for the proposed rule because we are proposing to certify
that the rule would not have a significant economic impact on a
substantial number of small entities. EPA is proposing to defer
standards for manufacturers meeting SBA's definition of small business
as described in 13 CFR 121.201 due to the short lead time to develop
this proposed rule, the extremely small emissions contribution of these
entities, and the potential need to develop a program that would be
structured differently for them (which would require more time). 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 for light-duty vehicles: Small
volume manufacturers (SVMs), independent commercial importers (ICIs),
and alternative fuel vehicle converters. Based on preliminary
assessment, EPA has identified a total of about 47 vehicle businesses,
about 13 entities (or 28 percent) that fit the Small Business
Administration (SBA) criterion of a small business. There are about 2
SVMs, 8 ICIs, and 3 alternative fuel vehicle converters in the light-
duty vehicle market which are small businesses (no major vehicle
manufacturers meet the small-entity criteria as defined by SBA). EPA
estimates that these small entities comprise about 0.03 percent of the
total light-duty vehicle sales in the U.S. for the year 2007, and
therefore the proposed deferment will have a negligible impact on the
GHG emissions reductions from the proposed standards.
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.
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. 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. 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.
Based on this, EPA is proposing to certify that the rule would not have
a significant economic impact on a substantial number of small
entities.
c. Conclusions
I therefore certify that this proposed rule will not have a
significant economic impact on a substantial number of small entities.
However, EPA recognizes that some small entities continue to be
concerned about the potential impacts of the statutory imposition of
PSD requirements that may occur given the various EPA rulemakings
currently under consideration concerning greenhouse gas emissions. As
explained in the preamble for the proposed PSD tailoring rule, EPA is
using the discretion afforded to it under section 609(c) of the RFA to
consult with OMB and SBA, with input from outreach to small entities,
regarding the potential impacts of PSD regulatory requirements as that
might occur as EPA considers regulations of GHGs. Concerns about the
potential impacts of statutorily imposed PSD requirements on small
entities will be the subject of deliberations in that consultation and
outreach. Concerned small entities should direct any comments relating
to potential adverse economic impacts on small entities from PSD
requirements for GHG emissions to the docket for the PSD tailoring
rule.
EPA continues to be interested in the potential impacts of the
proposed rule on small entities and welcomes comments on issues related
to such impacts.
4. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local,
[[Page 49630]]
and tribal governments, in the aggregate, or to the private sector, of
$100 million or more in any one year. Before promulgating an EPA rule
for which a written statement is needed, section 205 of the UMRA
generally requires EPA to identify and consider a reasonable number of
regulatory alternatives and adopt the least costly, most cost-effective
or least burdensome alternative that achieves the objectives of the
rule. The provisions of section 205 do not apply when they are
inconsistent with applicable law. Moreover, section 205 allows EPA to
adopt an alternative other than the least costly, most cost-effective
or least burdensome alternative if the Administrator publishes with the
final rule an explanation why that alternative was not adopted.
Before EPA establishes any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, it must have developed under section 203 of the UMRA a
small government agency plan. The plan must provide for notifying
potentially affected small governments, enabling officials of affected
small governments to have meaningful and timely input in the
development of EPA regulatory proposals with significant Federal
intergovernmental mandates, and informing, educating, and advising
small governments on compliance with the regulatory requirements.
This proposal contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, or tribal
governments. The rule imposes no enforceable duty on any State, local
or tribal governments. EPA has determined that this rule contains no
regulatory requirements that might significantly or uniquely affect
small governments. EPA has determined that this proposal contains a
Federal mandate that may result in expenditures of $100 million or more
for the private sector in any one year. EPA believes that the proposal
represents the least costly, most cost-effective approach to achieve
the statutory requirements of the rule. The costs and benefits
associated with the proposal are discussed above and in the Draft
Regulatory Impact Analysis, as required by the UMRA.
5. Executive Order 13132 (Federalism)
This action does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. This rulemaking would apply to
manufacturers of motor vehicles and not to State or local governments.
Thus, Executive Order 13132 does not apply to this action. Although
section 6 of Executive Order 13132 does not apply to this action, EPA
did consult with representatives of State governments in developing
this action.
In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and State and local
governments, EPA specifically solicits comment on this proposed action
from State and local officials.
6. Executive Order 13175 (Consultation and Coordination With Indian
Tribal Governments)
This proposed rule does not have tribal implications, as specified
in Executive Order 13175 (65 FR 67249, November 9, 2000). This rule
will be implemented at the Federal level and impose compliance costs
only on vehicle manufacturers. Tribal governments would be affected
only to the extent they purchase and use regulated vehicles. Thus,
Executive Order 13175 does not apply to this rule. EPA specifically
solicits additional comment on this proposed rule from tribal
officials.
7. Executive Order 13045: ``Protection of Children From Environmental
Health Risks and Safety Risks''
This action is subject to EO 13045 (62 FR 19885, April 23, 1997)
because it is an economically significant regulatory action as defined
by EO 12866, and EPA believes that the environmental health or safety
risk addressed by this action may have a disproportionate effect on
children. A synthesis of the science and research regarding how climate
change may affect children and other vulnerable subpopulations is
contained in the Technical Support Document for Endangerment or Cause
or Contribute Findings for Greenhouse Gases under Section 202(a) of the
Clean Air Act, which can be found in the public docket for this
proposed rule.\408\ A summary of the analysis is presented below.
---------------------------------------------------------------------------
\408\ U.S. EPA. (2009). Technical Support Document for
Endangerment or Cause or Contribute Findings for Greenhouse Gases
under Section 202(a) of the Clean Air Act. Washington, DC: U.S. EPA.
Retrieved on April 21, 2009 from http://epa.gov/climatechange/endangerment/downloads/TSD_Endangerment.pdf.
---------------------------------------------------------------------------
With respect to GHG emissions, the effects of climate change
observed to date and projected to occur in the future include the
increased likelihood of more frequent and intense heat waves.
Specifically, EPA's analysis has determined that severe heat waves are
projected to intensify in magnitude, frequency, and duration over the
portions of the U.S. where these events already occur, with potential
increases in mortality and morbidity, especially among the young,
elderly, and frail. EPA has estimated reductions in projected global
mean surface temperatures as a result of reductions in GHG emissions
associated with the standards proposed in this action (Section III.F).
Children may receive benefits from reductions in GHG emissions because
they are included in the segment of the population that is most
vulnerable to hot temperatures.
For non-GHG pollutants, EPA has determined that climate change is
expected to increase regional ozone pollution, with associated risks in
respiratory infection, aggravation of asthma, and premature death. The
directional effect of climate change on ambient PM levels remains
uncertain. However, disturbances such as wildfires are increasing in
the U.S. and are likely to intensify in a warmer future with drier
soils and longer growing seasons. PM emissions from forest fires can
contribute to acute and chronic illnesses of the respiratory system,
particularly in children, including pneumonia, upper respiratory
diseases, asthma and chronic obstructive pulmonary diseases.
The public is invited to submit comments or identify peer-reviewed
studies and data that assess effects of early life exposure to the
pollutants addressed by this proposed rule.
8. Executive Order 13211 (Energy Effects)
This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355
(May 22, 2001)) because it is not likely to have a significant adverse
effect on the supply, distribution, or use of energy. In fact, this
rule has a positive effect on energy supply and use. Because the GHG
emission standards proposed today result in significant fuel savings,
this rule encourages more efficient use of fuels. Therefore, we have
concluded that this rule is not likely to have any adverse energy
effects. Our energy effects analysis is described above in Section
III.H.
9. National Technology Transfer Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so would be inconsistent
[[Page 49631]]
with applicable law or otherwise impractical. Voluntary consensus
standards are technical standards (e.g., materials, specifications,
test methods, sampling procedures, and business practices) that are
developed or adopted by voluntary consensus standards bodies. NTTAA
directs EPA to provide Congress, through OMB, explanations when the
Agency decides not to use available and applicable voluntary consensus
standards.
For CO2, N2O, and CH4 emissions,
EPA is proposing to collect data over the same tests that are used for
the CAFE program. This will minimize the amount of testing done by
manufacturers, since manufacturers are already required to run these
tests. For A/C credits, EPA is proposing to use a consensus methodology
developed by the Society of Automotive Engineers (SAE) and also a new
A/C idle test. EPA knows of no consensus standard available for the A/C
idle test.
10. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
Federal executive policy on environmental justice. Its main provision
directs Federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
With respect to GHG emissions, EPA has determined that this
proposed rule will not have disproportionately high and adverse human
health or environmental effects on minority or low-income populations
because it increases the level of environmental protection for all
affected populations without having any disproportionately high and
adverse human health or environmental effects on any population,
including any minority or low-income population. The reductions in
CO2 and other GHGs associated with the proposed standards
will affect climate change projections, and EPA has estimated
reductions in projected global mean surface temperatures (Section
III.F.3). Within settlements experiencing climate change, certain parts
of the population may be especially vulnerable; these include the poor,
the elderly, those already in poor health, the disabled, those living
alone, and/or indigenous populations dependent on one or a few
resources. \409\ Therefore, these populations may receive benefits from
reductions in GHGs.
---------------------------------------------------------------------------
\409\ U.S. EPA. (2009). Technical Support Document for
Endangerment or Cause or Contribute Findings for Greenhouse Gases
under Section 202(a) of the Clean Air Act. Washington, DC: U.S. EPA.
Retrieved on April 21, 2009 from http://epa.gov/climatechange/endangerment/downloads/TSD_Endangerment.pdf.
---------------------------------------------------------------------------
For non-GHG co-pollutants such as ozone, PM2.5, and
toxics, EPA has concluded that it is not practicable to determine
whether there would be disproportionately high and adverse human health
or environmental effects on minority and/or low income populations from
this proposed rule.
J. Statutory Provisions and Legal Authority
Statutory authority for the vehicle controls proposed today is
found in section 202 (a) (which authorizes standards for emissions of
pollutants from new motor vehicles which emissions cause or contribute
to air pollution which may reasonably be anticipated to endanger public
health or welfare), 202 (d), 203-209, 216, and 301 of the Clean Air
Act, 42 U.S.C. 7521 (a), 7521 (d), 7522, 7523, 7524, 7525, 7541, 7542,
7543, 7550, and 7601.
IV. NHTSA Proposal for Passenger Car and Light Truck CAFE Standards for
MYs 2012-2016
A. Executive Overview of NHTSA Proposal
1. Introduction
The National Highway Traffic Safety Administration (NHTSA) is
proposing to establish corporate average fuel economy standards for
passenger automobiles (passenger cars) and nonpassenger automobiles
(light trucks) for model years (MY) 2012-2016. Improving vehicle fuel
economy has been long and widely recognized as one of the key ways of
achieving energy independence, energy security, and a low carbon
economy.\410\ NHTSA's proposed standards will require passenger cars
and light trucks to meet an estimated combined average of 34.1 mpg in
MY 2016. This represents an average annual increase of 4.3 percent from
the 27.3 mpg combined fuel economy level in MY 2011. NHTSA's proposal
projects total fuel savings of approximately 61.6 billion gallons over
the lifetimes of the vehicles sold in model years 2012-2016, with
corresponding net societal benefits of approximately $201.7 billion.
---------------------------------------------------------------------------
\410\ Among the reports and studies noting this point are the
following:
John Podesta, Todd Stern and Kim Batten, ``Capturing the Energy
Opportunity; Creating a Low-Carbon Economy,'' Center for American
Progress (November 2007), pp. 2, 6, 8, and 24-29, available at:
http://www.americanprogress.org/issues/2007/11/pdf/energy_chapter.pdf (last accessed August 9, 2009).
Sarah Ladislaw, Kathryn Zyla, Jonathan Pershing, Frank
Verrastro, Jenna Goodward, David Pumphrey, and Britt Staley, ``A
Roadmap for a Secure, Low-Carbon Energy Economy; Balancing Energy
Security and Climate Change,'' World Resources Institute and Center
for Strategic and International Studies (January 2009), pp. 21-22;
available at: http://pdf.wri.org/secure_low_carbon_energy_economy_roadmap.pdf (last accessed August 9, 2009).
Alliance to Save Energy et al., ``Reducing the Cost of
Addressing Climate Change Through Energy Efficiency (2009),
available at: http://Aceee.org/energy/climate/leg.htm (last accessed
August 9, 2009).
John DeCicco and Freda Fung, ``Global Warming on the Road; The
Climate Impact of America's Automobiles,'' Environmental Defense
(2006) pp. iv-vii; available at: http://www.edf.org/documents/5301_Globalwarmingontheroad.pdf (last accessed August 9, 2009).
``Why is Fuel Economy Important?,'' a Web page maintained by the
Department of Energy and Environmental Protection Agency, available
at http://www.fueleconomy.gov/feg/why.shtml (last accessed August 9,
2009);
Robert Socolow, Roberta Hotinski, Jeffery B. Greenblatt, and
Stephen Pacala, ``Solving the Climate Problem: Technologies
Available to Curb CO2 Emissions,'' Environment, volume
46, no. 10, 2004. Pages 8-19, available at: http://
www.princeton.edu/~cmi/resources/CMI--Resources--new--files/
Environ--08-21a.pdf (last accessed August 9, 2009).
---------------------------------------------------------------------------
The significance accorded improving fuel economy reflects several
factors. Conserving energy, especially reducing the nation's dependence
on petroleum, benefits the U.S. in several ways. Improving energy
efficiency has benefits for economic growth and the environment, as
well as other benefits, such as reducing pollution and improving
security of energy supply. More specifically, reducing total petroleum
use decreases our economy's vulnerability to oil price shocks. Reducing
dependence on oil imports from regions with uncertain conditions
enhances our energy security. Additionally, the emission of
CO2 from the tailpipes of cars and light trucks is one of
the largest sources of U.S. CO2 emissions.\411\ Using
vehicle technology to improve fuel economy, and thereby reducing
tailpipe emissions of CO2, is one of the three main measures
of reducing those tailpipe emissions of CO2.\412\ The two
other measures for
[[Page 49632]]
reducing the tailpipe emissions of CO2 are switching to
vehicle fuels with lower carbon content and changing driver behavior,
i.e., inducing people to drive less.
---------------------------------------------------------------------------
\411\ EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990--2006 (April 2008), pp. ES-4, ES-8, and 2-24. Available at
http://www.epa.gov/climatechange/emissions/usgginv_archive.html
(last accessed August 9, 2009).
\412\ Podesta et al., p. 25; Ladislaw et al. p. 21; DeCicco et
al. p. vii; ``Reduce Climate Change,'' a Web page maintained by the
Department of Energy and Environmental Protection Agency at http://www.fueleconomy.gov/feg/climate.shtml (last accessed August 9,
2009).
---------------------------------------------------------------------------
While NHTSA has been setting fuel economy standards since the
1970s, today's action represents the first-ever joint proposal by NHTSA
with another agency, the Environmental Protection Agency. As discussed
in Section I, NHTSA's proposed MYs 2012-2016 CAFE standards are part of
a joint National Program, such that a large majority of the projected
benefits are achieved jointly with EPA's GHG rule, described in detail
above in Section III of this preamble. These proposed CAFE standards
are consistent with the President's National Fuel Efficiency Policy
announcement of May 19, 2009, which calls for harmonized rules for all
automakers, instead of three overlapping and potentially inconsistent
requirements from DOT, EPA, and the California Air Resources Board. And
finally, the proposed CAFE standards and the analysis supporting them
also respond to President's Obama's January 26 memorandum regarding the
setting of CAFE standards for model years 2011 and beyond.
2. Role of Fuel Economy Improvements in Promoting Energy Independence,
Energy Security, and a Low Carbon Economy
The need to reduce energy consumption is more crucial today than it
was when EPCA was enacted in the mid-1970s. U.S. energy consumption has
been outstripping U.S. energy production at an increasing rate. Net
petroleum imports now account for approximately 57 percent of U.S.
domestic petroleum consumption, and the share of U.S. oil consumption
for transportation is approximately 71 percent.\413\ Moreover, world
crude oil production continues to be highly concentrated, exacerbating
the risks of supply disruptions and their negative effects on both the
U.S. and global economies.
---------------------------------------------------------------------------
\413\ Energy Information Administration, Petroleum Basic
Statistics, updated July 2009. Available at http://www.eia.doe.gov/basics/quickoil.html (last accessed August 9, 2009).
---------------------------------------------------------------------------
Gasoline consumption in the U.S. has historically been relatively
insensitive to fluctuations in both price and consumer income, and
people in most parts of the country tend to view gasoline consumption
as a non-discretionary expense. Thus, when gasoline's share in consumer
expenditures rises, the public experiences fiscal distress. This fiscal
distress can, in some cases, have macroeconomic consequences for the
economy at large. Additionally, since U.S. oil production is only
affected by fluctuations in prices over a period of years, any changes
in petroleum consumption (as through increased fuel economy) largely
flow into changes in the quantity of imports. Although petroleum
imports only account for about 2 percent of GDP, they are large enough
to create a discernible fiscal drag. As a consequence, however,
measures that reduce petroleum consumption, such as fuel economy
standards, will flow directly into the balance-of-payments account, and
strengthen the domestic economy to some degree. And finally, U.S.
foreign policy has been affected for decades by rising U.S. and world
dependency of crude oil as the basis for modern transportation systems,
although fuel economy standards have only an indirect and general
impact on U.S. foreign policy.
The benefits of a low carbon economy are manifold. The U.S.
transportation sector is a significant contributor to total U.S. and
global anthropogenic emissions of greenhouse gases. Motor vehicles are
the second largest greenhouse gas-emitting sector in the U.S., after
electricity generation, and accounted for 24 percent of total U.S.
greenhouse gas emissions in 2006. Concentrations of greenhouse gases
are at unprecedented levels compared to the recent and distant past,
which means that fuel economy improvements to reduce those emissions
are a crucial step toward addressing the risks of global climate
change. These risks are well documented in section III of this notice.
3. The National Program
NHTSA and EPA are each announcing proposed rules that have the
effect of addressing 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 medium-duty
passenger vehicles (hereafter light-duty vehicles), referred to as the
National Program. The proposed rules represent a coordinated program
that 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 will be
commercially available and that can be incorporated at a reasonable
cost. The agencies' proposals will also provide regulatory certainty
and consistency for the automobile industry by setting harmonized
national standards. They were developed and are designed in ways that
recognize and accommodate the serious current economic situation faced
by this industry.
This joint notice is consistent with the President's announcement
on May 19, 2009 of a National Fuel Efficiency Policy that will reduce
greenhouse gas emissions and improve fuel economy for all new cars and
light-duty trucks sold in the United States,\414\ and with the Notice
of Upcoming Joint Rulemaking signed by DOT and EPA on that date.\415\
This joint notice also responds to the President's January 26, 2009
memorandum on CAFE standards for model years 2011 and beyond, the
details of which can be found in Section IV of this joint notice.
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\414\ President Obama Announces National Fuel Efficiency Policy,
The White House, May 19, 2009.
\415\ 74 FR 24007 (May 22, 2009).
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a. Building Blocks of the National Program
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. CO2 is
the natural by-product of the combustion of fuel in motor vehicle
engines. 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.\416\ Since the
amount of CO2 emissions is essentially constant per gallon
combusted of a given type of fuel, the amount of fuel consumption per
mile is directly related to the amount of CO2 emissions per
mile. In the real world, there is a single pool of technologies for
reducing fuel consumption and CO2 emissions. Using those
technologies in the way that minimizes fuel consumption also minimizes
CO2 emissions. While there are emission control technologies
that can capture or destroy the pollutants (e.g., carbon monoxide) that
are produced by imperfect combustion of fuel, there is at present no
such technology for CO2. In fact, the only way at present to
reduce tailpipe emissions of CO2 is by reducing fuel
consumption. The National Program thus has dual benefits: It conserves
energy by improving fuel economy, as required of NHTSA by EPCA and
EISA; in the process, it necessarily reduces tailpipe
[[Page 49633]]
CO2 emissions consonant with EPA's purposes and
responsibilities under the Clean Air Act.
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\416\ 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, at 287.
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i. DOT's CAFE Program
In 1975, Congress enacted the Energy Policy and Conservation Act
(EPCA), mandating 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. EPCA allocates the responsibility for implementing
the program between NHTSA and EPA as follows:
NHTSA sets Corporate Average Fuel Economy (CAFE) standards
for passenger cars and light trucks.
Because fuel economy performance is measured during
emissions regulation testing, EPA establishes the procedures for
testing, tests vehicles, collects and analyzes manufacturers' test
data, and calculates the average fuel economy of each manufacturer's
passenger cars and light trucks. EPA determines fuel economy by the
simple expedient of measuring the amount of CO2 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. EPA then uses the carbon content of the test fuel\417\ to
calculate the amount of fuel that had to be consumed per mile in order
to produce that amount of CO2. Finally, EPA converts that
fuel consumption figure into a miles-per-gallon figure.
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\417\ This is the method that EPA uses to determine compliance
with NHTSA's CAFE standards.
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Based on EPA's calculation, NHTSA enforces the CAFE
standards.
The CAFE standards and compliance testing cannot capture all of the
real world CO2 emissions, because EPCA requires EPA to use
the 1975 passenger car test procedures under which vehicle air
conditioners are not turned on during fuel economy testing.\418\ 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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\418\ See 49 U.S.C. 32904(c).
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NHTSA has been setting CAFE standards pursuant to EPCA since the
enactment of the statute. 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, among other
things, attribute-based standards for passenger cars and light trucks.
The most recent CAFE rulemaking action was the issuance of standards
governing model years 2011 cars and trucks.
ii. EPA's Greenhouse Gas Program
On April 2, 2007, the U.S. Supreme Court issued its opinion in
Massachusetts v. EPA,\419\ 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 the
Clean Air Act.\420\ The Court ruled that greenhouse gases are
``pollutants'' under the CAA and that the Act therefore authorizes EPA
to regulate greenhouse gas emissions from motor vehicles if that agency
makes the necessary findings and determinations under section 202 of
the Act. The Court considered EPCA only briefly, stating that the two
obligations may overlap, but there is no reason to think the two
agencies cannot both administer their obligations and yet avoid
inconsistency.
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\419\ 127 S.Ct. 1438 (2007).
\420\ 68 FR 52922 (Sept. 8, 2003).
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EPA has been working on appropriate responses that are consistent
with the decision of the Supreme Court in Massachusetts v. EPA.\421\ As
part of those responses, in July 2008, EPA issued an Advance Notice of
Proposed Rulemaking seeking comments on the impact of greenhouse gases
on the environment and on ways to reduce greenhouse gas emissions from
motor vehicles. EPA recently also 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.\422\
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\421\ 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 EPA from 2007-
2008 in response to the Supreme Court remand.
\422\ 74 FR 18886 (Apr. 24, 2009).
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iii. California Air Resources Board's Greenhouse Gas Program
In 2004, the California Air Resources Board approved standards for
new light-duty 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
light-duty vehicle market, have adopted California's standards. These
standards apply to model years 2009 through 2016 and require reductions
in CO2 emissions for passenger cars and some light trucks of 323 g/mil
in 2009 up to 205 g/mi in 2016, and 439 g/mi for light trucks in 2009
up to 332 g/mi in 2016. In 2008, EPA denied a request by California for
a waiver of preemption under the CAA for its GHG emissions standards.
However, consistent with another Presidential Memorandum of January 26,
2009, EPA reconsidered the prior denial of California's request.\423\
EPA withdrew the prior denial and granted California's request for a
waiver on June 30, 2009.\424\ The granting of the waiver permits
California's emission standards to come into effect notwithstanding the
general preemption of State emission standards for new motor vehicles
that otherwise applies under the Clean Air Act.
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\423\ 74 FR 7040 (Feb. 12, 2009).
\424\ 74 FR 32744 (July 8, 2009).
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b. The President's Announcement of National Fuel Efficiency Policy (May
2009)
The issue of three separate regulatory frameworks and overlapping
requirements for reducing fuel consumption and CO2 emissions
has been a subject of much controversy and legal disputes. On May 19,
2009 President Obama announced a National Fuel Efficiency Policy aimed
at both increasing fuel economy and reducing greenhouse gas pollution
for all new cars and trucks sold in the United States, while also
providing a predictable regulatory framework for the automotive
industry. The policy seeks to set harmonized Federal standards to
regulate both fuel economy and greenhouse gas emissions while
preserving the legal authorities of the Department of Transportation,
the Environmental Protection Agency and the State of California. The
program covers model year 2012 to model year 2016 and ultimately
requires the equivalent of an average fuel economy of 35.5 mpg in 2016,
if all CO2 reduction were achieved through fuel economy
improvements. Building on the MY 2011 standard that was set in March
2009, this represents an average of 5 percent increase in average fuel
economy each year between 2012 and 2016.
In conjunction with the President's announcement, the Department of
Transportation and the Environmental Protection Agency issued on May
19, 2009, a Notice of Upcoming Joint
[[Page 49634]]
Rulemaking to propose a strong and coordinated fuel economy and
greenhouse gas National Program for Model Year (MY) 2012-2016 light
duty vehicles. Consistent, harmonized, and streamlined requirements
under that program hold out the promise of delivering 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 makes 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. Establishing a harmonized approach to regulating light-
duty vehicle greenhouse gas (GHG) emissions and fuel economy is
critically important given the interdependent goals of addressing
climate change and ensuring energy independence and security.
Additionally, establishing a harmonized approach may help to mitigate
the cost to manufacturers of having to comply with multiple sets of
Federal and State standards
4. Review of CAFE Standard Setting Methodology per the President's
January 26, 2009 Memorandum on CAFE Standards for MYs 2011 and Beyond
On May 2, 2008, NHTSA published a Notice of Proposed Rulemaking
entitled Average Fuel Economy Standards, Passenger Cars and Light
Trucks; Model Years 2011-2015, 73 Fed. Reg. 24352. In mid-October, the
agency completed and released a final environmental impact statement in
anticipation of issuing standards for those years. Based on its
consideration of the public comments and other available information,
including information on the financial condition of the automotive
industry, the agency adjusted its analysis and the standards and
prepared a final rule for MYs 2011-2015. On November 14, the Office of
Information and Regulatory Affairs (OIRA) of the Office of Management
and Budget concluded review of the rule as consistent with the
Order.\425\ However, issuance of the final rule was held in abeyance.
On January 7, 2009, the Department of Transportation announced that the
final rule would not be issued, saying:
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\425\ Record of OIRA's action can be found at http://www.reginfo.gov/public/do/eoHistReviewSearch (last accessed August
9, 2009). To find the report on the clearance of the draft final
rule, select ``Department of Transportation'' under ``Economically
Significant Reviews Completed'' and select ``2008'' under ``Select
Calendar Year.''
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The Bush Administration will not finalize its rulemaking on
Corporate Fuel Economy Standards. The recent financial difficulties of
the automobile industry will require the next administration to conduct
a thorough review of matters affecting the industry, including how to
effectively implement the Energy Independence and Security Act of 2007
(EISA). The National Highway Traffic Safety Administration has done
significant work that will position the next Transportation Secretary
to finalize a rule before the April 1, 2009 deadline.\426\
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\426\ The statement can be found at http://www.dot.gov/affairs/dot0109.htm (last accessed August 9, 2009).
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a. Requests in the President's Memorandum
In light of the requirement to prescribe standards for MY 2011 by
March 30, 2009 and in order to provide additional time to consider
issues concerning the analysis used to determine the appropriate level
of standards for MYs 2012 and beyond, the President issued a memorandum
on January 26, 2009, requesting the Secretary of Transportation and
Administrator\427\ of the National Highway Traffic Safety
Administration NHTSA to divide the rulemaking into two parts: (1) MY
2011 standards, and (2) standards for MY 2012 and beyond.
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\427\ Currently, the National Highway Traffic Safety
Administration does not have an Administrator. Ronald L. Medford is
the Acting Deputy Administrator.
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i. CAFE Standards for Model Year 2011
The request that the final rule establishing CAFE standards for MY
2011 passenger cars and light trucks be prescribed by March 30, 2009
was based on several factors. One was the requirement that the final
rule regarding fuel economy standards for a given model year must be
adopted at least 18 months before the beginning of that model year (49
U.S.C. 32902(g)(2)). The other was that the beginning of MY 2011 is
considered for the purposes of CAFE standard setting to be October 1,
2010.
ii. CAFE Standards for Model Years 2012 and Beyond
The President requested that, before promulgating a final rule
concerning the model years after model year 2011, NHTSA
[C]onsider the appropriate legal factors under the EISA, the
comments filed in response to the Notice of Proposed Rulemaking, the
relevant technological and scientific considerations, and to the
extent feasible, the forthcoming report by the National Academy of
Sciences mandated under section 107 of EISA.
In addition, the President requested that NHTSA consider whether
any provisions regarding preemption are appropriate under applicable
law and policy.
b. Implementing the President's Memorandum
In keeping with the President's remarks on January 26 for new
national policies to address the closely intertwined issues of energy
independence, energy security and climate change, and for the
initiation of serious and sustained domestic and international action
to address them, NHTSA has developed CAFE standards for MY 2012 and
beyond after collecting new information, conducting a careful review of
technical and economic inputs and assumptions, and standard setting
methodology, and completing new analyses.
The goal of the review and re-evaluation was to ensure that the
approach used for MY 2012 and thereafter would produce standards that
contribute, to the maximum extent possible under EPCA/EISA, to meeting
the energy and environmental challenges and goals outlined by the
President. We have sought to craft our program with the goal of
creating the maximum incentives for innovation, providing flexibility
to the regulated parties, and meeting the goal of making substantial
and continuing reductions in the consumption of fuel. To that end, we
have made every effort to ensure that the CAFE program for MYs 2012-
2016 is based on the best scientific, technical, and economic
information available, and that such information was developed in close
coordination with other Federal agencies and our stakeholders,
including the States and the vehicle manufacturers.
We have also re-examined EPCA, as amended by EISA, to consider
whether additional opportunities exist to improve the effectiveness of
the CAFE program. For example, EPCA authorizes increasing the amount of
civil penalties for violating the CAFE standards.\428\ Further, if the
test procedures used for light trucks were revised to provide for the
operation of air conditioning during fuel economy testing, vehicle
manufacturers would have a regulatory incentive to increase the
efficiency and reduce the weight of air conditioning systems, thereby
reducing both fuel
[[Page 49635]]
consumption and tailpipe emissions of CO2.
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\428\ Under 49 U.S.C. 32904(c), EPA must use the same procedures
for passenger automobiles that the Administrator used for model year
1975 (weighted 55 percent urban cycle and 45 percent highway cycle),
or procedures that give comparable results.
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With respect to the President's request that NHTSA consider the
issue of preemption, NHTSA is deferring further consideration of the
preemption issue. The agency believes that it is unnecessary to address
the issue further at this time because of the consistent and
coordinated Federal standards that would apply nationally under the
proposed National Program.
The following paragraphs provide a summary addressing how NHTSA has
complied with the President's requests in the January 26 memorandum.
NHTSA has reviewed comments received on the MY 2011 rulemaking and
revisited its assumptions and methodologies for purposes of developing
the proposed MY 2012-2016 standards. For any given assumption or aspect
of NHTSA's analysis, comments rarely converged on a single position--
and for many issues, NHTSA received diametrically-opposed comments from
different parties--which makes it challenging to resolve the concerns
of all parties in a single stroke. However, NHTSA has taken a fresh
look at all the issues as part of its joint process with EPA, changing
some assumptions and methodologies and validating others. The agency is
confident that the assumptions and analysis used to develop these
proposed standards represent the best possible approach that is
consistent with NHTSA's statutory requirements for setting the required
fuel economy standards.
The paragraphs below describe generally how the agency has reviewed
comments on different issues related to the setting of the standards,
and how the agency has either revised or validated its approach for the
MY 2012-2016 standards. Much more detail on how the agency addresses
all of these issues is found below in the rest of NHTSA's section of
this preamble, in the joint TSD, and in NHTSA's PRIA.
How stringent should the standards be? How quickly should they
increase?
EPCA requires that NHTSA set its standards for each model year at
the ``maximum feasible average fuel economy level that the Secretary
decides the manufacturers can achieve in that model year'' considering
four 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. None of these factors is further
defined in the statute, and ``maximum feasible average fuel economy
level'' is itself defined, if at all, only by reference to those four
factors and the Secretary's consideration of them.\429\ In addition,
the agency has the authority to and traditionally does consider other
relevant factors, such as the effect of the CAFE standards on motor
vehicle safety.
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\429\ 49 U.S.C. 32902(a).
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In the previous CAFE rulemaking, NHTSA proposed to set standards at
the point at which societal net benefits were maximized, which drew a
number of comments from both manufacturers and environmental and public
interest groups. Manufacturers generally commented that standards
should be lower than the ``maximizing net benefits'' alternative, due
to lead time concerns and manufacturers' difficulties in raising
capital. Environmental and consumer groups, as well as a number of
State Attorneys General, commented that NHTSA should set standards
above that point, with some arguing in favor of standards as high as
those at the point at which total costs equaled total benefits.
Commenters also emphasized that NHTSA should ensure that standards
increased ratably, as required by EISA.
For this NPRM, NHTSA has analyzed the costs and benefits of the
``maximizing net benefits'' alternative and other alternatives, using
inputs that diverge substantially from those used in the analyses in
the previous rulemakings to establish attribute-based standards. But
the agency has not sought to use ``maximizing net benefits'' as a
governing principle to select the applicable fuel economy standard in
this NPRM. NHTSA's balancing of the statutory factors in these
difficult financial times leads it to make a different conclusion this
time: NHTSA is proposing to set standards at 34.1 mpg in MY 2016, below
the point at which net benefits are maximized, due to economic
practicability concerns. The results of the alternatives analysis for
the ``maximizing net benefits'' alternative and the ``total costs =
total benefits'' alternative may be found in the DEIS and in the PRIA.
Additionally, because today's proposed standards cover five model
years, as opposed to the single model year covered by the March final
rule, NHTSA is better able in this rulemaking to confirm that the
standards do, in fact, increase ratably, as required by EISA.
What attribute should NHTSA use to set the standards?
In the previous rulemaking, most commenters agreed with NHTSA's use
of footprint as the vehicle attribute for setting CAFE standards. Some
manufacturers commented that NHTSA should consider multiple
attributes--for example, sports car manufacturers suggested a mix of
footprint and horsepower, while truck manufacturers suggested a mix of
footprint and towing, hauling, or off-road capability. Several members
of Congress also supported the latter comment.
For this NPRM, NHTSA and EPA together reconsidered the appropriate
attribute for setting CAFE and CO2 standards, and conclude
that footprint best provides the ability address safety concerns
without creating undue risk that program benefits will be lost to
induced mix shifting. More information about this decision may be found
in Section IV.C.5 below, in the draft joint TSD, and in NHTSA's PRIA.
What data should NHTSA use to develop the baseline market forecast?
In the previous rulemaking, the proposed standards were based on
data from only the seven largest manufacturers. Several small and
limited-line manufacturers commented that either the passenger car
standards should be based on the plans of all manufacturers subject to
the standards, or some alternative form of standard should be set for
them. Ultimately, NHTSA set the MY 2011 standards based on the plans of
all manufacturers subject to the standards.
However, a number of commenters also called for NHTSA to cease
using manufacturer's confidential product plans in any way for
developing the standards. Because manufacturers request confidentiality
when they submit their product plans to the agency out of competitive
concerns, NHTSA is prohibited by regulation from releasing that
information to the public. Thus, when NHTSA developed a baseline market
forecast using information from the manufacturer's product plans, NHTSA
could not release that forecast intact for public review.
For this NPRM, in response to these concerns, NHTSA and EPA are
using a baseline market file developed almost entirely from publicly-
available data. Relying on adjusted MY 2008 CAFE compliance data
enables the agency to make the baseline public and helps to address
transparency concerns. However, by virtue of not being based on product
plans, some manufacturers' concerns that the baseline does not
represent their particular intentions for MYs 2012-2016 may not be
addressed. These issues are explained in more detail in Section IV.C.1
below, in the draft joint TSD, and in NHTSA's PRIA.
Did commenters agree with NHTSA's technology assumptions?
In the previous rulemaking, manufacturers generally commented that
NHTSA had underestimated the costs of technologies and overestimated
[[Page 49636]]
their effectiveness, and that the rate of diesel and hybrid application
required by the standards was too high, too quickly. Environmental and
consumer groups, and the States Attorneys General who commented,
largely argued the opposite. Environmental and consumer groups and the
States Attorneys General also commented that NHTSA should include
downweighting in its analysis for vehicles under 5,000 lbs GVWR, while
the Insurance Institute for Highway Safety (IIHS) argued that NHTSA's
approach to restricting downweighting to only those vehicles was
correct.
For this NPRM, NHTSA, with EPA, has revisited every one of its cost
and effectiveness estimates for individual technologies. Many of the
estimates used in the MY 2011 final rule have been validated, while
some have changed, notably the estimates for turbocharging and
downsizing, diesels, and hybrids. Overall, the individual technology
costs are lower for purposes of this NPRM than in the MY 2011 final
rule due to the Indirect Cost Markup methodology developed by EPA for
this rulemaking, which results in a lower markup than the 1.5 Retail
Price Equivalent (RPE) markup previously used. The considerable
majority of estimates for individual technology effectiveness were
validated; changes largely resulted from the redefinition of certain
electrification-related technologies and mild hybrids.
Additionally, NHTSA is now applying downweighting/material
substitution to vehicles below 5,000 lbs GVWR, albeit in a way that, we
believe, mitigates the safety concerns to some extent. These issues are
explained in more detail in Section IV.C.2 below, in the draft joint
TSD, and in NHTSA's PRIA.
With regard to the President's request that NHTSA consider, ``to
the extent feasible, the forthcoming report by the National Academy of
Sciences mandated under section 107 of EISA,'' we note that it was not
feasible to consider this report for purposes of this NPRM because it
is not scheduled to be completed until Fall 2009. However, NHTSA
intends to make it available in the rulemaking docket as soon as the
agency receives it, and will consider it for the final rule.
Did commenters agree with NHTSA's economic assumptions?
In the previous rulemaking, NHTSA primarily received comments
regarding four particular economic assumptions. Regarding fuel prices,
many commenters supported NHTSA's use of the AEO 2008 Reference Case,
while many commenters also argued, given high pump prices in summer
2008, that NHTSA should use at least the AEO High Price Case or
possibly a higher estimate. Regarding the discount rate, some
commenters supported NHTSA's use of 7 percent, while others argued that
NHTSA should use no higher than 3 percent. Regarding the magnitude of
the rebound effect, some commenters supported NHTSA's use of a 15
percent rebound effect, while some called for a higher number and some
called for numbers as low as zero percent. And finally, for the social
cost of carbon, some commenters supported NHTSA's use of a domestic
value and stated that the value should be $7/ton or lower, while other
commenters argued that NHTSA should use a global value much higher than
$7/ton, although there was little consensus as to what precise number.
For this NPRM, NHTSA, with EPA, has revisited every one of its
economic assumptions. Many of the assumptions used in the MY 2011 final
rule have been validated, while some have changed. For fuel prices,
NHTSA used the AEO High Price Case in the MY 2011 final rule, but
stated that its decision was based on its expectation that the
Reference Case would soon be revised to reflect higher estimates of
future fuel prices. EIA did, in fact, revise the Reference Case upward
in AEO 2009 to levels higher than the 2008 High Price Case, and NHTSA
has therefore elected to use the Reference Case for this NPRM. For the
discount rate, NHTSA is continuing to conduct and present the results
of analyses using both a 3 percent and a 7 percent rate, as is EPA in
its analysis. For the rebound effect, NHTSA took a fresh look at the
recent literature and developed new estimates for the rebound effect,
and has used a value of 10 percent in its analysis. And for the social
cost of carbon, based on the results of an interagency effort to
develop an estimate that can be used by all government agencies in
rulemakings that affect climate change, NHTSA has conducted analyses
for this NPRM using a range of values from $5 to $56/ton, representing
global SCC values. These issues are explained in Section II above, in
more detail in Section IV.C.3 below, in the joint TSD, and in NHTSA's
PRIA.
Did commenters agree with NHTSA's analytical tools?
In the previous rulemaking, although some commenters generally
supported NHTSA's use of the CAFE modeling system developed by DOT's
Volpe National Transportation Systems Center (Volpe Center), other
commenters expressed concerns regarding the modeling system, the ways
in which the system was applied, and accessibility of the system and
its inputs and outputs.
Technical concerns regarding the model itself centered on the fact
that it does not apply a direct and explicit representation of the
physical processes connecting the engineering characteristics of a
given vehicle to that vehicle's fuel economy. As NHTSA explained in its
March 2009 Federal Register notice establishing final MY 2011 CAFE
standards, full vehicle simulation could useful in developing model
inputs, but not, at least in the foreseeable future, in performing
forward-looking analysis of the future fleet.\430\ Having again
reconsidered this issue, NHTSA again concludes that with proper care in
developing model inputs, the Volpe model is as ``physics-based'' as is
practical or necessary for CAFE analysis.
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\430\ 74 FR 14371-72 (Mar. 30, 2009).
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Some commenters also questioned the model's structural assumptions
about manufacturers' compliance strategies. NHTSA has reconsidered this
question with respect to the potential for systematic underestimation
or overestimation of compliance costs. As a result, the Volpe model has
been modified to account for manufacturers' ability to engage in
``multi-year planning,'' adding more technology than necessary for
compliance in an early model year when a vehicle model is being
redesigned in order to carry that technology forward and facilitate
compliance in later model years. This major change to the Volpe model
tends to produce greater costs (and benefits) in earlier model years in
order to reduce costs in later model years.
Some commenters also questioned the model's use of externally-
specified ``phase-in caps'' to constrain the speed at which
technologies can practicably be adopted. NHTSA has reconsidered these
inputs in light of the fact that the model also assumes that most
technologies can only be practicably applied during a vehicle redesign
or (in some cases) freshening, and tentatively concludes that these
inputs can be significantly relaxed. The analysis supporting today's
proposal therefore relies almost exclusively on the redesign- and
refresh-related constraints to produce practicable estimates of
potential technology adoption rates. We are seeking comment on this
change to the model's inputs, and note that further changes to these
inputs would impact our analysis.
Commenters had many other concerns regarding inputs to the model,
such as economic inputs and technology-related estimates. Commenters
often (and
[[Page 49637]]
particularly in relation to the agency's estimate of the social value
of avoided CO2 emissions) mistakenly attributed these
concerns to the model itself. In again reviewing commenters' concerns
regarding NHTSA's analysis, the agency has carefully differentiated
between (1) the model, (2) inputs to the model, and (3) ways in which
the model is applied. We encourage commenters to do the same in
reviewing the analysis supporting today's proposal.
Finally, some commenters expressed concern regarding the model's
transparency. However, as NHTSA explained in in the MY 2011 final rule,
these concerns appeared to have been mistakenly applied to the model
itself, as the actual lack of transparency related only to the agency's
use of manufacturers' product plans, which formed the basis for inputs
to the model.\431\ The agency had previously made publicly available
the model, source code (i.e., computer programming instructions), model
documentation, and sample input files. To make the model more easily
accessible to the public, the agency began (in March 2009) placing all
of this information on NHTSA's Web site.\432\ In connection with
today's proposal, the agency is placing the updated model, code, and
documentation on the Web site, along with inputs and outputs for
agency's current analysis. Among those inputs are those defining the
agency's baseline estimates of the MYs 2012-2016 U.S. market for
passenger cars and light trucks, as these inputs do not, for today's
proposal, make use of manufacturers' confidential product plans.
---------------------------------------------------------------------------
\431\ 74 FR 14372 (Mar. 30, 2009).
\432\ See http://www.nhtsa.dot.gov (click on ``Fuel Economy,''
then ``Related Links--CAFE Compliance and Effects Modeling System
(Volpe Model)'')
---------------------------------------------------------------------------
How should NHTSA develop and fit the target curves?
In the previous rulemaking, many commenters expressed concern about
the steepness of the proposed curves for passenger cars, which occurred
because of the way in which NHTSA fit the curves to the data. The more
steep a curve is, the more rapidly mpg targets decrease as footprint
increases.
For this NPRM, NHTSA reconsidered how to address this concern and
decided to propose curves that are based on a constrained linear
function rather than a constrained logistic function, that are
considerably less steep than the curves proposed in the previous
rulemaking. This issue is discussed in greater detail in Section IV.C.5
below, in the joint TSD, and in NHTSA's PRIA.
Should NHTSA set additional ``backstop'' standards besides the one
established by Congress?
In the previous rulemaking, several commenters argued that NHTSA
must establish absolute backstop standards for imported passenger cars
and light trucks, in addition to the one for domestically-manufactured
passenger cars required by EISA. NHTSA examined its statutory authority
and concluded that only a backstop for domestic passenger cars was
permissible under the statute.
For this NPRM, NHTSA has re-examined its authority, and while the
agency still tentatively concludes that Congress' intent is clear from
the text of the statute, we recognize commenters' concerns that
attribute-based standards may not absolutely guarantee the level of
fuel savings currently anticipated if market forces cause manufacturers
to build larger vehicles in MYs 2012-2016. Thus, we seek comment on
this issue, which is discussed in greater detail below in Section
IV.C.5.
Should NHTSA classify more vehicles as passenger cars rather than
as light trucks?
In the previous rulemaking, many commenters agreed with NHTSA's
decision to move many 2WD SUVs from the light truck to the passenger
car fleet, but some commenters argued that NHTSA should go further and
reclassify more light trucks as passenger cars.
For this NPRM, NHTSA has reconsidered its vehicle classification
system and has not included in the proposed regulatory text any changes
to that system. However, NHTSA seeks comment on whether any changes
should be adopted for that time period or whether changes, if any,
should be deferred to MY 2017 and beyond. Classification issues are
addressed in greater detail in Section IV.H below.
5. Summary of the Proposed MY 2012-2016 CAFE Standards
NHTSA is proposing CAFE standards that are, like the standards
NHTSA promulgated in March 2009 for MY 2011, 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.\433\ Under the proposed CAFE
standards, each light vehicle model produced for sale in the United
States would have a fuel economy target. The CAFE levels that must be
met by the fleet of each manufacturer would be determined by computing
the sales-weighted harmonic average of the targets applicable to each
of the manufacturer's passenger cars and light trucks. These targets,
the mathematical form and coefficients of which are presented later in
today's notice, appear as follows when the values of the targets are
plotted versus vehicle footprint:
---------------------------------------------------------------------------
\433\ See 49 CFR 523.2 for the exact definition of
``footprint.''
---------------------------------------------------------------------------
[[Page 49638]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.023
[[Page 49639]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.024
Under these proposed footprint-based CAFE standards, the CAFE
levels required of individual manufacturers depend, as noted above, on
the mix of vehicles sold. 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.
Based on the forecast developed for this NPRM of the MYs 2012-2016
vehicle fleet, NHTSA estimates that the targets shown above would
result in the following average required CAFE levels:
Table IV.A.5-1--Average Required Fuel Economy (mpg) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars................................. 33.6 34.4 35.2 36.4 38.0
Light Trucks................................... 25.0 25.6 26.2 27.1 28.3
----------------------------------------------------------------
Combined................................... 29.8 30.6 31.4 32.6 34.1
----------------------------------------------------------------------------------------------------------------
For the reader's reference, these miles per gallon would be
equivalent to the following gallons per 100 miles for passenger cars
and light trucks:
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars................................. 2.9762 2.907 2.8409 2.7473 2.6316
Light Trucks................................... 4.0 3.9063 3.8168 3.8168 3.5336
----------------------------------------------------------------------------------------------------------------
NHTSA estimates that average achieved fuel economy levels will
correspondingly increase through MY 2016, but that manufacturers will,
on average, undercomply \434\ in some model
[[Page 49640]]
years and overcomply \435\ in others, reaching a combined average fuel
economy of 33.7 mpg in MY 2016.\436\ Table IV.A.5-1 is the estimated
required fuel economy for the proposed CAFE standards while Table
IV.A.5-2 includes the effects of some manufacturers' payment of CAFE
fines. In addition, Section IV.G.4 below contains an analysis of the
achieved levels (and projected fuel savings, costs, and benefits) when
the use of FFV credits is also assumed.
---------------------------------------------------------------------------
\434\ In NHTSA's analysis, ``undercompliance'' is mitigated
either through use of FFV credits, use of existing or ``banked''
credits, or through fine payment. Because NHTSA cannot consider
availability of credits in setting standards, the estimated achieved
CAFE levels presented here do not account for their use. In
contrast, because NHTSA is not prohibited from considering fine
payment, the estimated achieved CAFE levels presented here include
the assumption that BMW, Daimler (i.e., Mercedes), Porsche, and,
Tata (i.e., Jaguar and Rover) will only apply technology up to the
point that it would be less expensive to pay civil penalties.
\435\ In NHTSA's analysis, ``overcompliance'' occurs through
multi-year planning: manufacturers apply some ``extra'' technology
in early model years (e.g., MY 2014) in order to carry that
technology forward and thereby facilitate compliance in later model
years (e.g., MY 2016)
\436\ Consistent with EPCA, NHTSA has not accounted for
manufacturers' ability to earn CAFE credits for selling FFVs, carry
credits forward and back between model years, and transfer credits
between the passenger car and light truck fleets.
Table IV.A.5-2--Average Achieved Fuel Economy (mpg) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars................................. 32.9 34.2 35.2 36.5 37.6
Light Trucks................................... 24.9 25.7 26.5 27.4 28.1
----------------------------------------------------------------
Combined................................... 29.3 30.5 31.5 32.7 33.7
----------------------------------------------------------------------------------------------------------------
For the reader's reference, these miles per gallon would be
equivalent to the following gallons per 100 miles for passenger cars
and light trucks:
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars................................. 3.0438 2.9267 2.8398 2.7434 2.6623
Light Trucks................................... 4.0241 3.8952 3.7713 3.6495 3.5604
----------------------------------------------------------------------------------------------------------------
NHTSA estimates that these fuel economy increases will lead to fuel
savings totaling 61.6 billion gallons during the useful lives of
vehicles sold in MYs 2012-2016:
Table IV.A.5-3--Fuel Saved (Billion Gallons) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars.................... 2.5 5.3 7.5 9.4 11.4 36.0
Light Trucks...................... 1.8 3.7 5.4 6.8 7.8 25.6
-----------------------------------------------------------------------------
Combined...................... 4.3 9.1 12.9 16.1 19.2 61.6
----------------------------------------------------------------------------------------------------------------
The agency also estimates that these new CAFE standards will lead
to corresponding reductions of CO2 emissions totaling 656
million metric tons (mmt) during the useful lives of vehicles sold in
MYs 2012-2016:
Table IV.A.5-4--Avoided Carbon Dioxide Emissions (mmt) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars.................... 25 56 79 99 121 381
Light Trucks...................... 19 40 58 73 85 275
-----------------------------------------------------------------------------
Combined...................... 44 96 137 173 206 656
----------------------------------------------------------------------------------------------------------------
The agency estimates that these fuel economy increases would
produce other benefits (e.g., reduced time spent refueling), as well as
some disbenefits (e.g., increase traffic congestion) caused by drivers'
tendency to increase travel when the cost of driving declines (as it
does when fuel economy increases). The agency has estimated the total
monetary value to society of these benefits and disbenefits, and
estimates that the proposed standards will produce significant benefits
to society. NHTSA estimates that, in present value terms, these
benefits would total $200 billion over the useful lives of vehicles
sold during MYs 2012-2016:
Table IV.A.5-5--Present Value of Benefits ($Billion) Under Proposed CAFE Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars.................... 7.6 17.0 24.4 31.2 38.7 119.1
[[Page 49641]]
Light Trucks...................... 5.5 11.6 17.3 22.2 26.0 82.6
-----------------------------------------------------------------------------
Combined...................... 13.1 28.7 41.8 53.4 64.7 201.7
----------------------------------------------------------------------------------------------------------------
NHTSA attributes most of these benefits--about $157 billion, as
noted above--to reductions in fuel consumption, valuing fuel (for
societal purposes) at future pretax prices in the Energy Information
Administration's (EIA's) reference case forecast from Annual Energy
Outlook (AEO) 2009. The Preliminary Regulatory Impact Analysis (PRIA)
accompanying today's proposed rule presents a detailed analysis of
specific benefits of the proposed rule.
------------------------------------------------------------------------
Amount $ Value
------------------------------------------------------------------------
Fuel savings................ 61.6 billion $158.0 billion.
gallons.
CO2 emissions reductions.... 656 million $16.4 billion.
metric tons
(mmt).
------------------------------------------------------------------------
NHTSA estimates that the necessary increases in technology
application will involve considerable monetary outlays, totaling $62.5
billion in incremental outlays (i.e., beyond those attributable to the
MY 2011 standards) by new vehicle purchasers during MYs 2012-2016:
Table IV.A.5-6--Incremental Technology Outlays ($b) Under Proposed CAFE Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars.................... 4.1 6.5 8.4 9.9 11.8 40.8
Light Trucks...................... 1.5 2.8 4.0 5.2 5.9 19.4
-----------------------------------------------------------------------------
Combined...................... 5.7 9.3 12.5 15.1 17.6 60.2
----------------------------------------------------------------------------------------------------------------
Corresponding to these outlays and, to a much lesser extent, civil
penalties that some companies are expected to pay for noncompliance,
the agency estimates that the proposed standards would lead to
increases in average new vehicle prices, ranging from $476 per vehicle
in MY 2012 to $1,091 per vehicle in MY 2016:
Table IV.A.5-7--Incremental Increases in Average New Vehicle Prices ($) Under Proposed CAFE Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars................................. 591 735 877 979 1,127
Light Trucks................................... 283 460 678 882 1,020
----------------------------------------------------------------------------------------------------------------
Combined................................... 476 635 806 945 1,091
----------------------------------------------------------------------------------------------------------------
Tables IV.A.5-8 and IV.A.5-9 below present itemized costs and
benefits for a 3 percent and a 7 percent discount rate, respectively,
for the combined fleet (passenger cars and light trucks) in each model
year and for all model years combined. Numbers in parentheses represent
negative values.
Table IV.A.5-8--Itemized Cost and Benefit Estimates for the Combined Vehicle Fleet, 3% Discount Rate
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Costs:
Technology Costs........ $5,695 $9,295 $12,454 $15,080 $17,633 $60,157
Benefits:
Lifetime Fuel $10,197 $22,396 $32,715 $41,880 $50,823 $158,012
Expenditures...........
Consumer Surplus from $751 $1,643 $2,389 $3,029 $3,639 $11,451
Additional Driving.....
Refueling Time Value.... $776 $1,551 $2,198 $2,749 $3,277 $10,550
Petroleum Market $559 $1,194 $1,700 $2,129 $2,538 $8,121
Externalities..........
Congestion Costs........ ($460) ($934) ($1,332) ($1,657) ($1,991) ($6,376)
Noise Costs............. ($7) ($14) ($21) ($26) ($31) ($99)
Crash Costs............. ($217) ($437) ($625) ($776) ($930) ($2,985)
CO2..................... $1,028 $2,287 $3,382 $4,376 $5,372 $16,446
CO...................... $0 $0 $0 $0 $0 $0
VOC..................... $41 $80 $108 $131 $156 $518
NOX..................... $82 $132 $155 $174 $200 $744
PM...................... $220 $438 $621 $771 $904 $2,956
[[Page 49642]]
SOX..................... $161 $345 $490 $613 $731 $2,341
-----------------------------------------------------------------------------------
Total............... $13,132 $28,680 $41,781 $53,394 $64,687 $201,676
===================================================================================
Net Benefits.... $7,044 $18,759 $27,090 $34,710 $41,386 $128,992
----------------------------------------------------------------------------------------------------------------
Table IV.A.5-9--Itemized Cost and Benefit Estimates for the Combined Vehicle Fleet, 7% Discount Rate
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Costs:
Technology Costs........ $5,695 $9,295 $12,454 $15,080 $17,633 $60,157
Benefits:
Lifetime Fuel $7,991 $17,671 $25,900 $33,264 $40,478 $125,305
Expenditures...........
Consumer Surplus from $590 $1,301 $1,896 $2,412 $2,904 $9,102
Additional Driving.....
Refueling Time Value.... $624 $1,249 $1,770 $2,215 $2,642 $8,500
Petroleum Market $448 $960 $1,367 $1,712 $2,043 $6,531
Externalities..........
Congestion Costs........ ($371) ($753) ($1,074) ($1,335) ($1,606) ($5,138)
Noise Costs............. ($6) ($12) ($16) ($21) ($24) ($80)
Crash Costs............. ($173) ($352) ($503) ($626) ($749) ($2,403)
CO2..................... $797 $1,781 $2,634 $3,410 $4,189 $12,813
CO...................... $0 $0 $0 $0 $0 $0
VOC..................... $33 $65 $87 $106 $125 $416
NOX..................... $60 $99 $120 $135 $156 $570
PM...................... $170 $344 $492 $613 $721 $2,339
SOX..................... $129 $278 $394 $493 $588 $1,882
-----------------------------------------------------------------------------------
Total............... $10,292 $22,631 $33,066 $42,380 $51,468 $159,837
===================================================================================
Net Benefits.... $4,281 $12,832 $18,818 $24,414 $29,293 $89,638
----------------------------------------------------------------------------------------------------------------
Neither EPCA nor EISA requires that NHTSA conduct a cost-benefit
analysis in determining average fuel economy standards, but too,
neither precludes its use.\437\ EPCA does require that NHTSA consider
economic practicability among other factors, and NHTSA has concluded,
as discussed elsewhere herein, that the standards it proposes today are
economically practicable. Further validating and supporting its
conclusion that the standards it proposes today are reasonable, a
comparison of the standards' costs and benefits shows that the
standards' estimated benefits far outweigh its estimated costs. Based
on the figures reported above, NHTSA estimates that the total benefits
of today's proposed standards would be more three times the magnitude
of the corresponding costs, such that the proposed standards would
produce net benefits of nearly $138 billion over the useful lives of
vehicles sold during MYs 2012-2016.
---------------------------------------------------------------------------
\437\ Center for Biological Diversity v. NHTSA, 508 F.3d 508
(9th Cir. 2007) (rejecting argument that EPCA precludes the use of a
marginal cost-benefit analysis that attempted to weigh all of the
social benefits (i.e., externalities as well as direct benefits to
consumers) of improved fuel savings in determining the stringency of
the CAFE standards). See also Entergy Corp. v. Riverkeeper, Inc.,
129 S.Ct. 1498, 1508 (2009) (``[U]nder Chevron, that an agency is
not required to [conduct a cost-benefit analysis] does not mean that
an agency is not permitted to do so.'')
---------------------------------------------------------------------------
B. Background
1. Chronology of Events Since the National Academy of Sciences Called
for Reforming and Increasing CAFE Standards
a. National Academy of Sciences Issues Report on Future of CAFE Program
(February 2002)
i. Significantly Increasing CAFE Standards Without Making Them
Attribute-Based Would Adversely Affect Safety
In the 2002 congressionally-mandated report entitled
``Effectiveness and Impact of Corporate Average Fuel Economy (CAFE)
Standards,'' \438\ a committee of the National Academy of Sciences
(NAS) (``2002 NAS Report'') concluded that the then-existing form of
passenger car and light truck CAFE standards permitted vehicle
manufacturers to comply in part by downweighting and even downsizing
their vehicles and that these actions had led to additional fatalities.
The committee explained that this safety problem arose because, at that
time, the CAFE standards were not attributed-based and thus subjected
all passenger cars to the same fuel economy target and all light trucks
to the same target, regardless of their weight, size, or load-carrying
capacity.\439\ The committee said that this experience suggests that
consideration should be given to developing a new system of fuel
economy targets that reflects differences in such vehicle attributes.
Without a thoughtful restructuring of the program, there would be the
trade-offs that must be made if CAFE standards were increased by any
significant amount.\440\
---------------------------------------------------------------------------
\438\ National Research Council, ``Effectiveness and Impact of
Corporate Average Fuel Economy (CAFE) Standards,'' National Academy
Press, Washington, DC (2002). Available at http://www.nap.edu/openbook.php?isbn=0309076013 (last accessed August 9, 2009). The
conference committee report for the Department of Transportation and
Related Agencies Appropriations Act for FY 2001 (Pub. L. 106-346)
directed NHTSA to fund a study by NAS to evaluate the effectiveness
and impacts of CAFE standards (H. Rep. No. 106-940, p. 117-118). In
response to the direction from Congress, NAS published this lengthy
report.
\439\ NHTSA formerly used this approach for CAFE standards. EISA
prohibits its use after MY 2010.
\440\ NAS, p. 9.
---------------------------------------------------------------------------
In response to these conclusions, NHTSA issued attribute-based CAFE
standards for light trucks and sought legislative authority to issue
attribute-based CAFE standards for passenger cars before undertaking to
raise the car
[[Page 49643]]
standards. Congress went a step further in enacting EISA, not only
authorizing the issuance of attribute-based standards, but also
mandating them.
ii. Climate Change and Other Externalities Justify Increasing the CAFE
Standards
The NAS committee said that there are two compelling concerns that
justify a government-mandated increase in fuel economy, both relating
to externalities. The first and most important concern, it argued, is
the accumulation in the atmosphere of greenhouse gases, principally
carbon dioxide.\441\
---------------------------------------------------------------------------
\441\ NAS, pp. 2, 13, and 83.
---------------------------------------------------------------------------
A second concern is that petroleum imports have been steadily
rising because of the nation's increasing demand for gasoline without a
corresponding increase in domestic supply. The high cost of oil imports
poses two risks: Downward pressure on the strength of the dollar (which
drives up the cost of goods that Americans import) and an increase in
U.S. vulnerability to macroeconomic shocks that cost the economy
considerable real output.
To determine how much the fuel economy standards should be
increased, the committee urged that all social benefits be considered.
That is, it urged not only that the dollar value of the saved fuel be
considered, but also that the dollar value to society of the resulting
reductions in greenhouse gas emissions and in dependence on imported
oil should be calculated and considered. The committee said that if it
is possible to assign dollar values to these favorable effects, it
becomes possible to make at least crude comparisons between the
socially beneficial effects of measures to improve fuel economy on the
one hand, and the costs (both out-of-pocket and more subtle) on the
other.
iii. Reforming the CAFE Program Could Address Inequity Arising From the
CAFE Structure
The 2002 NAS report expressed concerns about increasing the
standards under the CAFE program as currently structured. While raising
CAFE standards under the existing structure would reduce fuel
consumption, doing so under alternative structures ``could accomplish
the same end at lower cost, provide more flexibility to manufacturers,
or address inequities arising from the present'' structure.\442\
---------------------------------------------------------------------------
\442\ NAS, pp. 4-5 (Finding 10).
---------------------------------------------------------------------------
To address those structural problems, the report suggested various
possible reforms. The report found that the ``CAFE program might be
improved significantly by converting it to a system in which fuel
targets depend on vehicle attributes.''\443\ The report noted further
that under an attribute-based approach, the required CAFE levels could
vary among the manufacturers based on the distribution of their product
mix. NAS stated that targets could vary among passenger cars and among
trucks, based on some attribute of these vehicles such as weight, size,
or load-carrying capacity. The report explained that a particular
manufacturer's average target for passenger cars or for trucks would
depend upon the fractions of vehicles it sold with particular levels of
these attributes.\444\
---------------------------------------------------------------------------
\443\ NAS, p. 5 (Finding 12).
\444\ NAS, p. 87.
---------------------------------------------------------------------------
2. NHTSA Issues Final Rule Establishing Attribute-Based CAFE Standards
for MY 2008-2011 Light Trucks (March 2006)
The 2006 final rule reformed the structure of the CAFE program for
light trucks by introducing an attribute-based approach and using that
approach to establish higher CAFE standards for MY 2008-2011 light
trucks.\445\ Reforming the CAFE program enables it to achieve larger
fuel savings, while enhancing safety and preventing adverse economic
consequences.
---------------------------------------------------------------------------
\445\ 71 FR 17566 (Apr. 6, 2006).
---------------------------------------------------------------------------
As noted above, under Reformed CAFE, fuel economy standards were
restructured so that they are based on a vehicle attribute, a measure
of vehicle size called ``footprint.'' It is the product of multiplying
a vehicle's wheelbase by its track width. A target level of fuel
economy was established for each increment in footprint (0.1 ft\2\).
Trucks with smaller footprints have higher fuel economy targets;
conversely, larger ones have lower targets. A particular manufacturer's
compliance obligation for a model year is calculated as the harmonic
average of the fuel economy targets for the manufacturer's vehicles,
weighted by the distribution of the manufacturer's production volumes
among the footprint increments. Thus, each manufacturer is required to
comply with a single overall average fuel economy level for each model
year of production.
Compared to Unreformed (non-attributed-based) CAFE, Reformed CAFE
enhances overall fuel savings while providing vehicle manufacturers
with the flexibility they need to respond to changing market
conditions. Reformed CAFE also provides a more equitable regulatory
framework by creating a level playing field for manufacturers,
regardless of whether they are full-line or limited-line manufacturers.
We were particularly encouraged that Reformed CAFE will confer no
compliance advantage if vehicle makers choose to downsize some of their
fleet as a CAFE compliance strategy, thereby reducing the adverse
safety risks associated with the Unreformed CAFE program.
3. Ninth Circuit Issues Decision re Final Rule for MY 2008-2011 Light
Trucks (November 2007)
On November 15, 2007, the United States Court of Appeals for the
Ninth Circuit issued its decision in Center for Biological Diversity v.
NHTSA,\446\ the challenge to the MY 2008-11 light truck CAFE rule. The
court held that EPCA permits, but does not require, the use of a
marginal cost-benefit analysis. The court specifically emphasized
NHTSA's discretion to decide how to balance the statutory factors--as
long as that balancing does not undermine the fundamental statutory
purpose of energy conservation.
---------------------------------------------------------------------------
\446\ 508 F.3d 508.
---------------------------------------------------------------------------
However, the Court found that NHTSA had been arbitrary and
capricious in the following respects:
NHTSA's decision that it could not monetize the benefit of
reducing CO2 emissions for the purpose of conducting its
marginal benefit-cost analysis;
NHTSA's lack, in the Court's view, of a reasoned
explanation for its decision not to establish a ``backstop'' (i.e., a
fixed minimum CAFE standard applicable to manufacturers);
NHTSA's lack, again in the Court's view, of a reasoned
explanation for its decision not to revise the regulatory definitions
for the passenger car and light truck categories of automobiles so that
some vehicles currently classified as light trucks are instead
classified as passenger cars;
NHTSA's decision not to subject most medium- and heavy-
duty pickups and most medium- and heavy-duty cargo vans (i.e., those
between 8,500 and 10,000 pounds gross vehicle weight rating (GVWR,) to
the CAFE standards;
NHTSA's decision to prepare and publish an Environmental
Assessment (EA) and making a finding of no significant impact
notwithstanding what the Court found to be an insufficiently broad
range of alternatives, insufficient analysis of the climate change
effects of the CO2 emissions, and limited assessment of
cumulative impacts in its EA under the National Environmental Policy
Act (NEPA).
The Court did not vacate the standards, but instead said it would
remand the rule to NHTSA to
[[Page 49644]]
promulgate new standards consistent with its opinion ``as expeditiously
as possible and for the earliest model year practicable.\447\ Under the
decision, the standards established by the April 2006 final rule would
remain in effect unless and until amended by NHTSA. In addition, it
directed the agency to prepare an Environmental Impact Statement.
---------------------------------------------------------------------------
\447\ The deadline in EPCA for issuing a final rule
establishing, for the first time, a CAFE standard for a model year
is 18 months before the beginning of that model year. 49 U.S.C.
32902(g)(2). The same deadline applies to issuing a final rule
amending an existing CAFE standard so as to increase its stringency.
Given that the agency has long regarded October 1 as the beginning
of a model year, the statutory deadline for increasing the MY 2009
standard was March 30, 2007, and the deadline for increasing the MY
2010 standard is March 30, 2008. Thus, the only model year for which
there was sufficient time at the time of the Court's decision to
gather all of the necessary information, conduct the necessary
analyses and complete a rulemaking was MY 2011. As noted earlier in
this notice, however, EISA requires that a new standard be
established for that model year.
---------------------------------------------------------------------------
4. Congress Enacts Energy Security and Independence Act of 2007
(December 2007)
As noted above in Section I.B., EISA significantly changed the
provisions of EPCA governing the establishment of future CAFE
standards. These changes made it necessary for NHTSA to pause in its
efforts so that it could assess the implications of the amendments made
by EISA and then, as required, revise some aspects of the proposals it
had been developing (e.g., the model years covered and credit issues).
5. NHTSA Proposes CAFE Standards for MYs 2011-2015 (April 2008)
The agency cannot set out the exact level of CAFE that each
manufacturer would have been required to meet for each model year under
the passenger car or light truck standards since the levels would
depend on information that would not be available until the end of each
of the model years, i.e., the final actual production figures for each
of those years. The agency can, however, project what the industry-wide
level of average fuel economy would have been for passenger cars and
for light trucks if each manufacturer produced its expected mix of
automobiles and just met its obligations under the proposed
``optimized'' standards for each model year.
------------------------------------------------------------------------
Passenger Light
cars mpg trucks mpg
------------------------------------------------------------------------
MY 2011....................................... 31.2 25.0
MY 2012....................................... 32.8 26.4
MY 2013....................................... 34.0 27.8
MY 2014....................................... 34.8 28.2
MY 2015....................................... 35.7 28.6
------------------------------------------------------------------------
The combined industry-wide average fuel economy (in miles per
gallon, or mpg) levels for both cars and light trucks, if each
manufacturer just met its obligations under the proposed ``optimized''
standards for each model year, would have been as follows:
------------------------------------------------------------------------
Combined
mpg
------------------------------------------------------------------------
MY 2011.................................................... 27.8
MY 2012.................................................... 29.2
MY 2013.................................................... 30.5
MY 2014.................................................... 31.0
MY 2015.................................................... 31.6
------------------------------------------------------------------------
The annual average increase during this five year period would have
been approximately 4.5 percent. Due to the uneven distribution of new
model introductions during this period and to the fact that significant
technological changes could be most readily made in conjunction with
those introductions, the annual percentage increases were greater in
the early years in this period.
6. Ninth Circuit Revises its Decision re Final Rule for MY 2008-2011
Light Trucks (August 2008)
In response to the Government petition for rehearing, the Ninth
Circuit modified its decision by replacing its direction to prepare an
EIS with a direction to prepare either a new EA or, if necessary, an
EIS.\448\
---------------------------------------------------------------------------
\448\ See CBD v. NHTSA, 538 F.3d 1172 (9th Cir. 2008).
---------------------------------------------------------------------------
7. NHTSA Releases Final Environmental Impact Statement (October 2008)
On October 17, 2008, EPA published a notice announcing the
availability of NHTSA's final environmental impact statement (FEIS) for
this rulemaking.\449\ Throughout the FEIS, NHTSA relied extensively on
findings of the United Nations Intergovernmental Panel on Climate
Change (IPCC) and the U.S. Climate Change Science Program (USCCSP). In
particular, the agency relied heavily on the most recent, thoroughly
peer-reviewed, and credible assessments of global climate change and
its impact on the United States: the IPCC Fourth Assessment Report
Working Group I4 and II5 Reports, and reports by the USCCSP that
include Scientific Assessments of the Effects of Global Climate Change
on the United States and Synthesis and Assessment Products.
---------------------------------------------------------------------------
\449\ 73 FR 61859 (Oct. 18, 2008).
---------------------------------------------------------------------------
In the FEIS, NHTSA compared the environmental impacts of its
preferred alternative and those of reasonable alternatives. It
considered direct, indirect, and cumulative impacts and describes these
impacts to inform the decisionmaker and the public of the environmental
impacts of the various alternatives.
Among other potential impacts, NHTSA analyzed the direct and
indirect impacts related to fuel and energy use, emissions, including
carbon dioxide and its effects on temperature and climate change, air
quality, natural resources, and the human environment. Specifically,
the FEIS used a climate model to estimate and report on four direct and
indirect effects of climate change, driven by alternative scenarios of
GHG emissions, including:
1. Changes in CO2 concentrations;
2. Changes in global mean surface temperature;
3. Changes in regional temperature and precipitation; and
4. Changes in sea level.
NHTSA also considered the cumulative impacts of the proposed
standards for MY 2011-2015 passenger cars and light trucks, together
with estimated impacts of NHTSA's implementation of the CAFE program
through MY 2010 and NHTSA's future CAFE rulemaking for MYs 2016-2020.
8. Department of Transportation Decides not to Issue MY 2011-2015 Final
Rule (January 2009)
On January 7, 2009, the Department of Transportation announced that
the Bush Administration would not issue the final rule, notwithstanding
the Office of Information and Regulatory Affairs' completion of review
of the rule under Executive Order 12866, Regulatory Planning and
Review, on November 14, 2008.\450\
---------------------------------------------------------------------------
\450\ The statement can be found at http://www.dot.gov/affairs/dot0109.htm (last accessed August 9, 2009).
---------------------------------------------------------------------------
9. The President Requests NHTSA to Issue Final Rule for MY 2011 Only
(January 2009)
As explained above, in his memorandum of January 26, 2009, the
President requested the agency to issue a final rule adopting CAFE
standards for MY 2011 only. Further, the President requested NHTSA to
establish standards for MY 2012 and later after considering the
appropriate legal factors, the comments filed in response to the May
2008 proposal, the relevant technological and scientific
considerations, and, to the extent feasible, a forthcoming report by
the
[[Page 49645]]
National Academy of Sciences assessing automotive technologies that can
practicably be used to improve fuel economy.
10. NHTSA Issues Final Rule for MY 2011 (March 2009)
a. Introduction
NHTSA's review and analysis of comments on its proposal led the
agency to make many changes to its methods for analyzing potential MY
2011 CAFE standards, as well as to the data and other information to
which the agency has applied these methods. The following are some of
the more prominent changes:
After receiving, reviewing, and integrating updated
product plans from vehicle manufacturers, NHTSA revised its forecast of
the future light vehicle market.
NHTSA changed the methods and inputs it used to represent
the applicability, availability, cost, and effectiveness of future
fuel-saving technologies.
NHTSA based its fuel price forecast on the AEO 2008 High
Case price scenario instead of the AEO 2008 Reference Case.
NHTSA reduced mileage accumulation estimates (i.e.,
vehicle miles traveled) to levels consistent with this increased fuel
price forecast.
NHTSA applied increased estimates for the value of oil
import externalities.
NHTSA included all manufacturers--not just the largest
seven--in the process used to fit the curve and estimate the stringency
at which societal net benefits are maximized.
NHTSA tightened its application of the definition of
``nonpassenger automobiles,'' causing a reassigning of over one million
vehicles from the light truck fleet to the passenger car fleet, and
lowering the average fuel economy for cars due to the inclusion of
vehicles previously categorized as trucks, as well as the average fuel
economy for trucks because the truck category then had a larger
proportion of heavier trucks.
NHTSA fitted the shape of the curve based on
``exhaustion'' of available technologies instead of on manufacturer-
level optimization of CAFE levels.
These changes affected both the shape and stringency of the
attribute-based standards. Taken together, the last three of the above
changes reduced the steepness of the curves defining fuel economy
targets for passenger cars, and also less significantly reduced the
steepness of the light truck curves.
b. Standards
The final rule established footprint-based fuel economy standards
for MY 2011 passenger cars and light trucks, where each vehicle
manufacturer's required level of CAFE was based on target levels of
average fuel economy set for vehicles of different sizes and on the
distribution of that manufacturer's vehicles among those sizes. The
curves defining the performance target at each footprint reflect the
technological and economic capabilities of the industry. The target for
each footprint is the same for all manufacturers, regardless of
differences in their overall fleet mix. Compliance would be determined
by comparing a manufacturer's harmonically averaged fleet fuel economy
levels in a model year with a required fuel economy level calculated
using the manufacturer's actual production levels and the targets for
each footprint of the vehicles that it produces.
The agency analyzed seven regulatory alternatives, one of which
maximizes net benefits within the limits of available information and
was known at the time as the ``optimized standards.'' The optimized
standards were set at levels, such that, considering all of the
manufacturers together, no other alternative is estimated to produce
greater net benefits to society. Upon a considered analysis of all
information available, including all information submitted to NHTSA in
comments, the agency adopted the ``optimized standard'' alternative as
the final standards for MY 2011.\451\ By limiting the standards to
levels that can be achieved using technologies each of which are
estimated to provide benefits that at least equal its costs, the net
benefit maximization approach helped, at the time, to assure the
marketability of the manufacturers' vehicles and thus economic
practicability of the standards. Providing this assurance assumed
increased importance in view of current and anticipated conditions in
the industry in particular and the economy in general. As was widely
reported in the public domain throughout that rulemaking, and as shown
in public comments, the national and global economies raised serious
concerns. Even before those recent developments, the automobile
manufacturers were already facing substantial difficulties. Together,
these problems made NHTSA's economic practicability analysis
particularly important and challenging in that rulemaking.
---------------------------------------------------------------------------
\451\ The agency notes, for NEPA purposes, that the ``optimized
standard'' alternative adopted as the final standards corresponds to
the ``Optimized Mid-2'' scenario described in Section 2.2.2 of the
FEIS.
---------------------------------------------------------------------------
The agency could not set out the exact level of CAFE that each
manufacturer would be required to meet for MY 2011 under the passenger
car or light truck standards because the levels will depend on
information that will not be available until the end of that model
year, i.e., the final actual production figures for that year. However,
the following levels were projected for what the industry-wide level of
average fuel economy will be for passenger cars and for light trucks if
each manufacturer produced its expected mix of automobiles and just met
its obligations under the ``optimized'' standards.
------------------------------------------------------------------------
Passenger Light
cars mpg trucks mpg
------------------------------------------------------------------------
MY 2011....................................... 30.2 24.1
------------------------------------------------------------------------
The combined industry-wide average fuel economy (in miles per
gallon, or mpg) levels for both cars and light trucks, if each
manufacturer just met its obligations under the ``optimized''
standards, were projected as follows:
------------------------------------------------------------------------
mpg
Combined increase
mpg over prior
year
------------------------------------------------------------------------
MY 2011....................................... 27.3 2.0
------------------------------------------------------------------------
In addition, per EISA, each manufacturer's domestic passenger fleet
is required in MY 2011 to achieve 27.5 mpg or 92 percent of the CAFE of
the industry-wide combined fleet of domestic and non-domestic passenger
cars \452\ for that model year, whichever is higher. This requirement
resulted in the following projected alternative minimum standard (not
attribute-based) for domestic passenger cars:
---------------------------------------------------------------------------
\452\ Those numbers set out several paragraphs above.
------------------------------------------------------------------------
Domestic
passenger
cars mpg
------------------------------------------------------------------------
MY 2011.................................................... 27.8
------------------------------------------------------------------------
c. Credits
NHTSA also adopted a new Part 536 on use of ``credits'' earned for
exceeding applicable CAFE standards. Part 536 implements the provisions
in EISA authorizing NHTSA to establish by regulation a credit trading
program and directing it to establish by regulation a credit transfer
program.\453\ Since its
[[Page 49646]]
enactment, EPCA has permitted manufacturers to earn credits for
exceeding the standards and to apply those credits to compliance
obligations in years other than the model year in which it was earned.
EISA extended the ``carry-forward'' period to five model years, and
left the ``carry-back'' period at three model years. Under Part 536,
credit holders (including, but not limited to, manufacturers) will have
credit accounts with NHTSA, and will be able to hold credits, apply
them to compliance with CAFE standards, transfer them to another
``compliance category'' for application to compliance there, or trade
them. A credit may also be cancelled before its expiry date, if the
credit holder so chooses. Traded and transferred credits will be
subject to an ``adjustment factor'' to ensure total oil savings are
preserved, as required by EISA. EISA also prohibits credits earned
before MY 2011 from being transferred, so NHTSA has developed several
regulatory restrictions on trading and transferring to facilitate
Congress' intent in this regard.
---------------------------------------------------------------------------
\453\ Congress required that DOT establish a credit
``transferring'' regulation, to allow individual manufacturers to
move credits from one of their fleets to another (e.g., using a
credit earned for exceeding the light truck standard for compliance
with the domestic passenger car standard). Congress allowed DOT to
establish a credit ``trading'' regulation, so that credits may be
bought and sold between manufacturers and other parties.
---------------------------------------------------------------------------
11. Energy Policy and Conservation Act, as Amended by the Energy
Independence and Security Act
NHTSA's statutory authority and obligations under the Energy Policy
and Conservation Act of 1975 (EPCA), as amended by the Energy
Independence and Security Act of 2007 (EISA), is discussed at length
above in Section I.B.1.
C. Development and Feasibility of the Proposed Standards
1. How Was the Baseline Vehicle Fleet Developed?
a. Why Do the Agencies Establish a Baseline Vehicle Fleet?
In order to determine what levels of stringency are feasible in
future model years, the agencies must project what vehicles will exist
in those model years, and then evaluate what technologies can feasibly
be applied to those vehicles in order to raise their fuel economy and
lower their CO2 emissions. The agencies therefore establish
a baseline vehicle fleet representing those vehicles, based on the best
available information. Each agency then developed a separate reference
fleet, accounting (via their respective models) for the effect that the
MY 2011 CAFE standards have on the baseline fleet. This reference fleet
is then used for comparisons of technologies' incremental cost and
effectiveness, as well as the other relevant comparisons in the rule.
b. What Data Did the Agencies Use To Construct the Baseline, and How
Did They Do So?
As explained in the Technical Support Document (TSD) prepared
jointly by NHTSA and EPA, both agencies used a baseline vehicle fleet
constructed beginning with EPA fuel economy certification data for the
2008 model year, the most recent for which final data is currently
available from manufacturers. This data was used as the source for MY
2008 production volumes and some vehicle engineering characteristics,
such fuel economy ratings, engine sizes, numbers of cylinders, and
transmission types.
Some information important for analyzing new CAFE standards is not
contained in the EPA fuel economy certification data. EPA staff
estimated vehicle wheelbase and track widths using data from
Motortrend.com and Edmunds.com. This information is necessary for
estimating vehicle footprint, which is required for the analysis of
footprint-based standards. Considerable additional information
regarding vehicle engineering characteristics is also important for
estimating the potential to add new technologies in response to new
CAFE standards. In general, such information helps to avoid ``adding''
technologies to vehicles that already have the same or a more advanced
technology. Examples include valvetrain configuration (e.g., OHV, SOHC,
DOHC), presence of cylinder deactivation, and fuel delivery (e.g.,
MPFI, SIDI). To the extent that such engineering characteristics were
not available in certification data, EPA staff relied on data published
by Ward's Automotive, supplementing this with information from Internet
sites such as Motortrend.com and Edmunds.com. NHTSA staff also added
some more detailed engineering characteristics (e.g, type of variable
valve timing) using data available from ALLDATA[reg] Online. Combined
with the certification data, all of this information yielded a MY 2008
baseline vehicle fleet.
After the baseline was created the next step was to project the
sales volumes for 2011-2016 model years. EPA used projected car and
truck volumes for this period from Energy Information Administration's
(EIA's) 2009 Annual Energy Outlook (AEO).\454\ However, AEO projects
sales only at the car and truck level, not at the manufacturer and
model-specific level, which are needed in order to estimate the effects
new standards will have on individual manufacturers. Therefore, EPA
purchased data from CSM-Worldwide and used their projections of the
number of vehicles of each type predicted to be sold by manufacturers
in 2011-2015.\455\ This provided the year-by-year percentages of cars
and trucks sold by each manufacturer as well as the percentages of each
vehicle segment. Although it was, therefore, necessary to assume the
same manufacturer and segment shares in 2016 as in 2015, 2016 estimates
from CSM should be available for the final rule. Using these
percentages normalized to the AEO projected volumes then provided the
manufacturer-specific market share and model-specific sales for model
years 2011-2016.
---------------------------------------------------------------------------
\454\ Available at http://www.eia.doe.gov/oiaf/aeo/index.html.
The agencies have also used fuel price forecasts from AEO2009. Both
agencies regard AEO a credible source not only of such forecasts,
but also of many underlying forecasts, including forecasts of the
size the future light vehicle market.
\455\ EPA also considered other sources of similar information,
such as J.D. Powers, and concluded that CSM was better able to
provide forecasts at the requisite level of detail for most of the
model years of interest.
---------------------------------------------------------------------------
The processes for constructing the MY 2008 baseline vehicle fleet
and subsequently adjusting sales volumes to construct the MY 2011-2016
baseline vehicle fleet are presented in detail in Chapter 1 of the
draft Joint Technical Support Document accompanying today's notice.
c. How Is This Different From NHTSA's Historical Approach and Why is
This Approach Preferable?
As discussed above in Section II.B.3, 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. In contrast, the current market
forecast is based primarily on information sources which are all either
in the public domain or available commercially. There are advantages to
this approach, namely transparency and the potential to reduce some
errors due to manufacturers' misunderstanding of NHTSA's request for
information. There are also disadvantages, namely that the current
market forecast does not represent certain changes likely to occur in
the future vehicle fleet as opposed to the MY 2008 vehicle fleet, such
as vehicles being discontinued and newly introduced. On balance,
however, the agencies have carefully considered these
[[Page 49647]]
advantages and disadvantages of using a market forecast derived from
public and commercial sources rather than from manufacturers' product
plans, and conclude that the advantages outweigh the disadvantages.
Nevertheless, 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 incorporated into an analysis that is available for
public review and comment. In any event, because NHTSA and EPA are
releasing market inputs used in the agencies' respective analyses,
manufacturers, suppliers, and other automobile industry observers and
participants can submit comments on how these inputs should be revised,
as can all other reviewers. More information on the advantages and
disadvantages of the current approach and the agencies' decision to
follow it is available in Section II.B.3.
d. How Is This Baseline Different Quantitatively From the Baseline That
NHTSA Used for the MY 2011 (March 2009) Final Rule?
As discussed above, the current baseline was developed from
adjusted MY 2008 compliance data and covers MYs 2011-2016, while the
baseline that NHTSA used for the MY 2011 CAFE rule was developed from
confidential manufacturer product plans for MY 2011. This section
describes, for the reader's comparison, some of the differences between
the current baseline and the MY 2011 CAFE rule baseline.
Estimated vehicle sales:
The sales forecasts, based on the Energy Information
Administration's (EIA's) Annual Energy Outlook 2009 (AEO 2009), used in
the current baseline indicate that the total number of light vehicles
expected to be sold during MYs 2011-2015 is 77 million, or about 15.4
million vehicles annually. NHTSA's MY 2011 final rule forecast, based
on AEO 2008, of the total number of light vehicles likely to be sold
during MY 2011 through MY 2015 was 83 million, or about 16.6 million
vehicles annually. Light trucks are expected to make up 40 percent of
the MY 2011 baseline market forecast in the current baseline, compared
to 42 percent of the baseline market forecast in the MY 2011 final
rule. These changes in both the overall size of the light vehicle
market and the relative market shares of passenger cars and light
trucks reflect changes in the economic forecast underlying AEO, and
changes in AEO's forecast of future fuel prices.
The figures below attempt to demonstrate graphically the difference
between the variation of fuel economy with footprint for passenger cars
under the current baseline and MY 2011 final rule, and for light trucks
under the current baseline and MY 2011 final rule, respectively.
Figures IV.C.1-1 and 1-2 show the variation of fuel economy with
footprint for passenger car models in the current baseline and in the
MY 2011 final rule, while Figures IV.C.1-3 and 1-4 show the variation
of fuel economy with footprint for light truck models in the current
baseline and in the MY 2011 final rule. However, it is difficult to
draw meaningful conclusions by comparing figures from the current
baseline with those of the MY 2011 final rule. In the current baseline
the number of make/models, and their associated fuel economy and
footprint, are fixed and do not vary over time--this is why the number
of data points in the current baseline figures appears smaller as
compared to the number of data points in the MY 2011 final rule
baseline. In contrast, the baseline fleet used in the MY 2011 final
rule varies over time as vehicles (with different fuel economy and
footprint characteristics) are added to and dropped from the product
mix.
[GRAPHIC] [TIFF OMITTED] TP28SE09.025
[[Page 49648]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.026
[GRAPHIC] [TIFF OMITTED] TP28SE09.027
[[Page 49649]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.028
Estimated manufacturer market shares:
NHTSA's expectations regarding manufacturers' market shares (the
basis for which is discussed below) have also changed since the MY 2011
final rule. These changes are reflected below in Table IV.C.1-1, which
shows the agency's sales forecasts for passenger cars and light trucks
under the current baseline and the MY 2011 final rule.\456\
---------------------------------------------------------------------------
\456\ As explained below, although NHTSA normalized each
manufacturer's overall market share to produce a realistically-sized
fleet, the product mix for each manufacturer that submitted product
plans was preserved. The agency has reviewed manufacturers' product
plans in detail, and understands that manufacturers do not sell the
same mix of vehicles in every model year.
Table IV.C.1-1--Sales Forecasts
[Production for U.S. sale in MY 2011, thousand units]
----------------------------------------------------------------------------------------------------------------
Current baseline MY 2011 final rule
Manufacturer -----------------------------------------------------
Passenger Nonpassenger Passenger Nonpassenger
----------------------------------------------------------------------------------------------------------------
Chrysler.................................................. 194 403 707 1,216
Ford...................................................... 1,230 944 1,615 1,144
General Motors............................................ 1,156 1,314 1,700 1,844
Honda..................................................... 996 571 1,250 470
Hyundai................................................... 570 127 655 221
Kia \457\................................................. 302 98
Nissan.................................................... 794 421 789 479
Toyota.................................................... 1,474 1,059 1,405 1,094
Other Asian............................................... 631 212 441 191
European.................................................. 888 399 724 190
-----------------------------------------------------
Total................................................. 8,235 5,547 9,286 6,849
----------------------------------------------------------------------------------------------------------------
Dual-fueled vehicles:
---------------------------------------------------------------------------
\457\ Kia is not listed in the table for the MY 2011 final rule
because it was considered as part of Hyundai for purposes of that
analysis (i.e., Hyundai-Kia).
---------------------------------------------------------------------------
Manufacturers have also, during and since MY 2008, indicated plans
to sell more dual-fueled or flexible-fuel vehicles (FFVs) in MY 2011
than
[[Page 49650]]
indicated in the current baseline of adjusted MY 2008 compliance data.
FFVs create a potential market for alternatives to petroleum-based
gasoline and diesel fuel. For purposes of determining compliance with
CAFE standards, the fuel economy of a FFV is, subject to limitations,
adjusted upward to account for this potential.\458\ However, NHTSA is
precluded from ``taking credit'' for the compliance flexibility by
accounting for manufacturers' ability to earn and use credits in
setting the level of the standards.''\459\ Some manufacturers plan to
produce a considerably greater share of FFVs than can earn full credit
under EPCA. The projected average FFV share of the market in MY 2011 is
6 percent for the current baseline, versus 17 percent for the MY 2011
final rule.
---------------------------------------------------------------------------
\458\ See 49 U.S.C. 32905 and 32906.
\459\ 49 U.S.C. 32902(h).
---------------------------------------------------------------------------
Estimated achieved fuel economy levels:
Because manufacturers' product plans also reflect simultaneous
changes in fleet mix and other vehicle characteristics, the
relationship between increased technology utilization and increased
fuel economy cannot be isolated with any certainty. To do so would
require an apples-to-apples ``counterfactual'' fleet of vehicles that
are, except for technology and fuel economy, identical--for example, in
terms of fleet mix and vehicle performance and utility. The current
baseline market forecast shows industry-wide average fuel economy
levels somewhat higher in MY 2011 than shown in the MY 2011 final rule.
Under the current baseline, average fuel economy for MY 2011 is 26.7
mpg, versus 26.5 mpg under the baseline in the MY 2011 final rule.
These differences are shown in greater detail below in Table
IV.C.1-2, which shows manufacturer-specific CAFE levels (not counting
FFV credits that some manufacturers expect to earn) from the current
baseline versus the MY 2011 final rule baseline (from manufacturers'
2008 product plans) for passenger cars and light trucks. Table IV.C.1-3
shows the combined averages of these planned CAFE levels in the
respective baseline fleets. These tables demonstrate that, while the
difference at the industry level is not so large, there are significant
differences in CAFE at the manufacturer level between the current
baseline and the MY 2011 final rule baseline. For example, while Honda
and Hyundai are essentially the same under both, Toyota and Nissan show
increased combined CAFE levels under the current baseline (by 2.4 and
0.8 mpg respectively), while Chrysler, Ford, and GM show decreased
combined CAFE levels under the current baseline (by 1.1, 1.8, and 1.0
mpg, respectively) relative to the MY 2011 final rule baseline.
Table IV.C.1-2--Current Baseline Planned CAFE Levels in MY 2011 Versus MY 2011 Final Rule Planned Cafe Levels
[Passenger and nonpassenger]
----------------------------------------------------------------------------------------------------------------
Current baseline CAFE MY 2011 planned CAFE
levels levels
Manufacturer -----------------------------------------------------
Passenger Nonpassenger Passenger Nonpassenger
----------------------------------------------------------------------------------------------------------------
BMW....................................................... 27.2 23.1 27.0 23.0
Chrysler.................................................. 28.4 21.8 28.2 23.1
Ford...................................................... 28.2 20.5 29.3 22.5
Subaru.................................................... 29.1 25.6 28.6 28.6
General Motors............................................ 28.5 20.9 30.3 21.4
Honda..................................................... 33.8 25.3 32.3 25.2
Hyundai................................................... 31.5 24.3 31.7 26.0
Tata...................................................... 24.6 19.5 24.7 23.9
Kia \460\................................................. 31.7 23.7 ........... ............
Mazda \461\............................................... 31.0 26.7 ........... ............
Daimler................................................... 27.3 21.0 25.2 20.6
Mitsubishi................................................ 30.0 23.8 29.3 26.7
Nissan.................................................... 31.9 21.5 31.3 21.4
Porsche................................................... 26.2 20.0 27.2 20.0
Ferrari \462\............................................. ........... ............ 16.2 ............
Maserati \463\............................................ ........... ............ 18.2 ............
Suzuki.................................................... 30.5 23.3 28.7 24.0
Toyota.................................................... 35.4 24.8 33.2 22.7
Volkswagen................................................ 28.6 20.2 28.5 20.1
-----------------------------------------------------
Total/Average......................................... 30.8 22.3 30.4 22.6
----------------------------------------------------------------------------------------------------------------
[[Page 49651]]
---------------------------------------------------------------------------
\460\ Again, Kia is not listed in the table for the MY 2011
final rule because it was considered as part of Hyundai for purposes
of that analysis (i.e., Hyundai-Kia).
