[Federal Register Volume 86, Number 151 (Tuesday, August 10, 2021)]
[Proposed Rules]
[Pages 43726-43811]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16582]
[[Page 43725]]
Vol. 86
Tuesday,
No. 151
August 10, 2021
Part II
Environmental Protection Agency
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40 CFR Parts 86 and 600
Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse Gas
Emissions Standards; Proposed Rule
Federal Register / Vol. 86 , No. 151 / Tuesday, August 10, 2021 /
Proposed Rules
[[Page 43726]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 86 and 600
[EPA-HQ-OAR-2021-0208; FRL 8469-02-OAR]
RIN 2060-AV13
Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse
Gas Emissions Standards
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: The Environmental Protection Agency (EPA) is proposing to
revise the greenhouse gas (GHG) emissions standards for light-duty
vehicles for 2023 and later model years to make the standards more
stringent. On January 20, 2021, President Biden issued Executive Order
13990 ``Protecting Public Health and the Environment and Restoring
Science To Tackle the Climate Crisis'' directing EPA to consider
whether to propose suspending, revising, or rescinding the standards
previously revised under the ``The Safer Affordable Fuel-Efficient
(SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light
Trucks,'' promulgated in April 2020. The SAFE rule significantly
weakened the standards established in 2012, which in part set GHG
standards for model years 2021-25. EPA believes that in light of the
significant contribution of light-duty vehicles to transportation
sector GHG emissions, standards more stringent than those relaxed in
the SAFE rule are appropriate under the Clean Air Act. EPA is proposing
to revise the GHG standards to be more stringent than the SAFE rule
standards in each model year from 2023 through 2026. EPA is also
proposing to include several flexibilities to incentivize the
production and sale of vehicles with zero and near-zero emissions
technology to reduce compliance costs and to address the lead time of
the proposed standards. In addition, EPA is proposing some technical
amendments to clarify and streamline our regulations. Compliance with
the proposed standards would be feasible at reasonable costs to
manufacturers. The proposed revised standards would result in
significant benefits for public health and welfare, primarily through
substantial reductions in both GHG emissions and fuel consumption and
associated fuel costs paid by drivers, and the benefits of the proposed
standards would be far in excess of costs.
DATES:
Comments: Written comments must be received on or before September
27, 2021.
Public Hearing: EPA plans to hold a virtual public hearing on
August 25, 2021. An additional session may be held on August 26th if
necessary to accommodate the number of testifiers that sign-up to
testify. Please refer to the separate Federal Register notice issued by
EPA for public hearing details. The hearing notice is available at
https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-revise-existing-national-ghg-emissions.
ADDRESSES: You may send comments, identified by Docket ID No. EPA-HQ-
OAR-2021-0208, by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov/
(our preferred method). Follow the online instructions for submitting
comments.
Email: [email protected]. Include Docket ID No. EPA-
HQ-OAR-2021-0208 in the subject line of the message.
Mail: U.S. Environmental Protection Agency, EPA Docket
Center, OAR, Docket EPA-HQ-OAR-2021-0208, Mail Code 28221T, 1200
Pennsylvania Avenue NW, Washington, DC 20460.
Hand Delivery or Courier (by scheduled appointment only):
EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution
Avenue NW, Washington, DC 20004. The Docket Center's hours of
operations are 8:30 a.m.-4:30 p.m., Monday-Friday (except Federal
Holidays).
Instructions: All submissions received must include the Docket ID
No. EPA-HQ-OAR-2021-0208 for this rulemaking. Comments received may be
posted without change to https://www.regulations.gov/, including any
personal information provided. For detailed instructions on sending
comments and additional information on the rulemaking process, see the
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION
section of this document. Out of an abundance of caution for members of
the public and our staff, the EPA Docket Center and Reading Room are
closed to the public, with limited exceptions, to reduce the risk of
transmitting COVID-19. Our Docket Center staff will continue to provide
remote customer service via email, phone, and webform. We encourage the
public to submit comments via https://www.regulations.gov/ or email, as
there may be a delay in processing mail. Hand deliveries and couriers
may be received by scheduled appointment only. For further information
on EPA Docket Center services and the current status, please visit us
online at https://www.epa.gov/dockets.
EPA plans to hold a virtual public hearing for this rulemaking.
Please refer to the separate Federal Register notice issued by EPA for
public hearing details. The hearing notice is available at https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-revise-existing-national-ghg-emissions.
FOR FURTHER INFORMATION CONTACT: Tad Wysor, Office of Transportation
and Air Quality, Assessment and Standards Division (ASD), Environmental
Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105;
telephone number: (734) 214-4332; email address: [email protected].
SUPPLEMENTARY INFORMATION:
A. Public Participation
Written Comments
EPA will keep the comment period open until September 27, 2021. All
information will be available for inspection at the EPA Air Docket No.
EPA-HQ-OAR-2021-0208. Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2021-0208, at https://www.regulations.gov (our preferred
method), or the other methods identified in the ADDRESSES section. Once
submitted, comments cannot be edited or removed from the docket. EPA
may publish any comment received to its public docket. Do not submit to
EPA's docket at https://www.regulations.gov any information you
consider to be Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute. Multimedia
submissions (audio, video, etc.) must be accompanied by a written
comment. The written comment is considered the official comment and
should include discussion of all points you wish to make. EPA will
generally not consider comments or comment contents located outside of
the primary submission (i.e., on the web, cloud, or other file sharing
system). For additional submission methods, the full EPA public comment
policy, information about CBI or multimedia submissions, and general
guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.
EPA is temporarily suspending its Docket Center and Reading Room
for public visitors, with limited exceptions, to reduce the risk of
transmitting COVID-19. Our Docket Center staff will continue to provide
remote customer
[[Page 43727]]
service via email, phone, and webform. We encourage the public to
submit comments via https://www.regulations.gov/ as there may be a
delay in processing mail. Hand deliveries or couriers will be received
by scheduled appointment only. For further information and updates on
EPA Docket Center services, please visit us online at https://www.epa.gov/dockets.