\461\ Mazda is not listed in the table for the MY 2011 final
rule because it was considered as part of Ford for purposes of that
analysis.
\462\ EPA did not include Ferrari in the current baseline based
on the conclusion that including them would not impact the results,
and therefore Ferrari is not listed in the table for the current
baseline.
\463\ EPA did not include Maserati in the current baseline based
on the conclusion that including them would not impact the results,
and therefore Maserati is not listed in the table for the current
baseline.
Table IV.C.1-3--Current Baseline Planned CAFE Levels in MY 2011 Versus
MY 2011 Final Rule Planned CAFE Levels (Combined)
------------------------------------------------------------------------
MY 2011
Manufacturer Current final rule
baseline baseline
------------------------------------------------------------------------
BMW........................................... 25.6 26.0
Chrysler...................................... 23.6 24.7
Ford.......................................... 24.2 26.0
Subaru........................................ 27.5 28.6
General Motors................................ 23.9 24.9
Honda......................................... 30.1 30.0
Hyundai....................................... 29.9 30.0
Tata.......................................... 21.1 24.4
Kia........................................... 29.3 ...........
Mazda......................................... 30.2 ...........
Daimler....................................... 24.7 23.6
Mitsubishi.................................... 29.1 29.1
Nissan........................................ 27.3 26.6
Porsche....................................... 23.2 22.0
Ferrari....................................... ........... 16.2
Maserati...................................... ........... 18.2
Suzuki........................................ 28.6 27.8
Toyota........................................ 30.0 27.6
Volkswagen.................................... 26.2 27.1
-------------------------
Total/Average............................. 26.7 26.5
------------------------------------------------------------------------
Tables IV.C.1-4 through 1-6 summarize other differences between the
current baseline and manufacturers' product plans submitted to NHTSA in
2008 for the MY 2011 final rule. These tables present average vehicle
footprint, curb weight, and power-to-weight ratios for each
manufacturer represented in the current baseline and of the seven
largest manufacturers represented in the product plan data, and for the
overall industry. The tables containing product plan data do not
identify manufacturers by name, and do not present them in the same
sequence.
Tables IV.C.1-4a and 1-4b show that the current baseline reflects a
slight decrease in overall average passenger vehicle size relative to
the manufacturers' plans. This is a reflection of the market segment
shifts underlying the sales forecasts of the current baseline.
Table IV.C.1-4a--Current Baseline Average MY 2011 Vehicle Footprint
[Square Feet]
------------------------------------------------------------------------
Manufacturer PC LT Avg.
------------------------------------------------------------------------
BMW.............................. 45.4 49.7 46.9
Chrysler......................... 46.4 54.0 51.5
Ford............................. 46.2 57.9 51.3
Subaru........................... 43.1 46.3 44.4
General Motors................... 46.2 59.6 53.4
Honda............................ 44.3 49.4 46.2
Hyundai.......................... 44.7 48.8 45.5
Tata............................. 50.3 48.0 48.8
Kia.............................. 45.2 51.6 46.7
Mazda............................ 44.3 46.9 44.7
Daimler.......................... 46.6 53.3 49.0
Mitsubishi....................... 43.8 46.4 44.1
Nissan........................... 45.2 55.4 48.8
Porsche.......................... 38.6 51.0 43.6
Suzuki........................... 41.0 47.2 42.3
Toyota........................... 44.0 51.1 47.0
Volkswagen....................... 43.4 52.6 45.4
--------------------------------------
Industry Average............. 45.0 54.4 48.8
------------------------------------------------------------------------
Table IV.C.1-4b--MY 2011 Final Rule Average Planned MY 2011 Vehicle
Footprint
[Square Feet]
------------------------------------------------------------------------
PC LT Avg.
------------------------------------------------------------------------
Manufacturer 1................... 46.7 58.5 52.8
Manufacturer 2................... 46.0 5.4 47.1
Manufacturer 3................... 44.9 52.8 48.4
Manufacturer 4................... 45.4 55.8 49.3
Manufacturer 5................... 45.2 57.5 50.3
Manufacturer 6................... 48.5 54.7 52.4
Manufacturer 7................... 45.1 49.9 46.4
--------------------------------------
Industry Average............. 45.6 55.1 49.7
------------------------------------------------------------------------
[[Page 49652]]
Tables IV.C.1-5a and 1-5b show that the current baseline reflects a
decrease in overall average vehicle weight relative to the
manufacturers' plans. As above, this is most likely a reflection of the
market segment shifts underlying the sales forecasts of the current
baseline.
Table IV.C.1-5a--Current Baseline Average MY 2011 Vehicle Curb Weight
[Pounds]
------------------------------------------------------------------------
Manufacturer PC LT Avg.
------------------------------------------------------------------------
BMW.............................. 3,535 4,612 3,900
Chrysler......................... 3,498 4,506 4,178
Ford............................. 3,516 4,596 3,985
Subaru........................... 3,155 3,801 3,435
General Motors................... 3,495 5,030 4,311
Honda............................ 3,021 4,064 3,401
Hyundai.......................... 3,135 4,080 3,307
Tata............................. 3,906 5,198 4,717
Kia.............................. 3,034 4,057 3,284
Mazda............................ 3,236 3,744 3,316
Daimler.......................... 3,450 5,123 4,045
Mitsubishi....................... 3,238 3,851 3,312
Nissan........................... 3,242 4,535 3,690
Porsche.......................... 3,159 4,907 3,874
Suzuki........................... 2,870 3,843 3,080
Toyota........................... 3,112 4,186 3,561
Volkswagen....................... 3,479 5,673 3,959
--------------------------------------
Industry Average............. 3,280 4,538 3,786
------------------------------------------------------------------------
Table IV.C.1-5b--MY 2011 Final Rule Average Planned MY 2011 Vehicle Curb
Weight
[Pounds]
------------------------------------------------------------------------
PC LT Avg.
------------------------------------------------------------------------
Manufacturer 1................... 3,197 4,329 3,692
Manufacturer 2................... 3,691 4,754 4,363
Manufacturer 3................... 3,293 4,038 3,481
Manufacturer 4................... 3,254 4,191 3,510
Manufacturer 5................... 3,547 5,188 4,401
Manufacturer 6................... 3,314 4,641 3,815
Manufacturer 7................... 3,345 4,599 3,865
--------------------------------------
Industry Average............. 3,380 4,687 3,935
------------------------------------------------------------------------
Tables IV.C.1-6a and IV.C.1-6b show that the current baseline
reflects a decrease in average performance relative to that of the
manufacturers' product plans. This decreased performance is most likely
a reflection of the market segment shifts underlying the sales
forecasts of the current baseline, that is, an assumed shift away from
higher performance vehicles.
Table IV.C.1-6a--Current Baseline Average MY 2011 Vehicle Power-to-
Weight Ratio
[hp/lb]
------------------------------------------------------------------------
Manufacturer PC LT Avg.
------------------------------------------------------------------------
BMW.............................. 0.072 0.061 0.068
Chrysler......................... 0.055 0.052 0.053
Ford............................. 0.058 0.053 0.056
Subaru........................... 0.062 0.057 0.059
General Motors................... 0.056 0.056 0.056
Honda............................ 0.057 0.054 0.056
Hyundai.......................... 0.051 0.055 0.052
Tata............................. 0.077 0.057 0.064
Kia.............................. 0.050 0.056 0.051
Mazda............................ 0.051 0.053 0.052
Daimler.......................... 0.066 0.056 0.062
Mitsubishi....................... 0.053 0.056 0.053
Nissan........................... 0.058 0.057 0.058
Porsche.......................... 0.105 0.073 0.092
Suzuki........................... 0.049 0.062 0.052
Toyota........................... 0.052 0.062 0.056
Volkswagen....................... 0.058 0.052 0.056
--------------------------------------
[[Page 49653]]
Industry Average............. 0.056 0.056 0.056
------------------------------------------------------------------------
Table IV.C.1-6b--MY 2011 Final Rule Average Planned MY 2011 Vehicle
Power-to-Weight Ratio
[hp/lb]
------------------------------------------------------------------------
PC LT Avg.
------------------------------------------------------------------------
Manufacturer 1................... 0.065 0.058 0.060
Manufacturer 2................... 0.061 0.065 0.062
Manufacturer 3................... 0.053 0.059 0.056
Manufacturer 4................... 0.060 0.058 0.059
Manufacturer 5................... 0.060 0.057 0.059
Manufacturer 6................... 0.063 0.065 0.065
Manufacturer 7................... 0.053 0.055 0.053
--------------------------------------
Industry Average............. 0.060 0.059 0.060
------------------------------------------------------------------------
As discussed above, the agencies' market forecast for MY 2012-2016
holds the performance and other characteristics of individual vehicle
models constant, adjusting the size and composition of the fleet from
one model year to the next.
Refresh and redesign schedules (for application in NHTSA's
modeling):
Expected model years in which each vehicle model will be redesigned
or freshened constitute another important aspect of NHTSA's market
forecast. As discussed in Section IV.C.2.c below, NHTSA's analysis
supporting the current rulemaking times the addition of nearly all
technologies to coincide with either a vehicle redesign or a vehicle
freshening. Product plans submitted to NHTSA preceding the MY 2011
final rule contained manufacturers' estimates of vehicle redesign and
freshening schedules and NHTSA's estimates of the timing of the five-
year redesign cycle and the two- to three-year refresh cycle were made
with reference to those plans. In the current baseline, in contrast,
estimates of the timing of the refresh and redesign cycles were based
on historical dates--i.e., counting forward from known redesigns
occurring in or prior to MY 2008 for each vehicle in the fleet and
assigning refresh and redesign years accordingly. After applying these
estimates, the shares of manufacturers' passenger car and light truck
estimated to be redesigned in MY 2011 were as summarized below for the
current baseline and the MY 2011 final rule. Table IV.C.1-7 below shows
the percentages of each manufacturer's fleets expected to be redesigned
in MY 2011 for the current baseline. Table IV.C.1-8 presents
corresponding estimates from the market forecast used by NHTSA in the
analysis supporting the MY 2011 final rule (again, to protect
confidential information, manufacturers are not identified by name).
Table IV.C.1-7--Current Baseline, Share of Fleet Redesigned in MY 2011
------------------------------------------------------------------------
Manufacturer PC LT Avg.
------------------------------------------------------------------------
BMW.............................. 32% 40% 34%
Chrysler......................... 0% 11% 8%
Ford............................. 12% 7% 10%
Subaru........................... 0% 51% 22%
General Motors................... 20% 2% 11%
Honda............................ 31% 33% 32%
Hyundai.......................... 20% 0% 16%
Tata............................. 28% 100% 73%
Kia.............................. 35% 87% 48%
Mazda............................ 0% 0% 0%
Daimler.......................... 0% 0% 0%
Mitsubishi....................... 0% 56% 7%
Nissan........................... 4% 18% 9%
Porsche.......................... 0% 100% 41%
Suzuki........................... 8% 21% 11%
Toyota........................... 4% 24% 12%
Volkswagen....................... 23% 0% 18%
--------------------------------------
Industry Average............. 15% 17% 15%
------------------------------------------------------------------------
Table IV.C.1-8--MY 2011 Final Rule, Share of Fleet Redesigned in MY 2011
------------------------------------------------------------------------
PC LT Avg.
(percent) (percent) (percent)
------------------------------------------------------------------------
Manufacturer 1................... 19 0 11
[[Page 49654]]
Manufacturer 2................... 34 27 29
Manufacturer 3................... 5 0 3
Manufacturer 4................... 7 0 5
Manufacturer 5................... 19 0 11
Manufacturer 6................... 34 28 33
Manufacturer 7................... 27 28 28
--------------------------------------
Overall...................... 20 9 15
------------------------------------------------------------------------
We continue, therefore, to estimate that manufacturers' redesigns
will not be uniformly distributed across model years. This is in
keeping with standard industry practices, and reflects what
manufacturers actually do--NHTSA has observed that manufacturers in
fact do redesign more vehicles in some years than in others. NHTSA
staff have closely examined manufacturers' planned redesign schedules,
contacting some manufacturers for clarification of some plans, and
confirmed that these plans remain unevenly distributed over time. For
example, although Table 8 shows that NHTSA expects Company 2 to
redesign 34 percent of its passenger car models in MY 2011, current
information indicates that this company will then redesign only (a
different) 10 percent of its passenger cars in MY 2012. Similarly,
although Table 8 shows that NHTSA expects four of the largest seven
light truck manufacturers to redesign virtually no light truck models
in MY 2011, current information also indicates that these four
manufacturers will redesign 21-49 percent of their light trucks in MY
2012.
e. How Does Manufacturer Product Plan Data Factor Into the Baseline
Used in This Proposal?
As discussed in Section II.B.4 above, while the agencies received
updated product plans in Spring 2009 in response to NHTSA's request,
the baseline data used in this proposal is not informed by these
product plans, because they contain confidential business information
the agencies are legally required to protect from disclosure, and
because the agencies have concluded that, for purposes of this NPRM, a
transparent baseline is preferable.
However, as also discussed above, NHTSA has conducted a separate
analysis that does make use of these product plans, contained in
NHTSA's PRIA. NHTSA performed this separate analysis for purposes of
comparison only. NHTSA used the publicly available baseline for all
analysis related to the development and evaluation of the proposed new
CAFE standards.
2. How Were the Technology Inputs Developed?
As discussed above in Section II.E, for developing the technology
inputs for the MY 2012-2016 CAFE and GHG standards, the agencies
primarily began with the technology inputs used in the MY 2011 CAFE
final rule and in the July 2008 EPA ANPRM, and then reviewed, as
requested by President Obama in his January 26 memorandum, 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. In addition, the agencies supplemented their
review with updated information from more current literature, new
product plans and from EPA certification testing. More detail is
available regarding how the agencies developed the technology inputs
for this NPRM above in Section II.E, in Chapter 3 of the Draft Joint
TSD, and in Section V of NHTSA's PRIA.
a. What Technologies Does NHTSA Consider?
Section II.E.1 above describes the fuel-saving technologies
considered by the agencies that manufacturers could use to improve the
fuel economy 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. As discussed, the technologies considered fall into
five broad categories: Engine technologies, transmission technologies,
vehicle technologies, electrification/accessory technologies, and
hybrid technologies. Table IV.C.2-1 below lists all the technologies
considered and provides the abbreviations used for them in the Volpe
model,\464\ as well as their year of availability, which for purposes
of NHTSA's analysis means the first model year in the rulemaking period
that the Volpe model is allowed to apply a technology to a
manufacturer's fleet.\465\ Year of availability recognizes that
technologies must achieve a level of technical viability before they
can be implemented in the Volpe model, and are thus a means of
constraining technology use until such time as it is considered to be
technologically feasible. For a more detailed description of each
technology and their costs and effectiveness, we refer the reader to
Chapter 3 of the joint TSD and Section V of NHTSA's PRIA.
---------------------------------------------------------------------------
\464\ The abbreviations are used in this section both for
brevity and for the reader's reference if they wish to refer to the
expanded decision trees and the model input and output sheets, which
are available in Docket No. NHTSA-2009-0059 and on NHTSA's Web site.
\465\ A date of 2011 means the technology can be applied in all
model years, while a date of 2014 means the technology can only be
applied in model years 2014 through 2016.
Table IV.C.2-1--List of Technologies in NHTSA's Analysis
------------------------------------------------------------------------
Technology Model abbreviation Year available
------------------------------------------------------------------------
Low Friction Lubricants........... LUB................. 2011
Engine Friction Reduction......... EFR................. 2011
VVT--Coupled Cam Phasing (CCP) on CCPS................ 2011
SOHC.
Discrete Variable Valve Lift DVVLS............... 2011
(DVVL) on SOHC.
Cylinder Deactivation on SOHC..... DEACS............... 2011
[[Page 49655]]
VVT--Intake Cam Phasing (ICP)..... ICP................. 2011
VVT--Dual Cam Phasing (DCP)....... DCP................. 2011
Discrete Variable Valve Lift DVVLD............... 2011
(DVVL) on DOHC.
Continuously Variable Valve Lift CVVL................ 2011
(CVVL).
Cylinder Deactivation on DOHC..... DEADD............... 2011
Cylinder Deactivation on OHV...... DEACO............... 2011
VVT--Coupled Cam Phasing (CCP) on CCPO................ 2011
OHV.
Discrete Variable Valve Lift DVVLO............... 2011
(DVVL) on OHV.
Conversion to DOHC with DCP....... CDOHC............... 2011
Stoichiometric Gasoline Direct SGDI................ 2011
Injection (GDI).
Combustion Restart................ CBRST............... 2014
Turbocharging and Downsizing...... TRBDS............... 2011
Exhaust Gas Recirculation (EGR) EGRB................ 2013
Boost.
Conversion to Diesel following DSLC................ 2011
CBRST.
Conversion to Diesel following DSLT................ 2011
TRBDS.
6-Speed Manual/Improved Internals. 6MAN................ 2011
Improved Auto. Trans. Controls/ IATC................ 2011
Externals.
Continuously Variable Transmission CVT................. 2011
6/7/8-Speed Auto. Trans with NAUTO............... 2011
Improved Internals.
Dual Clutch or Automated Manual DCTAM............... 2011
Transmission.
Electric Power Steering........... EPS................. 2011
Improved Accessories.............. IACC................ 2011
12V Micro-Hybrid.................. MHEV................ 2011
Belt Integrated Starter Generator. BISG................ 2011
Crank Integrated Starter Generator CISG................ 2011
Power Split Hybrid................ PSHEV............... 2011
2-Mode Hybrid..................... 2MHEV............... 2011
Plug-in Hybrid.................... PHEV................ 2011
Mass Reduction 1 (1.5%)........... MS1................. 2011
Mass Reduction 2 (3.5%-8.5%)...... MS2................. 2014
Low Rolling Resistance Tires...... ROLL................ 2011
Low Drag Brakes................... LDB................. 2011
Secondary Axle Disconnect 4WD..... SAX................. 2011
Aero Drag Reduction............... AERO................ 2011
------------------------------------------------------------------------
For purposes of this NPRM and as discussed in greater detail in the
joint TSD, NHTSA and EPA carefully reviewed the list of technologies
used in the agency's analysis for the MY 2011 final rule. Given the
relatively short amount of time, from a technology-development
perspective, that has elapsed since March 2009 and this NPRM, NHTSA and
EPA concluded that the considerable majority of technologies were
correctly defined and continued to be appropriate for use in the
analysis supporting the proposed standards. However, some refinements
were made as discussed below.
Specific to its modeling, NHTSA has revised eight of the
technologies used in the current analysis from those considered in the
MY 2011 final rule. Specifically, two technologies which were
previously unavailable in the MY 2011 time frame are now available (in
the extended MY 2012-2016 period); one technology has been combined
with another; one is newly introduced; three have revised names and/or
definitions; and one has been deleted entirely. These changes are
discussed further below, and NHTSA seeks comment on both these changes
and the validation of the unchanged technology assumptions and
estimates.
Availability: In the MY 2011 final rule, two of the engine
technologies--EGR boost and combustion restart--were unavailable
because they were not considered technologically feasible until beyond
that rulemaking time frame. While both were described and discussed in
the MY 2011 final rule, neither was applied in the modeling process
that supported those standards.\466\ In this analysis, EGR boost
becomes available in MY 2013, and combustion restart in MY 2014, so
both are being applied by the Volpe model, as needed, in this analysis.
---------------------------------------------------------------------------
\466\ As an additional note, since combustion restart was
unavailable in the MY 2011 time frame, the technology titled diesel
following combustion restart (DSLC), which as the name indicates was
only applied after combustion restart, was also unavailable.
Accordingly, DSLC, which was described and discussed in the MY 2011
final rule, is now available in the current analysis.
---------------------------------------------------------------------------
Merging of technologies: In the MY 2011 final rule, higher voltage
and improved alternator (HVIA) was used to represent changes in the
design of the alternator, effectively optimizing it for higher
efficiency (instead of for low cost as is typically done). For purposes
of this analysis, the HVIA technology is no longer represented
individually, but instead has been incorporated into a new-to-this-
analysis technology called belt integrated starter generator, or BISG,
as discussed next.
New technology: In the MY 2011 final rule, two levels of mild
hybrid technology were defined: A 12 volt micro-hybrid (MHEV) system,
which utilized a belt-driven starter generator operating at 12 volts,
and the more capable integrated starter generator technology (ISG)
operating at higher voltages (100 volts). ISG envisioned both belt and
crank configured starter generator systems. In the current proposal,
and in an effort to offer a broader spectrum of more diversified mild
hybrid technologies for the modeling process to choose from, NHTSA has
added the BISG technology to the electrification decision tree, and
redefined the ISG technology to be a crank mounted version of ISG,
accordingly renamed to CISG.
The BISG technology is a belt-coupled system like the 12-volt MHEV,
but it operates at a higher voltage (e.g., 42 volts) and thus can make
use of regenerative braking, as well as
[[Page 49656]]
potentially adding some limited motive power. Since BISG is a higher
voltage system, optimization of the alternator occurs as part of the
BISG technology application; hence the HVIA technology is no longer
needed as a separate technology. Additionally, the CISG technology is
now defined as a crank mounted system that operates at higher voltages
(100 volts) than BISG, yet at lower voltage than the strong hybrids
(300 volts) that make greater use of regenerative braking and provide
greater motive power capability. Thus, three levels of mild hybrid
technology exist in the current proposal, as opposed to the two levels
offered in the MY 2011 final rule.
Revisions and Deletions: The Mass Reduction/Material Substitution
technologies have been revised for the current proposal. In the MY 2011
final rule, the Volpe model used three levels of material substitution
technologies, referred to as MS1, MS2, and MS5, which were
progressively applied to vehicles with curb weights in excess of 5,000
pounds (2,268 kg) so as to reduce weight by up to a 5 percent maximum.
In keeping with the agency's desire to limit potential negative impacts
to safety performance as a result of vehicle weight reduction, material
substitution was not applied to vehicles with curb weights below 5,000
pounds. In contrast, in the current analysis, and in keeping with some
manufacturers' stated plans to decrease overall fleet weights
regardless of subclass or curb weight, NHTSA now defines two Mass
Reduction/Material Substitution technologies as follows:
The Mass Reduction 1.5 percent (MS1) represents a 1.5 percent
weight decrease through material substitution applicable to all vehicle
subclasses, regardless of curb weight, that can be applied throughout
the rulemaking period (and at refresh or redesign cycle times). This
technology is similar to the MS1 technology used in the prior analysis
in terms of the scale of the weight reduction (1 versus 1.5 percent),
the methods and techniques manufacturers are anticipated to use in
achieving the reductions, and when in the product cycle the model
applies it (at refresh or redesign).
A second technology, Mass Reduction 3.5-8.5 percent (MS2), has also
been defined. The MS2 technology is unavailable until MY 2014, and can
only be applied by the Volpe model at a product redesign cycle. MS2
assumes a 3.5 to 8.5 percent weight reduction dependent on subclass
(with the smaller/lighter subclasses receiving the lowest amounts of
reduction, 3.5 percent, and the larger/heavier vehicles the 8.5
percent) via the types of more intrusive and complex mass reduction
associated with a complete vehicle redesign.\467\ MS2 is cumulative to
MS1, as it is only applied after MS1, therefore the maximum weight
reduction that can occur for smaller subclass vehicles is 5 percent,
while large cars, truck, and SUVs could experience 10 percent weight
reductions. Restricting weight reduction on smaller vehicle to lower
limits, and vice versa for larger vehicles, is intended to mitigate or
minimize the potential safety consequences from the modeled weight
reductions. Postponing the availability of the technology until MY 2014
recognizes the lead time required to implement platform redesigns that
would be necessary for these levels of weight reduction and mass
reduction. NHTSA seeks comment on the agency's use of a two-step
process, with the higher applications of MS in MYs 2014 and beyond, and
the process of applying smaller mass reductions to lighter vehicles and
higher reductions to heavier vehicles for the purpose of maintaining
safety neutrality.
---------------------------------------------------------------------------
\467\ Examples of such weight savings associated with new
platform introductions have been provided in confidential product
plan information provided by some manufacturers.
---------------------------------------------------------------------------
The MS5 technology used in the MY 2011 final rule is deleted.
Additionally, for purposes of this NPRM, NHTSA has revised the
applicability of the diesel technologies to restrict it to vehicles
with engines of 6 cylinders or more. NHTSA seeks comment on its
decision not to apply diesel technologies to vehicles with 4-cylinder
engines. NHTSA also seeks comment on the revised costing methodology
for diesel technologies.
Besides these, all other technologies considered in this analysis
were also considered in the analysis for the MY 2011 final rule, and
although the costs and effectiveness estimates may have been revised as
discussed further below, the other technologies remain otherwise
unchanged for the purposes of this analysis in terms of their
definition, functionality, and configuration. Thus, with this catalog
of technologies as a starting point, NHTSA could then review and
consider effectiveness and cost estimates for each technology, and,
through the Volpe model analysis, how a manufacturer might feasibly
apply these technologies to their MY 2012-2016 vehicles in order to
achieve compliance with the proposed standards.
b. How Did NHTSA Determine the Costs and Effectiveness of Each of These
Technologies for Use in Its Modeling Analysis?
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,\468\ the agencies took a fresh look at
technology cost and effectiveness values for purposes of the joint
proposal under the National Program. This joint work is reflected in
Chapter 3 of the Draft Joint TSD and in Section II of this preamble,
which is summarized below. For more detailed information on the
effectiveness and cost of fuel-saving technologies, please refer to
Chapter 3 of the joint TSD and Section V of NHTSA's PRIA.
---------------------------------------------------------------------------
\468\ 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.
---------------------------------------------------------------------------
Generally speaking, while NHTSA and EPA found that much of the cost
information used in NHTSA's MY 2011 final rule and EPA's 2008 staff
report was consistent to a great extent, the agencies, in reconsidering
information from many sources, revised several component costs of
several major technologies: turbocharging/downsizing, mild and strong
hybrids, diesels, SGDI, and Valve Train Lift Technologies. These are
discussed at length in the joint TSD and in NHTSA's PRIA. Additionally,
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 rulemaking. When
NHTSA and EPA's estimates for effectiveness diverged slightly due to
differences in how agencies apply technologies to vehicles in their
respective models, we report the ranges for the effectiveness values
used in each model. For much more information on the costs and
effectiveness of individual technologies, we refer the reader to
Chapter 3 of the joint TSD and Section V of NHTSA's PRIA.
NHTSA notes that, in developing technology cost and effectiveness
estimates, the agencies have made every effort to hold constant aspects
of vehicle performance and utility typically valued by consumers, such
as horsepower, carrying capacity, and towing and hauling capacity. For
example, NHTSA includes in its analysis technology cost and
effectiveness estimates that are specific to performance passenger cars
(i.e., sports cars), as compared to non-performance passenger cars.
When
[[Page 49657]]
commenting on the agencies' technology cost and effectiveness
estimates, NHTSA urges commenters either to place any related comments
within the same context, or explain any assumptions or estimates
regarding increases or decreases in vehicle performance or utility.
Additionally, NHTSA seeks comment on the extent to which commenters
believe that the agencies have been successful in holding constant
these elements of vehicle performance and utility in developing the
technology cost and effectiveness estimates.
Additionally, NHTSA notes that the technology costs included in
this NPRM take into account only those associated with the initial
build of the vehicle. The agencies seek comments on the additional
lifetime costs, if any, associated with the implementation of advanced
technologies, including warranty, maintenance and replacement costs,
such as the replacement costs for low rolling resistance tires, low
friction lubricants, and hybrid batteries, and maintenance costs for
diesel aftertreatment components.
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.
NHTSA seeks comment on the incremental cost and effectiveness
estimates employed by the agency in the Volpe modeling analysis for
this NPRM, examples of which are provided in table form below. These
example Tables present effectiveness and cost estimates which are
incremental in nature, according to the decision trees used in the
Volpe modeling analysis. Thus, the effectiveness and cost estimates are
not absolute to a single baseline vehicle, but are incremental to the
technology that precedes it.
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c. How Does NHTSA Use These Assumptions in Its Modeling Analysis?
NHTSA's analysis, using the Volpe model, relies on several inputs
and data files to conduct the compliance analysis, as discussed further
below and in Section V of the PRIA. For the purposes of applying
technologies, the Volpe model primarily uses three data files, one that
contains data on the vehicles expected to be manufactured in the model
years covered by the rulemaking, one that identifies the appropriate
stage within the vehicle's life-cycle for the technology to be applied,
and one that contains data/parameters regarding the available
technologies the model can apply. These inputs are discussed below.
As discussed above, the Volpe model begins with an initial state of
the domestic vehicle market, which in this case is the market for
passenger cars and light trucks to be sold during the period covered by
the proposed standards. The
[[Page 49660]]
vehicle market is defined on a model-by-model, engine-by-engine, and
transmission-by-transmission basis, such that each defined vehicle
model refers to a separately defined engine and a separately defined
transmission.
For the current proposal, which covers MYs 2012-2016, the light
vehicle (passenger car and light truck) market forecast was developed
jointly by NHTSA and EPA staff using MY 2008 CAFE compliance data. The
MY 2008 compliance data includes about 1,100 vehicle models, about 400
specific engines, and about 200 specific transmissions, which is a
somewhat lower level of detail in the representation of the vehicle
market than that used by NHTSA in recent CAFE analyses.\469\ However,
within the limitations of information that can be made available to the
public, it provides the foundation for a realistic analysis of
manufacturer-specific costs and the analysis of attribute-based CAFE
standards, and is much greater than the level of detail used by many
other models and analyses relevant to light vehicle fuel economy.\470\
---------------------------------------------------------------------------
\469\ The market file for the MY 2011 final rule, which included
data for MYs 2011-2015, had 5500 records, or rows, about 5 times
what we are using in this analysis of the MY 2008 certification
data. However, both market files had the same number of fields, or
rows.
\470\ Because CAFE standards apply to the average performance of
each manufacturer's fleet of cars and light trucks, the impact of
potential standards on individual manufacturers cannot be credibly
estimated without analysis of fleets manufacturers can be expected
to produce in the future. Furthermore, because required CAFE levels
under an attribute-based CAFE standard depend on manufacturers'
fleet composition, the stringency of an attribute-based standard
cannot be predicted without performing analysis at this level of
detail.
---------------------------------------------------------------------------
In addition to containing data about each vehicle, engine, and
transmission, this file contains information for each technology under
consideration as it pertains to the specific vehicle (whether the
vehicle is equipped with it or not), the model year the vehicle is
undergoing redesign, and information about the vehicle's subclass for
purposes of technology application. In essence, the model considers
whether it is appropriate to apply a technology to a vehicle.
Is a vehicle already equipped, or can it not be equipped, with a
particular technology?
The market forecast file provides NHTSA the ability to identify, on
a technology by technology basis, which technologies may already be
present (manufactured) on a particular vehicle, engine, or
transmission, or which technologies are not applicable (due to
technical considerations) to a particular vehicle, engine, or
transmission. These identifications are made on a model-by-model,
engine-by-engine, and transmission-by-transmission basis. For example,
if the market forecast file indicates that Manufacturer X's Vehicle Y
is manufactured with Technology Z, then for this vehicle Technology Z
will be shown as used. Additionally, NHTSA has determined that some
technologies are only suitable or unsuitable when certain vehicle,
engine, or transmission conditions exist. For example, secondary axle
disconnect is only suitable for 4WD vehicles, and cylinder deactivation
is unsuitable for any engine with fewer than 6 cylinders, while CVTs
can only be applied to unibody vehicles. Similarly, comments received
to the 2008 NPRM indicated that cylinder deactivation could not be
applied to vehicles equipped with manual transmissions, due primarily
to driveability and NVH concerns. The Volpe model employs ``engineering
constraints'' to address issues like these, which are a programmatic
method of controlling technology application that is independent of
other constraints. Thus, the market forecast file would indicate that
the technology in question should not be applied to the particular
vehicle/engine/transmission (i.e., is unavailable). Since multiple
vehicle models may be equipped with an engine or transmission, this may
affect multiple models. In using this aspect of the market forecast
file, NHTSA ensures the Volpe model only applies technologies in an
appropriate manner, since before any application of a technology can
occur, the model checks the market forecast to see if it is either
already present or unavailable.
NHTSA seeks comment on whether this approach is reasonable and
ensures that technologies are applied in an appropriate manner.
Is a vehicle being redesigned or refreshed?
Manufacturers typically plan vehicle changes to coincide with
certain stages of a vehicle's life cycle that are appropriate for the
change, or in this case the technology being applied. In the automobile
industry there are two terms that describe when technology changes to
vehicles occur: redesign and refresh (i.e., freshening). Vehicle
redesign usually refers to significant changes to a vehicle's
appearance, shape, dimensions, and powertrain. Redesign is
traditionally associated with the introduction of ``new'' vehicles into
the market, often characterized as the ``next generation'' of a
vehicle, or a new platform. Vehicle refresh usually refers to less
extensive vehicle modifications, such as minor changes to a vehicle's
appearance, a moderate upgrade to a powertrain system, or small changes
to the vehicle's feature or safety equipment content. Refresh is
traditionally associated with mid-cycle cosmetic changes to a vehicle,
within its current generation, to make it appear ``fresh.'' Vehicle
refresh generally occurs no earlier than two years after a vehicle
redesign, or at least two years before a scheduled redesign. For the
majority of technologies discussed today, manufacturers will only be
able to apply them at a refresh or redesign, because their application
would be significant enough to involve some level of engineering,
testing, and calibration work.\471\
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\471\ For example, applying material substitution through weight
reduction, or even something as simple as low rolling-resistance
tires, to a vehicle will likely require some level of validation and
testing to ensure that the vehicle may continue to be certified as
compliant with NHTSA's Federal Motor Vehicle Safety Standards
(FMVSS). Weight reduction might affect a vehicle's crashworthiness;
low rolling-resistance tires might change vehicle's braking
characteristics or how it performs in crash avoidance tests.
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Some technologies (e.g., those that require significant revision)
are nearly always applied only when the vehicle is expected to be
redesigned, like turbocharging and engine downsizing, or conversion to
diesel or hybridization. Other technologies, like cylinder
deactivation, electric power steering, and aerodynamic drag reduction
can be applied either when the vehicle is expected to be refreshed or
when it is expected to be redesigned, while a few others, like low
friction lubricants, can be applied at any time, regardless of whether
a refresh or redesign event is conducted. Accordingly, the model will
only apply a technology at the particular point deemed suitable. These
constraints are intended to produce results consistent with
manufacturers' technology application practices. For each technology
under consideration, NHTSA stipulates whether it can be applied any
time, at refresh/redesign, or only at redesign. The data forms another
input to the Volpe model. NHTSA develops redesign and refresh schedules
for each of a manufacturer's vehicles included in the analysis,
essentially based on the last known redesign year for each vehicle and
projected forward in a 5-year redesign and a 2-3 year refresh cycle,
and this data is also stored in the market forecast file. We note that
this approach is different than NHTSA has employed previously for
determining redesign and refresh schedules, where NHTSA included the
redesign and refresh dates in the market forecast file as provided by
manufacturers in confidential product plans. The new approach is
necessary
[[Page 49661]]
given the nature of the new baseline which as a single year of data
does not contain its own refresh and redesign cycle cues for future
model years, and to ensure the complete transparency of the agency's
analysis. Vehicle redesign/refresh assumptions are discussed in more
detail in Section V of the PRIA and in Chapter 3 of the TSD. NHTSA
seeks comment on its application for this proposal of refresh and
redesign schedules to manufacturers' vehicles counting from the last
known redesign in or prior to the baseline fleet, as compared to its
approach in the MY 2011 final rule.
Once the model has concluded that a technology should be applied to
a vehicle, the model must evaluate which technology should be applied.
This will depend on the vehicle subclass to which the vehicle is
assigned; what technologies have already been applied to the vehicle
(i.e., where in the ``decision tree'' the vehicle is); when the
technology is first available (i.e., year of availability); whether the
technology is still available (i.e., ``phase-in caps''); and the costs
and effectiveness of the technologies being considered. Technology
costs may be reduced, in turn, by learning effects, while technology
effectiveness may be increased or reduced by synergistic effects
between technologies. In the technology input file, NHTSA has developed
a separate set of technology data variables for each of the twelve
vehicle subclasses. Each set of variables is referred to as an ``input
sheet,'' so for example, the subcompact input sheet holds the
technology data that is appropriate for the subcompact subclass. Each
input sheet contains a list of technologies available for members of
the particular vehicle subclass. The following items are provided for
each technology: the name of the technology, its abbreviation, the
decision tree with which it is associated, the (first) year in which it
is available, the upper and lower cost and effectiveness (fuel
consumption reduction) estimates, the learning type and rate, the cost
basis, its applicability, and the phase-in values.
To which vehicle subclass is the vehicle assigned?
As part of its consideration of technological feasibility, the
agency evaluates whether each technology could be implemented on all
types and sizes of vehicles, and whether some differentiation is
necessary in applying certain technologies to certain types and sizes
of vehicles, and with respect to the cost incurred and fuel consumption
and CO2 emissions reduction achieved when doing so. The 2002
NAS Report differentiated technology application using ten vehicle
``classes'' (4 cars classes and 6 truck classes),\472\ but did not
determine how cost and effectiveness values differ from class to class.
NAS's purpose in separating vehicles into these classes was to create
groups of ``like'' vehicles, i.e., vehicles similar in size, powertrain
configuration, weight, and consumer use, and for which similar
technologies are applicable. NHTSA similarly differentiates vehicles by
``subclass'' for the purpose of applying technologies to vehicles and
assessing their incremental costs and effectiveness. NHTSA assigns each
vehicle manufactured in the rulemaking period to one of 12 subclasses:
for passenger cars, Subcompact, Subcompact Performance, Compact,
Compact Performance, Midsize, Midsize Performance, Large, and Large
Performance; and for light trucks, Small SUV/Pickup/Van, Midsize SUV/
Pickup/Van, Large SUV/Pickup/Van, and Minivan.
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\472\ The NAS classes included subcompact cars, compact cars,
midsize cars, large cars, small SUVs, midsize SUVs, large SUVs,
small pickups, large pickups, and minivans.
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For this NPRM as for the MY 2011 final rule, NHTSA divides the
vehicle fleet into subclasses based on model inputs, and applies
subclass-specific estimates, also from model inputs, of the
applicability, cost, and effectiveness of each fuel-saving technology.
Therefore, the model's estimates of the cost to improve the fuel
economy of each vehicle model depend upon the subclass to which the
vehicle model is assigned.
Each vehicle's subclass is stored in the market forecast file. When
conducting a compliance analysis, if the Volpe model seeks to apply
technology to a particular vehicle, it checks the market forecast to
see if the technology is available and if the refresh/redesign criteria
are met. If these conditions are satisfied, the model determines the
vehicle's subclass from the market data file, which it then uses to
reference another input called the technology input file. NHTSA
reviewed its methodology for dividing vehicles into subclasses for
purposes of technology application that it used in the MY 2011 final
rule, and concluded that the same methodology would be appropriate for
this NPRM for MYs 2012-2016, but the agency invites comments on the
method of assigning vehicles to subclasses for the purposes of
technology application in the CAFE model, and on the issue of
technology-application subclasses generally. The subclasses and the
methodology for dividing vehicles among them are discussed in more
detail in Section V of the PRIA and in Chapter 3 of the TSD.
For the reader's reference, the subclasses and example vehicles
from the market forecast file are provided in the tables below.
Passenger Car Subclasses Example (MY 2008) Vehicles
------------------------------------------------------------------------
Class Example vehicles
------------------------------------------------------------------------
Subcompact............................. Chevy Aveo, Honda Civic.
Subcompact Performance................. Mazda Miata, Saturn Sky.
Compact................................ Chevy Cobalt, Nissan Sentra and
Altima.
Compact Performance.................... Audi S4 Quattro, Mazda RX8.
Midsize................................ Chevy Camaro (V6), Toyota
Camry, Honda Accord, Hyundai
Azera.
Midsize Performance.................... Chevy Corvette, Ford Mustang
(V8), Nissan G37 Coupe.
Large.................................. Audi A8, Cadillac CTS and DTS.
Large Performance...................... Bentley Arnage, Daimler CL600.
------------------------------------------------------------------------
Light Truck Subclasses Example (MY 2008) Vehicles
------------------------------------------------------------------------
Class Example vehicles
------------------------------------------------------------------------
Minivans............................... Dodge Caravan, Toyota Sienna.
[[Page 49662]]
Small SUV/Pickup/Van................... Ford Escape & Ranger, Nissan
Rogue.
Midsize SUV/Pickup/Van................. Chevy Colorado, Jeep Wrangler 4-
door, Volvo XC70, Toyota
Tacoma.
Large SUV/Pickup/Van................... Chevy Silverado, Ford
Econoline, Toyota Sequoia.
------------------------------------------------------------------------
What technologies have already been applied to the vehicle (i.e.,
where in the ``decision trees'' is it)?
NHTSA's methodology for technology application analysis developed
out of the approach taken by NAS in the 2002 Report, and evaluates the
application of individual technologies and their incremental costs and
effectiveness. Incremental costs and effectiveness of individual
technologies are relative to the prior technology state, which means
that it is crucial to understand what technologies are already present
on a vehicle in order to determine correct incremental cost and
effectiveness values. The benefit of the incremental approach is
transparency in accounting, insofar as when individual technologies are
added incrementally to individual vehicles, it is clear and easy to
determine how costs and effectiveness adds up as technology levels
increase.
To keep track of incremental costs and effectiveness and to know
which technology to apply and in which order, the Volpe model's
architecture uses a logical sequence, which NHTSA refers to as
``decision trees,'' for applying fuel economy-improving technologies to
individual vehicles. In the MY 2011 final rule, NHTSA worked with
Ricardo to modify previously-employed decision trees in order to allow
for a much more accurate application of technologies to vehicles. For
purposes of the NPRM, NHTSA reviewed the technology sequencing
architecture and updated, as appropriate, the decision trees used in
the analysis reported in the final rule for MY 2011.
In general, and as described in great detail in the MY 2011 final
rule and in Section V of the current PRIA, each technology is assigned
to one of the five following categories based on the system it affects
or impacts: engine, transmission, electrification/accessory, hybrid or
vehicle. Each of these categories has its own decision tree that the
Volpe model uses to apply technologies sequentially during the
compliance analysis. The decision trees were designed and configured to
allow the Volpe model to apply technologies in a cost-effective,
logical order that also considers ease of implementation. For example,
software or control logic changes are implemented before replacing a
component or system with a completely redesigned one, which is
typically a much more expensive option. In some cases, and as
appropriate, the model may combine the sequential technologies shown on
a decision tree and apply them simultaneously, effectively developing
dynamic technology packages on an as-needed basis. For example, if
compliance demands indicate, the model may elect to apply LUB, EFR, and
ICP on a dual overhead cam engine, if they are not already present, in
one single step. An example simplified decision tree for engine
technologies is provided below; the other simplified decision trees may
be found in Chapter 3 of the joint TSD and in the PRIA. Expanded
decision trees are available in the docket for this NPRM.
BILLING CODE 6560-50-C
[[Page 49663]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.032
BILLING CODE 6560-50-C
Each technology within the decision trees has an incremental cost
and an incremental effectiveness estimate associated with it, and
estimates are specific to a particular vehicle subclass (see the tables
in Section V of the PRIA). Each technology's incremental estimate takes
into account its position in the decision tree path. If a technology is
located further down the decision tree, the estimates for the costs and
effectiveness values attributed to that technology are influenced by
the incremental estimates of costs and effectiveness values for prior
technology applications. In essence, this approach accounts for ``in-
path'' effectiveness synergies, as well as cost effects that occur
between the technologies in the same path. When comparing cost and
effectiveness estimates from various sources and those provided by
commenters in the previous CAFE
[[Page 49664]]
rulemakings, it is important that the estimates evaluated are analyzed
in the proper context, especially as concerns their likely position in
the decision trees and other technologies that may be present or
missing. Not all estimates available in the public domain or offered
for the agencies' consideration during the comment period can be
evaluated in an ``apples-to-apples'' comparison with those used by the
Volpe model, since in some cases the order of application, or included
technology content, is inconsistent with that assumed in the decision
tree.
The MY 2011 final rule discussed in detail the revisions and
improvements made to the Volpe model and decision trees during that
rulemaking process, including the improved handling and accuracy of
valve train technology application and the development and
implementation of a method for accounting path-dependent correction
factors in order to ensure that technologies are evaluated within the
proper context. The reader should consult the MY 2011 final rule
documents for further information on these modeling techniques, all of
which continued to be utilized in developing this proposal.\473\ To the
extent that the decision trees have changed for purposes of this NPRM,
it was due not to revisions in the order of technology application, but
rather to redefinitions of technologies or addition or subtraction of
technologies. NHTSA seeks comment on the decision trees described here
and in the PRIA.
---------------------------------------------------------------------------
\473\ See, e.g., 74 FR 14238-46 (Mar. 30, 2009) for a full
discussion of the decision trees in NHTSA's MY 2011 final rule, and
Docket No. NHTSA-2009-0062-0003.1 for an expanded decision tree used
in that rulemaking.
---------------------------------------------------------------------------
Is the next technology available in this model year?
As discussed above, the majority of technologies considered are
available on vehicles today, and thus will be available for application
in the rulemaking time frame. Some technologies, however, will not
become available for purposes of NHTSA's analysis until later in the
rulemaking time frame. When the model is considering whether to add a
technology to a vehicle, it checks its year of availability--if the
technology is available, it may be added; if it is not available, the
model will consider whether to switch to a different decision tree to
look for another technology, or will skip to the next vehicle in a
manufacturer's fleet. The year of availability for each technology is
provided above in Table IV.C.2-1.
Has the technology reached the phase-in cap for this model year?
Besides the refresh/redesign cycles used in the Volpe model, which
constrain the rate of technology application at the vehicle level so as
to ensure a period of stability following any modeled technology
applications, the other constraint on technology application employed
in NHTSA's analysis is ``phase-in caps.'' Unlike vehicle-level cycle
settings, phase-in caps constrain technology application at the vehicle
manufacturer level.\474\ They are intended to reflect a manufacturer's
overall resource capacity available for implementing new technologies
(such as engineering and development personnel and financial
resources), thereby ensuring that resource capacity is accounted for in
the modeling process. At a high level, phase-in caps and refresh/
redesign cycles work in conjunction with one another to avoid the
modeling process out-pacing an OEM's limited pool of available
resources during the rulemaking time frame, especially in years where
many models may be scheduled for refresh or redesign. This helps to
ensure technological feasibility and economic practicability in
determining the stringency of the standards.
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\474\ While phase-in caps are expressed as specific percentages
of a manufacturer's fleet to which a technology may be applied in a
given model year, phase-in caps cannot always be applied as precise
limits, and the Volpe model in fact allows ``override'' of a cap in
certain circumstances. When only a small portion of a phase-in cap
limit remains, or when the cap is set to a very low value, or when a
manufacturer has a very limited product line, the cap might prevent
the technology from being applied at all since any application would
cause the cap to be exceeded. Therefore, the Volpe model evaluates
and enforces each phase-in cap constraint after it has been exceeded
by the application of the technology (as opposed to evaluating it
before application), which can result in the described overriding of
the cap.
---------------------------------------------------------------------------
NHTSA has been developing the concept of phase-in caps over the
course of the last several CAFE rulemakings, as discussed in greater
detail in the MY 2011 final rule,\475\ and in Section V of the PRIA and
Chapter 3 of the joint TSD. The MY 2011 final rule employed non-linear
phase-in caps (that is, caps that varied from year to year) that were
designed to respond to comments raising lead-time concerns in reference
to the agency's proposed MY 2011-2015 standards, but because the final
rule covered only one model year, many phase-in caps for that model
year were lower than had originally been proposed. NHTSA emphasized
that the MY 2011 phase-in caps were based on assumptions for the full
five year period of the proposal (2011-2015), and stated that it would
reconsider the phase-in settings for all years beyond 2011 in a future
rulemaking analysis.
---------------------------------------------------------------------------
\475\ 74 FR 14268-14271 (Mar. 30, 2009).
---------------------------------------------------------------------------
For purposes of the current proposal for MYs 2012-2016, as in the
MY 2011 final rule, NHTSA combines phase-in caps for some groups of
similar technologies, such as valve phasing technologies that are
applicable to different forms of engine design (SOHC, DOHC, OHV), since
they are very similar from an engineering and implementation
standpoint. When the phase-in caps for two technologies are combined,
the maximum total application of either or both to any manufacturer's
fleet is limited to the value of the cap.\476\ In contrast to the
phase-in caps used in the MY 2011 final rule, NHTSA has increased the
phase-in caps for most of the technologies, as discussed below.
---------------------------------------------------------------------------
\476\ See 74 FR 14270 (Mar 30, 2009) for further discussion and
examples.
---------------------------------------------------------------------------
In developing phase-in cap values for purposes of the current
proposal, NHTSA initially considered the fact that many of the
technologies commonly applied by the model, those placed near the top
of the decision trees, such as low friction lubes, valve phasing,
electric power steering, improved automatic transmission controls, and
others, have been commonly available to manufacturers for several years
now. Many technologies, in fact, precede the 2002 NAS Report, which
estimated that such technologies would take 4 to 8 years to penetrate
the fleet. Since the current proposal would take effect in MY 2012,
nearly 10 years beyond the NAS report, and extends to MY 2016, and in
the interest of harmonization with EPA's proposal, NHTSA tentatively
determined that higher phase-in caps were likely justified.
Additionally, NHTSA considered the fact that manufacturers, as part of
the agreements supporting the National Program, appear to be
anticipating higher technology application rates than those used in the
MY 2011 final rule. This also supported higher phase-in caps for
purposes of the proposal.
Thus, while phase-in caps for the MY 2011 final rule reached a
maximum of 50 percent for a couple of technologies and generally fell
in the range between 0 and 20 percent, phase-in caps for this NPRM for
the majority of technologies are set to reach 85 or 100 percent by MY
2016, although more advanced technologies like diesels and strong
hybrids reach only 15 percent by MY 2016.
Theoretically, significantly higher phase-in caps, such as those
used in the current proposal as compared to those used in the MY 2011
final rule, should
[[Page 49665]]
result in higher levels of technology penetration in the modeling
results. Reviewing the modeling output does not, however, indicate
unreasonable levels of technology penetration for the proposed
standards.\477\ NHTSA believes that this is due to the interaction of
the various changes in methodology for the current proposal--changes to
phase-in caps are but one of a number of revisions to the Volpe model
and its inputs that could potentially impact the rate at which
technologies are applied in this proposal as compared to prior
rulemakings. Other revisions that could impact application rates
include the use of transparent CAFE certification data in baseline
fleet formulation and the use of other data for projecting it
forward,\478\ or the use of a multi-year planning programming technique
to apply technology retroactively to earlier-MY vehicles, both of which
may have a direct impact on the modeling process. Conversely the model
and inputs remain unchanged in other areas that also could impact
technology application, such as in the refresh/redesign cycle settings,
estimates used for the technologies, both of which remain largely
unchanged from the MY 2011 final rule. These changes together make it
difficult to predict how phase-in caps should be expected to function
in the new modeling process.
---------------------------------------------------------------------------
\477\ The modeling output for the analysis underlying these
proposed standards is available on NHTSA's Web site.
\478\ The baseline fleet sets the starting point, from a
technology point of view, for where the model begins the technology
application process, so changes have a direct impact on the net
application of technology.
---------------------------------------------------------------------------
Thus, after reviewing the output files, NHTSA tentatively concludes
that the higher phase-in caps, and the resulting technology application
rates produced by the Volpe model, at both the industry and
manufacturer level, are appropriate for this proposal, achieving a
suitable level of stringency without requiring unrealistic or
unachievable penetration rates. However, the agency will consider
comments received on this approach in determining what phase-in caps to
employ in the analysis for the final rule, and may change the caps in
response to comments and/or further analysis. One additional question
the agency has, which may be primarily academic at this point, is what
impact lower phase-in caps, such as those used in earlier rulemakings,
would have on compliance costs (and whether they might counter-
intuitively increase costs by forcing more expensive technologies).
NHTSA seeks comment on the revised phase-in caps as compared to the MY
2011 final rule, and particularly on whether, combined with the refresh
and redesign assumptions, they help to ensure sufficient lead time for
manufacturers to make the technology changes required by the proposed
standards. Readers are invited to review and assess the phase-in caps
listed and described more fully in Section V of the PRIA, along with
the application and penetration rates found in the Volpe model's output
files, and after making their own assessment, provide comment and
recommendations to the agency as appropriate.
Is the technology less expensive due to learning effects?
Historically, NHTSA did not explicitly account for the cost
reductions a manufacturer might realize through learning achieved from
experience in actually applying a technology. Since working with EPA to
develop the 2008 NPRM for MYs 2011-2015, and with Ricardo to refine the
concept for the March 2009 MY 2011 final rule, NHTSA has accounted for
these cost reductions through two kinds of mutually exclusive learning,
``volume-based'' and ``time-based'' which it continues to use in this
proposal, as discussed below.
In the 2008 NPRM, NHTSA applied learning factors to technology
costs for the first time. These learning factors were developed using
the parameters of learning threshold, learning rate, and the initial
cost, and were based on the ``experience curve'' concept which
describes reductions in production costs as a function of accumulated
production volume. The typical curve shows a relatively steep initial
decline in cost which flattens out to a gentle downwardly sloping line
as the volume increase to large values. In the NPRM, NHTSA applied a
learning rate discount of 20 percent for each successive doubling of
production volume (on a per manufacturer basis), and a learning
threshold of 25,000 units was assumed (thus a technology was viewed as
being fully learned out at 100,000 units). The factor was only applied
to certain technologies that were considered emerging or newly
implemented on the basis that significant cost improvements would be
achieved as economies of scale were realized (i.e., the technologies
were on the steep part of the curve).
In the MY 2011 final rule, NHTSA continued to use this learning
factor, referring to it as volume-based learning since the cost
reductions were determined by production volume increases, and again
only applied it to emerging technologies. However, and in response to
comments, NHTSA revised its assumptions on learning threshold, basing
them instead on an industry-wide production basis, and increasing the
threshold to 300,000 units annually.
Commenters to the 2008 NPRM also described another type of learning
factor which NHTSA decided to adopt and implement in the MY 2011 final
rule. Commenters described a relatively small negotiated cost decrease
that occurred on an annual basis through contractual agreements with
first tier component and systems suppliers for readily available, high
volume technologies commonly in use by multiple OEMs. Based on the same
experience curve principal, however at production volumes that were on
the flatter part of the curve (and thus the types of volumes that
represent annual industry volumes), NHTSA adopted this type learning
and referred to it as time-based learning. An annual cost reduction of
3 percent in the second and each subsequent year, which was consistent
with estimates from commenters and supported by work Ricardo conducted
for NHTSA, was used in the final rule.
In developing this proposal, NHTSA and EPA have reviewed both types
of learning factors, and the thresholds (300,000) and reduction rates
(20 percent for volume,\479\ 3 percent for time-based) they rely on,
and as implemented in the MY 2011 final rule, and agreed that both
factors continue to be accurate and appropriate; each agency has thus
implemented time- and volume-based learning in their analyses. Noting
that only one type of learning can be applied to any single technology,
if any learning is applied at all, the agencies reviewed each to
determine which learning factor was appropriate. Volume-based learning
is applied to the higher complexity hybrid technologies, while no
learning is applied to technologies likely to be affected by commodity
costs (LUB, ROLL) or that have loosely-defined BOMs (EFR, LDB), as was
the case in the MY 2011 final rule. Chapter 3 of the joint TSD shows
the specific learning factors that NHTSA has applied in this analysis
for each technology, and discusses learning factors and each agencies'
use of them further. NHTSA seeks comment on its use of learning
factors, including the types, the thresholds, and the reduction rates
proposed, and particularly on the revisions to the learning (time- and
volume-based) logic as compared to the MY 2011 final rule.
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\479\ NHTSA will conduct a sensitivity analysis on the volume-
based learning value of 20 percent for the final rule.
---------------------------------------------------------------------------
Is the technology more or less effective due to synergistic
effects?
When two or more technologies are added to a particular vehicle
model to
[[Page 49666]]
improve its fuel efficiency and reduce CO2 emissions, the
resultant fuel consumption reduction may sometimes be higher or lower
than the product of the individual effectiveness values for those
items.\480\ This may occur because one or more technologies applied to
the same vehicle partially address the same source (or sources) of
engine, drivetrain or vehicle losses. Alternately, this effect may be
seen when one technology shifts the engine operating points, and
therefore increases or reduces the fuel consumption reduction achieved
by another technology or set of technologies. The difference between
the observed fuel consumption reduction associated with a set of
technologies and the product of the individual effectiveness values in
that set is referred to for purposes of this rulemaking as a
``synergy.'' Synergies may be positive (increased fuel consumption
reduction compared to the product of the individual effects) or
negative (decreased fuel consumption reduction). An example of a
positive synergy might be a vehicle technology that reduces road loads
at highway speeds (e.g., lower aerodynamic drag or low rolling
resistance tires), that could extend the vehicle operating range over
which cylinder deactivation may be employed. An example of a negative
synergy might be a variable valvetrain system technology, which reduces
pumping losses by altering the profile of the engine speed/load map,
and a six-speed automatic transmission, which shifts the engine
operating points to a portion of the engine speed/load map where
pumping losses are less significant. As the complexity of the
technology combinations is increased, and the number of interacting
technologies grows accordingly, it becomes increasingly important to
account for these synergies.
---------------------------------------------------------------------------
\480\ More specifically, the products of the differences between
one and the technology-specific levels of effectiveness in reducing
fuel consumption. For example, not accounting for interactions, if
technologies A and B are estimated to reduce fuel consumption by 10%
(i.e., 0.1) and 20% (i.e., 0.2) respectively, the ``product of the
individual effectiveness values'' would be 1-0.1 times 1-0.2, or 0.9
times 0.8, which equals 0.72, corresponding to a combined
effectiveness of 28% rather than the 30% obtained by adding 10% to
20%. The ``synergy factors'' discussed in this section further
adjust these multiplicatively combined effectiveness values.
---------------------------------------------------------------------------
NHTSA and EPA determined synergistic impacts for this rulemaking
using EPA's ``lumped parameter'' analysis tool, which EPA described at
length in its March 2008 Staff Technical Report.\481\ The lumped
parameter tool is a spreadsheet model that represents energy
consumption in terms of average performance over the fuel economy test
procedure, rather than explicitly analyzing specific drive cycles. The
tool begins with an apportionment of fuel consumption across several
loss mechanisms and accounts for the average extent to which different
technologies affect these loss mechanisms using estimates of engine,
drivetrain and vehicle characteristics that are averaged over the EPA
fuel economy drive cycle. Results of this analysis were generally
consistent with those of full-scale vehicle simulation modeling
performed in 2007 by Ricardo, Inc.
---------------------------------------------------------------------------
\481\ 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.
---------------------------------------------------------------------------
For the current rulemaking, NHTSA used the lumped parameter tool as
modified in the MY 2011 CAFE final rule. NHTSA modified the lumped
parameter tool from the version described in the EPA Staff Technical
Report in response to public comments received in its rulemaking. The
modifications included updating the list of technologies and their
associated effectiveness values to match the updated list of
technologies used in the final rule. NHTSA also expanded the list of
synergy pairings based on further consideration of the technologies for
which a competition for losses would be expected. These losses are
described in more detail in Section V of the PRIA.
NHTSA and EPA incorporate synergistic impacts in their analyses in
slightly different manners. Because NHTSA applies technologies
individually in its modeling analysis, NHTSA incorporates synergistic
effects between pairings of individual technologies. The use of
discrete technology pair incremental synergies is similar to that in
DOE's National Energy Modeling System (NEMS).\482\ Inputs to the Volpe
model incorporate NEMS-identified pairs, as well as additional pairs
from the set of technologies considered in the Volpe model.
---------------------------------------------------------------------------
\482\ U.S. Department of Energy, Energy Information
Administration, Transportation Sector Module of the National Energy
Modeling System: Model Documentation 2007, May 2007, Washington, DC,
DOE/EIAM070(2007), at 29-30. Available at http://tonto.eia.doe.gov/ftproot/modeldoc/m070(2007).pdf (last accessed Jul. 6, 2009).
---------------------------------------------------------------------------
NHTSA notes that synergies that occur within a decision tree are
already addressed within the incremental values assigned and therefore
do not require a synergy pair to address. For example, all engine
technologies take into account incremental synergy factors of preceding
engine technologies, and all transmission technologies take into
account incremental synergy factors of preceding transmission
technologies. These factors are expressed in the fuel consumption
improvement factors in the input files used by the Volpe model.
For applying incremental synergy factors in separate path
technologies, the Volpe model uses an input table (see the tables in
Chapter 3 of the TSD and in the PRIA) which lists technology pairings
and incremental synergy factors associated with those pairings, most of
which are between engine technologies and transmission/electrification/
hybrid technologies. When a technology is applied to a vehicle by the
Volpe model, all instances of that technology in the incremental
synergy table which match technologies already applied to the vehicle
(either pre-existing or previously applied by the Volpe model) are
summed and applied to the fuel consumption improvement factor of the
technology being applied. Synergies for the strong hybrid technology
fuel consumption reductions are included in the incremental value for
the specific hybrid technology block since the model applies
technologies in the order of the most effectiveness for least cost and
also applies all available electrification and transmission
technologies before applying strong hybrid technologies. NHTSA seeks
comment on whether the synergistic effects presented are accurate, and
whether there are other synergies that the agency may have overlooked.
d. Where Can Readers Find More Detailed Information About NHTSA's
Technology Analysis?
Much more detailed information is provided in Section V of the
PRIA, and a discussion of how NHTSA and EPA jointly reviewed and
updated technology assumptions for purposes of this NPRM is available
in Chapter 3 of the TSD. Additionally, all of NHTSA's model input and
output files are now public and available for the reader's review and
consideration. The technology input files can be found in the docket
for this NPRM, Docket No. NHTSA-2009-0059, and on NHTSA's Web site. And
finally, because much of NHTSA's technology analysis for purposes of
this NPRM builds on the work that was done for the MY 2011 final rule,
we refer readers to that document as well for background information
concerning how NHTSA's methodology for technology application analysis
has evolved over the past several rulemakings, both in response to
comments and as a result of the agency's
[[Page 49667]]
growing experience with this type of analysis.\483\
---------------------------------------------------------------------------
\483\ 74 FR 14233-308 (Mar. 30, 2009).
---------------------------------------------------------------------------
3. How Did NHTSA Develop the Economic Assumption Inputs?
NHTSA's preliminary analysis of alternative CAFE standards for the
model years covered by this proposed rulemaking relies on a range of
forecast variables, economic assumptions, and parameter values. This
section describes the proposed sources of these forecasts, the
rationale underlying each assumption, and the agency's preliminary
choices of specific parameter values. These proposed economic values
play a significant role in determining the benefits of alternative CAFE
standards, as they have for the last several CAFE rulemakings. Under
those alternatives where standards would be established by reference to
their costs and benefits, these economic values also affect the levels
of the CAFE standards themselves. Some of these variables have more
important effects on the level of CAFE standards and the benefits from
requiring alternative increases in fuel economy than do others.
In reviewing these variables and the agency's estimates of their
values for purposes of this NPRM, NHTSA reconsidered previous comments
it had received and reviewed newly available literature. As a
consequence, the agency elected to revise some of its economic
assumptions and parameter estimates, while retaining others. Some of
the most important changes, which are discussed in greater detail
below, as well as in Chapter 4 of the joint TSD and in Chapter VIII of
the PRIA, 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. For the reader's reference, Table IV.C.3-1 below
summarizes the values used to calculate the economic benefits from each
alternative. The agency seeks comment on the economic assumptions
presented in the table and discussed below.
Table IV.C.3-1--Economic Values for Benefits Computations
(2007$)
------------------------------------------------------------------------
------------------------------------------------------------------------
Fuel Economy Rebound Effect............................. 10%
``Gap'' between test and on-road MPG.................... 20%
Value of refueling time per ($ per vehicle-hour)........ $ 24.64
Annual growth in average vehicle use.................... 1.1%
Fuel Prices (2012-50 average, $/gallon) ..............
Retail gasoline price............................... $3.77
Pre-tax gasoline price.............................. $3.40
Economic Benefits from Reducing Oil Imports ($/gallon) ..............
``Monopsony'' Component............................. $ 0.00
Price Shock Component............................... $ 0.17
Military Security Component......................... $ 0.00
---------------
Total Economic Costs ($/gallon)................. $ 0.17
Emission Damage Costs (2020, $/ton or $/metric ton) ..............
Carbon monoxide..................................... $ 0
Volatile organic compounds (VOC).................... $ 1,283
Nitrogen oxides (NOx)--vehicle use.................. $ 5,116
Nitrogen oxides (NOx)--fuel production and $ 5,339
distribution.......................................
Particulate matter (PM2.5)--vehicle use............. $ 238,432
Particulate matter (PM2.5)--fuel production and $ 292,180
distribution.......................................
Sulfur dioxide (SO2)................................ $ 30,896
Carbon dioxide (CO2)................................ $ 20
Annual Increase in CO2 Damage Cost.................. 3%
External Costs from Additional Automobile Use ($/vehicle- ..............
mile)
Congestion.......................................... $ 0.054
Accidents........................................... $ 0.023
Noise............................................... $ 0.001
---------------
Total External Costs............................ $ 0.078
External Costs from Additional Light Truck Use ($/ ..............
vehicle-mile)
Congestion.......................................... $0.048
Accidents........................................... $0.026
Noise............................................... $0.001
---------------
Total External Costs............................ $0.075
Discount Rate Applied to Future Benefits................ 3%
------------------------------------------------------------------------
a. Costs of Fuel Economy-Improving Technologies
We developed detailed estimates of the costs of applying fuel
economy-improving technologies to vehicle models jointly with EPA for
use in analyzing the impacts of alternative standards considered in
this rulemaking. The estimates were based on those reported by the 2002
NAS Report analyzing costs for increasing fuel economy, but were
modified for purposes of this analysis as a result of extensive
consultations among engineers from NHTSA, EPA, and the Volpe Center. As
part of this process, the agency also developed varying cost estimates
for applying certain fuel economy technologies to vehicles of different
sizes and body styles. We may adjust these cost estimates based on
comments received to this NPRM.
The technology cost estimates used in this analysis are intended to
represent
[[Page 49668]]
manufacturers' direct costs for high-volume production of vehicles with
these technologies and sufficient experience with their application so
that all remaining cost reductions due to ``learning curve'' effects
have been fully realized. However, NHTSA recognizes that manufacturers'
actual costs for employing these technologies include additional
outlays for accompanying design or engineering changes to models that
use them, development and testing of prototype versions, recalibrating
engine operating parameters, and integrating the technology with other
attributes of the vehicle. Manufacturers' indirect costs for employing
these technologies also include expenses for product development and
integration, modifying assembly processes and training assembly workers
to install them, increased expenses for operation and maintaining
assembly lines, higher initial warranty costs for new technologies, any
added expenses for selling and distributing vehicles that use these
technologies, and manufacturer and dealer profit. In previous CAFE
rulemakings and in NHTSA's safety rulemakings, the agency has accounted
for these additional costs by using a Retail Price Equivalent (RPE)
multiplier of 1.5. For purposes of this rulemaking, based on recent
work by EPA, NHTSA has applied indirect cost multipliers ranging from
1.11 to 1.64 to the estimates of vehicle manufacturers' direct costs
for producing or acquiring each technology to improve fuel
economy.\484\ These multipliers vary with the complexity of each
technology and the time frame over which costs are estimated. More
complex technologies are associated with higher multipliers because of
the larger increases in manufacturers' indirect costs for developing,
producing (or procuring), and deploying these more complex
technologies. The appropriate multipliers decline over time for
technologies of all complexity levels, since increased familiarity and
experience with their application is assumed to reduce manufacturers'
indirect costs for employing them. NHTSA seeks comment regarding the
new indirect cost multiplier approach to technology costs estimates. We
note additionally that this issue will be addressed in the upcoming
revised NAS report.
---------------------------------------------------------------------------
\484\ NHTSA notes that in addition to the technology cost
analysis employing this ``ICM'' approach, the PRIA contains a
sensitivity analysis using a technology cost multiplier of 1.5.
---------------------------------------------------------------------------
b. Potential Opportunity Costs of Improved Fuel Economy
An important concern is whether achieving the fuel economy
improvements required by alternative CAFE standards would require
manufacturers to compromise the performance, carrying capacity, safety,
or comfort of their vehicle models. To the extent that it does so, the
resulting sacrifice in the value of these attributes to consumers
represents an additional cost of achieving the required improvements in
fuel economy. While exact dollar values of these attributes to
consumers are difficult to infer, differences in vehicle purchase
prices and buyers' choices among competing models that feature
different combinations of these characteristics clearly demonstrate
that changing vehicle attributes clearly affect the utility and
economic value that vehicles provide to potential buyers.\485\
---------------------------------------------------------------------------
\485\ See, e.g., Kleit A.N., 1990. ``The Effect of Annual
Changes in Automobile Fuel Economy Standards.'' Journal of
Regulatory Economics 2: 151-172; Berry, Steven, James Levinsohn, and
Ariel Pakes, 1995. ``Automobile Prices in Market Equilibrium,''
Econometrica 63(4): 841-940; McCarthy, Patrick S., 1996. ``Market
Price and Income Elasticities of New Vehicle Demands.'' Review of
Economics and Statistics 78: 543-547; and Goldberg, Pinelopi K.,
1998. ``The Effects of the Corporate Average Fuel Efficiency
Standards in the US,'' Journal of Industrial Economics 46(1): 1-33.
---------------------------------------------------------------------------
NHTSA and EPA have approached this potential problem by developing
cost estimates for fuel economy-improving technologies that include any
additional manufacturing costs that would be necessary to maintain the
originally planned levels of performance, comfort, carrying capacity,
and safety of any light-duty vehicle model to which those technologies
are applied. In doing so, the agencies followed the precedent
established by the 2002 NAS Report, which estimated ``constant
performance and utility'' costs for fuel economy technologies. NHTSA
has used these as the basis for its continuing efforts to refine the
technology costs it uses to analyze manufacturer's costs for complying
with alternative passenger car and light truck CAFE standards for MYs
2012-2016. Although the agency has revised its estimates of
manufacturers' costs for some technologies significantly for use in
this rulemaking, these revised estimates are still intended to
represent costs that would allow manufacturers to maintain the
performance, carrying capacity, and utility of vehicle models while
improving their fuel economy.
Although we believe that our tentative cost estimates for fuel
economy-improving technologies should be generally sufficient to
prevent significant reductions in consumer welfare provided by vehicle
models to which manufacturers apply those technologies, it is possible
that they do not include adequate allowance for the necessary efforts
by manufacturers to prevent sacrifices in these attributes on all
vehicle models. If this is the case, the true economic costs of
achieving higher fuel economy should include the opportunity costs to
vehicle owners of any sacrifices in vehicles' performance, carrying
capacity, and utility and the agency's estimated technology costs would
underestimate the true economic costs of improving fuel economy.
Recognizing this possibility, it may be preferable for NHTSA 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 cargo-carrying capacity, or other
dimensions of utility. The net change in buyer's welfare that results
from the combination of these changes would provide a more accurate
estimate of the true economic costs for improving fuel economy. The
agency seeks comment on this or other possible ways to deal with this
extremely important issue.
c. 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 EPA to establish its published
fuel economy ratings for different models. In analyzing the fuel
savings from alternative CAFE standards, NHTSA has previously adjusted
the actual fuel economy performance of each light truck model downward
from its rated value to reflect the expected size of this on-road fuel
economy ``gap.'' On December 27, 2006, EPA adopted changes to its
regulations on fuel economy labeling, which were intended to bring
vehicles' rated fuel economy levels closer to their actual on-road fuel
economy levels.\486\
---------------------------------------------------------------------------
\486\ 71 FR 77871 (Dec. 27, 2006).
---------------------------------------------------------------------------
In its Final Rule, EPA estimated that actual on-road fuel economy
for light-duty vehicles averages 20 percent lower than published fuel
economy levels. For example, if the overall EPA fuel economy rating 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 (20*.80).
NHTSA employed EPA's revised estimate of this on-road fuel economy gap
in its analysis of the fuel
[[Page 49669]]
savings resulting from alternative CAFE standards evaluated in the MY
2011 final rule.
For purposes of this NPRM, NHTSA conducted additional analysis of
this issue. The agency used data on the number of passenger cars and
light trucks of each model year that were registered for use during
calendar years 2000 through 2006, average fuel economy for passenger
cars and light trucks produced during each model year, and estimates of
average miles driven per year by cars and light trucks of different
ages. These data were combined to develop estimates of the average fuel
economy that the U.S. passenger car and light truck fleets would have
achieved from 2000 through 2006 under test conditions.
NHTSA compared these estimates to the Federal Highway
Administration's (FHWA) published values of actual on-road fuel economy
for passenger cars and light trucks during each of those years.\487\
FHWA's estimates of actual fuel economy for passenger cars averaged 22
percent lower than NHTSA's estimates of its fleet-wide average value
under test conditions over this period, while FHWA's estimates for
light trucks averaged 17 lower than NHTSA's estimates of average light
truck fuel economy under test conditions. These results appear to
confirm that the 20 percent on-road fuel economy discount or gap
represents a reasonable estimate for use in evaluating the fuel savings
likely to result from alternative CAFE standards for MY 2012-2016
vehicles.
---------------------------------------------------------------------------
\487\ Federal Highway Administration, Highway Statistics, 2000
through 2006 editions, Table VM-1; see http://www.fhwa.dot.gov/policy/ohpi/hss/hsspubs.cfm (last accessed July 27, 2009).
---------------------------------------------------------------------------
d. 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. NHTSA 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, we used the AEO 2009
(April 2009 release) Reference Case forecasts of inflation-adjusted
(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.\488\
---------------------------------------------------------------------------
\488\ Energy Information Administration, Annual Energy Outlook
2009, Revised Updated Reference Case (April 2009), Table 12.
Available at http://www.eia.doe.gov/oiaf/servicerpt/stimulus/excel/aeostimtab_12.xls(last accessed July 26, 2009). 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.
---------------------------------------------------------------------------
While NHTSA relied on the forecasts of fuel prices presented in AEO
2008 High Price Case in the MY 2011 final rule, we noted at the time
that we were relying on that estimate primarily because volatility in
the oil market appeared to have overtaken the Reference Case, and that
we anticipated that the Reference Case forecast would be significantly
higher in the next AEO. In fact, EIA's AEO 2009 Reference Case forecast
projects higher retail fuel prices in most future years than those
forecast in the High Price Case from AEO 2008. NHTSA is thus confident
that the AEO 2009 Reference Case is an appropriate forecast for
projected future fuel prices.
Measured in constant 2007 dollars, the Reference Case forecast of
retail gasoline prices during calendar year 2020 is $3.62 per gallon,
rising gradually to $3.82 by the year 2030 (these values include
Federal, State and local taxes). To obtain fuel price forecasts for the
years 2031 through 2050, the agency assumes that retail fuel prices
will continue to increase after 2030 at the average annual rates
projected for 2020-2030 in the AEO 2009 Revised Reference Case.\489\
This assumption results in a projected retail price of gasoline that
reaches $4.25 in 2007 dollars by the year 2050.
---------------------------------------------------------------------------
\489\ This projection uses the rate of increase in fuel prices
for 2020-2030 rather than that over the complete forecast period
(2009-2030) because there is extreme volatility in the forecasts for
the years 2009 through approximately 2020. Using the average rate of
change over the complete 2009-2030 forecast period would result in
projections of declining fuel prices after 2030.
---------------------------------------------------------------------------
The value of fuel savings resulting from improved fuel economy to
buyers of light-duty vehicles is determined by the retail price of
fuel, which includes Federal, State, and any local taxes imposed on
fuel sales. Total taxes on gasoline, including Federal, State, and
local levies averaged $0.42 per gallon during 2006, while those levied
on diesel averaged $0.50. Because fuel taxes represent transfers of
resources from fuel buyers to government agencies, however, rather than
real resources that are consumed in the process of supplying or using
fuel, their value must be deducted from retail fuel prices to determine
the value of fuel savings resulting from more stringent CAFE standards
to the U.S. economy as a whole.
NHTSA follows the assumptions used by EIA in AEO 2009 that State
and local gasoline taxes will keep pace with inflation in nominal
terms, and thus remain constant when expressed in constant 2007
dollars. In contrast, EIA assumes that Federal gasoline taxes will
remain unchanged in nominal terms, and thus decline throughout the
forecast period when expressed in constant 2007 dollars. These
differing assumptions about the likely future behavior of Federal and
State/local fuel taxes are consistent with recent historical
experience, which reflects the fact that Federal as well as most State
motor fuel taxes are specified on a cents-per-gallon basis, and
typically require legislation to change.
The projected value of total taxes is deducted from each future
year's forecast of retail gasoline and diesel prices reported in AEO
2009 to determine the economic value of each gallon of fuel saved
during that year as a result of improved fuel economy. Subtracting fuel
taxes results in a projected value for saving gasoline of $3.22 per
gallon during 2020, rising to $3.45 per gallon by the year 2030.
EIA includes ``High Price Case'' and ``Low Price Case'' forecasts
in each AEO, which reflect uncertainties regarding future levels of oil
production and demand. These alternative scenarios project retail
gasoline prices that range from a low of $2.02 to a high of $5.04 per
gallon during 2020, and from $2.04 to $5.47 per gallon during 2030. In
conjunction with our assumption that fuel taxes will remain constant in
real or inflation-adjusted terms over this period, these forecasts
imply pre-tax values of saving fuel ranging from $1.63 to $4.65 per
gallon during 2020, and from $1.67 to $5.10 per gallon in 2030. In
conducting the preliminary analysis of uncertainty in benefits and
costs from alternative CAFE standards required by OMB, NHTSA evaluated
the sensitivity of its benefits estimates to these alternative
forecasts of future fuel prices. The results of this sensitivity
analysis can be found in the PRIA.
e. Consumer Valuation of Fuel Economy and Payback Period
In estimating the value of fuel economy improvements that would
result from alternative CAFE standards to potential vehicle buyers,
NHTSA assumes, as in the MY 2011 final rule, 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
discount the value of these future fuel savings at a 3 percent annual
rate. The five-year figure represents
[[Page 49670]]
approximately the current average term of consumer loans to finance the
purchase of new vehicles. We recognize that the period over which
individual buyers finance new vehicle purchases may not correspond
exactly to the time horizons they apply in valuing fuel savings from
higher fuel economy.
The agency deducts the discounted present value of fuel savings
over the first five years of a vehicle model's lifetime from the
technology costs incurred by its manufacturer to improve that model's
fuel economy to determine the increase in its ``effective price'' to
buyers. The Volpe model uses these estimates of effective costs for
increasing the fuel economy of each vehicle model to identify the order
in which manufacturers would be likely to select models for the
application of fuel economy-improving technologies in order to comply
with stricter standards. The average value of the resulting increase in
effective cost from each manufacturer's simulated compliance strategy
is also used to estimate the impact of alternative standards on its
total sales for future model years.
However, it is important to recognize that NHTSA estimates the
aggregate value to the U.S. economy of fuel savings resulting from
alternative standards--or their ``social'' value--over the entire
expected lifetimes of vehicles manufactured under those standards,
rather than over this shorter ``payback period'' we assume for their
buyers. The procedure the agency uses for doing so is discussed in
detail in the following section.
f. Vehicle Survival and Use Assumptions
NHTSA's first step in estimating lifetime fuel consumption by
vehicles produced during a model year is to calculate the number
expected to remain in service during each year following their
production and sale.\490\ This is calculated by multiplying the number
of vehicles originally produced during a model year by the proportion
typically expected to remain in service at their age during each later
year, often referred to as a ``survival rate.''
---------------------------------------------------------------------------
\490\ 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 1 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 http://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf (last accessed July 27, 2009).
---------------------------------------------------------------------------
To estimate production volumes of passenger cars and light trucks
for individual manufacturers, NHTSA relied on a baseline market
forecast constructed by EPA staff beginning with MY 2008 CAFE
certification data. After constructing a MY 2008 baseline, EPA used
projected car and truck volumes for this period from Energy Information
Administration's (EIA's) 2009 Annual Energy Outlook (AEO).\491\
However, AEO projects sales only at the car and truck level, not at the
manufacturer and model-specific level, which are needed in order to
estimate the effects new standards will have on individual
manufacturers.\492\ Therefore, EPA purchased data from CSM-Worldwide
and used their projections of the number of vehicles of each type
predicted to be sold by manufacturers in 2011-2015.\493\ This provided
the year-by-year percentages of cars and trucks sold by each
manufacturer as well as the percentages of each vehicle segment.
Although it was thus necessary to assume the same manufacturer and
segment shares in 2016 as in 2015, 2016 estimates from CSM should be
available for the final rule. Using these percentages normalized to the
AEO projected volumes then provided the manufacturer-specific market
share and model-specific sales for model years 2011-2016.
---------------------------------------------------------------------------
\491\ Available at http://www.eia.doe.gov/oiaf/aeo/index.html.
NHTSA and EPA made the simplifying assumption that projected sales
of cars and light trucks during each calendar year from 2012 through
2016 represented the likely production volumes for the corresponding
model year. The agency did not attempt to establish the exact
correspondence between projected sales during individual calendar
years and production volumes for specific model years.
\492\ Because AEO 2009's ``car'' and ``truck'' classes did not
reflect NHTSA's recent reclassification (in March 2009 for
enforcement beginning MY 2011) of many two wheel drive SUVs from the
nonpassenger (i.e., light truck) fleet to the passenger car fleet,
EPA staff made adjustments to account for such vehicles in the
baseline.
\493\ EPA also considered other sources of similar information,
such as J.D. Powers, and concluded that CSM was better able to
provide forecasts at the requisite level of detail for most of the
model years of interest.
---------------------------------------------------------------------------
To estimate the number of passenger cars and light trucks
originally produced during model years 2012 through 2016 that will
remain in use during each subsequent year the agency applied age-
specific survival rates for cars and light trucks to these adjusted
forecasts of passenger car and light truck sales. In 2008, NHTSA
updated its previous estimates of car and light truck survival rates
using the most current registration data for vehicles produced during
recent model years, in order to ensure that they reflected recent
increases in the durability and expected life spans of cars and light
trucks.\494\
---------------------------------------------------------------------------
\494\ Lu, S., NHTSA, Regulatory Analysis and Evaluation
Division, ``Vehicle Survivability and Travel Mileage Schedules,''
DOT HS 809 952, 8-11 (January 2006). Available at http://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf (last accessed August 9, 2009).
These updated survival rates suggest that the expected lifetimes of
recent-model passenger cars and light trucks are 13.8 and 14.5
years.
---------------------------------------------------------------------------
The next step in estimating fuel use is to calculate the total
number of miles that model year 2012-2016 cars and light trucks
remaining in use will be driven each year. To estimate total miles
driven, the number projected to remain in use during each future year
is multiplied by the average number of miles they are expected to be
driven at the age they will reach in that year. The agency estimated
annual usage of cars and light trucks of each age using data from the
Federal Highway Administration's 2001 National Household Transportation
Survey (NHTS).\495\ Because these estimates reflect the historically
low gasoline prices that prevailed at the time the 2001 NHTS was
conducted, however, NHTSA adjusted them to account for the effect on
vehicle use of subsequent increases in fuel prices. Details of this
adjustment are provided in Chapter VIII of the PRIA and Chapter of the
draft joint TSD.
---------------------------------------------------------------------------
\495\ For a description of the Survey, see http://nhts.ornl.gov/quickStart.shtml (last accessed August 9, 2009).
---------------------------------------------------------------------------
Increases in average annual use of cars and light trucks have been
an important source of historical growth in the total number of miles
they are driven each year. To estimate future growth in their average
annual use for purposes of this rulemaking, NHTSA calculated the rate
of growth in the adjusted mileage schedules derived from the 2001 NHTS
necessary for total car and light truck travel to increase at the rate
forecast in the AEO 2009 Reference Case.\496\ This rate was calculated
to be consistent with future changes in the overall size and age
distributions of the U.S. passenger car and light truck fleets that
result from the agency's forecasts of total car and light truck sales
and updated survival rates. The resulting growth rate in average annual
car and light truck use of approximately 1.1 percent per year was
[[Page 49671]]
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.\497\
---------------------------------------------------------------------------
\496\ This approach differs from that used in the MY 2011 final
rule, where it was assumed that future growth in the total number of
cars and light trucks in use resulting from projected sales of new
vehicles was adequate by itself to account for growth in total
vehicle use, without assuming continuing growth in average vehicle
use.
\497\ 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 significantly
for both passenger cars and about 16 percent for light trucks.
---------------------------------------------------------------------------
Finally, the agency estimated total fuel consumption by passenger
cars and light trucks remaining in use each year by dividing the total
number of miles surviving vehicles are driven by the fuel economy they
are expected to achieve under each alternative CAFE standard. Each
model year's total lifetime fuel consumption is the sum of fuel use by
the cars or light trucks produced during that model year during each
year of their life spans. In turn, the savings in a model year's
lifetime fuel use that will result from each alternative CAFE standard
is the difference between its lifetime fuel use at the fuel economy
level it attains under the Baseline alternative, and its lifetime fuel
use at the higher fuel economy level it is projected to achieve under
that alternative standard.\498\
---------------------------------------------------------------------------
\498\ To illustrate these calculations, the agency's adjustment
of the AEO 2009 Revised Reference Case forecast indicates that 9.26
million passenger cars will be produced during 2012, and the
agency's updated survival rates show that 83 percent of these
vehicles, or 7.64 million, are projected to remain in service during
the year 2022, when they will have reached an age of 10 years. At
that age, passenger achieving the fuel economy level they are
projected to achieve under the Baseline alternative are driven an
average of about 800 miles, so surviving model year 2012 passenger
cars will be driven a total of 82.5 billion miles (= 7.64 million
surviving vehicles x 10,800 miles per vehicle) during 2022. Summing
the results of similar calculations for each year of their 26-year
maximum lifetime, model year 2012 passenger cars will be driven a
total of 1,395 billion miles under the Baseline alternative. Under
that alternative, they are projected to achieve a test fuel economy
level of 32.4 mpg, which corresponds to actual on-road fuel economy
of 25.9 mpg (= 32.4 mpg x 80 percent). Thus their lifetime fuel use
under the Baseline alternative is projected to be 53.9 billion
gallons (= 1,395 billion miles divided by 25.9 miles per gallon).
---------------------------------------------------------------------------
g. Accounting for the Rebound Effect of Higher Fuel Economy
The fuel economy 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
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. By lowering the marginal cost
of vehicle use, improved fuel economy may lead to an increase in the
number of miles vehicles are driven each year and over their lifetimes.
Even with their higher fuel economy, this additional driving consumes
some fuel, so the rebound effect reduces the net fuel savings that
result when new CAFE standards require manufacturers to improve fuel
economy.
The magnitude of the rebound effect is an important determinant of
the actual fuel savings that are likely to result from adopting
stricter CAFE standards. Research on the magnitude of the rebound
effect in light-duty vehicle use dates to the early 1980s, and
generally concludes that a statistically significant rebound effect
occurs when vehicle fuel efficiency improves.\499\ The agency reviewed
studies of the rebound effect it had previously relied upon, considered
more recently published estimates, and developed new estimates of its
magnitude for purposes of this NPRM.\500\ Recent studies provide some
evidence that the rebound effect has been declining over time, and may
decline further over the immediate future if incomes rise faster than
gasoline prices. This result appears plausible, because the
responsiveness of vehicle use to variation in fuel costs is expected to
decline as they account for a smaller proportion of the total monetary
cost of driving, which has been the case until very recently. At the
same time, rising personal incomes would be expected to reduce the
sensitivity of vehicle use to fuel costs as the time component of
driving costs--which is likely to be related to income levels--accounts
for a larger fraction the total cost of automobile travel. NHTSA
developed new estimates of the rebound effect by using national data on
light-duty vehicle travel over the period from 1950 through 2006 to
estimate various econometric models of the relationship between vehicle
miles-traveled and factors likely to influence it, including household
income, fuel prices, vehicle fuel efficiency, road supply, the number
of vehicles in use, vehicle prices, and other factors.\501\ The results
of NHTSA's analysis are consistent with the findings from other recent
research: The average long-run rebound effect ranged from 16 percent to
30 percent over the period from 1950 through 2007, while estimates of
the rebound effect in 2007 range from 8 percent to 14 percent.
Projected values of the rebound effect for the period from 2010 through
2030, which the agency developed using forecasts of personal income,
fuel prices, and fuel efficiency from AEO 2009's Reference Case, range
from 4 percent to 16 percent, depending on the specific model used to
generate them.
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\499\ Some studies estimate that the long-run rebound effect is
significantly larger than the immediate response to increased fuel
efficiency. Although their estimates of the adjustment period
required for the rebound effect to reach its long-run magnitude
vary, this long-run effect is most appropriate for evaluating the
fuel savings and emissions reductions resulting from stricter
standards that would apply to future model years.
\500\ For details of the agency's analysis, see Chapter VIII of
the PRIA and Chapter 4 of the draft joint TSD accompanying this
proposed rule.
\501\ The agency used several different model specifications and
estimation procedures to control for the effect of fuel prices on
fuel efficiency in order to obtain accurate estimates of the rebound
effect.
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In light of these results, the agency's judgment is that the
apparent decline over time in the magnitude of the rebound effect
justifies using a value for future analysis that is lower than
historical estimates, which average 15-25 percent. Because the
lifetimes of vehicles affected by the alternative CAFE standards
considered in this rulemaking will extend from 2012 until nearly 2050,
a value that is significantly lower than historical estimates appears
to be appropriate. Thus NHTSA has elected to use a 10 percent rebound
effect in its analysis of fuel savings and other benefits from higher
CAFE standards for this NPRM.
NHTSA also invites comment 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 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 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. NHTSA 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
[[Page 49672]]
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.
Additionally, NHTSA recognizes that as the world price of oil falls
in response to lower U.S. demand for oil, there is the potential for an
increase in oil use and, in turn, greenhouse gas emissions outside the
U.S. This so called international oil ``take back'' effect is difficult
to estimate. Given that oil consumption patterns vary across countries,
there will be different demand responses to a change in the world price
of crude oil. In addition, many countries around the world subsidize
their oil consumption. It is not clear how oil consumption would change
due to changes in the market price of oil given the current pattern of
demand and subsidies. Further, many countries, especially in the
developed countries/regions (i.e., the European Union), already have or
anticipate implementing policies to limit GHG emissions. Further out in
the future, it is anticipated that developing countries would take
actions to reduce their GHG emissions as well. Any increases in
petroleum consumption and GHG emissions in other nations that occurs in
response to a decline in world petroleum prices would be attributed to
those nations, and recorded in their respective GHG emissions
inventories. Thus, including the same increase in emissions as part of
the impact of adopting CAFE standards in the U.S. would risk double-
counting of global emissions totals. NHTSA seeks comment on how to
estimate the international ``take back'' effect and its impact on fuel
consumption and GHG emissions. See the Energy Security section of the
TSD, 4.2.8, for more discussion of the impact of the proposed vehicle
rule on oil markets.
h. 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 additional
travel provides benefits to drivers and their passengers by improving
their access to social and economic opportunities away from home. As
evidenced by their decisions to make more frequent or longer trips when
improved fuel economy reduces their costs for driving, the benefits
from this additional travel exceed the costs drivers and passengers
incur in making more frequent or longer trips.
The agency's analysis estimates the economic benefits from
increased rebound-effect driving as the sum of fuel costs drivers incur
plus the consumer surplus they receive from the additional
accessibility it provides.\502\ Because the increase in travel depends
on the extent of improvement in fuel economy, the value of benefits it
provides differs among model years and alternative CAFE standards.
Under even those alternatives that would impose the highest standards,
however, the magnitude of these benefits represents a small fraction of
total benefits.
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\502\ The consumer surplus provided by added travel is estimated
as one-half of the product of the decline in fuel cost per mile and
the resulting increase in the annual number of miles driven.
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i. The Value of Increased Driving Range
Improving vehicles' fuel economy may also increase their driving
range before they require refueling. By reducing the frequency with
which drivers typically refuel, and by extending the upper limit of the
range they can travel before requiring refueling, improving fuel
economy thus provides some additional benefits to their owners.\503\
NHTSA re-examined this issue for purposes of this rulemaking, and found
no information in comments or elsewhere that would cause the agency to
revise its previous approach. Since no direct estimates of the value of
extended vehicle range are available, NHTSA calculates directly the
reduction in the annual number of required refueling cycles that
results from improved fuel economy, and applies DOT-recommended values
of travel time savings to convert the resulting time savings to their
economic value.\504\
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\503\ If manufacturers respond to improved fuel economy by
reducing the size of fuel tanks to maintain a constant driving
range, the resulting cost savings will presumably be reflected in
lower vehicle sales prices.
\504\ See Department of Transportation, Guidance Memorandum,
``The Value of Saving Travel Time: Departmental Guidance for
Conducting Economic Evaluations,'' Apr. 9, 1997. http://ostpxweb.dot.gov/policy/Data/VOT97guid.pdf (last accessed August 9,
2009); update available at http://ostpxweb.dot.gov/policy/Data/VOTrevision1_2-11-03.pdf (last accessed August 9, 2009).
---------------------------------------------------------------------------
As an illustration, a typical small light truck model has an
average fuel tank size of approximately 20 gallons. Assuming that
drivers typically refuel when their tanks are 55 percent full (i.e., 11
gallons in reserve), increasing this model's actual on-road fuel
economy from 24 to 25 mpg would extend its driving range from 216 miles
(= 9 gallons x 24 mpg) to 225 miles (= 9 gallons x 25 mpg). Assuming
that it is driven 12,000 miles/year, this reduces the number of times
it needs to be refueled each year from 55.6 (= 12,000 miles per year/
216 miles per refueling) to 53.3 (= 12,000 miles per year/225 miles per
refueling), or by 2.3 refuelings per year.
Weighted by the nationwide mix of urban and rural driving, personal
and business travel in urban and rural areas, and average vehicle
occupancy for driving trips, the DOT-recommended values of travel time
per vehicle-hour is $24.64 (in 2007 dollars).\505\ Assuming that
locating a station and filling up requires five minutes, the annual
value of time saved as a result of less frequent refueling amounts to
$4.72 (calculated as 5/60 x 2.3 x $24.64). This calculation is repeated
for each future year that model year 2012-2016 cars and light trucks
would remain in service. Like fuel savings and other benefits, the
value of this benefit declines over a model year's lifetime, because a
smaller number of vehicles originally produced during that model year
remain in service each year, and those remaining in service are driven
fewer miles.
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\505\ The hourly wage rate during 2008 is estimated to average
$25.50 when expressed in 2007 dollars. Personal travel in urban
areas (which represents 94 percent of urban travel) is valued at 50
percent of the hourly wage rate, while business travel (the
remaining 6 percent of urban travel) is valued at 100 percent of the
hourly wage rate. For intercity travel, personal travel (87 percent
of total intercity travel) is valued at 70 percent of the wage rate,
while business travel (13 percent) is valued at 100 percent of the
wage rate. The resulting values of travel time are $12.67 for urban
travel and $17.66 for intercity travel, and must be multiplied by
vehicle occupancy (1.6) to obtain the estimated values of time per
vehicle hour in urban and rural driving. Finally, about 66% of
driving occurs in urban areas, while the remaining 34% takes place
in rural areas, and these percentages are used to calculate a
weighted average of the value of time in all driving.
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NHTSA recognizes that many assumptions made in its estimate for the
value of increased driving range are subject to uncertainty. Please see
Chapter 4 of the TSD and Chapter 8 of NHTSA's PRIA for more information
about the uncertainty regarding these assumptions.
j. Added Costs From Congestion, Crashes and Noise
Increased vehicle use associated with the rebound effect also
contributes to increased traffic congestion, motor vehicle accidents,
and highway noise. NHTSA relies on estimates of per-mile congestion,
accident, and noise costs caused by increased use of automobiles and
light trucks developed by the Federal Highway Administration to
estimate these increased costs.\506\ NHTSA employed these estimates
previously in its analysis accompanying the MY 2011 final rule, and
continues
[[Page 49673]]
to find them appropriate for this NPRM after reviewing the procedures
used by FHWA to develop them and considering other available estimates
of these values. The agency multiplies FHWA's estimates of per-mile
costs by the annual increases in automobile and light truck use from
the rebound effect to yield the estimated increases in congestion,
accident, and noise externality costs during each future year.
---------------------------------------------------------------------------
\506\ These estimates were developed by FHWA for use in its 1997
Federal Highway Cost Allocation Study; see http://www.fhwa.dot.gov/policy/hcas/final/index.htm (last accessed August 9, 2009).
---------------------------------------------------------------------------
k. 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. 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 cushion against
resulting price increases.\507\
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\507\ 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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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 their market prices. Conversely, lowering U.S. imports of crude
petroleum or refined fuels by reducing domestic fuel consumption can
reduce these external costs, and any reduction in their total value
that results from improved fuel economy represents an economic benefit
of more stringent CAFE standards, in addition to the value of saving
fuel itself.
NHTSA has carefully reviewed its assumptions regarding the
appropriate value of these benefits for this proposed rule. In
analyzing benefits from its recent actions to increase light truck CAFE
standards for model years 2005-07 and 2008-11, NHTSA relied on a 1997
study by Oak Ridge National Laboratory (ORNL) to estimate the value of
reduced economic externalities from petroleum consumption and
imports.\508\ More recently, ORNL updated its estimates of the value of
these externalities, using the analytic framework developed in its
original 1997 study in conjunction with recent estimates of the
variables and parameters that determine their value.\509\ The updated
ORNL study was subjected to a detailed peer review by experts selected
by EPA, and its estimates of the value of oil import externalities were
subsequently revised to reflect their comments and
recommendations.\510\
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\508\ Leiby, Paul N., Donald W. Jones, T. Randall Curlee, and
Russell Lee, Oil Imports: An Assessment of Benefits and Costs, ORNL-
6851, Oak Ridge National Laboratory, November 1, 1997. Available at
http://pzl1.ed.ornl.gov/ORNL6851.pdf (last accessed August 9, 2009).
\509\ Leiby, Paul N. ``Estimating the Energy Security Benefits
of Reduced U.S. Oil Imports,'' Oak Ridge National Laboratory, ORNL/
TM-2007/028, Revised July 23, 2007. Available at http://pzl1.ed.ornl.gov/energysecurity.html (click on link below ``Oil
Imports Costs and Benefits'') (last accessed August 9, 2009).
\510\ Peer Review Report Summary: Estimating the Energy Security
Benefits of Reduced U.S. Oil Imports, ICF, Inc., September 2007.
---------------------------------------------------------------------------
At the request of EPA, ORNL further revised its 2008 estimates of
external costs from U.S. oil imports to reflect recent changes in the
outlook for world petroleum prices and continuing changes in the
structure and characteristics of global petroleum supply and demand.
These most recent revisions increase ORNL's estimates of the
``monopsony premium'' associated with U.S. oil imports, which measures
the reduced value of payments from U.S. oil purchasers to foreign oil
suppliers beyond the savings from reduced purchases of petroleum itself
that results when lower U.S. import demand reduces the world price of
petroleum.\511\ Consistency with NHTSA's use of estimates of the global
benefits from reducing emissions of CO2 and other greenhouse
gases in this analysis, however, requires the use of a global
perspective for assessing their net value. From this perspective,
reducing these payments simply results in a transfer of resources from
foreign oil suppliers to U.S. purchasers (or more properly, in a
savings in the value of resources previously transferred from U.S.
purchasers to foreign producers), and provides no real savings in
resources to the global economy. Thus NHTSA's analysis of the benefits
from adopting higher CAFE standards for MY 2012-2016 cars and light
trucks excludes the reduced value of monopsony payments by U.S. oil
consumers that might result from lower fuel consumption by these
vehicles.
---------------------------------------------------------------------------
\511\ The reduction in payments from U.S. oil purchasers to
domestic petroleum producers is not included as a benefit, since it
represents a transfer that occurs entirely within the U.S. economy.
---------------------------------------------------------------------------
The literature on the energy security for the last two decades has
routinely combined the monopsony and the macroeconomic disruption
components when calculating the total value of the energy security
premium. However, in the context of using a global value for the Social
Cost of Carbon (SCC) the question arises: How should the energy
security premium be used when some benefits from the proposed rule,
such as the benefits of reducing greenhouse gas emissions, are
calculated at a global level? Monopsony benefits represent avoided
payments by the U.S. to oil producers in foreign countries that result
from a decrease in the world oil price as the U.S. decreases its
consumption of imported oil. Although there is clearly a benefit to the
U.S. when considered from the domestic perspective, the decrease in
price due to decreased demand in the U.S. also represents a loss of
income to oil-producing countries. Given the redistributive nature of
this effect, do the negative effects on other countries ``net out'' the
positive impacts to the U.S.? If this is the case, then, the monopsony
portion of the energy security premium should be excluded from the net
benefits calculation for the rule.
As the preceding discussion has indicated, the agencies omitted the
reduction in monopsony payments that occurs when U.S. petroleum
consumption and imports are reduced from their estimates of economic
benefits for the proposed rules. Since the reduction in monopsony
payments by U.S. oil consumers is exactly offset by a decline in income
to suppliers of imported oil, this omission ensures consistency of the
agencies' analysis with the inclusion of global benefits from reducing
emissions of greenhouse gas emissions. The agencies seek comment on
whether, from other perspectives, it would be reasonable to include
both the global value of reducing GHG emissions and the reduction in
monopsony payments by U.S. consumers of petroleum products in their
estimates of total economic benefits from reducing U.S. fuel
consumption.
ORNL's most recently revised estimates of the increase in the
expected costs associated with potential disruptions in U.S. petroleum
imports imply that each gallon of imported fuel or petroleum saved
reduces the expected costs of oil supply disruptions
[[Page 49674]]
to the U.S. economy by $0.16 per gallon (in 2007$). The reduction in
expected disruption costs represents a real savings in resources, and
thus contributes economic benefits in addition to the savings in fuel
production costs that result from increasing fuel economy. NHTSA
employs this value in its evaluation of the economic benefits from
adopting higher CAFE standards for MY 2012-2016 cars and light trucks.
NHTSA's analysis does not include savings in budgetary outlays to
support U.S. military activities among the benefits of higher fuel
economy and the resulting fuel savings.\512\ NHTSA's analysis of
benefits from alternative CAFE standards for MY 2012-2016 also excludes
any cost savings from maintaining a smaller SPR from its estimates of
the external benefits of reducing gasoline consumption and petroleum
imports. This view concurs with that of the recent ORNL study of
economic costs from U.S. oil imports, which concludes that savings in
government outlays for these purposes are unlikely to result from
reductions in consumption of petroleum products and oil imports on the
scale of those resulting from higher CAFE standards.
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\512\ However, the agency conducted a sensitivity analysis of
the potential effect of assuming that some reduction military
spending would result from fuel savings and reduced petroleum
imports in order to investigate its impacts on the standards and
fuel savings.
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Based on a detailed analysis of differences in fuel consumption,
petroleum imports, and imports of refined petroleum products among the
Reference Case, High Economic Growth, and Low Economic Growth Scenarios
presented in AEO 2009, NHTSA estimates that approximately 50 percent of
the reduction in fuel consumption resulting from adopting higher CAFE
standards is likely to be reflected in reduced U.S. imports of refined
fuel, while the remaining 50 percent would be reduce domestic fuel
refining.\513\ Of this latter figure, 90 percent is anticipated to
reduce U.S. imports of crude petroleum for use as a refinery feedstock,
while the remaining 10 percent is expected to reduce U.S. domestic
production of crude petroleum.\514\ Thus on balance, each 100 gallons
of fuel saved as a consequence of higher CAFE standards is anticipated
to reduce total U.S. imports of crude petroleum or refined fuel by 95
gallons.\515\
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\513\ Differences between forecast annual U.S. imports of crude
petroleum and refined products among these three scenarios range
from 24-89 percent of differences in projected annual gasoline and
diesel fuel consumption in the U.S. These differences average 49
percent over the forecast period spanned by AEO 2009.
\514\ Differences between forecast annual U.S. imports of crude
petroleum among these three scenarios range from 67-97 percent of
differences in total U.S. refining of crude petroleum, and average
85 percent over the forecast period spanned by AEO 2009.
\515\ This figure is calculated as 50 gallons + 50 gallons * 90%
= 50 gallons + 45 gallons = 95 gallons.
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l. Air Pollutant Emissions
i. Impacts on Criteria Air Pollutant Emissions
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). While reductions in domestic fuel
refining and distribution that result from lower fuel consumption will
reduce U.S. emissions of these pollutants, additional vehicle use
associated with the rebound effect from higher fuel economy will
increase their emissions. Thus the net effect of stricter CAFE
standards on emissions of each criteria pollutant depends on the
relative magnitudes of its reduced emissions in fuel refining and
distribution, and increases in its emissions from vehicle use. Because
the relationship between emissions in fuel refining and vehicle use is
different for each criteria pollutant, the net effect of fuel savings
from the proposed standards on total emissions of each pollutant is
likely to differ. We note that any benefits in terms of criteria air
pollutant reductions resulting from this rule would not be direct
benefits.
With the exception of SO2, NHTSA calculated annual
emissions of each criteria pollutant resulting from vehicle use by
multiplying its estimates of car and light truck use during each year
over their expected lifetimes by per-mile emission rates appropriate to
each vehicle type, fuel, model year, and age. These emission rates were
developed by U.S. EPA using its Motor Vehicle Emission Simulator (Draft
MOVES 2009).\516\ Emission rates for SO2 were calculated by
NHTSA using average fuel sulfur content estimates supplied by EPA,
together with the assumption that the entire sulfur content of fuel is
emitted in the form of SO2.\517\ Total SO2
emissions under each alternative CAFE standard were calculated by
applying the resulting emission rates directly to estimated annual
gasoline and diesel fuel use by cars and light trucks.
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\516\ The MOVES model assumes that the per-mile rates at which
these pollutants are emitted are determined by EPA regulations and
the effectiveness of catalytic after-treatment of engine exhaust
emissions, and are thus unaffected by changes in car and light truck
fuel economy.
\517\ These are 30 and 15 parts per million (ppm, measured on a
mass basis) for gasoline and diesel respectively, which produces
emission rates of 0.17 grams of SO2 per gallon of
gasoline and 0.10 grams per gallon of diesel.
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As with other impacts, the changes in emissions of criteria air
pollutants resulting from alternative increases in CAFE standards for
MY 2012-2016 cars and light trucks were calculated from the differences
between emissions under each alternative that would increase CAFE
standards, and emissions under the baseline alternative.
NHTSA estimated the reductions in criteria pollutant emissions from
producing and distributing fuel that would occur under alternative CAFE
standards using emission rates obtained by EPA from Argonne National
Laboratories' Greenhouse Gases and Regulated Emissions in
Transportation (GREET) model.\518\ The GREET model provides separate
estimates of air pollutant emissions that occur in different phases of
fuel production and distribution, including crude oil extraction,
transportation, and storage, fuel refining, and fuel distribution and
storage.\519\ EPA modified the GREET model to change certain
assumptions about emissions during crude petroleum extraction and
transportation, as well as to update its emission rates to reflect
adopted and pending EPA emission standards. NHTSA converted these
emission rates from the mass per fuel energy content basis on which
GREET reports them to mass per gallon of fuel supplied using estimates
of fuel energy content supplied by GREET.
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\518\ Argonne National Laboratories, The Greenhouse Gas and
Regulated Emissions from Transportation (GREET) Model, Version 1.8,
June 2007, available at http://www.transportation.anl.gov/modeling_simulation/GREET/index.html (last accessed August 9, 2009).
\519\ Emissions that occur during vehicle refueling at retail
gasoline stations (primarily evaporative emissions of volatile
organic compounds, or VOCs) are already accounted for in the
``tailpipe'' emission factors used to estimate the emissions
generated by increased light truck use. GREET estimates emissions in
each phase of gasoline production and distribution in mass per unit
of gasoline energy content; these factors are then converted to mass
per gallon of gasoline using the average energy content of gasoline.
---------------------------------------------------------------------------
The resulting emission rates were applied to the agency's estimates
of fuel consumption under each alternative CAFE standard to develop
estimates of total emissions of each criteria pollutant during fuel
production and distribution. The assumptions about the effects of
changes in fuel consumption on domestic and imported sources of fuel
supply discussed above were then employed to calculate the effects of
[[Page 49675]]
reductions in fuel use from alternative CAFE standards on changes in
imports of refined fuel and domestic refining. NHTSA's analysis assumes
that reductions in imports of refined fuel would reduce criteria
pollutant emissions during fuel storage and distribution only.
Reductions in domestic fuel refining using imported crude oil as a
feedstock are assumed to reduce emissions during fuel refining,
storage, and distribution, because each of these activities would be
reduced. Reduced domestic fuel refining using domestically-produced
crude oil is assumed to reduce emissions during all four phases of fuel
production and distribution.\520\
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\520\ In effect, this assumes that the distances crude oil
travels to U.S. refineries are approximately the same regardless of
whether it travels from domestic oilfields or import terminals, and
that the distances that gasoline travels from refineries to retail
stations are approximately the same as those from import terminals
to gasoline stations.
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Finally, NHTSA calculated the net changes in domestic emissions of
each criteria pollutant by summing the increases in emissions projected
to result from increased vehicle use, and the reductions anticipated to
result from lower domestic fuel refining and distribution.\521\ As
indicated previously, the effect of adopting higher CAFE standards on
total emissions of each criteria pollutant depends on the relative
magnitudes of the resulting reduction in emissions from fuel refining
and distribution, and the increase in emissions from additional vehicle
use. Although these net changes vary significantly among individual
criteria pollutants, the agency projects that on balance, adopting
higher CAFE standards would reduce emissions of all criteria air
pollutants except carbon monoxide (CO).
---------------------------------------------------------------------------
\521\ All emissions from increased vehicle use are assumed to
occur within the U.S., since CAFE standards would apply only to
vehicles produced for sale in the U.S.
---------------------------------------------------------------------------
The net changes in domestic emissions of fine particulates
(PM2.5) and its chemical precursors (such as NOX,
SOX, and VOCs) are converted to economic values using
estimates of the reductions in health damage costs per ton of emissions
of each pollutant that is avoided, which were developed and recently
revised by EPA. These savings represent the estimated reductions in the
value of damages to human health resulting from lower atmospheric
concentrations and population exposure to air pollution that occur when
emissions of each pollutant that contributes to atmospheric
PM2.5 concentrations are reduced. The value of reductions in
the risk of premature death due to exposure to fine particulate
pollution (PM2.5) account for a majority of EPA's estimated
values of reducing criteria pollutant emissions, although the value of
avoiding other health impacts is also included in these estimates.
These values do not include a number of unquantified benefits, such as
reduction in the welfare and environmental impacts of PM2.5
pollution, or reductions in health and welfare impacts related to other
criteria pollutants (ozone, NO2, and SO2) and air
toxics. EPA estimates different PM-related per-ton values for reducing
emissions from vehicle use than for reductions in emissions of that
occur during fuel production and distribution.\522\ NHTSA applies these
separate values to its estimates of changes in emissions from vehicle
use and fuel production and distribution to determine the net change in
total economic damages from emissions of these pollutants.
---------------------------------------------------------------------------
\522\ These reflect differences in the typical geographic
distributions of emissions of each pollutant, their contributions to
ambient PM2.5 concentrations, pollution levels
(predominantly those of PM2.5), and resulting changes in
population exposure.
---------------------------------------------------------------------------
EPA projects that the per-ton values for reducing emissions of
criteria pollutants from both mobile sources (including motor vehicles)
and stationary sources such as fuel refineries and storage facilities
will increase over time. These projected increases reflect rising
income levels, which are assumed to increase affected individuals'
willingness to pay for reduced exposure to health threats from air
pollution, as well as future population growth, which increases
population exposure to future levels of air pollution.
ii. Reductions in CO2 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 CAFE
standards will reduce GHG emissions generated by fuel use, as well as
throughout the fuel supply cycle. Lowering these emissions is likely to
slow the projected pace and reduce the ultimate extent of future
changes in the global climate, thus reducing future economic damages
that changes in the global climate are expected to cause. By reducing
the probability that climate changes with potentially catastrophic
economic or environmental impacts will occur, lowering GHG emissions
may also result in economic benefits that exceed the resulting
reduction in the expected future economic costs caused by gradual
changes in the earth's climatic systems.
Quantifying and monetizing benefits from reducing GHG emissions is
thus an important step in estimating the total economic benefits likely
to result from establishing higher CAFE standards. The agency estimated
emissions of CO2 from passenger car and light truck use by
multiplying the number of gallons of each type of fuel (gasoline and
diesel) they are projected to consume under alternative CAFE standards
by the quantity or mass of CO2 emissions released per gallon
of fuel consumed. This calculation assumes that the entire carbon
content of each fuel is converted to CO2 emissions during
the combustion process. Carbon dioxide emissions account for nearly 95
percent of total GHG emissions that result from fuel combustion during
vehicle use.
iii. Economic Value of Reductions in CO2 Emissions
NHTSA has taken the economic benefits of reducing CO2
emission into account in this rulemaking, both in developing proposed
CAFE standards and in assessing the economic benefits of each
alternative that was considered. Since direct estimates of the economic
benefits from reducing GHG emissions are generally not reported in
published literature on the impacts of climate change, these benefits
are typically assumed to be the ``mirror image'' of the estimated
incremental costs resulting from an increase in those emissions. That
is, the benefits from reducing emissions are usually measured by the
savings in estimated economic damages that an equivalent increase in
emissions would otherwise have caused.
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 four reasons, any particular figure will be
contestable. First, scientific and economic 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
[[Page 49676]]
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 non-quantifiable impacts.'' Third, it is unlikely
that the damage estimates account for the directed technological change
that will lead to innovations that reduce the costs of responding to
climate change--for example, it is likely that scientists will develop
crops that are better able to withstand high temperatures. In this
respect, the current estimates may overstate the likely damages.
Fourth, controversial ethical judgments, including those involving the
treatment of future generations, 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 $7 per
ton CO2 \523\ (2006$) for 2011 emission reductions (with a
range of $0-14 for sensitivity analysis). A regulation finalized by DOE
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 MY 2011 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), increasing at 2.4 percent per year thereafter. The
final MY 2011 CAFE rule also presented a range from $2 to $80/
tCO2. 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 percent and 3 percent respectively (in 2006 real dollars for 2007
emissions).\524\
---------------------------------------------------------------------------
\523\ For the purposes of this discussion, we present all values
of the SCC as the cost per ton of CO2 emissions. Some
discussions of the SCC in the literature use an alternative
presentation of a dollar per 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.
\524\ 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.''
---------------------------------------------------------------------------
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
distribution of SCC is developed. This discussion proposes a set of
values for the interim social cost of carbon. It should be emphasized
that the analysis here is preliminary. Today's proposed joint
rulemaking presents SCC estimates that reflect the Administration's
current understanding of the relevant literature. These interim
estimates are being 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 a statement about the results of the
longer-term process. The Administration will be evaluating and seeking
comment in the preamble to today's proposed rule on all of the
scientific, economic, and ethical issues before establishing final
estimates for use in future rulemakings.
The outcomes of the Administration's process to develop interim
values are 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 2006 dollars) of $55, $33, $19, $10, and $5 per
ton of CO2. Notably, we have centered our current attention
on a SCC of $19. The proposed figures are based on the following
judgments.
1. 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 center our
current 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.\525\
---------------------------------------------------------------------------
\525\ 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.
---------------------------------------------------------------------------
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 the global measure is preferred.
Use of a global measure reflects the reality of the problem and is
expected to contribute to 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
country-specific estimates of the SCC in the literature. One potential
source of estimates comes from a recent unpublished EPA modeling effort
using the FUND model. The resulting estimates suggest that the ratio of
domestic to global benefits varies with key parameter assumptions. With
a 3 percent discount rate, for example, the U.S. benefit is about 6
percent of the global benefit 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 percent of the global benefit. With a 2 percent
discount rate, the U.S. share is about 2-5 percent of the global
estimate.
Based on this available evidence, an interim domestic SCC value
equal to 6 percent of the global damages is proposed. This figure is in
the middle of the range of available estimates from the literature. It
is recognized that the 6 percent figure is approximate and highly
speculative and alternative approaches will be explored before
establishing final values for future rulemakings.
2. 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.\526\ With
[[Page 49677]]
that starting point, the Administration proposes to ``filter'' existing
SCC estimates by using those that (1) are derived from peer-reviewed
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,
PAGE, and DICE.
---------------------------------------------------------------------------
\526\ Richard Tol, The Social Cost of Carbon: Trends, Outliers,
and Catastrophes, Economics: The Open-Access, Open-Assessment E-
Journal, Vol. 2, 2008-25. http://www.economics-ejournal.org/economics/journalarticles/2008-25 (2008).
---------------------------------------------------------------------------
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 been. Proposal (2) is based on a principle of neutrality and
simplicity; it does not treat the citizens of one nation (or different
citizens within the U.S.) differently on the basis of speculative or
controversial considerations. Further, it is consistent with the
potential compensation tests of Kaldor (1939) and Hicks (1940), which
use unweighted sums of willingness to pay. Finally, this is the
approach used in rulemakings across a variety of settings and
consequently keeps U.S. government 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 small enough changes to the larger economy to safely assume
that the marginal benefits of emissions reductions will not change
between the baseline and policy scenarios. A departure from this
approach would be to consider a more dynamic setting in which other
countries might implement policies to reduce GHG emissions at an
unknown future date and the U.S. could choose to implement such a
policy now or at a future date.
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. 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, the additional
information offered by different models is important.
3. Use a model-weighted average of the estimates at each discount
rate. At this time, a scientifically valid reason to prefer any of the
three major IAMs (FUND, PAGE, and DICE) has not been identified.
Accordingly, to address the concern that certain models not be given
unequal weight relative to the other models, 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.
4. Apply a 3 percent annual growth rate to the chosen SCC values.
SCC is assumed 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 percent 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).
(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 percent and 7
percent. It also permits a sensitivity analysis with low rates (1-3
percent) 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.'' \527\
---------------------------------------------------------------------------
\527\ See OMB Circular A-4, pp. 35-36, citing Portney and
Weyant, eds. (1999), Discounting and Intergenerational Equity,
Resources for the Future, Washington, DC.
---------------------------------------------------------------------------
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 (2007); Discounting and Intergenerational Equity
(Paul Portney and John Weyant eds. 1999). It is not clear that future
generations would be willing to trade environmental quality for
consumption at the same rate as the current generations. 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. 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.
In the context of climate change, questions of intergenerational equity
are especially important.
Reasonable arguments support the use of a 3 percent 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 percent 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 percent, the use of 3 percent provides an adjustment for
the liquidity premium that is reflected in these bonds' returns.
At the same time, others would argue that a 5 percent discount rate
can be supported. The argument relies on several assumptions. First,
that rate can also 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 percent discount rate may be preferable
to the riskless rate because it is based on risky investments and the
return to projects to mitigate climate change is also risky. In
contrast, the 3 percent riskless rate may be a more appropriate
discount rate for
[[Page 49678]]
projects where the return is known with a high degree of confidence
(e.g., highway guardrails). 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.\528\
---------------------------------------------------------------------------
\528\ Specifically, if the benefits of the policy are highly
correlated with the returns from 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).
---------------------------------------------------------------------------
Second, 5 percent, and not 3 percent, is roughly consistent with
estimates implied by reasonable inputs to the theoretically derived
Ramsey equation, 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 percent-5 percent. 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 percent, 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 percent is near the middle of the range of values that are able to be
derived from the Ramsey equation.
It is recognized that the arguments above--for use of market
behavior and 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. However, the historical evidence
is consistent with rising consumption over time.
Some critics note that using observed interest rates for inter-
generational decisions imposes current preferences on future
generations, which some economists say may not be appropriate. For
generational equity, they argue that the discount rate should be below
market rates to correct for market distortions and inefficiencies in
inter-generational transfers of wealth (which are presumed to
compensate future generations for damage), and to treat generations
equitably based on ethical principles (see Broome 2008).\529\
---------------------------------------------------------------------------
\529\ 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.
---------------------------------------------------------------------------
Additionally, some analyses attempt to deal with uncertainty with
respect to interest rates over time. We explore below how this might be
done.\530\
---------------------------------------------------------------------------
\530\ Richard Newell and William Pizer, Discounting the distant
future: how much do uncertain rates increase valuations? J. Environ.
Econ. Manage. 46 (2003) 52-71.
---------------------------------------------------------------------------
(2) Proposed Interim Estimates
The application of the methodology outlined above yields interim
estimates of the SCC that are reported in Table IV.C.3-2. These
estimates are reported separately using 3 percent and 5 percent
discount rates. The cells are empty in rows 10 and 11, because these
studies did not report estimates of the SCC at a 3 percent discount
rate. The model-weighted means are reported in the final or summary
row; they are $33 per tCO2 at a 3 percent discount rate and
$5 per tCO2 with a 5 percent discount rate.
---------------------------------------------------------------------------
\531\ Most of the estimates in Table 1 rely on climate scenarios
developed by the Intergovernmental Panel on Climate Change (IPCC).
The IPCC published a new set of scenarios in 2000 for use in the
Third Assessment Report (Special Report on Emissions Scenarios--
SRES). The SRES scenarios define four narrative storylines: A1, A2,
B1 and B2, describing the relationships between the forces driving
greenhouse gas and aerosol emissions and their evolution during the
21st century for large world regions and globally. Each storyline
represents different demographic, social, economic, technological,
and environmental developments that diverge in increasingly
irreversible ways. The storylines are summarized in Nakicenovic et
al., 2000 (see also http://sedac.ciesin.columbia.edu/ddc/sres/).
Because the B1 and B2 storylines represent policy cases rather than
business-as-usual projections, estimates derived from these
scenarios to be less appropriate for use in benefit-cost analysis.
They are therefore excluded.
\532\ Guo et al. (2006) report estimates based on two Gollier
discounting schemes. The Gollier discounting assumes complex
specifications about individual utility functions and risk
preferences. After various conditions are satisfied, declining
social discount rates emerge. Gollier Discounting Scheme 1 employs a
certainty-equivalent social rate of time preference (SRTP) derived
by assuming the regional growth rate is equally likely to be 1%
above or below the original forecast growth rate. Gollier
Discounting Scheme 2 calculates a certainty-equivalent social rate
of time preference (SRTP) using five possible growth rates, and
applies the new SRTP instead of the original. Hope (2008) conducts
Monte Carlo analysis on the PRTP component of the discount rate. The
PRTP is modeled as a triangular distribution with a min value of 1%/
yr, a most likely value of 2%/yr, and a max value of 3%/yr.
Table IV.C.3-2--Global Social Cost of Carbon (SCC) Estimates ($/tCO2 in 2007 (2006$)), Based on 3% and 5%
Discount Rates*
----------------------------------------------------------------------------------------------------------------
Model Study Climate scenario 3% 5%
----------------------------------------------------------------------------------------------------------------
1 FUND.................................. Anthoff et al. 2009....... FUND default.............. 6 -1
2 FUND.................................. Anthoff et al. 2009....... SRES A1b.................. 1 -1
3 FUND.................................. Anthoff et al. 2009....... SRES A2................... 9 -1
4 FUND.................................. Link and Tol 2004......... No THC.................... 12 3
5 FUND.................................. Link and Tol 2004......... THC continues............. 12 2
6 FUND.................................. Guo et al. 2006........... Constant PRTP............. 5 -1
7 FUND.................................. Guo et al. 2006........... Gollier discount 1........ 14 0
8 FUND.................................. Guo et al. 2006........... Gollier discount 2........ 7 -1
FUND Mean................. 8.25 0
9 PAGE.................................. Wahba & Hope 2006......... A2-scen................... 57 7
10 PAGE................................. Hope 2006................. .......................... ...... 7
11 DICE................................. Nordhaus 2008............. .......................... ...... 8
[[Page 49679]]
Summary................................. .......................... Model-weighted Mean....... 33 5
----------------------------------------------------------------------------------------------------------------
* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008),
Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of FUND, PAGE, or
DICE and use business-as-usual climate scenarios.531 532 All values are based on the best available
information from the underlying studies about the base year and year dollars, rather than the Tol (2008)
assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007
using a 3 percent annual growth rate in the SCC, and adjusted for inflation using GDP deflator.
Analyses have been conducted at $33 and $5 as these represent the
estimates associated with the 3 percent and 5 percent discount rates,
respectively.\533\ The 3 percent and 5 percent 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. (Based on the $19 global value, the
approximate domestic fraction of these benefits would be $1.14 per ton
of CO2 assuming that domestic benefits are 6 percent of the
global benefits.
---------------------------------------------------------------------------
\533\ It should be noted that reported discount rates may not be
consistently derived across models or specific applications of
models: While the discount rate may be identical, it may reflect
different assumptions about the individual components of the Ramsey
equation identified earlier.
---------------------------------------------------------------------------
It is true that there is uncertainty about interest rates over long
time horizons. Recognizing that point, Newell and Pizer (2003) have
made a careful effort to adjust for that uncertainty. The Newell-Pizer
approach models discount rate uncertainty as something that evolves
over time.\534\ This is a relatively recent contribution to the
literature, and estimates based on this method are included with the
aim of soliciting comment.
---------------------------------------------------------------------------
\534\ In contrast, an alternative approach based on Weitzman
(2001) would assume that there is a constant discount rate that is
uncertain and represented by a probability distribution. The Newell
and Pizer, and Weitzman approaches are relatively recent
contributions, and we invite comment on the advantages and
disadvantages of each.
---------------------------------------------------------------------------
There are several concerns with using this approach in this
context. First, it would be a departure from current OMB guidance.
Second, an approach that would average what emerges from discount rates
of 3 percent and 5 percent reflects uncertainty about the discount
rate, but based on a different model of uncertainty. The Newell-Pizer
approach models discount rate uncertainty as something that evolves
over time; in contrast, the preferred approach (outlined above) assumes
that there is a single discount rate with equal probability of 3
percent and 5 percent.
Table IV.C.3-3 reports on the application of the Newell-Pizer
adjustments. The precise numbers depend on the assumptions about the
data generating process that governs interest rates. Columns (1a) and
(1b) assume that ``random walk'' model best describes the data and uses
3 percent and 5 percent discount rates, respectively. Columns (2a) and
(2b) repeat this, except that it assumes a ``mean-reverting'' process.
While the empirical evidence does not rule out a mean-reverting model,
Newell and Pizer find stronger empirical support for the random walk
model.
Table IV.C.3-3--Global Social Cost of Carbon (SCC) Estimates ($/tCO2 in 2007 (2006$))*, Using Newell & Pizer
(2003) Adjustment for Future Discount Rate Uncertainty**
----------------------------------------------------------------------------------------------------------------
Random-walk Mean-
model reverting
---------------- model
Model Study Climate scenario ---------------
3% 5% 3% 5%
(1a) (1b) (2a) (2b)
----------------------------------------------------------------------------------------------------------------
1 FUND............................ Anthoff et al. 2009.. FUND default......... 10 0 7 -1
2 FUND............................ Anthoff et al. 2009.. SRES A1b............. 2 0 1 -1
3 FUND............................ Anthoff et al. 2009.. SRES A2.............. 15 0 10 -1
4 FUND............................ Link and Tol 2004.... No THC............... 20 6 13 4
5 FUND............................ Link and Tol 2004.... THC continues........ 20 4 13 2
6 FUND............................ Guo et al. 2006...... Constant PRTP........ 9 0 6 -1
7 FUND............................ Guo et al. 2006...... Gollier discount 1... 14 0 14 0
8 FUND............................ Guo et al. 2006...... Gollier discount 2... 7 -1 7 -1
FUND Mean............ 12 1 9 0
9 PAGE............................ Wahba & Hope 2006.... A2-scen.............. 97 13 63 8
10 PAGE........................... Hope 2006............ ..................... ...... 13 ...... 8
11 DICE........................... Nordhaus 2008........ ..................... ...... 15 ...... 9
Summary........................... ..................... Model-weighted Mean.. 55 10 36 6
----------------------------------------------------------------------------------------------------------------
* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008),
Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of FUND, PAGE, or
DICE and use business-as-usual climate scenarios. All values are based on the best available information from
the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all
estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3 percent
annual growth rate in the SCC, and adjusted for inflation using GDP deflator. See the Notes to Table 1 for
further details.
** Assumes a starting discount rate of 3 percent or 5 percent. Newell and Pizer (2003) based adjustment factors
are not applied to estimates from Guo et al. (2006) that use a different approach to account for discount rate
uncertainty (rows 7-8).
Note that the correction factor from Newell and Pizer is based on the DICE model. The proper adjustment may
differ for other integrated assessment models that produce different time schedules of marginal damages. We
would expect this difference to be minor.
[[Page 49680]]
The resulting estimates of the social cost of carbon are
necessarily greater. When the adjustments from the random walk model
are applied, the estimates of the social cost of carbon are $10 and $55
per ton of CO2, with the 5 percent and 3 percent discount
rates, respectively. The application of the mean-reverting adjustment
yields estimates of $6 and $36. Relying on the random walk model,
analyses are also conducted with the value of the SCC set at $10 and
$55.
(3) Caveats
There are at least four caveats to the approach outlined above.
First, the impacts of climate change are expected to be widespread,
diverse, and heterogeneous. In addition, the exact magnitude of these
impacts is uncertain, because of the inherent randomness in the Earth's
atmospheric processes, the U.S. and global economies, and the behaviors
of current and future populations. Current IAM do not currently
individually account for and assign value to all of the important
physical and other impacts of climate change that are recognized in the
climate change literature. Although it is likely that our capability to
quantify and monetize impacts will improve with time, it is also likely
that even in future applications, there are a number of potentially
significant benefits categories that will remain unmonetized.
Second, in the opposite direction, it is unlikely that the damage
estimates adequately account for the directed technological change that
climate change will cause. In particular, climate change will increase
the return on investment to develop technologies that allow individuals
to better cope with climate change. For example, it is likely that
scientists will develop crops that are better able to withstand high
temperatures. In this respect, the current estimates may overstate the
likely damages.
Third, there has been considerable recent discussion of the risk of
catastrophic impacts and of how best to account for worst-case
scenarios. Recent research by Weitzman (2009) specifies some conditions
under which the possibility of catastrophe would undermine the use of
IAMs and conventional cost-benefit analysis. This research requires
further exploration before its generality is known and the optimal way
to incorporate it into regulatory reviews is understood.
Fourth, it is also worth noting that the SCC estimates are only
relevant for incremental policies relative to the projected baselines,
which capture business-as-usual scenarios. To evaluate non-marginal
changes, such as might occur if the U.S. acts in tandem with other
nations, then it might be necessary to go beyond the simple expedient
of using the SCC along the BAU path. In particular, it would be correct
to calculate the aggregate WTP to move from the BAU scenario to the
policy scenario, without imposing the restriction that the marginal
benefit remains constant over this range.
All of the values derived from this process are expressed in 2006
dollars. NHTSA has adjusted them to their equivalent values in 2007
dollars for consistency with other values used in its analysis of
benefits from adopting higher CAFE standards for MY 2012-2016 passenger
cars and light trucks. The resulting value upon which we have centered
our analysis, which is derived from the figures reported in the tables
above, is equivalent to $20 per metric ton of CO2 emissions
avoided when expressed in 2007$, and the agency has relied on this
value in its analysis. NHTSA has also analyzed the sensitivity of its
benefit estimates to alternative values of $5, $10, $34, and $56 per
metric ton of CO2 emissions avoided, with all figures again
in 2007$. Each of these values applies to emissions during 2007, and
are assumed to grow in real terms by 3 percent annually beginning in
2007. NHTSA seeks comments on these values and the approach used to
derive them.
m. 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 benefits from alternative
increases in CAFE standards for MY 2012-2016 passenger cars and light
trucks, NHTSA has employed a discount rate of 3 percent per year. The
agency has also tested the sensitivity of these benefit and cost
estimates to the use of a 7 percent discount rate. Although these are
the same discount rates analyzed in the MY 2011 final rule, NHTSA has
chosen to use 3 percent as the basis for the Reference Case in this
proposed rule rather than the 7 percent rate it employed previously,
for the reasons discussed below.
The primary reason that NHTSA has selected 3 percent as the
appropriate rate for discounting future benefits from increased CAFE
standards is that most or all of vehicle manufacturers' costs for
complying with higher CAFE standards are likely to be reflected in
higher sales prices for their new vehicle models. By increasing sales
prices for new cars and light trucks, CAFE regulation will thus
primarily affect vehicle purchases and other private consumption
decisions. Both economic theory and OMB guidance on discounting
indicate that the future benefits and costs of regulations that mainly
affect private consumption should be discounted at the social rate of
time preference.\535\
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\535\ Id.
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OMB guidance also indicates that savers appear to discount future
consumption at an average real (that is, adjusted to remove the effect
of inflation) rate of about 3 percent when they face little risk about
its likely level. Since the real rate that savers use to discount
future consumption represents a reasonable estimate of the social rate
of time preference, NHTSA has employed the 3 percent rate to discount
projected future benefits and costs resulting from higher CAFE
standards for MY 2012-2016 passenger cars and light trucks.\536\
---------------------------------------------------------------------------
\536\ Office of Management and Budget, Circular A-4,
``Regulatory Analysis,'' September 17, 2003, 33. Available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf (last accessed August
9, 2009).
---------------------------------------------------------------------------
Because there is some uncertainty about the extent to which vehicle
manufacturers will be able to recover their costs for complying with
higher CAFE standards by increasing vehicle sales prices, however,
NHTSA has also tested the sensitivity of these benefit and cost
estimates to the use of a higher percent discount rate. OMB guidance
indicates that the real economy-wide opportunity cost of capital is the
appropriate discount rate to apply to future benefits and costs when
the primary effect of a regulation is ``* * * to displace or alter the
use of capital in the private sector,'' and estimates that this rate
currently averages about 7 percent.\537\ Thus the agency has also
tested the sensitivity of its benefit and cost estimates for
alternative MY 2012-2016 CAFE standards to the use of a 7 percent real
discount rate. NHTSA seeks comment on whether it should evaluate CAFE
standards using a discount rate of 3 percent, 7 percent, or an
alternative value.
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\537\ Id.
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n. Accounting for Uncertainty in Benefits and Costs
In analyzing the uncertainty surrounding its estimates of benefits
and costs from alternative CAFE standards,
[[Page 49681]]
NHTSA has considered alternative estimates of those assumptions and
parameters likely to have the largest effect. These include the
projected costs of fuel economy-improving technologies and their
expected effectiveness in reducing vehicle fuel consumption, forecasts
of future fuel prices, the magnitude of the rebound effect, the
reduction in external economic costs resulting from lower U.S. oil
imports, the value to the U.S. economy of reducing carbon dioxide
emissions, and the discount rate applied to future benefits and costs.
The range for each of these variables employed in the uncertainty
analysis is presented in the section of this notice discussing each
variable.
The uncertainty analysis was conducted by assuming independent
normal probability distributions for each of these variables, using the
low and high estimates for each variable as the values below which 5
percent and 95 percent of observed values are believed to fall. Each
trial of the uncertainty analysis employed a set of values randomly
drawn from each of these probability distributions, assuming that the
value of each variable is independent of the others. Benefits and costs
of each alternative standard were estimated using each combination of
variables. A total of 1,000 trials were used to establish the likely
probability distributions of estimated benefits and costs for each
alternative standard.
o. Where Can Readers Find More Information About the Economic
Assumptions?
Much more detailed information is provided in Chapter VIII of the
PRIA, and a discussion of how NHTSA and EPA jointly reviewed and
updated economic assumptions for purposes of this NPRM is available in
Chapter 4 of the TSD. In addition, all of NHTSA's model input and
output files are now public and available for the reader's review and
consideration. The economic input files can be found in the docket for
this NPRM, NHTSA-2009-0059, and on NHTSA's Web site. Finally, because
much of NHTSA's economic analysis for purposes of this NPRM builds on
the work that was done for the MY 2011 final rule, we refer readers to
that document as well for background information concerning how NHTSA's
assumptions regarding economic inputs for CAFE analysis have evolved
over the past several rulemakings, both in response to comments and as
a result of the agency's growing experience with this type of
analysis.\538\
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\538\ 74 FR 14308-14358 (Mar. 30, 2009).
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4. How Does NHTSA Use the Assumptions in Its Modeling Analysis?
In developing today's proposed CAFE standards, NHTSA has made
significant use of results produced by the CAFE Compliance and Effects
Model (commonly referred to as ``the CAFE model'' or ``the Volpe
model''), which DOT's Volpe National Transportation Systems Center
developed specifically to support NHTSA's CAFE rulemakings. The model,
which has been constructed specifically for the purpose of analyzing
potential CAFE standards, integrates the following core capabilities:
(1) Estimating how manufacturers could apply technologies in
response to new fuel economy standards,
(2) Estimating the costs that would be incurred in applying these
technologies,
(3) Estimating the physical effects resulting from the application
of these technologies, such as changes in travel demand, fuel
consumption, and emissions of carbon dioxide and criteria pollutants,
and
(4) Estimating the monetized societal benefits of these physical
effects.
An overview of the model follows below. Separate model
documentation provides a detailed explanation of the functions the
model performs, the calculations it performs in doing so, and how to
install the model, construct inputs to the model, and interpret the
model's outputs. Documentation of the model, along with model
installation files, source code, and sample inputs are available at
NHTSA's web site. The model documentation is also available in the
docket for today's proposed rule, as are inputs for and outputs from
analysis of today's proposed CAFE standards.
a. How Does the Model Operate?
As discussed above, the agency uses the Volpe model to estimate the
extent to which manufacturers could attempt to comply with a given CAFE
standard by adding technology to fleets that the agency anticipates
they will produce in future model years. This exercise constitutes a
simulation of manufacturers' decisions regarding compliance with CAFE
standards.
This compliance simulation begins with the following inputs: (a)
The baseline market forecast discussed above in Section IV.C.1, (b)
technology-related estimates discussed above in Section IV.C.2, (c)
economic inputs discussed above in Section IV.C.3, and (d) inputs
defining the characteristics of potential new CAFE standards. For each
manufacturer, the model applies technologies in a sequence that follows
a defined engineering logic (``decision trees'' discussed in the MY
2011 final rule and in the model documentation) and a cost-minimizing
strategy in order to identify a set of technologies the manufacturer
could apply in response to new CAFE standards. The model applies
technologies to each of the projected individual vehicles in a
manufacturer's fleet, until one of three things occurs:
(1) The manufacturer's fleet achieves compliance with the
applicable standard;
(2) The manufacturer ``exhausts'' \539\ available technologies; or
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\539\ In a given model year, the model makes additional
technologies available to each vehicle model within several
constraints, including (a) whether or not the technology is
applicable to the vehicle model's technology class, (b) whether the
vehicle is undergoing a redesign or freshening in the given model
year, (c) whether engineering aspects of the vehicle make the
technology unavailable (e.g., secondary axle disconnect cannot be
applied to two-wheel drive vehicles), and (d) whether technology
application remains within ``phase in caps'' constraining the
overall share of a manufacturer's fleet to which the technology can
be added in a given model year. Once enough technology is added to a
given manufacturer's fleet in a given model year that these
constraints make further technology application unavailable,
technologies are exhausted for that manufacturer in that model year.
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(3) For manufacturers estimated to be willing to pay civil
penalties, the manufacturer reaches the point at which doing so would
be more cost-effective (from the manufacturer's perspective) than
adding further technology.\540\
---------------------------------------------------------------------------
\540\ This possibility was added to the model to account for the
fact that under EPCA/EISA, manufacturers must pay fines if they do
not achieve compliance with applicable CAFE standards. 49 U.S.C.
32912(b). NHTSA recognizes that some manufacturers will find it more
cost-effective to pay fines than to achieve compliance, and believes
that to assume these manufacturers would exhaust available
technologies before paying fines would cause unrealistically high
estimates of market penetration of expensive technologies such as
diesel engines and strong hybrid electric vehicles, as well as
correspondingly inflated estimates of both the costs and benefits of
any potential CAFE standards.
---------------------------------------------------------------------------
As discussed below, the model has also been modified in order to
apply additional technology in early model years if doing so will
facilitate compliance in later model years.
The model accounts explicitly for each model year, applying most
technologies when vehicles are scheduled to be redesigned or freshened,
and carrying forward technologies between model years. The CAFE model
accounts explicitly for each model year because EPCA requires that
NHTSA make a year-by-year determination of the appropriate level of
[[Page 49682]]
stringency and then set the standard at that level, while ensuring
ratable increases in average fuel economy.\541\
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\541\ 49 U.S.C. 32902(a) states that at least 18 months before
the beginning of each model year, the Secretary of Transportation
shall prescribe by regulation average fuel economy standards for
automobiles manufactured by a manufacturer in that model year, and
that each standard shall be the maximum feasible average fuel
economy level that the Secretary decides the manufacturers can
achieve in that year. NHTSA has long interpreted this statutory
language to require year-by-year assessment of manufacturer
capabilities. 49 U.S.C. 32902(b)(2)(C) also requires that standards
increase ratably between MY 2011 and MY 2020.
---------------------------------------------------------------------------
The model also calculates the costs, effects, and benefits of
technologies that it estimates could be added in response to a given
CAFE standard.\542\ It calculates costs by applying the cost estimation
techniques discussed above in Section IV.C.2, and by accounting for the
number of affected vehicles. It accounts for effects such as changes in
vehicle travel, changes in fuel consumption, and changes in greenhouse
gas and criteria pollutant emissions. It does so by applying the fuel
consumption estimation techniques also discussed in Section IV.C.2, and
the vehicle survival and mileage accumulation forecasts, the rebound
effect estimate and the fuel properties and emission factors discussed
in Section IV.C.3. Considering changes in travel demand and fuel
consumption, the model estimates the monetized value of accompanying
benefits to society, as discussed in Section IV.C.3. The model
calculates both the undiscounted and discounted value of benefits that
accrue over time in the future.
---------------------------------------------------------------------------
\542\ As for all of its other rulemakings, NHTSA is required by
Executive Order 12866 and DOT regulations to analyze the costs and
benefits of CAFE standards. Executive Order 12866, 58 FR 51735 (Oct.
4, 1993); DOT Order 2100.5, ``Regulatory Policies and Procedures,''
1979, available at http://regs.dot.gov/rulemakingrequirements.htm
(last accessed August 21, 2009).
---------------------------------------------------------------------------
The Volpe model has other capabilities that facilitate the
development of a CAFE standard. It can be used to fit a mathematical
function forming the basis for an attribute-based CAFE standard,
following the steps described below. It can also be used to evaluate
many (e.g., 200 per model year) potential levels of stringency
sequentially, and identify the stringency at which specific criteria
are met. For example, it can identify the stringency at which net
benefits to society are maximized, the stringency at which a specified
total cost is reached, or the stringency at which a given average
required fuel economy level is attained. This allows the agency to
compare more easily the impacts in terms of fuel savings, emissions
reductions, and costs and benefits of achieving different levels of
stringency according to different criteria. The model can also be used
to perform uncertainty analysis (i.e., Monte Carlo simulation), in
which input estimates are varied randomly according to specified
probability distributions, such that the uncertainty of key measures
(e.g., fuel consumption, costs, benefits) can be evaluated.
b. Has NHTSA Considered Other Models?
Nothing in EPCA requires NHTSA to use the Volpe model. In
principle, NHTSA could perform all of these tasks through other means.
For example, in developing the standards proposed today, the agency did
not use the Volpe model's curve fitting routines, because they could
not be modified in time to reflect the change in the mathematical
function defining the proposed CAFE standards. The Volpe model may be
modified to do so for the final rule, although the agency can also
continue to fit the mathematical function outside the model. In
general, though, these model capabilities have greatly increased the
agency's ability to rapidly, systematically, and reproducibly conduct
key analyses relevant to the formulation and evaluation of new CAFE
standards.
During its previous rulemaking, which led to the final MY 2011
standards promulgated earlier this year, NHTSA received comments from
the Alliance and CARB encouraging NHTSA to examine the usefulness of
other models. As discussed in that final rule, NHTSA, having undertaken
such consideration, concluded that the Volpe model is a sound and
reliable tool for the development and evaluation of potential CAFE
standards.\543\
---------------------------------------------------------------------------
\543\ 74 FR 14372 (Mar. 30, 2009).
---------------------------------------------------------------------------
In reconsidering and reaffirming this conclusion for purposes of
this NPRM, NHTSA notes that the Volpe model not only has been formally
peer-reviewed and tested through three rulemakings, but also has some
features especially important for the analysis of CAFE standards under
EPCA/EISA. Among these are the ability to perform year-by-year
analysis, and the ability to account for engineering differences
between specific vehicle models.
EPCA requires that NHTSA set CAFE standards for each model year at
the level appropriate for that year.\544\ Doing so requires the ability
to analyze each model year and, when developing regulations covering
multiple model years, to account for the interdependency of model years
in terms of the appropriate levels of stringency for each one. Also, as
part of the evaluation of the economic practicability of the standards,
as required by EPCA, NHTSA has traditionally assessed the annual costs
and benefits of the standards as it is permitted to do so. The first
(2002) version of DOT's model treated each model year separately, and
did not perform this type of explicit accounting. Manufacturers took
strong exception to these shortcomings. For example, GM commented in
2002 that ``although the table suggests that the proposed standard for
MY 2007, considered in isolation, promises benefits exceeding costs,
that anomalous outcome is merely an artifact of the peculiar Volpe
methodology, which treats each year independently of any other * * *.''
In 2002, GM also criticized DOT's analysis for, in some cases, adding a
technology in MY 2006 and then replacing it with another technology in
MY 2007. GM (and other manufacturers) argued that this completely
failed to represent true manufacturer product-development cycles, and
therefore could not be technologically feasible or economically
practicable.
---------------------------------------------------------------------------
\544\ 49 U.S.C. 32902(a).
---------------------------------------------------------------------------
In response to these concerns, and related concerns expressed by
other manufacturers, DOT modified the CAFE model in order to account
for dependencies between model years and to better represent
manufacturers' planning cycles, in a way that still allowed NHTSA to
comply with the statutory requirement to determine the appropriate
level of the standards for each model year. This was accomplished by
limiting the application of many technologies to model years in which
vehicle models are scheduled to be redesigned (or, for some
technologies, ``freshened''), and by causing the model to ``carry
forward'' applied technologies from one model year to the next.
During the recent rulemaking for MY 2011 passenger cars and light
trucks, DOT further modified the CAFE model to account for cost
reductions attributable to ``learning effects'' related to volume
(i.e., economies of scale) and the passage of time (i.e., time-based
learning), both of which evolve on year-by-year basis. These changes
were implemented in response to comments by environmental groups and
other stakeholders.
The Volpe model is also able to account for important engineering
differences between specific vehicle models, and to thereby reduce the
risk of applying technologies that may be incompatible with or already
present on
[[Page 49683]]
a given vehicle model. Some commenters have previously suggested that
manufacturers are most likely to broadly apply generic technology
``packages,'' and the Volpe model does tend to form ``packages''
dynamically, based on vehicle characteristics, redesign schedules, and
schedules for increases in CAFE standards. For example, under the
proposed CAFE standards for passenger cars, the CAFE model estimated
that manufacturers could apply turbocharged SGDI engines mated with
dual-clutch AMTs to 1.8 million passenger cars in MY 2016, about 16
percent of the MY 2016 passenger car fleet. Recent modifications to the
model, discussed below, to represent multi-year planning, increase the
model's tendency to add relatively cost-effective technologies when
vehicles are estimated to be redesigned, and thereby increase the
model's tendency to form such packages.
On the other hand, some manufacturers have indicated that
especially when faced with significant progressive increases in the
stringency of new CAFE standards, they are likely to also look for
narrower opportunities to apply specific technologies. By progressively
applying specific technologies to specific vehicle models, the CAFE
model also produces such outcomes. For example, under the proposed CAFE
standards for passenger cars, the CAFE model estimated that in MY 2012,
some manufacturers could find it advantageous to apply SIDI to some
vehicle models without also adding turbochargers.
By following this approach of combining technologies incrementally
and on a model-by-model basis, the CAFE model is able to account for
important engineering differences between vehicle models and avoid
unlikely technology combinations. For example, the model does not apply
dual-clutch AMTs (or strong hybrid systems) to vehicle models with 6-
speed manual transmissions. Some vehicle buyers prefer a manual
transmission; this preference cannot be assumed away. The model's
accounting for manual transmissions is also important for vehicles with
larger engines: For example, cylinder deactivation cannot be applied to
vehicles with manual transmissions, because there is no reliable means
of predicting when the driver will change gears. By retaining cylinder
deactivation as a specific technology rather than part of a pre-
determined package and by retaining differentiation between vehicles
with different transmissions, DOT's model is able to target cylinder
deactivation only to vehicle models for which it is technologically
feasible.
The Volpe model also produces a single vehicle-level output file
that, for each vehicle model, shows which technologies were present at
the outset of modeling, which technologies were superseded by other
technologies, and which technologies were ultimately present at the
conclusion of modeling. For each vehicle, the same file shows resultant
changes in vehicle weight, fuel economy, and cost. This provides for
efficient identification, analysis, and correction of errors, a task
with which the public can now assist the agency, since all inputs and
outputs are public.
Such considerations, as well as those related to the efficiency
with which the Volpe model is able to analyze attribute-based CAFE
standards and changes in vehicle classification, and to perform higher-
level analysis such as stringency estimation (to meet predetermined
criteria), sensitivity analysis, and uncertainty analysis, lead the
agency to conclude that the model remains the best available to the
agency for the purposes of analyzing potential new CAFE standards.
c. What Changes Has DOT Made to the Model?
Prior to being used for analysis supporting today's proposal, the
Volpe model was revised to make some minor improvements, and to add one
significant new capability: the ability to simulate manufacturers'
ability to engage in ``multi-year planning.'' Multi-year planning
refers to the fact that when redesigning or freshening vehicles,
manufacturers can anticipate future fuel economy or CO2
standards, and add technologies accounting for these standards. For
example, a manufacturer might choose to over-comply in a given model
year when many vehicle models are scheduled for redesign, in order to
facilitate compliance in a later model year when standards will be more
stringent yet few vehicle models are scheduled for redesign.\545\ Prior
comments have indicated that the Volpe model, by not representing such
manufacturer choices, tended to overestimate compliance costs. However,
because of the technical complexity involved in representing these
choices when, as in the Volpe model, each model year is accounted for
separately and explicitly, the model could not be modified to add this
capability prior to the statutory deadline for the MY 2011 final
standards.
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\545\ Although a manufacturer may, in addition, generate CAFE
credits in early model years for use in later model years (or, less
likely, in later years for use in early years), EPCA does not allow
NHTSA, when setting CAFE standards, to account for manufacturers'
use of CAFE credits.
---------------------------------------------------------------------------
The model now includes this capability, and NHTSA has applied it in
analyzing the standards proposed today. Consequently, this often
produces results indicating that manufacturers could over-comply in
some model years (with corresponding increases in costs and benefits in
those model years) and thereby ``carry forward'' technology into later
model years in order to reduce compliance costs in those later model
years. NHTSA believes this better represents how manufacturers would
actually respond to new CAFE standards, and thereby produces more
realistic estimates of the costs and benefits of such standards.
The Volpe model has also been modified to accommodate inputs
specifying the amount of CAFE credit to be applied to each
manufacturer's fleet. Although the model is not currently capable of
estimating manufacturers' decisions regarding the generation and use of
CAFE credits, and EPCA does not allow NHTSA, in setting CAFE standards,
to take into account manufacturers' potential use of credits, this
additional capability in the Volpe model provides a basis for more
accurately estimating costs, effects, and benefits that may actually
result from new CAFE standards. Insofar as some manufacturers actually
do earn and use CAFE credits, this provides NHTSA with some ability to
examine outcomes more realistically than EPCA allows for purposes of
setting new CAFE standards.
In comments on recent NHTSA rulemakings, some reviewers have
suggested that the Volpe model should be modified to estimate the
extent to which new CAFE standards would induce changes in the mix of
vehicles in the new vehicle fleet. NHTSA, like EPA, agrees that a
``market shift'' model, also called a consumer vehicle choice model,
could provide useful information regarding the possible effects of
potential new CAFE standards. An earlier experimental version of the
Volpe model included a multinomial logit model that estimated changes
in sales resulting from CAFE-induced increases in new vehicle fuel
economy and prices. A fuller description of this attempt can be found
in Section V of the PRIA. However, NHTSA has thus far been unable to
develop credible coefficients specifying such a model. In addition, as
discussed in Section II.H.4, such a model is sensitive to the
coefficients used in it, and there is great variation over some key
values of these coefficients in published studies. NHTSA seeks comment
on ways to
[[Page 49684]]
improve on this earlier work and develop this capability effectively.
If the agency is able to do so prior to conducting analysis supporting
decisions regarding final CAFE standards, it will attempt to
reintegrate this capability in the Volpe model and include these
effects in its analysis of final standards. If not, NHTSA will continue
efforts to develop and make use of this capability in future
rulemakings.
d. Does the Model Set the Standards?
Although NHTSA currently uses the Volpe model as a tool to inform
its consideration of potential CAFE standards, the Volpe model does not
determine the CAFE standards that NHTSA proposes or promulgates as
final regulations. The results it produces are completely dependent on
inputs selected by NHTSA, based on the best available information and
data available in the agency's estimation at the time standards are
set. Although the model has been programmed in previous rulemakings to
estimate at what stringency net benefits are maximized, NHTSA has not
done so here and has instead used the Volpe model to estimate
stringency levels that produce roughly constant rates of increase in
the combined average required fuel economy. Ultimately, NHTSA's
selection of a CAFE standard is governed and guided by the statutory
requirements of EPCA, as amended by EISA: NHTSA sets the standard at
the maximum feasible average fuel economy level that it determines is
achievable during a particular model year, considering technological
feasibility, economic practicability, the effect of other standards of
the Government on fuel economy, and the need of the nation to conserve
energy.
NHTSA considers the results of analyses conducted by the Volpe
model and analyses conducted outside of the Volpe model, including
analysis of the impacts of carbon dioxide and criteria pollutant
emissions, analysis of technologies that may be available in the long
term and whether NHTSA could expedite their entry into the market
through these standards, and analysis of the extent to which changes in
vehicle prices and fuel economy might affect vehicle production and
sales. Using all of this information--not solely that from the Volpe
model--the agency considers the governing statutory factors, along with
environmental issues and other relevant societal issues such as safety,
and promulgates the standards based on its best judgment on how to
balance these factors.
This is why the agency considered eight regulatory alternatives,
only one of which reflects the agency's proposed standards, based on
the agency's determinations and assumptions. Others assess alternative
standards, some of which exceed the proposed standards and/or the point
at which net benefits are maximized. These comprehensive analyses,
which also included scenarios with different economic input assumptions
as presented in the FEIS and FRIA, are intended to inform and
contribute to the agency's consideration of the ``need of the United
States to conserve energy,'' as well as the other statutory factors. 49
U.S.C. 32902(f). Additionally, the agency's analysis considers the need
of the nation to conserve energy by accounting for economic
externalities of petroleum consumption and monetizing the economic
costs of incremental CO2 emissions in the social cost of
carbon. NHTSA uses information from the model when considering what
standards to propose and finalize, but the model does not determine the
standards.
e. How Does NHTSA Make the Model Available and Transparent?
Model documentation, which is publicly available in the rulemaking
docket and on NHTSA's web site, explains how the model is installed,
how the model inputs (all of which are available to the public) \546\
and outputs are structured, and how the model is used. The model can be
used on any Windows-based personal computer with Microsoft Office 2003
and the Microsoft .NET framework installed (the latter available
without charge from Microsoft). The executable version of the model and
the underlying source code are also available at NHTSA's Web site. The
input files used to conduct the core analysis documented in this
proposed rule are available in the public docket. With the model and
these input files, anyone is capable of independently running the model
to repeat, evaluate, and/or modify the agency's analysis.
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\546\ We note, however, that files from any supplemental
analysis conducted that relied in part on confidential manufacturer
product plans cannot be made public, as prohibited under 49 CFR part
512.
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5. How Did NHTSA Develop the Shape of the Target Curves for the
Proposed Standards?
In developing the shape of the target curves for today's proposed
standards, NHTSA took a new approach, primarily in response to comments
received in the MY 2011 rulemaking. NHTSA's authority under EISA allows
consideration of any ``attribute related to fuel economy'' and any
``mathematical function.'' While the attribute, footprint, is the same
for these proposed standards as the attribute used for the MY 2011
standards, the mathematical function is new.
Both vehicle manufacturers and public interest groups expressed
concern in the MY 2011 rulemaking process that the constrained logistic
function, particularly the function for the passenger car standards,
was overly steep and could lead, on the one hand, to fuel economy
targets that were overly stringent for small footprint vehicles, and on
the other hand, to a greater incentive for manufacturers to upsize
vehicles in order to reduce their compliance obligation (because
larger-footprint vehicles have less stringent targets) in ways that
could compromise energy and environmental benefits. We tentatively
believe that the constrained linear function developed here
significantly mitigates steepness concerns, but we seek comment on
whether readers agree, and whether there are any other issues relating
to the new approach that NHTSA should consider in developing the curves
for the final rule.
a. Standards Are Attribute-Based and Defined by a Mathematical Function
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.\547\ Like the MY 2011 standards, the MY 2012-
2016 passenger car and light truck standards are attribute-based and
defined by a mathematical function.\548\ Also like the MY 2011
standards, the MY 2012-2016 standards are based on the footprint
attribute. However, unlike the MY 2011 standards, the MY 2012-2016
standards are defined by a constrained linear rather than a constrained
logistic function. The reasons for these similarities and differences
are explained below.
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\547\ 49 U.S.C. 32902(a)(3)(A).
\548\ As discussed in Chapter 2 of the TSD, EPA is also
proposing to set attribute-based CO2 standards that are
defined by a mathematical function, given the advantages of using
attribute-based standards and given the goal of coordinating and
harmonizing the CAFE and CO2 standards as expressed by
President Obama in his announcement of the new National Program and
in the joint NOI.
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As discussed above in Section II, under attribute-based standards,
the fleet-wide average fuel economy that a particular manufacturer must
achieve in a given model year depends on the mix of vehicles that it
produces for sale.
[[Page 49685]]
Until NHTSA began to set ``Reformed'' attribute-based standards for
light trucks in MYs 2008-2011, and until EISA gave NHTSA authority to
set attribute-based standards for passenger cars beginning in MY 2011,
NHTSA set ``universal'' or ``flat'' industry-wide average CAFE
standards. Attribute-based standards are preferable to universal
industry-wide average standards for several reasons. First, attribute-
based standards increase fuel savings and reduce emissions when
compared to an equivalent universal industry-wide standard under which
each manufacturer is subject to the same numerical requirement. Absent
a policy to require all full-line manufacturers to produce and sell
essentially the same mix of vehicles, the stringency of the universal
industry-wide standards is constrained by the capability of those full-
line manufacturers whose product mix includes a relatively high
proportion of larger and heavier vehicles. In effect, the standards are
based on the mix of those manufacturers. As a result, the standards are
generally set below the capabilities of full-line and limited-line
manufacturers that sell predominantly lighter and smaller vehicles.
Under an attribute-based system, in contrast, every manufacturer is
more likely to be required to continue adding more fuel-saving
technology each year because the level of the compliance obligation of
each manufacturer is based on its own particular product mix. Thus, the
compliance obligation of a manufacturer with a higher percentage of
lighter and smaller vehicles will have a higher compliance obligation
than a manufacturer with a lower percentage of such vehicles. As a
result, all manufacturers must use technologies to enhance the fuel
economy levels of the vehicles they sell. Therefore, fuel savings and
CO2 emissions reductions should be higher under an
attribute-based system than under a comparable industry-wide standard.
Second, attribute-based standards minimize the incentive for
manufacturers to respond to CAFE in ways harmful to safety.\549\
Because each vehicle model has its own target (based on the attribute
chosen), attribute-based standards provide no incentive to build
smaller vehicles simply to meet a fleet-wide average. Since smaller
vehicles are subject to more stringent fuel economy targets, a
manufacturer's increasing its proportion of smaller vehicles would
simply cause its compliance obligation to increase.
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\549\ The 2002 NAS Report described at length and quantified the
potential safety problem with average fuel economy standards that
specify a single numerical requirement for the entire industry. See
NAS Report at 5, finding 12.
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Third, attribute-based standards provide a more equitable
regulatory framework for different vehicle manufacturers.\550\ A
universal industry-wide average standard imposes disproportionate cost
burdens and compliance difficulties on the manufacturers that need to
change their product plans and no obligation on those manufacturers
that have no need to change their plans. Attribute-based standards
spread the regulatory cost burden for fuel economy more broadly across
all of the vehicle manufacturers within the industry.
---------------------------------------------------------------------------
\550\ Id. at 4-5, finding 10.
---------------------------------------------------------------------------
And fourth, attribute-based standards respect economic conditions
and consumer choice, instead of having the government mandate a certain
fleet mix. Manufacturers are required to invest in technologies that
improve the fuel economy of their fleets, regardless of vehicle mix.
Additionally, attribute-based standards help to avoid the need to
conduct rulemakings to amend standards if economic conditions change,
causing a shift in the mix of vehicles demanded by the public. NHTSA
conducted three rulemakings during the 1980s to amend passenger car
standards for MYs 1986-1989 in response to unexpected drops in fuel
prices and resulting shifts in consumer demand that made the passenger
car standard of 27.5 mpg infeasible for several years following the
change in fuel prices.
As discussed above in Section II, for purposes of the CAFE
standards proposed in this NPRM, NHTSA recognizes that the risk, even
if small, does exist that low fuel prices in MYs 2012-2016 might lead
indirectly to less than currently anticipated fuel savings and
emissions reductions. Thus, we seek comment on whether backstop
standards, or any other method within the agencies' statutory
authority, should and can be implemented for the import and light truck
fleets in order to achieve the fuel savings that attribute-based
standards might not absolutely guarantee. Commenters are encouraged,
but not required, to review and respond to NHTSA's discussion of this
issue in the MY 2011 final rule as a starting point.\551\
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\551\ 74 FR 14409-14412 (Mar. 30, 2009).
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b. What Attribute Does NHTSA Use, and Why?
Consistent with the MY 2011 CAFE standards, NHTSA is proposing to
use footprint as the attribute for the MY 2012-2016 CAFE standards.
There are several policy reasons why NHTSA and EPA both believe that
footprint is the most appropriate attribute on which to base the
standards, as discussed below.
As discussed in the PRIA, in NHTSA's judgment, from the standpoint
of vehicle safety, it is important that the CAFE standards be set in a
way that does not encourage manufacturers to respond by selling
vehicles that are in any way less safe. While NHTSA's research also
indicates that reductions in vehicle mass tend to compromise vehicle
safety, footprint-based standards provide an incentive to use advanced
lightweight materials and structures that would be discouraged by
weight-based standards, because manufacturers can use them to improve a
vehicle's fuel economy without their use necessarily resulting in a
change in the vehicle's target level of fuel economy.
Further, although we recognize that weight is better correlated
with fuel economy than is footprint, we continue to believe that there
is less risk of ``gaming'' (artificial manipulation of the attribute(s)
to achieve a more favorable target) by increasing footprint under
footprint-based standards than by increasing vehicle mass under weight-
based standards--it is relatively easy for a manufacturer to add enough
weight to a vehicle to decrease its applicable fuel economy target a
significant amount, as compared to increasing vehicle footprint. We
also agree with concerns raised in 2008 by some commenters in the MY
2011 CAFE rulemaking that there would be greater potential for gaming
under multi-attribute standards, such as standards under which targets
would also depend on attributes such as weight, torque, power, towing
capability, and/or off-road capability. Standards that incorporate such
attributes in conjunction with footprint would not only be
significantly more complex, but by providing degrees of freedom with
respect to more easily-adjusted attributes, they would make it less
certain that the future fleet would actually achieve the projected
average fuel economy and CO2 reduction levels.
However, while NHTSA tentatively concludes that footprint is the
most appropriate attribute upon which to base the proposed standards,
recognizing strong public interest in this issue, we seek comment on
whether the agency should consider setting standards for the final rule
based on another attribute or another combination of attributes. If
commenters suggest that the agency should consider another attribute or
another combination of attributes, the agency specifically requests
that the commenters address the concerns raised
[[Page 49686]]
in the paragraphs above regarding the use of other attributes, and
explain how standards should be developed using the other attribute(s)
in a way that contributes more to fuel savings and CO2
reductions than the footprint-based standards, without compromising
safety.
c. What Mathematical Function Did NHTSA Use for the Recently-
Promulgated MY 2011 CAFE Standards?
The MY 2011 CAFE standards are defined by a continuous, constrained
logistic function, which takes the form of an S-curve, and is defined
according to the following formula:
[GRAPHIC] [TIFF OMITTED] TP28SE09.052
Here, TARGET is the fuel economy target (in mpg) applicable to
vehicles of a given footprint (FOOTPRINT, in square feet), b and a
are the function's lower and upper asymptotes (also in mpg), e is
approximately equal to 2.718,\552\ c is the footprint (in square
feet) at which the inverse of the fuel economy target falls halfway
between the inverses of the lower and upper asymptotes, and d is a
parameter (in square feet) that determines how gradually the fuel
economy target transitions from the upper toward the lower asymptote
as the footprint increases.
\552\ e is the irrational number for which the slope of the
function y = number\x\ is equal to 1 when x is equal to zero. The
first 8 digits of e are 2.7182818.
---------------------------------------------------------------------------
After fitting this mathematical form (separately) to the passenger
car and light truck fleets and determining the stringency of the
standards (i.e., the vertical positions of the curves), NHTSA arrived
at the following curves to define the MY 2011 standards:
[GRAPHIC] [TIFF OMITTED] TP28SE09.031
d. What Mathematical Function is NHTSA Proposing to Use for New CAFE
Standards, and Why?
In finalizing the MY 2011 standards, NHTSA noted that the agency is
not required to use a constrained logistic function and indicated that
the agency may consider defining future CAFE standards in terms of a
different mathematical function. NHTSA has done so in preparation for
the proposed CAFE standards.
In revisiting this question, NHTSA found that the final MY 2011
CAFE standard for passenger cars, though less
[[Page 49687]]
steep than the MY 2011 standard NHTSA proposed in 2008, continues to
concentrate the sloped portion of the curve (from a compliance
perspective, the area in which upsizing results in a slightly lower
applicable target) within a relatively narrow footprint range
(approximately 47-55 square feet). Further, most passenger car models
have footprints smaller than the curve's 51.4 square foot inflection
point, and many passenger car models have footprints at which the curve
is relatively flat.
For both passenger cars and light trucks, a mathematical function
that has some slope at most footprints where vehicles are produced is
advantageous in terms of fairly balancing regulatory burdens among
manufacturers, and in terms of providing a disincentive to respond to
new standards by downsizing vehicles in ways that compromise vehicle
safety. For example, a flat standard may be very difficult for a full-
line manufacturer to meet, while requiring very little of a
manufacturer concentrating on small vehicles, and a flat standard may
provide an incentive to manufacturers to downsize certain vehicles, in
order to ``balance out'' other vehicles subject to the same standard.
As a potential alternative to the constrained logistic function,
NHTSA had, in proposing MY 2011 standards, presented information
regarding a constrained linear function. As shown in the 2008 NPRM, a
constrained linear function has the potential to avoid creating a
localized region (in terms of vehicle footprint) over which the slope
of the function is relatively steep. Although NHTSA did not receive
public comments on this option, the agency indicated that it still
believed a linear function constrained by upper (on a gpm basis) and
possibly lower limits could merit reconsideration in future CAFE
rulemakings.
Having re-examined a constrained linear function for purposes of
the proposed standards, NHTSA tentatively concludes that for both
passenger cars and light trucks, it remains meaningfully sloped over a
wide footprint range, thereby providing a well-distributed disincentive
to downsize vehicles in ways that could compromise highway safety.
Further, the constrained linear function proposed today is not so
steeply sloped that it would provide a strong incentive to increase
vehicle size in order to obtain a lower CAFE requirement and higher
CO2 limit, thereby compromising energy and environmental
benefits. Therefore, the CAFE standards proposed today are defined by
constrained linear functions.
The constrained linear function is defined according to the
following formula:
[GRAPHIC] [TIFF OMITTED] TP28SE09.053
Here, TARGET is the fuel economy target (in mpg) applicable to
vehicles of a given footprint (FOOTPRINT, in square feet), b and a
are the function's lower and upper asymptotes (also in mpg),
respectively, c is the slope (in gpm per square foot) of the sloped
portion of the function, and d is 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. 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. The following chart shows an example of a linear
target function, where a = 0.0241 gpm (41.6 mpg), b = 0.032 gpm
(31.2 mpg), c = 0.000531 gpm per square foot, and d = 0.002292 gpm
(436 mpg). Because the function is linear on a gpm basis, not an mpg
basis, it is plotted on this basis.
e. How Did NHTSA Fit the Coefficients That Determine the Shape of the
Proposed Curves?
For purposes of this NPRM, and for EPA's use in developing new
CO2 emissions standards, the basic curve shapes were
developed using methods similar to those applied by NHTSA in fitting
the curves defining the MY 2011 standards. We began with the market
inputs discussed above, but because the baseline fleet is
technologically heterogeneous, NHTSA used the CAFE model to develop a
fleet to which nearly all the technologies discussed in Section V of
the PRIA and Chapter 3 of the joint TSD \553\ 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 fleet) for estimating the statistical
relationship between vehicle size and fuel economy.
---------------------------------------------------------------------------
\553\ 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.
---------------------------------------------------------------------------
More information on the process for fitting the passenger car and
light truck curves for MYs 2012-2016 is available above in Section
II.C, and NHTSA refers the reader to that section and to Chapter 2 of
the joint TSD. NHTSA seeks 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.
D. Statutory Requirements
1. EPCA, as Amended by EISA
a. Standard Setting
NHTSA must establish separate standards for MY 2011-2020 passenger
cars and light trucks, subject to two principal requirements.\554\
First, the standards are subject to a minimum requirement regarding
stringency: They must be set at levels high enough to ensure that the
combined U.S. passenger car and light truck fleet achieves an average
fuel economy level of not less than 35 mpg not later than MY 2020.\555\
Second, as discussed above and at length in the March 2009 final rule
establishing the MY 2011 CAFE standards, EPCA requires that the
[[Page 49688]]
agency establish standards for all new passenger cars and light trucks
at the maximum feasible average fuel economy level that the Secretary
decides the manufacturers can achieve in that model year.\556\ The
implication of this second requirement is that it calls for exceeding
the minimum requirement if the agency determines that the manufacturers
can achieve a higher level. When determining the level achievable by
the manufacturers, EPCA requires that the agency consider the four
statutory factors of technological feasibility, economic
practicability, the effect of other motor vehicle standards of the
Government on fuel economy, and the need of the United States to
conserve energy. In addition, the agency has the authority to and
traditionally does consider other relevant factors, such as the effect
of the CAFE standards on motor vehicle safety.
---------------------------------------------------------------------------
\554\ EISA added the following additional requirements.
Standards must be attribute-based and expressed in the form of a
mathematical function. 49 U.S.C. 32902(b)(3)(A). Standards for MYs
2011-2020 must ``increase ratably'' in each model year. 49 U.S.C.
32902(b)(2)(C). NHTSA interprets this requirement, in combination
with the requirement to set the standards for each model year at the
level determined to be the maximum feasible level for that model
year, to mean that the annual increases should not be
disproportionately large or small in relation to each other.
\555\ 49 U.S.C. 32902(b)(2)(A).
\556\ 49 U.S.C. 32902(a).
---------------------------------------------------------------------------
i. Statutory Factors Considered in Determining the Achievable Level of
Average Fuel Economy
As none of the four factors is defined in EPCA and each remains
interpreted only to a limited degree by case law, NHTSA has
considerable latitude in interpreting them. NHTSA interprets the four
statutory factors as set forth below.
(1) Technological Feasibility
``Technological feasibility'' refers to whether a particular
technology for improving fuel economy is available or can become
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 already
being commercially applied at the time of the rulemaking. It can,
instead, set technology-forcing standards, i.e., ones that make it
necessary for manufacturers to engage in research and development in
order to bring a new technology to market.
(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.''
\557\ In an attempt to ensure the economic practicability, the agency
considers a variety of factors, including the annual rate at which
manufacturers can increase the percentage of its fleet that has a
particular type of fuel saving technology, and cost to consumers.
Consumer acceptability is also an element of economic practicability.
---------------------------------------------------------------------------
\557\ 67 FR 77015, 77021 (Dec. 16, 2002).
---------------------------------------------------------------------------
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.''
\558\ Instead, the agency 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 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.
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\558\ CEI-I, 793 F.2d 1322, 1352 (D.C. Cir. 1986).
---------------------------------------------------------------------------
Thus, NHTSA believes that this term must be applied in the context
of the competing concerns associated with different levels of
standards. Prior to switching to attribute-based standards in the MY
2008-2011 rulemaking, the agency sought to ensure the economy
practicability of standards in part by setting them at or near the
capability of the ``least capable manufacturer'' with a significant
share of the market, i.e., typically the manufacturer whose vehicles
are, on average, the heaviest and largest. In the first several
rulemakings to establish attribute based standards, the agency applied
marginal cost benefit analysis. This ensured that the agency's
application of technologies was limited to those that would pay for
themselves and thus would have significant appeal to consumers.
However, the agency can and has limited its application of technologies
to those technologies, with or without the use of such analysis.
(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,\559\ 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
\560\ until present, the effects of such compliance on fuel economy
capability over the history of the CAFE program have been negative
ones. In those instances in which the effects are negative, NHTSA is
called upon to ``mak[e] a straightforward adjustment to the fuel
economy improvement projections to account for the impacts of other
Federal standards, principally those in the areas of emission control,
occupant safety, vehicle damageability, and vehicle noise. However,
only the unavoidable consequences should be accounted for. The
automobile manufacturers must be expected to adopt those feasible
methods of achieving compliance with other Federal standards which
minimize any adverse fuel economy effects of those standards.'' \561\
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.
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\559\ 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.
\560\ 42 FR 63184, 63188 (Dec. 15, 1977). See also 42 FR 33534,
33537 (Jun. 30, 1977).
\561\ 42 FR 33534, 33537 (Jun. 30, 1977).
---------------------------------------------------------------------------
The ``other motor vehicle standards'' consideration has thus in
practice functioned in a fashion similar to the provision in EPCA, as
originally enacted, for adjusting the statutorily-specified CAFE
standards for MY 1978-1980 passengers cars.\562\ EPCA did not permit
NHTSA to amend those standards based on a finding that the maximum
feasible level of average fuel economy for any of those three years was
greater or less than the standard specified for that year. Instead, it
provided that the agency could only reduce the standards and only on
one basis: if the agency found that there had been a Federal standards
fuel economy reduction, i.e., a reduction in fuel economy due to
changes in the Federal vehicle standards, e.g., emissions and safety,
relative to the year of enactment, 1975.
---------------------------------------------------------------------------
\562\ That provision was deleted as obsolete when EPCA was
codified in 1994.
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[[Page 49689]]
The ``other motor vehicle standards'' provision is broader than the
Federal standards fuel economy reduction provision. Although the
effects analyzed to date under the ``other motor vehicle standards''
provision have been negative, there could be circumstances in which the
effects are positive. In the event that the agency encountered such
circumstances, it would be required to consider those positive effects.
For example, if changes in vehicle safety technology led to NHTSA's
amending a safety standard in a way that permits manufacturers to
reduce the weight added in complying with that standard, that weight
reduction would increase vehicle fuel economy capability and thus
increase the level of average fuel economy that could be determined 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, the
agency 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.
Thus, NHTSA tentatively concludes that the effects of the EPA and
California standards are neither positive nor negative because the
proposed rule results in consistent standards among all components of
the National Program. Comment is requested on whether and in what way
the effects of the California and EPA standards should be 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.'' \563\ Environmental implications
principally include those associated with reductions in emissions of
criteria pollutants and CO2. A prime example of foreign
policy implications are energy independence and security concerns.
---------------------------------------------------------------------------
\563\ 42 FR 63184, 63188 (1977).
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ii. Other Factors Considered by NHTSA
The agency historically has considered the potential for adverse
safety consequences in setting CAFE standards. This practice is
recognized approvingly in case law. As the courts have recognized,
``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, 901 F.2d 107, 120 n. 11 (DC Cir. 1990) (``CEI I'')
(citing 42 Fed. Reg. 33534, 33551 (June 30, 1977)). The courts have
consistently upheld NHTSA's implementation of EPCA in this manner. See,
e.g., Competitive Enterprise Institute v. NHTSA, 956 F.2d 321, 322
(D.C. Cir. 1992) (``CEI II'') (in determining the maximum feasible fuel
economy standard, ``NHTSA has always taken passenger safety into
account.'') (citing CEI I, 901 F.2d at 120 n. 11); Competitive
Enterprise Institute v. NHTSA, 45 F.3d 481, 482-83 (D.C. Cir. 1995)
(``CEI III'') (same); Center for Biological Diversity v. NHTSA, 538
F.3d 1172, 1203-04 (9th Cir. 2008) (upholding NHTSA's analysis of
vehicle safety issues associated with weight in connection with the MY
2008-11 light truck CAFE rule). Thus, in evaluating what levels of
stringency would result in maximum feasible standards, NHTSA assesses
the potential safety impacts and considers them in balancing the
statutory considerations and to determine the appropriate level of the
standards.
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 today, that
risk is reduced because building smaller vehicles would tend to raise a
manufacturer's overall CAFE obligation, rather than only raising its
fleet average CAFE. However, even if the manufacturers did not engage
in any downsizing under attribute-based standards, there is still the
possibility that manufacturers would rely on downweighting to improve
their fuel economy (for a given vehicle at a given footprint target) in
ways that may reduce safety to a greater or lesser extent. While NHTSA
recognizes that manufacturers may nonetheless choose this option for
raising their CAFE levels, in prior rulemakings we have limited the
application of downweighting/material substitution in our modeling
analysis to vehicles over 5,000 lbs GVWR.\564\
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\564\ See 74 FR 14396-14407 (Mar. 30, 2009).
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For purposes of today's proposed standards, however, NHTSA has
revised its modeling analysis to allow some application of
downweighting/material substitution for all vehicles, including those
under 5,000 lbs GVWR, because we believe that this is more consistent
with how manufacturers will actually respond to the standards. However,
as discussed above, NHTSA does not mandate the use of any particular
technology by manufacturers in meeting the standards. More information
on the new approach to modeling manufacturer use of downweighting/
material substitution is available in Chapter 3 of the draft joint TSD
and in Section V of the PRIA; and the estimated safety impacts that may
be due to the proposed standards are described below.
iii. Factors That NHTSA Is Prohibited From Considering
EPCA also 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.\565\ As discussed further
below, 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.
---------------------------------------------------------------------------
\565\ 49 U.S.C. 32902(h).
---------------------------------------------------------------------------
The effect of the prohibitions against considering these
flexibilities in setting the CAFE standards is that the flexibilities
remain voluntarily-employed measures. If the agency were
[[Page 49690]]
instead to assume manufacturer use of those flexibilities in setting
new standards, that assumption would result in higher standards and
thus tend to require manufacturers to use those flexibilities.
iv. Determining the Level of the Standards by Balancing the Factors
NHTSA has broad discretion in balancing the above factors in
determining the appropriate levels of average fuel economy at which to
set the CAFE standards for each model year. Congress ``specifically
delegated the process of setting * * * fuel economy standards with
broad guidelines concerning the factors that the agency must
consider.'' \566\ 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 the competing policies and concerns
and then determine how to balance them. The exercise of that discretion
is subject to the necessity of ensuring that NHTSA's balancing does not
undermine the fundamental purpose of the EPCA: Energy
conservation,\567\ and as long as that balancing reasonably
accommodates ``conflicting policies that were committed to the agency's
care by the statute.'' \568\ The balancing of the factors in any given
rulemaking is highly dependent on the factual and policy context of
that rulemaking. Given the changes over time in facts bearing on
assessment of the various factors, such as those relating to the
economic conditions, fuel prices and the state of climate change
science, the agency recognizes that what was a reasonable balancing of
competing statutory priorities in one rulemaking may not be a
reasonable balancing of those priorities in another rulemaking.\569\
Nevertheless, the agency retains substantial discretion under EPCA to
choose among reasonable alternatives.
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\566\ Center for Auto Safety v. NHTSA, 793 F.2d 1322, 1341
(C.A.D.C. 1986).
\567\ Center for Biological Diversity v. NHTSA, 538 F.3d 1172,
1195 (9th Cir. 2008).
\568\ CAS, 1338 (quoting Chevron U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 845).
\569\ CBD v. NHTSA, 538 F.3d 1172, 1198 (9th Cir. 2008).
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EPCA neither requires nor precludes the use of any type of cost-
benefit analysis as a tool to help inform the balancing process. While
NHTSA used marginal cost-benefit analysis in the first two rulemakings
to establish attribute-based CAFE standards, it was not required to do
so and is not required to continue to do so. Regardless of what type of
analysis is or is not used, considerations relating to costs and
benefits remain an important part of CAFE standard setting.
Because the relevant considerations and factors can reasonably be
balanced in a variety of ways under EPCA, and because of uncertainties
associated with the many technological and cost inputs, NHTSA considers
a wide variety of alternative sets of standards, each reflecting
different balancing of those policies and concerns, to aid it in
discerning reasonable outcomes. Among the alternatives providing for an
increase in the standards in this rulemaking, the alternatives range in
stringency from a set of standards that increase, on average, 3 percent
annually to a set of standards that increase, on average, 7 percent
annually.
2. Administrative Procedure Act
To be upheld under the ``arbitrary and capricious'' standard of
judicial review in the APA, an agency rule must be rational, based on
consideration of the relevant factors, and within the scope of the
authority delegated to the agency by the statute. The agency must
examine the relevant data and articulate a satisfactory explanation for
its action including a ``rational connection between the facts found
and the choice made.'' Burlington Truck Lines, Inc. v. United States,
371 U.S. 156, 168 (1962).
Statutory interpretations included in an agency's rule are
subjected to the two-step analysis of Chevron, U.S.A., Inc. v. Natural
Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694
(1984). Under step one, where a statute ``has directly spoken to the
precise question at issue,'' id. at 842, 104 S.Ct. 2778, the court and
the agency ``must give effect to the unambiguously expressed intent of
Congress,'' id. at 843, 104 S.Ct. 2778. If the statute is silent or
ambiguous regarding the specific question, the court proceeds to step
two and asks ``whether the agency's answer is based on a permissible
construction of the statute.'' Id.
If an agency's interpretation differs from the one that it has
previously adopted, the agency need not demonstrate that the prior
position was wrong or even less desirable. Rather, the agency would
need only to demonstrate that its new position is consistent with the
statute and supported by the record, and acknowledge that this is a
departure from past positions. The Supreme Court emphasized this
recently in FCC v. Fox Television, 129 S.Ct. 1800 (2009). When an
agency changes course from earlier regulations, ``the requirement that
an agency provide reasoned explanation for its action would ordinarily
demand that it display awareness that it is changing position,'' but
``need not demonstrate to a court's satisfaction that the reasons for
the new policy are better than the reasons for the old one; it suffices
that the new policy is permissible under the statute, that there are
good reasons for it, and that the agency believes it to be better,
which the conscious change of course adequately indicates.'' \570\
---------------------------------------------------------------------------
\570\ Ibid., 1181.
---------------------------------------------------------------------------
3. National Environmental Policy Act
As discussed above, EPCA requires the agency to determine what
level at which to set the CAFE standards for each model year by
considering the four factors of technological feasibility, economic
practicability, the effect of other motor vehicle standards of the
Government on fuel economy, and the need of the United States to
conserve energy. NEPA directs that environmental considerations be
integrated into that process. To accomplish that purpose, NEPA requires
an agency to compare the potential environmental impacts of its
proposed action to those of a reasonable range of alternatives.
To explore the environmental consequences in depth, NHTSA has
prepared a draft environmental impact statement. The purpose of an EIS
is to ``provide full and fair discussion of significant environmental
impacts and [to] inform decisionmakers and the public of the reasonable
alternatives which would avoid or minimize adverse impacts or enhance
the quality of the human environment.'' 40 CFR 1502.1.
NEPA is ``a procedural statute that mandates a process rather than
a particular result.'' Stewart Park & Reserve Coal., Inc. v. Slater,
352 F.3d at 557. The agency's overall EIS-related obligation is to
``take a `hard look' at the environmental consequences before taking a
major action.'' Baltimore Gas & Elec. Co. v. Natural Res. Def. Council,
Inc., 462 U.S. 87, 97, 103 S.Ct. 2246, 76 L.Ed.2d 437 (1983).
Significantly, ``[i]f the adverse environmental effects of the proposed
action are adequately identified and evaluated, the agency is not
constrained by NEPA from deciding that other values outweigh the
environmental costs.'' Robertson v. Methow Valley Citizens Council, 490
U.S. 332, 350, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989).
[[Page 49691]]
The agency must identify the ``environmentally preferable''
alternative, but need not adopt it. ``Congress in enacting NEPA * * *
did not require agencies to elevate environmental concerns over other
appropriate considerations.'' Baltimore Gas and Elec. Co. v. Natural
Resources Defense Council, Inc., 462 U.S. 87, 97 (1983). Instead, NEPA
requires an agency to develop alternatives to the proposed action in
preparing an EIS. 42 U.S.C. 4332(2)(C)(iii). The statute does not
command the agency to favor an environmentally preferable course of
action, only that it make its decision to proceed with the action after
taking a hard look at environmental consequences.
E. What Are the Proposed CAFE Standards?
1. Form of the Standards
Each of the CAFE standards that NHTSA is proposing today for
passenger cars and light trucks is expressed as a mathematical function
that defines a fuel economy target applicable to each vehicle model
and, for each fleet, establishes a required CAFE level determined by
computing the sales-weighted harmonic average of those targets.\571\
---------------------------------------------------------------------------
\571\ Required CAFE levels shown here are estimated required
levels based on NHTSA's current projection of manufacturers' vehicle
fleets in MYs 2012-2016. Actual required levels are not determined
until the end of each model year, when all of the vehicles produced
by a manufacturer in that model year are known and their compliance
obligation can be determined with certainty. The target curves, as
defined by the constrained linear function, and as embedded in the
function for the sales-weighted harmonic average, are the real
``standards'' being proposed today.
---------------------------------------------------------------------------
As discussed above in Section II.C, NHTSA is proposing to determine
fuel economy targets using a constrained linear function defined
according to the following formula:
[GRAPHIC] [TIFF OMITTED] TP28SE09.054
Here, TARGET is the fuel economy target (in mpg) applicable to
vehicles of a given footprint (FOOTPRINT, in square feet), b and a
are the function's lower and upper asymptotes (also in mpg),
respectively, c is the slope (in gpm per square foot) of the sloped
portion of the function, and d is 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). The
MIN and MAX functions take the minimum and maximum, respectively of
the included values.
As also discussed in Section II.C, under the proposed standards (as
under the recently-promulgated MY 2011 standards), the CAFE level
required of any given manufacturer will be determined by calculating
the production-weighted harmonic average of the fuel economy targets
applicable to each vehicle model:
[GRAPHIC] [TIFF OMITTED] TP28SE09.055
Here, CAFErequired is the required level for a given fleet,
SALESi is the number of units of model i produced for
sale in the United States, TARGETi is the fuel economy target
applicable to model i (according to the equation shown in Chapter II
and based on the footprint of model i), and the summations in the
numerator and denominator are both performed over all models in the
fleet in question.
The proposed standards are, therefore, specified by the four
coefficients defining fuel economy targets:
a = upper limit (mpg)
b = lower limit (mpg)
c = slope (gpm per square foot)
d = intercept (gpm)
The values of the coefficients are different for the passenger car
standards and the light truck standards.
2. Passenger Car Standards for MYs 2012-2016
For passenger cars, NHTSA is proposing CAFE standards defined by
the following coefficients during MY 2012-2016:
Table IV.E.2-1--Coefficients Defining Proposed MY 2012-2016 Fuel Economy Targets for Passenger Cars
----------------------------------------------------------------------------------------------------------------
Coefficient 2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
a (mpg)......................... 36.23 37.15 38.08 39.55 41.38
b (mpg)......................... 28.12 28.67 29.22 30.08 31.12
c (gpm/sf)...................... 0.0005308 0.0005308 0.0005308 0.0005308 0.0005308
d (gpm)......................... 0.005842 0.005153 0.004498 0.003520 0.002406
----------------------------------------------------------------------------------------------------------------
These coefficients result in footprint-dependent target curves
shown graphically below. The MY 2011 final standard, which is specified
by a constrained logistic function rather than a constrained linear
function, is shown for comparison.