EPA continues to carefully and continuously monitor information
from the Centers for Disease Control and Prevention (CDC), local area
health departments, and our Federal partners so that we can respond
rapidly as conditions change regarding COVID-19.
Virtual Public Hearing
EPA plans to hold a virtual public hearing on August 25, 2021. An
additional session will be held on August 26th if necessary, to
accommodate the number of testifiers that sign-up to testify. Please
refer to the separate Federal Register notice issued by EPA for public
hearing details. The hearing notice is available at https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-revise-existing-national-ghg-emissions. Please also refer to this
website for any updates regarding the hearings. EPA does not intend to
publish additional documents in the Federal Register announcing
updates.
B. Does this action apply to me?
This action affects companies that manufacture or sell passenger
automobiles (passenger cars) and non-passenger automobiles (light
trucks) as defined in 49 CFR part 523. Regulated categories and
entities include:
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NAICS Examples of potentially
Category codes \A\ regulated entities
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Industry.......................... 336111 Motor Vehicle
336112 Manufacturers.
Industry.......................... 811111 Commercial Importers of
811112 Vehicles and Vehicle
Components.
811198
423110
Industry.......................... 335312 Alternative Fuel Vehicle
811198 Converters.
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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.
Table of Contents
I. Executive Summary
A. Purpose of This Proposed Rule and Legal Authority
1. Proposal for Near-Term Standards Through Model Year 2026
2. Why does EPA believe the proposed standards are appropriate
under the CAA?
3. Future Longer-Term Action to Further Reduce Light-Duty
Vehicle Emissions in 2027 and Beyond
B. Summary of Proposed Light-Duty Vehicle GHG Program
1. Proposed Revised GHG Emissions Standards
2. Proposed Compliance Incentives and Flexibilities
C. Analytical Support for the Proposed Revised Standards
1. Summary of Analyses for This Proposed Rule
2. History of Similar Analyses
D. Summary of Costs and Benefits of the Proposed Program
E. How has EPA considered environmental justice in this
proposal?
F. Affordability and Equity
G. What alternatives is EPA considering?
1. Description of the Alternatives
2. Summary of Costs and Benefits of the Alternatives
3. Summary of the Proposal's Costs and Benefits Compared to the
Alternatives
II. EPA Proposal for MY 2023-2026 Light-Duty Vehicle GHG Standards
A. Proposed Model Year 2023-2026 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 proposed CO2 attribute-based
standards?
3. EPA's Statutory Authority Under the CAA
4. Averaging, Banking, and Trading Provisions for CO2
Standards
5. Certification, Compliance, and Enforcement
6. On-Board Diagnostics Program Updates
7. Stakeholder Engagement
8. How do EPA's proposed standards relate to NHTSA's CAFE
proposal and to California's GHG program?
B. Additional Manufacturer Compliance Flexibilities
1. Multiplier Incentives for Advanced Technology Vehicles
2. Advanced Technology Incentives for Full-Size Pickups
3. Off-Cycle Technology Credits
4. Air Conditioning System Credits
5. Natural Gas Vehicles Technical Correction
C. What alternatives is EPA considering?
III. Technical Assessment of the Proposed CO2 Standards
A. What approach did EPA use in analyzing potential standards?
B. Projected Compliance Costs and Technology Penetrations
1. GHG Targets and Compliance Levels
2. Projected Compliance Costs per Vehicle
3. Technology Penetration Rates
C. Are the proposed standards feasible?
D. How did EPA consider the two alternatives in choosing the
proposed program?
IV. How would this proposal reduce GHG emissions and their
associated effects?
A. Impact on GHG Emissions
B. Climate Change Impacts From GHG Emissions
C. Global Climate Impacts and Benefits Associated With the
Proposal's GHG Emissions Reductions
V. How would the proposal impact non-GHG emissions and their
associated effects?
A. Impact on Non-GHG Emissions
B. Health and Environmental Effects Associated With Exposure to
Non-GHG Pollutants Impacted by the Proposed Standards
C. Air Quality Impacts of Non-GHG Pollutants
VI. Basis for the Proposed GHG Standards Under CAA Section 202(a)
A. Consideration of Technological Feasibility and Lead Time
1. Technological Readiness of the Auto Industry in Meeting
Revised GHG Standards
2. Opportunities Provided Through Credits and Incentives
Provisions
B. Consideration of Vehicle Costs of Compliance
C. Consideration of Impacts on Consumers
D. Consideration of Emissions of GHGs and Other Air Pollutants
E. Consideration of Energy, Safety and Other Factors
F. Balancing of Factors Under CAA 202(a)
VII. What are the estimated cost, economic, and other impacts of the
proposal?
A. Conceptual Framework for Evaluating Consumer Impacts
B. Vehicle Sales Impacts
C. Changes in Fuel Consumption
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D. Greenhouse Gas Emission Reduction Benefits
E. Non-Greenhouse Gas Health Impacts
F. Energy Security Impacts
G. Impacts of Additional Driving
H. Safety Considerations in Establishing GHG Standards
I. Summary of Costs and Benefits
J. Impacts on Consumers of Vehicle Costs and Fuel Savings
K. Employment Impacts
L. Environmental Justice
1. GHG Impacts
2. Non-GHG Impacts
M. Affordability and Equity Impacts
VIII. Statutory and Executive Order Reviews
A. Executive Order 12866: ``Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review''
B. Paperwork Reduction Act
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132: ``Federalism''
F. Executive Order 13175: ``Consultation and Coordination With
Indian Tribal Governments''
G. Executive Order 13045: ``Protection of Children From
Environmental Health Risks and Safety Risks''
H. Executive Order 13211: ``Energy Effects''
I. National Technology Transfer and Advancement Act
J. Executive Order 12898: ``Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations''
IX. Statutory Provisions and Legal Authority
I. Executive Summary
A. Purpose of This Proposed Rule and Legal Authority
1. Proposal for Near-Term Standards Through Model Year 2026
The Environmental Protection Agency (EPA) is proposing to revise
existing national greenhouse gas (GHG) emissions standards for
passenger cars and light trucks under section 202(a) of the Clean Air
Act (CAA), 42 U.S.C. 7521(a). Section 202(a) requires EPA to establish
standards for emissions of air pollutants from new motor vehicles
which, in the Administrator's judgment, cause or contribute to air
pollution which may reasonably be anticipated to endanger public health
or welfare.