[[Page 49692]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.033
As discussed, the CAFE levels required of individual manufacturers
will depend on the mix of vehicles they produce for sale in the United
States. Based on the market forecast of future sales that NHTSA has
used to examine today's proposed CAFE standards, the agency estimates
that the targets shown above will result in the following average
required fuel economy levels for individual manufacturers during MYs
2012-2016 (an updated estimate of the average required fuel economy
level under the final MY 2011 standard is shown for comparison): \572\
---------------------------------------------------------------------------
\572\ In the March 2009 final rule establishing MY 2011
standards for passenger cars and light trucks, NHTSA estimated that
the required fuel economy levels for passenger cars would average
30.2 mpg under the MY 2011 passenger car standard. Based on the
agency's current forecast of the MY 2011 passenger car market, which
anticipates greater numbers of passenger cars than the forecast used
in the MY 2011 final rule, NHTSA now estimates that the average
required fuel economy level for passenger cars will be 30.5 mpg in
MY 2011.
Table IV.E.2-2--Estimated Average Fuel Economy Required Under Final MY 2011 and Proposed MY 2012-2016 CAFE Standards for Passenger Cars
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer MY 2011 MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
BMW..................................................... 30.2 33.2 34.0 34.8 36.0 37.5
Chrysler................................................ 29.6 33.0 33.7 34.5 35.3 36.8
Daimler................................................. 29.4 32.6 33.1 33.8 35.0 36.4
Ford.................................................... 29.8 33.0 33.7 34.5 35.8 37.3
General Motors.......................................... 30.3 33.0 33.8 34.6 35.8 37.3
Honda................................................... 30.8 33.9 34.7 35.5 36.8 38.4
Hyundai................................................. 30.8 33.8 34.6 35.5 36.8 38.3
Kia..................................................... 30.6 33.6 34.4 35.2 36.5 38.0
Mazda................................................... 30.7 34.1 34.8 35.7 37.0 38.6
Mitsubishi.............................................. 31.0 34.4 35.3 36.1 37.4 39.2
Nissan.................................................. 30.7 33.5 34.2 35.0 36.2 37.8
Porsche................................................. 31.2 36.2 37.2 38.1 39.6 41.4
Subaru.................................................. 31.0 34.8 35.7 36.5 37.9 39.6
Suzuki.................................................. 31.2 35.9 36.8 37.7 39.2 41.0
Tata.................................................... 27.8 30.7 31.4 32.1 33.1 34.4
Toyota.................................................. 30.8 34.1 34.9 35.7 37.0 38.6
Volkswagen.............................................. 30.8 34.6 35.4 36.2 37.5 39.1
-----------------------------------------------------------------------------------------------
Average............................................. 30.5 33.6 34.4 35.2 36.4 38.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 49693]]
We note that a manufacturer's required average fuel economy level
for a model year under the proposed standards would be based on its
actual production numbers in that model year. Therefore, its official
required fuel economy level would not be known until the end of that
model year. However, because the targets for each vehicle footprint
would be established in advance of the model year, a manufacturer
should be able to estimate its required level accurately.
3. Minimum Domestic Passenger Car Standards
EISA expressly requires each manufacturer to meet a minimum fuel
economy standard for domestically manufactured passenger cars in
addition to meeting the standards set by NHTSA. According to the
statute (49 U.S.C. 32902(b)(4)) 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. The agency must
publish the projected minimum standards in the Federal Register when
the passenger car standards for the model year in question are
promulgated.
Based on NHTSA's current market forecast, the agency's estimates of
these minimum standards under the proposed MY 2012-2016 CAFE standards
(and, for comparison, the final MY 2011 standard) are summarized below
in Table IV.E.2-1.\573\ 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.
---------------------------------------------------------------------------
\573\ 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.
Table IV.E.3-1--Estimated Minimum Standard for Domestically Manufactured Passenger Cars Under Final MY 2011 and
Proposed MY 2012-2016 CAFE Standards for Passenger Cars
----------------------------------------------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
28.0 30.9 31.6 32.4 33.5 34.9
----------------------------------------------------------------------------------------------------------------
4. Light Truck Standards
For light trucks, NHTSA is proposing CAFE standards defined by the
following coefficients during MYs 2012-2016:
Table IV.E.4-1--Coefficients Defining Proposed MY 2012-2016 Fuel Economy Targets for Light Trucks
----------------------------------------------------------------------------------------------------------------
Coefficient 2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
a (mpg)......................... 29.44 30.32 31.30 32.70 34.38
b (mpg)......................... 22.06 22.55 23.09 23.84 24.72
c (gpm/sf)...................... 0.0004546 0.0004546 0.0004546 0.0004546 0.0004546
d (gpm)......................... 0.01533 0.01434 0.01331 0.01194 0.01045
----------------------------------------------------------------------------------------------------------------
These coefficients result in footprint-dependent targets shown
graphically below. The MY 2011 final standard, which is specified by a
constrained logistic function rather than a constrained linear
function, is shown for comparison.
[[Page 49694]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.034
Given these targets, the CAFE levels required of individual
manufacturers will depend on the mix of vehicles they produce for sale
in the United States. Based on the market forecast NHTSA has used to
examine today's proposed CAFE standards, the agency estimates that the
targets shown above will result in the following average required fuel
economy levels for individual manufacturers during MYs 2012-2016 (an
updated estimate of the average required fuel economy level under the
final MY 2011 standard is shown for comparison): \574\
---------------------------------------------------------------------------
\574\ In the March 2009 final rule establishing MY 2011
standards for passenger cars and light trucks, NHTSA estimated that
the required fuel economy levels for light trucks would average 24.1
mpg under the MY 2011 light truck standard. Based on the agency's
current forecast of the MY 2011 light truck market, NHTSA now
estimates that the required fuel economy levels will average 24.2
mpg in MY 2011. The increase in the estimate reflects a slight
decrease in the size of the average light truck.
Table IV.E.4-2--Estimated Average Fuel Economy Required Under Final MY 2011 and Proposed MY 2012-2016 CAFE Standards for Light Trucks
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer MY 2011 MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
BMW..................................................... 25.7 26.3 27.0 27.7 28.8 30.1
Chrysler................................................ 24.2 25.2 25.8 26.4 27.3 28.5
Daimler................................................. 24.7 25.4 26.1 26.9 27.9 29.1
Ford.................................................... 23.3 24.3 24.9 25.3 26.2 27.3
General Motors.......................................... 22.9 23.6 24.2 24.8 25.6 26.6
Honda................................................... 25.6 26.4 27.1 27.9 29.0 30.4
Hyundai................................................. 25.9 26.6 27.3 28.1 29.3 30.6
Kia..................................................... 25.1 25.8 26.4 27.2 28.3 29.6
Mazda................................................... 26.3 27.4 28.1 28.8 29.9 31.4
Mitsubishi.............................................. 26.4 27.4 28.1 28.9 30.1 31.6
Nissan.................................................. 24.1 25.0 25.6 26.1 27.0 28.2
Porsche................................................. 25.5 26.0 26.7 27.4 28.5 29.8
Subaru.................................................. 26.5 27.5 28.3 29.2 30.4 31.8
Suzuki.................................................. 26.3 27.2 27.9 28.7 29.9 31.3
Tata.................................................... 26.1 26.9 27.6 28.4 29.6 31.0
Toyota.................................................. 25.2 25.7 26.3 27.1 28.1 29.3
Volkswagen.............................................. 25.0 25.6 26.2 26.9 27.9 29.2
-----------------------------------------------------------------------------------------------
Average............................................. 24.2 25.0 25.6 26.2 27.1 28.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 49695]]
As discussed above with respect to the proposed passenger cars
standards, we note that a manufacturer's required fuel economy level
for a model year under the proposed standards would be based on its
actual production numbers in that model year.
F. How Do the Proposed Standards Fulfill NHTSA's Statutory Obligations?
In developing the proposed MY 2012-16 standards, the agency
developed and considered a wide variety of alternatives. NHTSA took a
new approach to defining alternatives as compared to the most recent
prior CAFE rulemaking. In response to comments received in the last
round of rulemaking, in our March 2009 notice of intent to prepare an
environmental impact statement, the agency selected a range of
candidate stringencies that increased annually, on average, 3% to
7%.\575\ That same approach has been carried over to this NPRM and to
the accompanying DEIS and PRIA. The majority of the alternatives
considered in this rulemaking are defined as average percentage
increases in stringency--3 percent per year, 4 percent per year, 5
percent per year, and so on. NHTSA believes that this approach more
clearly communicates the level of stringency of each alternative and is
more intuitive than alternatives defined in terms of different cost-
benefit ratios, and still allows us to identify alternatives that
represent different ways to balance NHTSA's statutory requirements
under EPCA/EISA.
---------------------------------------------------------------------------
\575\ Notice of intent to prepare an EIS, 74 FR 14857, 14859-60,
April 1, 2009.
---------------------------------------------------------------------------
In the notice of intent, we noted that each of the listed
alternatives represents, in part, a different way in which NHTSA could
conceivably balance conflicting policies and considerations in setting
the standards. We were mindful that the agency would need to weigh and
balance many factors, such as the technological feasibility, economic
practicability, including leadtime considerations for the introduction
of technologies and impacts on the auto industry, the impacts of the
standards on fuel savings and CO2 emissions, fuel savings by
consumers; as well as other relevant factors such as safety. For
example, the 7% Alternative, the most stringent alternative, weighs
energy conservation and climate change considerations more heavily and
technological feasibility and economic practicability less heavily. In
contrast, the 3% Alternative, the least stringent alternative, places
more weight on technological feasibility and economic practicability.
We recognized that the ``feasibility'' of the alternatives also may
reflect differences and uncertainties in the way in which key economic
(e.g., the price of fuel and the social cost of carbon) and
technological inputs could be assessed and estimated or valued.
In subsequently developing the NPRM and the associated analytical
documents, the agency expanded the list of alternatives to provide a
degree of analytical continuity between the old and new approach to
defining alternatives in an effort help the agency and the public
understand the similarities and dissimilarities between the two
approaches and to make the transition to the new approach. To that end,
we included and analyzed two additional alternatives, one that sets
standards at the point where net benefits are maximized, and another
that sets standards at the point at which total costs are equal to
total benefits.\576\ With respect to the first of those alternatives,
we note that Executive Order 12866 focuses attention on an approach
that maximizes net benefits. Further, since NHTSA has thus far set
attribute-based CAFE standards at the point at which net benefits are
maximized, we believed it would be useful and informative to consider
the potential impacts of that approach as compared to the new approach
for MYs 2012-2016.
---------------------------------------------------------------------------
\576\ The stringency indicated by each of these alternatives
depends on the value of inputs to NHTSA's analysis. Results
presented here for these two alternatives are based on NHTSA's
reference case inputs, which underlie the central analysis of the
proposed standards. In the accompanying PRIA, the agency presents
the results of that analysis to explore the sensitivity of results
to changes in key economic inputs. Because of numerous changes in
model inputs (e.g., discount rate, rebound effect, CO2
value, technology cost estimates), our analysis often exhausts all
available technologies before reaching the point at which total
costs equal total benefits. In these cases, the stringency that
exhausts all available technologies is considered.
---------------------------------------------------------------------------
After working with EPA in thoroughly reviewing and in some cases
reassessing the effectiveness and costs of technologies, most of which
are already being incorporated in at least some vehicles, market
forecasts and economic assumptions, we used the Volpe model extensively
to assess the technologies that the manufacturers could apply in order
to comply with each of the alternatives. This permitted us to assess
the variety, amount and cost of the technologies that could be needed
to enable the manufacturers to comply with each of the alternatives.
NHTSA estimated how the application of these and other technologies
could increase vehicle costs. The following five figures show industry-
wide average incremental (i.e., relative to the reference fleet) per-
vehicle costs, for each model year, each fleet, and the combined fleet.
Estimates specific to each manufacturer are shown in the accompanying
PRIA.
[[Page 49696]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.035
[GRAPHIC] [TIFF OMITTED] TP28SE09.036
[[Page 49697]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.037
[GRAPHIC] [TIFF OMITTED] TP28SE09.038
[[Page 49698]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.039
Corresponding to these per-vehicle cost increases, NHTSA estimated
total incremental outlays for additional technology in each model year.
The following figure shows cumulative results for MY 2012-2016 for
industry and Chrysler, Ford, General Motors, Honda, Nissan, and Toyota.
This figure focuses on these manufacturers as they currently (in MY
2008) represent three large U.S.-headquartered and three large foreign-
headquartered full-line manufacturers.
[GRAPHIC] [TIFF OMITTED] TP28SE09.040
[[Page 49699]]
For each alternative, NHTSA has also estimated all corresponding
effects for each model year, including fuel savings, CO2
reductions, and other effects, as well as the estimated societal
benefits of these effects.
Table IV.F.1--Fuel Savings, CO2 Reductions, and Technology Costs for Regulatory Alternatives
----------------------------------------------------------------------------------------------------------------
Fuel savings CO2 reductions
Regulatory alternative (b. gal) (mmt) Cost ($b)
----------------------------------------------------------------------------------------------------------------
3% per Year..................................................... 37 404 29
4% per Year..................................................... 54 582 46
5% per Year..................................................... 69 718 74
6% per Year..................................................... 83 846 103
Maximum Net Benefit............................................. 90 923 111
7% per Year..................................................... 91 934 116
-----------------------------------------------
Total Cost = Total Benefit.................................. 95 977 122
----------------------------------------------------------------------------------------------------------------
The accompanying PRIA presents a detailed analysis of these results.
Relevant to EPCA's requirement that NHTSA consider, among other
factors, economic practicability and the need of the nation to conserve
energy, the following figure compares the incremental technology
outlays presented above to the corresponding cumulative fuel savings.
[GRAPHIC] [TIFF OMITTED] TP28SE09.041
The agency then assessed which alternative would represent a reasonable
balancing of the statutory criteria, given the difficulties confronting
the industry and the economy, and the priorities and policy goals of
the President. Those priorities and goals include achieving nationally
harmonized and coordinated program for regulating fuel economy and GHG
emissions.
Part of that assessment entailed an evaluation of the stringencies
necessary to achieve both Federal and State GHG emission reduction
goals, especially those of California and the States that have adopted
its GHG emission standard for motor vehicles. Given that EPCA requires
attribute-based standards, NHTSA and EPA determined the level at which
an attribute-based GHG emissions standard would need to be set to
achieve the goals of California. This was done 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 the
California standards for MY 2009-2016 (known as ``Pavley 1''). In
essence, the stringency of the California Pavley 1 program was
evaluated, but for a national standard. For a number of reasons
discussed in section III.D, an assessment was developed 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. That
level, 250 g/mi, is equivalent to 35.5 mpg if the GHG standard is met
[[Page 49700]]
exclusively by fuel economy improvements.
To obtain the counterpart CAFE standard, we then adjusted that
level downward to account for differences between the more prescriptive
EPCA and the more flexible CAA. These differences give EPA greater
ability under the CAA to provide compliance flexibilities that would
enable manufacturers to achieve compliance with a given level of
requirement under the CAA at less cost than with the same level of
requirement under EPCA. Principal among those greater flexibilities are
the credits that EPA can provide for improving the efficiency of air
conditioners and reducing the leakage of refrigerants from them. The
adjustments result in a figure of 34.1 mpg as the appropriate
counterpart CAFE standard. This differential gives manufacturers the
opportunity to reach 35.5 mpg under the CAA in ways that would
significantly reduce their costs. Were NHTSA instead to establish its
standard at the same level, manufacturers would need to make
substantially greater expenditures on fuel-saving technologies to reach
35.5 mpg under EPCA.
Given the importance to this rulemaking of achieving a harmonized
National Program, we created a new alternative whose annual percentage
increases would achieve 34.1 mpg by MY 2016. That alternative is one
which increases on average at 4.3% annually.
This new alternative, like the seven alternative presented above,
represents a unique balancing of the statutory factors and other
relevant considerations. We have added that alternative to the table
below.
------------------------------------------------------------------------
Fuel
savings CO2 Cost
Regulatory alternative (b. reductions ($b)
gal) (mmt)
------------------------------------------------------------------------
3% per Year............................... 37 404 29
4% per Year............................... 54 582 46
Proposed (4.3% per Year).................. 62 656 60
5% per Year............................... 69 718 74
6% per Year............................... 83 846 103
Maximum Net Benefit....................... 90 923 111
7% per Year............................... 91 934 116
-----------------------------
Total Cost = Total Benefit............ 95 977 122
------------------------------------------------------------------------
As noted earlier, NHTSA has used the Volpe model to analyze each of
these alternatives based on analytical inputs determined jointly with
EPA. For a given regulatory alternative, the Volpe model estimates how
each manufacturer could apply technology in response to the MY 2012
standard (separately for cars and trucks), carries technologies applied
in MY 2012 forward to MY 2013, and then estimates how each manufacturer
could apply technology in response to the MY 2013 standard. When
analyzing MY 2013, the model considers the potential to add ``extra''
technology in MY 2012 in order to carry that technology into MY 2013,
thereby avoiding the use of more expensive technologies in MY 2013. The
model continues in this fashion through MY 2016, and then performs
calculations to estimate the costs, effects, and benefits of the
applied technologies, and to estimate any civil penalties owed based on
projected noncompliance. For each regulatory alternative, the model
calculates incremental costs, effects, and benefits relative to the
regulatory baseline (i.e., the no-action alternative), under which the
MY 2011 CAFE standards continue through MY 2016. The model calculates
results for each model year, because EPCA requires that NHTSA set its
standards for each model year at the ``maximum feasible average fuel
economy level that the Secretary decides the manufacturers can achieve
in that model year'' considering four statutory factors. Pursuant to
EPCA's directive notice not to consider statutory credits in
establishing CAFE standards, NHTSA did not FFV credits, credits carried
forward and backward, and transferred credit.577 578 In
addition, the analysis reflects the ability of manufacturers to pay
fines in lieu of compliance.
---------------------------------------------------------------------------
\577\ Separately, NHTSA has conducted analysis that accounts for
EPCA's provisions regarding FFVs.
\578\ Because NHTSA's modeling represents every model year
explicitly, accounts for estimates of when vehicle model redesigns
will occur, and sets aside these compliance flexibilities, the
agency's modeling produces results that differ varyingly from EPA's
for specific manufacturers, fleets, and model years.
---------------------------------------------------------------------------
Because it entails year-by-year examination of eight regulatory
alternatives for, separately, passenger cars and light trucks, NHTSA's
analysis involves a large amount of information. Detailed results of
this analysis are presented separately in the PRIA accompanying today's
notice. The remainder of this section discusses a combination of
aggregated and illustrative results of this analysis.
The following figure compares average fuel economy levels required
of manufacturers under the eight regulatory alternatives in MYs 2012,
2014, and 2016. Required levels for MY 2013 and MY 2015 fall between
those for MYs 2012 and 2014 and MYs 2014 and 2016, respectively.
Although required levels for these interim years are not presented in
the following figure to limit the complexity of the figure, they do
appear in the accompanying PRIA.\579\
---------------------------------------------------------------------------
\579\ Also, the ``Max NB'' and the ``TC = TB'' alternatives
depend on the inputs to the agencies' analysis. The sensitivity
analysis presented in the PRIA documents the response of these
alternatives to changes in key economic inputs. For example, the
combined average required fuel economy under the ``Max NB''
alternative is 36.8 mpg under the reference case economic inputs
presented here, and ranges from 32.8 mpg to 37.2 mpg under the
alternative economic inputs presented in the PRIA.
---------------------------------------------------------------------------
[[Page 49701]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.042
As this figure illustrates, the proposed standards involve a
``faster start'' toward increased stringency than do any of the
alternatives that increase steadily (i.e., the 3%/y, 4%/y, 5%/y, 6%/y,
and 7%/y alternatives). However, by MY 2016, the stringency of the
proposed standards reflects an average annual increase of 4.3%/y. The
proposed standards, therefore, represent an alternative that could be
referred to as ``4.3% per year with a fast start'' or a ``front-loaded
4.3% average annual increase.''
In NHTSA's analysis, these achieved average fuel economy levels
result from the application of technology rather than changes in the
mix of vehicles produced for sale in the U.S. The accompanying PRIA
presents detailed estimates of additional technology penetration into
the NHTSA reference fleet associated with each regulatory alternative.
The following four charts illustrate the results of this analysis,
considering the application of four technologies by six manufacturers
and the industry as a whole. Technologies include gasoline direct
injection (GDI), engine turbocharging and downsizing, diesel engines,
and strong HEV systems (including CISG systems). GDI and turbocharging
are among the technologies that play an important role in achieving the
fuel economy improvements shown in NHTSA's analysis, and diesels and
strong HEVs represent technologies involving significant challenges for
widespread use through MY 2016. These figures focus on Chrysler, Ford,
General Motors, Honda, Nissan, and Toyota, as these manufacturers
currently (in MY 2008) represent three large U.S.-headquartered and
three large foreign-headquartered full-line manufacturers. For each
alternative, the figures show additional application of technology by
MY 2016. The PRIA presents results for all model years, technologies,
and manufacturers, and NHTSA has considered these broader results when
considering the eight regulatory alternatives.
[[Page 49702]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.043
[GRAPHIC] [TIFF OMITTED] TP28SE09.044
[[Page 49703]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.045
[GRAPHIC] [TIFF OMITTED] TP28SE09.046
The agency began the process of winnowing the alternatives by
determining whether any of the lower stringency alternatives should be
eliminated from consideration. To begin with, the agency needs to
ensure that its standards are high enough to enable the combined fleet
of passenger cars and light trucks to achieve at least 35 mpg not later
than MY 2020, as required by EISA. Achieving that level makes it
necessary for the chosen alternative to increase at over 3 percent
annually.
NHTSA has concluded that it must reject the 3%/y and 4%/y
alternatives. Given that CO2 and fuel savings are very
closely correlated, the above chart reveals that the 3%/y and 4%/y
alternative would not produce the reductions in fuel savings and
CO2 emissions that the Nation needs at this time. Picking
either of those alternatives would unnecessarily result in foregoing
substantial benefits, in terms of fuel
[[Page 49704]]
savings and reduced CO2 emissions, which would be achievable
at reasonable cost. Further, NHTSA has tentatively concluded that it
must reject the 3%/y and 4%/y alternatives, as neither would lead to
the regulatory harmonization that forms a vital core principle of the
National Program that EPA and NHTSA are jointly striving to implement.
In order to achieve a harmonized National Program, an average annual
increase of 4.3% is necessary.
In contrast, at the upper end of the range of alternatives, the
agency was concerned that the increased benefits offered by those
alternatives were available only at excessive cost and might not be
practicable in all cases within the available leadtime.
NHTSA first considered the environmentally-preferable alternative.
Based on the information provided in the DEIS, the environmentally-
preferable alternative would be that involving stringencies at which
total costs most nearly equal total benefits. NHTSA notes that NEPA
does not require that agencies choose the environmentally-preferable
alternative if doing so would be contrary to the choice that the agency
would otherwise make under its governing statute. Given the levels of
stringency required by the environmentally-preferable alternative and
the lack of lead time to achieve such levels between now and MY 2016,
NHTSA tentatively concludes that the environmentally-preferable
alternative would not be economically practicable or technologically
feasible, and thus tentatively concludes that it would result in
standards that would be beyond the level achievable for MYs 2012-2016.
NHTSA determined that it would be inappropriate to propose any of
the other more stringent alternatives due to concerns over lead time
and economic practicability. At a time when the entire industry remains
in an economically critical state, the agencies believe that it would
be 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 MYs
2012 and 2013.
As revealed by the figures shown above, 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
stoichiometric gasoline direct injection engines and 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.
NHTSA does not believe that more stringent standards would meet
EPCA's requirement that CAFE standards be economically practicable. The
figures presented above reveal that increasing stringency beyond the
proposed standards would entail significant additional application of
technology--technology that, though perhaps feasible for individual
vehicle models, would not be economically practicable for the industry
at the scales involved. Among the more stringent alternatives, the one
closest in stringency to the standards proposed today is the
alternative under which combined CAFE stringency increases at 5%
annually. As indicated above, this alternative would yield fuel savings
and CO2 reductions about 12% and 9% higher, respectively,
than the proposed standards. However, compared to the proposed
standards, this alternative would increase outlays for new technologies
during MY 2012-2016 by about 24%, or $14b. Average MY 2016 cost
increases would, in turn, rise from $1,076 under the proposed standards
to $1,409 when stringency increases at 5% annually. This represents a
30% increase in per-vehicle cost for only a 3% increase in average
performance (on a gallon-per-mile basis to which fuel savings are
proportional). The following three tables summarize estimated
manufacturer-level average incremental costs for the 5%/y alternative
and the average of the passenger and light truck fleets:
Table IV.F.3--Average Incremental Costs ($/Vehicle) Under the 5%/y Alternative CAFE Standards for Passenger Cars
----------------------------------------------------------------------------------------------------------------
Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
BMW............................. 474 541 667 883 1,190
Chrysler........................ 726 1,464 1,832 1,928 1,913
Daimler......................... 132 209 814 1,094 1,467
Ford............................ 979 1,556 1,572 1,918 2,181
General Motors.................. 94 934 1,242 1,541 1,808
Honda........................... 55 263 408 451 671
Hyundai......................... 518 531 943 1,007 1,152
Kia............................. 180 344 440 612 796
Mazda........................... 603 919 1,294 1,569 1,863
Mitsubishi...................... 1,106 1,141 2,594 2,962 2,913
Nissan.......................... 298 587 1,344 1,402 1,517
Porsche......................... 209 240 350 465 581
Subaru.......................... 353 454 1,828 2,258 2,201
Suzuki.......................... 204 1,453 2,444 2,580 2,624
Tata............................ 202 239 428 632 1,350
Toyota.......................... 133 127 194 285 446
Volkswagen...................... 231 550 688 828 1,202
-------------------------------------------------------------------------------
Average..................... 337 664 916 1,079 1,291
----------------------------------------------------------------------------------------------------------------
Table IV.F.4--Average Incremental Costs ($/Vehicle) Under the 5%/y Alternative CAFE Standards for Light Trucks
----------------------------------------------------------------------------------------------------------------
Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
BMW............................ 297 306 403 753 935
Chrysler....................... 113 475 1,058 1,271 1,538
[[Page 49705]]
Daimler........................ 172 198 227 459 528
Ford........................... 732 1,201 1,685 2,345 2,380
General Motors................. ............... 786 1,121 1,275 1,457
Honda.......................... 646 614 1,139 1,265 1,624
Hyundai........................ 990 1,009 2,106 2,206 2,148
Kia............................ ............... 309 713 1,181 1,692
Mazda.......................... 434 608 612 722 953
Mitsubishi..................... 11 88 2,102 2,081 2,817
Nissan......................... 793 891 1,419 1,535 1,907
Porsche........................ (17) 55 117 962 1,009
Subaru......................... 1,398 1,370 1,501 1,441 1,486
Suzuki......................... 6 2,169 2,093 2,028 2,155
Tata........................... ............... 77 160 242 695
Toyota......................... 113 427 906 1,065 1,291
Volkswagen..................... (11) 55 127 209 286
--------------------------------------------------------------------------------
Average.................... 373 742 1,179 1,449 1,641
----------------------------------------------------------------------------------------------------------------
Table IV.F.5--Average Incremental Costs ($/Vehicle) Under the 5%/y Alternative CAFE Standards
----------------------------------------------------------------------------------------------------------------
Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
BMW............................. 415 469 590 848 1,123
Chrysler........................ 351 888 1,392 1,632 1,747
Daimler......................... 148 205 591 884 1,167
For[caret]d..................... 872 1,401 1,623 2,110 2,269
General Motors.................. 52 868 1,189 1,426 1,660
Honda........................... 272 386 638 701 955
Hyundai......................... 610 625 1,167 1,228 1,330
Kia............................. 143 337 489 707 942
Mazda........................... 571 862 1,181 1,443 1,732
Mitsubishi...................... 959 975 2,525 2,854 2,902
Nissan.......................... 462 683 1,367 1,441 1,627
Porsche......................... 120 172 272 623 717
Subaru.......................... 743 787 1,709 1,964 1,942
Suzuki.......................... 152 1,637 2,349 2,434 2,504
Tata............................ 71 144 267 420 1,001
Toyota.......................... 125 233 440 549 724
Volkswagen...................... 182 460 586 716 1,043
-------------------------------------------------------------------------------
Average..................... 350 692 1,010 1,207 1,409
----------------------------------------------------------------------------------------------------------------
These cost increases derive from accelerated application of
advanced technologies as stringency increases past the levels in the
proposed standards. For example, under the proposed standards,
additional diesel application rates average 2% for the industry and
range from 0% to 7% among Chrysler, Ford, GM, Honda, Nissan, and
Toyota. Under standards increasing in combined stringency at 5%
annually, these rates more than double, averaging 5% for the industry
and ranging from 2% to 13% for the same six manufacturers. The agency
tentatively concludes that the levels of technology penetration
required by the proposed standards are reasonable. Increasing the
standards beyond those levels would lead to rapidly increasing
dependence on advanced technologies with higher costs, particularly in
the early years of the rulemaking time frame, according to the agency's
analysis, and potentially pose too great an economic burden given the
state of the industry.
In contrast, through analysis of the illustrative results shown
above, as well as the more complete and detailed results presented in
the accompanying PRIA, NHTSA has concluded that the proposed standards
are technologically feasible and economically practicable. The proposed
standards will require manufacturers to apply considerable additional
technology. Although NHTSA cannot predict how manufacturers will
respond to the proposed standards, the agency's analysis indicates that
the standards could lead to significantly greater use of advanced
engine and transmission technologies. As shown above, the agency's
analysis shows considerable increases in the application of SGDI
systems and engine turbocharging and downsizing. Though not presented
above, the agency's analysis also shows similarly large increases in
the use of dual-clutch automated manual transmissions (AMTs). However,
the agency's analysis does not suggest that the additional application
of these technologies in response to the proposed standards would
extend beyond levels achievable by the industry. These technologies are
likely to be applied to at least some extent even in the absence of new
CAFE standards. In addition, the agency's analysis indicates that most
manufacturers would rely only to a limited extent on the most expensive
and advanced technologies, including diesel engines and strong HEVs.
As shown above, NHTSA estimates that the proposed standards could
lead to average incremental costs ranging
[[Page 49706]]
from $291 per vehicle (for light trucks in MY 2011) to $1,085 per
vehicle (for passenger cars in MY 2016), increasing steadily from $421
per vehicle in for all light vehicles in MY 2011 $1,076 for all light
vehicle in MY 2016. NHTSA estimates that these costs would vary
considerably among manufacturers, but would rarely exceed $2,000 per
vehicle. The following three tables summarize estimated manufacturer-
level average incremental costs for the proposed standards and the
average of the passenger and light truck fleets:
Table IV.F.6--Average Incremental Costs ($/Vehicle) Under Proposed Passenger Car CAFE Standards
----------------------------------------------------------------------------------------------------------------
Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
BMW............................. 524 552 634 828 1,124
Chrysler........................ 775 1,304 1,473 1,583 1,582
Daimler......................... 182 215 781 1,039 1,401
Ford............................ 1,746 1,719 1,735 1,880 2,078
General Motors.................. 143 990 1,189 1,387 1,553
Honda........................... 31 122 205 287 494
Hyundai......................... 418 452 643 726 868
Kia............................. 319 359 387 473 647
Mazda........................... 658 735 965 991 1,26
Mitsubishi...................... 1,156 1,076 1,715 2,076 2,035
Nissan.......................... 653 712 1,155 1,153 1,275
Porsche......................... 270 256 306 399 498
Subaru.......................... 408 465 1,493 1,877 1,838
Suzuki.......................... 259 1,001 1,445 1,494 1,675
Tata............................ 246 244 395 577 1,284
Toyota.......................... 133 127 155 257 267
Volkswagen...................... 286 561 650 767 1,125
-------------------------------------------------------------------------------
Average..................... 498 674 820 930 1,085
----------------------------------------------------------------------------------------------------------------
Table IV.F.7--Average Incremental Costs ($/Vehicle) Under Proposed Light Truck CAFE Standards
----------------------------------------------------------------------------------------------------------------
Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
BMW............................. 325 327 380 708 884
Chrysler........................ 152 399 749 892 1,188
Daimler......................... 322 289 316 420 478
Ford............................ 471 629 693 1,323 1,365
General Motors.................. 33 533 752 792 962
Honda........................... 390 380 616 749 1,006
Hyundai......................... 774 744 1,301 1,322 1,292
Kia............................. 228 373 547 843 1,218
Mazda........................... 340 608 610 679 776
Mitsubishi...................... 55 94 1,546 1,732 2,123
Nissan.......................... 541 608 903 1,022 1,312
Porsche......................... 28 46 84 913 954
Subaru.......................... 1,203 1,140 1,213 1,197 1,184
Suzuki.......................... 50 1,451 1,404 1,358 1,373
Tata............................ 44 83 127 193 635
Toyota.......................... 172 309 665 764 877
Volkswagen...................... 28 61 99 160 231
-------------------------------------------------------------------------------
Average..................... 291 485 701 911 1,058
----------------------------------------------------------------------------------------------------------------
Table IV.F.8--Average Incremental Costs ($/Vehicle) Under Proposed CAFE Standards
----------------------------------------------------------------------------------------------------------------
Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
BMW............................. 457 483 560 796 1,061
Chrysler........................ 393 777 1,061 1,271 1,408
Daimler......................... 236 243 604 834 1,106
Ford............................ 1,195 1,242 1,262 1,629 1,762
General Motors.................. 94 785 997 1,131 1,304
Honda........................... 162 212 335 429 647
Hyundai......................... 488 509 769 835 944
Kia............................. 300 362 416 535 740
Mazda........................... 598 712 907 944 1,193
Mitsubishi...................... 1,007 921 1,692 2,033 2,045
Nissan.......................... 616 679 1,078 1,115 1,286
Porsche......................... 174 179 231 562 643
Subaru.......................... 705 711 1,392 1,632 1,602
Suzuki.......................... 204 1,117 1,434 1,458 1,598
Tata............................ 115 150 234 368 938
Toyota.......................... 147 191 331 429 468
[[Page 49707]]
Volkswagen...................... 233 470 550 657 970
-------------------------------------------------------------------------------
Average..................... 421 605 777 924 1,076
----------------------------------------------------------------------------------------------------------------
In summary, NHTSA has considered eight regulatory alternatives,
including the proposed standards, examining technologies that could be
applied in response to each alternative, as well as corresponding
costs, effects, and benefits. The agency has concluded that
alternatives less stringent than the proposed standards would not
produce the fuel savings and CO2 reductions necessary at
this time to achieve either the overarching purpose of EPCA, i.e.,
energy conservation, or an important part of the regulatory
harmonization underpinning the National Program. Conversely, the agency
has concluded that more stringent standards would involve levels of
additional technology and cost that, considering the fragile state of
the automotive industry, would not be economically practicable.
Therefore, having considered these eight regulatory alternatives, and
the statutorily-relevant factors of technological feasibility, economic
practicability, the effect of other motor vehicle standards of the
Government on fuel economy, and the need of the United States to
conserve energy, along with other relevant factors such as the safety
impacts of the proposed standards,\580\ NHTSA tentatively concludes
that the proposed standards represent a reasonable balancing of all of
these concerns, and are the maximum feasible average fuel economy
levels that the manufacturers can achieve in MYs 2012-2016.
---------------------------------------------------------------------------
\580\ See Section IV.G.7 below.
---------------------------------------------------------------------------
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?
As discussed above, the CAFE level required under an attribute-
based standard depends on the mix of vehicles produced for sale in the
U.S. Based on the market forecast that NHTSA and EPA have used to
develop and analyze new CAFE and CO2 emissions standards,
NHTSA estimates that the new CAFE standards will require CAFE levels to
increase by an average of 4.3 percent annually through MY 2016,
reaching a combined average fuel economy requirement of 34.1 mpg in
that model year:
Table IV.G.1-1--Average Required Fuel Economy (mpg) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars.................. 33.6 34.4 35.2 36.4 38.0
Light Trucks.................... 25.0 25.6 26.2 27.1 28.3
-------------------------------------------------------------------------------
Combined.................... 29.8 30.6 31.4 32.6 34.1
----------------------------------------------------------------------------------------------------------------
NHTSA estimates that average achieved fuel economy levels will
correspondingly increase through MY 2016, but that manufacturers will,
on average, undercomply \581\ in some model years and overcomply \582\
in others, reaching a combined average fuel economy of 33.7 mpg in MY
2016: \583\
---------------------------------------------------------------------------
\581\ In NHTSA's analysis, ``undercompliance'' is mitigated
either through use of FFV credits, use of existing or ``banked''
credits, or through fine payment. Because NHTSA cannot consider
availability of credits in setting standards, the estimated achieved
CAFE levels presented here do not account for their use. In
contrast, because NHTSA is not prohibited from considering fine
payment, the estimated achieved CAFE levels presented here include
the assumption that BMW, Daimler (i.e., Mercedes), Porsche, and Tata
(i.e., Jaguar and Rover) will only apply technology up to the point
that it would be less expensive to pay civil penalties.
\582\ In NHTSA's analysis, ``overcompliance'' occurs through
multi-year planning: Manufacturers apply some ``extra'' technology
in early model years (e.g., MY 2014) in order to carry that
technology forward and thereby facilitate compliance in later model
years (e.g., MY 2016)
\583\ Consistent with EPCA, NHTSA has not accounted for
manufacturers' ability to earn CAFE credits for selling FFVs, carry
credits forward and back between model years, and transfer credits
between the passenger car and light truck fleets.
Table IV.G.1-2--Average Achieved Fuel Economy (mpg) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars.................. 32.9 34.2 35.2 36.5 37.6
Light Trucks.................... 24.9 25.7 26.5 27.4 28.1
-------------------------------------------------------------------------------
Combined.................... 29.3 30.5 31.5 32.7 33.7
----------------------------------------------------------------------------------------------------------------
NHTSA estimates that these fuel economy increases will lead to fuel
savings totaling 61.6 billion gallons during the useful lives of
vehicles sold in MYs 2012-2016:
[[Page 49708]]
Table IV.G.1-3--Fuel Saved (Billion Gallons)
[Under proposed standards]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 2.5 5.3 7.5 9.4 11.4 36.0
Light Trucks............................................ 1.8 3.7 5.4 6.8 7.8 25.6
-----------------------------------------------------------------------------------------------
Combined............................................ 4.3 9.1 12.9 16.1 19.2 61.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
The agency also estimates that these new CAFE standards will lead
to corresponding reductions of CO2 emissions totaling 656
million metric tons (mmt) during the useful lives of vehicles sold in
MYs 2012-2016:
Table IV.G.1-4--Avoided Carbon Dioxide Emissions (mmt) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
----------------------------------------------------------------------------------------------------------------
Passenger Cars............................................ 25 56 79 99 121 381
Light Trucks.............................................. 19 40 58 73 85 275
-----------------------------------------------------
Combined.............................................. 44 96 137 173 206 656
----------------------------------------------------------------------------------------------------------------
2. How Would These Proposed Standards Improve Fleet-Wide Fuel Economy
and Reduce GHG Emissions Beyond MY 2016?
Under the assumption that CAFE standards at least as stringent as
those proposed for MY 2016 would be established for subsequent model
years, the effects of the proposed standards on fuel consumption and
GHG emissions will continue to increase for many years. This will occur
because over time, a growing fraction of the U.S. light-duty vehicle
fleet will be comprised of cars and light trucks that meet the MY 2016
standard. The impact of the proposed standards on fuel use and GHG
emissions will continue to grow through approximately 2050, when
virtually all cars and light trucks in service will have met the MY
2016 standard.
As Table IV.G.2-1 shows, NHTSA estimates that the fuel economy
increases resulting from the proposed standards will lead to reductions
in total fuel consumption by cars and light trucks of 9 billion gallons
during 2020, increasing to 30 billion gallons by 2050. Over the period
from 2012--when the proposed standards would begin to take effect--
through 2050, cumulative fuel savings would total 693 billion gallons,
as Table IV.G.2-1 also indicates.
Table IV.G.2-1--Reduction in Fleet-Wide Fuel Use (Billion Gallons) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
Total,
Calendar year 2020 2030 2040 2050 2012-2050
----------------------------------------------------------------------------------------------------------------
Passenger Cars........................................... 5 12 16 19 431
Light Trucks............................................. 4 7 9 11 262
------------------------------------------------------
Combined............................................. 9 19 25 30 693
----------------------------------------------------------------------------------------------------------------
As a consequence of these reductions in fleet-wide fuel
consumption, the agency also estimates that the proposed CAFE standards
for MYs 2012-2016 will lead to corresponding reductions in
CO2 emissions from the U.S. light-duty vehicle fleet.
Specifically, NHTSA estimates that total CO2 emissions
associated with passenger car and light truck use in the U.S. use will
decline by 111 million metric tons (mmt) during 2020 as a consequence
of the proposed standards, as Table IV.G.2-2 reports. The table also
shows that the this reduction is estimated to grow to 355 million
metric tons by the year 2050, and will total 8,247 million metric tons
over the period from 2012, when the proposed standards would take
effect, through 2050.
Table IV.G.2-2--Reduction in Fleet-Wide Carbon Dioxide Emissions (mmt) From Passenger Car and Light Truck Use
Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
Total,
Calendar year 2020 2030 2040 2050 2012-2050
----------------------------------------------------------------------------------------------------------------
Passenger Cars........................................... 64 144 186 222 5,117
Light Trucks............................................. 47 87 110 132 3,130
------------------------------------------------------
Combined............................................. 111 231 295 355 8,247
----------------------------------------------------------------------------------------------------------------
[[Page 49709]]
These reductions in fleet-wide CO2 emissions, together
with corresponding reductions in other GHG emissions from fuel
production and use, would lead to small but significant reductions in
projected changes in the future global climate. These changes are
summarized in Table IV.G.2-3 below.
Table IV.G.2-3--Effects of Reductions in Fleet-Wide Carbon Dioxide Emissions (mmt) On Projected Changes in
Global Climate
----------------------------------------------------------------------------------------------------------------
Projected change in measure
--------------------------------------------------
Measure Units Date With proposed
No action standards Difference
----------------------------------------------------------------------------------------------------------------
Atmospheric CO2 Concentration... ppm............... 2100 783.0 780.3 -2.7
Increase in Global Mean Surface [deg]C............ 2100 3.136 3.126 -0.010
Temperature.
Sea Level Rise.................. cm................ 2100 38.00 37.91 -0.09
Global Mean Precipitation....... % change from 1980- 2090 4.59% 4.57% -0.02%
1999 avg..
----------------------------------------------------------------------------------------------------------------
3. How Would These Proposed Standards Impact Non-GHG Emissions and
Their Associated Effects?
Under the assumption that CAFE standards at least as stringent as
those proposed for MY 2016 would be established for subsequent model
years, the effects of the proposed standards on air quality and its
associated health effects will continue to be felt over the foreseeable
future. This will occur because over time a growing fraction of the
U.S. light-duty vehicle fleet will be comprised of cars and light
trucks that meet the MY 2016 standard, and this growth will continue
until approximately 2050.
Increases in the fuel economy of light-duty vehicles required by
the proposed CAFE standards will cause a slight increase in the number
of miles they are driven, through the fuel economy ``rebound effect.''
In turn, this increase in vehicle use will lead to increases in
emissions of criteria air pollutants and some airborne toxics, since
these are products of the number of miles vehicles are driven.
At the same time, however, the projected reductions in fuel
production and use reported in Table IV.G.2-1 above will lead to
corresponding reductions in emissions of these pollutants that occur
during fuel production and distribution (``upstream'' emissions). For
most of these pollutants, the reduction in upstream emissions resulting
from lower fuel production and distribution will outweigh the increase
in emissions from vehicle use, resulting in a net decline in their
total emissions.
Tables IV.G.3-1a and 3-1b report estimated reductions in emissions
of selected criteria air pollutants (or their chemical precursors) and
airborne toxics expected to result from the proposed standards during
calendar year 2030. By that date, the majority of light-duty vehicles
in use will have met the proposed MY 2016 CAFE standards, so these
reductions provide a useful index of the long-term impact of the
proposed standards on air pollution and its consequences for human
health.
Table IV.G.3-1a--Projected Changes in Emissions of Criteria Air Pollutants From Car and Light Truck Use
[Calendar year 2030; tons]
----------------------------------------------------------------------------------------------------------------
Criteria air pollutant
---------------------------------------------------------------
Source of Volatile
Vehicle class emissions Nitrogen Particulate Sulfur oxides organic
oxides (NOX) matter (PM2.5) (SOX) compounds
(VOC)
----------------------------------------------------------------------------------------------------------------
Passenger Cars................ Vehicle use..... 1,791 630 -2,375 2,157
Fuel production -19,022 -2,539 -11,363 -75,031
and
distribution.
---------------------------------------------------------------------------------
All sources..... -17,231 -1,909 -13,738 -72,874
----------------------------------------------------------------------------------------------------------------
Light Trucks.................. Vehicle use..... 1,137 257 -1,401 1,094
Fuel production -11,677 -1,569 -7,031 -43,667
and
distribution.
---------------------------------------------------------------------------------
All sources..... -10,540 -1,312 -8,432 -42,573
---------------------------------------------------------------------------------
Total..................... Vehicle use..... 2,928 887 -3,776 3,251
Fuel production -30,699 -4,108 -18,394 -118,698
and
distribution.
---------------------------------------------------------------------------------
All sources..... -27,771 -3,221 -22,170 -115,447
----------------------------------------------------------------------------------------------------------------
Table IV.F.3-1b--Projected Changes in Emissions of Airborne Toxics From Car and Light Truck Use
[Calendar year 2030; tons]
----------------------------------------------------------------------------------------------------------------
Toxic air pollutant
Vehicle class Source of emissions -----------------------------------------------
Benzene 1,3-Butadiene Formaldehyde
----------------------------------------------------------------------------------------------------------------
Passenger Cars........................ Vehicle use............. 67 19 72
[[Page 49710]]
Fuel production and -158 -1 -54
distribution.
-------------------------------------------------------------------------
All sources............. -91 18 18
----------------------------------------------------------------------------------------------------------------
Light Trucks.......................... Vehicle use............. 45 9 32
Fuel production and -93 -1 -33
distribution.
-------------------------------------------------------------------------
All sources............. -48 8 -1
-------------------------------------------------------------------------
Total............................. Vehicle use............. 112 28 104
Fuel production and -251 -2 -87
distribution.
-------------------------------------------------------------------------
All sources............. -139 26 17
----------------------------------------------------------------------------------------------------------------
Note: Positive values indicate increases in emissions; negative values indicate reductions.
In turn, the reductions in emissions reported in Tables IV.G.3-1a
and 3-1b are projected to result in significant declines in the health
effects that result from population exposure to these pollutants. Table
IV.G.3-2 reports the estimated reductions in selected PM2.5-
related human health impacts that are expected to result from reduced
population exposure to unhealthful atmospheric concentrations of
PM2.5. The estimates reported in Table IV.G.3-2 are derived
from PM2.5-related dollar-per-ton estimates that include
only quantifiable reductions in health impacts likely to result from
reduced population exposure to particular matter (PM). They do not
include all health impacts related to reduced exposure to PM, nor do
they include any reductions in health impacts resulting from lower
population exposure to other criteria air pollutants (particularly
ozone) and air toxics. NHTSA and EPA are using PM-related benefits-per-
ton values as an interim approach to estimating the PM-related benefits
of the proposal. To model the ozone and PM air quality benefit sof the
final rule, the analysis will utilize ambient concentration data
derived from full-scale photochemical air quality modeling.
Table IV.G.3-2--Projected Reductions in Health Impacts of Exposure to
Criteria Air Pollutants From Proposed Standards
[Calendar year 2030]
------------------------------------------------------------------------
Projected
Health impact Measure reduction (2030)
------------------------------------------------------------------------
Mortality (ages 30 and older). premature deaths per 217 to 554
year.
Chronic Bronchitis............ cases per year........ 142
Emergency Room Visits for number per year....... 198
Asthma.
Work Loss..................... workdays per year..... 25,522
------------------------------------------------------------------------
4. What Are the Estimated Costs and Benefits of These Proposed
Standards?
NHTSA estimates that the proposed standards could entail
significant additional technology beyond the levels reflected in the
baseline market forecast used by NHTSA. This additional technology will
lead to increases in costs to manufacturers and vehicle buyers, as well
as fuel savings to vehicle buyers. The following three tables summarize
the extent to which the agency estimates technologies could be added to
the passenger car, light truck, and overall fleets in each model year
in response to the proposed standards. Percentages reflect the
technology's additional application in the market, and are negative in
cases where one technology is superseded (i.e., displaced) by another.
For example, the agency estimates that many automatic transmissions
used in light trucks could be displaced by dual clutch transmissions.
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In order to pay for this additional technology (and, for some
manufacturers, civil penalties), NHTSA estimates that average passenger
car and light truck prices will, relative to levels resulting from
compliance with baseline (MY 2011) standards, increase by $591-$1,127
and $283-$1,020, respectively, during MYs 2011-2016. The following
tables summarize the agency's estimates of average price increases for
each manufacturer's passenger car, light truck, and overall fleets
(with corresponding averages for the industry):
Table IV.G.4-4--Average Passenger Car Incremental Price Increases ($) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
BMW............................. 524 552 634 828 1,124
Chrysler........................ 775 1,304 1,473 1,583 1,582
Daimler......................... 182 215 781 1,039 1,401
[[Page 49714]]
Ford............................ 1,746 1,719 1,735 1,880 2,078
General Motors.................. 143 990 1,189 1,387 1,553
Honda........................... 31 122 205 287 494
Hyundai......................... 418 452 643 726 868
Kia............................. 319 359 387 473 647
Mazda........................... 658 735 965 991 1,263
Mitsubishi...................... 1,156 1,076 1,715 2,076 2,035
Nissan.......................... 653 712 1,155 1,153 1,275
Porsche......................... 270 256 306 399 498
Subaru.......................... 408 465 1,493 1,877 1,838
Suzuki.......................... 259 1,001 1,445 1,494 1,675
Tata............................ 246 244 395 577 1,284
Toyota.......................... 133 127 155 257 267
Volkswagen...................... 286 561 650 767 1,125
-------------------------------------------------------------------------------
Total/Average............... 498 674 820 930 1,085
----------------------------------------------------------------------------------------------------------------
Table IV.G.4-5--Average Light Truck Incremental Price Increases ($) Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
BMW............................. 325 327 380 708 884
Chrysler........................ 152 399 749 892 1,188
Daimler......................... 322 289 316 420 478
Ford............................ 471 629 693 1,323 1,365
General Motors.................. 33 533 752 792 962
Honda........................... 390 380 616 749 1,006
Hyundai......................... 774 744 1,301 1,322 1,292
Kia............................. 228 373 547 843 1,218
Mazda........................... 340 608 610 679 776
Mitsubishi...................... 55 94 1,546 1,732 2,123
Nissan.......................... 541 608 903 1,022 1,312
Porsche......................... 28 46 84 913 954
Subaru.......................... 1,203 1,140 1,213 1,197 1,184
Suzuki.......................... 50 1,451 1,404 1,358 1,373
Tata............................ 44 83 127 193 635
Toyota.......................... 172 309 665 764 877
Volkswagen...................... 28 61 99 160 231
-------------------------------------------------------------------------------
Total/Average............... 291 485 701 911 1,058
----------------------------------------------------------------------------------------------------------------
Table IV.G.4-6--Average Incremental Price Increases ($) by Manufacturer Under Proposed Standards
----------------------------------------------------------------------------------------------------------------
Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
BMW............................. 457 483 560 796 1,061
Chrysler........................ 393 777 1,061 1,271 1,408
Daimler......................... 236 243 604 834 1,106
Ford............................ 1,195 1,242 1,262 1,629 1,762
General Motors.................. 94 785 997 1,131 1,304
Honda........................... 162 212 335 429 647
Hyundai......................... 488 509 769 835 944
Kia............................. 300 362 416 535 740
Mazda........................... 598 712 907 944 1,193
Mitsubishi...................... 1,007 921 1,692 2,033 2,045
Nissan.......................... 616 679 1,078 1,115 1,286
Porsche......................... 174 179 231 562 643
Subaru.......................... 705 711 1,392 1,632 1,602
Suzuki.......................... 204 1,117 1,434 1,458 1,598
Tata............................ 115 150 234 368 938
Toyota.......................... 147 191 331 429 468
Volkswagen...................... 233 470 550 657 970
-------------------------------------------------------------------------------
Total/Average............... 421 605 777 924 1,076
----------------------------------------------------------------------------------------------------------------
[[Page 49715]]
Based on the agencies' estimates of manufacturers' future sales
volumes, these price increases will lead to a total of $60.2 billion in
incremental outlays during MYs 2012-2016 for additional technology
attributable to the proposed standards:
Table IV.G.4-7--Incremental Technology Outlays ($b) Under Proposed Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 4.1 6.5 8.4 9.9 11.8 40.8
Light Trucks............................................ 1.5 2.8 4.0 5.2 5.9 19.4
-----------------------------------------------------------------------------------------------
Combined............................................ 5.7 9.3 12.5 15.1 17.6 60.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
NHTSA notes that these estimates of the economic costs for meeting
higher CAFE standards omit certain potentially important categories of
costs, and may also reflect underestimation (or possibly
overestimation) of some costs that are included. For example, although
the agency's analysis attempts to hold vehicle performance, capacity,
and utility constant in estimating the costs of applying fuel-saving
technologies to vehicles, the analysis imputes no cost to any actual
reductions in vehicle performance, capacity, and utility that may
result from manufacturers' efforts to comply with the proposed CAFE
standards. Although these costs are difficult to estimate accurately,
they nonetheless represent a potentially significant category of
omitted costs. Similarly, the agency's estimates of costs for meeting
higher CAFE standards does not estimate the economic value of potential
increases in motor vehicle fatalities and injuries that could result
from reductions in the size or weight of vehicles. While NHTSA reports
worst-case estimates of these increases in fatalities and injuries, no
estimate of their economic value is included in the agency's estimates
of the net benefits resulting from the proposed standards due to
ongoing discussion regarding these potential impacts.
Finally, it is possible that the agency may have underestimated or
overestimated manufacturers' direct costs for applying some fuel
economy technologies, or the increases in manufacturer's indirect costs
associated with higher vehicle manufacturing costs. In either case, the
technology outlays reported here will not correctly represent the costs
of meeting higher CAFE standards. Similarly, NHTSA's estimates of
increased costs of congestion, accidents, and noise associated with
added vehicle use are drawn from a 1997 study, and the correct
magnitude of these values may have changed since they were
developed.\584\ If this is the case, the costs of increased vehicle use
associated with the fuel economy rebound effect will differ from the
agency's estimates in this analysis. Thus, like the agency's estimates
of economic benefits, estimates of total compliance costs reported here
may underestimate or overestimate the true economic costs of the
proposed standards.
---------------------------------------------------------------------------
\584\ The agency seeks comment above on appropriate values for
these costs.
---------------------------------------------------------------------------
However, offsetting these costs, the achieved increases in fuel
economy will also produce significant benefits to society. NHTSA
estimates that, in present value terms (at a discount rate of 3
percent), these benefits will total $201.7 billion over the useful
lives of light vehicles sold during MYs 2012-2016:
Table IV.G.4-8--Present Value of Benefits ($Billion) Under Proposed Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 7.6 17.0 24.4 31.2 38.7 119.1
Light Trucks............................................ 5.5 11.6 17.3 22.2 26.0 82.6
-----------------------------------------------------------------------------------------------
Combined............................................ 13.1 28.7 41.8 53.4 64.7 201.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
NHTSA attributes most of these benefits to reductions in fuel
consumption, valuing fuel at future pretax prices in EIA's reference
case forecast from AEO 2009. The total benefits shown in the above
table also include other benefits and disbenefits, examples of which
include the social values of reductions in CO2 and criteria
pollutant emissions, the value of additional travel (induced by the
rebound effect), and the social cost of additional congestion,
accidents, and noise attributable to that additional travel. The PRIA
accompanying today's proposed rule presents a detailed analysis of
specific benefits of the proposed rule.
For both the passenger car and light truck fleets, NHTSA estimates
that the benefits of today's proposed standards will exceed the
corresponding costs in every model year. Over the useful lives of the
affected (MY 2012-2016) vehicles, the agency estimates that the
benefits of the proposed standards will exceed the costs of the
proposed standards by $141.5 billion:
Table IV.G.4-9--Present Value of Net Benefits ($Billion) Under Proposed Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 3.5 10.5 16.0 21.3 26.9 78.3
Light Trucks............................................ 3.9 8.9 13.3 17.0 20.1 63.2
-----------------------------------------------------------------------------------------------
[[Page 49716]]
Combined............................................ 7.4 19.4 29.3 38.3 47.1 141.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
NHTSA's estimates of economic benefits from establishing higher
CAFE are also subject to considerable uncertainty. Most important, the
agency's estimates of the fuel savings likely to result from adopting
higher CAFE standards depend critically on the accuracy of the
estimated fuel economy levels that will be achieved under both the
baseline scenario, which assumes that manufacturers will continue to
comply with the MY 2011 CAFE standards, and under alternative increases
in the standards that apply to MY 2012-16 passenger cars and light
trucks. Specifically, if the agency has underestimated the fuel economy
levels that manufacturers will achieve under the baseline scenario, its
estimates of fuel savings and the resulting economic benefits will be
too large. As another example, the agency's estimate of benefits from
reducing the threat of economic damages from disruptions in the supply
of imported petroleum to the U.S. applies to calendar year 2015. If the
magnitude of this estimate would be expected to grow after 2015 in
response to increases in U.S. petroleum imports, growth in the level of
U.S. economic activity, or increases in the likelihood of disruptions
in the supply of imported petroleum, the agency may have underestimated
the benefits from the reduction in petroleum imports expected to result
from adopting higher CAFE standards.
However, it is also possible that NHTSA's estimates of economic
benefits from establishing higher CAFE standards underestimate the true
economic benefits of the fuel savings those standards would produce.
This is partly because the agency has been unable to develop monetized
estimates of the economic value of certain potentially significant
categories of benefits from reducing fuel consumption. Specifically,
the agency's estimate of the economic value of reduced damages to human
health resulting from lower exposure to criteria air pollutants
includes only the effects of reducing population exposure to
PM2.5 emissions. Although this is likely to be the most
significant component of health benefits from reduced emissions of
criteria air pollutants, it excludes the value of reduced damages to
human health and other impacts resulting from lower emissions and
reduced population exposure to other criteria air pollutants, including
ozone and nitrous oxide (N2O), as well as airborne toxics.
The agency's analysis excludes these benefits because no reliable
estimates of the health impacts of criteria pollutants other than
PM2.5 or of the health impacts of airborne toxics were
available to use in developing estimates of these benefits.
In addition, the agency's estimate of the value of reduced climate-
related economic damages from lower emissions of GHGs excludes many
sources of potential benefits from reducing the pace and extent of
global climate change. These include reductions in the risk of
catastrophic changes in the global climate, lower costs for necessary
adaptations to changes in climate, reduced water supply within specific
global sub-regions, reductions in damages caused by severe storms,
lower population exposure to harmful air pollution levels, reductions
in ecosystem impacts and risks to natural resources of global
significance, and reduced threats from widespread social or political
unrest. Including monetized estimates of benefits from reducing the
extent of climate change and these associated impacts would increase
the agency's estimates of benefits from adopting higher CAFE standards.
The benefits, costs, and net benefits shown above are all based on
a discount rate of 3 percent. As documented in the accompanying PRIA,
the agency examined the sensitivity of results to changes in many
economic inputs. With an alternative discount rate of 7 percent,
incremental technology outlays were virtually identical to those
estimated at a 3 percent discount rate: \585\
---------------------------------------------------------------------------
\585\ Because some economic inputs change the effective cost of
some technologies, and NHTSA assumes some manufacturers will be
willing to pay civil penalties based on economic considerations,
this outcome is not assured.
Table IV.G.4-10--Incremental Technology Outlays ($b) Under Proposed Standards (Using 7 Percent Discount Rate)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 4.1 6.5 8.4 9.9 11.8 40.8
Light Trucks............................................ 1.5 2.8 4.0 5.2 5.9 19.4
-----------------------------------------------------------------------------------------------
Combined............................................ 5.7 9.3 12.5 15.1 17.6 60.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
However, the present value of the benefits accrued over the
lifetime of the vehicles covered by the proposal is about 20 percent
smaller when discounted at a 7 percent annual rate than when discounted
at a 3 percent annual rate:
Table IV.G.4-11--Present Value of Benefits ($Billion) Under Proposed Standards (Using 7 Percent Discount Rate)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 6.0 13.6 19.5 25.0 31.1 95.3
Light Trucks............................................ 4.3 9.1 13.5 17.4 20.4 64.6
-----------------------------------------------------------------------------------------------
[[Page 49717]]
Combined............................................ 10.3 22.6 33.1 42.4 51.5 159.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
As a result, net benefits are 38 percent lower when total benefits
are discounted at a 7 percent annual rate:
Table IV.G.4-12--Present Value of Net Benefits ($Billion) Under Proposed Standards (Using 7 Percent Discount Rate)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 1.9 7.0 11.1 15.1 19.3 54.5
Light Trucks............................................ 2.7 6.3 9.5 12.2 14.5 45.2
-----------------------------------------------------------------------------------------------
Combined............................................ 4.6 13.3 20.6 27.3 33.8 99.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
The following tables also present itemized costs and benefits for
the combined fleet for each year of the proposed standards and for all
the years combined, at 3 and 7 percent discount rates, respectively.
Numbers in parentheses represent negative values.
Table IV.G.4-13--Itemized Cost and Benefit Estimates for the Combined Vehicle Fleet, 3% Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs: .............. .............. .............. .............. .............. ..............
Technology Costs.................................... $5,695 $9,295 $12,454 $15,080 $17,633 $60,157
Benefits .............. .............. .............. .............. .............. ..............
Lifetime Fuel Expenditures.......................... 10,197 22,396 32,715 41,880 50,823 158,012
Consumer Surplus from Additional Driving............ 751 1,643 2,389 3,029 3,639 11,451
Refueling Time Value................................ 776 1,551 2,198 2,749 3,277 10,550
Petroleum Market Externalities...................... 559 1,194 1,700 2,129 2,538 8,121
Congestion Costs.................................... (460) (934) (1,332) (1,657) (1,991) (6,376)
Noise Costs......................................... (7) (14) (21) (26) (31) (99)
Crash Costs......................................... (217) (437) (625) (776) (930) (2,985)
CO2................................................. 1,028 2,287 3,382 4,376 5,372 16,446
CO.................................................. 0 0 0 0 0 0
VOC................................................. 41 80 108 131 156 518
NOX................................................. 82 132 155 174 200 744
PM.................................................. 220 438 621 771 904 2,956
SOX................................................. 161 345 490 613 731 2,341
-----------------------------------------------------------------------------------------------
Total........................................... 13,132 28,680 41,781 53,394 64,687 201,676
========================================================================================================================================================
Net Benefits............................................ 7,044 18,759 27,090 34,710 41,386 128,992
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table IV.G.4-14--Itemized Cost and Benefit Estimates for the Combined Vehicle Fleet, 7% Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
Technology Costs.................................... $5,695 $9,295 $12,454 $15,080 $17,633 $60,157
Benefits:
Lifetime Fuel Expenditures.......................... 7,991 17,671 25,900 33,264 40,478 125,305
Consumer Surplus from Additional Driving............ 590 1,301 1,896 2,412 2,904 9,102
Refueling Time Value................................ 624 1,249 1,770 2,215 2,642 8,500
Petroleum Market Externalities...................... 448 960 1,367 1,712 2,043 6,531
Congestion Costs.................................... (371) (753) (1,074) (1,335) (1,606) (5,138)
Noise Costs......................................... (6) (12) (16) (21) (24) (80)
Crash Costs......................................... (173) (352) (503) (626) (749) (2,403)
CO2................................................. 797 1,781 2,634 3,410 4,189 12,813
CO.................................................. 0 0 0 0 0 0
VOC................................................. 33 65 87 106 125 416
NOX................................................. 60 99 120 135 156 570
PM.................................................. 170 344 492 613 721 2,339
[[Page 49718]]
SOX................................................. 129 278 394 493 588 1,882
-----------------------------------------------------------------------------------------------
Total........................................... 10,292 22,631 33,066 42,380 51,468 159,837
========================================================================================================================================================
Net Benefits............................................ 4,281 12,832 18,818 24,414 29,293 89,638
--------------------------------------------------------------------------------------------------------------------------------------------------------
The above benefit and cost estimates did not reflect the
availability and use of flexibility mechanisms, such as compliance
credits and credit trading, because EPCA prohibits NHTSA from
considering the effects of those mechanisms in setting CAFE standards.
However, the agency noted that, in reality, manufacturers were likely
to rely to some extent on flexibility mechanisms provided by EPCA and
would thereby reduce the cost of complying with the proposed standards
to a meaningful extent.
As discussed in the PRIA, NHTSA has performed an analysis to
estimate the costs and benefits if EPCA's provisions regarding FFVs are
accounted for. The agency considered also attempting to account for
other EPCA flexibility mechanisms, in particular credit transfers
between the passenger and nonpassenger fleets, but has concluded that,
at least within a context in which each model year is represented
explicitly, technologies carry forward between model years, and
multiyear planning effects are represented, there is no basis to
reliably estimate how manufacturers might use these mechanisms.
Accounting for the FFV provisions indicates that achieved fuel
economies would be 0.6-1.1 mpg lower than when these provisions are not
considered (for comparison see Table IV.G.1-2 above):
Table IV.G.4-15--Average Achieved Fuel Economy (mpg) Under Proposed Standards (With FFV Credits)
----------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
Passenger Cars.................. 32.5 33.4 34.3 35.3 36.5
Light Trucks.................... 24.1 24.6 25.3 26.3 27.0
Combined.................... 28.7 29.6 30.4 31.6 32.7
----------------------------------------------------------------------------------------------------------------
As a result, NHTSA estimates that, when FFV credits are taken into
account, fuel savings will total 58.8 billion gallons--about 4.5
percent less than the 61.6 billion gallons estimated when these credits
are not considered:
Table IV.G.4-16--Fuel Saved (Billion Gallons) Under Proposed Standards (With FFV Credits)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 2.5 5.0 6.9 8.6 10.9 33.9
Light Trucks............................................ 2.0 3.3 5.0 6.8 7.9 24.9
-----------------------------------------------------------------------------------------------
Combined............................................ 4.5 8.2 11.8 15.4 18.8 58.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
The agency similarly estimates CO2 emissions reductions
would total 639 million metric tons (mmt), about 2.6 percent less than
the 656 mmt estimated when these credits are not considered:\586\
---------------------------------------------------------------------------
\586\ Differences in the application of diesel engines lead to
differences in the incremental percentage changes in fuel
consumption and carbon dioxide emissions.
Table IV.G.4-17--Avoided Carbon Dioxide Emissions (mmt) Under Proposed Standards (With FFV Credits)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 27 54 75 93 118 368
Light Trucks............................................ 22 36 54 74 86 272
-----------------------------------------------------------------------------------------------
Combined............................................ 49 90 129 167 204 639
--------------------------------------------------------------------------------------------------------------------------------------------------------
This analysis further indicates significant reductions in outlays
for additional technology when FFV provisions are taken into account--
about $45b, or about 25 percent less than the $60b estimated when
excluding these provisions:
[[Page 49719]]
Table IV.G.4-18--Incremental Technology Outlays ($b) Under Proposed Standards (With FFV Credits)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 2.5 4.4 6.1 7.4 9.3 29.6
Light Trucks............................................ 1.3 2.0 3.1 4.3 5.0 15.6
-----------------------------------------------------------------------------------------------
Combined............................................ 3.7 6.3 9.2 11.7 14.2 45.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Because NHTSA's analysis indicated that FFV provisions would not
significantly reduce fuel savings, the agency's estimate of discounted
benefits when including these provisions, $192.5b, is only about 4.5
percent lower than the $201.7b shown above for the analysis that
excluded these provisions:
Table IV.G.4-19--Present Value of Benefits ($Billion) Under Proposed Standards (With FFV Credits)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 7.8 15.9 22.5 28.6 37.1 111.9
Light Trucks............................................ 6.1 10.2 15.9 22.1 26.3 80.5
-----------------------------------------------------------------------------------------------
Combined............................................ 13.9 26.1 38.4 50.7 63.3 192.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
However, although the agency estimates lower discounted benefits
when FFV provisions are taken into account, the agency estimates that
these provisions slightly increase net benefits (by about 4 percent,
from $141.5b to $147.2b) because costs decrease by more than discounted
benefits:
Table IV.G.4-20--Present Value of Net Benefits ($Billion) Under Proposed Standards (With FFV Credits)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger Cars.......................................... 5.3 11.5 16.4 21.2 27.8 82.3
Light Trucks............................................ 4.8 8.2 12.8 17.8 21.3 64.9
-----------------------------------------------------------------------------------------------
Combined............................................ 10.2 19.7 29.2 39.0 49.1 147.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
The agency has performed several sensitivity analyses to examine
important assumptions. We examine sensitivity with respect to the
following five economic parameters:
(1) The price of gasoline: The Reference Case uses the AEO 2009
reference case estimate for the price of gasoline. In this sensitivity
analysis we examine the effect of using the AEO high or low forecast
estimates instead.
(2) The discount rate: The Reference Case uses a discount rate of 3
percent to discount future benefits. In the sensitivity analysis, we
equally examine the effect of using a 7 percent discount rate instead.
(3) The rebound effect: The Reference Case uses a rebound effect of
10 percent to project increased miles traveled as the cost per mile
driven decreases. In the sensitivity analysis, we examine the effect of
using a 5 percent or 15 percent rebound effect instead.
(4) The values of CO2 benefits and monopsony: The Reference Case
uses $20 per ton to quantify the benefits of reducing CO2
emissions and $0.178 per gallon to quantify the benefits of reducing
fuel consumption. In the sensitivity analysis, we examine the effect of
using values of $5, $10, $34, or $56 per ton instead to value
CO2 benefits. These values can be translated into cents per
gallon by multiplying by 0.0089,\587\ giving the following values:
---------------------------------------------------------------------------
\587\ The molecular weight of Carbon (C) is 12, the molecular
weight of Oxygen (O) is 16, thus the molecular weight of
CO2 is 44. One ton of C = 44/12 tons CO2 =
3.67 tons CO2. 1 gallon of gas weighs 2,819 grams, of
that 2,433 grams are carbon. $1.00 CO2 = $3.67 C and
$3.67/ton * ton/1000kg * kg/1000g * 2433g/gallon = (3.67 * 2433)/
1000 * 1000 = $0.0089/gallon.
($5 per ton CO2) x 0.0089 = $0.0445 per gallon
($10 per ton CO2) x 0.0089 = $0.089 per gallon
($20 per ton CO2) x 0.0089 = $0.178 per gallon
($34 per ton CO2) x 0.0089 = $0.3026 per gallon
($56 per ton CO2) x 0.0089 = $0.4984 per gallon
The $5 per ton value reflects the domestic impacts of
CO2 emissions and so we use a nonzero monopsony cost, namely
$0.30 cents per gallon, when valuing CO2 emissions at $5 per
ton. The higher per-ton values of CO2 emissions reflect the
global impacts of CO2 emissions and we so use $0 per gallon
for monopsony in these cases.
(5) Military security: The Reference Case uses $0 per gallon to
quantify the military security benefits of reducing fuel consumption.
In the sensitivity analysis, we examine the impact of using a value of
5 cents per gallon instead.
Varying each of the above 5 parameters in isolation results in 10
economic scenarios, not including the Reference case. These are listed
in Table IV.G.4-21 below, together with two additional scenarios that
use values for these parameters that produce the lowest and highest
valued benefits.
[[Page 49720]]
Table IV.G.4-21--Sensitivity Analyses Evaluated in NHTSA's PRIA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rebound Monopsony Military
Name Fuel price Discount rate effect SCC effect security
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reference................................. Reference................... 3% 10% $20 0[cent]/gal 0[cent]/gal
High Fuel Price........................... High........................ 3% 10% $20 0[cent]/gal 0[cent]/gal
Low Fuel Price............................ Low......................... 3% 10% $20 0[cent]/gal 0[cent]/gal
7% Discount Rate.......................... Reference................... 7% 10% $20 0[cent]/gal 0[cent]/gal
5% Rebound Effect......................... Reference................... 3% 5% $20 0[cent]/gal 0[cent]/gal
15% Rebound Effect........................ Reference................... 3% 15% $20 0[cent]/gal 0[cent]/gal
$56/ton CO2 Value......................... Reference................... 3% 10% $56 0[cent]/gal 0[cent]/gal
$34/ton CO2............................... Reference................... 3% 10% $34 0[cent]/gal 0[cent]/gal
$10/ton CO2............................... Reference................... 3% 10% $10 0[cent]/gal 0[cent]/gal
$5/ton CO2................................ Reference................... 3% 10% $5 30[cent]/gal 0[cent]/gal
5[cent]/gal Military Security Value....... Reference................... 3% 10% $20 0[cent]/gal 5[cent]/gal
Lowest Discounted Benefits................ Low......................... 7% 15% $5 0[cent]/gal 0[cent]/gal
Highest Discounted Benefits............... High........................ 3% 5% $56 0[cent]/gal 5[cent]/gal
--------------------------------------------------------------------------------------------------------------------------------------------------------
The basic results of the sensitivity analyses were as follows:
(1) The various economic assumptions have similar effects on the
passenger car and light truck standards.
(2) Varying the economic assumptions has virtually no impact on
achieved fuel economy.
(3) The economic parameter with the greatest impact is fuel price.
Changing the fuel price forecast to AEO's High or Low forecasts impacts
benefits by about 37 percent. However, the impact of fuel
price on other quantities, such as cost, is much smaller, resulting in
increases or decreases of 3-8 percent.
(4) Economic parameters other than fuel price and the rebound
effect had no effect on per-vehicle cost, total cost, fuel savings, or
CO2 reductions. Their impacts on benefits were 6 percent or
less, with the exception of the 7 percent discount rate, which
decreased benefits by 20 percent, and the $56/ton CO2 value,
which raised benefits by 14 percent.
(5) Changing all economic parameters simultaneously (among the
considered values) changes benefits by at most about 60 percent.
However impacts to other quantities, such as cost, are much smaller,
resulting in increases or decreases of 6 percent or less.
(6) Impacts other than those discussed in 1) through 5) were small
(5 percent or less).
For more detailed information regarding NHTSA's sensitivity
analyses for this NPRM, please see Chapter X of NHTSA's PRIA.
5. How Would These Proposed Standards Impact Vehicle Sales?
Higher fuel economy standards are expected to increase the price of
passenger cars and light trucks, because manufacturers will have to add
technology to vehicles to increase their fuel economy, the cost for
which they will likely pass on in some fashion to consumers. NHTSA
examined the potential impact of higher vehicle prices on sales on an
industry-wide basis for passenger cars and light trucks separately. We
note that the analysis conducted for this rule does not have the
precision to examine effects on individual manufacturers or different
vehicle classes.
There is a broad consensus in the economic literature that the
price elasticity for demand for automobiles is approximately -1.0.\588\
Thus, every one percent increase in the price of the vehicle would
reduce sales by one percent. Elasticity estimates assume no perceived
change in the quality of the product. However, in this case, vehicle
price increases result from adding technologies that improve fuel
economy. If consumers did not value improved fuel economy at all, and
considered nothing but the increase in price in their purchase
decisions, then the estimated impact on sales from price elasticity
could be applied directly. However, NHTSA believes that consumers do
value improved fuel economy, because it reduces the operating cost of
the vehicles. NHTSA also believes that consumers consider other factors
that affect their costs and have included these in the analysis.
---------------------------------------------------------------------------
\588\ Kleit, A.N. (1990). ``The Effect of Annual Changes in
Automobile Fuel Economy Standards,'' Journal of Regulatory
Economics, vol. 2, pp. 151-172; Bordley, R. (1994). ``An Overlapping
Choice Set Model of Automotive Price Elasticities,'' Transportation
Research B, vol. 28B, no. 6, pp. 401-408; McCarthy, P.S. (1996).
``Market Price and Income Elasticities of New Vehicle Demands,'' The
Review of Economics and Statistics, vol. LXXVII, no. 3, pp. 543-547.
---------------------------------------------------------------------------
The main question, however, is how much of the retail price needed
to cover the technology investments to meet higher fuel economy
standards will manufacturers be able to pass on to consumers. The
ability of manufacturers to pass the compliance costs on to consumers
depends upon how consumers value the fuel economy improvements.\589\
Consumer valuation of fuel economy improvements often depends upon the
price of gasoline, which has recently been very volatile. The estimates
reported below as part of NHTSA's analysis on sales impacts assume that
manufacturers will be able to pass all of their costs to improve fuel
economy on to consumers. To the extent that NHTSA has accurately
predicted the price of gasoline and consumers' reactions, and
manufacturers can pass on all of the costs to consumers, then the sales
and employment impact analyses are reasonable. On the other hand, if
manufacturers only increase retail prices to the extent that consumers
value these fuel economy improvements (i.e., to the extent that they
value fuel savings), then there would be no impact on sales, although
manufacturers' profit levels would fall. Sales losses are predicted to
occur only if consumers fail to value fuel economy improvements at
least as much as they pay in higher vehicle prices. Likewise, if fuel
prices rise beyond levels used in this analysis, consumer valuation of
improved fuel economy could increase to match or exceed their initial
investment, resulting in no impact or even an increase in sales levels.
---------------------------------------------------------------------------
\589\ Gron, Ann and Swenson, Deborah, 2000, ``Cost Pass-Through
in the U.S. Automobile Market,'' The Review of Economics and
Statistics, 82: 316-324.
---------------------------------------------------------------------------
To estimate the average value consumers place on fuel savings at
the time of purchase, NHTSA assumes that the average purchaser
considers the fuel savings they would receive over a 5-year time frame.
NHTSA chose 5 years because this is the average length of time of a
financing agreement.\590\ The
[[Page 49721]]
present values of these savings were calculated using a 3 percent
discount rate. NHTSA used a fuel price forecast that included taxes,
because this is what consumers must pay. Fuel savings were calculated
over the first 5 years and discounted back to a present value.
---------------------------------------------------------------------------
\590\ National average financing terms for automobile loans are
available from the Board of Governors of the Federal Reserve System
G.19 ``Consumer Finance'' release. See http://www.federalreserve.gov/releases/g19/ (last accessed August 9, 2009).
---------------------------------------------------------------------------
NHTSA believes that consumers may consider several other factors
over the 5-year horizon when contemplating the purchase of a new
vehicle. NHTSA added these factors into the calculation to represent
how an increase in technology costs might affect consumers' buying
considerations.
First, consumers might consider the sales taxes they have to pay at
the time of purchasing the vehicle. NHTSA took sales taxes in 2007 by
State and weighted them by population by State to determine a national
weighted-average sales tax of 5.5 percent.
Second, NHTSA considered insurance costs over the 5-year period.
More expensive vehicles will require more expensive collision and
comprehensive (e.g., theft) car insurance. The increase in insurance
costs is estimated from the average value of collision plus
comprehensive insurance as a proportion of average new vehicle price.
Collision plus comprehensive insurance is the portion of insurance
costs that depends on vehicle value. The Insurance Information
Institute provides the average value of collision plus comprehensive
insurance in 2006 as $448.\591\ This is compared to an average price
for light vehicles of $24,033 for 2006.\592\ Average prices and
estimated sales volumes are needed because price elasticity is an
estimate of how a percent increase in price affects the percent
decrease in sales.
---------------------------------------------------------------------------
\591\ Insurance Information Institute, 2008, ``Average
Expenditures for Auto Insurance By State, 2005-2006.'' Available at
http://www.iii.org/media/facts/statsbyissue/auto/ (last accessed
August 9, 2009).
\592\ $29,678/$26,201 = 1.1327 * $22,651 = $25,657 average price
for light trucks. In 2006, passenger cars were 54 percent of the on-
road fleet, and light trucks were 46 percent of the on-road fleet,
resulting in an average light vehicle price for 2006 of $24,033.
---------------------------------------------------------------------------
Dividing the insurance cost by the average price of a new vehicle
gives the proportion of comprehensive plus collision insurance as 1.86
percent of the price of a vehicle. If we assume that this premium is
proportional to the new vehicle price, it represents about 1.86 percent
of the new vehicle price, and insurance is paid each year for the five-
year period we are considering for payback. Discounting that stream of
insurance costs back to present value indicates that the present value
of the component of insurance costs that vary with vehicle price is
equal to 8.5 percent of the vehicle's price at a 3 percent discount
rate.
Third, NHTSA considered that 70 percent of new vehicle purchasers
take out loans to finance their purchase. The average new vehicle loan
is for 5 years at a 6 percent rate.\593\ At these terms, the average
person taking a loan will pay 16 percent more for their vehicle over
the 5 years than a consumer paying cash for the vehicle at the time of
purchase.\594\ Discounting the additional 3.2 percent (16 percent/5
years) per year over the 5 years using a 3 percent mid-year discount
rate \595\ results in a discounted present value of 14.87 percent
higher for those taking a loan. Multiplying that by the 70 percent of
consumers who take out a loan means that the average consumer would pay
10.2 percent more than the retail price for loans the consumer
discounted at a 3 percent discount rate.
---------------------------------------------------------------------------
\593\ New car loan rates in 2007 averaged about 7.8 percent at
commercial banks and 4.5 percent at auto finance companies, so their
average is close to 7 percent.
\594\ Based on www.bankrate.com auto loan calculator for a 5-
year loan at 6 percent.
\595\ For a 3 percent discount rate, the summation of 3.2
percent x 0.9853 in year one, 3.2 x 0.9566 in year two, 3.2 x 0.9288
in year three, 3.2 x 0.9017 in year 4, and 3.2 x 0.8755 in year
five.
---------------------------------------------------------------------------
Fourth, NHTSA considered the residual value (or resale value) of
the vehicle after 5 years and expressed this as a percentage of the new
vehicle price. In other words, if the price of the vehicle increases
due to fuel economy technologies, the resale value of the vehicle will
go up proportionately. The average resale price of a vehicle after 5
years is about 35 percent of the original purchase price.\596\
Discounting the residual value back 5 years using a 3 percent discount
rate (35 percent * .8755) gives an effective residual value at new of
30.6 percent.
---------------------------------------------------------------------------
\596\ Consumer Reports, August 2008, ``What That Car Really
Costs to Own.'' Available at http://www.consumerreports.org/cro/cars/pricing/what-that-car-really-costs-to-own-4-08/overview/what-that-car-really-costs-to-own-ov.htm (last accessed August 9, 2009).
---------------------------------------------------------------------------
NHTSA then adds these four factors together. At a 3 percent
discount rate, the consumer considers she could get 30.6 percent back
upon resale in 5 years, but will pay 5.5 percent more for taxes, 8.5
percent more in insurance, and 10.2 percent more for loans, resulting
in a 6.48 percent return on the increase in price for fuel economy
technology. Thus, the increase in price per vehicle is multiplied by
0.9352 (1-0.0648) before subtracting the fuel savings to determine the
overall net consumer valuation of the increase of costs on her purchase
decision.
The following table shows the estimated impact on sales for
passenger cars and light trucks combined for the proposed alternative.
For all model years except MY 2012, NHTSA anticipates an increase in
sales, based on consumers valuing the improvement in fuel economy more
than the increase in price.
Table IV.G.5-1--Potential Impact on Sales, Passenger Cars and Light Trucks Combined
----------------------------------------------------------------------------------------------------------------
MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
-58,058................................................. 52,719 178,470 342,628 454,520
----------------------------------------------------------------------------------------------------------------
6. What Are the Consumer Welfare Impacts of These Proposed Standards?
There are two viewpoints for evaluating the costs and benefits of
the proposed increase in CAFE standards: The private perspective of
vehicle buyers themselves on the higher fuel economy levels the
proposed rule would require, and the economy-wide or ``social''
perspective on the costs and benefits of requiring higher fuel economy.
From the perspective of vehicle buyers, raising CAFE standards would
impose significant costs in the form of higher prices for new vehicles,
as manufacturers attempt to recover their added costs for producing
vehicles with higher fuel efficiency. If vehicle manufacturers are
unable to fully recover their higher costs for producing more fuel-
efficient cars and light trucks through higher sales prices, they will
bear part of these costs in the form of reduced ``producer surplus'' or
short-term profits.
Other private costs from requiring higher fuel economy also result
from changes in the welfare of potential vehicle buyers, as they
respond to
[[Page 49722]]
higher vehicle prices by purchasing different models or postponing
their purchases of new vehicles. The effects of requiring higher fuel
economy on consumer welfare also depend on whether manufacturers elect
to make other changes in vehicle attributes as they comply with
stricter CAFE standards, such as performance, passenger- and cargo-
carrying capacity, comfort, or occupant safety. Although NHTSA believes
it has employed estimates of costs for improving fuel economy that
include adequate allowances for any accompanying modifications
necessary to maintain new vehicles' current levels of other attributes,
any changes in these attributes that manufacturers elect to make will
represent additional private costs to vehicle buyers from requiring
increased fuel economy.
At the same time, raising CAFE standards also provides important
private benefits to vehicle buyers, mainly in the form of the values
buyers assign to the future savings in fuel costs they believe are
likely to result from purchasing more fuel-efficient vehicles. Although
these values are likely to vary significantly among buyers depending on
their expectations about future fuel prices, how long they anticipate
owning their vehicles, and how much they expect to drive, fuel savings
are the primary source of private benefits from increased fuel economy.
In addition, requiring new cars and light trucks to attain higher fuel
economy will also provide benefits to their buyers through the increase
in vehicle use associated with the fuel economy rebound effect, as well
as from increases in vehicles' driving range, which allow drivers to
refuel less frequently.
From the social perspective, the economic benefits and costs of
establishing higher CAFE standards include not only these private
benefits and costs, but also changes in the value of environmental and
economic externalities that result from fuel consumption and vehicle
use.\597\ These include the reduction in potential climate-related
economic damages resulting from lower CO2 emissions, reduced
damages to human health from lower emissions of criteria air
pollutants, reductions in economic externalities associated with U.S.
petroleum imports, and increases in traffic congestion, vehicle noise,
and accidents caused by the increased driving that results through the
fuel economy rebound effect.
---------------------------------------------------------------------------
\597\ Vehicle buyers are likely to value fuel savings using
retail fuel prices, which include taxes levied by Federal, State,
and some local governments. Because the reduction in these tax
payments resulting from lower fuel purchases is exactly offset by
lower tax revenues to government agencies (and reduced spending on
the transportation infrastructure and other investments financed by
fuel taxes), it does not represent a net benefit from the
perspective of the U.S. economy as a whole. Thus the social costs of
requiring higher fuel efficiency also include an adjustment to
reflect the reduction in fuel tax revenues that results from reduced
fuel purchases by new-car buyers.
---------------------------------------------------------------------------
NHTSA has estimated most elements of the private and social
benefits and costs that will result from its proposal to establish
higher CAFE standards for model years 2012 through 2016, and the agency
reports detailed empirical estimates of these impacts in this document
and its Preliminary Regulatory Impact Analysis for the proposed rule.
However, the agency is unable to provide a definitive accounting of the
private costs and benefits from establishing higher CAFE standards,
because we are unable to estimate the losses in consumer welfare that
are likely to result from the effects of higher prices for on the
number of new vehicles sold or on the mix of specific vehicle models
that buyers decide to purchase. Assuming that the agency has correctly
estimated each of the other costs and benefits that will result from
the proposed rule, its estimates of the net private and total (private
plus social) benefits represent their maximum possible values, and
considering the rule's impacts on consumer welfare would invariably
reduce the agency's reported estimates of the proposed rule's net
private and total benefits.
If the agency's estimates of technology costs are indeed adequate
to maintain vehicles' current levels of these other attributes
constant, the only changes in vehicles' characteristics resulting from
higher CAFE standards will be improvements in the fuel economy and
increases in sales prices for some (or perhaps even all) models. In
this case, the welfare effects of requiring higher fuel economy depend
on exactly how potential vehicle buyers value the future savings in
fuel costs that they anticipate will result from purchasing vehicles
with higher fuel economy.
If the market for new vehicles is perfectly competitive and
consumers have reliable information to estimate the likely magnitude
and value of future fuel savings from buying more efficient models,
economic theory suggests that they will make correct trade[hyphen]offs
between higher initial costs for purchasing more fuel-efficient
vehicles and subsequent reductions in their operating costs. These
include lower fuel expenditures, savings in the time they spend
refueling, and the benefits from any additional driving they do in
response to its lower per-mile cost. The assumption that consumers have
adequate information, foresight, and capability to make such trade-offs
has been challenged on both theoretical and empirical grounds. If this
assumption is accurate, however, no net private benefits can result
from requiring higher fuel economy, since doing so will alter both the
purchase prices of new cars and their lifetime streams of operating
costs in ways that will inevitably reduce consumers' well-being.
The essence of this view is that in the absence of the regulation,
consumers fully understand their current and future costs for owning
and using vehicles, and make tradeoffs between these that maximize
their individual welfare. From this viewpoint, CAFE standards--or any
other regulation that alters this trade[hyphen]off--will reduce their
private well being. The intuition behind this conclusion is probably
best captured by recognizing that automobile manufacturers currently
sell a wide range of vehicle models, including many that already comply
with the CAFE standards proposed in this rule. Yet sufficiently few
buyers elect to purchase these vehicles that the average fuel economy
of new vehicles sold today remains well below the levels this rule
would require.
On the other hand, a great deal of recent evidence suggests that
many consumers do not accurately trade off current and future costs of
owning and operating cars. For example, it appears that some buyers do
not know how to estimate future savings in fuel costs from purchasing a
higher-mpg vehicle, or that they incorrectly estimate the increased
expense of purchasing a more fuel-efficient new car. In this situation,
higher CAFE standards--which will increase purchase prices for new
cars, but reduce their lifetime operating costs--can indeed improve
consumers' financial well-being. If these circumstances are widespread,
then it is likely that requiring manufacturers to achieve higher fuel
economy can increase private well-being, and thus that potentially
significant savings in private costs can result from the proposed rule.
Whether these circumstances are indeed typical is largely a
question of the values that consumers place on additional fuel economy.
NHTSA is not currently in a position to reach a conclusive judgment on
this issue, and is thus unable to determine how requiring higher fuel
economy levels is likely to affect consumer welfare, even if the only
impacts of the proposed rule are to change the sales prices and fuel
[[Page 49723]]
economy levels of new cars and light trucks, as the agency assumes.
Even if these are the only changes that result from the proposed
rule, however, changes in the sales prices and fuel economy levels of
some new vehicle models are likely to affect some potential buyers'
decisions about whether to purchase a car and what type or model to
purchase. Research has demonstrated that previous CAFE rules and
market[hyphen]based changes in operating costs (for example, resulting
from changes in gasoline prices) lead consumers to alter the number and
types of cars they purchase, and that these changes can lead to losses
in consumer well[hyphen]being. However, NHTSA is not currently able to
provide empirical estimates of the magnitude of potential losses in
vehicle buyers' welfare resulting from postponement of their decisions
to purchase new vehicles or changes in the specific models they elect
to buy.
For both of these reasons, the likely impacts of adopting higher
CAFE standards on consumer welfare remain unknown. Because changes in
consumer welfare are an important component of the total private costs
and benefits resulting from higher standards, the magnitude and even
the direction of the net private economic impact of adopting stricter
CAFE standards also remains unknown.
How Do Consumers Value Fuel Economy?
For this proposed rule, NHTSA estimates several sources of private
benefits to vehicle buyers, including savings in future fuel costs, the
value of time saved due to less frequent refueling, and utility gained
from additional travel that results from the rebound effect. In
combination, the agency's estimates suggest that these private savings
greatly outweigh its estimates of the costs to consumers for providing
higher fuel economy, even without accounting for the additional social
benefits from higher fuel economy. This is due primarily to the very
large estimated value of future fuel savings from higher fuel economy,
which in turn partly reflects the agency's use of modest discount rates
(3 percent and 7 percent).
Even without considering the unmeasured welfare losses likely to
result from changes in the number of new cars sold and the specific
models purchased, however, this finding presents a conundrum. On the
one hand, requiring higher fuel economy levels appears likely to
produce large net benefits, primarily because the increased cost of
producing more fuel-efficient cars and light trucks appears to be far
outweighed by the value of the future fuel savings projected to result
from higher fuel economy (assuming modest discount rates). At the same
time, however, vehicle manufacturers currently produce many models that
would allow them to meet the proposed higher CAFE standards, yet at
least on average, buyers reveal a preference for lower fuel economy
than the proposed rule would require.
In this situation, often referred to as the Energy Efficiency
Paradox, consumers appear not to purchase products that are in their
economic self[hyphen]interest. There are theoretical reasons that could
explain such behavior: consumers may be myopic, and thus undervalue the
long term; they might lack information or be unable to use it properly
even when it is presented to them; they may be particularly averse to
potential short[hyphen]term losses associated with purchasing energy-
efficient products (the behavioral phenomenon of ``loss aversion''); or
even if consumers have relevant knowledge, the benefits of energy
efficient vehicles might not seem sufficiently important to them at the
time they decide to purchase a new car. A great deal of work in
behavioral economics has suggested the possibility that factors of this
sort help account for the Energy Efficiency Paradox.
Another possible explanation for the paradox between the apparently
large private benefits to vehicle buyers from requiring higher fuel
economy and the reluctance of many buyers to purchase new vehicles with
higher fuel economy is that consumers may apply much higher discount
rates than the agency has used when they evaluate future cost savings
from purchasing more fuel-efficient vehicles or other capital goods
offering gains in energy efficiency. For example, the Energy
Information Agency (1996) has used discount rates as high as 111
percent for water heaters and 120 percent for electric clothes
dryers.\598\
---------------------------------------------------------------------------
\598\ Energy Information Administration, U.S. Department of
Energy (1996). Issues in Midterm Analysis and Forecasting 1996, DOE/
EIA-0607(96), Washington, D.C. Available at http://www.osti.gov/bridge/purl.cover.jsp?purl=/366567-BvCFp0/webviewable/ (last
accessed Jul. 7, 2009).
---------------------------------------------------------------------------
Some evidence also suggests directly that vehicle buyers employ
high discount rates: consumers surveyed by Kubik (2006) reported that
fuel savings would have to be adequate to pay back the additional
purchase price of a more fuel-efficient vehicle in less than 3 years to
persuade a typical buyer to purchase it. \599\ In short, there appears
to be no consensus in the literature on what the private discount rate
should be in the context of vehicle purchase decisions.
---------------------------------------------------------------------------
\599\ Kubik, M. (2006). Consumer Views on Transportation and
Energy. Second Edition. Technical Report: National Renewable Energy
Laboratory.
---------------------------------------------------------------------------
Another possible reconciliation of the Energy Efficiency Paradox,
which poses a significant complication for evaluating the private
benefits resulting from higher CAFE standards, is that the values
consumers place on the future savings from higher fuel economy may vary
sufficiently widely that it is unclear whether on average this value
exceeds the costs of providing higher 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.\600\ (For
comparison, the present value of saving $1 per year on fuel for 15
years at a 3 percent discount rate is $11.94, while a 7 percent
discount rate produces a present value of $8.78.) Thus, this study
finds that some consumers appear to be willing to pay far too much to
obtain future fuel savings, while others may be willing to pay far too
little.
---------------------------------------------------------------------------
\600\ Greene, David L., and Jin-Tan Liu (1988). ``Automotive
Fuel Economy Improvements and Consumers' Surplus.'' Transportation
Research Part A 22A(3): 203-218. The study actually calculated the
willingness to pay for reduced vehicle operating costs, of which
vehicle fuel economy is a major component.
---------------------------------------------------------------------------
Although NHTSA has not found an updated survey of these values, a
few examples suggest that vehicle choice models also imply 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 nearly $600 extra to purchase a
vehicle that achieves one additional mile per gallon.\601\ 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).\602\ Thus, some buyers appear
[[Page 49724]]
not to make accurate trade[hyphen]offs between higher initial purchase
prices and subsequent fuel savings. At the same time, however, these
results may simply reflect the fact that the expected savings from
purchasing higher fuel economy vary widely among individuals, because
they travel different amounts or have different driving styles.
---------------------------------------------------------------------------
\601\ Espey, Molly, and Santosh Nair (2005). ``Automobile Fuel
Economy: What is it Worth?'' Contemporary Economic Policy 23(3):
317-323; McManus, Walter M. (2006). ``Can Proactive Fuel Economy
Strategies Help Automakers Mitigate Fuel-Price Risks?'' University
of Michigan Transportation Research Institute.
\602\ Gramlich, Jacob (2008). ``Gas Prices and Endogenous
Product Selection in the U.S. Automobile Industry.'' Available at
http://www.econ.yale.edu/seminars/apmicro/am08/gramlich-081216.pdf
(last accessed May 1, 2009).
---------------------------------------------------------------------------
Finally, it is possible that the apparent Energy Efficiency Paradox
is in fact not a paradox at all when one considers the uncertainty
surrounding future fuel prices and a vehicle's expected lifetime and
usage. As Metcalf and Rosenthal (1995) indicate, purchasing higher fuel
economy requires buyers to weigh known, up[hyphen]front costs that are
essentially irreversible (that is, they have a relatively low salvage
value if the return never materializes) against an unknown future
stream of fuel savings.\603\ They find some evidence that this accounts
for a large portion of the seeming inconsistency between low cost
opportunities to invest in energy efficiency and the current lack of
investment in them. This would not imply failure on the part of
consumers in making decisions, but rather that the rate of return
buyers require on their vehicle purchases (or other energy efficiency
investments) is much higher than that implied by a 3 percent discount
rate that does not include a provision for uncertainty.
---------------------------------------------------------------------------
\603\ Metcalf, G., and D. Rosenthal (1995). ``The `New' View of
Investment Decisions and Public Policy Analysis: An Application to
Green Lights and Cold Refrigerators,'' Journal of Policy Analysis
and Management 14: 517-531.
---------------------------------------------------------------------------
Greene et al. (2009) find additional support for this conclusion in
the context of fuel economy decisions: They find that the expected net
present value of increasing the fuel economy of a passenger car from 28
to 35 miles per gallon falls from $405 when calculated using standard
net present value calculations to nearly zero when uncertainty
regarding future cost savings is taken into account.\604\ In contrast
to Metcalf and Rosenthal, Greene et al. find that uncertainty regarding
the future price of gasoline is less important than uncertainty
surrounding the expected lifetimes of new vehicles. Supporting this
hypothesis is a finding by Dasgupta et al. (2007) that consumers are
more likely to lease than buy a vehicle with higher maintenance costs,
because leasing provides them with the option to return it before those
costs become too high.\605\
---------------------------------------------------------------------------
\604\ Greene, D., J. German, and M. Delucchi (2009). ``Fuel
Economy: The Case for Market Failure'' in Reducing Climate Impacts
in the Transportation Sector, Sperling, D., and J. Cannon, eds.
Springer Science.
\605\ Dasgupta, S., S. Siddarth, and J. Silva-Risso (2007). ``To
Lease or to Buy? A Structural Model of a Consumer's Vehicle and
Contract Choice Decisions.'' Journal of Marketing Research 44: 490-
502.
---------------------------------------------------------------------------
In contrast, other research suggests that the Energy Efficiency
Paradox is real and significant, and owes 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.\606\ If
the behavior identified in these studies is indeed widespread, then
significant gains to consumers can result from requiring higher fuel
economy.
---------------------------------------------------------------------------
\606\ 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.
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How NHTSA Proposes To Treat the Issue of Welfare Losses
In the course of future rulemakings, the agency intends to explore
methods that would allow it to present a more comprehensive accounting
of private costs and benefits from requiring higher fuel economy,
including more detailed estimates of changes in the welfare of new
vehicle buyers that are likely to result from higher CAFE standards.
One promising approach to estimating the full welfare loss associated
with CAFE's impact on vehicle purchasing decisions is using consumer
vehicle choice models to evaluate the simultaneous effects of increases
in sales prices, improvements in fuel economy, and changes in other
attributes of specific vehicle models, rather than in the average
values of these variables. NHTSA invites comments on the state of the
art of consumer vehicle choice modeling, as well as on the prospects
for these models to yield reliable estimates of changes in consumer
welfare from requiring higher fuel economy.
7. What Are the Estimated Safety Impacts of These Proposed Standards?
As discussed above, in evaluating the appropriate levels at which
to establish new CAFE standards, NHTSA must assess any potential safety
trade-offs. Safety trade-offs associated with fuel economy increases
have occurred in the past and the possibility of future ones remains a
concern. In the congressionally-mandated report entitled
``Effectiveness and Impact of Corporate Average Fuel Economy (CAFE)
Standards,'' a committee of the National Academy of Sciences (NAS)
(``2002 NAS Report'') \607\ concluded that the then-existing form of
passenger car and light truck CAFE standards, together with market
forces, created an incentive for vehicle manufacturers to comply in
part by downweighting and even downsizing their vehicles and that these
actions led to additional fatalities. Given the cost advantages of
downsizing instead of substituting lighter, higher strength materials,
NAS urged that the CAFE program be restructured to reduce the
regulatory incentive to downsize. As NAS observed, the ability to
reduce weight without reducing size does not mean they will exclusively
rely on those means of weight reduction. Responding to NAS' concern,
Congress mandated in EISA that CAFE standards be based on an attribute
related to fuel economy, like footprint or weight.
---------------------------------------------------------------------------
\607\ National Research Council, ``Effectiveness and Impact of
Corporate Average Fuel Economy (CAFE) Standards,'' National Academy
Press, Washington, DC (2002). Available at http://www.nap.edu/openbook.php?isbn=0309076013 (last accessed September 11, 2009).
---------------------------------------------------------------------------
Given the relative cost-effectiveness of at least some approaches
to weight reduction, it is reasonable to assume that the vehicle
manufacturers will choose weight reduction as one means of achieving
compliance with the proposed standards. In fact, informal statements by
the vehicle manufacturers themselves indicate that they intend to
engage in some weight reduction, as appropriate for certain vehicle
models, during the rulemaking time frame. While the manufacturers
generally indicate that they plan to reduce weight without reducing
size, their adherence to those plans would not remove all bases for any
safety concerns.
The question of the effect of changes in vehicle weight on safety
in the context of fuel economy is a complex question that poses serious
analytic challenges and has been a contentious issue for many years.
This contentiousness arises, at least in part, from the difficulty of
isolating vehicle weight from other confounding factors (e.g., driver
behavior, or vehicle factors such as engine size and wheelbase). In
addition, at least in the past, several vehicle factors have been
closely related, such as vehicle mass, wheelbase, track width, and
structural integrity. The issue has been addressed in the literature
for more than two decades. For the reader's reference, much more
information about safety in
[[Page 49725]]
the CAFE context is available in the MY 2011 final rule \608\ and in
Section IX of the PRIA.
---------------------------------------------------------------------------
\608\ 74 FR 14396-14407 (Mar. 30, 2009).
---------------------------------------------------------------------------
Conducting the safety assessment for this rulemaking is thus
difficult since, in general, it is unclear to what extent the higher
fatality risk of smaller and lighter vehicles is associated with their
reduced mass as compared to their reduced physical dimensions. That is
because, historically, the safest vehicles have been heavy and large,
while the vehicles with the highest fatal-crash rates have been light
and small, both because the crash rate is higher for small/light
vehicles and because the fatality rate is higher for small/light
vehicle crashes.\609\ Intuitively, a reduction in mass while
maintaining physical dimensions is likely to be less harmful than a
reduction in both mass and physical dimensions.
---------------------------------------------------------------------------
\609\ Kahane, Charles J., Ph.D., ``Vehicle Weight, Fatality Risk
and Crash Compatibility of Model Year 1991-99 Passenger Cars and
Light Trucks,'' DOT HS 809 662, October 2003, Executive Summary.
Available at http://www.nhtsa.dot.gov/cars/rules/regrev/evaluate/809662.html (last accessed August 12, 2009).
---------------------------------------------------------------------------
As noted above, the manufacturers have generally informally stated
that they plan to use weight reduction methods that do not involve size
reduction. That is plausible since the selection of footprint as the
attribute in setting CAFE standards helps to minimize the incentive to
reduce a vehicle's physical dimensions. This is because as footprint
decreases, the corresponding fuel economy target decreases.\610\
---------------------------------------------------------------------------
\610\ Vehicle footprint is not synonymous with vehicle size.
Since the footprint is only that portion of the vehicle between the
front and rear axles, footprint based standards do not discourage
downsizing the portions of a vehicle in front of the front axle and
to the rear of the rear axle. The crush space provided by those
portions of a vehicle can make important contributions to managing
crash energy.
---------------------------------------------------------------------------
However, NHTSA cautions that vehicle footprint is not synonymous
with vehicle size. Since the footprint is only that portion of the
vehicle bounded by the front and rear axles and by the wheels,
footprint based standards do not discourage downsizing the portions of
a vehicle in front of the front axle and to the rear of the rear axle
(front and rear overhand). Similarly, they do not discourage downsizing
the portions of a vehicle outside its wheels (side overhang). The crush
space provided by those portions of a vehicle can make important
contributions to managing crash energy. We note that at least one
manufacturer has confidentially indicated plans to reduce overhang as a
way of reducing weight on some vehicles during the rulemaking time
frame.
Neither the CAFE standards nor our analysis of the feasibility of
fuel economy improvements mandates mass reduction or any other specific
technology application. In addition, considering NHTSA's analysis of
the observed relationship between vehicle mass and the prevalence of
fatalities, NHTSA has, except for vehicles with baseline curb weight
over 5,000 pounds, excluded weight reduction from its analysis of
potential CAFE standards in past rulemakings. The agency followed this
analytical approach in order to ensure that its consideration of new
standards was not dependent on weight reduction that could potentially
compromise highway safety, recognizing, though, that the structure of
CAFE standards does not prohibit manufacturers from making such
responses to new CAFE standards. The agency implemented this approach
by setting the Volpe model to apply this exclusion when estimating how
manufacturers could apply technology in response to new CAFE standards.
In its rulemakings on MY 2008-2011 light truck CAFE standards and
MY 2011 car and light truck CAFE standards, NHTSA received comments
suggesting that NHTSA expand the applicability of weight reduction
technologies in its modeling to vehicles under 5,000 pounds, because,
according to the commenters, weight reduction can be accompanied by
proper vehicle design to assure that vehicle safety is not compromised.
In the final rules in those rulemakings, the agency said that there may
be great possibilities in the use of material substitution and other
processes to minimize the safety effects of reducing weight. The agency
further noted that this should be explored as data become available.
After reviewing its assumptions and methodologies per the
President's January 26 memorandum and working with EPA in this
rulemaking, NHTSA revised its approach to include weight reduction of
up to 5-10 percent of baseline curb weight, depending on vehicle type.
Recently-submitted manufacturer product plans as well as public
statements from a number of the manufacturers suggest some of them
expect that by MY 2016, they will be able to reduce the weight of some
specific vehicle models by similar levels. However, NHTSA does not
believe that, except where already planned, such significant weight
reductions can be achieved in MY 2012 or MY 2013, because there is not
enough lead time for the necessary design, engineering, and tooling.
NHTSA estimates that weight reductions of 1.5 percent can be achieved
during redesigns occurring prior to MY 2014, and that weight reductions
of 5-10 percent can be achieved in redesigns occurring in MY 2014 or
later. For purposes of analyzing CAFE standards, NHTSA has further
assumed that weight reductions would be limited to 5 percent for small
vehicles (e.g., subcompact passenger cars), and that reductions of 10
percent would only be applied to the larger vehicle types (e.g., large
light trucks).
NHTSA's modeling approach is similar to EPA's in terms of maximum
available weight reduction for any vehicle model, sensitive to vehicle
safety in terms of when and to which vehicle types significant weight
reduction can be achieved safely, and supported by information in some
manufacturers' product plans. Some manufacturers have indicated that,
in later model years, they plan to reduce significantly the weight of
some specific vehicle models, and that they plan to do so without
reducing vehicle size. NHTSA's analysis results in similar degrees of
weight reduction, applied more widely to some manufacturers. NHTSA
notes, though, that some manufacturers are also planning considerable
changes in product mix, and some of these changes could mean reduced
average size along with reduced average weight. In NHTSA's (and EPA's)
analysis, such changes in product mix are not counted, because they are
either in the baseline market forecast, or are not estimated.
As stated above, neither the CAFE standards nor our analysis
mandates mass reduction, or mandates that if mass reduction occurs, it
be done in any specific manner. However, mass reduction is one of the
technology applications available to the manufacturers and has been
used by them in the past. A degree of mass reduction is used by the
Volpe model in determining the capabilities of manufacturers and in
predicting both cost and fuel consumption impacts of improved CAFE
standards.
In this section, we briefly summarize our analysis of the potential
impacts of these mass reductions on vehicle safety. NHTSA's quantified
analysis is based on the 2003 Kahane study,\611\ which estimates the
effect of 100-pound reductions in MYs 1991-1999 heavy light trucks and
vans (LTVs), light LTVs, heavy passenger cars, and light passenger
cars. The study compares the fatality rates of LTVs and cars to
quantify differences between vehicle
[[Page 49726]]
types, given drivers of the same age/gender, etc. In this analysis, the
effect of ``weight reduction'' is not limited to the effect of mass per
se, but includes all the factors, such as length, width, structural
strength, and size of the occupant compartment, that were naturally or
historically confounded with mass in MYs 1991-1999 vehicles. The
rationale is that adding length, width, or strength to a vehicle will
also make it heavier.
---------------------------------------------------------------------------
\611\ Id.
---------------------------------------------------------------------------
The agency utilized the relationships between weight and safety
from Kahane (2003), expressed as percentage increases in fatalities per
100-pound weight reduction, and examined the weight impacts assumed in
this CAFE analysis. However, there are several identifiable safety
trends that are already in place or expected to occur in the
foreseeable future and that are not accounted for in the study. For
example, two important new safety standards that have already been
issued and will be phasing in during the rulemaking time frame. Federal
Motor Vehicle Safety Standard No. 126 (49 CFR 571.126) will require
electronic stability control in all new vehicles by MY 2012, and the
upgrade to Federal Motor Vehicle Safety Standard No. 214 (Side Impact
Protection, 49 CFR 571.214) will likely result in all new vehicles
being equipped with head-curtain air bags by MY 2014.\612\
Additionally, we anticipate continued improvements in driver (and
passenger) behavior, such as higher safety belt use rates. All of these
will tend to reduce the absolute number of fatalities resulting from
weight reductions. Thus, while the percentage increases in Kahane
(2003) was applied, the reduced base has resulted in smaller absolute
increases than those that were predicted in the 2003 report.
---------------------------------------------------------------------------
\612\ We note that the Volpe model currently does not account
for the weight of safety standards that will be added compared to
the MY 2008 baseline, nor does it account for the societal cost of
reductions in weight. However, both of these items will be added to
the model for the final rule; doing so will raise the weight of
every vehicle by roughly 17 pounds in MY 2016 (slightly less in
earlier years), which will likely require manufacturers to add
slightly more technology to reach the final standards than they were
estimated to need to reach the proposed standards. However, NHTSA
does not expect the impact of these roughly 17 pounds per vehicle to
have a significant impact on the safety analysis.
---------------------------------------------------------------------------
The agency examined the impacts of the identifiable safety trends
over the lifetime of the vehicles produced in each model year. An
estimate of these impacts was contained in a previous agency
report.\613\ The impacts were estimated on a year-by-year basis, but
could be examined in a combined fashion. The agency assumed that the
safety trends will result in a reduction in the target population of
fatalities from which the weight impacts are derived. Using this
method, we found a 12.6 percent reduction in fatality levels between
2007 and 2020. The estimates derived from applying Kahane's percentages
to a baseline of 2007 fatalities were thus multiplied by 0.874 to
account for changes that the agency believes will take place in
passenger car and light truck safety between the 2007 baseline on-road
fleet used for this particular analysis and year 2020.
---------------------------------------------------------------------------
\613\ Blincoe, L. and Shankar, U, ``The Impact of Safety
Standards and Behavioral Trends on Motor Vehicle Fatality Rates,''
DOT HS 810 777, January 2007. See Table 4 comparing 2020 to 2007
(37,906/43,363 = 12.6% reduction (1-.126 = .874).
---------------------------------------------------------------------------
We note that because these new analyses are based on the method
shown in Kahane (2003), which predicts the safety effect of 100-pound
mass reductions in MY 1991-1999 light trucks and vans (LTVs) and
passenger cars, the new analyses need to be understood in the context
of that study. Specifically, the numbers in the new analyses represent
an upper bound (or worst case) fatality estimate--that is, the estimate
would only apply if all weight reductions come from reducing both
weight and footprint. Kahane's conclusions are based upon a cross-
sectional analysis of the actual on-road safety experience of 1991-1999
vehicles. For those vehicles, heavier usually also meant larger-
footprint. Hence, the numbers in the new analyses predict the safety-
related fatalities that would occur in the unlikely event that weight
reduction for MYs 2012-2016 is accomplished entirely by reducing mass
and reducing footprint.
Exclusive reliance on downsizing for the model years covered by
this rulemaking is unlikely for the following reasons. As noted above,
the manufacturers have generally indicated that they plan reduce weight
without reducing size. Further, the flat CAFE standards in effect when
those MY 1991-1999 vehicles were produced had no penalty for such a
strategy for improving fuel economy. In contrast, as discussed above,
the current attribute-based CAFE standards do not encourage vehicle
downsizing by reducing footprint. This structural change to the CAFE
program means that the CAFE standards now favor the use of weight
reduction strategies that do not involve simply making that portion of
the vehicle smaller. These other strategies include downsizing the
engine and adding turbocharging, as well as materials substitution.
Given this structural change to the CAFE program, it is likely that
a significant portion of the weight reduction in the MY 2012-2016
vehicles will be accomplished by strategies that have a lesser safety
impact than the prevalent 1990s strategy of simply making the vehicles
smaller, although NHTSA is unable to predict how large a portion. For
example, a manufacturer could conceivably add length, width, or
strength to a vehicle by replacing existing materials with light, high-
strength components.
To the extent that future weight reductions could be achieved by
substituting light, high-strength materials for existing materials--
without any accompanying reduction in the size or structural strength
of the vehicle--then NHTSA believes that the fatality increases
associated with the weight reductions anticipated by the model as a
result of the proposed standards could be significantly smaller than
those in the worst-case scenario. However, NHTSA does not currently
have information (on-road data) to calibrate and predict how much
smaller those increases would be for any given mixture of material
substitution and downsizing, since the data on the safety effects of
mass reduction alone is not available due to the low numbers of
vehicles in the current on-road fleet that have utilized this
technology extensively. Further, to the extent that weight reductions
were accomplished through use of light, high-strength materials, there
would be significant additional costs that would need to be determined
and accounted for. Those higher costs are not reflected in NHTSA's
cost-benefit analysis for this proposal.
Nevertheless, even though NHTSA cannot quantify these safety
effects, we can project that they could be significantly less than
those that would result from simple downsizing. However, we are also
convinced that the safety effects are larger than zero for the
following reasons:
The effects of mass per se (laws of physics) will persist
regardless whether mass is reduced by material substitution,
downsizing, or any other method. There are a variety of crash types
that could be impacted in various ways by changes in vehicle weight and
at times by the way in which the vehicle's weight is changed. The
following discussion examines weight reduction by either engine size
reductions or material substitution and its impact on each of the
different crash types.\614\
---------------------------------------------------------------------------
\614\ For a similar discussion of effect of weight reduction on
different crash modes, see Effectiveness and Impact of Corporate
Average Fuel Economy Standards, NAS 1972, pp 74-75.
---------------------------------------------------------------------------
Let us assume that Car A weighs X pounds and that Car B weighs X-
100
[[Page 49727]]
pounds and that Cars A and B have the same footprint, overhang and
structural strength.
[cir] Single-vehicle crashes
Hitting an immovable object (like a big tree or bridge abutment).
In most cases, there would be little impact on vehicle safety if
Car A and Car B each hit a different immovable object at the same speed
because the change in velocity (delta-V) would be the same for both
vehicles.
Hitting a partially movable object (like a small tree, parked car,
storefront, or dwelling).
Heavier vehicles will impart more force to movable objects than
lighter vehicles. This will increase the chance that the movable
objects will break, crush, or otherwise give way and increase the
distance over which the striking vehicle can decelerate, which will
reduce the delta-V for the vehicle's occupants.
Single-vehicle rollovers.
Smaller vehicles end up in more rollover crashes than larger
vehicles. Part of the reason for this is the static stability factor,
since smaller vehicles have less track width. Part of the reason for
this is the way smaller vehicles are driven. Given the same track width
for Car A and Car B, the impact on rollovers is hard to determine since
the weight helps build up momentum and the influence of momentum versus
weight for tripped rollovers is hard to discern.
[cir] Multi-vehicle crashes
Frontal impact--two light vehicles.
While a collision of Car B with Car B is likely to have the same
risk as a similar collision of Car A with Car A, the final answer on
safety will depend upon what vehicle sizes receive overall weight
reductions. As NHTSA's study shows, if weight is taken out of the
larger light trucks, overall safety is improved. If weight is taken out
of passenger cars or smaller light trucks, overall safety decreases.
Overall, we can't determine whether there will be an overall difference
in safety.
Side impact--struck vehicle.
As a struck vehicle, Car B is at a disadvantage because its delta V
would be increased. Car B would be less safe.
Side impact--striking vehicle.
NHTSA analyses have shown that for a striking vehicle in a side
impact, weight is not as important as striking height. Weight does have
an impact, because of imparting a lower delta V on the struck vehicle.
When struck by Car B, the struck vehicle would be somewhat safer.
Side impact--overall.
Overall, there will be a minimal difference in safety.
Collision with an older light vehicle.
Car B would experience a higher delta V and a higher fatality risk
than Car A, if either were struck by the same pre-2012 vehicle. But the
occupants of the older vehicle would experience a lower delta V and a
lower risk if struck by Car B.
Collision with a medium-sized truck (somewhat over 10,000 GVWR).
Medium-size trucks are not affected by CAFE and do not need to
decrease their weight. Car B would experience a higher delta V and a
higher risk than Car A. (The risk to the occupants of the medium-size
truck would be minimally higher with Car A.) Overall, Car B would be
less safe.
Collision with a fully-loaded tractor trailer (significantly over
10,000 GVWR).
Car B would experience a higher delta V than Car A, but in this
case, the difference in delta V would be minimal. Risk would be similar
in both cars.
[cir] Pedestrian/bicyclist impacts
In general, Car A would impose a slightly higher delta V on the
pedestrian than Car B, but the difference would be so small that risk
for the pedestrian would essentially be the same either way.
Our attribute-based standards have the excellent feature
that they can avoid encouraging reductions in footprint. However,
weight can be removed by downsizing, rather than material substitution,
even while maintaining footprint:
[cir] By reducing the overhang in front of the front wheels and
behind the rear wheels. These are protective structures whose removal
would increase risk to occupants by reducing vehicle crush space.
[cir] By thinning or removing structures within the vehicle.
NHTSA has found that lighter vehicles are driven in a
manner that results in a higher involvement rate in fatal crashes, even
after controlling for the driver's age, gender, urbanization, and
region of the country. However, in our response in the MY 2011 final
rule to the DRI analyses, we were unable to attribute this effect to
any obvious ``size'' parameter such as track width or wheelbase. In
non-rollover crashes, weight continued to be the most important
parameter, even when track width and wheelbase were included as
independent variables. Until we understand the phenomenon better, we
assume that weight reduction is likely to be associated with higher
fatal-crash rates, no matter how the weight reduction is achieved.
Table IV.G.7-1 below shows the results of NHTSA's worst case
analysis of safety-related fatalities separately for each model year.
Additionally, the societal impacts of increasing fatalities can be
monetized using DOT's estimated comprehensive cost per life of $6.1
million. This consists of a value of a statistical life of $5.8 million
plus external economic costs associated with fatalities such as medical
care, insurance administration costs and legal costs.\615\
---------------------------------------------------------------------------
\615\ Blincoe et al., The Economic Impact of Motor Vehicle
Crashes 2000, May 2002, DOT HS 809 446. Data from this report were
updated for inflation and combined with the current DOT guidance on
value of a statistical life to estimate the comprehensive value of a
statistical life.
---------------------------------------------------------------------------
NHTSA has also calculated an assumed impact on injuries and added
that to the societal costs of fatalities. This assumed impact is based
on past studies indicating that fatalities account for roughly 44
percent of total comprehensive costs due to injury.\616\ If weight
impacts non-fatal injuries roughly proportional to its impact on
fatalities, then total costs would be roughly 2.3 times those noted in
Table IV.G.7-2. The potential societal costs for just fatalities are
shown in Table IV.G.7-2. The combined potential social costs are shown
in Table IV.G.7-4.
---------------------------------------------------------------------------
\616\ Based on data in Blincoe et al., updated for inflation and
reflecting the Department's current VSL of $5.8 million.
---------------------------------------------------------------------------
Looking at the results on a calendar year basis, we also note that
the safety impacts of the Kahane analysis based weight reduction have a
slow onset. Passenger cars typically have a 10-25 year lifetime, and
light trucks somewhat longer. Thus, some of the fatalities for MY 2016
light trucks will not occur until after 2050. Moreover, the weight
reductions are small in the early model years 2012 and 2013. The
vehicles with reduced weight will only be a small proportion of the
entire on-road fleet in the initial calendar years of these proposed
CAFE standards. The influence of these factors is illustrated in Table
IV.G.7-3 below.
Additionally, there will be significant fuel-saving benefits from
these proposed standards, up to 61.6 billion gallons during the
lifetime of MYs 2012-2016 vehicles. There will also be significant
reductions in CO2 emissions, up to 656 million metric tons
during that same time period.
Improved fuel economy will also result in a decrease in harmful
criteria pollutants, which will decrease premature deaths due to a
number of diseases related to environmental pollution. The literature
strongly supports the causal relationship between health and exposure
to criteria pollutants. However, as with vehicle safety impacts, there
is much
[[Page 49728]]
uncertainty regarding the exact level of health impacts that might be
achieved with this rule. Thus, there are potentially both positive and
negative impacts that could result from this rulemaking. We have not
attempted to quantify other beneficial health impacts that are expected
to result from the proposed standards, including the results of a
decrease in the rate of global warming, and increased energy security
resulting from a lesser dependence on oil imported volatile regions of
the world, but they, too, could be significant.
In summary, the agency recognizes the balancing inherent in
achieving higher levels of fuel economy through reduction of vehicle
weight. We emphasize that these safety-related fatality estimates
represent a worst case scenario for the potential effects of this
rulemaking, and that actual fatalities will be less than these
estimates, possibly significantly less, based on the qualitative
discussion above of the various factors that could reduce the
estimates. At the same time, however, the agency cannot specify a
reasonable lower-bound estimate. It is possible that the impact could
be fairly small, but the agency is unable to specify a lower-bound at
this time due to a lack of studies that address the safety risk
associated with weight reduction that is not also accompanied by size
reduction. Additionally, the estimates presented here do not include
estimates for injuries. Nevertheless, we believe that the balancing is
reasonable.
In the absence of data that permit examining the fatality impact of
reductions in weight and footprint independently, we considered whether
it would be appropriate to use the industry-sponsored DRI study to
estimate a lower-bound value. However, as noted below, the agency's
inability to reproduce DRI's results raises questions whether the DRI
reports sufficiently satisfy reproducibility criteria and thus have the
quality, objectivity, utility, and integrity needed for information
relied upon and disseminated by the Federal Government to the public.
Reliance upon non-reproducible studies undermines the credibility of
the Government's scientific information. Further, the DRI reports raise
a significant additional data quality concern. They have not been
subjected to a rigorous form of peer review.
DRI produced several studies between 2000 and 2005, funded by a
manufacturer of small vehicles and purporting to analyze mass, track
width, and wheelbase as independent variables. DRI's 2002 paper
indicated that reducing mass would be beneficial, while reducing track
width and wheelbase would be harmful. If true, this meant that weight
reduction would benefit safety if track width and wheelbase were
maintained. However, NHTSA has concluded that the 2002 DRI study
inadvertently introduced significant biases in the analysis, as a
result of including 2-door cars in the analysis. Dr. Kahane's analyses
have excluded 2-door passenger cars on the grounds that in the data
reviewed in those analyses (and by DRI in its analysis), 2-door cars
consisted in considerable part of sports and muscle cars. Including
sports and muscle cars in a regression analysis of vehicle weight and
safety biases the results for two primary reasons: first, because
sports and muscle cars tend to have short wheelbases but be relatively
heavy for their size, they function as outliers in the regression
analysis and thus distort the derived relationships and second, because
sports and muscle cars as a group tend to be disproportionately
involved in crashes. NHTSA provided this response to DRI publicly in
2004.\617\ In response, DRI submitted a new study in 2005 with a
sensitivity analysis limited to 4-door cars, excluding police cars. DRI
further stated that it could mimic NHTSA's logistic regression approach
for an analysis of model year 1991-98 4-door cars in calendar year
1995-1999 crashes. DRI stated that its updated 2005 analysis still
showed results directionally similar to its earlier work--increased
risk for lower track width and wheelbase, reduced risk for lower mass--
although DRI acknowledged that the wheelbase and mass effects were no
longer statistically significant after removing the 2-door cars from
the analysis.
---------------------------------------------------------------------------
\617\ Docket No. NHTSA-2003-16318-0016.
---------------------------------------------------------------------------
Since receiving it, NHTSA has disagreed with the results of DRI's
2005 analysis, most recently on record in the MY 2011 CAFE final rule,
for two primary reasons. First, even using the same (NHTSA) data and
methodology as DRI used, NHTSA has been unable to reproduce DRI's 2005
results. And second, to our knowledge, unlike Dr. Kahane's 2003 study,
DRI's 2005 study has not been rigorously peer-reviewed.
The following provides an example of how NHTSA has tried to
reproduce DRI's results, unsuccessfully. In MY 1991-1998, the average
car weighing x + 100 pounds had a track width that was 0.34 inches
larger and a wheelbase that was 1.01 inches longer. Thus, one could say
that a ``historical'' 100-pound weight reduction would have been
accompanied by a 0.34 inch track width reduction and a 1.01 inch
wheelbase reduction. However, using a reasonable check, if one
dissociates weight, track width, and wheelbase and treats them as
independent parameters, DRI's logistic regression of model year 1991-
1998 4-door cars excluding police cars attributes the following
effects:
[[Page 49729]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.050
However, applying NHTSA's logistic regression analyses \618\ to
NHTSA's database, exactly as described in the agency's response to
comments on its 2003 report, except for limiting the data to model
years 1991-98, instead of 1991-99, produces results that are not at all
like DRI's. Mass still has the largest effect, exceeding track width,
and it moves in the expected direction.
---------------------------------------------------------------------------
\618\ Regression analysis involves modeling and analyzing
several variables, when the focus is on the relationship between a
dependent variable and one or more independent variables. Logistic
regression analysis involves three variables.
[GRAPHIC] [TIFF OMITTED] TP28SE09.051
NHTSA obtained its estimates by adding the results from 12
individual logistic regressions: Six types of crashes multiplied by two
car-weight groups (less than 2,950 pounds; 2,950 pounds or more).\619\
DRI does not appear to have followed the same procedures, based on the
widely differing results.
---------------------------------------------------------------------------
\619\ See, e.g., Kahane (2003), Table 2 on p. xi.
---------------------------------------------------------------------------
Based on our review, NHTSA is not persuaded by the DRI analysis.
NHTSA's analyses do not corroborate the 2005 DRI study that suggested
mass could be reduced without safety harm and perhaps with safety
benefit. Moreover, even though NHTSA's analyses continue to attribute a
much larger effect for mass than for track width or wheelbase in small
cars, NHTSA has never said that mass alone is the single factor that
increases or decreases fatality risk. There may not be a single factor,
but rather it may be that mass and some of the other factors that are
historically correlated with mass, such as wheelbase and track width,
together are the factors.
We note that comparatively it would seem the least harmful way to
reduce mass would be from material substitution, where one replaces a
heavy material with a lighter one that delivers the same performance,
or other designs that reduce mass while maintaining wheelbase and track
width. While this may seem intuitively to be the case, there is an
absence of supporting data for the thrust of the 2005 DRI analysis,
because those changes have not happened to any substantial number of
vehicles in the real world. NHTSA thus has no way, yet, of proving the
intuitive conclusion. We do know that mass has historically been
correlated with wheelbase and track width, and that reductions in mass
have also reduced those other factors. Until there is an analysis that
clearly demonstrates that mass does not matter for safety, NHTSA
concludes it should be guided by the decades' worth of studies
suggesting
[[Page 49730]]
that mass is the most important of the related factors.
The tables below contain NHTSA's estimates of the safety-related
fatality impacts of the proposed standards, the costs associated with
those impacts, and the overall change in impacts given other
anticipated mitigating effects during the next several years. Again, we
emphasize that the safety-related fatality impacts presented below
represent a worst case scenario, and that NHTSA believes that the
fatality increases associated with the anticipated weight reductions
could be significantly smaller than those shown, because manufacturers
are unlikely to respond to this rulemaking by decreasing the footprint
or reducing the structural integrity of their vehicles.
In addition, we note that the implementation of new Federal Motor
Vehicle Safety Standards, combined with behavioral changes (e.g.,
further increases in safety belt use), will produce important
reductions in the number of deaths and injuries that would otherwise
occur in the vehicles subject to this rulemaking over their lifetime.
NHTSA seeks comments on its analysis of the safety impacts of the
proposed standards. To aid the agency in refining its analysis for the
final rule, including its attempts to assess reasonable upper and lower
ends of the potential range of estimated fatalities, NHTSA requests
that each vehicle manufacturer provide, for inclusion in the record of
this rulemaking, detailed information concerning the extent to which
and manner in which it plans to reduce the weight of each of its models
for the period covered by this rulemaking, and the cost of each method
used. Manufacturers should include in those plans whether there will be
any footprint or other size reduction, whether through reducing the
size of an existing model, mix shifting or other means. Please also
submit the analysis, including engineering or computer simulation
analysis, performed to assess the possible safety impacts of such
planned weight reduction. In addition, please submit the results of any
vehicle crash or component tests that would aid in assessing those
impacts.
Table IV.G.7-1--Comparison of the Calculated Worst Case Weight Safety-Related Fatality Impacts of the Pending
Proposed Standards Over the Lifetime of the Vehicles Produced in Each Model Year
[Increase in fatalities compared to the Calendar Year 2007 fatality level]
----------------------------------------------------------------------------------------------------------------
MY 2012 MY 2013 MY 2014 MY 2015 MY 2016
----------------------------------------------------------------------------------------------------------------
Baseline MY 2011 standards continued for lifetime of vehicles
----------------------------------------------------------------------------------------------------------------
Passenger cars.................. 13 15 18 18 19
Light trucks.................... 13 15 17 17 18
-------------------------------------------------------------------------------
Combined.................... 26 30 35 35 37
----------------------------------------------------------------------------------------------------------------
Proposed standards
----------------------------------------------------------------------------------------------------------------
Passenger cars.................. 42 64 165 242 379
Light trucks.................... 18 20 64 106 150
-------------------------------------------------------------------------------
Combined.................... 60 84 229 348 530
----------------------------------------------------------------------------------------------------------------
Difference between proposed standards and baseline continued
----------------------------------------------------------------------------------------------------------------
Passenger cars.................. 29 49 147 224 360
Light trucks.................... 5 5 47 89 132
-------------------------------------------------------------------------------
Combined.................... 34 54 194 313 493
----------------------------------------------------------------------------------------------------------------
Note--all estimates in this table are worst-case. Actual values could be significantly less.
Table IV.G.7-2--Calculated Worst Case Weight Safety-Related Fatality Impacts on Societal Costs for the Proposed Standards Over the Lifetime of the
Vehicles Produced in Each Model Year
[$ millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger cars.......................................... 177 299 897 1,366 2,916 4,935
Light trucks............................................ 31 31 287 543 805 1,696
-----------------------------------------------------------------------------------------------
Combined............................................ 207 329 1,183 1,909 3,001 6,637
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note--all estimates in this table are worst-case. Actual values could be significantly less.
Table IV.G.7-3--Estimated Worst Case Impact of Weight on Calculated Fatalities by Calendar Year
[Additional fatalities by model year and calendar year]
--------------------------------------------------------------------------------------------------------------------------------------------------------
MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 MY 2017 MY 2018 MY 2019 MY 2020 Totals
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012............................ 3 .......... .......... .......... .......... .......... .......... .......... .......... 3
2013............................ 3 5 .......... .......... .......... .......... .......... .......... .......... 8
2014............................ 3 5 19 .......... .......... .......... .......... .......... .......... 27
2015............................ 3 5 19 30 .......... .......... .......... .......... .......... 57
2016............................ 3 5 18 29 47 .......... .......... .......... .......... 102
[[Page 49731]]
2017............................ 3 5 17 28 46 47 .......... .......... .......... 146
2018............................ 3 5 16 27 44 46 47 .......... .......... 187
2019............................ 3 4 16 26 42 44 46 47 .......... 226
2020............................ 2 4 15 24 40 42 44 46 47 264
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note--all estimates in this table are worst-case. Actual values could be significantly less.
The following table is based on the worst-case scenario estimate
for fatalities.
Table IV.G.7-4--Calculated Worst Case Weight Safety Impacts on Societal Costs for the Proposed Standards over the Lifetime of the Vehicles Produced in
Each Model Year, Estimated Fatalities and Assumed Injuries
[$ millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Undiscounted:
Passenger Cars.................................. $406 $686 $2,058 $3,136 $5,040 $11,326
Light Trucks.................................... 70 70 658 1,246 1,848 3,892
Combined........................................ 476 756 2,716 4,382 6,888 15,218
Discounted 3%:
Passenger Cars...................................... 337 570 1,709 2,604 4,185 9,405
Light Trucks........................................ 56 56 528 1,000 1,482 3,122
Combined............................................ 393 626 2,237 3,604 5,668 12,527
Discounted 7%:
Passenger Cars...................................... 272 460 1,379 2,101 3,377 7,588
Light Trucks........................................ 44 44 415 785 1,165 2,453
Combined............................................ 316 504 1,794 2,886 4,542 10,042
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note--all estimates in this table are worst-case. Actual values could be significantly less.
Discount factors: passenger cars, 3% = 0.8304, 7% = 0.67; light trucks, 3% = 0.8022, 7% = 0.6303.
8. What Other Impacts (Quantitative and Unquantifiable) Will These
Proposed Standards Have?
In addition to the quantified benefits and costs of fuel economy
standards, the standards we are proposing will have other impacts that
we have not quantified in monetary terms. The decision on whether or
not to quantify a particular impact depends on several considerations:
Does the impact exist, and can the magnitude of the impact
reasonably be attributed to the outcome of this rulemaking?
Would quantification help NHTSA and the public evaluate
standards that may be set in rulemaking?
Is the impact readily quantifiable in monetary terms? Do
we know how to quantify a particular impact?
If quantified, would the monetary impact likely be
material?
Can a quantification be derived with a sufficiently narrow
range of uncertainty so that the estimate is useful?
NHTSA expects that this rulemaking will have a number of genuine,
material impacts that have not been quantified due to one or more of
the considerations listed above. In some cases, further research may
yield estimates for future rulemakings.
Technology Forcing
The proposed rule will improve the fuel economy of the U.S. new
vehicle fleet, but it will also increase the cost (and presumably, the
price) of new passenger cars and light trucks built during MYs 2012-
2016. We anticipate that the cost, scope, and duration of this rule, as
well as the steadily rising standards it requires, will cause
automakers and suppliers to devote increased attention to methods of
improving vehicle fuel economy.
This increased attention will stimulate additional research and
engineering, and we anticipate that, over time, innovative approaches
to reducing the fuel consumption of light duty vehicles will emerge.
These innovative approaches may reduce the cost of the proposed rule in
its later years, and also increase the set of feasible technologies in
future years.
We have attempted to estimate the effect of learning on known
technologies within the period of the proposed rulemaking. We have not
attempted to estimate the extent to which not-yet-invented technologies
will appear, either within the time period of the current rulemaking or
that might be available after MY 2016.
Effects on Vehicle Maintenance, Operation, and Insurance Costs
Any action that increases the cost of new vehicles will
subsequently make such vehicles more costly to maintain, repair, and
insure. In general, this effect can be expected to be a positive linear
function of vehicle costs. The proposed rulemaking, however, raises
vehicle costs by only a few percent at most, and hence the change in
maintenance and operation costs, distributed over the expected life of
regulated vehicles and discounted back to the present, is probably de
minimus in terms of the full analysis.
One of the common consequences of using more complex or innovative
technologies is a decline in vehicle reliability and an increase in
[[Page 49732]]
maintenance costs, borne, in part, by the manufacturer (through
warranty costs, which are included in the indirect costs of production)
and, in part by the vehicle owner. NHTSA believes that this effect is
difficult to quantify, but likely to be de minimus as well.
Effects on Vehicle Miles Traveled (VMT)
While NHTSA has estimated the impact of the rebound effect on VMT,
we have not estimated how a change in vehicle sales could impact VMT.
Since the value of the fuel savings to consumers outweighs the
technology costs, new vehicle sales are predicted to increase. A change
in vehicle sales will have complicated and a hard-to-quantify effect on
vehicle miles traveled given the rebound effect, the trade-in of older
vehicles, etc. In general, overall VMT should not be significantly
affected.
Effect on Composition of Passenger Car and Light Truck Sales
In addition, manufacturers, to the extent that they pass on costs
to customers, may distribute these costs across their motor vehicle
fleets in ways that affect the composition of sales by model. To the
extent that changes in the composition of sales occur, this could
affect fuel savings to some degree. However, NHTSA's view is that the
scope for compositional effects is relatively small, since the total
effect of the regulation itself will be to increase costs by only a few
percent. Compositional effects might be important with respect to
compliance costs for individual manufacturers, but are unlikely to be
material for the rule as a whole.
NHTSA is continuing to study methods of estimating compositional
effects and may be able to develop methods for use in future
rulemakings.
Effects on the Used Vehicle Market
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 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.
Impacts of Changing Fuel Composition on Costs, Benefits, and Emissions
EPAct, as amended by EISA, creates a Renewable Fuels Standard that
sets targets for greatly increased usage of renewable fuels over the
next decade. The law requires fixed volumes of renewable fuels to be
used--volumes that are not linked to actual usage of transportation
fuels.
Ethanol and biodiesel (in the required volumes) may increase the
cost of gasoline and diesel depending on crude oil prices and tax
subsidies. The extra cost of renewable fuels will be borne through a
cross-subsidy: The price of every gallon of gasoline will rise
sufficiently to pay for the extra cost of renewable fuels. The proposed
CAFE rule, by reducing total fuel consumption, would tend to increase
any necessary cross-subsidy per gallon of fuel, and hence raise the
market price of transportation fuels, while there would be no change in
the volume or cost of renewable fuels used.
Some of these effects are indirectly incorporated in NHTSA's
analysis of the proposed CAFE rule because they are directly
incorporated in EIA's projections of future gasoline and diesel prices
in the Annual Energy Outlook, which incorporates in its baseline both a
Renewable Fuel Standard and an increasing CAFE standard.
The net effect of incorporating an RFS then might be to slightly
reduce the benefits of the rule because affected vehicles might be
driven slightly less, and because they emit slightly fewer greenhouse
gas emissions per gallon. In addition there might be deadweight losses
from the induced reduction in VMT. All of these effects are difficult
to estimate, because of uncertainty in future crude oil prices,
uncertainty in future tax policy, and uncertainty about how petroleum
marketers will actually comply with the RFS, but they are likely to be
small, because the cumulative deviation from baseline fuel consumption
induced by the proposed rule will itself be small.
Macroeconomic Impacts of This Rule
The proposed rule will have a number of consequences that may have
short-run and longer-run macroeconomic effects. It is important to
recognize, however, that these effects do not represent benefits in
addition to those resulting directly from reduced fuel consumption and
emissions. Instead, they represent the economic effects that occur as
these direct impacts filter through the interconnected markets
comprising the U.S. economy.
Increasing the cost and quality (in the form of better
fuel economy) of new light duty vehicles will have ripple effects
through the rest of the economy. Depending on the assumptions made, the
rule could generate very small increases or declines in output.
Reducing consumption of imported petroleum should induce
an increase in long-run output.
Decreasing the world price of oil should induce an
increase in long-run output.
NHTSA has not studied the macroeconomic effects of the proposal,
however a discussion of the economy-wide impacts of this rule conducted
by EPA is included in Section III.H.5. Although economy-wide models do
not capture all of the potential impacts of this rule (e.g.,
improvements in product quality), these models can provide valuable
insights on how this proposal would impact the U.S. economy in ways
that extend beyond the transportation sector.
Military Expenditures
This analysis contains quantified estimates for the social cost of
petroleum imports based on monopsony effects and the risk of oil market
disruption. We have not included estimates of the cost of military
expenditures associated with petroleum imports.
H. Vehicle Classification
Vehicle classification, for purposes of the CAFE program, refers to
whether NHTSA considers a vehicle to be a passenger automobile or a
light truck, and thus subject to either the passenger automobile or the
light truck standards. As NHTSA explained in the MY 2011
[[Page 49733]]
rulemaking, EPCA categorizes some light 4-wheeled vehicles as passenger
automobiles (cars) and the balance as non-passenger automobiles (light
trucks). EPCA defines passenger automobiles as any automobile (other
than an automobile capable of off-highway operation) which NHTSA
decides by rule is manufactured primarily for use in the transportation
of not more than 10 individuals. EPCA 501(2), 89 Stat. 901. NHTSA
created regulatory definitions for passenger automobiles and light
trucks, found at 49 CFR part 523, to guide the agency and manufacturers
in classifying vehicles.
Under EPCA, there are two general groups of automobiles that
qualify as non-passenger automobiles or light trucks: (1) Those defined
by NHTSA in its regulations as other than passenger automobiles due to
their having design features that indicate they were not manufactured
``primarily'' for transporting up to ten individuals; and (2) those
expressly excluded from the passenger category by statute due to their
capability for off-highway operation, regardless of whether they might
have been manufactured primarily for passenger transportation. NHTSA's
classification rule directly tracks those two broad groups of non-
passenger automobiles in subsections (a) and (b), respectively, of 49
CFR 523.5.
For the purpose of this NPRM for the MYs 2012-2016 standards, EPA
agreed to use NHTSA's regulatory definitions for determining which
vehicles would be subject to which CO2 standards.
In the MY 2011 rulemaking, NHTSA took a fresh look at the
regulatory definitions in light of several factors and developments:
its desire to ensure clarity in how vehicles are classified, the
passage of EISA, and the Ninth Circuit's decision in CBD v. NHTSA.\620\
NHTSA explained the origin of the current definitions of passenger
automobiles and light trucks by tracing them back through the history
of the CAFE program, and did not propose to change the definitions
themselves at that time, because the agency concluded that the
definitions were largely consistent with Congress' intent in separating
passenger automobiles and light trucks, but also in part because the
agency tentatively concluded that doing so would not lead to increased
fuel savings. However, the agency tightened the definitions in Sec.
523.5 to ensure that only vehicles that actually have 4WD will be
classified as off-highway vehicles by reason of having 4WD (to prevent
2WD SUVs that also come in a 4WD ``version'' from qualifying
automatically as ``off-road capable'' simply by reason of the existence
of the 4WD version). It also took this action to ensure that
manufacturers may only use the ``greater cargo-carrying capacity''
criterion of 523.5(a)(4) for cargo van-type vehicles, rather than for
SUVs with removable second-row seats unless they truly have greater
cargo-carrying than passenger-carrying capacity ``as sold'' to the
first retail purchaser. NHTSA concluded that these changes increased
clarity, were consistent with EPCA and EISA, and responded to the Ninth
Circuit's decision with regard to vehicle classification.
---------------------------------------------------------------------------
\620\ 538 F.3d 1172 (9th Cir. 2008).
---------------------------------------------------------------------------
However, manufacturers currently have an incentive to classify
vehicles as light trucks because, generally speaking, the fuel economy
target for light trucks with a given footprint is less stringent than
the target for passenger cars with the same footprint. This is due to
the fact that the curves are based on actual fuel economy capabilities
of the vehicles to which they apply. Because of characteristics like
4WD, towing and hauling capacity, and heavy weight, the vehicles in the
current light truck fleet are generally less capable of achieving
higher fuel economy levels as compared to the vehicles in the passenger
car fleet. 2WD SUVs are the vehicles that could be most readily
redesigned so that they can be ``moved'' from the passenger car to the
light truck fleet. A manufacturer could do this by adding a third row
of seats, for example, or boosting GVWR over 6,000 lbs for a 2WD SUV
that already meets the ground clearance requirements for ``off-road
capability.'' A change like this may only be possible during a vehicle
redesign, but since vehicles are redesigned, on average, every 5 years,
at least some manufacturers may make such changes before or during the
model years covered by this rulemaking.
In looking forward to model years beyond 2011 and considering how
CAFE should operate in the context of the National Program and
previously-received comments as requested by President Obama, NHTSA
seeks comment on the following potential changes to NHTSA's vehicle
classification system. We request comment also on whether, if any of
the changes were to be adopted, they should be applied to any of the
model years covered by this rulemaking or whether, due to lead time
concerns, they should apply only to MY 2017 and thereafter.
Reclassifying Minivans and other ``3-row'' light trucks as
passenger cars (i.e., removing 49 CFR 523.5(a)(5)):
NHTSA has received repeated comments over the course of the last
several rulemakings from environmental and consumer groups regarding
the classification of minivans as light trucks instead of as passenger
cars. Commenters have argued that because minivans generally have three
rows of seats, are built on unibody chassis, and are used primarily for
transporting passengers, they should be classified as passenger cars.
NHTSA did not accept these arguments in the MY 2011 final rule, due to
concerns that moving minivans to the passenger car fleet would lower
the fuel economy targets for those passenger cars having essentially
the same footprint as the minivans, and thus lower the overall fuel
average fuel economy level that the manufacturers would need to meet.
However, due to the new methodology for setting standards, the as-yet-
unknown fuel-economy capabilities of future minivans and 3-row 2WD
SUVs, and the unknown state of the vehicle market (particularly for MYs
2017 and beyond), NHTSA can no longer say with certainty that moving
these vehicles could negatively affect potential stringency levels for
either passenger cars or light trucks.
Although such a change would not be made applicable during the MY
2012-2016 time frame, we seek comment on why NHTSA should or should not
consider, as part of this rulemaking, reclassifying minivans (and other
current light trucks that qualify as such because they have three rows
of designated seating positions as standard equipment) for MYs 2017 and
after.
Classifying ``like'' vehicles together:
Many commenters objected in the rulemaking for the MY 2011
standards to NHTSA's regulatory separation of ``like'' vehicles.
Industry commenters argued that it was technologically inappropriate
for NHTSA to place 4WD and 2WD versions of the same SUV in separate
classes. They argued that the vehicles are the same, except for their
drivetrain features, thus giving them similar fuel economy improvement
potential. They further argued that all SUVs should be classified as
light trucks. Environmental and consumer group commenters, on the other
hand, argued that 4WD SUVs and 2WD SUVs that are ``off-highway
capable'' by virtue of a GVWR above 6,000 pounds should be classified
as passenger cars, since they are primarily used to transport
passengers. In the MY 2011 rulemaking, NHTSA rejected both of these
sets of arguments. NHTSA concluded that 2WD SUVs that were neither
``off-highway capable'' nor possessed ``truck-like'' functional
characteristics were appropriately classified as passenger cars. At the
same time, NHTSA also
[[Page 49734]]
concluded that because Congress explicitly designated vehicles with
GVWRs over 6,000 pounds as ``off-highway capable'' (if they meet the
ground clearance requirements established by the agency), NHTSA did not
have authority to move these vehicles to the passenger car fleet.
With regard to the first argument, that ``like'' vehicles should be
classified similarly (i.e., that 2WD SUVs should be classified as light
trucks because, besides their drivetrain, they are ``like'' the 4WD
version that qualifies as a light truck), NHTSA continues to believe
that 2WD SUVs that do not meet any part of the existing regulatory
definition for light trucks should be classified as passenger cars.
However, NHTSA recognizes the additional point raised by industry
commenters in the MY 2011 rulemaking that manufacturers may respond to
this tighter classification by ceasing to build 2WD versions of SUVs,
which could reduce fuel savings. In response to that point, NHTSA
stated in the MY 2011 final rule that it expects that manufacturer
decisions about whether to continue building 2WD SUVs will be driven in
much greater measure by consumer demand than by NHTSA's regulatory
definitions. If it appears, in the course of the next several model
years, that manufacturers are indeed responding to the CAFE regulatory
definitions in a way that reduces overall fuel savings from expected
levels, it may be appropriate for NHTSA to review this question again.
NHTSA seeks comment on how the agency might go about reviewing this
question as more information about manufacturer behavior is
accumulated.
With regard to the second argument, that NHTSA should move vehicles
that qualify as ``off-highway capable'' from the light truck to the
passenger car fleet because they are primarily used to transport
passengers, NHTSA reiterates that EPCA is clear that certain vehicles
are non-passenger automobiles (i.e., light trucks) because of their
off-highway capabilities, regardless of how they may be used day-to-
day.
However, NHTSA could explore additional approaches, although not
all could be pursued on current law. Possible alternative legal regimes
might include: (a) classifying vehicles as passenger cars or light
trucks based on use alone (rather than characteristics); (b) removing
the regulatory distinction altogether and setting standards for the
entire fleet of vehicles instead of for separate passenger car and
light truck fleets; or (c) dividing the fleet into multiple categories
more consistent with current vehicle fleets (i.e., sedans, minivans,
SUVs, pickup trucks, etc.). NHTSA seeks comment on whether and why it
should pursue any of these courses of action.
I. Compliance and Enforcement
1. Overview
NHTSA's CAFE enforcement program and the compliance flexibilities
available to manufacturers are largely established by statute--unlike
the CAA, EPCA and EISA are very prescriptive and leave the agency
limited authority to increase the flexibilities available to
manufacturers. This was intentional, however. Congress balanced the
energy saving purposes of the statute against the benefits of the
various flexibilities and incentives it provided and placed precise
limits on those flexibilities and incentives. For example, while the
Department sought authority for unlimited transfer of credits between a
manufacturer's car and light truck fleets, Congress limited the extent
to which a manufacturer could raise its average fuel economy for one of
its classes of vehicles through credit transfer in lieu of adding more
fuel saving technologies. It did not want these provisions to slow
progress toward achieving greater energy conservation or other policy
goals. In keeping with EPCA's focus on energy conservation, NHTSA has
done its best, for example, in crafting the credit transfer and trading
regulations authorized by EISA, to ensure that total fuel savings are
preserved when manufacturers exercise their compliance flexibilities.
The following sections explain how NHTSA determines whether
manufacturers are in compliance with the CAFE standards for each model
year, and how manufacturers may address potential non-compliance
situations through the use of compliance flexibilities or fine payment.
2. How Does NHTSA Determine Compliance?
a. Manufacturer Submission of Data and CAFE Testing by EPA
NHTSA begins to determine CAFE compliance by considering pre- and
mid-model year reports submitted by manufacturers pursuant to 49 CFR
part 537, Automotive Fuel Economy Reports.\621\ The reports for the
current model year are submitted to NHTSA every December and July. As
of the time of this NPRM, NHTSA has received mid-model year reports
from manufacturers for MY 2009, and anticipates receiving pre-model
year reports for MY 2010 at the end of this year. Although the reports
are used for NHTSA's reference only, they help the agency, and the
manufacturers who prepare them, anticipate potential compliance issues
as early as possible, and help manufacturers plan compliance
strategies. Currently, NHTSA receives these reports in paper form. In
order to facilitate submission by manufacturers and consistent with the
President's electronic government initiatives, NHTSA proposes to amend
Part 537 to allow for electronic submission of the pre- and mid-model
year CAFE reports.
---------------------------------------------------------------------------
\621\ 49 CFR Part 537 is authorized by 49 U.S.C. 32907.
---------------------------------------------------------------------------
NHTSA makes its ultimate determination of manufacturers' CAFE
compliance upon receiving EPA's official certified and reported CAFE
data. The EPA certified data is based on vehicle testing and on final
model year data submitted by manufacturers to EPA pursuant to 40 CFR
600.512, Model Year Report, no later than 90 days after the end of the
calendar year. Pursuant to 49 U.S.C. 32904(e), EPA is responsible for
calculating automobile manufacturers' CAFE values so that NHTSA can
determine compliance with the CAFE standards. In measuring the fuel
economy of passenger cars, EPA is required by EPCA \622\ to use the EPA
test procedures in place as of 1975 (or procedures that give comparable
results), which are the city and highway tests of today, with
adjustments for procedural changes that have occurred since 1975. EPA
uses similar procedures for light trucks, although, as noted above,
EPCA does not require it to do so. One notable shortcoming of the 1975
test procedure is that it does not include a provision for air
conditioner usage during the test cycle. As discussed in Section III
above of the preamble, air conditioner usage increases the load on a
vehicle's engine, reducing fuel efficiency and increasing
CO2 emissions. Since the air conditioner is not turned on
during testing, equipping a vehicle model with a relatively inefficient
air conditioner will not adversely affect that model's measured fuel
economy, while quipping a vehicle model with a relatively efficient air
conditioner will not raise that model's measured fuel economy. 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 in section I.D.2
regarding implementing such amendments beginning in MY 2017 and also on
the more immediate
[[Page 49735]]
interim step of providing credits under 49 U.S.C. 32904(c) for light
trucks equipped with relatively efficient air conditioners for MYs
2012-2016. Modernizing the passenger car test procedures as well would
not be possible under EPCA as currently written.
---------------------------------------------------------------------------
\622\ 49 U.S.C. 32904(c).
---------------------------------------------------------------------------
b. NHTSA Then Analyzes EPA-Certified CAFE Values for Compliance
Determining CAFE compliance is fairly straightforward. After
testing, EPA verifies the data submitted by manufacturers and issues
final CAFE reports to manufacturers and to NHTSA between April and
October of each year (for the previous model year). NHTSA then
identifies the manufacturers' compliance categories (fleets) that do
not meet the applicable CAFE fleet standards.
To determine if manufacturers have earned credits that would offset
those shortfalls, NHTSA calculates a cumulative credit status for each
of a manufacturer's vehicle compliance categories according to 49
U.S.C. 32903. If a manufacturer's compliance category exceeds the
applicable fuel economy standard, NHTSA adds credits to the account for
that compliance category. If a manufacturer's vehicles in a particular
compliance category fall below the standard fuel economy value, NHTSA
will provide written notification to the manufacturer that it has not
met a particular fleet standard. The manufacturer will be required to
confirm the shortfall and must either: Submit a plan indicating it will
allocate existing credits, and/or for MY 2011 and later, how it will
earn, transfer and/or acquire credits; or pay the appropriate civil
penalty. The manufacturer must submit a plan or payment within 60 days
of receiving agency notification. The amount of credits are determined
by multiplying the number of tenths of a mpg by which a manufacturer
exceeds, or falls short of, 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. Credits used
to offset shortfalls are subject to the three and five year limitations
as described in 49 U.S.C. 32903(a). Transferred credits are subject to
the limitations specified by 49 U.S.C. 32903(g)(3). The value of each
credit, when used for compliance, received via trade or transfer is
adjusted, using the adjustment factor described in 49 CFR part 536.4,
pursuant to 49 U.S.C. 32903(f)(1). Credit allocation plans received
from the manufacturer will be reviewed and approved by NHTSA. NHTSA
will approve a credit allocation plan unless it finds the proposed
credits are unavailable or that it is unlikely that the plan will
result in the manufacturer earning sufficient credits to offset the
subject credit shortfall. If a plan is approved, NHTSA will revise the
respective manufacturer's credit account accordingly. If a plan is
rejected, NHTSA will notify the respective manufacturer and request a
revised plan or payment of the appropriate fine.
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. 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. All penalties are paid to the
U.S. Treasury and not to NHTSA itself.
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 provisions \623\ 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 which 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.
---------------------------------------------------------------------------
\623\ 49 U.S.C. 30120, Remedies for defects and noncompliance.
---------------------------------------------------------------------------
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 on a model-by-
model or vehicle-by-vehicle basis. However, as a practical matter, if a
manufacturer chooses to design some vehicles so they fall below their
target levels of fuel economy, it will need to design other vehicles so
they 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.
After enforcement letters are sent, NHTSA continues to monitor
receipt of credit allocation plans or civil penalty payments that are
due within 60 days from the date of receipt of the letter by the
vehicle manufacturer, and takes further action if the manufacturer is
delinquent in responding.
3. What Compliance Flexibilities Are Available Under the CAFE Program
and How Do Manufacturers Use Them?
There are three basic flexibilities permitted by EPCA/EISA that
manufacturers can use to achieve compliance with CAFE standards beyond
applying fuel economy-improving technologies: (1) Building dual- and
alternative-fueled vehicles; (2) banking, trading, and transferring
credits earned for exceeding fuel economy standards; and (3) paying
fines. We note again that while these flexibility mechanisms will
reduce compliance costs to some degree for most manufacturers, 49
U.S.C. 32902(h) expressly prohibits NHTSA from considering the
availability of credits (either for building dual- or alternative-
fueled vehicles or from accumulated transfers or trades) in determining
the level of the standards. Thus, NHTSA may not raise CAFE standards
because manufacturers have enough credits to meet higher standards.
This is an important difference from EPA's authority under the CAA,
which does not contain such a restriction, and which allows EPA to set
higher standards as a result.
a. Dual- and Alternative-Fueled Vehicles
As discussed at length in prior rulemakings, EPCA encourages
manufacturers to build alternative-fueled and dual- (or flexible-)
fueled vehicles by providing special fuel economy calculations for
``dedicated'' (that is, 100 percent) alternative fueled vehicles and
``dual-fueled'' (that is,
[[Page 49736]]
capable of running on either the alternative fuel or gasoline)
vehicles. The fuel economy of a dedicated alternative fuel vehicle is
determined by dividing its fuel economy in equivalent miles per gallon
of gasoline or diesel fuel by 0.15.\624\ Thus, a 15 mpg dedicated
alternative fuel vehicle would be rated as 100 mpg. For dual-fueled
vehicles, the rating is the average of the fuel economy on gasoline or
diesel and the fuel economy on the alternative fuel vehicle divided by
0.15.\625\
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\624\ 49 U.S.C. 32905(a).
\625\ 49 U.S.C. 32905(b)
---------------------------------------------------------------------------
For example, this calculation procedure turns a dual-fueled vehicle
that averages 25 mpg on gasoline or diesel into a 40 mpg vehicle for
CAFE purposes. This assumes that (1) the vehicle operates on gasoline
or diesel 50 percent of the time and on alternative fuel 50 percent of
the time; (2) fuel economy while operating on alternative fuel is 15
mpg (15/.15 = 100 mpg); and (3) fuel economy while operating on gas or
diesel is 25 mpg. Thus:
CAFE FE = 1/{0.5/(mpg gas) + 0.5/(mpg alt fuel){time} = 1/{0.5/25 +
0.5/100) = 40 mpg
In the case of natural gas, the calculation is performed in a
similar manner. The fuel economy is the weighted average while
operating on natural gas and operating on gas or diesel. The statute
specifies that 100 cubic feet (ft\3\) of natural gas is equivalent to
0.823 gallons of gasoline. The gallon equivalency of natural gas is
equal to 0.15 (as for other alternative fuels).\626\ Thus, if a vehicle
averages 25 miles per 100 ft\3\ of natural gas, then:
---------------------------------------------------------------------------
\626\ 49 U.S.C. 32905(c).
---------------------------------------------------------------------------
CAFE FE = (25/100) * (100/.823)* (1/0.15) = 203 mpg
Congress extended the incentive in EISA for dual-fueled automobiles
through MY 2019, but provided for its phase out between MYs 2015 and
2019.\627\ The maximum fuel economy increase which may be attributed to
the incentive is thus as follows:
---------------------------------------------------------------------------
\627\ 49 U.S.C. 32906(a). NHTSA notes that the incentive for
dedicated alternative-fuel automobiles, automobiles that run
exclusively on an alternative fuel, at 49 U.S.C. 32905(a), was not
phased-out by EISA.
------------------------------------------------------------------------
Model year mpg increase
------------------------------------------------------------------------
MYs 1993-2014............................................. 1.2
MY 2015................................................... 1.0
MY 2016................................................... 0.8
MY 2017................................................... 0.6
MY 2018................................................... 0.4
MY 2019................................................... 0.2
After MY 2019............................................. 0
------------------------------------------------------------------------
49 CFR part 538 implements the statutory alternative-fueled and
dual-fueled automobile manufacturing incentive. NHTSA is proposing to
update Part 538 as part of this NPRM to reflect the EISA changes, but
to the extent that 49 U.S.C. 32906(a) differs from the current version
of 49 CFR 538.9, the statute supersedes the regulation, and regulated
parties may rely on the text of the statute.
A major difference between EPA's statutory authority and NHTSA's
statutory authority is that the CAA contains no specific prescriptions
with regard to credits for dual- and alternative-fueled vehicles
comparable to those found in EPCA/EISA. As an exercise of that
authority, and as discussed in Section III above, EPA is offering
similar credits for dual- and alternative-fueled vehicles through MY
2015 for compliance with its CO2 standards, but for MY 2016
and beyond EPA will establish CO2 emission levels for
alternative fuel vehicles based on measurement of actual CO2
emissions during testing, plus a manufacturer demonstration that the
vehicles are actually being run on the alternative fuel. NHTSA has no
such authority under EPCA/EISA to require that vehicles manufactured
for the purpose of obtaining the credit actually be run on the
alternative fuel, but requests comment on whether it should seek
legislative changes to revise its authority to address this issue.
b. Credit Trading and Transfer
In the MY 2011 final rule, NHTSA established Part 536 for credit
trading and transfer. Part 536 implements the provisions in EISA
authorizing NHTSA to establish by regulation a credit trading program
and directing it to establish by regulation a credit transfer
program.\628\ Since its enactment, EPCA has permitted manufacturers to
earn credits for exceeding the standards and to carry those credits
backward or forward. EISA extended the ``carry-forward'' period from
three to five model years, and left the ``carry-back'' period at three
model years. Under Part 536, credit holders (including, but not limited
to, manufacturers) will have credit accounts with NHTSA, and will be
able to hold credits, use them to achieve compliance with CAFE
standards, transfer them between compliance categories, or trade them.
A credit may also be cancelled before its expiry date, if the credit
holder so chooses. Traded and transferred credits are subject to an
``adjustment factor'' to ensure total oil savings are preserved, as
required by EISA. EISA also prohibits credits earned before MY 2011
from being transferred, so NHTSA has developed several regulatory
restrictions on trading and transferring to facilitate Congress' intent
in this regard. EISA also establishes a ``cap'' for the maximum
increase in any compliance category attributable to transferred
credits: for MYs 2011-2013, transferred credits can only be used to
increase a manufacturer's CAFE level in a given compliance category by
1.0 mpg; for MYs 2014-2017, by 1.5 mpg; and for MYs 2018 and beyond, by
2.0 mpg.
---------------------------------------------------------------------------
\628\ Congress required that DOT establish a credit
``transferring'' regulation, to allow individual manufacturers to
move credits from one of their fleets to another (e.g., using a
credit earned for exceeding the light truck standard for compliance
with the domestic passenger car standard). Congress allowed DOT to
establish a credit ``trading'' regulation, so that credits may be
bought and sold between manufacturers and other parties.
---------------------------------------------------------------------------
NHTSA recognizes that some manufacturers may have to rely on credit
transferring for compliance in MYs 2012-2017.\629\ As a way to improve
the transferring flexibility mechanism for manufacturers, NHTSA
interprets EISA not to prohibit the banking of transferred credits for
use in later model years. Thus, NHTSA believes that the language of
EISA may be read to allow manufacturers to transfer credits from one
fleet that has an excess number of credits, within the limits
specified, to another fleet that may also have excess credits instead
of transferring only to a fleet that has a credit shortfall. This would
mean that a manufacturer could transfer a certain number of credits
each year and bank them, and then the credits could be carried forward
or back ``without limit'' later if and when a shortfall ever occurred
in that same fleet. NHTSA bases this interpretation on 49 U.S.C.
32903(g)(2), which states that transferred credits ``are available to
be used in the same model years that the manufacturer could have
applied such credits under subsections (a), (b), (d), and (e), as well
as for the model year in which the manufacturer earned such credits.''
The EISA limitation applies only to the application of such credits for
compliance in particular model years, and not their transfer per se. If
transferred credits have the same lifespan and may be used in carry-
back and carry-forward plans, it seems reasonable that they should be
allowed to be stored in any fleet, rather than only in the fleet in
which they were
[[Page 49737]]
earned. Of course, manufacturers could not transfer and bank credits
for purposes of achieving the minimum standard for domestically-
manufactured passenger cars, as prohibited by 49 U.S.C. 32903(g)(4).
Transferred and banked credits would additionally still be subject to
the adjustment factor when actually used, which would help to ensure
that total oil savings are preserved while still offering greater
flexibility to manufacturers. This interpretation of EISA also helps
NHTSA, to some extent, to harmonize better with EPA's CO2
program, which allows unlimited banking and transfer of credits. NHTSA
seeks comment on this interpretation of EISA.
---------------------------------------------------------------------------
\629\ In contrast, manufacturers stated in comments in NHTSA's
MY 2011 rulemaking that they did not anticipate a robust market for
credit trading, due to competitive concerns. NHTSA does not yet know
whether those concerns will continue to deter manufacturers from
exercising the trading flexibility during MYs 2012-2016.
---------------------------------------------------------------------------
c. Payment of Fines
If a manufacturer's average miles per gallon for a given compliance
category (domestic passenger car, imported passenger car, light truck)
falls below the applicable standard, and the manufacturer cannot make
up the difference by using credits earned or acquired, the manufacturer
is subject to penalties. The penalty, as mentioned, 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, manufactured for that model
year. NHTSA has collected $772,850,459.00 to date in CAFE penalties,
the largest ever being paid by DaimlerChrysler for its MY 2006 import
passenger car fleet, $30,257,920.00. For their MY 2007 fleets, five
manufacturers paid CAFE fines for not meeting an applicable standard--
Ferrari, Maserati, Mercedes-Benz, Porsche, and Volkswagen--for a total
of $37,385,941.00
NHTSA recognizes that some manufacturers may use the option to pay
fines as a CAFE compliance flexibility--presumably, when paying fines
is deemed more cost-effective than applying additional fuel economy-
improving technology, or when adding fuel economy-improving technology
would fundamentally change the characteristics of the vehicle in ways
that the manufacturer believes its target consumers would not accept.
NHTSA has no authority under EPCA/EISA to prevent manufacturers from
turning to fine-payment if they choose to do so. This is another
important difference from EPA's authority under the CAA, which allows
EPA to revoke a manufacturer's certificate of compliance that permits
it to sell vehicles if EPA determines that the manufacturer is in non-
compliance, and does not permit manufacturers to pay fines in lieu of
compliance with applicable standards.
NHTSA has grappled repeatedly with the issue of whether fines are
motivational for manufacturers, and whether raising fines would
increase manufacturers' compliance with the standards. EPCA authorizes
increasing the civil penalty very slightly up to $10.00, exclusive of
inflationary adjustments, if NHTSA decides that the increase in the
penalty ``will result in, or substantially further, substantial energy
conservation for automobiles in the model years in which the increased
penalty may be imposed; and will not have a substantial deleterious
impact on the economy of the United States, a State, or a region of a
State.'' 49 U.S.C. 32912(c).
To support a decision that increasing the penalty would result in
``substantial energy conservation'' without having ``a substantial
deleterious impact on the economy,'' NHTSA would likely need to provide
some reasonably certain quantitative estimates of the fuel that would
be saved, and the impact on the economy, if the penalty were raised.
Comments received on this issue in the past have not explained in clear
quantitative terms what the benefits and drawbacks to raising the
penalty might be. Additionally, it may be that the range of possible
increase that the statute provides, i.e., up to $10 per tenth of a mpg,
is insufficient to result in substantial energy conservation, although
changing this would require an amendment to the statute by Congress.
While NHTSA continues to seek to gain information on this issue to
inform a future rulemaking decision, we request that commenters wishing
to address this issue please provide, as specifically as possible,
estimates of how raising or not raising the penalty amount will or will
not substantially raise energy conservation and impact the economy.
4. Other CAFE Enforcement Issues--Variations in Footprint
NHTSA has a standardized test procedure for determining vehicle
footprint,\630\ which is defined by regulation as follows:
---------------------------------------------------------------------------
\630\ NHTSA TP-537-01, March 30, 2009. Available at http://www.nhtsa.gov/portal/site/nhtsa/menuitem.b166d5602714f9a73baf3210dba046a0/, scroll down to ``537''
(last accessed July 18, 2009).
---------------------------------------------------------------------------
Footprint is defined as the product of track width (measured in
inches, calculated as the average of front and rear track widths, and
rounded to the nearest tenth of an inch) times wheelbase (measured in
inches and rounded to the nearest tenth of an inch), divided by 144 and
then rounded to the nearest tenth of a square foot.\631\
---------------------------------------------------------------------------
\631\ 49 CFR 523.2.
---------------------------------------------------------------------------
``Track width,'' in turn, is defined as ``the lateral distance
between the centerlines of the base tires at ground, including the
camber angle.'' \632\ ``Wheelbase'' is defined as ``the longitudinal
distance between front and rear wheel centerlines.'' \633\
---------------------------------------------------------------------------
\632\ Id.
\633\ Id.
---------------------------------------------------------------------------
NHTSA began requiring manufacturers to submit this information as
part of their pre-model year reports in MY 2008 for light trucks, and
will require manufacturers to submit this information for passenger
cars as well beginning in MY 2011. Manufacturers have submitted the
required information for their light trucks, but NHTSA has identified
several issues with regard to footprint measurement, that could affect
how required fuel economy levels are calculated for a manufacturer. The
paragraphs that follow explain NHTSA's views regarding these issues,
and solicit public input on what NHTSA should do to address them in the
future.
a. Variations in Track Width
By definition, wheelbase measurement should be very consistent from
one vehicle to another of the same model. Track width, in contrast, may
vary in two respects: Wheel offset,\634\ and camber. Most current
vehicles have wheels with positive offset, with technical
specifications for offset typically expressed in millimeters.
Additionally, for most vehicles, the camber angle of each of a
vehicle's wheels is specified as a range, i.e., front axle, left and
right within minus 0.9 to plus 0.3 degree and rear axle, left and right
within minus 0.9 to plus 0.1 degree. Given the small variations in
offset and camber angle dimensions, the potential effects of components
(wheels) and vehicle specifications (camber) within existing designs on
vehicle footprints are considered insignificant.
---------------------------------------------------------------------------
\634\ Offset of a wheel is the distance from its hub mounting
surface to the centerline of the wheel, i.e., measured laterally
inboard or outboard.
Zero offset--the hub mounting surface is even with the
centerline of the wheel.
Positive offset--the hub mounting surface is outboard of the
centerline of the wheel (toward street side).
Negative offset--the hub mounting surface is inboard of the
centerline of the wheel (away from street side).
---------------------------------------------------------------------------
However, NHTSA recognizes that manufacturers may change the
specifications of and the equipment on vehicles, even those that are
not redesigned or refreshed, during a model year and from year to year.
There may be opportunity for manufacturers to change specifications for
wheel offset and camber to increase a vehicle's track
[[Page 49738]]
width and footprint, and thus decrease their required fuel economy
level. NHTSA believes that this is likely easiest on vehicles that
already have sufficient space to accommodate changes without
accompanying changes to the body profile and/or suspension component
locations.
There may be drawbacks to such a decision, however. Changing from
positive offset wheels to wheels with zero or negative offset will move
tires and wheels outward toward the fenders. Increasing the negative
upper limit of camber will tilt the top of the tire and wheel inward
and move the bottom outward, placing the upper portion of the rotating
tires and wheels in closer proximity to suspension components. In
addition, higher negative camber can adversely affect tire life and the
on-road fuel economy of the vehicle. Furthermore, it is likely that
most vehicle designs have already used the available space in wheel
areas since, by doing so, the vehicle's handling performance is
improved. Therefore, it seems unlikely that manufacturers will make
significant changes to wheel offset and camber.
b. How Manufacturers Designate ``Base Tires'' and Wheels
According to the definition of ``track width'' in 49 CFR 523.2,
manufacturers must determine track width when the vehicle is equipped
with ``base tires.'' Section 523.2 defines ``base tire,'' in turn, as
``the tire specified as standard equipment by a manufacturer on each
configuration of a model type.'' NHTSA did not define ``standard
equipment.''
In their pre-model year reports required by 49 CFR part 537,
manufacturers have the option of either (A) reporting a base tire for
each model type, or (B) reporting a base tire for each vehicle
configuration within a model type, which represents an additional level
of specificity. If different vehicle configurations have different
footprint values, then reporting the number of vehicles for each
footprint will improve the accuracy of the required fuel economy level
for the fleet, since the pre-model year report data is part of what
manufacturers use to determine their CAFE obligations.
For example, assume a manufacturer's pre-model year report listed
five vehicle configurations that comprise one model type. If the
manufacturer provides only one vehicle configuration's front and rear
track widths, wheelbase, footprint and base tire size to represent the
model type, and the other vehicle configurations all have a different
tire size specified as standard equipment, the footprint value
represented by the manufacturer may not capture the full spectrum of
footprint values for that model type. Similarly, the base tires of a
model type may be mounted on two or more wheels with different offset
dimensions for different vehicle configurations. Of course, if the
footprint value for all vehicle configurations is essentially the same,
there would be no need to report by vehicle configuration. However, if
footprints are different--larger or smaller--reporting for each group
with similar footprints or for each vehicle configuration would produce
a more accurate result.
c. Vehicle ``Design'' Values Reported by Manufacturers
NHTSA understands that the track widths and wheelbase values and
the calculated footprint calculated values, as provided in pre-model
year reports, are based on vehicle designs. This can lead to inaccurate
calculations of required fuel economy level. For example, if the values
reported by manufacturers are within an expected range of values, but
are skewed to the higher end of the ranges, the required fuel economy
level for the fleet will be artificially lower, an inaccurate attribute
based value. Likewise, it would be inaccurate for manufacturers to
submit values on the lower end of the ranges, but would decrease the
likelihood that measured values would be less than the values reported
and reduce the likelihood of an agency inquiry. Since not every vehicle
is identical, it is also probable that variations between vehicles
exist that can affect track width, wheelbase and footprint. As with
other self-certifications, each manufacturer must decide how it will
report, by model type, vehicle configuration, or a combination, and
whether the reported values have sufficient margin to account for
variations.
To address this, the agency will be monitoring the track widths,
wheelbases and footprints reported by manufacturers, and anticipates
measuring vehicles to determine if the reported and measured values are
consistent. We will look for year-to-year changes in the reported
values. We can compare MY 2008 light truck information and MY 2010
passenger car information to the information reported in subsequent
model years. Moreover, under 49 CFR 537.8, manufacturers may make
separate reports to explain why changes have occurred or they may be
contacted by the agency to explain them.
d. How Manufacturers Report This Information in their Pre-Model Year
Reports
49 CFR 537.7(c) requires that manufacturers' pre-model year reports
include ``model type and configuration fuel economy and technical
information.'' The fuel economy of a ``model type'' is, for many
manufacturers, comprised of a number of vehicle configurations. 49 CFR
537.4 states that ``model type'' and ``vehicle configuration'' are
defined in 40 CFR part 600. Under that Part, ``model type'' includes
engine, transmission, and drive configuration (2WD, 4WD, or all-wheel
drive), while ``vehicle configuration'' includes those parameters plus
test weight. Model type is important for calculating fuel economy in
the new attribute-based system--the required fuel economy level for
each of a manufacturer's fleets is calculated using the number of
vehicles within each model type and the applicable fuel economy target
for each model type.
In MY 2008 and 2009 pre-model year reports for light trucks,
manufacturers have expressed information in different ways. Some
manufacturers that have many vehicle configurations within a model type
have included information for each vehicle configuration's track width,
wheelbase and footprint. Other manufacturers reported vehicle
configuration information per Sec. 537.7(c)(4), but provided only
model type track width, wheelbase and footprint information for
subsections 537.7(c)(4)(xvi)(B)(3), (4) and (5). NHTSA believes that
these manufacturers may have reported the information this way because
the track widths, wheelbase and footprint are essentially the same for
each vehicle configuration within each model type. A third group of
manufacturers submitted model type information only, presumably because
each model type contains only one vehicle configuration.
NHTSA does not believe that this variation in reporting methodology
presents an inherent problem, as long as manufacturers follow the
specifications in Part 537 for reporting format, and as long as pre-
model year reports provide information that is accurate and represents
each vehicle configuration within a model type. The report may, but
need not, be similar to what manufacturers submit to EPA as their end-
of-model year report. However, NHTSA seeks comment on any potential
benefits or drawbacks to requiring a more standardized reporting
methodology. If commenters recommend increasing standardization, NHTSA
requests that they provide
[[Page 49739]]
specific examples of what information should be required and how NHTSA
should require it to be provided.
J. Other Near-Term Rulemakings Mandated by EISA
1. Commercial Medium- and Heavy-Duty On-Highway Vehicles and Work
Trucks
EISA added a new provision to 49 U.S.C. 32902 requiring DOT, in
consultation with DOE and EPA, to examine the fuel efficiency of
commercial medium- and heavy-duty on-highway vehicles \635\ and work
trucks \636\ and determine the appropriate test procedures and
methodologies for measuring their fuel efficiency, as well as the
appropriate metric for measuring and expressing their fuel efficiency
performance and the range of factors that affect their fuel efficiency.
Work on developing these standards is on-going.
---------------------------------------------------------------------------
\635\ Defined as an on-highway vehicle with a gross vehicle
weight rating of 10,000 pounds or more.
\636\ Defined as a vehicle that is both rated at between 8,500
and 10,000 pounds gross vehicle weight; and also is not a medium-
duty passenger vehicle (as defined in 40 CFR 86.1803-01, as in
effect on the date of EISA's enactment.
---------------------------------------------------------------------------
2. Consumer Information
EISA also added a new provision to 49 U.S.C. 32908 requiring DOT,
in consultation with DOE and EPA, to develop and implement by rule a
program to require manufacturers to label new automobiles sold in the
United States with:
(1) Information reflecting an automobile's performance on the basis
of criteria that EPA shall develop, not later than 18 months after the
date of the enactment of EISA, to reflect fuel economy and greenhouse
gas and other emissions over the useful life of the automobile; and
(2) A rating system that would make it easy for consumers to
compare the fuel economy and greenhouse gas and other emissions of
automobiles at the point of purchase, including a designation of
automobiles with the lowest greenhouse gas emissions over the useful
life of the vehicles; and with the highest fuel economy.
DOT must also develop and implement by rule a program to require
manufacturers to include in the owner's manual for vehicles capable of
operating on alternative fuels information that describes that
capability and the benefits of using alternative fuels, including the
renewable nature and environmental benefits of using alternative fuels.
EISA further requires DOT, in consultation with DOE and EPA, to
Develop and implement by rule a consumer education program
to improve consumer understanding of automobile performance described
[by the label to be developed] and to inform consumers of the benefits
of using alternative fuel in automobiles and the location of stations
with alternative fuel capacity;
Establish a consumer education campaign on the fuel
savings that would be recognized from the purchase of vehicles equipped
with thermal management technologies, including energy efficient air
conditioning systems and glass; and
By rule require a label to be attached to the fuel
compartment of vehicles capable of operating on alternative fuels, with
the form of alternative fuel stated on the label.
49 U.S.C. 32908(g)(2) and (3). DOT has 42 months from the date of
EISA's enactment (by the end of 2011) to issue final rules under this
subsection. Work on developing these standards is also on-going.
Additionally, in preparation for this future rulemaking, NHTSA will
consider appropriate metrics for presenting fuel economy-related
information on labels. Based on the non-linear relationship between mpg
and fuel costs as well as emissions, inclusion of the ``gallons per 100
miles'' metric on fuel economy labels may be appropriate going forward,
although the mpg information is currently required by law. A cost/
distance metric may also be useful, as could a CO2e grams
per mile metric to facilitate comparisons between conventional vehicles
and alternative fuel vehicles and to incorporate information about air
conditioning-related emissions. NHTSA seeks comment on these options.
K. Regulatory Notices and Analyses
1. Executive Order 12866 and DOT Regulatory Policies and Procedures
Executive Order 12866, ``Regulatory Planning and Review'' (58 FR
51735, Oct. 4, 1993), provides for making determinations whether a
regulatory action is ``significant'' and therefore subject to OMB
review and to the requirements of the Executive Order. The Order
defines a ``significant regulatory action'' as one that is likely to
result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or Tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
The rulemaking proposed in this NPRM will be economically
significant if adopted. Accordingly, OMB reviewed it under Executive
Order 12866. The rule, if adopted, would also be significant within the
meaning of the Department of Transportation's Regulatory Policies and
Procedures.
The benefits and costs of this proposal are described above.
Because the proposed rule would, if adopted, be economically
significant under both the Department of Transportation's procedures
and OMB guidelines, the agency has prepared a Preliminary Regulatory
Impact Analysis (PRIA) and placed it in the docket and on the agency's
Web site. Further, pursuant to OMB Circular A-4, we have prepared a
formal probabilistic uncertainty analysis for this proposal. The
circular requires such an analysis for complex rules where there are
large, multiple uncertainties whose analysis raises technical
challenges or where effects cascade and where the impacts of the rule
exceed $1 billion. This proposal meets these criteria on all counts.
2. National Environmental Policy Act
NHTSA has initiated the Environmental Impact Statement (EIS)
process under the National Environmental Policy Act (NEPA), 42 U.S.C.
4321-4347, and implementing regulations issued by the Council on
Environmental Quality (CEQ), 40 CFR part 1500, and NHTSA, 49 CFR part
520. On April 1, 2009, NHTSA published a notice of intent to prepare an
EIS for this rulemaking and requested scoping comments. (74 FR 14857)
The notice invites Federal, State, and local agencies, Indian tribes,
and the public to participate in the scoping process and to help
identify the environmental issues and reasonable alternatives to be
examined in the EIS. The scoping notice also provides information about
the proposed standards, the alternatives NHTSA expects to consider in
its NEPA analysis, and the scoping process.
Concurrently with this NPRM, NHTSA is releasing a Draft
Environmental Impact Statement (DEIS). NHTSA prepared the DEIS to
analyze and disclose the potential
[[Page 49740]]
environmental impacts of the proposed MY 2012-2016 CAFE standards for
the total fleet of passenger cars and light trucks and reasonable
alternative standards for the NHTSA CAFE Program pursuant to the
Council on Environmental Quality (CEQ) regulations implementing NEPA,
DOT Order 5610.1C, and NHTSA regulations.\637\ The DEIS compares the
potential environmental impacts of alternative mile per gallon (mpg)
levels that will be considered by NHTSA for the final rule. It also
analyzes direct, indirect, and cumulative impacts and analyzes impacts
in proportion to their significance.
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\637\ NEPA is codified at 42 U.S.C. 4321-4347. CEQ NEPA
implementing regulations are codified at 40 Code of Federal
Regulations (CFR) Parts 1500-1508. NHTSA NEPA implementing
regulations are codified at 49 CFR Part 520.
---------------------------------------------------------------------------
The DEIS also describes potential environmental impacts to a
variety of resources. Resources that may be affected by the proposed
action and alternatives include water resources, biological resources,
land use and development, safety, hazardous materials and regulated
wastes, noise, socioeconomics, and environmental justice. These
resource areas were assessed qualitatively in the DEIS.
Throughout the DEIS, NHTSA has relied extensively on findings of
the United Nations Intergovernmental Panel on Climate Change (IPCC),
the U.S. Climate Change Science Program (CCSP), and EPA. Our discussion
relies heavily on the most recent, thoroughly peer-reviewed, and
credible assessments of global and U.S. climate change: the IPCC Fourth
Assessment Report (Climate Change 2007), EPA's proposed Endangerment
and Cause or Contribute Findings for Greenhouse Gases under Section
202(a) of the Clean Air Act and the accompanying Technical Support
Document (TSD), and CCSP and National Science and Technology Council
reports that include the Scientific Assessment of the Effects of Global
Change on the United States and Synthesis and Assessment Products. The
DEIS cites these sources and the studies they review frequently.
Because of the link between the transportation sector and GHG
emissions, NHTSA recognizes the need to consider the possible impacts
on climate and global climate change in the analysis of the effects of
these fuel economy standards. NHTSA also recognizes the difficulties
and uncertainties involved in such an impact analysis. Accordingly,
consistent with CEQ regulations on addressing incomplete or unavailable
information in environmental impact analyses, NHTSA has reviewed
existing credible scientific evidence that is relevant to this analysis
and summarized it in the DEIS. NHTSA has also employed and summarized
the results of research models generally accepted in the scientific
community.
Although the alternatives have the potential to decrease GHG
emissions substantially, they do not prevent climate change, but only
result in reductions in the anticipated increases in CO2
concentrations, temperature, precipitation, and sea level. They would
also, to a small degree, delay the point at which certain temperature
increases and other physical effects stemming from increased GHG
emissions would occur. As discussed below, NHTSA presumes that these
reductions in climate effects will be reflected in reduced impacts on
affected resources.
NHTSA consulted with various Federal agencies in the development of
the DEIS, including EPA, Bureau of Land Management, Centers for Disease
Control and Prevention, Minerals Management Service, National Park
Service, U.S. Army Corps of Engineers, U.S. Forest Service, and
Advisory Council on Historic Preservation. NHTSA is also exploring its
obligations under Section 7 of the Endangered Species Act with the U.S.
Fish and Wildlife Service and the National Oceanic and Atmospheric
Administration Fisheries Service.
The main direct and indirect effects resulting from the different
alternatives analyzed in the DEIS are as follows:
Fuel consumption: For passenger cars, fuel consumption under the No
Action Alternative is 171 billion gallons in 2060. Fuel consumption
ranges from 156.1 billion gallons under Alternative 2 (3-Percent
Alternative) to 133.7 billion gallons under Alternative 9 (TCTB). Fuel
consumption is 149.3 billion gallons under the Preferred Alternative.
For light trucks, fuel consumption under the No Action Alternative is
105.4 billion gallons in 2060. Fuel consumption ranges from 97.1
billion gallons under Alternative 2 (3-Percent Alternative) to 83.8
billion gallons under Alternative 9 (TCTB). Fuel consumption is 92.2
billion gallons under the Preferred Alternative (Alternative 4).
Air quality: Emissions of criteria pollutants change very little
between the No Action Alternative and Alternatives 2 through 4. In the
case of particulate matter (PM2.5), sulfur oxides
(SOX), nitrogen oxides (NOX), and volatile
organic compounds (VOCs), the No Action Alternative results in the
highest emissions, and emissions generally decline as fuel economy
standards increase across alternatives. There are some increases from
Alternative 6 through Alternative 9, but emissions remain below the
levels under the No Action Alternative. In the case of carbon monoxide
(CO), emissions under Alternatives 2 through 4 are slightly higher than
under the No Action Alternative. Emissions of CO decline as fuel
economy standards increase across Alternatives 5 through 9.
The trend for toxic air pollutant emissions across the alternatives
is mixed. Emissions of nearly all toxic air pollutants are highest
under the No Action Alternative, except for those of acrolein, which
increases with each successive alternative and are highest under
Alternative 9. The acrolein emissions are an upper-bound estimate and
actual emissions might be less. Emissions of acetaldehyde, benzene, and
DPM in 2030 decrease with successive alternatives from Alternative 1 to
Alternative 9. Emissions of 1,3-butadiene increase slightly from
Alternative 3 (4-Percent Alternative) to Alternative 4 (Preferred), and
emissions of formaldehyde increase slightly from Alternative 8 (7-
Percent Alternative) to Alternative 9 (TCTB) in 2030.