This proposal also responds to Executive Order (E.O.) 13990,
``Protecting Public Health and the Environment and Restoring Science To
Tackle the Climate Crisis'' (Jan. 20, 2021), which directs EPA to
consider taking the action proposed in this notice: \1\
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\1\ 86 FR 7037, January 25, 2021.
``[T]he head of the relevant agency, as appropriate and
consistent with applicable law, shall consider publishing for notice
and comment a proposed rule suspending, revising, or rescinding the
agency action[s set forth below] within the time frame specified.''
``Establishing Ambitious, Job-Creating Fuel Economy Standards: .
. . `The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for
Model Years 2021-2026 Passenger Cars and Light Trucks,' 85 FR 24174
(April 30, 2020), by July 2021. . . . In considering whether to
propose suspending, revising, or rescinding the latter rule, the
agency should consider the views of representatives from labor
unions, States, and industry.''
The proposed program would revise the light-duty vehicle GHG
standards previously revised by the SAFE rule and would build upon
earlier EPA actions and supporting analyses that established or
maintained stringent light-duty vehicle GHG emissions standards. For
example, in 2012, EPA issued a final rule establishing light-duty
vehicle GHG standards for model years (MYs) 2017-2025,\2\ which were
supported in analyses accounting for compliance costs, lead time and
other relevant factors.\3\ That rule and its analyses also accounted
for the development and availability of advanced GHG emission-reducing
technologies for gasoline-fueled vehicles, which demonstrated that the
standards were appropriate under section 202(a) of the CAA.\4\ This
proposed rule provides additional analysis that takes into
consideration updated data and recent developments. Auto manufacturers
are currently implementing an increasing array of advanced gasoline
vehicle GHG emission-reducing technologies at a rapid pace throughout
their vehicle fleets. Vehicle electrification technologies are also
advancing rapidly, as battery costs have continued to decline, and
automakers have announced an increasing diversity and volume of zero-
emission vehicle models. Meanwhile, in 2019, several auto manufacturers
voluntarily entered into agreements with the State of California to
comply with GHG emission reduction targets through MY 2026 across their
national vehicle fleets (the ``California Framework Agreements'') that
are more stringent than the EPA standards as revised by the SAFE rule.
These developments further support EPA's decision to reconsider and
propose revising the existing EPA standards to be more stringent,
particularly in light of factors indicating that more stringent near-
term standards are feasible at reasonable cost and would achieve
significantly greater GHG emissions reductions and public health and
welfare benefits than the existing program. In developing this
proposal, EPA has conducted outreach with a wide range of interested
stakeholders, including labor unions, States, and industry as provided
in E.O. 13990, and we will continue to engage with these and other
stakeholders as part of our regulatory development process.
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\2\ EPA's model year emission standards also apply in subsequent
model years, unless revised, e.g., MY 2025 standards issued in the
2012 rule also applied to MY 2026 and beyond.
\3\ 77 FR 62624, October 15, 2012.
\4\ Id.
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This proposal is limited to MYs 2023-2026, given lead time
considerations under the CAA, which is consistent with E.O. 13990's
direction to review the SAFE rule standards. We have designed the
proposed program based on our assessment that the proposed standards
are reasonable and appropriate and will achieve a significant level of
GHG reductions for MYs 2023-2026 vehicles, with the expectation that a
future, longer-term program for MYs 2027 and later will build upon
these near-term standards.
EPA has set previous light-duty vehicle GHG emission standards in
joint rulemakings where NHTSA also established CAFE standards. EPA has
concluded that it is not necessary at this time for this EPA proposal
to be done in a joint action with NHTSA. EPA has coordinated with
NHTSA, both on a bilateral level as well as through the interagency
review of the EPA proposal led by the Office of Management and Budget.
2. Why does EPA believe the proposed standards are appropriate under
the CAA?
EPA is proposing to revise GHG emissions standards for passenger
cars and light trucks under its authority in section 202(a) of the CAA.
Section 202(a) requires EPA to establish standards for emissions of
pollutants from new motor vehicles which, in the Administrator's
judgment, cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare. Standards under
section 202(a) take effect ``after 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.'' Thus, in establishing or revising
section 202(a) standards designed to reduce air pollution that
endangers public health and welfare, EPA also must consider issues of
technological feasibility, compliance cost, and lead time. EPA also may
consider other factors and in previous light-duty vehicle GHG standards
rulemakings has considered the impacts of potential GHG standards
[[Page 43729]]
on the auto industry, fuel savings by consumers, oil conservation,
energy security and other energy impacts, as well as other relevant
considerations such as safety.
As we describe in greater detail below, EPA has carefully
considered the technological feasibility and cost of the proposed
standards and the available lead time for manufacturers to comply with
them, including existing and proposed flexibilities designed to
facilitate compliance during the MYs 2023-2026 timeframe. Based on our
analysis, we believe that the proposed standards, combined with
proposed flexibilities that address lead time considerations resulting
from relaxations in standards revised in the SAFE rule, are appropriate
and justified under section 202(a) of the CAA. Our updated analysis for
this proposal, as well as our earlier analyses of similar standards,
supports the conclusion that the proposed standards are technologically
feasible for the model years covered (MYs 2023-2026) and that the costs
of compliance for manufacturers would be reasonable. The proposed
standards would result in greater reductions in GHG emissions, as well
as reductions in emissions of some criteria pollutants and air toxics,
resulting in significant benefits for public health and welfare. We
also show that the proposal would result in reduced vehicle operating
costs for consumers and that the benefits of the proposed program would
significantly exceed the costs.
EPA has significantly updated its analysis for this rule. As
discussed further below, we have updated a number of key inputs, such
as, for example, certain technology costs and penetrations, to ensure
they are up to date. Notably, the results of this updated analysis are
generally in agreement with prior analyses, including those conducted
for the SAFE rule. In particular, the costs that have been estimated
for manufacturers to meet standards of a similar stringency to the
proposed standards have been roughly consistent since EPA first
estimated them in 2012. That is, although manufacturers have less lead
time before these standards would be implemented than with previous
rulemakings, the significant progress that has been made in
implementing advanced gasoline technologies in the fleet (as well as
advances in electric and hybrid vehicle technology) since 2012 means
the proposed standards can be achieved at roughly the same cost as
previous estimates, and additional lead time is unnecessary.
When considering similar cost estimates in the SAFE rule, EPA
identified some factors, primarily costs to manufacturers and upfront
costs to consumers, as favoring reductions in stringency of the then-
existing standards, and other factors, such as reduced emissions that
endanger public health and welfare and reduced operating costs for
consumers, as favoring increased stringency (or a lower degree of
reduced stringency). In balancing these factors in the SAFE rule, EPA
placed greater weight on the former factors, and thereby decided to
make EPA's GHG standards significantly less stringent. But the purpose
of adopting standards under CAA section 202 is to address air pollution
that may reasonably be anticipated to endanger public health and
welfare. Indeed, reducing air pollution has traditionally been the
focus of such standards. EPA has reconsidered how costs, lead time and
other factors were weighed in the SAFE rule and is reaching a different
conclusion as to the appropriate stringency of GHG standards. In light
of the statutory purpose of section 202, the Administrator is placing
greater weight on the emission reductions and resulting public health
and welfare benefits, as well as the savings in vehicle operating costs
for consumers, and proposing significantly more stringent standards for
MYs 2023-2026 compared to the standards established by the SAFE rule.
As discussed in Section III.A, the proposed standards take into
consideration both the updated analysis for this rule and past EPA
analyses conducted for similar GHG standards. We are revising decisions
made in the SAFE final rule in accordance with Supreme Court decisions
affirming that agencies are free to reconsider and revise their prior
decisions where they provide a reasonable explanation for their revised
decisions.\5\ In this rulemaking, the agency is changing its 2020
position and restoring its previous approach by proposing to find, in
light of the statutory purposes of the Clean Air Act and in particular
of section 202(a), that it is more appropriate to place greater weight
on the magnitude and benefits of reducing emissions that endanger
public health and welfare, while continuing to consider compliance
costs, lead time and other relevant factors.
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\5\ See, e.g., Encino Motorcars, LLC v. Navarro, 136 S. Ct.
2117, 2125 (2016); FCC v. Fox Television Stations, Inc., 556 U.S.
502, 515 (2009).
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3. Future Longer-Term Action To Further Reduce Light-Duty Vehicle
Emissions in 2027 and Beyond
Addressing the climate crisis will require substantial reductions
in GHG emissions from the transportation sector. The transportation
sector is the largest U.S. source of GHG emissions, representing 29
percent of total GHG emissions.\6\ Within the transportation sector,
light-duty vehicles are the largest contributor, at 58 percent, and
thus comprise 17 percent of total U.S. GHG emissions.\7\ GHG emissions
have significant impacts on public health and welfare as evidenced by
the well-documented scientific record and as set forth in EPA's
Endangerment and Cause or Contribute Findings under Section 202(a) of
the CAA.\8\ Additionally, major scientific assessments continue to be
released that further advance our understanding of the climate system
and the impacts that GHGs have on public health and welfare both for
current and future generations, as discussed in Section IV.B, making it
clear that continued emission reductions in the light-duty vehicle
sector are needed beyond the model years covered by the standards
proposed today.
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\6\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2019 (EPA-430-R-21-005, published April 2021).
\7\ 7 Ibid.
\8\ 74 FR 66496, December 15, 2009; 81 FR 54422, August 15,
2016.
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This proposed action therefore serves as a critical building block
for a comprehensive, multipollutant longer-term regulatory program
implementing EPA's statutory authority under the CAA. We are at a
pivotal moment in the history of the light-duty transportation sector--
a shift to zero-emission vehicle technologies is already underway, and
it presents a strong potential for dramatic reductions in GHG and
criteria pollutant emissions over the longer term. Major automakers as
well as many global jurisdictions and U.S. states have announced plans
to shift the light-duty fleet toward zero-emissions technology, as
detailed below. EPA anticipates that the design of a future, longer-
term program beyond 2026 will incorporate accelerating advances in
zero-emission technologies.
A proliferation of recent announcements from automakers signals a
rapidly growing shift in investment away from internal-combustion
technologies and toward high levels of electrification. These automaker
announcements are supported by continued advances in automotive
electrification technologies, and further driven by the need to
[[Page 43730]]
compete in a global market as other countries implement aggressive
zero-emission transportation policies. For example, in January 2021,
General Motors announced plans to become carbon neutral by 2040,
including an effort to shift its light-duty vehicles entirely to zero-
emissions by 2035.\9\ In March 2021, Volvo announced plans to make only
electric cars by 2030,\10\ and Volkswagen announced that it expects
half of its U.S. sales will be all-electric by 2030.\11\ In April 2021,
Honda announced a full electrification plan to take effect by 2040,
with 40 percent of North American sales expected to be fully electric
or fuel cell vehicles by 2030, 80 percent by 2035 and 100 percent by
2040.\12\ In May 2021, Ford announced that they expect 40 percent of
their global sales will be all-electric by 2030.\13\ In June 2021, Fiat
announced a move to all electric vehicles by 2030, and in July 2021 its
parent corporation Stellantis announced an intensified focus on
electrification across all of its brands.14 15 Also in July
2021, Mercedes-Benz announced that all of its new architectures would
be electric-only from 2025, with plans to become ready to go all-
electric by 2030 where possible.\16\
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\9\ General Motors, ``General Motors, the Largest U.S.
Automaker, Plans to be Carbon Neutral by 2040,'' Press Release,
January 28, 2021.
\10\ Volvo Car Group, ``Volvo Cars to be fully electric by
2030,'' Press Release, March 2, 2021.
\11\ Volkswagen Newsroom, ``Strategy update at Volkswagen: The
transformation to electromobility was only the beginning,'' March 5,
2021. Accessed June 15, 2021 at https://www.volkswagen-newsroom.com/en/stories/strategy-update-at-volkswagen-the-transformation-to-electromobility-was-only-the-beginning-6875.