The reductions in emissions are expected to lead to reductions in
adverse health effects. There would be reductions in adverse health
effects nationwide under Alternatives 2 (3-Percent Alternative) through
9 (TCTB) compared to the No Action Alternative. These reductions
primarily reflect the projected PM2.5 reductions, and
secondarily the reductions in SO2. The economic value of
health impacts would vary proportionally with changes in health
outcomes.
Climate: The DEIS uses a climate model to estimate the changes in
CO2 concentrations, global mean surface temperature, and
changes in sea level for each alternative CAFE standard. NHTSA used the
publicly available modeling software, Model for Assessment of
Greenhouse Gas-induced Climate Change (MAGICC) version 5.3.v2 to
estimate changes in key direct and indirect effects. The application of
MAGICC version 5.3.v2 uses the emissions estimates for CO2,
CH4, N2O, CO, NOX, SO2, and
VOCs from the Volpe model. A sensitivity analysis was completed to
examine the relationship among selected CAFE alternatives and likely
climate sensitivities, and the associated direct and indirect effects
for each combination. These relationships can be used to infer the
effect of emissions associated with the regulatory alternatives on
direct and indirect climate effects.
[[Page 49741]]
For the analysis using MAGICC, NHTSA has assumed that global
emissions consistent with the No Action Alternative (Alternative 1)
follow the trajectory provided by the Representative Concentration
Pathway (RCP) 4.5 MiniCAM (Mini Climate Assessment Model) reference
scenario.\638\ The SAP 2.1 global emissions scenarios were created as
part of CCSP's effort to develop a set of long-term (2000 to 2100)
global emissions scenarios that incorporate an update of economic and
technology data and utilize improved scenario development tools
compared to the IPCC Special Report on Emissions Scenarios (SRES)
developed more than a decade ago.
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\638\ The reference scenario for global emissions assumes the
absence of significant global GHG control policies. It is based on
the Climate Change Science Program's (CCSP) Synthesis and Assessment
Product (SAP) 2.1 MiniCAM reference scenario, and has been revised
by the Joint Global Change Research Institute to update emission
estimates of non-CO2 gases.
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The results rely primarily on the RCP 4.5 MiniCAM reference
scenario to represent an emissions scenario, that is, future global
emissions assuming no additional climate policy. Each alternative was
simulated by calculating the difference in annual GHG emissions in
relation to the No Action Alternative and subtracting this change from
the RCP 4.5 MiniCAM reference scenario to generate modified global-
scale emissions scenarios, which each show the effect of the various
regulatory alternatives on the global emissions path.
To estimate changes in global precipitation, this EIS uses
increases in global mean surface temperature combined with a scaling
approach and coefficients from the IPCC Fourth Assessment Report.
For all of the climate change analysis, the approaches focus on
marginal changes in emissions that affect climate. Thus, the approaches
result in a reasonable characterization of climate change for a given
set of emissions reductions, regardless of the underlying details
associated with those emissions reductions. The climate sensitivity
analysis provides a basis for determining climate responses to varying
climate sensitivities under the No Action Alternative (Alternative 1)
and the Preferred Alternative (Alternative 4). Some responses of the
climate system are believed to be non-linear; by using a range of
emissions cases and climate sensitivities, the effects of the
alternatives in relation to different scenarios and sensitivities can
be estimated.
GHG emissions: Although GHG emissions from new passenger cars and
light trucks will continue to rise over 2012 through 2100 (absent other
reduction efforts), the effect of the alternatives is to slow this
increase by varying amounts. Emissions for the period range from
196,341 million metric tons of CO2 (MMTCO2) for
the TCTB Alternative (Alternative 9) to 244,821 MMTCO2 for
the No Action Alternative (Alternative 1). Compared to the No Action
Alternative, projections of emissions reductions over the period 2012
to 2100 due to the MY 2012-2016 CAFE standards range from 19,169 to
48,480 MMTCO2. Compared to cumulative global emissions of
5,293,896 MMTCO2 over this period (projected by the RCP 4.5
MiniCAM reference scenario), this rulemaking is expected to reduce
global CO2 emissions by about 0.4 to 0.9 percent.
To get a sense of the relative impact of these reductions, it can
be helpful to consider the relative importance of emissions from
passenger cars and light trucks as a whole and to compare them against
emissions projections from the transportation sector. As mentioned
earlier, U.S. passenger cars and light trucks currently account for
significant CO2 emissions in the United States. With the
action alternatives reducing U.S. passenger car and light truck
CO2 emissions by 7.8 to 19.8 percent, the CAFE alternatives
would have a noticeable impact on total U.S. CO2 emissions.
Compared to total U.S. CO2 emissions in 2100 projected by
the MiniCAM reference scenario of 7,886 MMTCO2, the action
alternatives would reduce annual U.S. CO2 emissions by 3.5
to 8.9 percent in 2100.
CO2 concentration, global mean surface temperature, sea-level rise,
and precipitation: Estimated CO2 concentrations for 2100
range from 778.4 ppm under the most stringent alternative (TCTB) to
783.0 ppm under the No Action Alternative. For 2030 and 2050, the range
is even smaller. Because CO2 concentration is the key driver
of other climate effects (which in turn act as drivers on resource
impacts), this leads to small differences in these effects. For the No
Action alternative, the temperature increase from 1990 is 0.92 [deg]C
for 2030, 1.56 [deg]C for 2050, and 3.14 [deg]C for 2100. The
differences among alternatives are small. For 2100, the reduction in
temperature increase, in relation to the No Action Alternative, ranges
from 0.007 [deg]C to 0.018 [deg]C. Given that all the action
alternatives reduce temperature increases slightly in relation to the
No Action Alternative, they also slightly reduce predicted increases in
precipitation.
In summary, the impacts of the proposed action and alternatives on
global mean surface temperature, precipitation, or sea-level rise are
small in absolute terms. This is because the action alternatives have a
small proportional change in the emissions trajectories in the RCP 4.5
MiniCAM reference scenario.\639\ This is due primarily to the global
and multi-sectoral nature of the climate change issues.
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\639\ These conclusions are not meant to be interpreted as
expressing NHTSA's views that impacts on global mean surface
temperature, precipitation, or sea-level rise are not areas of
concern for policymakers. Under NEPA, the agency is obligated to
discuss the environmental impact[s] of the proposed action. 42
U.S.C. 4332(2)(C)(i) (emphasis added). This analysis fulfills
NHTSA's obligations in this regard.
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Under CEQ regulations, NHTSA must also analyze cumulative impacts,
defined as ``the impact on the environment which results from the
incremental impact of the action when added to other past, present, and
reasonably foreseeable future actions regardless of what agency or
person undertakes such other actions.'' 40 CFR 1508.7. Following is a
description of the cumulative effects of the proposed action and
alternatives on energy, air quality, and climate.
The methodology for evaluating cumulative effects includes the
reasonably foreseeable future actions of projected average annual
passenger-car and light-truck mpg estimates from 2016 through 2030 that
differ from mpg estimates reflected in the analysis of the direct and
indirect impacts of MY 2012 through MY 2016 fuel economy requirements
under each of the action alternatives, assuming no further increases in
average new passenger-car or light-truck mpg after 2016. The evaluation
of cumulative effects projects ongoing gains in average new passenger-
car and light-truck mpg consistent with further increases in CAFE
standards to an EISA-mandated minimum level of 35 mpg combined for
passenger cars and light trucks by the year 2020, along with AEO April
2009 (updated) Reference Case projections of annual percentage gains of
0.51 percent in passenger-car mpg and 0.86 percent in light-truck mpg
through 2030.\640\ AEO Reference Case
[[Page 49742]]
projections are regarded as the official U.S. government energy
projections by both the public and private sector.
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\640\ NHTSA considers these AEO projected mpg increases to be
reasonably foreseeable future actions under NEPA because the AEO
projections reflect future consumer and industry actions that result
in ongoing mpg gains through 2030. The AEO projections of fuel
economy gains beyond the EISA requirement of combined achieved 35
mpg by 2020 result from a future forecasted increase in consumer
demand for fuel economy resulting from projected fuel price
increases. Since the AEO forecasts do not extend beyond the year
2030, the mpg estimates for MY 2030 through MY 2060 remain constant.
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The assumption that all action alternatives reach the EISA 35 mpg
target by 2020, with mpg growth at the AEO forecast rate from 2020 to
2030, results in estimated cumulative impacts for Alternatives 2, 3,
and 4 that are substantially equivalent, with any minor variation in
cumulative impacts across these Alternatives due to the specific
modeling assumptions used to ensure that each Alternative achieves at
least 35 mpg by 2020. Therefore, the cumulative impacts analysis adds
substantively to the analysis of direct and indirect impacts when
comparing cumulative impacts between Alternatives 4 through 9, but not
when comparing cumulative impacts between Alternatives 2 through 4.
Another important difference in the methodology for evaluating
cumulative effects is that the No Action Alternative (Alternative 1)
also reflects the AEO Reference Case projected annual percentage gains
of 0.51 percent in car mpg and 0.86 percent in light truck mpg for the
period 2016 through 2030, whereas the direct and indirect impacts
analysis assumed no increases in average new passenger-car or light-
truck mpg after 2016 under any alternative, including the No Action
Alternative. NHTSA also considered other reasonably foreseeable actions
that would affect greenhouse gas emissions, such as regional, national,
and international initiatives and programs to reduce GHG emissions.
Fuel consumption: The nine alternatives examined in the DEIS will
result in different future levels of fuel use, total energy, and
petroleum consumption, which will in turn have an impact on emissions
of GHG and criteria air pollutants. For passenger cars, by 2060, fuel
consumption reaches 160.4 billion gallons under the No Action
Alternative (Alternative 1). Consumption falls across the alternatives,
from 139.4 billion gallons under the Preferred Alternative (Alternative
4) to 125.7 billion gallons under the TCTB Alternative (Alternative 9)
representing a fuel savings of 21.0 to 34.7 billion gallons in 2060, as
compared to fuel consumption projected under the No Action Alternative.
For light trucks, fuel consumption by 2060 reaches 94.8 billion gallons
under the No Action Alternative (Alternative 1). Consumption declines
across the alternatives, from 83.3 billion gallons under the 3-Percent
Alternative (Alternative 2) to 75.7 billion gallons under the TCTB
Alternative (Alternative 9). This represents a fuel savings of 11.5 to
19.1 billion gallons in 2060, as compared to fuel consumption projected
under the No Action Alternative.
Air quality: In the case of PM2.5, SOX,
NOX, and VOCs, the No Action Alternative results in the
highest emissions, and emissions generally decline as fuel economy
standards increase across alternatives. Exceptions to this declining
trend are NOX under the Preferred Alternative (Alternative
4); PM2.5 under Alternatives 3 and 4, and Alternatives 8 and
9; SOX under Alternatives 3 (4-Percent Alternative) and 4
(Preferred Alternative); and VOCs under Alternative 4. Despite these
individual increases, emissions of PM2.5, SOX,
NOX, and VOCs remain below the levels under the No Action
Alternative (Alternative 1). In the case of CO, emissions under
Alternatives 2 through 4 are slightly higher than under the No Action
Alternative. Emissions of CO decline as fuel economy standards increase
across Alternatives 5 through 9.
As with criteria pollutants, emissions of most toxic air pollutants
would decrease from one alternative to the next more stringent
alternative. The exceptions are acetaldehyde emissions, which would
increase under Alternative 4; acrolein emissions, which increase under
each of the alternatives; benzene emissions, which would increase under
Alternative 4; 1,3-butadiene, which would increase under Alternatives 2
and 4; diesel particulate matter (DPM), which would increase under
Alternatives 3 and 4; and formaldehyde, which would increase under
Alternatives 3, 5, 6, 8, and 9. The changes in toxic air pollutant
emissions, whether positive or negative, generally would be small
relative to Alternative 1 emissions levels.\641\ The exceptions are
acetaldehyde emissions, which would decrease by more than 10 percent
under Alternative 9; acrolein emissions, which would increase across
successive alternatives (as noted above, the acrolein emissions are an
upper-bound estimate and actual emissions might be less); benzene
emissions, which would decrease by more than 10 percent under
Alternatives 8 and 9; and DPM emissions, which would decrease by more
than 10 percent under all action alternatives.
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\641\ These conclusions are not meant to be interpreted as
expressing NHTSA's views that impacts on air quality is not an area
of concern for policymakers. Under NEPA, the agency is obligated to
discuss the environmental impact[s] of the proposed action. 42
U.S.C. 4332(2)(C)(i) (emphasis added). This analysis fulfills
NHTSA's obligations in this regard.
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Cumulative emissions generally would be less than noncumulative
emissions for the same combination of pollutant, year, and alternative
because of differing changes in VMT and fuel consumption under the
cumulative case compared to the noncumulative case. The exceptions are
acrolein for all alternatives except Alternative 9, and 1,3-butadiene
for all alternatives except Alternative 2 (3-Percent Alternative).
The reductions in emissions are expected to lead to reductions in
cumulative adverse health effects. There would be reductions in adverse
health effects nationwide under Alternatives 2 (3-Percent Alternative)
through 9 (TCTB) compared to the No Action Alternative. Reductions in
adverse health effects decrease from Alternative 2 (3-Percent
Alternative) through Alternative 4 (Preferred Alternative), and then
increase under Alternatives 5 (5-Percent Alternative through
Alternative 9 (TCTB). These reductions primarily reflect the projected
PM2.5 reductions, and secondarily the reductions in
SO2. The economic value of health impacts would vary
proportionally with changes in health outcomes.
Climate change: As with the analysis of the direct and indirect
effects of the proposed action and alternatives on climate change, for
the cumulative impacts analysis this EIS uses MAGICC version 5.3.v2 to
estimate the changes in CO2 concentrations, global mean
surface temperature, and changes in sea level for each alternative CAFE
standard. To estimate changes in global precipitation, NHTSA uses
increases in global mean surface temperature combined with a scaling
approach and coefficients from the IPCC Fourth Assessment Report. A
sensitivity analysis was completed to examine the relationship among
the alternatives and likely climate sensitivities, and the associated
direct and indirect effects for each combination. These relationships
can be used to infer the effect of emissions associated with the
regulatory alternatives on direct and indirect climate effects.
One of the key categories of inputs to MAGICC is a time series of
global GHG emissions. In assessing the cumulative effects on climate,
NHTSA used the CCSP SAP 2.1 MiniCAM Level 3 scenario to represent a
Reference Case global emission scenario, that is, future global
emissions assuming significant global actions to address climate
change. This Reference Case global emission scenario serves as a
baseline against which the climate benefits of the various alternatives
can be measured.
The Reference Case global emissions scenario used in the cumulative
impacts analysis (and described in Chapter 4 of this EIS) differs from
the global emissions scenario used for the climate
[[Page 49743]]
change modeling presented in Chapter 3. In Chapter 4, the Reference
Case global emission scenario reflects reasonably foreseeable actions
in global climate change policy; in Chapter 3, the global emissions
scenario used for the analysis assumes that there are no significant
global controls. Given that the climate system is non-linear, the
choice of a global emissions scenario could produce different estimates
of the benefits of the proposed action and alternatives, if the
emission reductions of the alternatives were held constant.
The SAP 2.1 MiniCAM Level 3 scenario assumes a moderate level of
global GHG reductions, resulting in a global atmospheric CO2
concentration of roughly 650 parts per million by volume (ppmv) as of
2100. The following regional, national, and international initiatives
and programs are reasonably foreseeable actions to reduce GHG
emissions: Regional Greenhouse Gas Initiative (RGGI); Western Climate
Initiative (WCI); Midwestern Greenhouse Gas Reduction Accord; EPA's
Proposed GHG Emissions Standards; H.R. 2454: American Clean Energy and
Security Act (``Waxman-Markey Bill''); Renewable Fuel Standard (RFS2);
Program Activities of DOE's Office of Fossil Energy; Program Activities
of DOE's Office of Nuclear Energy; United Nation's Framework Convention
on Climate Change (UNFCCC)--The Kyoto Protocol and upcoming Conference
of the Parties (COP) 15 in Copenhagen, Denmark; G8 Declaration--Summit
2009; and the Asia Pacific Partnership on Clean Development and
Climate.\642\ The SAP 2.1 MiniCAM Level 3 scenario provides a global
context for emissions of a full suite of GHGs and ozone precursors for
a Reference Case harmonious with implementation of the above policies
and initiatives. Each of the action alternatives was simulated by
calculating the difference in annual GHG emissions in relation to the
No Action Alternative, and subtracting this change in the MiniCAM Level
3 scenario to generate modified global-scale emissions scenarios, which
each show the effect of the various regulatory alternatives on the
global emissions path.
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\642\ The regional, national, and international initiatives and
programs discussed above are those which NHTSA has tentatively
concluded are reasonably foreseeable past, current, or future
actions to reduce GHG emissions. Although some of the actions,
policies, or programs listed are not associated with precise GHG
reduction commitments, collectively they illustrate a current and
continuing trend of U.S. and global awareness, emphasis, and efforts
towards significant GHG reductions. Together they imply that future
commitments for reductions are probable and, therefore, reasonably
foreseeable under NEPA.
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NHTSA used the MiniCAM Level 3 scenario as the primary global
emissions scenario for evaluating climate effects, and used the MiniCAM
Level 2 scenario and the RCP 4.5 MiniCAM reference emissions scenario
to evaluate the sensitivity of the results to alternative emission
scenarios. The sensitivity analysis provides a basis for determining
climate responses to varying levels of climate sensitivities and global
emissions and under the No Action Alternative (Alternative 1) and the
Preferred Alternative (Alternative 4). Some responses of the climate
system are believed to be non-linear; by using a range of emissions
cases and climate sensitivities, it is possible to estimate the effects
of the alternatives in relation to different reference cases.
Cumulative GHG emissions: Projections of GHG emissions reductions
over the 2012 to 2100 period due to the MY 2012-2016 CAFE standards and
other reasonably foreseeable future actions ranged from 27,164 to
44,626 MMTCO2. Compared to global emissions of 3,919,462
MMTCO2 over this period (projected by the SAP 2.1 MiniCAM
Level 3 scenario), the incremental impact of this rulemaking is
expected to reduce global CO2 emissions by about 0.7 to 1.1
percent from their projected levels under the No Action Alternative.
CO2 concentration, global mean surface temperature, sea-
level rise, and precipitation: For the mid-range results of MAGICC
model simulations for the No Action Alternative and the eight action
alternatives in terms of CO2 concentrations and increase in
global mean surface temperature in 2030, 2050, and 2100, the impact on
the growth in CO2 concentrations and temperature is just a
fraction of the total growth in CO2 concentrations and
global mean surface temperature. However, the relative impact of the
action alternatives is illustrated by the reduction in growth of both
CO2 concentrations and temperature in the TCTB Alternative
(Alternative 9).
There is a fairly narrow band of estimated CO2
concentrations as of 2100, from 653.5 ppm for the TCTB Alternative
(Alternative 9) to 657.5 ppm for the No Action Alternative (Alternative
1). For 2030 and 2050, the range is even smaller. Because
CO2 concentrations are the key driver of all other climate
effects, this leads to small differences in these effects.
The MAGICC simulations of mean global surface air temperature
increases are also shown in Table S-18. For all alternatives, the
cumulative global mean surface temperature increase is about 0.80
[deg]C to 0.81 [deg]C as of 2030; 1.32 to 1.33 [deg]C as of 2050; and
2.59 to 2.61 [deg]C as of 2100.\643\ The differences among alternatives
are small. For 2100, the reduction in temperature increase for the
action alternatives in relation to the No Action Alternative is about
0.01 to 0.02 [deg]C.
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\643\ Because the actual increase in global mean surface
temperature lags the commitment to warming, the impact on global
mean surface temperature increase is less than the long-term
commitment to warming.
---------------------------------------------------------------------------
The impact on sea-level rise in 2100 ranges from 32.84 centimeters
under the No Action Alternative (Alternative 1) to 32.68 centimeters
under the TCTB Alternative (Alternative 9), for a maximum reduction of
0.16 centimeter by 2100 from the action alternatives.
Given that the action alternatives would reduce temperature
increases slightly in relation to the No Action Alternative
(Alternative 1), they also would reduce predicted increases in
precipitation slightly. In summary, the impacts of the proposed action
and alternatives and other reasonably foreseeable future actions on
global mean surface temperature, sea-level rise, and precipitation are
relatively small in the context of the expected changes associated with
the emissions trajectories in the SRES scenarios.\644\ This is due
primarily to the global and multi-sectoral nature of the climate
problem.
---------------------------------------------------------------------------
\644\ These conclusions are not meant to be interpreted as
expressing NHTSA's views that impacts on global mean surface
temperature, precipitation, or sea-level rise are not areas of
concern for policymakers. Under NEPA, the agency is obligated to
discuss the environmental impact[s] of the proposed action. 42
U.S.C. 4332(2)(C)(i) (emphasis added). This analysis fulfills
NHTSA's obligations in this regard.
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NHTSA examined the sensitivity of climate effects on key
assumptions used in the analysis. The two variables for which
assumptions were varied were climate sensitivity and global emissions.
Climate sensitivities used included 2.0, 3.0, and 4.5 [deg]C for a
doubling of CO2 concentrations in the atmosphere. Global
emissions scenarios used included the SAP 2.1 MiniCAM Level 3 (650 ppm
as of 2100), the SAP 2.1 MiniCAM Level 2 (550 ppm as of 2100), and RCP
4.5 MiniCAM reference scenario (783 ppm as of 2100). The sensitivity
analysis is based on the results provided for two alternatives--the No
Action Alternative (Alternative 1) and the Preferred Alternative
(Alternative 4). The sensitivity analysis was conducted only for two
alternatives, as this was deemed sufficient to assess the effect of
various climate sensitivities on the results.
[[Page 49744]]
The results of these simulations illustrate the uncertainty due to
factors influencing future global emissions of GHGs (factors other than
the CAFE rulemaking). The use of different climate sensitivities \645\
(the equilibrium warming that occurs at a doubling of CO2
from pre-industrial levels) can affect not only warming but also
indirectly affect sea-level rise and CO2 concentration. The
use of alternative global emissions scenarios can influence the results
in several ways. Emissions reductions can lead to larger reductions in
the CO2 concentrations in later years because more
anthropogenic emissions can be expected to stay in the atmosphere.
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\645\ Equilibrium climate sensitivity (or climate sensitivity)
is the projected responsiveness of Earth's global climate system to
forcing from GHG drivers, and is often expressed in terms of changes
to global surface temperature resulting from a doubling of
CO2 in relation to pre-industrial atmospheric
concentrations. According to IPCC, using a likely emissions scenario
that results in a doubling of the concentration of atmospheric
CO2, there is a 66- to 90-percent probability of an
increase in surface warming of 2.5 to 4.0 [deg]C by the end of the
century (relative to 1990 average global temperatures), with 3
[deg]C as the single most likely surface temperature increase.
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NHTSA's analysis indicates that the sensitivity of the simulated
CO2 emissions in 2030, 2050, and 2100 to assumptions of
global emissions and climate sensitivity is low; stated simply,
CO2 emissions do not change much with changes in global
emissions and climate sensitivity. For 2030 and 2050, the choice of
global emissions scenario has little impact on the results. By 2100,
the Preferred Alternative (Alternative 4) has the greatest impact in
the global emissions scenario with the highest CO2 emissions
(MiniCAM Reference) and the least impact in the scenario with the
lowest CO2 emissions (MiniCAM Level 2). The total range of
the impact of the Preferred Alternative on CO2
concentrations in 2100 is from 2.2 to 2.6 ppm. The Reference Case using
the MiniCAM Level 3 scenario and a 3.0 [deg]C climate sensitivity has
an impact of 2.4 ppm.
The sensitivity of the simulated global mean surface temperatures
for 2030 is also low due primarily to the slow rate at which the global
mean surface temperature increases in response to increases in
radiative forcing. The relatively slow response in the climate system
explains the observation that even by 2100, when CO2
concentrations more than double in comparison to pre-industrial levels,
the temperature increase is below the equilibrium sensitivity levels,
i.e., the climate system has not had enough time to equilibrate to the
new CO2 concentrations. Nonetheless, as of 2100 there is a
larger range in temperatures across the different values of climate
sensitivity: The reduction in global mean surface temperature from the
No Action Alternative to the Preferred Alternative ranges from 0.008
[deg]C for the 2.0 [deg]C climate sensitivity to 0.012 [deg]C for the
4.5 [deg]C climate sensitivity, for the MiniCAM Level 3 emissions
scenario.
The impact on global mean surface temperature due to assumptions
concerning global emissions of GHGs is also important. The scenario
with the higher global emissions of GHGs (viz., the MiniCAM Reference)
has a slightly lower reduction in global mean surface temperature, and
the scenario with lower global emissions (viz., the MiniCAM Level 2)
has a slightly higher reduction. This is in large part due to the non-
linear and near-logarithmic relationship between radiative forcing and
CO2 concentrations. At high emissions levels, CO2
concentrations are higher and, as a result, a fixed reduction in
emissions yields a lower reduction in radiative forcing and global mean
surface temperature.
The sensitivity of the simulated sea-level rise to changes in
climate sensitivity and global GHG emissions mirrors that of global
temperature. Scenarios with lower climate sensitivities have lower
increases in sea-level rise. The greater the climate sensitivity, the
greater the decrement in sea-level rise for the Preferred Alternative
as compared to the No Action Alternative.
Resource impacts of climate change: The effects of the alternatives
on climate--CO2 concentrations, temperature, precipitation,
and sea-level rise--can translate into impacts on key resources
including terrestrial and freshwater ecosystems; marine, coastal
systems, and low-lying areas; food, fiber, and forest products;
industries, settlements, and society; and human health. Although the
alternatives have the potential to substantially decrease GHG
emissions, they would not alone prevent climate change from occurring.
The magnitude of the changes in climate effects that the alternatives
would produce--two to five parts per million of CO2, a few
hundredths of a degree Celsius difference in temperature, a small
percentage change in the rate of precipitation increase, and 1 or 2
millimeters of sea-level rise--are too small to address quantitatively
in terms of their impacts on resources. Given the enormous resource
values at stake, these distinctions could be important--very small
percentages of huge numbers can still yield substantial results--but
they are too small for current quantitative techniques to resolve.
Consequently, the discussion of resource impacts does not distinguish
among the CAFE alternatives; rather, it provides a qualitative review
of the benefits of reducing GHG emissions and the magnitude of the
risks involved in climate change.\646\
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\646\ See 42 U.S.C. 4332 (requiring Federal agencies to
``identify and develop methods and procedures * * * which will
insure that presently unquantified environmental amenities and
values may be given appropriate consideration''); 40 CFR 1502.23
(requiring an EIS to discuss the relationship between a cost-benefit
analysis and any analyses of unquantified environmental impacts,
values, and amenities); CEQ, Considering Cumulative Effects Under
the National Environmental Policy Act (1984), available at http://ceq.hss.doe.gov/nepa/ccenepa/ccenepa.htm (recognizing that agencies
are sometimes ``limited to qualitative evaluations of effects
because cause-and-effect relationships are poorly understood'' or
cannot be quantified).
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NHTSA examined the impacts resulting from global climate change due
to all global emissions on the U.S. and global scale. Impacts to
freshwater resources could include changes in precipitation patterns,
decreasing aquifer recharge in some locations, changes in snowpack and
timing of snowmelt, salt-water intrusion from sea-level changes,
changes in weather patterns resulting in flooding or drought in certain
regions, increased water temperature, and numerous other changes to
freshwater systems that disrupt human use and natural aquatic habitats.
Impacts to terrestrial ecosystems could include shifts in species range
and migration patterns, potential extinctions of sensitive species
unable to adapt to changing conditions, increases in the occurrence of
forest fires and pest infestation, and changes in habitat productivity
because of increased atmospheric CO2. Impacts to coastal
ecosystems, primarily from predicted sea-level rise, could include the
loss of coastal areas due to submersion and erosion, additional impacts
from severe weather and storm surges, and increased salinization of
estuaries and freshwater aquifers (for example, one impact could be
reductions in manatee habitat in the Florida coastal areas). Impacts to
land use and several key economic sectors could include flooding and
severe-weather impacts to coastal, floodplain, and island settlements;
extreme heat and cold waves; increases in drought in some locations;
and weather- or sea-level related disruptions of the service,
agricultural, and transportation sectors. Impacts to human health could
include increased mortality and morbidity due to excessive heat,
increases in respiratory conditions due to poor air quality, increases
in water and food-
[[Page 49745]]
borne diseases, changes to the seasonal patterns of vector-borne
diseases, and increases in malnutrition.
Non-climate cumulative impacts of CO2 emissions: In
addition to its role as a GHG in the atmosphere, CO2 is
transferred from the atmosphere to water, plants, and soil. In water,
CO2 combines with water molecules to form carbonic acid.
When CO2 dissolves in seawater, a series of well-known
chemical reactions begin that increase the concentration of hydrogen
ions and make seawater more acidic, which has adverse effects on corals
and some other marine life.
Increased concentrations of CO2 in the atmosphere can
also stimulate plant growth to some degree, a phenomenon known as the
CO2 fertilization effect. This effect could have positive
ramifications for agricultural productivity and forest growth. The
available evidence indicates that different plants respond in different
ways to enhanced CO2 concentrations.
As with the climate effects of CO2, the changes in non-
climate impacts associated with the alternatives are difficult to
assess quantitatively. Whether the distinction in concentrations is
substantial across alternatives is not clear because the damage
functions and potential existence of thresholds for CO2
concentration are not known. However, what is clear is that a reduction
in the rate of increase in atmospheric CO2, which all the
action alternatives would provide to some extent, would reduce the
ocean acidification effect and the CO2 fertilization effect.
For much more information on NHTSA's NEPA analysis, please see the
DEIS.
3. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.,
as amended by the Small Business Regulatory Enforcement Fairness Act
(SBREFA) of 1996), whenever an agency is required to publish a notice
of rulemaking for any proposed or final rule, it must prepare and make
available for public comment a regulatory flexibility analysis that
describes the effect of the rule on small entities (i.e., small
businesses, small organizations, and small governmental jurisdictions).
The Small Business Administration's regulations at 13 CFR part 121
define a small business, in part, as a business entity ``which operates
primarily within the United States.'' 13 CFR 121.105(a). No regulatory
flexibility analysis is required if the head of an agency certifies the
rule will not have a significant economic impact on a substantial
number of small entities.
I certify that the proposed rule would not have a significant
economic impact on a substantial number of small entities. The
following is NHTSA's statement providing the factual basis for the
certification (5 U.S.C. 605(b)).
If adopted, the proposal would directly affect twenty-one large
single stage motor vehicle manufacturers.\647\ The proposal would also
affect two small domestic single stage motor vehicle manufacturers,
Saleen and Tesla.\648\ According to the Small Business Administration's
small business size standards (see 13 CFR 121.201), a single stage
automobile or light truck manufacturer (NAICS code 336111, Automobile
Manufacturing; 336112, Light Truck and Utility Vehicle Manufacturing)
must have 1,000 or fewer employees to qualify as a small business. Both
Saleen and Tesla have less than 1,000 employees and make less than
1,000 vehicles per year. We believe that the rulemaking would not have
a significant economic impact on these small vehicle manufacturers
because under Part 525, passenger car manufacturers making less than
10,000 vehicles per year can petition NHTSA to have alternative
standards set for those manufacturers. Tesla produces only electric
vehicles with fuel economy values far beyond those proposed today, so
we would not expect them to need to petition for relief. Saleen
modifies a very small number of vehicles produced by one of the 21
large single-stage manufacturers, and currently does not meet the 27.5
mpg passenger car standard, nor is it anticipated to be able to meet
the standards proposed today. However, Saleen already petitions the
agency for relief. If the standard is raised, it has no meaningful
impact on Saleen, because it must still go through the same process to
petition for relief. Given that there already is a mechanism for
handling small businesses, which is the purpose of the Regulatory
Flexibility Act, a regulatory flexibility analysis was not prepared.
---------------------------------------------------------------------------
\647\ BMW, Daimler (Mercedes), Chrysler, Ferrari, Ford, Subaru,
General Motors, Honda, Hyundai, Kia, Lotus, Maserati, Mazda,
Mitsubishi, Nissan, Porsche, Subaru, Suzuki, Tata, Toyota, and
Volkswagen.
\648\ The Regulatory Flexibility Act only requires analysis of
small domestic manufacturers. There are two passenger car
manufacturers that we know of, Saleen and Tesla, and no light truck
manufacturers.
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4. Executive Order 13132 (Federalism)
Executive Order 13132 requires NHTSA to develop an accountable
process to ensure ``meaningful and timely input by State and local
officials in the development of regulatory policies that have
federalism implications.'' The Order defines the term ``Policies that
have federalism implications'' to include regulations that have
``substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.'' Under
the Order, NHTSA may not issue a regulation that has federalism
implications, that imposes substantial direct compliance costs, and
that is not required by statute, unless the Federal government provides
the funds necessary to pay the direct compliance costs incurred by
State and local governments, or NHTSA consults with State and local
officials early in the process of developing the proposed regulation.
NHTSA solicits comment on this proposed action from State and local
officials. In his January 26 memorandum, the President requested NHTSA
to ``consider whether any provisions regarding preemption are
consistent with the EISA, the Supreme Court's decision in Massachusetts
v. EPA and other relevant provisions of law and the policies underlying
them.'' NHTSA is deferring consideration of the preemption issue. The
agency believes that it is unnecessary to address the issue further at
this time because of the consistent and coordinated Federal standards
that would apply nationally under the proposed National Program.
5. Executive Order 12988 (Civil Justice Reform)
Pursuant to Executive Order 12988, ``Civil Justice Reform,'' \649\
NHTSA has considered whether this rulemaking would have any retroactive
effect. This proposed rule does not have any retroactive effect.
---------------------------------------------------------------------------
\649\ 61 FR 4729 (Feb. 7, 1996).
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6. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires Federal agencies to prepare a written assessment of the costs,
benefits, and other effects of a proposed or final rule that includes a
Federal mandate likely to result in the expenditure by State, local, or
tribal governments, in the aggregate, or by the private sector, of more
than $100 million in any one year (adjusted for inflation with base
year of 1995). Adjusting this amount by the implicit gross domestic
product price deflator for 2006 results in $126 million (116.043/
92.106=1.26). Before promulgating a rule for which a written statement
is needed, section 205 of
[[Page 49746]]
UMRA generally requires NHTSA to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, most
cost-effective, or least burdensome alternative that achieves the
objectives of the rule. The provisions of section 205 do not apply when
they are inconsistent with applicable law. Moreover, section 205 allows
NHTSA to adopt an alternative other than the least costly, most cost-
effective, or least burdensome alternative if the agency publishes with
the final rule an explanation why that alternative was not adopted.
This proposed rule will not result in the expenditure by State,
local, or tribal governments, in the aggregate, of more than $126
million annually, but it will result in the expenditure of that
magnitude by vehicle manufacturers and/or their suppliers. In
promulgating this proposal, NHTSA considered a variety of alternative
average fuel economy standards lower and higher than those proposed.
NHTSA is statutorily required to set standards at the maximum feasible
level achievable by manufacturers based on its consideration and
balancing of relevant factors and has tentatively concluded that the
proposed fuel economy standards are the maximum feasible standards for
the passenger car and light truck fleets for MYs 2012-2016 in light of
the statutory considerations.
7. Paperwork Reduction Act
Under the procedures established by the Paperwork Reduction Act of
1995, a person is not required to respond to a collection of
information by a Federal agency unless the collection displays a valid
OMB control number. This section describes a request for clearance for
a collection of information associated with product plan information to
assist the agency in developing final corporate average fuel economy
standards for MY 2012 through 2016 passenger cars and light trucks. The
establishment of those standards is required by the Energy Policy and
Conservation Act, as amended by the Energy Independence and Security
Act (EISA) of 2007, Pub. L. 110-140. In compliance with the PRA, this
notice requests comment on the Information Collection Request (ICR)
abstracted below. The ICR describes the nature of the information
collection and its expected burden. This is a request for an extension
of an existing collection.
Agency: National Highway Traffic Safety Administration (NHTSA).
Title: 49 CFR parts 531 and 533 Passenger Car Average Fuel Economy
Standards--Model Years 2008-2020; Light Truck Average Fuel Economy
Standards--Model Years 2008-2020; Production Plan Data
Type of Request: Extension of existing collection.
OMB Clearance Number: 2127-0655.
Form Number: This collection of information will not use any
standard forms.
Summary of the Collection of Information
In this collection of information, NHTSA is requesting any updates
to previously-submitted future product plans from vehicle
manufacturers, as well as production data through the recent past,
including data about engines and transmissions for model year (MY) 2008
through MY 2020 passenger cars and light trucks and the assumptions
underlying those plans. If manufacturers have not previously submitted
product plan information to NHTSA and wish to do so, NHTSA also
requests such information from them.
NHTSA requests information for MYs 2008-2020 to supplement other
information used by NHTSA in developing a realistic forecast of the MY
2012-2016 vehicle market, and in evaluating what technologies may
feasibly be applied by manufacturers to achieve compliance with the MY
2012-2016 standards. Information regarding earlier model years may help
the agency to better account for cumulative effects such as volume- and
time-based reductions in costs, and also may help to reveal product mix
and technology application trends during model years for which the
agency is currently receiving actual corporate average fuel economy
(CAFE) compliance data. Information regarding later model years may
help the agency gain a better understanding of how manufacturers' plans
through MY 2016 relate to their longer-term expectations regarding
Energy Independence and Security Act requirements, market trends, and
prospects for more advanced technologies.
NHTSA will also consider information from model years before and
after MYs 2012-2016 when reviewing manufacturers' planned schedules for
redesigning and freshening their products, in order to examine how
manufacturers anticipate tying technology introduction to product
design schedules and to consider how the agency should account for
those schedules in its analysis for the final rule. In addition, the
agency is requesting information regarding manufacturers' estimates of
the future vehicle population, and fuel economy improvements and
incremental costs attributed to this notice.
Description of the Need for the Information and Use of the Information
NHTSA needs the information described above to aid in assessing
what CAFE standards should be established for MY 2012 through 2016
passenger cars and light trucks.
Description of the Likely Respondents (Including Estimated Number, and
Proposed Frequency of Response to the Collection of Information)
It is estimated that this collection affects approximately 22 motor
vehicle manufacturers. The information that is the subject of this
collection of information is collected whenever NHTSA publishes a
notice of proposed rulemaking for the purpose of setting CAFE
standards.
Estimate of the Total Annual Reporting and Recordkeeping Burden
Resulting From the Collection of Information
It is estimated that this collection affects approximately 22
vehicle manufacturers. One major manufacturer (General Motors)
estimated their burden to be approximately 4,300 hours. The burden to
other manufacturers was estimated using sales weights relative to
General Motor's total sales (e.g., if a manufacturer produces 50
percent as many vehicles as General Motors, their burden is estimated
to be 4,300 * 0.5 = 2,150 hours). Therefore the burden to each
manufacturer depends on the number of vehicles that manufacturer
produces. The total estimated burden is 16,000 hours annually.
------------------------------------------------------------------------
------------------------------------------------------------------------
Number of Affected Vehicle Manufacturers.. 22
Annual Labor Hours for Each Manufacturer Variable
To Prepare and Submit Required
Information.
-----------------------------
Total Annual Information Collection 16,000 Hours
Burden.
------------------------------------------------------------------------
The monetized cost associated with this information collection is
determined by multiplying the total labor hours by an appropriate labor
rate. For this information collection, we believe vehicle manufacturers
will use mechanical engineers to prepare and submit the data.
Therefore, we are applying a labor rate of $36.02 per hour which is the
median national wage for mechanical engineers.\650\ Thus, the
[[Page 49747]]
estimated monetized annual cost is 16,000 hours x $36.02 per hour =
$576,320.
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\650\ The national median hourly rate for mechanical engineers,
May 2008, according to the Bureau of Labor Statistics, is $36.02.
See http://www.bls.gov/oes/2008/may/oes_nat.htm#b17-0000 (last
accessed August 26, 2009).
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Comments are specifically sought on the following issues:
Whether the collection of information is necessary for the
proper performance of the functions of the Department, including
whether the information will have practical utility.
Whether the Department's estimate for the burden of the
information collection is accurate.
Ways to minimize the burden of the collection of
information on respondents, including the use of automated collection
techniques or other forms of information technology.
Please send comments to the docket number cited in the heading of
this notice. PRA comments are due within 60 days following publication
of this document in the Federal Register. The agency recognizes that
the amendment to the existing collection of information may be subject
to revision in response to public comments and the OMB review.
For further information on this proposal to extend the collection
of information, please contact Ken Katz, Fuel Economy Division, Office
of International Policy, Fuel Economy, and Consumer Programs, National
Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE.,
Washington, DC 20590. You may also contact him by phone at (202) 366-
0846 or by fax at (202) 493-2290.
8. Regulation Identifier Number
The Department of Transportation assigns a regulation identifier
number (RIN) to each regulatory action listed in the Unified Agenda of
Federal Regulations. The Regulatory Information Service Center
publishes the Unified Agenda in April and October of each year. You may
use the RIN contained in the heading at the beginning of this document
to find this action in the Unified Agenda.
9. Executive Order 13045
Executive Order 13045 \651\ applies to any rule that: (1) Is
determined to be economically significant as defined under E.O. 12866,
and (2) concerns an environmental, health, or safety risk that NHTSA
has reason to believe may have a disproportionate effect on children.
If the regulatory action meets both criteria, we must evaluate the
environmental health or safety effects of the proposed rule on
children, and explain why the proposed regulation is preferable to
other potentially effective and reasonably foreseeable alternatives
considered by us.
---------------------------------------------------------------------------
\651\ 62 FR 19885 (Apr. 23, 1997).
---------------------------------------------------------------------------
Chapter 4 of NHTSA's DEIS notes that breathing PM can cause
respiratory ailments, heart attack, and arrhythmias (Dockery et al.
1993, Samet et al. 2000, Pope et al. 1995, 2002, 2004, Pope and Dockery
2006, Dominici et al. 2006, Laden et al. 2006, all in Ebi et al. 2008).
Populations at greatest risk could include children, the elderly, and
those with heart and lung disease, diabetes (Ebi et al. 2008), and high
blood pressure (K[uuml]nzli et al. 2005, in Ebi et al. 2008). Chronic
exposure to PM could decrease lifespan by 1 to 3 years (Pope 2000, in
American Lung Association 2008). Increasing PM concentrations are
expected to have a measurable adverse impact on human health
(Confalonieri et al. 2007).
Additionally, the DEIS notes that substantial morbidity and
childhood mortality has been linked to water- and food-borne diseases.
Climate change is projected to alter temperature and the hydrologic
cycle through changes in precipitation, evaporation, transpiration, and
water storage. These changes, in turn, potentially affect water-borne
and food-borne diseases, such as salmonellosis, campylobacter,
leptospirosis, and pathogenic species of vibrio. They also have a
direct impact on surface water availability and water quality. It has
been estimated that more than 1 billion people in 2002 did not have
access to adequate clean water (McMichael et al. 2003, in Epstein et
al. 2006). Increased temperatures, greater evaporation, and heavy rain
events have been associated with adverse impacts on drinking water
through increased waterborne diseases, algal blooms, and toxins (Chorus
and Bartram 1999, Levin et al. 2002, Johnson and Murphy 2004, all in
Epstein et al. 2006). A seasonal signature has been associated with
waterborne disease outbreaks (EPA 2009b). In the United States, 68
percent of all waterborne diseases between 1948 and 1994 were observed
after heavy rainfall events (Curriero et al. 2001a, in Epstein et al.
2006).
Climate change could further impact a pathogen by directly
affecting its life cycle (Ebi et al. 2008). The global increase in the
frequency, intensity, and duration of red tides could be linked to
local impacts already associated with climate change (Harvell et al.
1999, in Epstein et al. 2006); toxins associated with red tide directly
affect the nervous system (Epstein et al. 2006).
Many people do not report or seek medical attention for their
ailments of water-borne or food-borne diseases; hence, the number of
actual cases with these diseases is greater than clinical records
demonstrate (Mead et al. 1999, in Ebi et al. 2008). Many of the
gastrointestinal diseases associated with water-borne and food-borne
diseases can be self-limiting; however, vulnerable populations include
young children, those with a compromised immune system, and the
elderly.
Thus, as detailed in the DEIS, NHTSA has evaluated the
environmental health and safety effects of the proposed rule on
children. The DEIS also explains why the proposed regulation is
preferable to other potentially effective and reasonably foreseeable
alternatives considered by the agency.
10. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act (NTTAA) requires NHTA to evaluate and use existing voluntary
consensus standards in its regulatory activities unless doing so would
be inconsistent with applicable law (e.g., the statutory provisions
regarding NHTSA's vehicle safety authority) or otherwise impractical.
Voluntary consensus standards are technical standards developed or
adopted by voluntary consensus standards bodies. Technical standards
are defined by the NTTAA as ``performance-base or design-specific
technical specification and related management systems practices.''
They pertain to ``products and processes, such as size, strength, or
technical performance of a product, process or material.''
Examples of organizations generally regarded as voluntary consensus
standards bodies include the American Society for Testing and Materials
(ASTM), the Society of Automotive Engineers (SAE), and the American
National Standards Institute (ANSI). If NHTSA does not use available
and potentially applicable voluntary consensus standards, we are
required by the Act to provide Congress, through OMB, an explanation of
the reasons for not using such standards.
There are currently no voluntary consensus standards relevant to
today's proposed CAFE standards.
11. Executive Order 13211
Executive Order 13211 \652\ applies to any rule that: (1) Is
determined to be economically significant as defined under E.O. 12866,
and is likely to have a significant adverse effect on the supply,
distribution, or use of energy; or (2) that is designated by the
Administrator of the Office of
[[Page 49748]]
Information and Regulatory Affairs as a significant energy action. If
the regulatory action meets either criterion, we must evaluate the
adverse energy effects of the proposed rule and explain why the
proposed regulation is preferable to other potentially effective and
reasonably feasible alternatives considered by us.
---------------------------------------------------------------------------
\652\ 66 FR 28355 (May 18, 2001).
---------------------------------------------------------------------------
The proposed rule seeks to establish passenger car and light truck
fuel economy standards that will reduce the consumption of petroleum
and will not have any adverse energy effects. Accordingly, this
proposed rulemaking action is not designated as a significant energy
action.
12. Department of Energy Review
In accordance with 49 U.S.C. 32902(j)(1), we submitted this
proposed rule to the Department of Energy for review. That Department
did not make any comments that we have not addressed.
13. Plain Language
Executive Order 12866 requires each agency to write all rules in
plain language. Application of the principles of plain language
includes consideration of the following questions:
Have we organized the material to suit the public's needs?
Are the requirements in the rule clearly stated?
Does the rule contain technical language or jargon that
isn't clear?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the rule easier to understand?
Would more (but shorter) sections be better?
Could we improve clarity by adding tables, lists, or
diagrams?
What else could we do to make the rule easier to
understand?
If you have any responses to these questions, please include them
in your comments on this proposal.
14. Privacy Act
Anyone is able to search the electronic form of all comments
received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an organization, business, labor union, etc.). You may review DOT's
complete Privacy Act statement in the Federal Register (65 FR 19477-78,
April 11, 2000) or you may visit http://www.dot.gov/privacy.html.
List of Subjects
40 CFR Part 86
Administrative practice and procedure, Confidential business
information, Labeling, Motor vehicle pollution, Reporting and
recordkeeping requirements.
40 CFR Part 600
Administrative practice and procedure, Electric power, Fuel
economy, Incorporation by reference, Labeling, Reporting and
recordkeeping requirements.
49 CFR Part 531 and 533
Fuel economy.
49 CFR Part 537
Fuel economy, Reporting and recordkeeping requirements.
49 CFR Part 538
Administrative practice and procedure, Fuel economy, Motor
vehicles, Reporting and recordkeeping requirements.
Environmental Protection Agency
40 CFR Chapter I
For the reasons set forth in the preamble, the Environmental
Protection Agency proposes to amend parts 86 and 600 of title 40,
Chapter I of the Code of Federal Regulations as follows:
PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES
AND ENGINES
1. The authority citation for part 86 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
2. Section 86.1 is amended by adding paragraphs (b)(2)(xxxix)
through (xxxxi) to read as follows:
Sec. 86.1 Reference materials.
* * * * *
(b) * * *
(2) * * *
(xxxix) SAE J2064, December 2005, R134a Refrigerant Automotive Air-
Conditioned Hose, IBR approved for Sec. 86.166-12.
(xxxx) SAE J2727, revised August 2008, HFC-134a Mobile Air
Conditioning System Refrigerant Emission Chart, IBR approved for Sec.
86.166-12.
(xxxxi) SAE J2765, October, 2008, Procedure for Measuring System
COP [Coefficient of Performance] of a Mobile Air Conditioning System on
a Test Bench, IBR approved for Sec. 86.1866-12.
* * * * *
Subpart B--[Amended]
3. Section 86.111-94 is amended by revising paragraph (b)
introductory text to read as follows:
Sec. 86.111-94 Exhaust gas analytical system.
* * * * *
(b) Major component description. The exhaust gas analytical system,
Figure B94-7, consists of a flame ionization detector (FID) (heated,
235 [deg] 15 [deg]F (113 [deg] 8 [deg]C) for
methanol-fueled vehicles) for the determination of THC, a methane
analyzer (consisting of a gas chromatograph combined with a FID) for
the determination of CH4, non-dispersive infrared analyzers
(NDIR) for the determination of CO and CO2, a
chemiluminescence analyzer (CL) for the determination of
NOX, and an analyzer meeting the requirements specified in
Sec. 86.167-12 for the determination of N2O for 2012 and
later model year vehicles. A heated flame ionization detector (HFID) is
used for the continuous determination of THC from petroleum-fueled
diesel-cycle vehicles (may also be used with methanol-fueled diesel-
cycle vehicles), Figure B94-5 (or B94-6). The analytical system for
methanol consists of a gas chromatograph (GC) equipped with a flame
ionization detector. The analysis for formaldehyde is performed using
high-pressure liquid chromatography (HPLC) of 2,4-
dinitrophenylhydrazine (DNPH) derivatives using ultraviolet (UV)
detection. The exhaust gas analytical system shall conform to the
following requirements:
* * * * *
4. Section 86.127-00 is amended as follows:
a. By revising the introductory text.
b. By revising paragraph (a) introductory text.
c. By revising paragraph (a)(1),
d. By revising paragraph (b).
e. By revising paragraph (c).
f. By revising paragraphs (d) and (e).
Sec. 86.127-00 Test procedures; overview.
Applicability. The procedures described in this subpart are used to
determine the conformity of vehicles with the standards set forth in
subpart A or S of this part (as applicable) for light-duty vehicles,
light-duty trucks, and medium-duty passenger vehicles. Except where
noted, the procedures of paragraphs (a) through (b) of this section,
Sec. 86.127-96 (c) and (d), and the contents of Sec. Sec. 86.135-94,
86.136-90, 86.137-96, 86.140-94, 86.142-90, and 86.144-94 are
applicable for determining emission results for vehicle exhaust
emission systems designed to comply with the FTP emission standards, or
the FTP emission element required for determining compliance with
composite SFTP standards. Paragraphs (f) and (g) of this section
discuss the additional test elements of
[[Page 49749]]
aggressive driving (US06) and air conditioning (SC03) that comprise the
exhaust emission components of the SFTP. Section 86.127-96(e) discusses
fuel spitback emissions and paragraphs (h) and (i) of this section are
applicable to all vehicle emission test procedures. Section 86.127-00
includes text that specifies requirements that differ from Sec.
86.127-96. Where a paragraph in Sec. 86.127-96 is identical and
applicable to Sec. 86.127-00, this may be indicated by specifying the
corresponding paragraph and the statement ``[Reserved]. For guidance
see Sec. 86.127-96.''
(a) The overall test consists of prescribed sequences of fueling,
parking, and operating test conditions. Vehicles are tested for any or
all of the following emissions, depending upon the specific test
requirements and the vehicle fuel type:
(1) Gaseous exhaust THC, NMHC, CO, NOX, CO2,
N2O, CH4, CH3OH,
C2H5OH, C2H4O, and HCHO.
* * * * *
(b) The FTP Otto-cycle exhaust emission test is designed to
determine gaseous THC, CO, CO2, CH4,
NOX, N2O, and particulate mass emissions from
gasoline-fueled, methanol-fueled and gaseous-fueled Otto-cycle vehicles
as well as methanol and formaldehyde from methanol-fueled Otto-cycle
vehicles, as well as methanol, ethanol, acetaldehyde, and formaldehyde
from ethanol-fueled vehicles while simulating an average trip in an
urban area of 11 miles (18 kilometers). The test consists of engine
start-ups and vehicle operation on a chassis dynamometer through a
specified driving schedule (see paragraph (a) of appendix I to this
part for the Urban Dynamometer Driving Schedule). A proportional part
of the diluted exhaust is collected continuously for subsequent
analysis, using a constant volume (variable dilution) sampler or
critical flow venturi sampler.
(c) The diesel-cycle exhaust emission test is designed to determine
particulate and gaseous mass emissions during a test similar to the
test in Sec. 86.127(b). For petroleum-fueled diesel-cycle vehicles,
diluted exhaust is continuously analyzed for THC using a heated sample
line and analyzer; the other gaseous emissions (CH4, CO,
CO2, N2O, and NOX) are collected
continuously for analysis as in Sec. 86.127(b). For methanol- and
ethanol-fueled vehicles, THC, methanol, formaldehyde, CO,
CO2, CH4, N2O, and NOX are
collected continuously for analysis as in Sec. 86.127(b).
Additionally, for ethanol-fueled vehicles, ethanol and acetaldehyde are
collected continuously for analysis as in Sec. 86.127(b). THC,
methanol, ethanol, acetaldehyde, and formaldehyde are collected using
heated sample lines, and a heated FID is used for THC analyses.
Simultaneous with the gaseous exhaust collection and analysis,
particulates from a proportional part of the diluted exhaust are
collected continuously on a filter. The mass of particulate is
determined by the procedure described in Sec. 86.139. This testing
requires a dilution tunnel as well as the constant volume sampler.
(d)-(e) [Reserved]. For guidance see Sec. 86.127-96.
* * * * *
5. Section 86.135-00 is amended by revising paragraph (a) to read
as follows:
Sec. 86.135-12 Dynamometer procedure.
* * * * *
(a) Overview. The dynamometer run consists of two tests, a ``cold''
start test, after a minimum 12-hour and a maximum 36-hour soak
according to the provisions of Sec. Sec. 86.132 and 86.133, and a
``hot'' start test following the ``cold'' start by 10 minutes. Engine
startup (with all accessories turned off), operation over the UDDS and
engine shutdown make a complete cold start test. Engine startup and
operation over the first 505 seconds of the driving schedule complete
the hot start test. The exhaust emissions are diluted with ambient air
in the dilution tunnel as shown in Figure B94-5 and Figure B94-6. A
dilution tunnel is not required for testing vehicles waived from the
requirement to measure particulates. Six particulate samples are
collected on filters for weighing; the first sample plus backup is
collected during the first 505 seconds of the cold start test; the
second sample plus backup is collected during the remainder of the cold
start test (including shutdown); the third sample plus backup is
collected during the hot start test. Continuous proportional samples of
gaseous emissions are collected for analysis during each test phase.
For gasoline-fueled, natural gas-fueled and liquefied petroleum gas-
fueled Otto-cycle vehicles, the composite samples collected in bags are
analyzed for THC, CO, CO2, CH4, NOX,
and, for 2012 and later model year vehicles, N2O. For
petroleum-fueled diesel-cycle vehicles (optional for natural gas-
fueled, liquefied petroleum gas-fueled and methanol-fueled diesel-cycle
vehicles), THC is sampled and analyzed continuously according to the
provisions of Sec. 86.110. Parallel samples of the dilution air are
similarly analyzed for THC, CO, CO2, CH4,
NOX, and, for 2012 and later model year vehicles,
N2O. For natural gas-fueled, liquefied petroleum gas-fueled
and methanol-fueled vehicles, bag samples are collected and analyzed
for THC (if not sampled continuously), CO, CO2,
CH4, NOX, and, for 2012 and later model year
vehicles, N2O. For methanol-fueled vehicles, methanol and
formaldehyde samples are taken for both exhaust emissions and dilution
air (a single dilution air formaldehyde sample, covering the total test
period may be collected). For ethanol-fueled vehicles, methanol,
ethanol, acetaldehyde, and formaldehyde samples are taken for both
exhaust emissions and dilution air (a single dilution air formaldehyde
sample, covering the total test period may be collected). Parallel bag
samples of dilution air are analyzed for THC, CO, CO2,
CH4, NOX, and, for 2012 and later model year
vehicles, N2O. Methanol and formaldehyde samples may be
omitted for 1990 through 1994 model years when a FID calibrated on
methanol is used.
* * * * *
6. A new Sec. 86.165-12 is added to subpart B to read as follows:
Sec. 86.165-12 Air conditioning idle test procedure.
(a) Applicability. This section describes procedures for
determining air conditioning-related CO2 emissions from 2014
and later model year light-duty vehicles, light-duty trucks, and
medium-duty passenger vehicles. The results of this test are used to
qualify for air conditioning efficiency CO2 credits
according to Sec. 86.1866-12(c).
(b) Overview. The test consists of a brief period to stabilize the
vehicle at idle, followed by a ten-minute period at idle when
CO2 emissions are measured without any air conditioning
systems operating, followed by a ten-minute period at idle when
CO2 emissions are measured with the air conditioning system
operating. This test is designed to determine the air conditioning-
related CO2 emission value, in grams per minute. If engine
stalling occurs during cycle operation, follow the provisions of Sec.
86.136-90 to restart the test. Measurement instruments must meet the
specifications described in this subpart.
(c) Test cell ambient conditions.
(1) Ambient humidity within the test cell during all phases of the
test sequence shall be controlled to an average of 50 5
grains of water/pound of dry air.
(2) Ambient air temperature within the test cell during all phases
of the test sequence shall be controlled to 75 2 [deg]F on
average and 75 5 [deg]F as an instantaneous measurement.
Air temperature shall be recorded
[[Page 49750]]
continuously at a minimum of 30 second intervals.
(d) Test sequence.
(1) Connect the vehicle exhaust system to the raw sampling location
or dilution stage according to the provisions of this subpart. For
dilution systems, dilute the exhaust as described in this subpart.
Continuous sampling systems must meet the specifications provided in
this subpart.
(2) Test the vehicle in a fully warmed-up condition. If the vehicle
has soaked for two hours or less since the last exhaust test element,
preconditioning may consist of a 505 Cycle, 866 Cycle, US06, or SC03,
as these terms are defined in Sec. 86.1803-01, or a highway fuel
economy test procedure, as defined in Sec. 600.002-08 of this chapter.
For longer soak periods, precondition the vehicle using one full Urban
Dynamometer Driving Schedule. Ensure that the vehicle has stabilized at
test cell ambient conditions such that the vehicle interior temperature
is not substantially different from the external test cell temperature.
Windows may be opened during preconditioning to achieve this
stabilization.
(3) Immediately after the preconditioning, turn off any cooling
fans, if present, close the vehicle's hood, fully close all the
vehicle's windows, ensure that all the vehicle's air conditioning
systems are set to full off, start the CO2 sampling system,
and then idle the vehicle for not less than 1 minute and not more than
5 minutes to achieve normal and stable idle operation.
(4) Measure and record the continuous CO2 concentration
for 600 seconds. Measure the CO2 concentration continuously
using raw or dilute sampling procedures. Multiply this concentration by
the continuous (raw or dilute) flow rate at the emission sampling
location to determine the CO2 flow rate. Calculate the
CO2 cumulative flow rate continuously over the test
interval. This cumulative value is the total mass of the emitted
CO2.
(5) Within 60 seconds after completing the measurement described in
paragraph (d)(4) of this section, turn on the vehicle's air
conditioning system. Set automatic air conditioning systems to a
temperature 9 [deg]F (5 [deg]C) below the ambient temperature of the
test cell. Set manual air conditioning systems to maximum cooling with
recirculation turned off, except that recirculation shall be enabled if
the air conditioning system automatically defaults to a recirculation
mode when set to maximum cooling. Continue idling the vehicle while
measuring and recording the continuous CO2 concentration for
600 seconds as described in paragraph (d)(4) of this section. Air
conditioning systems with automatic temperature controls are finished
with the test. Manually controlled air conditioning systems must
complete one additional idle period described in paragraph (d)(6) of
this section.
(6) This paragraph (d)(6) applies only to manually controlled air
conditioning systems. Within 60 seconds after completing the
measurement described in paragraph (d)(5) of this section, leave the
vehicle's air conditioning system on and set as described in paragraph
(d)(5) of this section but set the fan speed to the lowest setting that
continues to provide air flow. Recirculation shall be turned off except
that if the system defaults to a recirculation mode when set to maximum
cooling and maintains recirculation with the low fan speed, then
recirculation shall continue to be enabled. After the fan speed has
been set, continue idling the vehicle while measuring and recording the
continuous CO2 concentration for a total of 600 seconds as
described in paragraph (d)(4) of this section.
(e) Calculations. (1) For the measurement with no air conditioning,
calculate the CO2 emissions (in grams per minute) by
dividing the total mass of CO2 from paragraph (d)(4) of this
section by 10.0 (the duration in minutes for which CO2 is measured).
Round this result to the nearest whole gram per minute.
(2)(i) For the measurement with air conditioning in operation for
automatic air conditioning systems, calculate the CO2
emissions (in grams per minute) by dividing the total mass of
CO2 from paragraph (d)(5) of this section by 10.0. Round
this result to the nearest whole gram per minute.
(ii) For the measurement with air conditioning in operation for
manually controlled air conditioning systems, calculate the
CO2 emissions (in grams per minute) by summing the total
mass of CO2 from paragraphs (d)(5) and (d)(6) of this
section and dividing by 20.0. Round this result to the nearest whole
gram per minute.
(3) Calculate the increased CO2 emissions due to air
conditioning (in grams per minute) by subtracting the results of
paragraph (e)(1) of this section from the results of paragraph
(e)(2)(i) or (ii) of this section, whichever is applicable.
7. A new Sec. 86.166-12 is added to subpart B to read as follows:
Sec. 86.166-12 Method for calculating emissions due to air
conditioning leakage.
This section describes procedures used to determine a refrigerant
leakage rate from vehicle-based air conditioning units. The results of
this test are used to determine air conditioning leakage credits
according to Sec. 86.1866-12(b).
(a) Emission totals. Calculate an annual rate of refrigerant
leakage from an air conditioning system using the following equation:
Grams/YRTOT = Grams/YRRP + Grams/
YRSP + Grams/YRFH + Grams/YRMC +
Grams/YRC - Grams/YRCREDIT
Where:
Grams/YRTOT = Total air conditioning system emission rate
in grams per year and rounded to the nearest tenth of a gram per
year.
Grams/YRRP = Emission rate for rigid pipe connections as
described in paragraph (b) of this section.
Grams/YRSP = Emission rate for service ports and
refrigerant control devices as described in paragraph (c) of this
section.
Grams/YRFH = Emission rate for flexible hoses as
described in paragraph (d) of this section.
Grams/YRMC = Emission rate for heat exchangers, mufflers,
receiver/driers, and accumulators as described in paragraph (e) of
this section.
Grams/YRC = Emission rate for compressors as described in
paragraph (f) of this section.
Grams/YRCREDIT = Leakage monitoring credit, as
applicable, from paragraph (g) of this section.
(b) Fittings. Determine the grams per year emission rate for rigid
pipe connections using the following equation:
Grams/YRRP = 0.00522 [middot] [(125 [middot] SO) + (75
[middot] SCO) + (50 [middot] MO) + (10 [middot] SW) + (5 [middot] SWO)
+ (MG)]
Where:
Grams/YRRP = Total emission rate for rigid pipe
connections in grams per year.
SO = The number of single O-ring connections.
SCO = The number of single captured O-ring connections.
MO = The number of multiple O-ring connections.
SW = The number of seal washer connections.
SWO = The number of seal washer with O-ring connections.
MG = The number of metal gasket connections.
(c) Service ports and refrigerant control devices. Determine the
grams per year emission rate for service ports and refrigerant control
devices using the following equation:
Grams/YRSP = (0.3 [middot] HSSP [middot] 0.522) + (0.2
[middot] LSSP [middot] 0.522) + (0.2 [middot] STV [middot] 0.522) +
(0.2 [middot] TXV [middot] 0.522)
Where:
Grams/YRSP = The emission rate for service ports and
refrigerant control devices, in grams per year.
HSSP = The number of high side service ports.
[[Page 49751]]
LSSP = The number of low side service ports.
STV = The total number of switches, transducers, and pressure relief
valves.
TXV = The number of TXV refrigerant control devices.
(d) Flexible hoses. Determine the permeation emission rate in grams
per year for each segment of flexible hose using the following
equation, and then sum the values for each hose in the system to
calculate a total emission rate for the system:
Grams/YRFH = 0.00522 [middot] (3.14159 [middot] ID [middot]
L [middot] ER)
Where:
Grams/YRFH = Emission rate for a segment of flexible hose
in grams per year.
ID = Inner diameter of hose, in millimeters.
L = Length of hose, in millimeters.
ER = Emission rate per unit internal surface area of the hose, in g/
mm\2\. Select the appropriate value from the following table:
------------------------------------------------------------------------
ER
Material/configuration -----------------------------------------
High-pressure side Low-pressure side
------------------------------------------------------------------------
All rubber hose............... 0.0216 0.0144
Standard barrier or veneer 0.0054 0.0036
hose.........................
Ultra-low permeation barrier 0.00225 0.00167
or veneer hose...............
------------------------------------------------------------------------
(e) Heat exchangers, mufflers, receiver/driers, and accumulators.
Use an emission rate of 0.261 grams per year as a combined value for
all heat exchangers, mufflers, receiver/driers, and accumulators
(Grams/YRMC).
(f) Compressors. Determine the emission rate for compressors using
the following equation, except that the final term in the equation
(``1500/SSL'') is not applicable to electric (or semi-hermetic)
compressors:
Grams/YRC = 0.00522 [middot] [(300 [middot] OHS) + (200
[middot] MHS) + (150 [middot] FAP) + (100 [middot] GHS) + (1500/SSL)]
Where:
Grams/YRC = The emission rate for the compressors in the
air conditioning system, in grams per year.
OHS = The number of O-ring housing seals.
MHS = The number of molded housing seals.
FAP = The number of fitting adapter plates.
GHS = The number of gasket housing seals.
SSL = The number of lips on shaft seal (for belt-driven compressors
only).
(g) Leakage monitoring credits. Electronic monitoring systems that
provide indication of a refrigerant loss to the operator through an
interior driver information display or an air conditioning-specific
malfunction indicator when the air conditioning system has lost 40
percent of its charge capacity shall use a credit of 1 g/yr.
(h) Definitions. The following definitions apply to this section:
(1) All rubber hose means a Type A or Type B hose as defined by SAE
J2064 with a permeation rate not greater than 15 kg/m\2\/year when
tested according to SAE J2064. SAE J2064 is incorporated by reference;
see Sec. 86.1.
(2) Standard barrier or veneer hose means a Type C, D, E, or F hose
as defined by SAE J2064 with a permeation rate not greater than 5 kg/
m\2\/year when tested according to SAE J2064. SAE J2064 is incorporated
by reference; see Sec. 86.1.
(3) Ultra-low permeation barrier or veneer hose means a hose with a
permeation rate not greater than 1.5 kg/m\2\/year when tested according
to SAE J2064. SAE J2064 is incorporated by reference; see Sec. 86.1.
8. A new Sec. 86.167-12 is added to subpart B to read as follows:
Sec. 86.167-12 N2O measurement devices.
(a) General component requirements. We recommend that you use an
analyzer that meets the specifications in Table 1 of 40 CFR 1065.205.
Note that your system must meet the linearity verification in 40 CFR
1065.307.
(b) Instrument types. You may use any of the following analyzers to
measure N2O:
(1) Nondispersive infra-red (NDIR) analyzer. You may use an NDIR
analyzer that has compensation algorithms that are functions of other
gaseous measurements and the engine's known or assumed fuel properties.
The target value for any compensation algorithm is 0.0% (that is, no
bias high and no bias low), regardless of the uncompensated signal's
bias.
(2) Fourier transform infra-red (FTIR) analyzer. You may use an
FTIR analyzer that has compensation algorithms that are functions of
other gaseous measurements and the engine's known or assumed fuel
properties. The target value for any compensation algorithm is 0.0%
(that is, no bias high and no bias low), regardless of the
uncompensated signal's bias. Use EPA Test Method 320 ``Measurement of
Vapor Phase Organic and Inorganic Emissions by Extractive Fourier
Transform Infrared (FTIR) Spectroscopy'' for spectral interpretation
(see 40 CFR part 63 appendix A).
(3) Photoacoustic analyzer. You may use a photoacoustic analyzer
that has compensation algorithms that are functions of other gaseous
measurements. The target value for any compensation algorithm is 0.0%
(that is, no bias high and no bias low), regardless of the
uncompensated signal's bias. Use an optical wheel configuration that
gives analytical priority to measurement of the least stable components
in the sample. Select a sample integration time of at least 5 seconds.
Take into account sample chamber and sample line volumes when
determining flush times for your instrument.
(4) Gas chromatograph (GC) analyzer. You may use a gas
chromatograph with Electron Capture Detector (ECD) to measure
N2O concentrations of diluted exhaust for batch sampling.
You may use a packed or porous layer open tubular (PLOT) column phase
of suitable polarity and length to achieve adequate resolution of the
N2O peak for analysis. Examples of acceptable columns are a
PLOT column consisting of bonded polystyrene-divinylbenzene or a
Porapack Q packed column. Take the column temperature profile and
carrier gas selection into consideration when setting up your method to
achieve adequate N2O peak resolution.
(c) Interference validation. Perform interference validation for
NDIR, FTIR, and Photoacoustic analyzers using the procedures of Sec.
86.168-12 as follows:
(1) Certain interference gases can positively interfere with these
analyzers by causing a response similar to N2O as follows:
(i) The interference gases for NDIR analyzers are CO,
CO2, H2O, CH4 and SO2. Note
that interference species, with the exception of H2O, are
dependent on the N2O infrared absorption band chosen by the
instrument manufacturer and should be determined independently for each
analyzer.
(ii) Use good engineering judgment to determine interference gases
for FTIR. Note that interference species, with the exception of
H2O, are dependent on the N2O infrared absorption
band chosen by the instrument manufacturer and should be determined
independently for each analyzer.
(iii) The interference gases for photoacoustic analyzers are CO,
CO2, and H2O.
[[Page 49752]]
(2) Analyzers must have combined interference that is within (0.0
1.0) mol/mol. We strongly recommend a lower interference
that is within (0.0 0.5) mol/.
9. A new Sec. 86.168-12 is added to subpart B to read as follows:
Sec. 86.168-12 Interference verification for N2O
analyzers.
(a) Scope and frequency. See 40 CFR 1065.275 to determine whether
you need to verify the amount of interference after initial analyzer
installation and after major maintenance.
(b) Measurement principles. Interference gasses can positively
interfere with certain analyzers by causing a response similar to
N2O. If the analyzer uses compensation algorithms that
utilize measurements of other gases to meet this interference
verification, simultaneously conduct these other measurements to test
the compensation algorithms during the analyzer interference
verification.
(c) System requirements. See 40 CFR 1065.275 for system
requirements related to allowable interference levels.
(d) Procedure. Perform the interference verification as follows:
(1) Start, operate, zero, and span the N2O FTIR analyzer
as you would before an emission test. If the sample is passed through a
dryer during emission testing, you may run this verification test with
the dryer if it meets the requirements of 40 CFR 1065.342. Operate the
dryer at the same conditions as you will for an emission test. You may
also run this verification test without the sample dryer.
(2) Create a humidified test gas by bubbling a multi component span
gas that incorporates the target interference species and meets the
specifications in 40 CFR 1065.750 through distilled water in a sealed
vessel. If the sample is not passed through a dryer during emission
testing, control the vessel temperature to generate an H2O
level at least as high as the maximum expected during emission testing.
If the sample is passed through a dryer during emission testing,
control the vessel temperature to generate an H2O level at
least as high as the level determined in 40 CFR 1065.145(e)(2) for that
dryer. Use interference span gas concentrations that are at least as
high as the maximum expected during testing.
(3) Introduce the humidified interference test gas into the sample
system. You may introduce it downstream of any sample dryer, if one is
used during testing.
(4) If the sample is not passed through a dryer during this
verification test, measure the water mole fraction, xH2O, of
the humidified interference test gas as close as possible to the inlet
of the analyzer. For example, measure dewpoint, Tdew, and
absolute pressure, ptotal, to calculate xH2O.
Verify that the water content meets the requirement in paragraph (d)(2)
of this section. If the sample is passed through a dryer during this
verification test, you must verify that the water content of the
humidified test gas downstream of the vessel meets the requirement in
paragraph (d)(2) of this section based on either direct measurement of
the water content (e.g., dewpoint and pressure) or an estimate based on
the vessel pressure and temperature. Use good engineering judgment to
estimate the water content. For example, you may use previous direct
measurements of water content to verify the vessel's level of
saturation.
(5) If a sample dryer is not used in this verification test, use
good engineering judgment to prevent condensation in the transfer
lines, fittings, or valves from the point where xH2O is
measured to the analyzer. We recommend that you design your system so
that the wall temperatures in the transfer lines, fittings, and valves
from the point where xH2O is measured to the analyzer are at
least 5 [deg]C above the local sample gas dewpoint.
(6) Allow time for the analyzer response to stabilize.
Stabilization time may include time to purge the transfer line and to
account for analyzer response.
(7) While the analyzer measures the sample's concentration, record
its output for 30 seconds. Calculate the arithmetic mean of this data.
(8) The analyzer meets the interference verification if the result
of paragraph (d)(7) of this section meets the tolerance in 40 CFR
1065.275.
(9) You may also run interference procedures separately for
individual interference gases. If the interference gas levels used are
higher than the maximum levels expected during testing, you may scale
down each observed interference value by multiplying the observed
interference by the ratio of the maximum expected concentration value
to the actual value used during this procedure. You may run separate
interference concentrations of H2O (down to 0.025 mol/mol
H2O content) that are lower than the maximum levels expected
during testing, but you must scale up the observed H2O
interference by multiplying the observed interference by the ratio of
the maximum expected H2O concentration value to the actual
value used during this procedure. The sum of the scaled interference
values must meet the tolerance specified in 40 CFR 1065.275.
Subpart S--[Amended]
10. A new Sec. 86.1801-12 is added to read as follows:
Sec. 86.1801-12 Applicability.
(a) Applicability. Except as otherwise indicated, the provisions of
this subpart apply to new light-duty vehicles, light-duty trucks,
medium-duty passenger vehicles, and Otto-cycle complete heavy-duty
vehicles, including multi-fueled, alternative fueled, hybrid electric,
plug-in hybrid electric, and electric vehicles. These provisions also
apply to new incomplete light-duty trucks below 8,500 Gross Vehicle
Weight Rating. In cases where a provision applies only to a certain
vehicle group based on its model year, vehicle class, motor fuel,
engine type, or other distinguishing characteristics, the limited
applicability is cited in the appropriate section of this subpart.
(b) Aftermarket conversions. The provisions of this subpart apply
to aftermarket conversion systems, aftermarket conversion installers,
and aftermarket conversion certifiers, as those terms are defined in 40
CFR 85.502, of all model year light-duty vehicles, light-duty trucks,
medium-duty passenger vehicles, and complete Otto-cycle heavy-duty
vehicles.
(c) Optional applicability.
(1) [Reserved]
(2) A manufacturer may request to certify any incomplete Otto-cycle
heavy-duty vehicle of 14,000 pounds Gross Vehicle Weight Rating or less
in accordance with the provisions for complete heavy-duty vehicles.
Heavy-duty engine or heavy-duty vehicle provisions of subpart A of this
part do not apply to such a vehicle.
(3) [Reserved]
(4) Upon preapproval by the Administrator, a manufacturer may
optionally certify an aftermarket conversion of a complete heavy-duty
vehicle greater than 10,000 pounds Gross Vehicle Weight Rating and of
14,000 pounds Gross Vehicle Weight Rating or less under the heavy-duty
engine or heavy-duty vehicle provisions of subpart A of this part. Such
preapproval will be granted only upon demonstration that chassis-based
certification would be infeasible or unreasonable for the manufacturer
to perform.
(5) A manufacturer may optionally certify an aftermarket conversion
of a complete heavy-duty vehicle greater than 10,000 pounds Gross
Vehicle Weight Rating and of 14,000 pounds
[[Page 49753]]
Gross Vehicle Weight Rating or less under the heavy-duty engine or
heavy-duty vehicle provisions of subpart A of this part without advance
approval from the Administrator if the vehicle was originally certified
to the heavy-duty engine or heavy-duty vehicle provisions of subpart A
of this part.
(d) Small volume manufacturers. Special certification procedures
are available for any manufacturer whose projected or actual combined
sales in all States and territories of the United States of light-duty
vehicles, light-duty trucks, heavy-duty vehicles, and heavy-duty
engines in its product line (including all vehicles and engines
imported under the provisions of 40 CFR 85.1505 and 85.1509) are fewer
than 15,000 units for the model year in which the manufacturer seeks
certification. The small volume manufacturer's light-duty vehicle and
light-duty truck certification procedures and described in Sec.
86.1838-01.
(e)-(g) [Reserved]
(h) Applicability of provisions of this subpart to light-duty
vehicles, light-duty trucks, medium-duty passenger vehicles, and heavy-
duty vehicles. Numerous sections in this subpart provide requirements
or procedures applicable to a ``vehicle'' or ``vehicles.'' Unless
otherwise specified or otherwise determined by the Administrator, the
term ``vehicle'' or ``vehicles'' in those provisions apply equally to
light-duty vehicles (LDVs), light-duty trucks (LDTs), medium-duty
passenger vehicles (MDPVs), and heavy-duty vehicles (HDVs), as those
terms are defined in Sec. 86.1803-01.
(i) Applicability of provisions of this subpart to exhaust CO2
emissions. Numerous sections in this subpart refer to requirements
relating to ``exhaust emissions.'' Unless otherwise specified or
otherwise determined by the Administrator, the term ``exhaust
emissions'' refers at a minimum to emissions of all pollutants
described by emission standards in this subpart, including carbon
dioxide (CO2) starting with the 2012 model year.
(j) Conditional exemption from greenhouse gas emission standards
for small businesses. Businesses meeting the Small Business
Administration size standard defining a small business as described in
13 CFR 121.201 are eligible for exemption from the greenhouse gas
emission standards specified in Sec. 86.1818-12 and associated
provisions. To be exempted from these provisions, businesses must
submit a declaration to EPA containing a detailed written description
of how the business qualifies as a small business under the provisions
of 13 CFR 121.201. This declaration must be signed by a chief officer
of the company, and must be made prior to each model year for which the
small business status is requested. The declaration must be submitted
to EPA at least 30 days prior to the introduction into commerce of any
vehicles for each model year for which the small business status is
requested, but not later than December of the calendar year prior to
the model year for which exemption is requested. Exemption will be
granted when EPA approves the small business declaration. The
declaration of small business status must be sent to the Environmental
Protection Agency at the following address: Director, Certification and
Innovative Strategies Division, U.S. Environmental Protection Agency,
2000 Traverwood Drive, Ann Arbor, Michigan 48105.
(1) The following categories of businesses (with their associated
NAICS codes) may apply for exemption based on the Small Business
Administration size standards in 13 CFR 121.201.
(i) Vehicle manufacturers (NAICS code 336111).
(ii) Independent commercial importers (NAICS codes 811111, 811112,
811198, 423110, 424990, and 441120).
(iii) Alternate fuel vehicle converters (NAICS codes 335312,
336312, 336322, 336399, 454312, 485310, and 811198).
(2) For purposes of determining the number of employees or annual
sales revenue for small entities, the entity shall include the
employees or annual sales revenue of any subsidiary companies, any
parent company, subsidiaries of the parent company in which the parent
has a controlling interest, and any joint ventures.
(3) An entity may use the provisions of this paragraph (j) only if
it has primary responsibility for designing and assembling, converting,
or modifying the subject vehicles.
(4) An entity may import vehicles under this paragraph (j) only if
that entity has primary responsibility for designing and assembling,
converting or modifying the subject vehicles.
11. Section 86.1803-01 is amended as follows:
a. By adding the definition for ``Air conditioning idle test.''
b. By adding the definition for ``Air conditioning system.''
c. By revising the definition for ``Banking.''
d. By adding the definition for ``Base level.''
e. By adding the definition for ``Base tire.''
f. By adding the definition for ``Base vehicle.''
g. By revising the definition for ``Basic engine.''
h. By adding the definition for ``Battery electric vehicle.''
i. By adding the definition for ``Carbon-related exhaust
emissions.''
j. By adding the definition for ``Combined CO2.''
k. By adding the definition for ``Electric vehicle.''
l. By revising the definition for ``Engine code.''
m. By adding the definition for ``Ethanol fueled vehicle.''
n. By revising the definition for ``Flexible fuel vehicle.''
o. By adding the definition for ``Footprint.''
p. By adding the definition for ``Fuel cell.''
q. By adding the definition for ``Fuel cell electric vehicle.''
r. By adding the definition for ``Highway fuel economy test
procedure.''
s. By adding the definition for ``Hybrid electric vehicle.''
t. By adding the definition for ``Interior volume index.''
u. By adding the definition for ``Motor vehicle.''
v. By adding the definition for ``Multi-fuel vehicle.''
w. By adding the definition for ``Petroleum equivalency factor.''
x. By adding the definition for ``Petroleum-equivalent fuel
economy.''
y. By adding the definition for ``Petroleum powered accessory.''
z. By adding the definition for ``Plug-in hybrid electric
vehicle.''
aa. By adding the definition for ``Production volume.''
bb. By revising the definition for ``Round, rounded, or rounding.''
cc. By adding the definition for ``Subconfiguration.''
dd. By adding the definition for ``Track width.''
ee. By revising the definition for ``Transmission class.''
ff. By revising the definition for ``Transmission configuration.''
gg. By adding the definition for ``Wheelbase.''
Sec. 86.1803-01 Definitions.
* * * * *
Air Conditioning Idle Test means the test procedure specified in
Sec. 86.165-12.
Air conditioning system means a unique combination of air
conditioning and climate control components, including: compressor type
(e.g., belt, gear, or electric-driven, or a combination of compressor
drive mechanisms); compressor refrigerant capacity; the number and type
of rigid pipe and flexible hose connections; the
[[Page 49754]]
number of high side service ports; the number of low side service
ports; the number of switches, transducers, and expansion valves; the
number of TXV refrigerant control devices; the number and type of heat
exchangers, mufflers, receiver/dryers, and accumulators; and the type
of flexible hose (e.g., rubber, standard barrier or veneer, ultra-low
permeation).
* * * * *
Banking means one of the following:
(1) The retention of NOX emission credits for complete
heavy-duty vehicles by the manufacturer generating the emission
credits, for use in future model year certification programs as
permitted by regulation.
(2) The retention of cold temperature non-methane hydrocarbon
(NMHC) emission credits for light-duty vehicles, light-duty trucks, and
medium-duty passenger vehicles by the manufacturer generating the
emission credits, for use in future model year certification programs
as permitted by regulation.
(3) The retention of NOX emission credits for light-duty
vehicles, light-duty trucks, and medium-duty passenger vehicles for use
in future model year certification programs as permitted by regulation.
(4) The retention of CO2 emission credits for light-duty
vehicles, light-duty trucks, and medium-duty passenger vehicles for use
in future model year certification programs as permitted by regulation.
Base level has the meaning given in Sec. 600.002-08 of this
chapter.
Base tire has the meaning given in Sec. 600.002-08 of this
chapter.
Base vehicle has the meaning given in Sec. 600.002-08 of this
chapter.
Basic engine has the meaning given in Sec. 600.002-08 of this
chapter.
Battery electric vehicle means a motor vehicle propelled solely by
an electric motor where energy for the motor is supplied by a battery.
* * * * *
Carbon-related exhaust emissions means the summation of the carbon-
containing constituents of the exhaust emissions, with each constituent
adjusted by a coefficient representing the carbon weight fraction of
each constituent, as specified in Sec. 600.113-08.
* * * * *
Combined CO2 means the CO2 value determined for a
vehicle (or vehicles) by averaging the city and highway fuel economy
values, weighted 0.55 and 0.45 respectively.
* * * * *
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:
(1) Recharge energy must be drawn from a source off the vehicle,
such as residential electric service; and
(2) The vehicle must be certified to the emission standards of Bin
1 of Table S04-1 in Sec. 86.1811-09(c)(6).
* * * * *
Engine code means a unique combination within a test group of
displacement, fuel injection (or carburetor) calibration, choke
calibration, distributor calibration, auxiliary emission control
devices, and other engine and emission control system components
specified by the Administrator. For electric vehicles, engine code
means a unique combination of manufacturer, electric traction motor,
motor configuration, motor controller, and energy storage device.
* * * * *
Ethanol-fueled vehicle means any motor vehicle or motor vehicle
engine that is engineered and designed to be operated using ethanol
fuel (i.e., a fuel that contains at least 50 percent ethanol
(C2H5OH) by volume) as fuel.
* * * * *
Flexible fuel vehicle means any motor vehicle engineered and
designed to be operated on a petroleum fuel, a methanol or ethanol
fuel, or any mixture of the two. Methanol-fueled and ethanol-fueled
vehicles that are only marginally functional when using gasoline (e.g.,
the engine has a drop in rated horsepower of more than 80 percent) are
not flexible fuel vehicles.
Footprint is the product of track width (measured in inches,
calculated as the average of front and rear track widths, and rounded
to the nearest tenth of an inch) and wheelbase (measured in inches and
rounded to the nearest tenth of an inch), divided by 144 and then
rounded to the nearest tenth of a square foot.
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.
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.
* * * * *
Highway Fuel Economy Test Procedure (HFET) has the meaning given in
Sec. 600.002-08 of this chapter.
* * * * *
Hybrid electric vehicle (HEV) means a motor vehicle which draws
propulsion energy from onboard sources of stored energy that are both
an internal combustion engine or heat engine using consumable fuel, and
a rechargeable energy storage system such as a battery, capacitor,
hydraulic accumulator, or flywheel.
* * * * *
Interior volume index has the meaning given in Sec. 600.315-08 of
this chapter.
* * * * *
Motor vehicle has the meaning given in 40 CFR 85.1703.
* * * * *
Multi-fuel vehicle means any motor vehicle capable of operating on
two or more different fuel types, either separately or simultaneously.
* * * * *
Petroleum equivalency factor means the value specified in 10 CFR
474.3(b), which incorporates the parameters listed in 49 U.S.C.
32904(a)(2)(B) and is used to calculate petroleum-equivalent fuel
economy.
Petroleum-equivalent fuel economy means the value, expressed in
miles per gallon, that is calculated for an electric vehicle in
accordance with 10 CFR 474.3(a), and reported to the Administrator of
the Environmental Protection Agency for use in determining the vehicle
manufacturer's corporate average fuel economy.
* * * * *
Petroleum-powered accessory means a vehicle accessory (e.g., a
cabin heater, defroster, and/or air conditioner) that:
(1) Uses gasoline or diesel fuel as its primary energy source; and
(2) Meets the requirements for fuel, operation, and emissions in 40
CFR part 88.104-94(g).
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.
* * * * *
Production volume has the meaning given in Sec. 600.002-08 of this
chapter.
* * * * *
Round, rounded or rounding means, unless otherwise specified, that
numbers will be rounded according to ASTM-E29-93a, which is
incorporated by reference in this part pursuant to Sec. 86.1.
* * * * *
[[Page 49755]]
Subconfiguration has the meaning given in Sec. 600.002-08 of this
chapter.
* * * * *
Track width is the lateral distance between the centerlines of the
base tires at ground, including the camber angle.
* * * * *
Transmission class has the meaning given in Sec. 600.002-08 of
this chapter.
Transmission configuration has the meaning given in Sec. 600.002-
08 of this chapter.
* * * * *
Wheelbase is the longitudinal distance between front and rear wheel
centerlines.
* * * * *
12. A new section 86.1805-12 is added to read as follows:
Sec. 86.1805-12 Useful life.
(a) Except as permitted under paragraph (b) of this section or
required under paragraphs (c) and (d) of this section, the full useful
life for all LDVs and LLDTs is a period of use of 10 years or 120,000
miles, whichever occurs first. The full useful life for all HLDTs,
MDPVs, and complete heavy-duty vehicles is a period of 11 years or
120,000 miles, whichever occurs first. These full useful life values
apply to all exhaust, evaporative and refueling emission requirements
except for standards which are specified to only be applicable at the
time of certification. These full useful life requirements also apply
to all air conditioning leakage credits, air conditioning efficiency
credits, and other credit programs used by the manufacturer to comply
with fleet average CO2 emission standards.
(b) Manufacturers may elect to optionally certify a test group to
the Tier 2 exhaust emission standards for 150,000 miles to gain
additional NOX credits, as permitted in Sec. 86.1860-04(g),
or to opt out of intermediate life standards as permitted in Sec.
86.1811-04(c). In such cases, useful life is a period of use of 15
years or 150,000 miles, whichever occurs first, for all exhaust,
evaporative and refueling emission requirements except for cold CO
standards and standards which are applicable only at the time of
certification.
(c) Where intermediate useful life exhaust emission standards are
applicable, such standards are applicable for five years or 50,000
miles, whichever occurs first.
(d) Where cold CO standards are applicable, the useful life
requirement for compliance with the cold CO standard only, is 5 years
or 50,000 miles, whichever occurs first.
13. Section 86.1806-05 is amended by revising paragraph (a)(1) to
read as follows:
Sec. 86.1806-05 On-board diagnostics for vehicles less than or equal
to 14,000 pounds GVWR.
(a) * * *
(1) Except as provided by paragraph (a)(2) of this section, all
light-duty vehicles, light-duty trucks and complete heavy-duty vehicles
weighing 14,000 pounds GVWR or less (including MDPVs) must be equipped
with an onboard diagnostic (OBD) system capable of monitoring all
emission-related powertrain systems or components during the applicable
useful life of the vehicle. All systems and components required to be
monitored by these regulations must be evaluated periodically, but no
less frequently than once per applicable certification test cycle as
defined in paragraphs (a) and (d) of Appendix I of this part, or
similar trip as approved by the Administrator. Emissions of
CO2 are not required to be monitored by the OBD system.
* * * * *
14. Section 86.1809-10 is amended by revising paragraphs (d)(1) and
(e) to read as follows:
Sec. 86.1809-10 Prohibition of defeat devices.
* * * * *
(d) * * *
(1) The manufacturer must show to the satisfaction of the
Administrator that the vehicle design does not incorporate strategies
that unnecessarily reduce emission control effectiveness exhibited
during the Federal Test Procedure or Supplemental Federal Test
Procedure (FTP or SFTP), or, for 2012 and later model years, the
Highway Fuel Economy Test Procedure or the Air Conditioning Idle Test,
when the vehicle is operated under conditions that may reasonably be
expected to be encountered in normal operation and use.
* * * * *
(e) For each test group the manufacturer must submit, with the Part
II certification application, an engineering evaluation demonstrating
to the satisfaction of the Administrator that a discontinuity in
emissions of non-methane organic gases, carbon monoxide, carbon
dioxide, oxides of nitrogen and formaldehyde measured on the Federal
Test Procedure (subpart B of this part) does not occur in the
temperature range of 20 to 86 [deg]F. For diesel vehicles, the
engineering evaluation must also include particulate emissions.
15. Section 86.1810-09 is amended by revising paragraph (f) to read
as follows:
Sec. 86.1810-09 General standards; increase in emissions; unsafe
condition; waivers.
* * * * *
(f) Altitude requirements. (1) All emission standards apply at low
altitude conditions and at high altitude conditions, except for the
following standards, which apply only at low altitude conditions:
(i) The supplemental exhaust emission standards as described in
Sec. 86.1811-04(f);
(ii) The cold temperature NMHC emission standards as described in
Sec. 86.1811-10(g);
(iii) The evaporative emission standards as described in Sec.
86.1811-09(e).
(2) For vehicles that comply with the cold temperature NMHC
standards described in Sec. 86.1811-10(g) and the CO2,
N2O, and CH4 exhaust emission standards described
in Sec. 86.1818-12, manufacturers must submit an engineering
evaluation indicating that common calibration approaches are utilized
at high altitudes. Any deviation from low altitude emission control
practices must be included in the auxiliary emission control device
(AECD) descriptions submitted at certification. Any AECD specific to
high altitude must require engineering emission data for EPA evaluation
to quantify any emission impact and validity of the AECD.
* * * * *
16. A new Sec. 86.1818-12 is added to read as follows:
Sec. 86.1818-12 Greenhouse gas emission standards for light-duty
vehicles, light-duty trucks, and medium-duty passenger vehicles.
(a) Applicability. This section contains regulations implementing
greenhouse gas emission standards for CO2, N2O,
and CH4 applicable to all LDVs, LDTs and MDPVs. This section
applies to 2012 and later model year LDVs, LDTs and MDPVs, including
multi-fuel vehicles, vehicles fueled with alternative fuels, hybrid
electric vehicles, plug-in hybrid electric vehicles, electric vehicles,
and fuel cell electric vehicles. Unless otherwise specified, multi-fuel
vehicles must comply with all requirements established for each
consumed fuel. The provisions of this section also apply to aftermarket
conversion systems, aftermarket conversion installers, and aftermarket
conversion certifiers, as those terms are defined in 40 CFR 85.502, of
all model year light-duty vehicles, light-duty trucks, and
[[Page 49756]]
medium-duty passenger vehicles. Manufacturers meeting the requirements
of Sec. 86.1801-12(j) are exempted from the requirements of this
section.
(b) Definitions. For the purposes of this section, the following
definitions shall apply:
(1) Passenger automobile means a motor vehicle that is a passenger
automobile as that term is defined in 49 CFR 523.4.
(2) Light truck means a motor vehicle that is a non-passenger
automobile as that term is defined by the Department of Transportation
in 49 CFR 523.5.