\12\ Honda News Room, ``Summary of Honda Global CEO Inaugural
Press Conference,'' April 23, 2021. Accessed June 15, 2021 at
https://global.honda/newsroom/news/2021/c210423eng.html.
\13\ Ford Motor Company, ``Superior Value From EVs, Commercial
Business, Connected Services is Strategic Focus of Today's
`Delivering Ford+' Capital Markets Day,'' Press Release, May 26,
2021.
\14\ Stellantis, ``World Environment Day 2021--Comparing
Visions: Olivier Francois and Stefano Boeri, in Conversation to
Rewrite the Future of Cities,'' Press Release, June 4, 2021.
\15\ Stellantis, ``Stellantis Intensifies Electrification While
Targeting Sustainable Double-Digit Adjusted Operating Income Margins
in the Mid-Term,'' Press Release, July 8, 2021.
\16\ Mercedes-Benz, ``Mercedes-Benz prepares to go all-
electric,'' Press Release, July 22, 2021.
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These announcements and others like them continue a pattern over
the past several years of many manufacturers taking steps to
aggressively pursue zero-emission technologies, introduce a wide range
of zero-emission vehicle models, and reduce their reliance on the
internal-combustion engine in various markets around the
globe.17 18 These goals and investments have been coupled
with a rapidly increasing availability of plug-in vehicle models in the
U.S.\19\ For example, the number of all-electric vehicle (EV) and plug-
in hybrid electric vehicle (PHEV) models available for sale in the U.S.
more than doubled from about 24 in MY 2015 to about 60 in MY 2021, with
offerings in a growing range of vehicle segments.\20\ Recent model
announcements indicate that this number will increase to more than 80
models by MY 2023, with many more expected to reach production before
the end of the decade.\21\ Many of the zero-emission vehicles already
on the market today cost less to drive than conventional
vehicles,22 23 offer improved performance and handling,\24\
and can be charged at a growing network of public chargers \25\ as well
as at home.
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\17\ Environmental Defense Fund and M.J. Bradley & Associates,
``Electric Vehicle Market Status--Update, Manufacturer Commitments
to Future Electric Mobility in the U.S. and Worldwide,'' April 2021.
\18\ International Council on Clean Transportation, ``The end of
the road? An overview of combustion-engine car phase-out
announcements across Europe,'' May 10, 2020.
\19\ Muratori et al., ``The rise of electric vehicles--2020
status and future expectations,'' Progress in Energy v3n2 (2021),
March 25, 2021. Accessed July 15, 2021 at https://iopscience.iop.org/article/10.1088/2516-1083/abe0ad.
\20\ Fueleconomy.gov, 2015 Fuel Economy Guide and 2021 Fuel
Economy Guide.
\21\ Environmental Defense Fund and M.J. Bradley & Associates,
``Electric Vehicle Market Status--Update, Manufacturer Commitments
to Future Electric Mobility in the U.S. and Worldwide,'' April 2021.
\22\ Department of Energy Vehicle Technologies Office,
Transportation Analysis Fact of the Week #1186, ``The National
Average Cost of Fuel for an Electric Vehicle is about 60% Less than
for a Gasoline Vehicle,'' May 17, 2021.
\23\ Department of Energy Vehicle Technologies Office,
Transportation Analysis Fact of the Week #1190, ``Battery-Electric
Vehicles Have Lower Scheduled Maintenance Costs than Other Light-
Duty Vehicles,'' June 14, 2021.
\24\ Consumer Reports, ``Electric Cars 101: The Answers to All
Your EV Questions,'' November 5, 2020. Accessed June 8, 2021 at
https://www.consumerreports.org/hybrids-evs/electric-cars-101-the-answers-to-all-your-ev-questions/.
\25\ Department of Energy Alternative Fuels Data Center,
Electric Vehicle Charging Station Locations. Accessed on May 19,
2021 at https://afdc.energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC.
---------------------------------------------------------------------------
At the same time, an increasing number of global jurisdictions and
U.S. states plan to take actions to shift the light-duty fleet toward
zero-emissions technology. In 2020, California announced an intention
to require increasing volumes of zero-emission vehicles to meet the
goal that, by 2035, all new light-duty vehicles sold in the state be
zero-emission vehicles.\26\ Massachusetts \27\ and New York \28\ are
also poised to adopt similar targets and requirements to take effect by
2035. Several other states may adopt similar provisions by 2050 as
members of the International Zero-Emission Vehicle Alliance.\29\
Globally, at least 12 countries, as well as numerous local
jurisdictions, have announced similar goals to shift all new passenger
car sales to zero-emission vehicles in the coming years, including
Norway (2025); the Netherlands, Denmark, Iceland, Ireland, Sweden, and
Slovenia (2030); Canada and the United Kingdom (2035); France and Spain
(2040); and Costa Rica (2050).30 31 Together, these
countries represent approximately 13 percent of the global market for
passenger cars,\32\ in addition to that represented by the
aforementioned U.S. states and other global jurisdictions.
---------------------------------------------------------------------------
\26\ State of California Office of the Governor, ``Governor
Newsom Announces California Will Phase Out Gasoline-Powered Cars &
Drastically Reduce Demand for Fossil Fuel in California's Fight
Against Climate Change,'' Press Release, September 23, 2020.
\27\ Commonwealth of Massachusetts, ``Request for Comment on
Clean Energy and Climate Plan for 2030,'' December 30, 2020.
\28\ New York State Senate, Senate Bill S2758, 2021-2022
Legislative Session. January 25, 2021.
\29\ ZEV Alliance, ``International ZEV Alliance Announcement,''
Dec. 3, 2015. Accessed on July 16, 2021 at http://www.zevalliance.org/international-zev-alliance-announcement/.
\30\ International Council on Clean Transportation, ``Update on
the global transition to electric vehicles through 2019,'' July
2020.
\31\ Reuters, ``Canada to ban sale of new fuel-powered cars and
light trucks from 2035,'' June 29, 2021. Accessed July 1, 2021 from
https://www.reuters.com/world/americas/canada-ban-sale-new-fuel-powered-cars-light-trucks-2035-2021-06-29/.
\32\ International Council on Clean Transportation, ``Growing
momentum: Global overview of government targets for phasing out new
internal combustion engine vehicles,'' posted 11 November 2020,
accessed April 28, 2021 at https://theicct.org/blog/staff/global-ice-phaseout-nov2020.
---------------------------------------------------------------------------
EPA recognizes that in addition to substantially reducing GHG
emissions, a longer-term rulemaking could also address criteria
pollutant and air toxics emissions from the new light-duty vehicle
fleet--especially important considerations during the transition to
zero-emission vehicles. EPA expects that a future longer-term
rulemaking will take critical steps to continue the trajectory of
transportation emission reductions needed to protect public health and
welfare. Achieving this trajectory with the help of increased fleet
penetration of zero-emission vehicles would bring with it other
advantages as well, such as potentially large reductions in roadway
pollution and noise in overburdened communities, and potentially
support for the future development of vehicle-to-grid services that
could become a key enabler for increased utilization of
[[Page 43731]]
variable renewable energy sources, such as wind and solar, across the
grid.\33\
---------------------------------------------------------------------------
\33\ Department of Energy Electricity Advisory Committee,
``Enhancing Grid Resilience with Integrated Storage from Electric
Vehicles: Recommendations for the U.S. Department of Energy,'' June
25, 2018.
---------------------------------------------------------------------------
B. Summary of Proposed Light-Duty Vehicle GHG Program
EPA is proposing revised GHG standards that would begin in MY 2023
and increase in stringency year over year through MY 2026. EPA proposes
to increase the stringency of the standards from the average roughly
1.5 percent year-over-year stringency increase of the relaxed SAFE
standards to a nearly 10 percent proposed stringency increase in MY
2023, followed by a nearly 5 percent proposed stringency increase in
each MY from 2024 through 2026. EPA believes the 10 percent proposed
increase in stringency in MY 2023 is appropriate given the
technological investments industry has continued to make beyond what
would be required to meet the SAFE rule revised standards, such as
improvements being made in response to the California Framework
Agreements, as well as the compliance flexibilities built into the
program. Also, as discussed in Section I.G below, EPA requests comment
on standards for MY 2026 that would result in fleet average target
levels that are in the range of 5-10 g/mile lower (i.e., more
stringent) than the levels proposed. This request for comments is in
keeping with the additional lead time available for this out-year
compared to MYs 2023-2025, and because EPA may determine that it is
appropriate, particularly in light of the accelerating transition to
electrified vehicles, to require additional reductions in this time
frame. The proposed standards would achieve significant GHG and other
emission reductions and related public health and welfare benefits,
while providing consumers with lower operating costs resulting from
significant fuel savings. Our analysis described in this notice
demonstrates that the proposed standards are appropriate under section
202(a) of the CAA, considering costs, technological feasibility,
available lead time, and other factors. The proposed trajectory of
increasing stringency from MYs 2023 to 2026 takes into account the
credit-based emissions averaging, banking and trading flexibilities of
the current program as well as additional flexibility provisions that
we are proposing to ease the transition to more stringent standards.
EPA also took into account manufacturers' ability to generate credits
against the existing standards relaxed in the SAFE rule for MYs 2021
and 2022, which we are not proposing to revise.
In our design and analyses of the proposed program and our overall
updated assessment of feasibility, EPA also took into account the
decade-long light-duty vehicle GHG emission reduction program in which
the auto industry has introduced a wide lineup of ever more fuel-
efficient, GHG-reducing technologies. The technological achievements
already developed and applied to vehicles within the current new
vehicle fleet will enable the industry to achieve the proposed
standards even without the development of new technologies beyond those
already widely available. Furthermore, in light of the design cycle
timing for vehicles, EPA has basis to expect that the vehicles that
automakers will be selling during the first years of the proposed MY
2023-26 program were already designed before the less stringent SAFE
standards were recently adopted. Further support that the technologies
needed to meet the proposed standards do not need to be developed, but
are already widely available and in use on vehicles, can be found in
the fact that five vehicle manufacturers, representing about a third of
U.S. auto sales, agreed in 2019 with the State of California that their
nationwide fleets would meet GHG emission reduction targets more
stringent than the applicable EPA standards beginning in model year
2021. The fact that five automakers voluntarily entered into the
California Framework Agreements also supports the feasibility of
meeting standards at least as stringent as the emission reduction
targets under the California Framework, which we describe in detail
later in this preamble. We describe additional details of the proposal
below and in later sections of the preamble as well as in the Draft
Regulatory Impact Analysis (DRIA). We also describe and analyze both
less stringent and more stringent alternatives, consistent with OMB
Circular A-4.
Although most automakers have launched ambitious plans to develop
and produce increasing numbers of zero- and near-zero-emission
vehicles, EPA recognizes that during the near-term timeframe of the
proposed standards through MY 2026, the new vehicle fleet likely will
continue to consist primarily of gasoline-fueled vehicles. In this
preamble and in the DRIA, we provide our analyses supporting our
assessment that the proposed standards for MYs 2023 through 2026 would
be achievable primarily through the application of advanced gasoline
vehicle technologies. We project that during the four-year ramping up
of the stringency of the CO2 standards, the proposed
standards could be met with gradually increasing sales of plug-in
electric vehicles in the U.S., up to about 8 percent market share
(including both electric vehicles (EVs) and plug-in hybrid electric
vehicles (PHEVs)) by MY 2026. Given that EVs and PHEVs represented
about 2 percent of the new vehicle market in MY 2019,\34\ this would
represent a significant increase in penetration of these vehicles but
one that we believe is reasonable given automaker announcements on
increasing EV and PHEV production. We note later in this preamble in
the discussion of the alternative levels of stringency that EPA is
considering, that there may be the potential for higher levels of EV
penetration by MY 2026, which could enable EPA to consider a more
stringent standard for MY 2026. As described elsewhere in this
preamble, we believe that, in conjunction with the proposed standards,
the limited but focused incentives and flexibilities that we are
proposing would support automakers' acceleration of their introduction
and sales of advanced technologies, including zero and near-zero-
emission technologies.