(c) Fleet average CO2 standards for passenger
automobiles and light trucks. (1) For a given individual model year's
production of vehicles, manufacturers must comply with a fleet average
CO2 standard calculated according to the provisions of this
paragraph (c). Manufacturers must calculate separate fleet average
CO2 standards for their passenger automobile and the light
truck fleets, as those terms are defined in this section. Each
manufacturer's fleet average CO2 standards determined in
this paragraph (c) shall be expressed in whole grams per mile, in the
model year specified as applicable. Manufacturers eligible for and
choosing to participate in the optional interim fleet average
CO2 standards for qualifying manufacturers specified in
paragraph (e) of this section shall not include vehicles subject to the
optional interim fleet average CO2 standards in the
calculations of their primary passenger automobile or light truck
standards determined in this paragraph (c). Manufacturers shall
demonstrate compliance with the applicable standards according to the
provisions of Sec. 86.1865-12.
(2) Passenger automobiles.
(i) Calculation of CO2 target values for passenger automobiles. A
CO2 target value shall be determined for each passenger
automobile as follows:
(A) For passenger automobiles with a footprint of less than or
equal to 41 square feet, the gram/mile CO2 target value
shall be selected for the appropriate model year from the following
table:
------------------------------------------------------------------------
CO2 target value
Model year (grams/mile)
------------------------------------------------------------------------
2012................................................. 242
2013................................................. 234
2014................................................. 227
2015................................................. 215
2016 and later....................................... 204
------------------------------------------------------------------------
(B) For passenger automobiles with a footprint of greater than 56
square feet, the gram/mile CO2 target value shall be
selected for the appropriate model year from the following table:
------------------------------------------------------------------------
CO2 target value
Model year (grams/mile)
------------------------------------------------------------------------
2012................................................. 313
2013................................................. 305
2014................................................. 297
2015................................................. 286
2016 and later....................................... 275
------------------------------------------------------------------------
(C) For passenger automobiles with a footprint that is greater
than 41 square feet and less than or equal to 56 square feet, the gram/
mile CO2 target value shall be calculated using the
following equation:
TargetCO2 = [4.72 x f] + b
Where:
f is the vehicle footprint, as defined in Sec. 86.1803; and
b is selected from the following table for the appropriate model
year:
------------------------------------------------------------------------
Model year b
------------------------------------------------------------------------
2012................................................. 48.8
2013................................................. 40.8
2014................................................. 33.2
2015................................................. 22.0
2016 and later....................................... 10.9
------------------------------------------------------------------------
(ii) Calculation of the fleet average CO2 standard for
passenger automobiles. In each model year manufacturers must comply
with the CO2 exhaust emission standard for their passenger
automobile fleet, calculated for that model year as follows:
(A) A CO2 target value shall be determined according to
paragraph (c)(2)(i) of this section for each unique combination of
model type and footprint value.
(B) Each CO2 target value, determined for each unique
combination of model type and footprint value, shall be multiplied by
the total production of that model type/footprint combination for the
appropriate model year.
(C) The resulting products shall be summed, and that sum shall be
divided by the total production of passenger automobiles in that model
year. The result shall be rounded to the nearest whole gram per mile.
This result shall be the applicable fleet average CO2
standard for the manufacturer's passenger automobile fleet.
(3) Light trucks.
(i) Calculation of CO2 target values for light trucks. A
CO2 target value shall be determined for each light truck as
follows:
(A) For light trucks with a footprint of less than or equal to 41
square feet, the gram/mile CO2 target value shall be
selected for the appropriate model year from the following table:
------------------------------------------------------------------------
CO2 target value
Model year (grams/mile)
------------------------------------------------------------------------
2012................................................. 298
2013................................................. 287
2014................................................. 276
2015................................................. 261
2016 and later....................................... 246
------------------------------------------------------------------------
(B) For light trucks with a footprint of greater than 66 square
feet, the gram/mile CO2 target value shall be selected for
the appropriate model year from the following table:
------------------------------------------------------------------------
CO2 target value
Model year (grams/mile)
------------------------------------------------------------------------
2012................................................. 399
2013................................................. 388
2014................................................. 377
2015................................................. 362
2016 and later....................................... 347
------------------------------------------------------------------------
(C) For light trucks with a footprint that is greater than 41
square feet and less than or equal to 66 square feet, the gram/mile
CO2 target value shall be calculated using the following
equation:
CO2TargetValue = (4.04 x f) + b
Where:
f is the footprint, as defined in Sec. 86.1803; and
b is selected from the following table for the appropriate model
year:
------------------------------------------------------------------------
Model year b
------------------------------------------------------------------------
2012................................................. 132.6
2013................................................. 121.6
2014................................................. 110.3
2015................................................. 95.2
2016 and later....................................... 80.4
------------------------------------------------------------------------
(ii) Calculation of fleet average CO2 standards for
light trucks. In each model year manufacturers must comply with the
CO2 exhaust emission standard for their light truck fleet,
calculated for that model year as follows:
(A) A CO2 target value shall be determined according to
paragraph (c)(2)(i) of this section for each unique combination of
model type and footprint value.
(B) Each CO2 target value, which represents a unique
combination of model type and footprint value, shall be multiplied by
the total production of that model type/footprint combination for the
appropriate model year.
(C) The resulting products shall be summed, and that sum shall be
divided by the total production of light trucks in that model year. The
result shall be rounded to the nearest whole gram per mile. This result
shall be the applicable fleet average CO2 standard for the
manufacturer's light truck fleet.
(d) In-use CO2 exhaust emission standards. The in-use
exhaust CO2 emission standard for each model type
[[Page 49757]]
shall be the combined city/highway carbon-related exhaust emission
value calculated according to the provisions of 40 CFR 600.208-08
(except that total model year production data shall be used instead of
sales projections) multiplied by 1.1 and rounded to the nearest whole
gram per mile. These standards apply to in-use testing performed by the
manufacturer pursuant to regulations at Sec. 86.1845-04 and 86.1846-01
and to in-use testing performed by EPA. For any model type that is not
covered by vehicle testing conducted according to 40 CFR 600.208-08 the
applicable in-use standard shall be the CO2-equivalent value
submitted at certification according to the provisions of Sec. 86.1841
multiplied by 1.1 and rounded to the nearest whole gram per mile.
(e) Optional interim fleet average CO2 standards for
qualifying manufacturers. (1) The interim fleet average CO2
standards in this paragraph (e) are optionally applicable to each
qualifying manufacturer as follows:
(i) A qualifying manufacturer is a manufacturer with sales of 2009
model year combined passenger automobiles and light trucks in the
United States of less than 400,000 vehicles, except that manufacturers
with no U.S. sales in the 2009 model year do not qualify for the
optional interim standards.
(ii) For the purposes of making the determination in paragraph
(e)(1)(i) of this section, ``manufacturer'' shall mean that term as
defined at 49 CFR 531.4 and as that definition was applied to the 2009
model year for the purpose of determining compliance with the 2009
corporate average fuel economy standards at 49 CFR parts 531 and 533.
(iii) Only 2012 through 2015 model year passenger automobiles and
light trucks are eligible for these standards. All model year 2016 and
later passenger automobiles and light trucks are subject to the fleet
average standards described in paragraph (c) of this section.
(iv) A qualifying manufacturer may select any combination of 2012
through 2015 model year passenger automobiles and/or light trucks to
comply with these optional standards up to a cumulative total of
100,000 vehicles. Vehicles selected to comply with these standards
shall not be included in the calculations of the manufacturer's fleet
average standards under paragraph (c) of this section.
(v) A qualifying manufacturer may not use these optional interim
fleet average CO2 standards until they have used all
available banked CO2 credits and/or CO2 credits
available for transfer. A qualifying manufacturer with a net positive
credit balance in any model year after considering all available
credits generated, carried forward from a prior model year, transferred
from other averaging sets, or obtained from other manufacturers, may
not use these optional interim fleet average CO2 standards
in such model year.
(2) To calculate an optional interim fleet average CO2
standard, qualifying manufacturers shall determine the fleet average
standard separately for the passenger automobiles and light trucks
selected by the manufacturer to be subject to the interim fleet average
CO2 standard, subject to the limitations expressed in
paragraphs (e)(1)(iii) and (iv) of this section.
(i) The interim fleet average CO2 standard applicable to
qualified passenger automobiles shall be the standard calculated using
the provisions of paragraph (c)(2)(ii) of this section for the
appropriate model year multiplied by 1.25 and rounded to the nearest
whole gram per mile. For the purposes of applying paragraph (c)(2)(ii)
of this section to determine the standard, the passenger automobile
fleet shall be limited to those passenger automobiles subject to the
interim fleet average CO2 standard.
(ii) The interim fleet average CO2 standard applicable
to qualified light trucks shall be the standard calculated using the
provisions of paragraph (c)(3)(ii) of this section for the appropriate
model year multiplied by 1.25 and rounded to the nearest whole gram per
mile. For the purposes of applying paragraph (c)(3)(ii) of this section
to determine the standard, the light truck fleet shall be limited to
those light trucks subject to the interim fleet average CO2
standard.
(3) Manufacturers choosing to optionally apply these standards are
subject to the restrictions on credit banking and trading specified in
Sec. 86.1865-12.
(f) N2O standards for light-duty vehicles, light-duty trucks, and
medium-duty passenger vehicles. Exhaust emissions of nitrous oxide
(N2O) shall not exceed 0.010 grams per mile at full useful
life, as measured according to the Federal Test Procedure (FTP)
described in subpart B of this part.
(g) Methane standards for light-duty vehicles, light-duty trucks,
and medium-duty passenger vehicles. Exhaust emissions of methane
(CH4) shall not exceed 0.030 grams per mile at full useful
life, as measured according to the Federal Test Procedure (FTP)
described in subpart B of this part.
17. Section 86.1823-08 is amended by adding paragraph (m) to read
as follows:
Sec. 86.1823-08 Durability demonstration procedures for exhaust
emissions.
* * * * *
(m) Durability demonstration procedures for vehicles subject to the
greenhouse gas exhaust emission standards specified in 86.1818-12.
(1) CO2. (i) Unless otherwise specified under paragraph (m)(1)(ii)
of this section, manufacturers may use a multiplicative CO2
deterioration factor of one or an additive deterioration factor of
zero.
(ii) Based on an analysis of industry-wide data, EPA may
periodically establish and/or update the deterioration factor for
CO2 emissions including air conditioning and other credit
related emissions. Deterioration factors established and/or updated
under this paragraph (m)(1)(ii) will provide adequate lead time for
manufacturers to plan for the change.
(iii) Alternatively, manufacturers may use the whole-vehicle
mileage accumulation procedures in Sec. 86.1823-08 paragraphs (c) or
(d)(1) to determine CO2 deterioration factors. In this case,
each FTP test performed on the durability data vehicle selected under
Sec. 86.1822-01 of this part must also be accompanied by an HFET test,
and combined FTP/HFET CO2 results determined by averaging
the city (FTP) and highway (HFET) CO2 values, weighted 0.55
and 0.45 respectively. The deterioration factor will be determined for
this combined CO2 value. Calculated multiplicative
deterioration factors that are less than one shall be set to equal one,
and calculated additive deterioration factors that are less than zero
shall be set to zero.
(iv) If, in the good engineering judgment of the manufacturer, the
deterioration factors determined according to paragraphs (m)(1)(i),
(m)(1)(ii), or (m)(1)(iii) of this section do not adequately account
for the expected CO2 emission deterioration over the
vehicle's useful life, the manufacturer may petition EPA to request a
more appropriate deterioration factor.
(2) N2O and CH4. Deterioration factors for N2O and
CH4 shall be determined according to the provisions of Sec.
86.1823-08.
(3) Air Conditioning leakage and efficiency or other emission
credit requirements to comply with exhaust CO2 standards. Manufactures
will attest to the durability of components and systems used to meet
the CO2 standards. Manufacturers may submit engineering data
to provide durability demonstration.
[[Page 49758]]
18. Section 86.1827-01 is amended by revising paragraph (a)(5) and
by adding paragraph (f) to read as follows:
Sec. 86.1827-01 Test group determination.
* * * * *
(a) * * *
(5) Subject to the same emission standards (except for
CO2), or FEL in the case of cold temperature NMHC standards,
except that a manufacturer may request to group vehicles into the same
test group as vehicles subject to more stringent standards, so long as
all the vehicles within the test group are certified to the most
stringent standards applicable to any vehicle within that test group.
Light-duty trucks and light-duty vehicles may be included in the same
test group if all vehicles in the test group are subject to the same
emission standards, with the exception of the CO2 standard,
the light-duty truck idle CO standard, and/or the total HC standard.
* * * * *
(f) Unless otherwise approved by the Administrator, a manufacturer
of electric vehicles must create separate test groups based on the type
of battery technology, the capacity and voltage of the battery, and the
type and size of the electric motor.
19. Section 86.1829-01 is amended by revising paragraph (b)(1)(i)
and by adding paragraph (b)(1)(iii)(G) to read as follows:
Sec. 86.1829-01 Durability and emission testing requirements;
waivers.
* * * * *
(b) * * *
(1) * * *
(i) Testing at low altitude. One EDV shall be tested in each test
group for exhaust emissions using the FTP and SFTP test procedures of
subpart B of this part and the HFET test procedure of subpart B of part
600 of this chapter. The configuration of the EDV will be determined
under the provisions of Sec. 86.1828-01 of this subpart.
* * * * *
(iii) * * *
(G) For the 2012 model year only, in lieu of testing a vehicle for
N2O emissions, a manufacturer may provide a statement in its
application for certification that such vehicles comply with the
applicable standards. Such a statement must be based on previous
emission tests, development tests, or other appropriate information and
good engineering judgment.
* * * * *
20. Section 86.1835-01 is amended as follows:
a. By revising paragraph (a)(4).
b. By revising paragraph (b)(1) introductory text.
c. By adding paragraph (b)(1)(vi).
d. By revising paragraph (b)(3).
e. By revising paragraph (c)(1)(ii).
Sec. 86.1835-01 Confirmatory certification testing.
(a) * * *
(4) Retesting for fuel economy reasons or for compliance with
applicable exhaust CO2 emission standards may be conducted
under the provisions of 40 CFR 600.008-01.
(b) * * *
(1) If the Administrator determines not to conduct a confirmatory
test under the provisions of paragraph (a) of this section,
manufacturers of light-duty vehicles, light-duty trucks, and/or medium-
duty passenger vehicles will conduct a confirmatory test at their
facility after submitting the original test data to the Administrator
whenever any of the conditions listed in paragraphs (b)(1)(i) through
(vi) of this section exist, and complete heavy-duty vehicles
manufacturers will conduct a confirmatory test at their facility after
submitting the original test data to the Administrator whenever the
conditions listed in paragraph (b)(1)(i) or (b)(1)(ii) of this section
exist, as follows:
* * * * *
(vi) The exhaust CO2 emissions of the test as measured
in accordance with the procedures in 40 CFR Part 600 are lower than
expected based on procedures approved by the Administrator.
* * * * *
(3) For light-duty vehicles, light-duty trucks, and medium-duty
passenger vehicles the manufacturer shall conduct a retest of the FTP
or highway test if the difference between the fuel economy or carbon-
related exhaust emissions of the confirmatory test and the original
manufacturer's test equals or exceeds three percent (or such lower
percentage to be applied consistently to all manufacturer conducted
confirmatory testing as requested by the manufacturer and approved by
the Administrator).
(i) For use in the fuel economy and CO2 fleet averaging
program described in 40 CFR parts 86 and 600, the manufacturer may, in
lieu of conducting a retest, accept as official the lower of the
original and confirmatory test fuel economy results, and the higher of
the original and confirmatory test CO2 results.
(ii) The manufacturer shall conduct a second retest of the FTP or
highway test if the fuel economy or CO2 emissions difference
between the second confirmatory test and the original manufacturer test
equals or exceeds three percent (or such lower percentage as requested
by the manufacturer and approved by the Administrator) and the fuel
economy or CO2 emissions difference between the second
confirmatory test and the first confirmatory test equals or exceeds
three percent (or such lower percentage as requested by the
manufacturer and approved by the Administrator). In lieu of conducting
a second retest, the manufacturer may accept as official (for use in
the fuel economy program and the CO2 fleet averaging
program) the lowest fuel economy and highest CO2 emissions
of the original test, the first confirmatory test, and the second
confirmatory test fuel economy results.
(c) * * *
(1) * * *
(ii) Official test results for fuel economy and exhaust
CO2 emission purposes are determined in accordance with the
provisions of 40 CFR 600.008-01.
* * * * *
21. Section 86.1841-01 is amended by adding paragraph (a)(3) and
revising paragraph (b) to read as follows:
Sec. 86.1841-01 Compliance with emission standards for the purpose of
certification.
(a) * * *
(3) Compliance with CO2 exhaust emission standards shall
be demonstrated at certification by the certification levels on the FTP
and HFET tests for carbon-related exhaust emissions determined
according to Sec. 600.113-08 of this chapter.
* * * * *
(b) To be considered in compliance with the standards for the
purposes of certification, the certification levels for the test
vehicle calculated in paragraph (a) of this section shall be less than
or equal to the standards for all emission constituents to which the
test group is subject, at both full and intermediate useful life as
appropriate for that test group.
* * * * *
22. Section 86.1845-04 is amended as follows:
a. By revising paragraph (a)(1).
b. By revising paragraph (b)(5)(i).
c. By revising paragraph (c)(5)(i).
Sec. 86.1845-04 Manufacturer in-use verification testing
requirements.
(a) * * *
(1) A manufacturer of LDVs, LDTs, MDPVs and/or complete HDVs must
test, or cause to have tested, a specified number of LDVs, LDTs, MDPVs
and complete HDVs. Such testing must be conducted in accordance with
the provisions of this section. For purposes of this section, the term
vehicle includes light-duty vehicles, light-duty trucks and medium-duty
passenger vehicles.
* * * * *
[[Page 49759]]
(b) * * *
(5) * * *
(i) Each test vehicle of a test group shall be tested in accordance
with the Federal Test Procedure and the US06 portion of the
Supplemental Federal Test Procedure as described in subpart B of this
part, when such test vehicle is tested for compliance with applicable
exhaust emission standards under this subpart. Test vehicles subject to
applicable exhaust CO2 emission standards under this subpart
shall also be tested in accordance with the highway fuel economy test
as described in subpart B of 40 CFR part 600.
* * * * *
(c) * * *
(5) * * *
(i) Each test vehicle shall be tested in accordance with the
Federal Test Procedure and the US06 portion of the Supplemental Federal
Test Procedure as described in subpart B of this part when such test
vehicle is tested for compliance with applicable exhaust emission
standards under this subpart. Test vehicles subject to applicable
exhaust CO2 emission standards under this subpart shall also
be tested in accordance with the highway fuel economy test as described
in subpart B of 40 CFR part 600. The US06 portion of the SFTP is not
required to be performed on vehicles certified in accordance with the
National LEV provisions of subpart R of this part. One test vehicle
from each test group shall receive a Federal Test Procedure at high
altitude. The test vehicle tested at high altitude is not required to
be one of the same test vehicles tested at low altitude. The test
vehicle tested at high altitude is counted when determining the
compliance with the requirements shown in Table S04-06 and Table S04-07
in paragraph (b)(3) of this section or the expanded sample size as
provided for in this paragraph (c).
* * * * *
23. Section 86.1846-01 is amended by revising paragraphs (a)(1) and
(b) introductory text to read as follows:
Sec. 86.1846-01 Manufacturer in-use confirmatory testing
requirements.
(a) * * *
(1) A manufacturer of LDVs, LDTs and/or MDPVs must test, or cause
testing to be conducted, under this section when the emission levels
shown by a test group sample from testing under Sec. Sec. 86.1845-01
or 86.1845-04, as applicable, exceeds the criteria specified in
paragraph (b) of this section. The testing required under this section
applies separately to each test group and at each test point (low and
high mileage) that meets the specified criteria. The testing
requirements apply separately for each model year starting with model
year 2001. These provisions do not apply to heavy-duty vehicles or
heavy-duty engines prior to the 2007 model year. These provisions do
not apply to emissions of CO2, CH4, and
N2O.
* * * * *
(b) Criteria for additional testing. A manufacturer shall test a
test group or a subset of a test group as described in paragraph (j) of
this section when the results from testing conducted under Sec. Sec.
86.1845-01 and 86.1845-04, as applicable, show mean emissions for that
test group of any pollutant(s) (except CO2, CH4,
and N2O) to be equal to or greater than 1.30 times the
applicable in-use standard and a failure rate, among the test group
vehicles, for the corresponding pollutant(s) of fifty percent or
greater.
* * * * *
24. Section 86.1848-10 is amended by adding paragraph (c)(9) to
read as follows:
Sec. 86.1848-10 Certification.
* * * * *
(c) * * *
(9) For 2012 and later model year LDVs, LDTs, and MDPVs, all
certificates of conformity issued are conditional upon compliance with
all provisions of Sec. Sec. 86.1818-12 and 86.1865-12 both during and
after model year production. The manufacturer bears the burden of
establishing to the satisfaction of the Administrator that the terms
and conditions upon which the certificate(s) was (were) issued were
satisfied. For recall and warranty purposes, vehicles not covered by a
certificate of conformity will continue to be held to the standards
stated or referenced in the certificate that otherwise would have
applied to the vehicles.
(i) Failure to meet the fleet average CO2 requirements
will be considered a failure to satisfy the terms and conditions upon
which the certificate(s) was (were) issued and the vehicles sold in
violation of the fleet average CO2 standard will not be
covered by the certificate(s). The vehicles sold in violation will be
determined according to Sec. 86.1865-12(k)(7).
(ii) Failure to comply fully with the prohibition against selling
credits that are not generated or that are not available, as specified
in Sec. 86.1865-12, will be considered a failure to satisfy the terms
and conditions upon which the certificate(s) was (were) issued and the
vehicles sold in violation of this prohibition will not be covered by
the certificate(s).
* * * * *
25. A new Sec. 86.1854-12 is added to read as follows:
Sec. 86.1854-12 Prohibited acts.
(a) The following acts and the causing thereof are prohibited:
(1) In the case of a manufacturer, as defined by Sec. 86.1803, of
new motor vehicles or new motor vehicle engines for distribution in
commerce, the sale, or the offering for sale, or the introduction, or
delivery for introduction, into commerce, or (in the case of any
person, except as provided by regulation of the Administrator), the
importation into the United States of any new motor vehicle or new
motor vehicle engine subject to this subpart, unless such vehicle or
engine is covered by a certificate of conformity issued (and in effect)
under regulations found in this subpart (except as provided in Section
203(b) of the Clean Air Act (42 U.S.C. 7522(b)) or regulations
promulgated thereunder).
(2)(i) For any person to fail or refuse to permit access to or
copying of records or to fail to make reports or provide information
required under Section 208 of the Clean Air Act (42 U.S.C. 7542) with
regard to vehicles.
(ii) For a person to fail or refuse to permit entry, testing, or
inspection authorized under Section 206(c) (42 U.S.C. 7525(c)) or
Section 208 of the Clean Air Act (42 U.S.C. 7542) with regard to
vehicles.
(iii) For a person to fail or refuse to perform tests, or to have
tests performed as required under Section 208 of the Clean Air Act (42
U.S.C. 7542) with regard to vehicles.
(iv) For a person to fail to establish or maintain records as
required under Sec. Sec. 86.1844, 86.1862, 86.1864, and 86.1865 with
regard to vehicles.
(v) For any manufacturer to fail to make information available as
provided by regulation under Section 202(m)(5) of the Clean Air Act (42
U.S.C. 7521(m)(5)) with regard to vehicles.
(3)(i) For any person to remove or render inoperative any device or
element of design installed on or in a vehicle or engine in compliance
with regulations under this subpart prior to its sale and delivery to
the ultimate purchaser, or for any person knowingly to remove or render
inoperative any such device or element of design after such sale and
delivery to the ultimate purchaser.
(ii) For any person to manufacture, sell or offer to sell, or
install, any part or component intended for use with, or as part of,
any vehicle or engine, where a principal effect of the part or
component is to bypass, defeat, or render inoperative any device or
[[Page 49760]]
element of design installed on or in a vehicle or engine in compliance
with regulations issued under this subpart, and where the person knows
or should know that the part or component is being offered for sale or
installed for this use or put to such use.
(4) For any manufacturer of a vehicle or engine subject to
standards prescribed under this subpart:
(i) To sell, offer for sale, introduce or deliver into commerce, or
lease any such vehicle or engine unless the manufacturer has complied
with the requirements of Section 207 (a) and (b) of the Clean Air Act
(42 U.S.C. 7541 (a), (b)) with respect to such vehicle or engine, and
unless a label or tag is affixed to such vehicle or engine in
accordance with Section 207(c)(3) of the Clean Air Act (42 U.S.C.
7541(c)(3)).
(ii) To fail or refuse to comply with the requirements of Section
207 (c) or (e) of the Clean Air Act (42 U.S.C. 7541 (c) or (e)).
(iii) Except as provided in Section 207(c)(3) of the Clean Air Act
(42 U.S.C. 7541(c)(3)), to provide directly or indirectly in any
communication to the ultimate purchaser or any subsequent purchaser
that the coverage of a warranty under the Clean Air Act is conditioned
upon use of any part, component, or system manufactured by the
manufacturer or a person acting for the manufacturer or under its
control, or conditioned upon service performed by such persons.
(iv) To fail or refuse to comply with the terms and conditions of
the warranty under Section 207 (a) or (b) of the Clean Air Act (42
U.S.C. 7541 (a) or (b)).
(b) For the purposes of enforcement of this subpart, the following
apply:
(1) No action with respect to any element of design referred to in
paragraph (a)(3) of this section (including any adjustment or
alteration of such element) shall be treated as a prohibited act under
paragraph (a)(3) of this section if such action is in accordance with
Section 215 of the Clean Air Act (42 U.S.C. 7549);
(2) Nothing in paragraph (a)(3) of this section is to be construed
to require the use of manufacturer parts in maintaining or repairing a
vehicle or engine. For the purposes of the preceding sentence, the term
``manufacturer parts'' means, with respect to a motor vehicle engine,
parts produced or sold by the manufacturer of the motor vehicle or
motor vehicle engine;
(3) Actions for the purpose of repair or replacement of a device or
element of design or any other item are not considered prohibited acts
under paragraph (a)(3) of this section if the action is a necessary and
temporary procedure, the device or element is replaced upon completion
of the procedure, and the action results in the proper functioning of
the device or element of design;
(4) Actions for the purpose of a conversion of a motor vehicle or
motor vehicle engine for use of a clean alternative fuel (as defined in
title II of the Clean Air Act) are not considered prohibited acts under
paragraph (a) of this section if:
(i) The vehicle complies with the applicable standard when
operating on the alternative fuel; and
(ii) In the case of engines converted to dual fuel or flexible use,
the device or element is replaced upon completion of the conversion
procedure, and the action results in proper functioning of the device
or element when the motor vehicle operates on conventional fuel.
26. A new Sec. 86.1865-12 is added to subpart S to read as
follows:
Sec. 86.1865-12 How to comply with the fleet average CO2
standards.
(a) Applicability. (1) Unless otherwise exempted under the
provisions of Sec. 86.1801-12(j), CO2 fleet average exhaust
emission standards apply to:
(i) 2012 and later model year passenger automobiles and light
trucks.
(ii) Aftermarket conversion systems as defined in 40 CFR 85.502.
(iii) Vehicles imported by ICIs as defined in 40 CFR 85.1502.
(2) The terms ``passenger automobile'' and ``light truck'' as used
in this section have the meanings as defined in Sec. 86.1818-12.
(b) Useful life requirements. Full useful life requirements for
CO2 standards are defined in Sec. 86.1818-12. There is not
an intermediate useful life standard for CO2 standards.
(c) Altitude. Altitude requirements for CO2 standards
are provided in Sec. 86.1810-12(f).
(d) Small volume manufacturer certification procedures.
Certification procedures for small volume manufacturers are provided in
Sec. 86.1838-01. Small businesses meeting certain criteria may be
exempted from the fleet average CO2 standards under Sec.
86.1801-12(j).
(e) CO2 fleet average exhaust emission standards. The fleet average
standards referred to in this section are the corporate fleet average
CO2 standards for passenger automobiles and light trucks set
forth in 86.1818-12(c) and (e). The fleet average CO2
standards applicable in a given model year are calculated separately
for passenger automobiles and light trucks for each manufacturer and
each model year according to the provisions in Sec. 86.1818-12. Each
manufacturer must comply with the applicable CO2 fleet
average standard on a production-weighted average basis, for each
separate averaging set, at the end of each model year, using the
procedure described in paragraph (c) of this section.
(f) In-use CO2 standards. In-use CO2 exhaust emission
standards applicable to each model type are provided in Sec. 86.1818-
12(d).
(g) Durability procedures and method of determining deterioration
factors (DFs). Deterioration factors for CO2 exhaust
emission standards are provided in Sec. 86.1823-08(m).
(h) Vehicle test procedures. (1) The test procedures for
demonstrating compliance with CO2 exhaust emission standards
are contained in subpart B of this part and subpart B of part 600 of
this chapter.
(2) Testing of all passenger automobiles and light trucks to
determine compliance with CO2 exhaust emission standards set
forth in this section must be on a loaded vehicle weight (LVW) basis,
as defined in Sec. 86.1803-01.
(3) Testing for the purpose of providing certification data is
required only at low altitude conditions. If hardware and software
emission control strategies used during low altitude condition testing
are not used similarly across all altitudes for in-use operation, the
manufacturer must include a statement in the application for
certification, in accordance with Sec. Sec. 86.1844-01(d)(11) and
86.1810-12(f), stating what the different strategies are and why they
are used.
(i) Calculating the fleet average carbon-related exhaust emissions.
(1) Manufacturers must compute separate production-weighted fleet
average carbon-related exhaust emissions at the end of the model year
for passenger automobiles and light trucks, using actual production,
where production means vehicles produced and delivered for sale, and
certifying model types to standards as defined in Sec. 86.1818-12. The
model type carbon-related exhaust emission results determined according
to 40 CFR 600 subpart F become the certification standard for each
model type.
(2) Manufacturers must separately calculate production-weighted
fleet average carbon-related exhaust emissions levels for the following
averaging sets according to the provisions of part 600 subpart F of
this chapter:
[[Page 49761]]
(i) Passenger automobiles subject to the fleet average
CO2 standards specified in Sec. 86.1818-12(c)(2);
(ii) Light trucks subject to the fleet average CO2
standards specified in Sec. 86.1818-12(c)(3);
(iii) Passenger automobiles subject to the optional interim fleet
average CO2 standards specified in Sec. 86.1818-12(e), if
applicable; and
(iv) Light trucks subject to the optional interim fleet average
CO2 standards specified in Sec. 86.1818-12(e), if
applicable.
(j) Certification compliance and enforcement requirements for CO2
exhaust emission standards. (1) Compliance and enforcement requirements
are provided in Sec. 86.1864-10 and Sec. 86.1848-10(c)(8).
(2) The certificate issued for each test group requires all model
types within that test group to meet the emission standard to which
each model type is certified.
(3) Each manufacturer must comply with the applicable
CO2 fleet average standard on a production-weighted average
basis, at the end of each model year, using the procedure described in
paragraph (i) of this section.
(4) Manufacturers must compute separate CO2 fleet
averages for passenger automobiles and light trucks. The production-
weighted CO2 fleet averages must be compared with the
applicable fleet average standard.
(5) Each manufacturer must comply on an annual basis with the fleet
average standards as follows:
(i) Manufacturers must report in their annual reports to the Agency
that they met the relevant corporate average standard by showing that
their production-weighted average CO2 emissions levels of
passenger automobiles and light trucks, as applicable, are at or below
the applicable fleet average standard; or
(ii) If the production-weighted average is above the applicable
fleet average standard, manufacturers must obtain and apply sufficient
CO2 credits as authorized under paragraph (k)(7) of this
section. A manufacturer must show that they have offset any exceedence
of the corporate average standard via the use of credits. Manufacturers
must also include their credit balances or deficits in their annual
report to the Agency.
(iii) If a manufacturer fails to meet the corporate average
CO2 standard for four consecutive years, the vehicles
causing the corporate average exceedence will be considered not covered
by the certificate of conformity (see paragraph (k)(7) of this
section). A manufacturer will be subject to penalties on an individual-
vehicle basis for sale of vehicles not covered by a certificate.
(iv) EPA will review each manufacturer's production to designate
the vehicles that caused the exceedence of the corporate average
standard. EPA will designate as nonconforming those vehicles in test
groups with the highest certification emission values first, continuing
until reaching a number of vehicles equal to the calculated number of
noncomplying vehicles as determined in paragraph (k)(7) of this
section. In a group where only a portion of vehicles would be deemed
nonconforming, EPA will determine the actual nonconforming vehicles by
counting backwards from the last vehicle produced in that test group.
Manufacturers will be liable for penalties for each vehicle sold that
is not covered by a certificate.
(k) Requirements for the CO2 averaging, banking and trading (ABT)
program. (1) A manufacturer whose CO2 fleet average
emissions exceed the applicable standard must complete the calculation
in paragraph (k)(4) of this section to determine the size of its
CO2 deficit. A manufacturer whose CO2 fleet
average emissions are less than the applicable standard must complete
the calculation in paragraph (k)(4) of this section to generate
CO2 credits. In either case, the number of credits or debits
must be rounded to the nearest whole number.
(2) There are no property rights associated with CO2
credits generated under this subpart. Credits are a limited
authorization to emit the designated amount of emissions. Nothing in
this part or any other provision of law should be construed to limit
EPA's authority to terminate or limit this authorization through a
rulemaking.
(3) Each manufacturer must comply with the reporting and
recordkeeping requirements of paragraph (l) of this section for
CO2 credits, including early credits. The averaging, banking
and trading program is enforceable through the certificate of
conformity that allows the manufacturer to introduce any regulated
vehicles into commerce.
(4) Credits are earned on the last day of the model year.
Manufacturers must calculate, for a given model year, the number of
credits or debits it has generated according to the following equation,
rounded to the nearest megagram:
CO2 Credits or Debits (Mg) = [(CO2 Standard--
Manufacturer's Production-Weighted Fleet Average CO2
Emissions) x (Total Number of Vehicles Produced) x (Vehicle Lifetime
Miles)] / 1,000,000
Where:
CO2 Standard = the applicable standard for the model year
as determined by Sec. 86.1818-12;
Manufacturer's Production-Weighted Fleet Average CO2
Emissions = average calculated according to paragraph (i) of this
section;
Total Number of Vehicles Produced = The number of vehicles
domestically produced plus those imported as defined in 40 CFR
600.511-80; and
Vehicle Lifetime Miles is 190,971 for passenger automobiles and
221,199 for light trucks.
(5) Total credits or debits generated in a model year, maintained
and reported separately for passenger automobiles and light trucks,
shall be the sum of the credits or debits calculated in paragraph
(k)(4) of this section and any of the following credits, if applicable:
(i) Air conditioning leakage credits earned according to the
provisions of 86.1866-12(b);
(ii) Air conditioning efficiency credits earned according to the
provisions of 86.1866-12(c);
(iii) Off-cycle technology credits earned according to the
provisions of 86.1866-12(d).
(6) Unused CO2 credits shall retain their full value
through the five subsequent model years after the model year in which
they were generated. Credits available at the end of the fifth model
year after the year in which they were generated shall expire.
(7) Credits may be used as follows:
(i) Credits generated and calculated according to the method in
paragraph (k)(4) of this section may not be used to offset deficits
other than those deficits accrued with respect to the standard in Sec.
86.1818-12. Credits may be banked and used in a future model year in
which a manufacturer's average CO2 level exceeds the
applicable standard. Credits may be exchanged between the passenger
automobile and light truck fleets of a given manufacturer. Credits may
also be traded to another manufacturer according to the provisions in
paragraph (k)(8) of this section. Before trading or carrying over
credits to the next model year, a manufacturer must apply available
credits to offset any deficit, where the deadline to offset that credit
deficit has not yet passed.
(ii) The use of credits shall not change Selective Enforcement
Auditing or in-use testing failures from a failure to a non-failure.
The enforcement of the averaging standard occurs through the vehicle's
certificate of conformity. A manufacturer's certificate of conformity
is conditioned upon compliance with the averaging provisions. The
certificate will be void ab initio if a manufacturer
[[Page 49762]]
fails to meet the corporate average standard and does not obtain
appropriate credits to cover its shortfalls in that model year or
subsequent model years (see deficit carry-forward provisions in
paragraph (k)(7) of this section). Manufacturers must track their
certification levels and production unless they produce only vehicles
certified to CO2 levels below the standard and do not plan
to bank credits.
(iii) Special provisions for manufacturers using the optional
interim fleet average CO2 standards. (A) Credits generated by vehicles
subject to the fleet average CO2 standards specified in
Sec. 86.1818-12(c) may only be used to offset a deficit generated by
vehicles subject to the optional interim fleet average CO2
standards specified in Sec. 86.1818-12(e).
(B) Credits generated by a passenger automobile or light truck
averaging set subject to the optional interim fleet average
CO2 standards specified in Sec. 86.1818-12(e)(2)(i) or (ii)
of this section may be used to offset a deficit generated by an
averaging set subject to the optional interim fleet average
CO2 standards through the 2015 model year.
(C) Credits generated by an averaging set subject to the optional
interim fleet average CO2 standards specified in Sec.
86.1818-12(e)(2)(i) or (ii) of this section may not be used to offset a
deficit generated by an averaging set subject to the fleet average
CO2 standards specified in Sec. 86.1818-12(c)(2) or (3) or
otherwise transferred to an averaging set subject to the fleet average
CO2 standards specified in Sec. 86.1818-12(c)(2) or (3).
(D) Credits generated by vehicles subject to the optional interim
fleet average CO2 standards specified in Sec. 86.1818-
12(e)(2)(i) or (ii) may be banked for use in a future model year,
except that all such credits shall expire at the end of the 2015 model
year.
(E) A manufacturer with any vehicles subject to the optional
interim fleet average CO2 standards specified in Sec.
86.1818-12(e)(2)(i) or (ii) of this section in a model year in which
that manufacturer also generates credits with vehicles subject to the
fleet average CO2 standards specified in Sec. 86.1818-12(c)
may not trade those credits or bank those credits earned against the
fleet average standards in Sec. 86.1818-12(c) for use in a future
model year.
(8) The following provisions apply if debits are accrued:
(i) If a manufacturer calculates that it has negative credits (also
called ``debits'' or a ``credit deficit'') for a given model year, it
may carry that deficit forward into the next three model years. Such a
carry-forward may only occur after the manufacturer exhausts any supply
of banked credits. At the end of the third model year, the deficit must
be covered with an appropriate number of credits that the manufacturer
generates or purchases. Any remaining deficit is subject to a voiding
of the certificate ab initio, as described in this paragraph (k)(8).
Manufacturers are not permitted to have a credit deficit for four
consecutive years.
(ii) If debits are not offset within the specified time period, the
number of vehicles not meeting the fleet average CO2
standards (and therefore not covered by the certificate) must be
calculated.
(A) Determine the gram per mile quantity of debits for the
noncompliant vehicle category by multiplying the total megagram deficit
by 1,000,000 and then dividing by the vehicle lifetime miles for the
vehicle category (passenger automobile or light truck) specified in
paragraph (k)(4) of this section.
(B) Divide the result by the fleet average standard applicable to
the model year in which the deficit failed to be offset and round to
the nearest whole number to determine the number of vehicles not
meeting the fleet average CO2 standards.
(iii) EPA will determine the vehicles not covered by a certificate
because the condition on the certificate was not satisfied by
designating vehicles in those test groups with the highest
CO2 emission values first and continuing until reaching a
number of vehicles equal to the calculated number of noncomplying
vehicles as determined in paragraph (k)(7) of this section. If this
calculation determines that only a portion of vehicles in a test group
contribute to the debit situation, then EPA will designate actual
vehicles in that test group as not covered by the certificate, starting
with the last vehicle produced and counting backwards.
(iv)(A) If a manufacturer ceases production of passenger cars and
light trucks, the manufacturer continues to be responsible for
offsetting any debits outstanding within the required time period. Any
failure to offset the debits will be considered a violation of
paragraph (k)(7)(i) of this section and may subject the manufacturer to
an enforcement action for sale of vehicles not covered by a
certificate, pursuant to paragraphs (k)(7)(ii) and (iii) of this
section.
(B) If a manufacturer is purchased by, merges with, or otherwise
combines with another manufacturer, the controlling entity is
responsible for offsetting any debits outstanding within the required
time period. Any failure to offset the debits will be considered a
violation of paragraph (k)(7)(i) of this section and may subject the
manufacturer to an enforcement action for sale of vehicles not covered
by a certificate, pursuant to paragraphs (k)(7)(ii) and (iii) of this
section.
(v) For purposes of calculating the statute of limitations, a
violation of the requirements of paragraph (k)(7)(i) of this section, a
failure to satisfy the conditions upon which a certificate(s) was
issued and hence a sale of vehicles not covered by the certificate, all
occur upon the expiration of the deadline for offsetting debits
specified in paragraph (k)(7)(i) of this section.
(9) The following provisions apply to CO2 credit
trading:
(i) EPA may reject CO2 credit trades if the involved
manufacturers fail to submit the credit trade notification in the
annual report.
(ii) A manufacturer may not sell credits that are not available for
sale pursuant to the provisions in paragraph (k)(6)(i) of this section.
(iii) In the event of a negative credit balance resulting from a
transaction, both the buyer and seller are liable. EPA may void ab
initio the certificates of conformity of all test groups participating
in such a trade.
(iv) (A) If a manufacturer trades a credit that it has not
generated pursuant to paragraph (k) of this section or acquired from
another party, the manufacturer will be considered to have generated a
debit in the model year that the manufacturer traded the credit. The
manufacturer must offset such debits by the deadline for the annual
report for that same model year.
(B) Failure to offset the debits within the required time period
will be considered a failure to satisfy the conditions upon which the
certificate(s) was issued and will be addressed pursuant to paragraph
(k)(7) of this section.
(v) A manufacturer may only trade credits that it has generated
pursuant to paragraph (k)(4) of this section or acquired from another
party.
(l) Maintenance of records and submittal of information relevant to
compliance with fleet average CO2 standards--(1) Maintenance of
records. (i) Manufacturers producing any light-duty vehicles, light-
duty trucks, or medium-duty passenger vehicles subject to the
provisions in this subpart must establish, maintain, and retain all the
following information in adequately organized records for each model
year:
(A) Model year.
(B) Applicable fleet average CO2 standards for each
averaging set as defined in paragraph (i) of this section.
[[Page 49763]]
(C) The calculated fleet average CO2 value for each
averaging set as defined in paragraph (i) of this section.
(D) All values used in calculating the fleet average CO2
values.
(ii) Manufacturers producing any passenger cars or light trucks
subject to the provisions in this subpart must establish, maintain, and
retain all the following information in adequately organized records
for each passenger car or light truck subject to this subpart:
(A) Model year.
(B) Applicable fleet average CO2 standard.
(C) EPA test group.
(D) Assembly plant.
(E) Vehicle identification number.
(F) Carbon-related exhaust emission standard to which the passenger
car or light truck is certified.
(G) In-use carbon-related exhaust emission standard.
(H) Information on the point of first sale, including the
purchaser, city, and State.
(iii) Manufacturers must retain all required records for a period
of eight years from the due date for the annual report. Records may be
stored in any format and on any media, as long as manufacturers can
promptly send EPA organized written records in English if we ask for
them. Manufacturers must keep records readily available as EPA may
review them at any time.
(iv) The Administrator may require the manufacturer to retain
additional records or submit information not specifically required by
this section.
(v) Pursuant to a request made by the Administrator, the
manufacturer must submit to the Administrator the information that the
manufacturer is required to retain.
(vi) EPA may void ab initio a certificate of conformity for
vehicles certified to emission standards as set forth or otherwise
referenced in this subpart for which the manufacturer fails to retain
the records required in this section or to provide such information to
the Administrator upon request, or to submit the reports required in
this section in the specified time period.
(2) Reporting. (i) Each manufacturer must submit an annual report.
The annual report must contain for each applicable CO2
standard, the calculated fleet average CO2 value, all values
required to calculate the CO2 emissions value, 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.
(ii) For each applicable fleet average CO2 standard, the
annual report must also include documentation on all credit
transactions the manufacturer has engaged in since those included in
the last report. Information for each transaction must include all of
the following:
(A) Name of credit provider.
(B) Name of credit recipient.
(C) Date the trade occurred.
(D) Quantity of credits traded in megagrams.
(E) Model year in which the credits were earned.
(iii) Manufacturers calculating early air conditioning leakage and/
or efficiency credits under paragraph (b) of this section shall report
the following information for each model year separately for passenger
automobiles and light trucks and for each air conditioning system used
to generate credits:
(A) A description of the air conditioning system.
(B) The leakage credit value and all the information required to
determine this value.
(C) The total credits earned for each averaging set, model year,
and region, as applicable.
(iv) Manufacturers calculating early advanced technology vehicle
credits under paragraph (c) of this section shall report, for each
model year and separately for passenger automobiles and light trucks,
the following information:
(A) The number of each model type of eligible vehicle sold.
(B) The carbon-related exhaust emission value by model type and
model year.
(v) Manufacturers calculating early off-cycle technology credits
under paragraph (d) of this section shall report, for each model year
and separately for passenger automobiles and light trucks, all test
results and data required for calculating such credits.
(vi) Unless a manufacturer reports the data required by this
section in the annual production report required under Sec. 86.1844-
01(e) or the annual report required under Sec. 600.512-12, a
manufacturer must submit an annual report for each model year after
production ends for all affected vehicles produced by the manufacturer
subject to the provisions of this subpart and no later than May 1 of
the calendar year following the given model year. Annual reports must
be submitted to: Director, Compliance and Innovative Strategies
Division, U.S. Environmental Protection Agency, 2000 Traverwood, Ann
Arbor, Michigan 48105.
(vii) Failure by a manufacturer to submit the annual report in the
specified time period for all vehicles subject to the provisions in
this section is a violation of section 203(a)(1) of the Clean Air Act
(42 U.S.C. 7522 (a)(1)) for each applicable vehicle produced by that
manufacturer.
(viii) If EPA or the manufacturer determines that a reporting error
occurred on an annual report previously submitted to EPA, the
manufacturer's credit or debit calculations will be recalculated. EPA
may void erroneous credits, unless traded, and will adjust erroneous
debits. In the case of traded erroneous credits, EPA must adjust the
selling manufacturer's credit balance to reflect the sale of such
credits and any resulting credit deficit.
(3) Notice of opportunity for hearing. Any revoking of the
certificate under paragraph (l)(1)(vi) of this section will be made
only after EPA has offered the affected manufacturer an opportunity for
a hearing conducted in accordance with Sec. 86.614-84 for light-duty
vehicles or Sec. 86.1014-84 for light-duty trucks and, if a
manufacturer requests such a hearing, will be made only after an
initial decision by the Presiding Officer.
27. A new section 86.1866-12 is added to subpart S to read as
follows:
Sec. 86.1866-12 CO2 fleet average credit programs.
(a) Additional credits for certification of advanced technology
vehicles. A manufacturer may generate additional credits by certifying
and producing electric vehicles, plug-in hybrid electric vehicles, or
fuel cell electric vehicles, as those terms are defined in Sec.
86.1803-01, in the 2012 through 2016 model years. When calculating the
fleet average CO2 emissions according to the provisions of
part 600 subpart F of this chapter, the manufacturer may multiply the
number of advanced technology vehicles produced by [1.2-2.0]. This
multiplier may be used if the following conditions are met:
(1) Documentation of the use of this multiplier and the number of
credits generated by its use shall be included in the annual report to
the Administrator;
(2) Vehicles must be certified to Tier 2 Bin No. 5 or a more
stringent set of emissions standards in Sec. 86.1811-04(c)(6);
(3) These multipliers may not be used after the 2016 model year;
(b) Credits for reduction of air conditioning refrigerant leakage.
Manufacturers may generate credits applicable to the CO2
fleet average program described in Sec. 86.1865-12 by implementing
specific air conditioning system technologies designed to reduce air
conditioning refrigerant leakage over the useful life of their
passenger cars and/or light trucks. Credits shall be calculated
according to this paragraph
[[Page 49764]]
(b) for each air conditioning system that the manufacturer is using to
generate CO2 credits.
(1) The manufacturer shall calculate an annual rate of refrigerant
leakage from an air conditioning system in grams per year according to
the provisions of Sec. 86.166-12.
(2) The CO2-equivalent gram per mile leakage reduction
to be used to calculate the total credits generated by the air
conditioning system shall be determined according to the following
formulae, rounded to the nearest tenth of a gram per mile:
(i) Passenger automobiles:
[GRAPHIC] [TIFF OMITTED] TP28SE09.056
Where:
MaxCredit is 12.6 for air conditioning systems using HFC 134a, and
13.8 for air conditioning systems using a refrigerant with a lower
global warming potential.
Leakage means the annual refrigerant leakage rate determined
according to the provisions of Sec. 86.166-12(a), except if the
calculated rate is less than 8.3 grams per year the rate for the
purpose of this formula shall be 8.3 grams per year;
GWPNEW means the global warming potential of the
refrigerant, if such refrigerant is not R134a, as determined by the
Administrator;
GWPHFC134a means the global warming potential of HFC
134a, which shall be equal to 1430 unless determined otherwise by
the Administrator.
(ii) Light trucks:
[GRAPHIC] [TIFF OMITTED] TP28SE09.057
Where:
MaxCredit is 15.6 for air conditioning systems using HFC 134a,
and 17.2 for air conditioning systems using a refrigerant with a
lower global warming potential.
Leakage means the annual refrigerant leakage rate determined
according to the provisions of Sec. 86.166-12(a), except if the
calculated rate is less than 10.4 grams per year the rate for the
purpose of this formula shall be 10.4 grams per year;
GWPNEW means the global warming potential of the
refrigerant, if such refrigerant is not HFC 134a, as determined by
the Administrator;
GWPR134a means the global warming potential of HFC 134a,
which shall be equal to 1430 unless determined otherwise by the
Administrator.
(3) The total leakage reduction credits generated by the air
conditioning system shall be calculated separately for passenger cars
and light trucks according to the following formula:
Total Credits (megagrams) = (Leakage x Production x VLM) / 1,000,000
Where:
Leakage = the CO2-equivalent leakage credit value in
grams per mile determined in paragraph (b)(2) of this section.
Production = The total number of passenger cars or light trucks,
whichever is applicable, produced with the air conditioning system
to which to the leakage credit value from paragraph (b)(2) of this
section applies.
VLM = vehicle lifetime miles, which for passenger cars shall be
190,971 and for light trucks shall be 221,199.
(4) The results of paragraph (b)(3) of this section, rounded to the
nearest whole number, shall be included in the manufacturer's credit/
debit totals calculated in Sec. 86.1865-12(k)(5).
(c) Credits for improving air conditioning system efficiency.
Manufacturers may generate credits applicable to the CO2
fleet average program described in Sec. 86.1865-12 by implementing
specific air conditioning system technologies designed to reduce air
conditioning-related CO2 emissions over the useful life of
their passenger cars and/or light trucks. Credits shall be calculated
according to this paragraph (c) for each air conditioning system that
the manufacturer is using to generate CO2 credits.
Manufacturers may also generate early air conditioning efficiency
credits under this paragraph (b) for the 2009 through 2011 model years
according to the provisions of Sec. 86.1867-12(c). For model years
2012 and 2013 the manufacturer may determine air conditioning
efficiency credits using the requirements in paragraphs (c)(1) through
(4) of this section. For model years 2014 and later the eligibility
requirements specified in paragraph (c)(5) of this section must be met
before an air conditioning system is allowed to generate credits.
(1) Air conditioning efficiency credits are available for the
following technologies in the gram per mile amounts indicated:
(i) Reduced reheat, with externally-controlled, variable-
displacement compressor: 1.7 g/mi.
(ii) Reduced reheat, with externally-controlled, fixed-displacement
or pneumatic variable displacement compressor: 1.1 g/mi.
(iii) Default to recirculated air mode whenever the air
conditioning system is being used to reduce cabin air temperature and
the outside air temperature is greater than 75 [deg]F: 1.7 g/mi.
(iv) Blower motor and cooling fan controls which limit waste energy
(e.g. pulsewidth modulated power controller): 0.9 g/mi.
(v) Electronic expansion valve: 1.1 g/mi.
(vi) Improved evaporators and condensers (with system analysis on
each component indicating a coefficient of performance improvement
greater than 10%, when compared to previous design): 1.1 g/mi.
(vii) Oil separator: 0.6 g/mi.
(2) Air conditioning efficiency credits are determined on an air
conditioning system basis. For each air conditioning system that is
eligible for a credit based on the use of one or more of the items
listed in paragraph (c)(1) of this section, the total credit value is
the sum of the gram per mile values listed in paragraph (c)(1) of this
section for each item that applies to the air conditioning system. If
the sum of those values for an air conditioning system is greater than
5.7 grams per mile, the total credit value is deemed to be 5.7 grams
per mile.
(3) The total efficiency credits generated by an air conditioning
system shall be calculated separately for passenger cars and light
trucks according to the following formula:
Total Credits (Megagrams) = (Credit x Production x VLM) / 1,000,000
Where:
[[Page 49765]]
Credit = the CO2 efficiency credit value in grams per
mile determined in paragraph (c)(2) of this section.
Production = The total number of passenger cars or light trucks,
whichever is applicable, produced with the air conditioning system
to which the efficiency credit value from paragraph (c)(2) of this
section applies.
VLM = vehicle lifetime miles, which for passenger cars shall be
190,971 and for light trucks shall be 221,199.
(4) The results of paragraph (c)(3) of this section, rounded to the
nearest whole number, shall be included in the manufacturer's credit/
debit totals calculated in Sec. 86.1865-12(k)(5).
(5) Use of the Air Conditioning Idle Test Procedure is required
after the 2013 model year as specified in this paragraph (c)(5).
(i) After the 2013 model year, for each air conditioning system
selected by the manufacturer to generate air conditioning efficiency
credits, the manufacturer shall perform the Air Conditioning Idle Test
Procedure specified in Sec. 86.165-14 of this part.
(ii) Using good engineering judgment, the manufacturer must select
the vehicle configuration to be tested that is expected to result in
the greatest increased CO2 emissions as a result of the
operation of the air conditioning system for which efficiency credits
are being sought. If the air conditioning system is being installed in
passenger automobiles and light trucks, a separate determination of the
quantity of credits for passenger automobiles and light trucks must be
made, but only one test vehicle is required to represent the air
conditioning system, provided it represents the worst-case impact of
the system on CO2 emissions.
(iii) For an air conditioning system to be eligible to generate
credits in the 2014 and later model years, the increased CO2
emissions as a result of the operation of that air conditioning system
determined according to the Idle Test Procedure in Sec. 86.165-14 must
be less than 14.9 grams per minute.
(iv) Air conditioning systems with compressors that are solely
powered by electricity shall submit Air Conditioning Idle Test
Procedure data to be eligible to generate credits in the 2014 and later
model years, but such systems are not required to meet a specific
threshold to be eligible to generate such credits, as long as the
engine remains off for a period of at least 2 minutes during the air
conditioning on portion of the Idle Test Procedure in Sec. 86.165-12
(d).
(6) The following definitions apply to this paragraph (c):
(i) Reduced reheat, with externally-controlled, variable
displacement compressor means a system in which compressor displacement
is controlled via an electronic signal, based on input from sensors
(e.g. position or setpoint of interior temperature control, interior
temperature, evaporator outlet air temperature, or refrigerant
temperature) and air temperature at the outlet of the evaporator can be
controlled to a level at 41 [deg]F, or higher.
(ii) Reduced reheat, with externally-controlled, fixed-displacement
or pneumatic variable displacement compressor means a system in which
the output of either compressor is controlled by cycling the compressor
clutch off-and-on via an electronic signal, based on input from sensors
(e.g. position or setpoint of interior temperature control, interior
temperature, evaporator outlet air temperature, or refrigerant
temperature) and air temperature at the outlet of the evaporator can be
controlled to a level at 41 [deg]F, or higher.
(iii) Default to recirculated air mode means that the default
position of the mechanism which controls the source of air supplied to
the air conditioning system shall change from outside air to
recirculated air when the operator or the automatic climate control
system has engaged the air conditioning system (i.e. evaporator is
removing heat), except under those conditions where dehumidification is
required for visibility (i.e. defogger mode). In vehicles equipped with
interior air quality sensors (e.g. humidity sensor, or carbon dioxide
sensor), the controls may determine proper blend of air supply sources
to maintain freshness of the cabin air while continuing to maximize the
use of recirculated air. At any time, the vehicle operator may manually
select the non-recirculated air setting during vehicle operation but
the system must default to recirculated air mode on subsequent vehicle
operations (i.e. next vehicle start). The climate control system may
delay switching to recirculation mode until the interior air
temperature is less than the outside air temperature, at which time the
system must switch to recirculated air mode.
(iv) Blower motor and cooling fan controls which limit waste energy
means a method of controlling fan and blower speeds which does not use
resistive elements to decrease the voltage supplied to the motor.
(v) Electronic expansion valve means a valve which throttles the
expansion of the refrigerant where the position of the valve (and flow
of refrigerant) is controlled via an electronic signal, based on input
from sensors (e.g. position or setpoint of interior temperature
control, interior temperature, evaporator outlet air temperature, or
refrigerant temperature).
(vi) Improved evaporators and condensers means that the coefficient
of performance (COP) of air conditioning system using improved
evaporator and condenser designs is 10 percent higher, as determined
using the bench test procedures described in SAE J2765 ``Procedure for
Measuring System COP of a Mobile Air Conditioning System on a Test
Bench,'' when compared to a system using standard, or prior model year,
component designs. SAE J2765 is incorporated by reference; see Sec.
86.1.
(vii) Oil separator means a mechanism which removes at least 50
percent of the oil entrained in the oil/refrigerant mixture exiting the
compressor and returns it to the compressor housing or compressor
inlet, or a compressor design which does not rely on the circulation of
an oil/refrigerant mixture for lubrication.
(d) Credits for CO2-reducing technologies where the
CO2 reduction is not captured on the Federal Test Procedure
or the Highway Fuel Economy Test. Manufacturers may optionally generate
credits applicable to the CO2 fleet average program
described in Sec. 86.1865-12 by implementing innovative technologies
that have a measurable, demonstrable, and verifiable real-world
CO2 reduction. These optional credits are referred to as
``off-cycle'' credits and may be earned through the 2016 model year.
(1) Qualification criteria. To qualify for this credit, the
following must be true:
(i) The technology must be an innovative and novel vehicle- or
engine-based approach to reducing greenhouse gas emissions, and not in
widespread use.
(ii) The CO2-reducing impact of the technology must not
be significantly measurable over the Federal Test Procedure and the
Highway Fuel Economy Test. The technology must improve CO2
emissions beyond the driving conditions of those tests.
(iii) The technology must be able to be demonstrated to be
effective for the full useful life of the vehicle. Unless the
manufacturer demonstrates that the technology is not subject to in-use
deterioration, the manufacturer must account for the deterioration in
their analysis.
(2) Quantifying the CO2 reductions of an off-cycle
technology. The manufacturer may use one of the two options specified
in this paragraph (d)(2) to measure the CO2-reducing
potential of an innovative off-cycle technology. The option described
in paragraph (d)(2)(ii) of this section may
[[Page 49766]]
be used only with EPA approval, and to use that option the manufacturer
must be able to justify to the Administrator why the 5-cycle option
described in paragraph (d)(2)(i) of this section insufficiently
characterizes the effectiveness of the off-cycle technology. The
manufacturer should notify EPA in their pre-model year report of their
intention to generate any credits under paragraph (d) of this section.
(i) Technology demonstration using EPA 5-cycle methodology. To
demonstrate an off-cycle technology and to determine a CO2
credit using the EPA 5-cycle methodology, the manufacturer shall
determine 5-cycle city/highway combined carbon-related exhaust
emissions both with the technology installed and operating and without
the technology installed and/or operating. The manufacturer shall
conduct the following steps, both with the off-cycle technology
installed and operating and without the technology operating or
installed.
(A) Determine carbon-related exhaust emissions over the FTP, the
HFET, the US06, the SC03, and the cold temperature FTP test procedures
according to the test procedure provisions specified in 40 CFR part 600
subpart B and using the calculation procedures specified in Sec.
600.113-08 of this chapter.
(B) Calculate 5-cycle city and highway carbon-related exhaust
emissions using data determined in paragraph (d)(2)(i)(A) of this
section according to the calculation procedures in paragraphs (d)
through (f) of 40 CFR 600.114-08.
(C) Calculate a 5-cycle city/highway combined carbon-related
exhaust emission value using the city and highway values determined in
paragraph (d)(2)(i)(B) of this section.
(D) Subtract the 5-cycle city/highway combined carbon-related
exhaust emission value determined with the off-cycle technology
operating from the 5-cycle city/highway combined carbon-related exhaust
emission value determined with the off-cycle technology not operating.
The result is the gram per mile credit amount assigned to the
technology.
(ii) Technology demonstration using alternative EPA-approved
methodology. In cases where the EPA 5-cycle methodology described in
paragraph (d)(2)(i) of this section cannot adequately measure the
emission reduction attributable to an innovative off-cycle technology,
the manufacturer may develop an alternative approach. Prior to a model
year in which a manufacturer intends to seek these credits, the
manufacturer must submit a detailed analytical plan to EPA. EPA will
work with the manufacturer to ensure that an analytical plan will
result in appropriate data for the purposes of generating these
credits. The alternative demonstration program must be approved in
advance by the Administrator and should:
(A) Use modeling, on-road testing, on-road data collection, or
other approved analytical or engineering methods;
(B) Be robust, verifiable, and capable of demonstrating the real-
world emissions benefit with strong statistical significance;
(C) Result in a demonstration of baseline and controlled emissions
over a wide range of driving conditions and number of vehicles such
that issues of data uncertainty are minimized;
(D) Result in data on a model type basis unless the manufacturer
demonstrates that another basis is appropriate and adequate.
(iii) Calculation of total off-cycle credits. Total off-cycle
credits in Megagrams of CO2 shall be calculated separately
for passenger automobiles and light trucks according to the following
formula:
Total Credits (Megagrams) = (Credit x Production x VLM) / 1,000,000
Where:
Credit = the 5-cycle credit value in grams per mile determined in
paragraph (d)(2)(i)(D) or (d)(2)(ii) of this section.
Production = The total number of passenger cars or light trucks,
whichever is applicable, produced with the off-cycle technology to
which to the credit value determined in paragraph (d)(2)(i)(D) or
(d)(2)(ii) of this section applies.
VLM = vehicle lifetime miles, which for passenger cars shall be
190,971 and for light trucks shall be 221,199.
28. A new Sec. 86.1867-12 is added to subpart S to read as
follows:
Sec. 86.1867-12 Optional early CO2 credit programs.
Manufacturers may optionally generate CO2 credits in the
2009 through 2011 model years for use in the 2012 and later model years
subject to the provisions of this section. Manufacturers may generate
early fleet average credits, air conditioning leakage credits, air
conditioning efficiency credits, early advanced technology credits, and
early off-cycle technology credits. Manufacturers generating any
credits under this section must submit an early credits report to the
Administrator as required in this section.
(a) Early fleet average CO2 reduction credits.
Manufacturers may optionally generate credits for reductions in their
fleet average CO2 emissions achieved in the 2009 through
2011 model years. To generate early fleet average CO2
reduction credits, manufacturers must select one of the four pathways
described in paragraphs (a)(1) through (4) of this section. The
manufacturer may select only one pathway, and that pathway must remain
in effect for the 2009 through 2011 model years. Fleet average credits
(or debits) must be calculated and reported to EPA for each model year
under each selected pathway. Early credits are subject to five year
carry-forward restrictions based on the model year in which the credits
are generated.
(1) Pathway 1. To earn credits under this pathway, the manufacturer
shall calculate an average carbon-related exhaust emission value to the
nearest one gram per mile for the classes of motor vehicles identified
in this paragraph (a)(1), and the results of such calculations will be
reported to the Administrator for use in determining compliance with
the applicable CO2 early credit threshold values.
(i) An average carbon-related exhaust emission value calculation
will be made for the combined LDV/LDT1 averaging set.
(ii) An average carbon-related exhaust emission value calculation
will be made for the combined LDT2/HLDT/MDPV averaging set.
(iii) Average carbon-related exhaust emission values shall be
determined according to the provisions of 40 CFR 600.510-12, except
that:
(A) Total U.S. model year sales data will be used, instead of
production data;
(B) The average carbon-related exhaust emissions for alcohol fueled
model types shall be calculated according to the provisions of 40 CFR
600.510-12(j)(2)(ii)(B), without the use of the 0.15 multiplicative
factor.
(C) The average carbon-related exhaust emissions for natural gas
fueled model types shall be calculated according to the provisions of
40 CFR 600.510-12(j)(2)(iii)(B), without the use of the 0.15
multiplicative factor.
(D) The average carbon-related exhaust emissions for alcohol dual
fueled model types shall be calculated according to the provisions of
40 CFR 600.510-12(j)(2)(vi), without the use of the 0.15 multiplicative
factor and with F=0. For the 2010 and 2011 model years only, if the
California Air Resources Board has approved a manufacturer's request to
use a non-zero value of F, the manufacturer may use such an approved
value.
(E) The average carbon-related exhaust emissions for natural gas
dual fueled model types shall be calculated according to the provisions
of 40 CFR
[[Page 49767]]
600.510-12(j)(2)(vii), without the use of the 0.15 multiplicative
factor and with F=0. For the 2010 and 2011 model years only, if the
California Air Resources Board has approved a manufacturer's request to
use a non-zero value of F, the manufacturer may use such an approved
value.
(F) 40 CFR 600.510-12(j)(3) shall not apply. Electric, fuel cell
electric, and plug-in hybrid electric model type carbon-related exhaust
emission values shall be included in the fleet average determined under
paragraph (a)(1) of this section only to the extent that such vehicles
are not being used to generate early advanced technology vehicle
credits under paragraph (c) of this section.
(iv) Fleet average CO2 credit threshold values.
------------------------------------------------------------------------
Model year LDV/LDT1 LDT2/HLDT/MDPV
------------------------------------------------------------------------
2009.......................... 321.............. 437
2010.......................... 299.............. 418
2011.......................... 265.............. 388
------------------------------------------------------------------------
(v) Credits are earned on the last day of the model year.
Manufacturers must calculate, for a given model year, the number of
credits or debits it has generated according to the following equation,
rounded to the nearest megagram:
CO2 Credits or Debits (Mg) = [(CO2 Credit
Threshold - Manufacturer's Sales Weighted Fleet Average CO2
Emissions) x (Total Number of Vehicles Sold) x (Vehicle Lifetime
Miles)] / 1,000,000
Where:
CO2 Credit Threshold = the applicable credit threshold
value for the model year and vehicle averaging set as determined by
paragraph (a)(1)(iv) of this section;
Manufacturer's Sales Weighted Fleet Average CO2 Emissions
= average calculated according to paragraph (a)(1)(iii) of this
section;
Total Number of Vehicles Sold = The number of vehicles domestically
sold as defined in 40 CFR 600.511-80; and
Vehicle Lifetime Miles is 190,971 for the LDV/LDT1 averaging set and
221,199 for the LDT2/HLDT/MDPV averaging set.
(vi) Deficits generated against the applicable CO2
credit threshold values in paragraph (a)(1)(iv) of this section in any
averaging set for any of the 2009-2011 model years must be offset using
credits accumulated by any averaging set in any of the 2009-2011 model
years before determining the number of credits that may be carried
forward to the 2012. Deficit carry forward and credit banking
provisions of Sec. 86.1865-12 apply to early credits earned under this
paragraph (a)(1), except that deficits may not be carried forward from
any of the 2009-2011 model years into the 2012 model year.
(2) Pathway 2. To earn credits under this pathway, manufacturers
shall calculate an average carbon-related exhaust emission value to the
nearest one gram per mile for the classes of motor vehicles identified
in paragraph (a)(1) of this section, and the results of such
calculations will be reported to the Administrator for use in
determining compliance with the applicable CO2 early credit
threshold values.
(i) Credits under this pathway shall be calculated according to the
provisions of paragraph (a)(1) of this section, except credits may only
be generated by vehicles sold in a model year in States with a section
177 program in effect in that model year. For the purposes of this
section, ``section 177 program'' means State regulations or other laws
that apply to any of the following categories of motor vehicles:
Passenger cars, light-duty trucks up through 6,000 pounds GVWR, and
medium-duty vehicles from 6,001 to 14,000 pounds GVWR, as these
categories of motor vehicles are defined in the California Code of
Regulations, Title 13, Division 3, Chapter 1, Article 1, Section 1900.
(ii) A deficit in any averaging set for any of the 2009-2011 model
years must be offset using credits accumulated by any averaging set in
any of the 2009-2011 model years before determining the number of
credits that may be carried forward to the 2012 model year. Deficit
carry forward and credit banking provisions of Sec. 86.1865-12 apply
to early credits earned under this paragraph (a)(1), except that
deficits may not be carried forward from any of the 2009-2011 model
years into the 2012 model year.
(3) Pathway 3. Pathway 3 credits are those credits earned under
Pathway 2 as described in paragraph (a)(2) of this section and in the
section 177 States determined in paragraph (a)(2)(i) of this section,
combined with additional credits earned in the set of states that does
not include the section 177 States determined in paragraph (a)(2)(i) of
this section and calculated according to this paragraph (a)(3).
(i) Manufacturers shall earn additional credits under Pathway 3 by
calculating an average carbon-related exhaust emission value to the
nearest one gram per mile for the classes of motor vehicles identified
in this paragraph (a)(3). The results of such calculations will be
reported to the Administrator for use in determining compliance with
the applicable CO2 early credit threshold values.
(ii) Credits may only be generated by vehicles sold in the States
not included in the section 177 States determined in paragraph
(a)(2)(i) of this section.
(iii) An average carbon-related exhaust emission value calculation
will be made for the passenger automobile averaging set. The term
``passenger automobile'' shall have the meaning given by the Department
of Transportation at 49 CFR 523.4 for the specific model year for which
the calculation is being made.
(iv) An average carbon-related exhaust emission value calculation
will be made for the light truck averaging set. The term ``light
truck'' shall have the meaning given by the Department of
Transportation at 49 CFR 523.5 for the specific model year for which
the calculation is being made.
(v) Average carbon-related exhaust emission values shall be
determined according to the provisions of 40 CFR 600.510-12, except
that:
(A) Total model year sales data will be used, instead of production
data, except that vehicles sold in the section 177 States determined in
paragraph (a)(2)(i) of this section shall not be included;
(B) The average carbon-related exhaust emissions for alcohol fueled
model types shall be calculated according to the provisions of 40 CFR
600.510-12(j)(2)(ii)(B), without the use of the 0.15 multiplicative
factor.
(C) The average carbon-related exhaust emissions for natural gas
fueled model types shall be calculated according to the provisions of
40 CFR 600.510-12(j)(2)(iii)(B), without the use of the 0.15
multiplicative factor.
(D) The average carbon-related exhaust emissions for alcohol dual
fueled model types shall be calculated according to the provisions of
40 CFR 600.510-12(j)(2)(vi), without the use of
[[Page 49768]]
the 0.15 multiplicative factor and with F=0.
(E) The average carbon-related exhaust emissions for natural gas
dual fueled model types shall be calculated according to the provisions
of 40 CFR 600.510-12(j)(2)(vii), without the use of the 0.15
multiplicative factor and with F=0.
(F) 40 CFR 600.510-12(j)(3) shall not apply. Electric, fuel cell
electric, and plug-in hybrid electric model type carbon-related exhaust
emission values shall be included in the fleet average determined under
paragraph (a)(1) of this section only to the extent that such vehicles
are not being used to generate early advanced technology vehicle
credits under paragraph (c) of this section.
(vi) Pathway 3 fleet average CO2 credit threshold
values.
(A) For 2009 and 2010 model year passenger automobiles, the fleet
average CO2 credit threshold value is 323 grams/mile.
(B) For 2009 model year light trucks the fleet average
CO2 credit threshold value is 381 grams/mile, or, if the
manufacturer chose to optionally meet an alternative manufacturer-
specific light truck fuel economy standard calculated under 49 CFR
533.5 for the 2009 model year, the gram per mile fleet average
CO2 credit threshold shall be the CO2 value
determined by dividing 8887 by that alternative manufacturer-specific
fuel economy standard and rounding to the nearest whole gram per mile.
(C) For 2010 model year light trucks the fleet average
CO2 credit threshold value is 376 grams/mile, or, if the
manufacturer chose to optionally meet an alternative manufacturer-
specific light truck fuel economy standard calculated under 49 CFR
533.5 for the 2010 model year, the gram per mile fleet average
CO2 credit threshold shall be the CO2 value
determined by dividing 8887 by that alternative manufacturer-specific
fuel economy standard and rounding to the nearest whole gram per mile.
(D) For 2011 model year passenger automobiles the fleet average
CO2 credit threshold value is the value determined by
dividing 8887 by the manufacturer-specific passenger automobile fuel
economy standard for the 2011 model year determined under 49 CFR 531.5
and rounding to the nearest whole gram per mile.
(E) For 2011 model year light trucks the fleet average
CO2 credit threshold value is the value determined by
dividing 8887 by the manufacturer-specific light truck fuel economy
standard for the 2011 model year determined under 49 CFR 533.5 and
rounding to the nearest whole gram per mile.
(vii) Credits are earned on the last day of the model year.
Manufacturers must calculate, for a given model year, the number of
credits or debits it has generated according to the following equation,
rounded to the nearest megagram:
CO2 Credits or Debits (Mg) = [(CO2 Credit
Threshold - Manufacturer's Sales Weighted Fleet Average CO2
Emissions) x (Total Number of Vehicles Sold) x (Vehicle Lifetime
Miles)] / 1,000,000
Where:
CO2 Credit Threshold = the applicable credit threshold
value for the model year and vehicle averaging set as determined by
paragraph (a)(3)(vii) of this section;
Manufacturer's Sales Weighted Fleet Average CO2 Emissions
= average calculated according to paragraph (a)(3)(vi) of this
section;
Total Number of Vehicles Sold = The number of vehicles domestically
sold as defined in 40 CFR 600.511-80 except that vehicles sold in
the section 177 States determined in paragraph (a)(2)(i) of this
section shall not be included; and
Vehicle Lifetime Miles is 190,971 for the LDV/LDT1 averaging set and
221,199 for the LDT2/HLDT/MDPV averaging set.
(viii) Deficits in any averaging set for any of the 2009-2011 model
years must be offset using credits accumulated by any averaging set in
any of the 2009-2011 model years before determining the number of
credits that may be carried forward to the 2012. Deficit carry forward
and credit banking provisions of 86.1865-12 apply to early credits
earned under this paragraph (a)(3), except that deficits may not be
carried forward from any of the 2009-2011 model years into the 2012
model year.
(4) Pathway 4. Pathway 4 credits are those credits earned under
Pathway 3 as described in paragraph (a)(3) of this section in the set
of states that does not include the section 177 States determined in
paragraph (a)(2)(i) of this section and calculated according to
paragraph (a)(3) of this section. Credits may only be generated by
vehicles sold in the set of states that does not include the section
177 States determined in paragraph (a)(2)(i) of this section.
(b) Early air conditioning leakage and efficiency credits. (1)
Manufacturers may optionally generate air conditioning refrigerant
leakage credits according to the provisions of paragraph (b) of Sec.
86.1866-12 and/or air conditioning efficiency credits according to the
provisions of Sec. 86.1866-12(c) in model years 2009 through 2011. The
early credits are subject to five year carry forward limits based on
the model year in which the credits are generated. Credits must be
tracked by model type and model year.
(2) Manufacturers that select Pathway 4 described in paragraph
(a)(4) of this section may not generate early air conditioning credits
for vehicles sold in the section 177 States as determined in paragraph
(a)(2)(i) of this section.
(c) Early advanced technology vehicle credits. Vehicles eligible
for this credit are electric vehicles, fuel cell electric vehicles, and
plug-in hybrid electric vehicles, as those terms are defined in Sec.
86.1803-01. If a manufacturer chooses to not include electric vehicles,
fuel cell electric vehicles, and plug-in hybrid electric vehicles in
their fleet averages calculated under any of the options described in
paragraph (a) of this section, the manufacturer may generate early
advanced technology vehicle credits pursuant to this paragraph (c).
(1) The manufacturer shall record the sales and carbon-related
exhaust emission values of eligible vehicles by model type and model
year for model years 2009 through 2011 and report these values to the
Administrator under paragraph (e) of this section.
(2) Manufacturers may use the 2009 through 2011 eligible vehicles
in their fleet average calculations starting with the 2012 model year,
subject to a five-year carry-forward limitation.
(i) Eligible 2009 model year vehicles may be used in the
calculation of a manufacturer's fleet average carbon-related exhaust
emissions in the 2012 through 2014 model years.
(ii) Eligible 2010 model year vehicles may be used in the
calculation of a manufacturer's fleet average carbon-related exhaust
emissions in the 2012 through 2015 model years.
(iii) Eligible 2011 model year vehicles may be used in the
calculation of a manufacturer's fleet average carbon-related exhaust
emissions in the 2012 through 2016 model years.
(3) (i) To use advanced technology vehicle credits, the
manufacturer will apply the 2009, 2010, and/or 2011 model type sales
volumes and their model type emission levels to a manufacturer's fleet
average calculation using the credit multiplier specified in Sec.
86.1866-12(a).
(ii) Early advanced technology vehicle credits must be used to
offset a deficit in one of the 2012 through 2016 model years, as
appropriate under paragraph (c)(2) of this section.
(iii) The advanced technology vehicle sales and emission values may
be included in a fleet average calculation for passenger automobiles or
light
[[Page 49769]]
trucks, but may not be used to generate credits in the model year in
which they are included or in the averaging set in which they are used.
Use of early advanced technology vehicle credits is limited to
offsetting a deficit that would otherwise be generated without the use
of those credits. Manufacturers shall report the use of such credits in
their model year report for the model year in which the credits are
used.
(d) Early off-cycle technology credits. Manufacturers may
optionally generate credits for the implementation of certain
CO2-reducing technologies according to the provisions of
Sec. 86.1866-12(d).
(e) Early credit reporting requirements. Each manufacturer shall
submit a report to the Administrator, known as the early credits
report, that reports the credits earned in the 2009 through 2011 model
years under this section.
(1) The report shall contain all information necessary for the
calculation of the manufacturer's early credits in each of the 2009
through 2011 model years.
(2) The early credits report shall be in writing, signed by the
authorized representative of the manufacturer and shall be submitted no
later than 90 days after the end of the 2011 model year.
(3) Manufacturers using one of the optional early fleet average
CO2 reduction credit pathways described in paragraph (a) of
this section shall report the following information separately for the
LDV/LDT1 and LDT2/HLDT/MDPV averaging sets:
(i) The pathway that they have selected (1, 2, 3, or 4).
(ii) A carbon-related exhaust emission value for each model type of
the manufacturer's product line calculated according to paragraph (a)
of this section.
(iii) The manufacturer's average carbon-related exhaust emission
value calculated according to paragraph (a) of this section for the
applicable averaging set and region and all data required to complete
this calculation.
(iv) The credits earned for each averaging set, model year, and
region, as applicable.
(4) Manufacturers calculating early air conditioning leakage and/or
efficiency credits under paragraph (b) of this section shall report the
following information for each model year separately for passenger
automobiles and light trucks and for each air conditioning system used
to generate credits:
(i) A description of the air conditioning system.
(ii) The leakage credit value and all the information required to
determine this value.
(iii) The total credits earned for each averaging set, model year,
and region, as applicable.
(5) Manufacturers calculating early advanced technology vehicle
credits under paragraph (c) of this section shall report, for each
model year and separately for passenger automobiles and light trucks,
the following information:
(i) The number of each model type of eligible vehicle sold.
(ii) The carbon-related exhaust emission value by model type and
model year.
(6) Manufacturers calculating early off-cycle technology credits
under paragraph (d) of this section shall report, for each model year
and separately for passenger automobiles and light trucks, all test
results and data required for calculating such credits.
PART 600--FUEL ECONOMY AND CARBON-RELATED EXHAUST EMISSIONS OF
MOTOR VEHICLES
29. The authority citation for part 600 continues to read as
follows:
Authority: 49 U.S.C. 32901-23919q, Pub. L. 109-58.
30. The heading for Part 600 is revised as set forth above.
Subpart A--Fuel Economy and Carbon-Related Exhaust Emission
Regulations for 1977 and Later Model Year Automobiles--General
Provisions
31. The heading for subpart A is revised as set forth above.
32. A new Sec. 600.001-12 is added to subpart A to read as
follows:
Sec. 600.001-12 General applicability.
(a) The provisions of this subpart are applicable to 2012 and later
model year automobiles and to the manufacturers of 2012 and later model
year automobiles.
(b) Fuel economy and related emissions data. Unless stated
otherwise, references to fuel economy or fuel economy data in this
subpart shall also be interpreted to mean the related exhaust emissions
of CO2, HC, and CO, and where applicable for alternative
fuel vehicles, CH3OH, C2H5OH,
C2H4O, HCHO, NMHC and CH4. References
to average fuel economy shall be interpreted to also mean average
carbon-related exhaust emissions. References to fuel economy data
vehicles shall also be meant to refer to vehicles tested for carbon-
related exhaust emissions for the purpose of demonstrating compliance
with fleet average CO2 standards in 40 CFR 86.1818-12.
33. Section 600.002-08 is amended as follows:
a. By adding the definition for ``Base tire.''
b. By adding the definition for ``Carbon-related exhaust
emissions.''
c. By adding the definition for ``Electric vehicle.''
d. By adding the definition for ``Footprint.''
e. By adding the definition for ``Fuel cell.''
f. By adding the definition for ``Fuel cell electric vehicle.''
g. By adding the definition for ``Hybrid electric vehicle.''
h. By revising the definition for ``Non-passenger automobile.''
i. By revising the definition for ``Passenger automobile.''
j. By adding the definition for ``Plug-in hybrid electric
vehicle.''
Sec. 600.002-08 Definitions.
* * * * *
Base tire means the tire specified as standard equipment by the
manufacturer.
* * * * *
Carbon-related exhaust emissions means the summation of the carbon-
containing constituents of the exhaust emissions, with each constituent
adjusted by a coefficient representing the carbon weight fraction of
each constituent, as specified in Sec. 600.113-08.
* * * * *
Electric vehicle means a 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:
(1) Recharge energy must be drawn from a source off the vehicle,
such as residential electric service; and
(2) The vehicle must be certified to the emission standards of Bin
1 of Table S04-1 in paragraph (c)(6) of Sec. 86.1811 of this
chapter.
* * * * *
Footprint is the product of track width (measured in inches,
calculated as the average of front and rear track widths, and rounded
to the nearest tenth of an inch) times wheelbase (measured in inches
and rounded to the nearest tenth of an inch), divided by 144 and then
rounded to the nearest tenth of a square foot. For purposes of this
definition, track width is the lateral distance between the centerlines
of the base tires at ground, including the camber angle. For purposes
of this definition, wheelbase is the longitudinal distance
[[Page 49770]]
between front and rear wheel centerlines.
* * * * *
Fuel cell means an electrochemical cell that produced electricity
via the reaction of a consumable fuel on the anode with an oxidant on
the cathode in the presence of an electrolyte.
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.
* * * * *
Hybrid electric vehicle (HEV) means a motor vehicle which draws
propulsion energy from onboard sources or stored energy that are both
an internal combustion engine or heat engine using consumable fuel, and
a rechargeable energy storage system such as a battery, capacitor, or
flywheel.
* * * * *
Non-passenger automobile has the meaning given by the Department of
Transportation at 49 CFR 523.5. This term is synonymous with ``light
truck.''
* * * * *
Passenger automobile has the meaning given by the Department of
Transportation at 49 CFR 523.4.
* * * * *
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.
* * * * *
34. Section 600.006-08 is amended as follows:
a. By revising the heading.
b. By revising paragraph (b)(2)(ii).
c. By revising paragraph (b)(2)(iv).
d. By adding paragraph (c)(5).
e. By revising paragraph (e).
f. By revising paragraph (g)(3).
Sec. 600.006-08 Data and information requirements for fuel economy
data vehicles.
* * * * *
(b) * * *
(2) * * *
(ii) In the case of electric vehicles, plug-in hybrid electric
vehicles, and hybrid electric vehicles, a description of all
maintenance to electric motor, motor controller, battery configuration,
or other components performed within 2,000 miles prior to fuel economy
testing.
* * * * *
(iv) In the case of electric vehicles, plug-in hybrid electric
vehicles, and hybrid electric vehicles, a copy of calibrations for the
electric motor, motor controller, battery configuration, or other
components on the test vehicle as well as the design tolerances.
* * * * *
(c) * * *
(5) Starting with the 2012 model year, the data submitted according
to paragraphs (c)(1) through (c)(4) of this section shall include total
HC, CO, CO2, and, where applicable for alternative fuel
vehicles, CH3OH, C2H5OH,
C2H4O, HCHO, NMHC and CH4. The fuel
economy and CO2 emission test results shall be adjusted in
accordance with paragraph (g) of this section. Round the test results
as follows:
* * * * *
(e) In lieu of submitting actual data from a test vehicle, a
manufacturer may provide fuel economy values derived from a previously
tested vehicle, where the fuel economy and carbon-related exhaust
emissions are expected to be equivalent (or less fuel-efficient and
with higher carbon-related exhaust emissions). Additionally, in lieu of
submitting actual data from a test vehicle, a manufacturer may provide
fuel economy and carbon-related exhaust emission values derived from an
analytical expression, e.g., regression analysis. In order for fuel
economy values derived from analytical methods to be accepted, the
expression (form and coefficients) must have been approved by the
Administrator.
* * * * *
(g) * * *
(3)(i) The manufacturer shall adjust all fuel economy test data
generated by vehicles with engine-drive system combinations with more
than 6,200 miles by using the following equation:
FE4,000mi = FET[0.979 + 5.25 x
10-6(mi)]-1
Where:
FE4,000mi = Fuel economy data adjusted to 4,000-mile test
point rounded to the nearest 0.1 mpg.
FET = Tested fuel economy value rounded to the nearest
0.1 mpg.
mi = System miles accumulated at the start of the test rounded to
the nearest whole mile.
(ii)(A) The manufacturer shall adjust all CO2 exhaust
emission test data generated by vehicles with engine-drive system
combinations with more than 6,200 miles by using the following
equation:
CO24,000mi= CO2T[0.979 + 5.25 x
10-6(mi)]
Where:
CO24,000mi = CO2 emission data adjusted to
4,000-mile test point.
CO2T = Tested emissions value of CO2 in grams
per mile.
mi = System miles accumulated at the start of the test rounded to
the nearest whole mile.
(B) Emissions test values and results used and determined in the
calculations in paragraph (g)(3)(ii) of this section shall be rounded
in accordance with 40 CFR 86.1837-01 as applicable. CO2
values shall be rounded to the nearest gram per mile.
* * * * *
35. Section 600.007-08 is amended as follows:
a. By revising paragraph (b)(4) through (6).
b. By revising paragraph (c).
c. By revising paragraph (f) introductory text.
Sec. 600.007-08 Vehicle acceptability.
* * * * *
(b) * * *
(4) Each fuel economy data vehicle must meet the same exhaust
emission standards as certification vehicles of the respective engine-
system combination during the test in which the city fuel economy test
results are generated. This may be demonstrated using one of the
following methods:
(i) The deterioration factors established for the respective
engine-system combination per Sec. 86.1841-01 of this chapter as
applicable will be used; or
(ii) The fuel economy data vehicle will be equipped with aged
emission control components according to the provisions of 86.1823-01
of this chapter.
(5) The calibration information submitted under Sec. 600.006(b)
must be representative of the vehicle configuration for which the fuel
economy and carbon-related exhaust emissions data were submitted.
(6) Any vehicle tested for fuel economy or carbon-related exhaust
emissions purposes must be representative of a vehicle which the
manufacturer intends to produce under the provisions of a certificate
of conformity.
* * * * *
(c) If, based on review of the information submitted under Sec.
600.006(b), the Administrator determines that a fuel economy data
vehicle meets the requirements of this section, the fuel economy data
vehicle will be judged to be acceptable and fuel economy and carbon-
related exhaust emissions data from that fuel economy data vehicle will
be reviewed pursuant to Sec. 600.008.
* * * * *
(f) All vehicles used to generate fuel economy and carbon-related
exhaust
[[Page 49771]]
emissions data, and for which emission standards apply, must be covered
by a certificate of conformity under part 86 of this chapter before:
* * * * *
36. Section 600.008-08 is amended by revising the heading and
paragraph (a)(1) to read as follows:
Sec. 600.008-08 Review of fuel economy and carbon-related exhaust
emission data, testing by the Administrator.
(a) Testing by the Administrator. (1) (i) The Administrator may
require that any one or more of the test vehicles be submitted to the
Agency, at such place or places as the Agency may designate, for the
purposes of conducting fuel economy tests. The Administrator may
specify that such testing be conducted at the manufacturer's facility,
in which case instrumentation and equipment specified by the
Administrator shall be made available by the manufacturer for test
operations. The tests to be performed may comprise the FTP, highway
fuel economy test, US06, SC03, or Cold temperature FTP or any
combination of those tests. Any testing conducted at a manufacturer's
facility pursuant to this paragraph shall be scheduled by the
manufacturer as promptly as possible.
(ii) Starting with the 2012 model year, evaluations, testing, and
test data described in this section pertaining to fuel economy shall
also be performed for carbon-related exhaust emissions, except that
carbon-related exhaust emissions shall be arithmetically averaged
instead of harmonically averaged, and in cases where the manufacturer
selects the lowest of several fuel economy results to represent the
vehicle, the manufacturer shall select the highest of the carbon-
related exhaust emissions test results to represent the vehicle.
* * * * *
Subpart B--[Amended]
37. A new Sec. 600.101-12 is added to subpart B to read as
follows:
Sec. 600.101-12 General applicability.
(a) The provisions of this subpart are applicable to 2012 and later
model year automobiles and to the manufacturers of 2012 and later model
year automobiles.
(b) Fuel economy and carbon-related emissions data. Unless stated
otherwise, references to fuel economy or fuel economy data in this
subpart shall also be interpreted to mean the related exhaust emissions
of CO2, HC, and CO, and where applicable for alternative
fuel vehicles, CH3OH, C2H5OH,
C2H4O, HCHO, NMHC and CH4. References
to average fuel economy shall be interpreted to also mean average
carbon-related exhaust emissions.
38. Section 600.113-08 is amended as follows:
a. By revising the introductory text.
b. By revising paragraph (a)(1).
c. By revising paragraph (b)(1) and (2).
d. By revising paragraph (c)(1).
e. By revising paragraph (d)(1) and (2).
f. By revising paragraph (e).
g. By adding paragraph (f)(4).
h. By revising paragraphs (g) through (l).
i. By adding paragraph (m).
Sec. 600.113-08 Fuel economy calculations for FTP, HFET, US06, SC03
and cold temperature FTP tests.
The Administrator will use the calculation procedure set forth in
this paragraph for all official EPA testing of vehicles fueled with
gasoline, diesel, alcohol-based or natural gas fuel. The calculations
of the weighted fuel economy values require input of the weighted
grams/mile values for total hydrocarbons (HC), carbon monoxide (CO),
and carbon dioxide (CO2); and, additionally for methanol-
fueled automobiles, methanol (CH3OH) and formaldehyde
(HCHO); and, additionally for ethanol-fueled automobiles, methanol
(CH3OH), ethanol (C2H5OH),
acetaldehyde (C2H4O), and formaldehyde (HCHO);
and additionally for natural gas-fueled vehicles non-methane
hydrocarbons (NMHC) and methane (CH4) for the FTP, HFET,
US06, SC03 and cold temperature FTP tests. Additionally, the specific
gravity, carbon weight fraction and net heating value of the test fuel
must be determined. The FTP, HFET, US06, SC03 and cold temperature FTP
fuel economy and carbon-related exhaust emission values shall be
calculated as specified in this section. An example fuel economy
calculation appears in Appendix II of this part.
(a) * * *
(1) Calculate the weighted grams/mile values for the FTP test for
CO2, HC, and CO, and where applicable, CH3OH,
C2H5OH, C2H4O, HCHO, NMHC
and CH4 as specified in Sec. 86.144(b) of this chapter.
Measure and record the test fuel's properties as specified in paragraph
(f) of this section.
* * * * *
(b) * * *
(1) Calculate the mass values for the highway fuel economy test for
HC, CO and CO2, and where applicable, CH3OH,
C2H5OH, C2H4O, HCHO, NMHC
and CH4 as specified in Sec. 86.144(b) of this chapter.
Measure and record the test fuel's properties as specified in paragraph
(f) of this section.
(2) Calculate the grams/mile values for the highway fuel economy
test for HC, CO and CO2, and where applicable
CH3OH, C2H5OH,
C2H4O, HCHO, NMHC and CH4 by dividing
the mass values obtained in paragraph (b)(1) of this section, by the
actual distance traveled, measured in miles, as specified in Sec.
86.135(h) of this chapter.
* * * * *
(c) * * *
(1) Calculate the weighted grams/mile values for the cold
temperature FTP test for HC, CO and CO2, and where
applicable, CH3OH, C2H5OH,
C2H4O, HCHO, NMHC and CH4 as specified
in Sec. 86.144(b) of this chapter. For 2008 through 2010 diesel-fueled
vehicles, HC measurement is optional.
* * * * *
(d) * * *
(1) Calculate the total grams/mile values for the US06 test for HC,
CO and CO2, and where applicable, CH3OH,
C2H5OH, C2H4O, HCHO, NMHC
and CH4 as specified in Sec. 86.144(b) of this chapter.
(2) Calculate separately the grams/mile values for HC, CO and
CO2, and where applicable, CH3OH,
C2H5OH, C2H4O, HCHO, NMHC
and CH4, for both the US06 City phase and the US06 Highway
phase of the US06 test as specified in Sec. 86.164 of this chapter. In
lieu of directly measuring the emissions of the separate city and
highway phases of the US06 test according to the provisions of Sec.
86.159 of this chapter, the manufacturer may, with the advance approval
of the Administrator and using good engineering judgment, optionally
analytically determine the grams/mile values for the city and highway
phases of the US06 test. To analytically determine US06 City and US06
Highway phase emission results, the manufacturer shall multiply the
US06 total grams/mile values determined in paragraph (d)(1) of this
section by the estimated proportion of fuel use for the city and
highway phases relative to the total US06 fuel use. The manufacturer
may estimate the proportion of fuel use for the US06 City and US06
Highway phases by using modal CO2, HC, and CO emissions
data, or by using appropriate OBD data (e.g., fuel flow rate in grams
of fuel per second), or another method approved by the Administrator.