---------------------------------------------------------------------------
\34\ ``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-21-
003, January 2021, p. 52.
---------------------------------------------------------------------------
1. Proposed Revised GHG Emissions Standards
i. Proposed Revised CO2 Targets
As with EPA's previous light-duty GHG programs, EPA is proposing
footprint-based standards curves for both passenger cars and trucks.
Each manufacturer would have a unique standard for the passenger cars
category and another for the truck category \35\ for each MY based on
the sales-weighted footprint-based CO2 targets \36\ of the
vehicles produced in that MY. Figure 1 shows EPA's proposed standards,
expressed as average fleetwide GHG emissions targets (cars and trucks
combined), projected through MY 2026. For comparison, the figure also
shows the corresponding targets for the SAFE final rulemaking (FRM) and
the 2012 FRM. The projected fleet targets for this proposed rule
increase in stringency in
[[Page 43732]]
MY 2023 by about 10 percent (from the existing SAFE rule standards in
MY 2022), followed by stringency increases thereafter of nearly 5
percent year over year from MY 2024 through MY 2026. Also, as discussed
in Section I.G, EPA requests comment on standards for MY 2026 that
would result in fleet average target levels that are in the range of 5-
10 g/mile lower (i.e., more stringent) than the levels proposed. As
with all EPA vehicle emissions standards, the proposed MY 2026
standards would then remain in place for all subsequent MYs, unless and
until they are revised in a subsequent rulemaking. Table 1 presents the
estimates of EPA's proposed standards presented in Figure 1, again in
terms of the projected overall industry fleetwide CO2-
equivalent emission compliance target levels. The industry fleet-wide
estimates in Table 1 are projections based on modeling that EPA
conducted for the proposed rule, taking into consideration projected
fleet mix and footprints for each manufacturer's fleet in each model
year. Table 2 presents projected industry fleet average year-over-year
percent reductions comparing the existing standards under the SAFE rule
and the proposed revised standards. See Section II.A below for a full
discussion of the proposed standards and presentations of the footprint
standards curves.
---------------------------------------------------------------------------
\35\ Passenger cars include cars and smaller cross-overs and
SUVs, while the truck category includes larger cross-overs and SUVs,
minivans, and pickup trucks.
\36\ Because compliance is based on the full range of vehicles
in a manufacturer's car and truck fleets, with lower-emitting
vehicles compensating for higher-emitting vehicles, the emission
levels of specific vehicles within the fleet are referred to as
targets, rather than standards.
---------------------------------------------------------------------------
BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TP10AU21.000
BILLING CODE 6560-50-C
Table 1--Projected Industry Fleet-Wide CO2 Compliance Targets for MYs 2023-2026
[grams/mi]
----------------------------------------------------------------------------------------------------------------
2022 * 2023 2024 2025 2026 **
----------------------------------------------------------------------------------------------------------------
Cars............................ 180 165 157 149 142
Trucks.......................... 260 232 221 210 199
Combined Cars and Trucks........ 220 199 189 180 171
----------------------------------------------------------------------------------------------------------------
* SAFE rule targets included for reference.
** EPA is also requesting comment on MY 2026 standards that would result in fleet average levels that are 5-10 g/
mile more stringent than the levels shown.
The combined car/truck CO2 targets are a function of assumed car/truck shares. For this illustration, we assume
an approximately 50/50% split in MYs 2023-2026. See DRIA Chapter 2 for detail.
[[Page 43733]]
Table 2--Projected Industry Fleet Average Target Year-Over-Year Percent Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
SAFE rule Proposal
-----------------------------------------------------------------------------------------------
Cars % Trucks % Combined % Cars % Trucks % Combined %
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.................................................... 1.7 1.5 1.6 8.3 10.8 9.8
2024.................................................... 1.1 1.2 1.2 4.8 4.7 4.7
2025.................................................... 2.3 2.0 2.2 5.1 5.0 4.9
2026 *.................................................. 1.8 1.6 1.7 4.7 5.2 5.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The percentages shown do not include EPA's request for comments on MY 2026 standards that are 5-10 g/mile more stringent than proposed.
2. Proposed Compliance Incentives and Flexibilities
The existing GHG program established in the 2010 and 2012 rules
included several key flexibilities, such as credit programs and
technology incentives that are discussed further in this proposal where
EPA is requesting comment or proposing modifications.\37\ These
include:
---------------------------------------------------------------------------
\37\ See 75 FR 25324, May 7, 2010 and 77 FR 62624, Oct. 15,
2012.
Credit Averaging, Banking, and Trading (ABT) including credit
carry-forward, credit carry-back, transferring credits between a
manufacturer's car and truck fleets, and credit trading between
manufacturers (MY 2012 and later)
Off-cycle credits for GHG emissions reductions not captured on
the test procedures used for fleet average compliance with the
footprint-based standards (MY 2012 and later)
Air conditioning credits for system efficiency improvements
and reduced refrigerant leakage or use of low global warming potential
refrigerants (MY 2012 and later)
Multiplier incentives for advanced technology vehicles
including electric vehicles, fuel cell vehicles, plug-in hybrids
(ending after MY 2021)
Multiplier incentives for natural gas fueled vehicles (MY
2021-2026)
Full-size pick-up incentives for hybridization or performance
improvements equivalent to hybridization (ending after MY 2021)
EPA is proposing a targeted set of extended or additional
compliance flexibilities and incentives that we believe are appropriate
given the stringency and lead time of the proposed standards. We are
proposing four types of flexibilities/incentives, in addition to
flexibilities/incentives that already will be available for these MYs
under EPA's existing regulations: (1) A limited extension of carry-
forward credits generated in MYs 2016 through 2020; (2) an extension of
the advanced technology vehicle multiplier credits for MYs 2022 through
2025 with a cumulative credit cap; (3) restoration of the 2012 rule's
full-size pickup truck incentives for strong hybrids or similar
performance-based credit for MYs 2022 through 2025 (provisions which
were removed in the SAFE rule); and (4) an increase of the off-cycle
credits menu cap from 10 g/mile to 15 g/mile. EPA is also proposing to
remove the multiplier incentives for natural gas fueled vehicles for
MYs 2023-2026. We summarize these proposals below and provide details
in Sections II.B and II.C below.