* * * * *
(e) Calculate the SC03 fuel economy.
(1) Calculate the grams/mile values for the SC03 test for HC, CO
and CO2, and where applicable, CH3OH,
C2H5OH, C2H4O, HCHO, NMHC
and CH4 as specified in Sec. 86.144(b) of this chapter.
[[Page 49772]]
(2) Measure and record the test fuel's properties as specified in
paragraph (f) of this section.
(f) * * *
(4) Ethanol test fuel shall be analyzed to determine the following
fuel properties:
(i) Specific gravity using either:
(A) ASTM D 1298-85 (Reapproved 1990) ``Standard Practice for
Density, Relative Density (Specific Gravity), or API Gravity of Crude
Petroleum and Liquid Petroleum Products by Hydrometer Method'' for the
blend. This incorporation by reference was approved by the Director of
the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part
51. Copies may be obtained from the American Society for Testing and
Materials, 100 Barr Harbor Drive, P.O. Box C700, West Conshohocken, PA
19428-2959. Copies may be inspected at U.S. EPA Headquarters Library,
EPA West Building, Constitution Avenue and 14th Street, NW., Room 3340,
Washington, DC, or at the National Archives and Records Administration
(NARA). For information on the availability of this material at NARA,
call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html or:
(B) ASTM D 1298-85 (Reapproved 1990) ``Standard Practice for
Density, Relative Density (Specific Gravity), or API Gravity of Crude
Petroleum and Liquid Petroleum Products by Hydrometer Method'' for the
gasoline fuel component and also for the methanol fuel component and
combining as follows. This incorporation by reference was approved by
the Director of the Federal Register in accordance with 5 U.S.C. 552(a)
and 1 CFR part 51. Copies may be obtained from the American Society for
Testing and Materials, 100 Barr Harbor Drive, P.O. Box C700, West
Conshohocken, PA 19428-2959. Copies may be inspected at U.S. EPA
Headquarters Library, EPA West Building, Constitution Avenue and 14th
Street, NW., Room 3340, Washington, DC, or at the National Archives and
Records Administration (NARA). For information on the availability of
this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
SG = SGg x volume fraction gasoline + SGm x volume fraction ethanol.
(ii)(A) Carbon weight fraction using the following equation:
CWF = CWFg x MFg+ 0.375 x MFe
Where:
CWFg = Carbon weight fraction of gasoline portion of blend per ASTM
D 3343-90 ``Standard Test Method for Estimation of Hydrogen Content
of Aviation Fuels.'' This incorporation by reference was approved by
the Director of the Federal Register in accordance with 5 U.S.C.
552(a) and 1 CFR part 51. Copies may be obtained from the American
Society for Testing and Materials, 100 Barr Harbor Drive, P.O. Box
C700, West Conshohocken, PA 19428-2959. Copies may be inspected at
U.S. EPA Headquarters Library, EPA West Building, Constitution
Avenue and 14th Street, NW., Room 3340, Washington, DC, or at the
National Archives and Records Administration (NARA). For information
on the availability of this material at NARA, call 202-741-6030, or
go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
MFg = Mass fraction gasoline = (G x SGg)/(G x SGg + E x SGm)
MFe = Mass fraction methanol = (E x SGm)/(G x SGg + E x SGm)
Where:
G = Volume fraction gasoline.
E = Volume fraction ethanol.
SGg = Specific gravity of gasoline as measured by ASTM D 1298-85
(Reapproved 1990) ``Standard Practice for Density, Relative Density
(Specific Gravity), or API Gravity of Crude Petroleum and Liquid
Petroleum Products by Hydrometer Method.'' This incorporation by
reference was approved by the Director of the Federal Register in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be
obtained from the American Society for Testing and Materials, 100
Barr Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959.
Copies may be inspected at U.S. EPA Headquarters Library, EPA West
Building, Constitution Avenue and 14th Street, NW, Room 3340,
Washington DC, or at the National Archives and Records
Administration (NARA). For information on the availability of this
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
SGm = Specific gravity of methanol as measured by ASTM D 1298-85
(Reapproved 1990) ``Standard Practice for Density, Relative Density
(Specific Gravity), or API Gravity of Crude Petroleum and Liquid
Petroleum Products by Hydrometer Method.'' This incorporation by
reference was approved by the Director of the Federal Register in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be
obtained from the American Society for Testing and Materials, 100
Barr Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959.
Copies may be inspected at U.S. EPA Headquarters Library, EPA West
Building, Constitution Avenue and 14th Street, NW, Room 3340,
Washington DC, or at the National Archives and Records
Administration (NARA). For information on the availability of this
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
(B) Upon the approval of the Administrator, other procedures to
measure the carbon weight fraction of the fuel blend may be used if the
manufacturer can show that the procedures are superior to or equally as
accurate as those specified in this paragraph (f)(2)(ii).
(iii) Net heating value (BTU/lb) per ASTM D 240-92 ``Standard Test
Method for Heat of Combustion of Liquid Hydrocarbon Fuels by Bomb
Calorimeter.'' This incorporation by reference was approved by the
Director of the Federal Register in accordance with 5 U.S.C. 552(a) and
1 CFR part 51. Copies may be obtained from the American Society for
Testing and Materials, 100 Barr Harbor Drive, P.O. Box C700, West
Conshohocken, PA 19428-2959. Copies may be inspected at U.S. EPA
Headquarters Library, EPA West Building, Constitution Avenue and 14th
Street, NW, Room 3340, Washington DC, or at the National Archives and
Records Administration (NARA). For information on the availability of
this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
* * * * *
(g) Calculate separate FTP, highway, US06, SC03 and Cold
temperature FTP fuel economy from the grams/mile values for total HC,
CO, CO2 and, where applicable, CH3OH,
C2H5OH, C2H4O, HCHO, NMHC
and CH4, and the test fuel's specific gravity, carbon weight
fraction, net heating value, and additionally for natural gas, the test
fuel's composition.
(1) If the emission values (obtained per paragraph (a) through (e)
of this section, as applicable) were obtained from testing with aged
exhaust emission control components as allowed under 86.1823-01, then
these test values shall be used in the calculations of this section.
(2) If the emission values (obtained per paragraph (a) through (e)
of this section, as applicable) were not obtained from testing with
aged exhaust emission control components as allowed under 86.1823-01,
then these test values shall be adjusted by the appropriate
deterioration factor
[[Page 49773]]
determined according to 86.1823-01 before being used in the
calculations of this section.
(3) The emission values determined in paragraph (g)(1) or (2) of
this section shall be rounded in accordance with Sec. 86.094-
26(a)(6)(iii) or Sec. 86.1837-01 of this chapter as applicable. The
CO2 values (obtained per this section, as applicable) used
in each calculation of this section shall be rounded to the nearest
gram/mile. The specific gravity and the carbon weight fraction
(obtained per paragraph (f) of this section) shall be recorded using
three places to the right of the decimal point. The net heating value
(obtained per paragraph (f) of this section) shall be recorded to the
nearest whole Btu/lb.
(h)(1) For gasoline-fueled automobiles tested on test fuel
specified in Sec. 86.113-04(a), the fuel economy in miles per gallon
is to be calculated using the following equation and rounded to the
nearest 0.1 miles per gallon:
mpg = (5174 x 10\4\ x CWF x SG)/[((CWF x HC) + (0.429 x CO) + (0.273 x
CO2)) x ((0.6 x SG x NHV) + 5471)]
Where:
HC = Grams/mile HC as obtained in paragraph (g) of this section.
CO = Grams/mile CO as obtained in paragraph (g) of this section.
CO2 = Grams/mile CO2 as obtained in paragraph
(g) of this section.
CWF = Carbon weight fraction of test fuel as obtained in paragraph
(g) of this section.
NHV = Net heating value by mass of test fuel as obtained in
paragraph (g) of this section.
SG = Specific gravity of test fuel as obtained in paragraph (g) of
this section.
(2) For 2012 and later model year gasoline-fueled automobiles
tested on test fuel specified in Sec. 86.113-04(a), the carbon-related
exhaust emissions in grams per mile is to be calculated using the
following equation and rounded to the nearest 1 gram per mile:
CREE = CWF*HC + 1.571*CO + CO2
Where:
CREE means the carbon-related exhaust emissions as defined in Sec.
600.002-08.
HC = Grams/mile HC as obtained in paragraph (g) of this section.
CO = Grams/mile CO as obtained in paragraph (g) of this section.
CO2 = Grams/mile CO2 as obtained in paragraph
(g) of this section.
CWF = Carbon weight fraction of test fuel as obtained in paragraph
(g) of this section.
(i)(1) For diesel-fueled automobiles, calculate the fuel economy in
miles per gallon of diesel fuel by dividing 2778 by the sum of three
terms and rounding the quotient to the nearest 0.1 mile per gallon:
(i)(A) 0.866 multiplied by HC (in grams/miles as obtained in
paragraph (g) of this section), or
(B) Zero, in the case of cold FTP diesel tests for which HC was not
collected, as permitted in Sec. 600.113-08(c);
(ii) 0.429 multiplied by CO (in grams/mile as obtained in paragraph
(g) of this section); and
(iii) 0.273 multiplied by CO2 (in grams/mile as obtained
in paragraph (g) of this section).
(2) For 2012 and later model year diesel-fueled automobiles, the
carbon-related exhaust emissions in grams per mile is to be calculated
using the following equation and rounded to the nearest 1 gram per
mile:
CREE = 0.866*HC + 1.571*CO + CO2
Where:
CREE means the carbon-related exhaust emissions as defined in Sec.
600.002-08.
HC = Grams/mile HC as obtained in paragraph (g) of this section.
CO = Grams/mile CO as obtained in paragraph (g) of this section.
CO2 = Grams/mile CO2 as obtained in paragraph
(g) of this section.
(j)(1) For methanol-fueled automobiles and automobiles designed to
operate on mixtures of gasoline and methanol, the fuel economy in miles
per gallon is to be calculated using the following equation:
mpg = (CWF x SG x 3781.8)/((CWFexHC x HC) + (0.429 x CO) +
(0.273 x CO2) + (0.375 x CH3OH) + (0.400 x HCHO))
Where:
CWF = Carbon weight fraction of the fuel as determined in paragraph
(f)(2)(ii) of this section.
SG = Specific gravity of the fuel as determined in paragraph
(f)(2)(i) of this section.
CWFexHC = Carbon weight fraction of exhaust hydrocarbons
= CWFg as determined in (f)(2)(ii) of this section (for
M100 fuel, CWFexHC= 0.866).
HC = Grams/mile HC as obtained in paragraph (g) of this section.
CO = Grams/mile CO as obtained in paragraph (g) of this section.
CO2 = Grams/mile CO2 as obtained in paragraph
(g) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (d) of this section.
HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)
of this section.
(2) For 2012 and later model year methanol-fueled automobiles and
automobiles designed to operate on mixtures of gasoline and methanol,
the carbon-related exhaust emissions in grams per mile is to be
calculated using the following equation and rounded to the nearest 1
gram per mile:
CREE = (CWFexHC x HC) + (1.571 x CO) + (1.374 x
CH3OH) + (1.466 x HCHO) + CO2
Where:
CREE means the carbon-related exhaust emission value as defined in
Sec. 600.002-08.
CWFexHC = Carbon weight fraction of exhaust hydrocarbons
= CWFg as determined in (f)(2)(ii) of this section (for
M100 fuel, CWFexHC = 0.866).
HC = Grams/mile HC as obtained in paragraph (g) of this section.
CO = Grams/mile CO as obtained in paragraph (g) of this section.
CO2 = Grams/mile CO2 as obtained in paragraph
(g) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (d) of this section.
HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)
of this section.
(k)(1) For automobiles fueled with natural gas, the fuel economy in
miles per gallon of natural gas is to be calculated using the following
equation:
[GRAPHIC] [TIFF OMITTED] TP28SE09.058
Where:
mpge = miles per equivalent gallon of natural gas.
CWFHC/NG = carbon weight fraction based on the
hydrocarbon constituents in the natural gas fuel as obtained in
paragraph (g) of this section.
DNG = density of the natural gas fuel [grams/ft \3\ at 68
[deg]F (20 [deg]C) and 760 mm Hg (101.3 kPa)] pressure as obtained
in paragraph (g) of this section.
CH4, NMHC, CO, and CO2 = weighted mass exhaust
emissions [grams/mile] for methane, non-methane HC, carbon monoxide,
and carbon dioxide as calculated in Sec. 600.113.
CWFNMHC = carbon weight fraction of the non-methane HC
constituents in the fuel as determined from the speciated fuel
composition per paragraph (f)(3) of this section.
[[Page 49774]]
CO2NG = grams of carbon dioxide in the natural gas fuel
consumed per mile of travel.
CO2NG = FCNG x DNG x
WFCO2
Where:
[GRAPHIC] [TIFF OMITTED] TP28SE09.059
Where:
CWFNG = the carbon weight fraction of the natural gas
fuel as calculated in paragraph (f) of this section.
WFCO2 = weight fraction carbon dioxide of the natural gas
fuel calculated using the mole fractions and molecular weights of
the natural gas fuel constituents per ASTM D 1945-91 ``Standard Test
Method for Analysis of Natural Gas by Gas Chromatography.'' This
incorporation by reference was approved by the Director of the
Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part
51. Copies may be obtained from the American Society for Testing and
Materials, 100 Barr Harbor Drive, P.O. Box C700, West Conshohocken,
PA 19428-2959. Copies may be inspected at U.S. EPA Headquarters
Library, EPA West Building, Constitution Avenue and 14th Street,
NW., Room 3340, Washington, DC, or at the National Archives and
Records Administration (NARA). For information on the availability
of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
(2) For automobiles fueled with natural gas, the carbon-related
exhaust emissions in grams per mile is to be calculated for 2012 and
later model year vehicles using the following equation and rounded to
the nearest 1 gram per mile:
CREE = 10.916 x CH4 + CWFNMHC x NMHC + 1.571 x CO
+ CO2
Where:
CREE means the carbon-related exhaust emission value as defined in
Sec. 600.002-08.
CH4 = Grams/mile CH4 as obtained in paragraph (g) of this
section.
NMHC = Grams/mile NMHC as obtained in paragraph (g) of this section.
CO = Grams/mile CO as obtained in paragraph (g) of this section.
CO2 = Grams/mile CO2 as obtained in paragraph
(g) of this section.
CWFNMHC = carbon weight fraction of the non-methane HC
constituents in the fuel as determined from the speciated fuel
composition per paragraph (f)(3) of this section.
(l)(1) For ethanol-fueled automobiles and automobiles designed to
operate on mixtures of gasoline and ethanol, the fuel economy in miles
per gallon is to be calculated using the following equation:
mpg = (CWF x SG x 3781.8)/((CWFexHC x HC) + (0.429 x CO) +
(0.273 x CO2) + (0.375 x CH3OH) + (0.400 x HCHO)
+ (0.521 x C2H5OH) + (0.545 x
C2H4O))
Where:
CWF = Carbon weight fraction of the fuel as determined in paragraph
(f)(4) of this section.
SG = Specific gravity of the fuel as determined in paragraph (f)(4)
of this section.
CWFexHC = Carbon weight fraction of exhaust hydrocarbons
= CWFg as determined in (f)(4) of this section.
HC = Grams/mile HC as obtained in paragraph (g) of this section.
CO = Grams/mile CO as obtained in paragraph (g) of this section.
CO2 = Grams/mile CO2 as obtained in paragraph
(g) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (d) of this section.
HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)
of this section.
C2H5OH = Grams/mile CH3OH (ethanol)
as obtained in paragraph (d) of this section.
C2H4O = Grams/mile C2H4O
(acetaldehyde) as obtained in paragraph (d) of this section.
(2) For 2012 and later model year ethanol-fueled automobiles and
automobiles designed to operate on mixtures of gasoline and ethanol,
the carbon-related exhaust emissions in grams per mile is to be
calculated using the following equation and rounded to the nearest 1
gram per mile:
CREE = (CWFexHC x HC) + (1.571 x CO) + (1.374 x
CH3OH) + (1.466 x HCHO) + (0.955 x
C2H5OH) + (0.999 x C2H4O) +
CO2
Where:
CREE means the carbon-related exhaust emission value as defined in
Sec. 600.002-08.
CWFexHC= Carbon weight fraction of exhaust hydrocarbons =
CWFg as determined in (f)(4) of this section.
HC = Grams/mile HC as obtained in paragraph (g) of this section.
CO = Grams/mile CO as obtained in paragraph (g) of this section.
CO2= Grams/mile CO2as obtained in paragraph
(g) of this section.
CH3OH = Grams/mile CH3OH (methanol) as
obtained in paragraph (d) of this section.
HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)
of this section.
C2H5OH = Grams/mile CH3OH (ethanol)
as obtained in paragraph (d) of this section.
C2H4O = Grams/mile C2H4O
(acetaldehyde) as obtained in paragraph (d) of this section.
(m) Equations for fuels other than those specified in paragraphs
(h) through (l) of this section may be used with advance EPA approval.
Alternate calculation methods may be used if shown to yield equivalent
or superior results and if approved in advance by the Administrator.
39. Section 600.114-08 is amended as follows:
a. By revising the heading.
b. By revising the introductory text.
c. By adding paragraphs (d) through (f).
Sec. 600.114-08 Vehicle-specific 5-cycle fuel economy and carbon-
related exhaust emission calculations.
Paragraphs (a) through (c) of this section apply to data used for
fuel economy labeling under Subpart D of this part. Paragraphs (d)
through (f) of this section are used to calculate 5-cycle carbon-
related exhaust emissions values for the purpose of determining
optional technology-based CO2 emissions credits under the
provisions of paragraph (d) of Sec. 86.1866-12 of this title.
* * * * *
(d) City carbon-related exhaust emission value. For each vehicle
tested, determine the 5-cycle city carbon-related exhaust emissions
using the following equation:
(1) CityCREE = 0.905 x (StartCREE + RunningCREE)
Where:
(i) StartCREE =
[GRAPHIC] [TIFF OMITTED] TP28SE09.060
[[Page 49775]]
Where:
StartCREEx = 3.6 x (Bag1CREEx -
Bag3CREEx)
Where:
Bag Y CREEx = the carbon-related exhaust emissions in
grams per mile during the specified bag of the FTP test conducted at
an ambient temperature of 75 [deg]F or 20 [deg]F.
(ii) Running CREE=
0.82 x [(0.48 x Bag275CREE) + (0.41 x
Bag375CREE) + 0.11 x US06CityCREE)] + 0.18 x [(0.5 x
Bag220CREE) + (0.5 x Bag320CREE)] + 0.144 x
[SC03CREE - ((0.61 x Bag375CREE) + (0.39 x
Bag275CREE))]
Where:
BagYXCREE = carbon-related exhaust emissions in grams per
mile over Bag Y at temperature X.
US06 City CREE = carbon-related exhaust emissions in grams per mile
over the ``city'' portion of the US06 test.
SC03 CREE = carbon-related exhaust emissions in grams per mile over
the SC03 test.
(e) Highway carbon-related exhaust emissions. (1) For each vehicle
tested, determine the 5-cycle highway carbon-related exhaust emissions
using the following equation:
HighwayCREE = 0.905 x (StartCREE + RunningCREE)
Where:
(1) StartCREE =
[GRAPHIC] [TIFF OMITTED] TP28SE09.061
Where:
StartCREEx = 3.6 x (Bag1CREEx -
Bag3CREEx)
(ii) Running CREE =
1.007 x [(0.79 x US06 Highway CREE) + (0.21 x HFET CREE)] + 0.045 x
[SC03CREE - ((0.61 x Bag375CREE) + (0.39 x
Bag275CREE))]
Where:
BagYXCREE =carbon-related exhaust emissions in grams per
mile over Bag Y at temperature X,
US06 Highway CREE = carbon-related exhaust emissions in grams per
mile over the highway portion of the US06 test,
HFET CREE = carbon-related exhaust emissions in grams per mile over
the HFET test,
SC03 CREE = carbon-related exhaust emissions in grams per mile over
the SC03 test.
(f) Carbon-related exhaust emissions calculations for hybrid
electric vehicles. Hybrid electric vehicles shall be tested according
to California test methods which require FTP emission sampling for the
75 [deg]F FTP test over four phases (bags) of the UDDS (cold-start,
transient, warm-start, transient). Optionally, these four phases may be
combined into two phases (phases 1 + 2 and phases 3 + 4). Calculations
for these sampling methods follow.
(1) Four-bag FTP equations. If the 4-bag sampling method is used,
manufacturers may use the equations in paragraphs (a) and (b) of this
section to determine city and highway carbon-related exhaust emissions
values. If this method is chosen, it must be used to determine both
city and highway carbon-related exhaust emissions. Optionally, the
following calculations may be used, provided that they are used to
determine both city and highway carbon-related exhaust emissions
values:
(i) City carbon-related exhaust emissions.
CityCREE = 0.905 x (StartCREE + RunningCREE)
Where:
(A) StartCREE =
[GRAPHIC] [TIFF OMITTED] TP28SE09.062
Where:
(1) StartCREE75 =
3.6 x (Bag1CREE75 - Bag3CREE75) + 3.9 x
(Bag2CREE75 - Bag4CREE75)
and
(2) StartCREE20 =
= 3.6 x (Bag1CREE20 - Bag3CREE20)
(B) RunningCREE =
0.82 x [(0.48 x Bag475CREE) + (0.41 x Bag375CREE)
+ (0.11 x US06CityCREE)] + 0.18 x [(0.5 x Bag220 CREE) +
(0.5 x Bag375 CREE)] + 0.144 x [(SC03CREE - ((0.61 x
Bag375 CREE) + (0.39 x Bag475 CREE))]
Where:
US06 Highway CREE = carbon-related exhaust emissions in grams per
mile over the city portion of the US06 test.
US06 Highway CREE = carbon-related exhaust emissions in miles per
gallon over the Highway portion of the US06 test.
HFET CREE = carbon-related exhaust emissions in grams per mile over
the HFET test.
SC03 CREE = carbon-related exhaust emissions in grams per mile over
the SC03 test.
(ii) Highway carbon-related exhaust emissions.
HighwayCREE = 0.905 x (StartCREE + RunningCREE)
Where:
(A) StartCREE =
[GRAPHIC] [TIFF OMITTED] TP28SE09.063
Where:
StartCREE75 = 3.6 x (Bag1CREE75 -
Bag3CREE75) + 3.9 x (Bag2CREE75 -
Bag4CREE75)
and
StartCREE20 = 3.6 x (Bag1CREE20 -
Bag3CREE20)
(B) RunningCREE =
1.007 x [(0.79 x US06 HighwayCREE) + (0.21 x HFET CREE)] + 0.045 x
[SC03CREE = ((0.61 x Bag375CREE) + (0.39 x
Bag475CREE))]
[[Page 49776]]
Where:
US06 Highway CREE = carbon-related exhaust emissions in grams per
mile over the Highway portion of the US06 test,
HFET CREE = carbon-related exhaust emissions in grams per mile over
the HFET test,
SC03 CREE = carbon-related exhaust emissions in grams per mile over
the SC03 test.
(2) Two-bag FTP equations. If the 2-bag sampling method is used for the
75 [deg]F FTP test, it must be used to determine both city and highway
carbon-related exhaust emissions. The following calculations must be
used to determine both city and highway carbon-related exhaust
emissions:
(i) City carbon-related exhaust emissions.
CityCREE = 0.905 x (StartCREE + RunningCREE)
Where:
(A) StartCREE =
[GRAPHIC] [TIFF OMITTED] TP28SE09.064
Where:
StartCREE75 = 3.6 x (Bag\1/2\CREE75 - Bag\3/
4\CREE75)
and
StartCREE20 = 3.6 x (Bag1CREE20 -
Bag3CREE20)
Where:
Bag Y FE20= the carbon-related exhaust emissions in grams
per mile of fuel during Bag 1 or Bag 3 of the 20 [deg]F FTP test,
and
Bag X/Y FE75 = carbon-related exhaust emissions in grams
per mile of fuel during combined phases 1 and 2 or phrases 3 and 4
of the FTP test conducted at an ambient temperature of 75 [deg]F.
(B) RunningCREE =
0.82 x [(0.90 x Bag3/475CREE) + (0.10 x US06CityCREE)] +
(0.18 x [(0.5 x Bag220 CREE) + (0.5 x Bag320
CREE)] + 0.144 x [(SC03CREE - ((Bag\3/4\75 CREE)]
Where:
US06 City CREE = carbon-related exhaust emissions in grams per mile
over the city portion of the US06 test, and
SC03 CREE = carbon-related exhaust emissions in grams per mile over
the SC03 test, and
Bag X/Y FE75 = carbon-related exhaust emissions in grams
per mile of fuel during combined phases 1 and 2 or phrases 3 and 4
of the FTP test conducted at an ambient temperature of 75 [deg]F.
(ii) Highway carbon-related exhaust emissions.
HighwayCREE = 0.905 x (StartCREE + RunningCREE)
Where:
(A) StartCREE =
[GRAPHIC] [TIFF OMITTED] TP28SE09.065
Where:
StartCREE75 = 7.5 x (Bag\1/2\CREE75 - Bag\3/
4\CREE75)
and
StartCREE20 = 3.6 x (Bag1CREE20 -
Bag3CREE20)
(B) RunningCREE =
1.007 x [(0.79 x US06 HighwayCREE) + (0.21 x HFET CREE)] + 0.045 x
[SC03CREE - Bag3/475CREE)
Where:
US06 City CREE = carbon-related exhaust emissions in grams per mile
over the city portion of the US06 test, and
SC03 CREE = carbon-related exhaust emissions in grams per mile over
the SC03 test, and
Bag Y FE20 = the carbon-related exhaust emissions in
grams per mile of fuel during Bag 1 or 3 of the 20 [deg]F FTP test,
and
Bag X/Y FE75 = carbon-related exhaust emissions in
grams per mile of fuel during phases 1 and 2 or phases 3 and 4 of
the FTP test conducted at an ambient temperature of 75 [deg]F.
40. Section 600.115-08 is amended by revising the introductory text
to read as follows:
Sec. 600.115-08 Criteria for determining the fuel economy label
calculation method for 2011 and later model year vehicles.
This section provides the criteria to determine if the derived 5-
cycle method for determining fuel economy label values, as specified in
Sec. 600.210-08 (a)(2) or (b)(2), as applicable, may be used to
determine label values for 2011 and later model year vehicles. Separate
criteria apply to city and highway fuel economy for each test group.
The provisions of this section are optional. If this option is not
chosen, or if the criteria provided in this section are not met, fuel
economy label values for 2011 and later model year vehicles must be
determined according to the vehicle-specific 5-cycle method specified
in Sec. 600.210-08(a)(1) or (b)(1), as applicable. However, dedicated
alternative-fuel vehicles, dual fuel vehicles when operating on
alternative fuel, and MDPVs may use the derived 5-cycle method for
determining fuel economy labels for 2011 and later model years whether
or not the criteria provided in this section are met.
* * * * *
Subpart C--Procedures for Calculating Fuel Economy and Carbon-
related Exhaust Emission Values for 1977 and Later Model Year
Automobiles
41. The heading for subpart C is revised as set forth above.
42. A new Sec. 600.201-12 is added to subpart C to read as
follows:
Sec. 600.201-12 General applicability.
The provisions of this subpart are applicable to 2012 and later
model year automobiles and to the manufacturers of 2012 and later model
year automobiles.
43. A new Sec. 600.206-12 is added to subpart C to read as
follows:
Sec. 600.206-12 Calculation and use of FTP-based and HFET-based fuel
economy and carbon-related exhaust emission values for vehicle
configurations.
(a) Fuel economy and carbon-related exhaust emissions values
determined for each vehicle under Sec. 600.113(a) and (b) and as
approved in Sec. 600.008-08 (c), are used to determine FTP-based city,
HFET-based highway, and combined FTP/Highway-based fuel economy and
carbon-related exhaust emission values
[[Page 49777]]
for each vehicle configuration for which data are available.
(1) If only one set of FTP-based city and HFET-based highway fuel
economy values is accepted for a vehicle configuration, these values,
rounded to the nearest tenth of a mile per gallon, comprise the city
and highway fuel economy values for that configuration. If only one set
of FTP-based city and HFET-based highway carbon-related exhaust
emission values is accepted for a vehicle configuration, these values,
rounded to the nearest gram per mile, comprise the city and highway
carbon-related exhaust emission values for that configuration.
(2) If more than one set of FTP-based city and HFET-based highway
fuel economy and/or carbon-related exhaust emission values are accepted
for a vehicle configuration:
(i) All data shall be grouped according to the subconfiguration for
which the data were generated using sales projections supplied in
accordance with Sec. 600.208(a)(3).
(ii) Within each group of data, all fuel economy values are
harmonically averaged and rounded to the nearest 0.0001 of a mile per
gallon and all carbon-related exhaust emission values are
arithmetically averaged and rounded to the nearest tenth of a gram per
mile in order to determine FTP-based city and HFET-based highway fuel
economy and carbon-related exhaust emission values for each
subconfiguration at which the vehicle configuration was tested.
(iii) All FTP-based city fuel economy and carbon-related exhaust
emission values and all HFET-based highway fuel economy and carbon-
related exhaust emission values calculated in paragraph (a)(2)(ii) of
this section are (separately for city and highway) averaged in
proportion to the sales fraction (rounded to the nearest 0.0001) within
the vehicle configuration (as provided to the Administrator by the
manufacturer) of vehicles of each tested subconfiguration. Fuel economy
values shall be harmonically averaged and carbon-related exhaust
emission values shall be arithmetically averaged. The resultant fuel
economy values, rounded to the nearest 0.0001 mile per gallon, are the
FTP-based city and HFET-based highway fuel economy values for the
vehicle configuration. The resultant carbon-related exhaust emission
values, rounded to the nearest tenth of a gram per mile, are the FTP-
based city and HFET-based highway carbon-related exhaust emission
values for the vehicle configuration.
(3)(i) For the purpose of determining average fuel economy under
Sec. 600.510-08, the combined fuel economy value for a vehicle
configuration is calculated by harmonically averaging the FTP-based
city and HFET-based highway fuel economy values, as determined in Sec.
600.206(a)(1) or (2) of this section, weighted 0.55 and 0.45
respectively, and rounded to the nearest 0.0001 mile per gallon. A
sample of this calculation appears in Appendix II of this part.
(ii) For the purpose of determining average carbon-related exhaust
emissions under Sec. 600.510-08, the combined carbon-related exhaust
emission value for a vehicle configuration is calculated by
arithmetically averaging the FTP-based city and HFET-based highway
carbon-related exhaust emission values, as determined in Sec.
600.206(a)(1) or (2) of this section, weighted 0.55 and 0.45
respectively, and rounded to the nearest tenth of gram per mile.
(4) For alcohol dual fuel automobiles and natural gas dual fuel
automobiles the procedures of paragraphs (a)(1) or (2) of this section,
as applicable, shall be used to calculate two separate sets of FTP-
based city, HFET-based highway, and combined fuel economy and carbon-
related exhaust emission values for each configuration.
(i) Calculate the city, highway, and combined fuel economy and
carbon-related exhaust emission values from the tests performed using
gasoline or diesel test fuel.
(ii) Calculate the city, highway, and combined fuel economy and
carbon-related exhaust emission values from the tests performed using
alcohol or natural gas test fuel.
(b) If only one equivalent petroleum-based fuel economy value
exists for an electric vehicle configuration, that value, rounded to
the nearest tenth of a mile per gallon, will comprise the petroleum-
based fuel economy for that configuration. The carbon-related exhaust
emission value for that configuration shall be 0 grams per mile.
(c) If more than one equivalent petroleum-based fuel economy value
exists for an electric vehicle configuration, all values for that
vehicle configuration are harmonically averaged and rounded to the
nearest 0.0001 mile per gallon for that configuration. The carbon-
related exhaust emission value for that configuration shall be 0 grams
per mile.
44. A new Sec. 600.208-12 is added to subpart C to read as
follows:
Sec. 600.208-12 Calculation of FTP-based and HFET-based fuel economy
and carbon-related exhaust emission values for a model type.
(a) Fuel economy and carbon-related exhaust emission values for a
base level are calculated from vehicle configuration fuel economy and
carbon-related exhaust emission values as determined in Sec. 600.206-
08(a), (b), or (c) as applicable, for low-altitude tests.
(1) If the Administrator determines that automobiles intended for
sale in the State of California are likely to exhibit significant
differences in fuel economy and carbon-related exhaust emission values
from those intended for sale in other states, she will calculate fuel
economy and carbon-related exhaust emission values for each base level
for vehicles intended for sale in California and for each base level
for vehicles intended for sale in the rest of the States.
(2) In order to highlight the fuel efficiency and carbon-related
exhaust emission values of certain designs otherwise included within a
model type, a manufacturer may wish to subdivide a model type into one
or more additional model types. This is accomplished by separating
subconfigurations from an existing base level and placing them into a
new base level. The new base level is identical to the existing base
level except that it shall be considered, for the purposes of this
paragraph, as containing a new basic engine. The manufacturer will be
permitted to designate such new basic engines and base level(s) if:
(i) Each additional model type resulting from division of another
model type has a unique car line name and that name appears on the
label and on the vehicle bearing that label;
(ii) The subconfigurations included in the new base levels are not
included in any other base level which differs only by basic engine
(i.e., they are not included in the calculation of the original base
level fuel economy values); and
(iii) All subconfigurations within the new base level are
represented by test data in accordance with Sec. 600.010-08(c)(1)(ii).
(3) The manufacturer shall supply total model year sales
projections for each car line/vehicle subconfiguration combination.
(i) Sales projections must be supplied separately for each car
line-vehicle subconfiguration intended for sale in California and each
car line/vehicle subconfiguration intended for sale in the rest of the
States if required by the Administrator under paragraph (a)(1) of this
section.
[[Page 49778]]
(ii) Manufacturers shall update sales projections at the time any
model type value is calculated for a label value.
(iii) The provisions of paragraph (a)(3) of this section may be
satisfied by providing an amended application for certification, as
described in Sec. 86.1844-01.
(4) Vehicle configuration fuel economy and carbon-related exhaust
emission values, as determined in Sec. 600.206-08 (a), (b) or (c), as
applicable, are grouped according to base level.
(i) If only one vehicle configuration within a base level has been
tested, the fuel economy and carbon-related exhaust emission values
from that vehicle configuration will constitute the fuel economy and
carbon-related exhaust emission values for that base level.
(ii) If more than one vehicle configuration within a base level has
been tested, the vehicle configuration fuel economy values are
harmonically averaged in proportion to the respective sales fraction
(rounded to the nearest 0.0001) of each vehicle configuration and the
resultant fuel economy value rounded to the nearest 0.0001 mile per
gallon; and the vehicle configuration carbon-related exhaust emission
values are arithmetically averaged in proportion to the respective
sales fraction (rounded to the nearest 0.0001) of each vehicle
configuration and the resultant carbon-related exhaust emission value
rounded to the nearest gram per mile.
(5) The procedure specified in paragraph (a)(1) through (4) of this
section will be repeated for each base level, thus establishing city,
highway, and combined fuel economy and carbon-related exhaust emission
values for each base level.
(6) For the purposes of calculating a base level fuel economy or
carbon-related exhaust emission value, if the only vehicle
configuration(s) within the base level are vehicle configuration(s)
which are intended for sale at high altitude, the Administrator may use
fuel economy and carbon-related exhaust emission data from tests
conducted on these vehicle configuration(s) at high altitude to
calculate the fuel economy or carbon-related exhaust emission value for
the base level.
(7) For alcohol dual fuel automobiles and natural gas dual fuel
automobiles, the procedures of paragraphs (a)(1) through (6) of this
section shall be used to calculate two separate sets of city, highway,
and combined fuel economy and carbon-related exhaust emission values
for each base level.
(i) Calculate the city, highway, and combined fuel economy and
carbon-related exhaust emission values from the tests performed using
gasoline or diesel test fuel.
(ii) Calculate the city, highway, and combined fuel economy and
carbon-related exhaust emission values from the tests performed using
alcohol or natural gas test fuel.
(b) For each model type, as determined by the Administrator, a
city, highway, and combined fuel economy value and a carbon-related
exhaust emission value will be calculated by using the projected sales
and fuel economy and carbon-related exhaust emission values for each
base level within the model type. Separate model type calculations will
be done based on the vehicle configuration fuel economy and carbon-
related exhaust emission values as determined in Sec. 600.206-08 (a),
(b) or (c), as applicable.
(1) If the Administrator determines that automobiles intended for
sale in the State of California are likely to exhibit significant
differences in fuel economy and carbon-related exhaust emission values
from those intended for sale in other States, she will calculate fuel
economy and carbon-related exhaust emission values for each model type
for vehicles intended for sale in California and for each model type
for vehicles intended for sale in the rest of the States.
(2) The sales fraction for each base level is calculated by
dividing the projected sales of the base level within the model type by
the projected sales of the model type and rounding the quotient to the
nearest 0.0001.
(3)(i) The FTP-based city fuel economy values of the model type
(calculated to the nearest 0.0001 mpg) are determined by dividing one
by a sum of terms, each of which corresponds to a base level and which
is a fraction determined by dividing:
(A) The sales fraction of a base level; by
(B) The FTP-based city fuel economy value for the respective base
level.
(ii) The FTP-based city carbon-related exhaust emission value of
the model type (calculated to the nearest gram per mile) are determined
by a sum of terms, each of which corresponds to a base level and which
is a product determined by multiplying:
(A) The sales fraction of a base level; by
(B) The FTP-based city carbon-related exhaust emission value for
the respective base level.
(4) The procedure specified in paragraph (b)(3) of this section is
repeated in an analogous manner to determine the highway and combined
fuel economy and carbon-related exhaust emission values for the model
type.
(5) For alcohol dual fuel automobiles and natural gas dual fuel
automobiles, the procedures of paragraphs (b)(1) through (4) of this
section shall be used to calculate two separate sets of city, highway,
and combined fuel economy values and two separate sets of city,
highway, and combined carbon-related exhaust emission values for each
model type.
(i) Calculate the city, highway, and combined fuel economy and
carbon-related exhaust emission values from the tests performed using
gasoline or diesel test fuel.
(ii) Calculate the city, highway, and combined fuel economy and
carbon-related exhaust emission values from the tests performed using
alcohol or natural gas test fuel.
Subpart D--Fuel Economy Regulations for 1977 and Later Model Year
Automobiles--Labeling
45. A new Sec. 600.301-12 is added to subpart D to read as
follows:
Sec. 600.301-12 General applicability.
(a) Unless otherwise specified, the provisions of this subpart are
applicable to 2012 and later model year automobiles.
(b) [Reserved]
Subpart F--Fuel Economy Regulations for Model Year 1978 Passenger
Automobiles and for 1979 and Later Model Year Automobiles (Light
Trucks and Passenger Automobiles)--Procedures for Determining
Manufacturer's Average Fuel Economy and Manufacturer's Average
Carbon-related Exhaust Emissions
46. The heading for subpart F is revised as set forth above.
47. A new Sec. 600.501-12 is added to subpart F to read as
follows:
Sec. 600.501-12 General applicability.
The provisions of this subpart are applicable to 2012 and later
model year passenger automobiles and light trucks and to the
manufacturers of 2012 and later model year passenger automobiles and
light trucks.
48. A new Sec. 600.507-12 is added to subpart F to read as
follows:
Sec. 600.507-12 Running change data requirements.
(a) Except as specified in paragraph (d) of this section, the
manufacturer shall submit additional running change fuel economy and
carbon-related exhaust emissions data as specified in
[[Page 49779]]
paragraph (b) of this section for any running change approved or
implemented under Sec. Sec. 86.079-32, 86.079-33, or 86.082-34 or
86.1842-01 as applicable, which:
(1) Creates a new base level or,
(2) Affects an existing base level by:
(i) Adding an axle ratio which is at least 10 percent larger (or,
optionally, 10 percent smaller) than the largest axle ratio tested.
(ii) Increasing (or, optionally, decreasing) the road-load
horsepower for a subconfiguration by 10 percent or more for the
individual running change or, when considered cumulatively, since
original certification (for each cumulative 10 percent increase using
the originally certified road-load horsepower as a base).
(iii) Adding a new subconfiguration by increasing (or, optionally,
decreasing) the equivalent test weight for any previously tested
subconfiguration in the base level.
(iv) Revising the calibration of an electric vehicle, fuel cell
electric vehicle, hybrid electric vehicle, plug-in hybrid electric
vehicle or other advanced technology vehicle in such a way that the
city or highway fuel economy of the vehicle (or the energy consumption
of the vehicle, as may be applicable) is expected to become less fuel
efficient (or optionally, more fuel efficient) by 4.0 percent or more
as compared to the original fuel economy label values for fuel economy
and/or energy consumption, as applicable.
(b)(1) The additional running change fuel economy and carbon-
related exhaust emissions data requirement in paragraph (a) of this
section will be determined based on the sales of the vehicle
configurations in the created or affected base level(s) as updated at
the time of running change approval.
(2) Within each newly created base level as specified in paragraph
(a)(1) of this section, the manufacturer shall submit data from the
highest projected total model year sales subconfiguration within the
highest projected total model year sales configuration in the base
level.
(3) Within each base level affected by a running change as
specified in paragraph (a)(2) of this section, fuel economy and carbon-
related exhaust emissions data shall be submitted for the vehicle
configuration created or affected by the running change which has the
highest total model year projected sales. The test vehicle shall be of
the subconfiguration created by the running change which has the
highest projected total model year sales within the applicable vehicle
configuration.
(c) The manufacturer shall submit the fuel economy data required by
this section to the Administrator in accordance with Sec. 600.314(b).
(d) For those model types created under Sec. 600.208-08(a)(2), the
manufacturer shall submit fuel economy and carbon-related exhaust
emissions data for each subconfiguration added by a running change.
49. A new Sec. 600.509-12 is added to subpart F to read as
follows:
Sec. 600.509-12 Voluntary submission of additional data.
(a) The manufacturer may optionally submit data in addition to the
data required by the Administrator.
(b) Additional fuel economy and carbon-related exhaust emissions
data may be submitted by the manufacturer for any vehicle configuration
which is to be tested as required in Sec. 600.507 or for which fuel
economy and carbon-related exhaust emissions data were previously
submitted under paragraph (c) of this section.
(c) Within a base level, additional fuel economy and carbon-related
exhaust emissions data may be submitted by the manufacturer for any
vehicle configuration which is not required to be tested by Sec.
600.507.
50. A new Sec. 600.510-12 is added to subpart F to read as
follows:
Sec. 600.510-12 Calculation of average fuel economy and average
carbon-related exhaust emissions.
(a)(1) Average fuel economy will be calculated to the nearest 0.1
mpg for the classes of automobiles identified in this section, and the
results of such calculations will be reported to the Secretary of
Transportation for use in determining compliance with the applicable
fuel economy standards.
(i) An average fuel economy calculation will be made for the
category of passenger automobiles that is domestically manufactured as
defined in Sec. 600.511(d)(1).
(ii) An average fuel economy calculation will be made for the
category of passenger automobiles that is not domestically manufactured
as defined in Sec. 600.511(d)(2).
(iii) An average fuel economy calculation will be made for the
category of light trucks that is domestically manufactured as defined
in Sec. 600.511(e)(1).
(iv) An average fuel economy calculation will be made for the
category of light trucks that is not domestically manufactured as
defined in Sec. 600.511(e)(2).
(2) Average carbon-related exhaust emissions will be calculated to
the nearest one gram per mile for the classes of automobiles identified
in this section, and the results of such calculations will be reported
to the Administrator for use in determining compliance with the
applicable CO2 emission standards.
(i) An average carbon-related exhaust emissions calculation will be
made for passenger automobiles.
(ii) An average carbon-related exhaust emissions calculation will
be made for light trucks.
(b) For the purpose of calculating average fuel economy under
paragraph (c) of this section and for the purpose of calculating
average carbon-related exhaust emissions under paragraph (j) of this
section:
(1) All fuel economy and carbon-related exhaust emissions data
submitted in accordance with Sec. 600.006(e) or Sec. 600.512(c) shall
be used.
(2) The combined city/highway fuel economy and carbon-related
exhaust emission values will be calculated for each model type in
accordance with Sec. 600.208-08 of this section except that:
(i) Separate fuel economy values will be calculated for model types
and base levels associated with car lines that are:
(A) Domestically produced; and
(B) Nondomestically produced and imported;
(ii) Total model year production data, as required by this subpart,
will be used instead of sales projections;
(iii) [Reserved]
(iv) The fuel economy value will be rounded to the nearest 0.1 mpg;
(v) The carbon-related exhaust emission value will be rounded to
the nearest gram per mile; and
(vi) At the manufacturer's option, those vehicle configurations
that are self-compensating to altitude changes may be separated by
sales into high-altitude sales categories and low-altitude sales
categories. These separate sales categories may then be treated (only
for the purpose of this section) as separate configurations in
accordance with the procedure of Sec. 600.208-08(a)(4)(ii).
(3) The fuel economy and carbon-related exhaust emission values for
each vehicle configuration are the combined fuel economy and carbon-
related exhaust emissions calculated according to Sec. 600.206-
08(a)(3) except that:
(i) Separate fuel economy values will be calculated for vehicle
configurations associated with car lines that are:
(A) Domestically produced; and
(B) Nondomestically produced and imported;
(ii) Total model year production data, as required by this subpart
will be used instead of sales projections; and
[[Page 49780]]
(iii) The fuel economy value of diesel-powered model types will be
multiplied by the factor 1.0 to convert gallons of diesel fuel to
equivalent gallons of gasoline.
(c) Except as permitted in paragraph (d) of this section, the
average fuel economy will be calculated individually for each category
identified in paragraph (a) of this section as follows:
(1) Divide the total production volume of that category of
automobiles; by
(2) A sum of terms, each of which corresponds to a model type
within that category of automobiles and is a fraction determined by
dividing the number of automobiles of that model type produced by the
manufacturer in the model year; by
(i) For gasoline-fueled and diesel-fueled model types, the fuel
economy calculated for that model type in accordance with paragraph
(b)(2) of this section; or
(ii) For alcohol-fueled model types, the fuel economy value
calculated for that model type in accordance with paragraph (b)(2) of
this section divided by 0.15 and rounded to the nearest 0.1 mpg; or
(iii) For natural gas-fueled model types, the fuel economy value
calculated for that model type in accordance with paragraph (b)(2) of
this section divided by 0.15 and rounded to the nearest 0.1 mpg; or
(iv) For alcohol dual fuel model types, for model years 1993
through 2019, the harmonic average of the following two terms; the
result rounded to the nearest 0.1 mpg:
(A) The combined model type fuel economy value for operation on
gasoline or diesel fuel as determined in Sec. 600.208(b)(5)(i); and
(B) The combined model type fuel economy value for operation on
alcohol fuel as determined in Sec. 600.208(b)(5)(ii) divided by 0.15
provided the requirements of Sec. 600.510(g) are met; or
(v) For natural gas dual fuel model types, for model years 1993
through 2019, the harmonic average of the following two terms; the
result rounded to the nearest 0.1 mpg:
(A) The combined model type fuel economy value for operation on
gasoline or diesel as determined in Sec. 600.208(b)(5)(i); and
(B) The combined model type fuel economy value for operation on
natural gas as determined in Sec. 600.208(b)(5)(ii) divided by 0.15
provided the requirements of paragraph (g) of this section are met.
(d) The Administrator may approve alternative calculation methods
if they are part of an approved credit plan under the provisions of 15
U.S.C. 2003.
(e) For passenger categories identified in paragraphs (a)(1) and
(2) of this section, the average fuel economy calculated in accordance
with paragraph (c) of this section shall be adjusted using the
following equation:
AFEadj = AFE[((0.55 x a x c) + (0.45 x c) + (0.5556 x a) +
0.4487)/((0.55 x a) + 0.45)] + IW
Where:
AFEadj = Adjusted average combined fuel economy, rounded
to the nearest 0.1 mpg;
AFE = Average combined fuel economy as calculated in paragraph (c)
of this section, rounded to the nearest 0.0001 mpg;
a = Sales-weight average (rounded to the nearest 0.0001 mpg) of all
model type highway fuel economy values (rounded to the nearest 0.1
mpg) divided by the sales-weighted average (rounded to the nearest
0.0001 mpg) of all model type city fuel economy values (rounded to
the nearest 0.1 mpg). The quotient shall be rounded to 4 decimal
places. These average fuel economies shall be determined using the
methodology of paragraph (c) of this section.
c = 0.0014;
IW = (9.2917 x 10 -3 x SF3IWC x
FE3IWC) - (3.5123 x 10 -3 x SF4ETW
x FE4IWC).
Note: Any calculated value of IW less than zero shall be set equal
to zero.
SF3IWC = The 3000 lb. inertia weight class sales divided
by total sales. The quotient shall be rounded to 4 decimal places.
SF4ETW = The 4000 lb. equivalent test weight category
sales divided by total sales. The quotient shall be rounded to 4
decimal places.
FE4IWC = The sales-weighted average combined fuel economy
of all 3000 lb. inertia weight class base levels in the compliance
category. Round the result to the nearest 0.0001 mpg.
FE4IWC = The sales-weighted average combined fuel economy
of all 4000 lb. inertia weight class base levels in the compliance
category. Round the result to the nearest 0.0001 mpg.
(f) The Administrator shall calculate and apply additional average
fuel economy adjustments if, after notice and opportunity for comment,
the Administrator determines that, as a result of test procedure
changes not previously considered, such correction is necessary to
yield fuel economy test results that are comparable to those obtained
under the 1975 test procedures. In making such determinations, the
Administrator must find that:
(1) A directional change in measured fuel economy of an average
vehicle can be predicted from a revision to the test procedures;
(2) The magnitude of the change in measured fuel economy for any
vehicle or fleet of vehicles caused by a revision to the test
procedures is quantifiable from theoretical calculations or best
available test data;
(3) The impact of a change on average fuel economy is not due to
eliminating the ability of manufacturers to take advantage of
flexibility within the existing test procedures to gain measured
improvements in fuel economy which are not the result of actual
improvements in the fuel economy of production vehicles;
(4) The impact of a change on average fuel economy is not solely
due to a greater ability of manufacturers to reflect in average fuel
economy those design changes expected to have comparable effects on in-
use fuel economy;
(5) The test procedure change is required by EPA or is a change
initiated by EPA in its laboratory and is not a change implemented
solely by a manufacturer in its own laboratory.
(g)(1) Alcohol dual fuel automobiles and natural gas dual fuel
automobiles must provide equal or greater energy efficiency while
operating on alcohol or natural gas as while operating on gasoline or
diesel fuel to obtain the CAFE credit determined in paragraphs
(c)(2)(iv) and (v) of this section or to obtain the carbon-related
exhaust emissions credit determined in paragraphs (j)(2)(ii) and (iii).
The following equation must hold true:
Ealt/Epet> or = 1
Where:
Ealt = [FEalt/(NHValt x
Dalt)] x 10\6\ = energy efficiency while operating on
alternative fuel rounded to the nearest 0.01 miles/million BTU.
Epet = [FEpet/(NHVpet x
Dpet)] x 10\6\ = energy efficiency while operating on
gasoline or diesel (petroleum) fuel rounded to the nearest 0.01
miles/million BTU.
FEalt is the fuel economy [miles/gallon for liquid fuels
or miles/100 standard cubic feet for gaseous fuels] while operated
on the alternative fuel as determined in Sec. 600.113-08(a) and
(b);
FEpet is the fuel economy [miles/gallon] while operated
on petroleum fuel (gasoline or diesel) as determined in Sec.
600.113(a) and (b);
NHValt is the net (lower) heating value [BTU/lb] of the
alternative fuel;
NHVpet is the net (lower) heating value [BTU/lb] of the
petroleum fuel;
Dalt is the density [lb/gallon for liquid fuels or lb/100
standard cubic feet for gaseous fuels] of the alternative fuel;
Dpet is the density [lb/gallon] of the petroleum fuel.
(i) The equation must hold true for both the FTP city and HFET
highway fuel economy values for each test of each test vehicle.
(ii)(A) The net heating value for alcohol fuels shall be determined
per
[[Page 49781]]
ASTM D 240-92 ``Standard Test Method for Heat of Combustion of Liquid
Hydrocarbon Fuels by Bomb Calorimeter.'' This incorporation by
reference was approved by the Director of the Federal Register in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be
obtained from the American Society for Testing and Materials, 100 Barr
Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959. Copies
may be inspected at U.S. EPA Headquarters Library, EPA West Building,
Constitution Avenue and 14th Street, NW., Room 3340, Washington, DC, or
at the National Archives and Records Administration (NARA). For
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
(B) The density for alcohol fuels shall be determined per ASTM D
1298-85 (Reapproved 1990) ``Standard Practice for Density, Relative
Density (Specific Gravity), or API Gravity of Crude Petroleum and
Liquid Petroleum Products by Hydrometer Method.'' This incorporation by
reference was approved by the Director of the Federal Register in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be
obtained from the American Society for Testing and Materials, 100 Barr
Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959. Copies
may be inspected at U.S. EPA Headquarters Library, EPA West Building,
Constitution Avenue and 14th Street, NW., Room 3340, Washington, DC, or
at the National Archives and Records Administration (NARA). For
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
(iii) The net heating value and density of gasoline are to be
determined by the manufacturer in accordance with Sec. 600.113(f).
(2) [Reserved]
(3) Alcohol dual fuel passenger automobiles and natural gas dual
fuel passenger automobiles manufactured during model years 1993 through
2019 must meet the minimum driving range requirements established by
the Secretary of Transportation (49 CFR part 538) to obtain the CAFE
credit determined in paragraphs (c)(2)(iv) and (v) of this section.
(h) [Reserved]
(i) For model years 2012 through 2015, and for each category of
automobile identified in paragraph (a)(2) of this section, the maximum
decrease in average carbon-related exhaust emissions determined in
paragraph (c) of this section attributable to alcohol dual fuel
automobiles and natural gas dual fuel automobiles shall be as follows:
------------------------------------------------------------------------
Maximum decrease-- Maximum
Model year passenger decrease--light
automobiles (g/mi) trucks (g/mi)
------------------------------------------------------------------------
2012.............................. 9.8 17.9
2013.............................. 9.3 17.1
2014.............................. 8.9 16.3
2015.............................. 6.9 12.6
------------------------------------------------------------------------
(1) The Administrator shall calculate the decrease in average
carbon-related exhaust emissions to determine if the maximum decrease
provided in paragraph (i) of this section has been reached. The
Administrator shall calculate the average carbon-related exhaust
emissions for each category of automobiles specified in paragraph
(a)(2) of this section by subtracting the average carbon-related
exhaust emission values determined in paragraphs (b)(2)(vi),
(b)(2)(vii), and (c) of this section from the average carbon-related
exhaust emission values calculated in accordance with this section by
assuming all alcohol dual fuel and natural gas dual fuel automobiles
are operated exclusively on gasoline (or diesel) fuel. The difference
is limited to the maximum decrease specified in paragraph (i) of this
section.
(2) [Reserved]
(j) The average carbon-related exhaust emissions will be calculated
individually for each category identified in paragraph (a)(2) of this
section as follows:
(1) Divide the total production volume of that category of
automobiles into:
(2) A sum of terms, each of which corresponds to a model type
within that category of automobiles and is a product determined by
multiplying the number of automobiles of that model type produced by
the manufacturer in the model year by:
(i) For gasoline-fueled and diesel-fueled model types, the carbon-
related exhaust emissions value calculated for that model type in
accordance with paragraph (b)(2) of this section; or
(ii)(A) For alcohol-fueled model types, for model years 2012
through 2015, the carbon-related exhaust emissions value calculated for
that model type in accordance with paragraph (b)(2) of this section
multiplied by 0.15 and rounded to the nearest gram per mile; or
(B) For alcohol-fueled model types, for model years 2016 and later,
the carbon-related exhaust emissions value calculated for that model
type in accordance with paragraph (b)(2) of this section; or
(iii)(A) For natural gas-fueled model types, for model years 2012
through 2015, the carbon-related exhaust emissions value calculated for
that model type in accordance with paragraph (b)(2) of this section
multiplied by 0.15 and rounded to the nearest gram per mile; or
(B) For natural gas-fueled model types, for model years 2016 and
later, the carbon-related exhaust emissions value calculated for that
model type in accordance with paragraph (b)(2) of this section; or
(iv) For alcohol dual fuel model types, for model years 2012
through 2015, the arithmetic average of the following two terms, the
result rounded to the nearest gram per mile:
(A) The combined model type carbon-related exhaust emissions value
for operation on gasoline or diesel fuel as determined in Sec.
600.208(b)(5)(i); and
(B) The combined model type carbon-related exhaust emissions value
for operation on alcohol fuel as determined in Sec. 600.208(b)(5)(ii)
multiplied by 0.15 provided the requirements of Sec. 600.510(g) are
met; or
(v) For natural gas dual fuel model types, for model years 2012
through 2015, the arithmetic average of the following two terms; the
result rounded to the nearest gram per mile:
(A) The combined model type carbon-related exhaust emissions value
for
[[Page 49782]]
operation on gasoline or diesel as determined in Sec.
600.208(b)(5)(i); and
(B) The combined model type carbon-related exhaust emissions value
for operation on natural gas as determined in Sec. 600.208(b)(5)(ii)
multiplied by 0.15 provided the requirements of paragraph (g) of this
section are met.
(vi) For alcohol dual fuel model types, for model years 2016 and
later, the combined model type carbon-related exhaust emissions value
determined according to the following formula and rounded to the
nearest gram per mile:
CREE = (F x CREEalt) + ((1-F) x CREEgas)
Where:
F = 0.00 unless otherwise approved by the Administrator according to
the provisions of paragraph (k) of this section;
CREEalt = The combined model type carbon-related exhaust
emissions value for operation on alcohol fuel as determined in Sec.
600.208(b)(5)(ii); and
CREEgas = The combined model type carbon-related exhaust
emissions value for operation on gasoline or diesel fuel as
determined in Sec. 600.208(b)(5)(i).
(vii) For natural gas dual fuel model types, for model years 2016
and later, the combined model type carbon-related exhaust emissions
value determined according to the following formula and rounded to the
nearest gram per mile:
CREE = (F x CREEalt) + ((1-F) x CREEgas)
Where:
F = 0.00 unless otherwise approved by the Administrator according to
the provisions of paragraph (k) of this section;
CREEalt = The combined model type carbon-related exhaust
emissions value for operation on natural gas as determined in Sec.
600.208(b)(5)(ii); and
CREEgas = The combined model type carbon-related exhaust
emissions value for operation on gasoline or diesel fuel as
determined in Sec. 600.208(b)(5)(i).
(3) The production volume of electric, fuel cell electric and plug-
in hybrid electric model types for model years 2012 through 2016 may be
adjusted by the multiplier specified in 40 CFR 86.1866-12(a) and in
accordance with the provisions of 40 CFR 86.1866-12(a). The adjusted
production volumes shall be accounted for both in the total production
volume specified in paragraph (j)(1) of this section and in the model
type production volume specified in paragraph (j)(2) of this section.
(k) Alternative in-use weighting factors for dual fuel model types.
Using one of the methods in either paragraph (k)(1) or (2) of this
section, manufacturers may request the use of alternative values for
the weighting factor F in the equations in paragraphs (j)(2)(vi) and
(vii) of this section. Unless otherwise approved by the Administrator,
the manufacturer must use the value of F that is in effect in
paragraphs (j)(2)(vi) and (vii) of this section.
(1) Upon written request from a manufacturer, the Administrator
will determine and publish by written guidance an appropriate value of
F for each requested alternative fuel based on the Administrator's
assessment of real-world use of the alternative fuel. Such published
values would be available for any manufacturer to use. The
Administrator will periodically update these values upon written
request from a manufacturer.
(2) The manufacturer may optionally submit to the Administrator its
own demonstration regarding the real-world use of the alternative fuel
in their vehicles and its own estimate of the appropriate value of F in
the equations in paragraphs (j)(2)(vi) and (vii) of this section.
Depending on the nature of the analytical approach, the manufacturer
could provide estimates of F that are model type specific or that are
generally applicable to the manufacturer's dual fuel fleet. The
manufacturer's analysis could include use of data gathered from on-
board sensors and computers, from dual fuel vehicles in fleets that are
centrally fueled, or from other sources. The analysis must be based on
sound statistical methodology and must account for analytical
uncertainty. Any approval by the Administrator will pertain to the use
of values of F for the model types specified by the manufacturer.
51. A new Sec. 600.512-12 is added to subpart F to read as
follows:
Sec. 600.512-12 Model year report.
(a) For each model year, the manufacturer shall submit to the
Administrator a report, known as the model year report, containing all
information necessary for the calculation of the manufacturer's average
fuel economy and all information necessary for the calculation of the
manufacturer's average carbon-related exhaust emissions.
(1) The results of the manufacturer calculations and summary
information of model type fuel economy values which are contained in
the average fuel economy calculation shall also be submitted to the
Secretary of the Department of Transportation, National Highway and
Traffic Safety Administration.
(2) The results of the manufacturer calculations and summary
information of model type carbon-related exhaust emission values which
are contained in the average calculation shall be submitted to the
Administrator.
(b)(1) The model year report shall be in writing, signed by the
authorized representative of the manufacturer and shall be submitted no
later than 90 days after the end of the model year.
(2) The Administrator may waive the requirement that the model year
report be submitted no later than 90 days after the end of the model
year. Based upon a request by the manufacturer, if the Administrator
determines that 90 days is insufficient time for the manufacturer to
provide all additional data required as determined in Sec. 600.507,
the Administrator shall establish an alternative date by which the
model year report must be submitted.
(3) Separate reports shall be submitted for passenger automobiles
and light trucks (as identified in Sec. 600.510).
(c) The model year report must include the following information:
(1)(i) All fuel economy data used in the FTP/HFET-based model type
calculations under Sec. 600.208-12, and subsequently required by the
Administrator in accordance with Sec. 600.507;
(ii) All carbon-related exhaust emission data used in the FTP/HFET-
based model type calculations under Sec. 600.208-12, and subsequently
required by the Administrator in accordance with Sec. 600.507;
(2)(i) All fuel economy data for certification vehicles and for
vehicles tested for running changes approved under Sec. 86.1842-01 of
this chapter;
(ii) All carbon-related exhaust emission data for certification
vehicles and for vehicles tested for running changes approved under
Sec. 86.1842-01 of this chapter;
(3) Any additional fuel economy and carbon-related exhaust emission
data submitted by the manufacturer under Sec. 600.509;
(4)(i) A fuel economy value for each model type of the
manufacturer's product line calculated according to Sec.
600.510(b)(2);
(ii) A carbon-related exhaust emission value for each model type of
the manufacturer's product line calculated according to Sec.
600.510(b)(2);
(5)(i) The manufacturer's average fuel economy value calculated
according to Sec. 600.510(c);
(ii) The manufacturer's average carbon-related exhaust emission
value calculated according to Sec. 600.510(j);
(6) A listing of both domestically and nondomestically produced car
lines as
[[Page 49783]]
determined in Sec. 600.511 and the cost information upon which the
determination was made; and
(7) The authenticity and accuracy of production data must be
attested to by the corporation, and shall bear the signature of an
officer (a corporate executive of at least the rank of vice-president)
designated by the corporation. Such attestation shall constitute a
representation by the manufacturer that the manufacturer has
established reasonable, prudent procedures to ascertain and provide
production data that are accurate and authentic in all material
respects and that these procedures have been followed by employees of
the manufacturer involved in the reporting process. The signature of
the designated officer shall constitute a representation by the
required attestation.
52. A new Sec. 600.514-12 is added to subpart F to read as
follows:
Sec. 600.514-12 Reports to the Environmental Protection Agency.
This section establishes requirements for automobile manufacturers
to submit reports to the Environmental Protection Agency regarding
their efforts to reduce automotive greenhouse gas emissions.
(a) General Requirements. (1) For each current model year, each
manufacturer shall submit a pre-model year report, and, as required by
paragraph (d) of this section, supplementary reports.
(2)(i) The pre-model year report required by this section for each
model year must be submitted during the month of December (e.g., the
pre-model year report for the 2012 model year must be submitted during
December, 2011).
(ii) Each supplementary report must be submitted in accordance with
paragraph (e)(3) of this section.
(3) Each report required by this section must:
(i) Identify the report as a pre-model year report or supplementary
report as appropriate;
(ii) Identify the manufacturer submitting the report;
(iii) State the full name, title, and address of the official
responsible for preparing the report;
(iv) Be submitted to: Director, Compliance and Innovative
Strategies Division, U.S. Environmental Protection Agency, 2000
Traverwood, Ann Arbor, Michigan 48105;
(v) Identify the current model year;
(vi) Be written in the English language; and
(vii)(A) Specify any part of the information or data in the report
that the manufacturer believes should be withheld from public
disclosure as trade secret or other confidential business information.
(B) With respect to each item of information or data requested by
the manufacturer to be withheld, the manufacturer shall:
(1) Show that disclosure of the item would result in significant
competitive damage;
(2) Specify the period during which the item must be withheld to
avoid that damage; and
(3) Show that earlier disclosure would result in that damage.
(4) Each report required by this section must be based upon all
information and data available to the manufacturer 30 days before the
report is submitted to the Administrator.
(b) General content of reports. (1) Pre-model year report. Except
as provided in paragraph (b)(3) of this section, each pre-model year
report for each model year must contain the information required by
paragraph (c)(1) of this section.
(2) Supplementary report. Each supplementary report must contain
the information required by paragraph (e)(2)(i), (ii), or (iii), as
appropriate.
(3) Exceptions. (i) The pre-model year report is not required to
contain the information specified in paragraphs (c)(2), (c)(3)(i) and
(i), or (c)(3)(iv)(N) and (S) of this section if that report is
required to be submitted before the fifth day after the date by which
the manufacturer must submit the preliminary determination of its
average fuel economy for the current model year to the Environmental
Protection Agency under 40 CFR 600.506, when such determination is
required. Each manufacturer that does not include information under the
exception in the immediately preceding sentence shall indicate in its
report the date by which it must submit that preliminary determination.
(ii) The pre-model year report submitted by an incomplete
automobile manufacturer for any model year is not required to contain
the information specified in paragraphs (c)(3)(iv)(O) through (Q) and
(c)(3)(v) of this section. The information provided by the incomplete
automobile manufacturer under (c)(3) shall be according to base level
instead of model type or carline.
(c) Pre-model year reports. (1) Provide the information required by
paragraphs (c)(2) and (3) of this section for the manufacturer's
passenger automobiles and light trucks for the current model year.
(2) Projected average and required carbon-related exhaust
emissions. (i) State the projected average carbon-related exhaust
emissions for the manufacturer's automobiles determined in accordance
with Sec. 600.510-12 and based upon the carbon-related exhaust
emission values and projected sales figures provided under paragraph
(c)(3)(ii) of this section.
(ii) State the projected final average carbon-related exhaust
emissions value that the manufacturer anticipates having if changes
implemented during the model year will cause that average to be
different from the average carbon-related exhaust emissions projected
under paragraph (c)(2)(i) of this section.
(iii) State the projected required carbon-related exhaust emissions
value for the manufacturer's passenger automobiles and light trucks
determined in accordance with 40 CFR 86.1818-12 and based upon the
projected sales figures provided under paragraph (c)(3)(ii) of this
section.
(iv) State the projected final required carbon-related exhaust
emissions value that the manufacturer anticipates having if changes
implemented during the model year will cause the targets to be
different from the target carbon-related exhaust emissions projected
under paragraph (c)(2)(iii) of this section.
(v) State whether the manufacturer believes that the projections it
provides under paragraphs (c)(2)(ii) and (c)(2)(iv) of this section, or
if it does not provide an average or target under those paragraphs, the
projections it provides under paragraphs (c)(2)(i) and (c)(2)(iii) of
this section, sufficiently represent the manufacturer's average and
target carbon-related exhaust emissions for the current model year. In
the case of a manufacturer that believes that the projections are not
sufficiently representative for those purposes, state the specific
nature of any reason for the insufficiency and the specific additional
testing or derivation of carbon-related exhaust emission values by
analytical methods believed by the manufacturer necessary to eliminate
the insufficiency and any plans of the manufacturer to undertake that
testing or derivation voluntarily and submit the resulting data to the
Environmental Protection Agency under 40 CFR 600.509.
(vi) State the number of credits, if any, projected to be earned
under the provisions of Sec. 86.1866-12 and the sources and
calculations of such credits.
(3) Model type and configuration fuel economy and technical
information. (i) For each model type of the manufacturer's passenger
cars and light trucks, provide the information specified in paragraph
(c)(3)(ii) of this section in tabular form. List the model types in
order of increasing average inertia weight from top to bottom down the
left side of the table and list the
[[Page 49784]]
information categories in the order specified in paragraph (c)(3)(ii)
of this section from left to right across the top of the table.
(ii)(A) Combined carbon-related exhaust emissions value; and
(B) Projected sales for the current model year and total sales of
all model types.
(iii) For each vehicle configuration whose carbon-related exhaust
emission value was used to calculate the carbon-related exhaust
emission values for a model type under paragraph (c)(3)(ii) of this
section, provide the information specified in paragraph (c)(3)(iv) of
this section in tabular form. If a tabular form is used then list the
vehicle configurations, by model type in the order listed under
paragraph (c)(3)(ii) of this section, from top to bottom down the left
of the table and list the information categories across the top of the
table from left to right in the order specified in paragraph (c)(3)(iv)
of this section. Other formats (such as copies of EPA reports) which
contain all the required information in a readily identifiable form are
also acceptable.
(iv)(A) Loaded vehicle weight;
(B) Equivalent test weight;
(C) Engine displacement, liters;
(D) SAE net rated power, kilowatts;
(E) SAE net horsepower;
(F) Engine code;
(G) Fuel system (number of carburetor barrels or, if fuel injection
is used, so indicate);
(H) Emission control system;
(I) Transmission class;
(J) Number of forward speeds;
(K) Existence of overdrive (indicate yes or no);
(L) Total drive ratio (N/V);
(M) Axle ratio;
(N) Combined fuel economy;
(O) Projected sales for the current model year;
(P) In the case of passenger automobiles:
(1) Interior volume index, determined in accordance with subpart D
of 40 CFR part 600,
(2) Body style,
(3) Beginning model year 2012, base tire as defined in Sec.
600.002-08,
(4) Beginning model year 2012, track width as defined in Sec. 600.
002-08,
(5) Beginning model year 2012, wheelbase as defined in Sec. 600.
002-08, and
(6) Beginning model year 2012, footprint as defined in Sec. 600.
002-08.
(Q) In the case of light trucks:
(1) Passenger-carrying volume,
(2) Cargo-carrying volume,
(3) Beginning model year 2012, base tire as defined in Sec.
600.002-08,
(4) Beginning model year 2012, track width as defined in Sec.
600.002-08,
(5) Beginning model year 2012, wheelbase as defined in Sec.
600.002-08, and
(6) Beginning model year 2012, footprint as defined in Sec.
600.002-08.
(R) Frontal area;
(S) Road load power at 50 miles per hour, if determined by the
manufacturer for purposes other than compliance with this part to
differ from the road load setting prescribed in 40 CFR 86.177-11(d);
(T) Optional equipment that the manufacturer is required under 40
CFR parts 86 and 600 to have actually installed on the vehicle
configuration, or the weight of which must be included in the curb
weight computation for the vehicle configuration, for fuel economy and
CO2 emission testing purposes.
(v) For each model type of automobile which is classified as an
automobile capable of off-highway operation under 49 CFR 523, provide
the following data:
(A) Approach angle;
(B) Departure angle;
(C) Breakover angle;
(D) Axle clearance;
(E) Minimum running clearance; and
(F) Existence of 4-wheel drive (indicate yes or no).
(vi) The CO2 emission values provided under paragraphs
(c)(3)(ii) and (iv) of this section shall be determined in accordance
with Sec. 600.208-12.
(d) Supplementary reports. (1)(i) Except as provided in paragraph
(d)(4) of this section, each manufacturer whose most recently submitted
report contained an average carbon-related exhaust emissions projection
under (c)(2)(ii) of this section, or, if no average carbon-related
exhaust emission value was projected under that paragraph, under
paragraph (c)(2)(i), that was not greater than the applicable average
CO2 emissions standard and who now projects an average
carbon-related exhaust emissions value which is greater than the
applicable standard shall file a supplementary report containing the
information specified in paragraph (d)(2)(i) of this section.
(ii) Except as provided in paragraph (d)(4) of this section, each
manufacturer that determines that its average carbon-related exhaust
emissions for the current model year as projected under paragraph
(c)(2)(ii) of this section or, if no average carbon-related exhaust
emissions value was projected under that paragraph, as projected under
paragraph (c)(2)(i) of this section, is less representative than the
manufacturer previously reported it to be under paragraph (c)(2)(iii)
of this section, this paragraph (d), or both, shall file a
supplementary report containing the information specified in paragraph
(d)(2)(ii) of this section.
(iii) Each manufacturer whose pre-model year report omits any of
the information specified in (c)(2), (c)(3)(i) and (ii), or
(c)(3)(iv)(P) and (Q) shall file a supplementary report containing the
information specified in paragraph (d)(2)(iii) of this section.
(2)(i) The supplementary report required by paragraph (d)(1)(i) of
this section must contain:
(A) Such revisions of and additions to the information previously
submitted by the manufacturer under this part regarding the automobiles
whose projected average carbon-related exhaust emissions value has
increased as specified in paragraph (d)(1)(i) of this section as are
necessary--
(1) To reflect the increase and its cause;
(2) To indicate a new projected average carbon-related exhaust
emissions value based upon these additional measures.
(B) An explanation of the cause of the increase in average carbon-
related exhaust emissions that led to the manufacturer's having to
submit the supplementary report required by paragraph (d)(1)(i) of this
section.
(ii) The supplementary report required by paragraph (d)(1)(ii) of
this section must contain:
(A) A statement of the specific nature of and reason for the
insufficiency in the representativeness of the projected average
carbon-related exhaust emissions;
(B) A statement of specific additional testing or derivation of
carbon-related exhaust emissions values by analytical methods believed
by the manufacturer necessary to eliminate the insufficiency; and
(C) A description of any plans of the manufacturer to undertake
that testing or derivation voluntarily and submit the resulting data to
the Environmental Protection Agency under 40 CFR 600.509.
(iii) The supplementary report required by paragraph (d)(1)(iii) of
this section must contain:
(A) All of the information omitted from the pre-model year report
under paragraph (b)(3)(ii); and
(B) Such revisions of and additions to the information submitted by
the manufacturer in its pre-model year report regarding the automobiles
produced during the current model year as are necessary to reflect the
information provided under paragraph (b)(3)(i) of this section.
(3)(i) Each report required by paragraph (d)(1)(i) or (ii) of this
section must be submitted in accordance with
[[Page 49785]]
paragraph (a)(3) not more than 45 days after the date on which the
manufacturer determined, or could have, with reasonable diligence,
determined that a report is required under paragraph (d)(1)(i) or (ii)
of this section.
(ii) Each report required by paragraph (d)(1)(iii) of this section
must be submitted in accordance with paragraph (a)(3) of this section
not later than five days after the day by which the manufacturer is
required to submit a preliminary calculation of its average fuel
economy for the current model year to the Environmental Protection
Agency under 40 CFR 600.506.
(4) A supplementary report is not required to be submitted by the
manufacturer under paragraph (d)(1)(i) or (ii) of this section:
(i) With respect to information submitted under this part before
the most recent report submitted by the manufacturer under this part,
or
(ii) When the date specified in paragraph (d)(3) of this section
occurs after the day by which the pre-model year report for the model
year immediately following the current model year must be submitted by
the manufacturer under this part.
(e) Determination of carbon-related exhaust emission values and
average carbon-related exhaust emissions.
(1) Vehicle configuration carbon-related exhaust emission values.
(i) For each vehicle configuration for which a carbon-related exhaust
emission value is required under paragraph (e)(3) of this section and
has been determined and approved under 40 CFR part 600, the
manufacturer shall submit that carbon-related exhaust emission value.
(ii) For each vehicle configuration specified in paragraph
(e)(1)(i) of this section for which a carbon-related exhaust emissions
value approved under 40 CFR part 600, does not exist, but for which a
carbon-related exhaust emissions value determined under that part
exists, the manufacturer shall submit that carbon-related exhaust
emissions value.
(iii) For each vehicle configuration specified in paragraph
(e)(1)(i) of this section for which a carbon-related exhaust emissions
value has been neither determined nor approved under 40 CFR part 600,
the manufacturer shall submit a carbon-related exhaust emissions value
based on tests or analyses comparable to those prescribed or permitted
under 40 CFR part 600 and a description of the test procedures or
analytical methods used.
(2) Base level and model type carbon-related exhaust emission
values. For each base level and model type, the manufacturer shall
submit a carbon-related exhaust emission value based on the values
submitted under paragraph (e)(1) of this section and calculated in the
same manner as base level and model type carbon-related exhaust
emission values are calculated for use under subpart F of 40 CFR part
600.
(3) Average carbon-related exhaust emissions. Average carbon-
related exhaust emissions must be based upon carbon-related exhaust
emission values calculated under paragraph (e)(2) of this section for
each model type and must be calculated in accordance with 40 CFR
600.506, using the configurations specified in 40 CFR 600.506(a)(2),
except that carbon-related exhaust emission values for running changes
and for new base levels are required only for those changes made or
base levels added before the average carbon-related exhaust emission
value is required to be submitted under this section.
In consideration of the foregoing, under the authority of 49 U.S.C.
32901, 32902, 32903, and 32907, and delegation of authority at 49 CFR
1.50, NHTSA proposes to amend 49 CFR Chapter V as follows:
PART 531--PASSENGER AUTOMOBILE AVERAGE FUEL ECONOMY STANDARDS
1. The authority citation for part 531 continues to read as
follows:
Authority: 49 U.S.C. 32902; delegation of authority at 49 CFR
1.50.
2. Amend Sec. 531.5 by redesignating paragraph (d) as paragraph
(e), revising the introductory text of paragraph (a), revising
paragraph (c), and adding a new paragraph (d) to read as follows:
Sec. 531.5 Fuel economy standards.
(a) Except as provided in paragraph (e) of this section, each
manufacturer of passenger automobiles shall comply with the average
fuel economy standards in Table I, expressed in miles per gallon, in
the model year specified as applicable:
* * * * *
(c) For model years 2012-2016, a manufacturer's passenger
automobile fleet shall comply with the fuel economy level calculated
for that model year according to Figure 2 and the appropriate values in
Table III.
[GRAPHIC] [TIFF OMITTED] TP28SE09.066
Where:
CAFErequired is the required level for a given fleet,
SALESi is the number of units of model i produced for sale in the
United States,
TARGETi is the fuel economy target applicable to model i (according
to the equation shown in Figure 3 and based on the footprint of
model i),
and the summations in the numerator and denominator are both
performed over all models in the fleet in question.
[GRAPHIC] [TIFF OMITTED] TP28SE09.067
Where:
TARGET is the fuel economy target (in mpg) applicable to vehicles of
a given footprint (FOOTPRINT, in square feet),
Parameters a, b, c, and d are defined in Table III, and
The MIN and MAX functions take the minimum and maximum, respectively
of the included values.
[[Page 49786]]
Table III--Parameters for the Passenger Automobile Fuel Economy Targets
----------------------------------------------------------------------------------------------------------------
Parameters
Model year ---------------------------------------------------------------
a b c d
----------------------------------------------------------------------------------------------------------------
2012............................................ 36.23 28.12 0.0005308 0.005842
2013............................................ 37.15 28.67 0.0005308 0.005153
2014............................................ 38.08 29.22 0.0005308 0.004498
2015............................................ 39.55 30.08 0.0005308 0.003520
2016............................................ 41.38 31.12 0.0005308 0.002406
----------------------------------------------------------------------------------------------------------------
(d) In addition to the requirement of paragraphs (b) and (c) of
this section, each manufacturer shall also meet the minimum standard
for domestically manufactured passenger automobiles expressed in Table
IV:
Table IV
------------------------------------------------------------------------
Model year Minimum standard
------------------------------------------------------------------------
2011...................................... 28.0
2012...................................... 30.9
2013...................................... 31.6
2014...................................... 32.4
2015...................................... 33.5
2016...................................... 34.9
------------------------------------------------------------------------
* * * * *
3. Add Appendix A to Part 531 to read as follows:
Appendix A to Part 531--Example of Calculating Compliance Under Sec.
531.5 Paragraph (b)
Assume a hypothetical manufacturer (Manufacturer X) produces a
fleet of passenger automobiles in MY 2011 as follows:
Appendix A, Table 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Production Footprint
Model Carline Desc Eng/Trans Drive system Fuel econ mpg volume (ft\2\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A............................ PC A............. 2DS.............. 1.8L, A5......... FWD............. 32.5 1,500 39.2
B............................ PC B............. 2DS.............. 1.8L, M6......... FWD............. 33.1 2,000 39.2
C............................ PC C............. 2DCv............. 1.8L, A5......... FWD............. 32.3 2,000 39.1
D............................ PC D............. 2DCv............. 1.8L, M6......... FWD............. 32.9 1,000 39.1
E1........................... PC E............. 4DS.............. 2.5L, A6......... FWD............. 31.5 3,000 47.1
E2........................... ................. SUV.............. ................. ................ 30.4 1,000
F............................ PC F............. 4DW.............. 2.5L, A6......... AWD............. 30.2 8,000 47.1
G1........................... PC G............. 4DS.............. 2.5L, A7......... FWD............. 31.7 2,000 48.4
G2........................... ................. SUV.............. ................. ................ 30.6 5,000
H............................ PC H............. 4DS.............. 3.2L, A7......... RWD............. 29.3 5,000 48.4
30,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
Abbreviations: 2DS = two door sedan, 2DCv = two door convertible, SUV = sport utility vehicle, 4DW = four door station wagon, 1.8L = 1.8 liter
displacement engine, A5 = five speed automatic transmission, M6 = six speed manual transmission, FWD = front wheel drive, AWD = all wheel drive, and
RWD = rear wheel drive.
Note to Appendix A Table 1. Manufacturer X's required corporate
average fuel economy level under section 531.5(b) would first be
calculated by determining the fuel economy targets applicable to
each model type (A through H) as illustrated in Appendix A, Table 2.
Appendix A, Table 2
Manufacturer X calculates target fuel economy values for each
model.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Track width
Wheel --------------------------------- Foot Target
Model Carline Base tire base (in) Front print Prod vol fuel econ
(in) Rear (in) Avg (in) (ft\2\) (mpg)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A............................... PC A................ 205/75R14.......... 96.0 58.8 58.8 58.8 39.2 1,500 31.19
B............................... PC B................ 215/70R15.......... 96.0 58.8 58.8 58.8 39.2 2,000 31.19
C............................... PC C................ 215/70R15.......... 96.1 58.5 58.7 58.6 39.1 2,000 31.19
D............................... PC D................ 235/60R15.......... 96.1 58.5 58.7 58.6 39.1 1,000 31.19
E1.............................. PC E................ 225/65R16.......... 105.0 64.7 64.5 64.6 47.1 3,000 30.52
E2.............................. .................... ................... ......... ......... ......... ......... ......... 1,000
F............................... PC F................ 235/65R16.......... 105.0 64.6 64.6 64.6 47.1 8,000 30.52
G1.............................. PC G................ 235/65R17.......... 107.0 65.1 65.3 65.2 48.4 2,000 29.34
G2.............................. .................... ................... ......... ......... ......... ......... ......... 5,000
H............................... PC H................ 265/55R18.......... 107.0 65.2 65.2 65.2 48.4 5,000 29.34
30,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note to Appendix A Table 2. Accordingly, vehicle models A, B,
C, D, E, F, G and H would be compared to fuel economy values of
31.19, 31.19, 31.19, 31.19, 30.52, 30.52, 29.34 and 29.34 mpg,
respectively. With the appropriate fuel economy targets calculated,
Manufacturer X's required fuel economy would be calculated as
illustrated in ``Appendix A Figure 1.''
Appendix A, Figure 1
Calculation of Manufacturer X's target fuel economy standard.
[[Page 49787]]
[GRAPHIC] [TIFF OMITTED] TP28SE09.068
Manufacturer X's passenger car fleet target fuel economy
standard = 30.2 mpg
Appendix A, Figure 2
Calculation of Manufacturer X's actual fuel economy.
[GRAPHIC] [TIFF OMITTED] TP28SE09.069
Manufacturer X's passenger car fleet actual fuel economy
performance = 31.2 mpg
Note to Appendix A Figure 2. Since the actual average fuel
economy of Manufacturer X's fleet is 31.2 mpg, as compared to its
required fuel economy level of 30.2 mpg, Manufacturer X complied
with the CAFE standard for MY 2011 as set forth in section 531.5(b).
PART 533--LIGHT TRUCK FUEL ECONOMY STANDARDS
4. The authority citation for part 533 continues to read as
follows:
Authority: 49 U.S.C. 32902; delegation of authority at 49 CFR
1.50.
5. Amend Sec. 533.5 by adding Figures 2 and 3 and Table VI at the
end of paragraph (a), and adding paragraph (i), to read as follows:
Sec. 533.5 Requirements.
(a) * * *
* * * * *
[GRAPHIC] [TIFF OMITTED] TP28SE09.070
Where:
CAFErequired is the required level for a given fleet,
SALESi is the number of units of model i produced for sale in the
United States,
TARGETi is the fuel economy target applicable to model i (according
to the equation shown in Figure 3 and based on the footprint of
model i), and the summations in the numerator and denominator are
both performed over all models in the fleet in question.
[GRAPHIC] [TIFF OMITTED] TP28SE09.071
Where:
TARGET is the fuel economy target (in mpg) applicable to vehicles of
a given footprint (FOOTPRINT, in square feet),
Parameters a, b, c, and d are defined in Table VI, and
The MIN and MAX functions take the minimum and maximum, respectively
of the included values.
Table VI--Parameters for the Light Truck Fuel Economy Targets
----------------------------------------------------------------------------------------------------------------
Parameters
Model year ---------------------------------------------------------------
A b c d
----------------------------------------------------------------------------------------------------------------
2012............................................ 29.44 22.06 0.0004546 0.01533
[[Page 49788]]
2013............................................ 30.32 22.55 0.0004546 0.01434
2014............................................ 31.30 23.09 0.0004546 0.01331
2015............................................ 32.70 23.84 0.0004546 0.01194
2016............................................ 34.38 24.72 0.0004546 0.01045
----------------------------------------------------------------------------------------------------------------
* * * * *
(i) For model years 2012-2016, a manufacturer's light truck fleet
shall comply with the fuel economy level calculated for that model year
according to Figures 2 and 3 and the appropriate values in Table VI.
6. Revise Appendix A to Part 533 to read as follows:
Appendix A to Part 533--Example of Calculating Compliance Under Sec.
533.5 Paragraph (h)
Assume a hypothetical manufacturer (Manufacturer X) produces a
fleet of light trucks in MY 2011 as follows:
Appendix A, Table 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Production Footprint
Model Carline Desc Eng/Trans Drive system Fuel econ mpg volume (ft\2\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A............................ PU A............. RC, MB........... 4.0L, A5......... 2WD............. 27.1 800 47.8
B............................ PU B............. RC, MB........... 4.0L, M5......... 2WD............. 27.6 200 47.8
C1........................... PU C............. RC, LB........... 4.5L, A5......... 2WD............. 23.9 300 59.7
C2........................... EC,MB............ 23.7 400
C3........................... CC, SB........... 23.5 400
D............................ PU D............. CC, SB........... 4.5L, A6......... 2WD............. 23.6 400 59.7
E1........................... PU E............. EC, LB........... 5.0L, A6......... 2WD............. 22.7 500 71.8
E2........................... CC, MB........... 22.5 500
F1........................... PU F............. RC, LB........... 4.5L, A5......... 4WD............. 22.5 1,600 59.8
F2........................... EC, MB........... 22.3 800
F3........................... CC, SB........... 22.2 800
G............................ PU G............. CC, SB........... 5.0L, A6......... 4WD............. 22.3 800 59.8
H1........................... PU H............. EC, LB........... 5.0L, A6......... 4WD............. 22.2 1,000 71.9
H2........................... CC, MB........... 22.1 1,000
.............. 9,500 ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Abbreviations: PU = pickup truck, RC = regular cab, EC = extended cab, CC = crew cab, SB = short cargo bed, MB = medium cargo bed, LB = long cargo bed,
4.0L = 4.0 liter engine, A5 = five speed automatic transmission, M5 = five speed manual transmission, 2WD = two wheel drive, 4WD = four wheel drive.
Appendix A, Table 2
Manufacturer X calculates target fuel economy values for each
model.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Track width
Wheel --------------------------------- Foot Target
Model Carline Base tire base (in) Front print Prod vol fuel econ
(in) Rear (in) Avg (in) (ft\2\) (mpg)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A............................... PU A................ 235/75R15.......... 100.0 68.6 69.0 68.8 47.8 800 30.26
B............................... PU B................ 235/75R15.......... 100.0 68.6 69.0 68.8 47.8 200 30.26
C1.............................. .................... ................... ......... ......... ......... ......... ......... 300 .........
C2.............................. PU C................ 255/70R17.......... 125.0 68.7 68.9 68.8 59.7 400 24.09
C3.............................. .................... ................... ......... ......... ......... ......... ......... 400 .........
D............................... PU D................ 255/70R17.......... 125.0 68.7 68.9 68.8 59.7 400 24.09
E1.............................. PU E................ 275/70R17.......... 150.0 68.9 68.9 68.9 71.8 500 24.00
E2.............................. .................... ................... ......... ......... ......... ......... ......... 500 .........
F1.............................. .................... ................... ......... ......... ......... ......... ......... 1,600 .........
F2.............................. PU F................ 255/70R17.......... 125.0 69.0 68.8 68.9 59.8 800 24.09
F3.............................. .................... ................... ......... ......... ......... ......... ......... 800 .........
G............................... PU G................ 255/70R17.......... 125.0 69.0 68.8 68.9 59.8 800 24.09
H1.............................. PU H................ 275/70R17.......... 150.0 68.9 69.1 69.0 71.9 1,000 24.00
H2.............................. 1,000
......... ......... ......... ......... ......... 9,500 .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note to Appendix A Table 2. Accordingly, vehicle models A, B,
C, D, E, F, G and H would be compared to fuel economy values of
30.26, 30.26, 24.09, 24.09, 24.00, 24.09, 24.09 and 24.00 mpg,
respectively. With the appropriate fuel economy targets calculated,
Manufacturer X's required fuel economy would be calculated as
illustrated in ``Appendix A Figure 1.''
[[Page 49789]]
Appendix A, Figure 1
Calculation of Manufacturer X's target fuel economy standard.
[GRAPHIC] [TIFF OMITTED] TP28SE09.072
Manufacturer X's light truck fleet target fuel economy standard
= 24.6 mpg
Appendix A, Figure 2
Calculation of Manufacturer X's actual fuel economy.
[GRAPHIC] [TIFF OMITTED] TP28SE09.073
Manufacturer X's light truck fleet actual fuel economy
performance = 23.0 mpg
Note to Appendix A Figure 2. Since the actual average fuel
economy of Manufacturer X's fleet is 23.0 mpg, as compared to its
required fuel economy level of 24.6 mpg, Manufacturer X did not
comply with the CAFE standard for MY 2011 as set forth in section
533.5(h).
PART 537--AUTOMOTIVE FUEL ECONOMY REPORTS
7. The authority citation for part 537 continues to read as
follows:
Authority: 49 U.S.C. 32907, delegation of authority at 49 CFR
1.50.
8. Amend Sec. 537.5 by revising paragraph (c)(4) to read as
follows:
Sec. 537.5 General requirements for reports.
* * * * *
(c) * * *
(4) Be submitted in 5 copies to: Administrator, National Highway
Traffic Safety Administration, 1200 New Jersey Avenue, SE., Washington,
DC 20590, or submitted electronically to the following secure e-mail
address: [email protected]. Electronic submissions should be provided in a
pdf format.
* * * * *
9. Amend Sec. 537.7 by revising paragraphs (c)(4)(xvi)(A)(4) and
(c)(4)(xvi)(B)(4) to read as follows:
Sec. 537.7 Pre-model year and mid-model year reports.
* * * * *
(c) * * *
(4) * * *
(xvi)(A) * * *
(4) Beginning model year 2010, front axle, rear axle and average
track width as defined in 49 CFR 523.2,
* * * * *
(B) * * *
(4) Beginning model year 2010, front axle, rear axle and average
track width as defined in 49 CFR 523.2,
* * * * *
PART 538--MANUFACTURING INCENTIVES FOR ALTERNATIVE FUEL VEHICLES
10. The authority citation for part 538 continues to read as
follows:
Authority: 49 U.S.C. 32901, 32905, and 32906; delegation of
authority at 49 CFR 1.50.
11. Revise Sec. 538.1 to read as follows:
Sec. 538.1 Scope.
This part establishes minimum driving range criteria to aid in
identifying passenger automobiles that are dual-fueled automobiles. It
also establishes gallon equivalent measurements for gaseous fuels other
than natural gas.
12. Revise Sec. 538.2 to read as follows:
Sec. 538.2 Purpose.
The purpose of this part is to specify one of the criteria in 49
U.S.C. chapter 329 ``Automobile Fuel Economy'' for identifying dual-
fueled passenger automobiles that are manufactured in model years 1993
through 2019. The fuel economy of a qualifying vehicle is calculated in
a special manner so as to encourage its production as a way of
facilitating a manufacturer's compliance with the Corporate Average
Fuel Economy standards set forth in part 531 of this chapter. The
purpose is also to establish gallon equivalent measurements for gaseous
fuels other than nautral gas.
13. Revise Sec. 538.7(b)(1) to read as follows:
Sec. 538.7 Petitions for reduction of minimum driving range.
* * * * *
(b) * * *
(1) Be addressed to: Administrator, National Highway Traffic Safety
Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590.
* * * * *
Dated: September 15, 2009.
Ray LaHood,
Secretary, Department of Transportation.
Dated: September 15, 2009.
Lisa P. Jackson,
Administrator, Environmental Protection Agency.
[FR Doc. E9-22516 Filed 9-17-09; 4:15 pm]
BILLING CODE 4910-59-P; 6560-50-P