The GHG program includes existing provisions initially established
in the 2010 rule, which set the MY 2012-2016 GHG standards, for how
credits may be used within the program. These averaging, banking, and
trading (ABT) provisions include credit carry-forward, credit carry-
back (also called deficit carry-forward), credit transfers (within a
manufacturer), and credit trading (across manufacturers). These ABT
provisions define how credits may be used and are integral to the
program. The current program limits credit carry-forward to 5 years.
EPA is proposing a limited extension of credit carry-forward for
credits generated in MYs 2016 through 2020. The proposal would change
the credit carry-forward time limitation for MY 2016 credits from five
to seven years and the carry-forward limit for MYs 2017-2020 from 5 to
6 years, as shown in Table 3 below.
Table 3--EPA Proposed Extension of Credit Carry-Forward Provisions
--------------------------------------------------------------------------------------------------------------------------------------------------------
MYs credits are valid under EPA's proposed extension
MY credits are banked -------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
2016...................................... ........ x x x x x + + ........ ........ ........
2017...................................... ........ ........ x x x x x + ........ ........ ........
2018...................................... ........ ........ ........ x x x x x + ........ ........
2019...................................... ........ ........ ........ ........ x x x x x + ........
2020...................................... ........ ........ ........ ........ ........ x x x x x +
2021...................................... ........ ........ ........ ........ ........ ........ x x x x x
--------------------------------------------------------------------------------------------------------------------------------------------------------
x = Current program. + = Proposed additional years.
The existing GHG program also includes temporary incentives through
MY 2021 that encourage the use of advanced technologies such as
electric, hybrid, and fuel cell vehicles, as well as incentives for
full-size pickups using strong hybridization or technologies providing
similar emissions reductions to hybrid technology. The full-size pickup
incentives originally were available through MY 2025, but the SAFE rule
removed these incentives for MYs 2022 through 2025. When EPA
established these incentives in the 2012 rule, EPA recognized that they
would reduce the effective stringency of the standards, but believed
that it was worthwhile to have a limited near-term
[[Page 43734]]
loss of emissions reduction benefits to increase the potential for far
greater emissions reduction and technology diffusion benefits in the
longer term.\38\ EPA believed that the temporary regulatory incentives
would help bring low emission technologies to market more quickly than
in the absence of incentives.\39\ With these same goals in mind for
this program, EPA is proposing multiplier incentives from MY 2022
though MY 2025 with a cap on multiplier credits and to reinstate the
full-size pickup incentives removed from the program by the SAFE rule.
These proposed incentives are intended as a temporary measure
supporting the transition to zero-emission vehicles and to provide
additional flexibility in meeting the MY 2023-2026 proposed standards,
as further discussed in Section II.B.1.
---------------------------------------------------------------------------
\38\ See Tables III-2 and III-3, 77 FR 62772, October 15, 2012.
\39\ 77 FR 62812, October 15, 2012.
---------------------------------------------------------------------------
EPA is also proposing to remove the extended multiplier incentives
added by the SAFE rule from the GHG program after MY 2022. EPA is
proposing to end multipliers for NGVs in this manner because NGVs are
not a near-zero emissions technology and EPA believes multipliers are
no longer necessary or appropriate for these vehicles. Any NGV
multiplier credits generated in MY 2022 would be included under the
proposed multiplier cap.
The current program also includes credits for real-world emissions
reductions not reflected on the test cycles used for measuring
CO2 emissions for compliance with the fleet average
standards. There are credits for using technologies that reduce GHG
emissions that aren't captured on EPA tests (``off-cycle''
technologies) and improvements to air conditioning systems that
increase efficiency and reduce refrigerant leakage. These credit
opportunities do not sunset under the existing regulations, remaining a
part of the program through MY 2026 and beyond unless the program is
changed by regulatory action. EPA is proposing to modify an aspect of
the off-cycle credits program to provide additional opportunities for
manufacturers to generate credits by increasing the pre-defined menu
credit cap from 10 to 15 g/mile. EPA is also proposing to modify some
of the regulatory definitions that are used to determine whether a
technology is eligible for the menu credits. EPA is not proposing
changes to the air conditioning credits elements of the program.
C. Analytical Support for the Proposed Revised Standards
1. Summary of Analyses for This Proposed Rule
All of EPA's analyses of the national light-duty vehicle GHG
program over the past decade have been built on the same overall
framework and produce the same types of results. Section III.A below
explains this common EPA framework in more detail. In summary, it
includes the following primary elements:
i. Analyzing Issues of Feasibility, Costs, and Lead Time
As with our earlier analyses, EPA used a model to simulate the
decision process of auto manufacturers in choosing among the emission
reduction technologies available to incorporate in vehicles across
their fleets. The models take into account both the projected costs of
established and newer technologies and the relative ability of each of
these technologies to reduce GHG emissions. This process identifies
potential pathways for manufacturers to comply with a given set of GHG
standards. EPA then estimates projected average and total costs for
manufacturers to produce these vehicles to meet the standards under
evaluation during the model years covered by the analysis.
In addition to projecting the technological capabilities of the
industry and estimating compliance costs for each of the four affected
model years (MYs 2023-2026), EPA has considered the role of the
averaging, banking, and trading system that has been available and
extensively used by the industry since the beginning of the light-duty
vehicle GHG program in model year 2012. Our analysis of the current and
anticipated near-future usage of the GHG credit mechanisms (III.B.2
below) reinforces the trends we identified in our other analyses
showing widespread technological advancement in the industry at
reasonable per-vehicle costs. Together, these analyses support EPA's
conclusion under section 202(a) of the CAA that technologically
feasible pathways are available at reasonable costs for automakers to
comply with the proposed standards during each of the four model years.
We discuss these analyses and their results further in Section III
below.
ii. Analyzing the Projected Impacts of the Proposed Program
We also estimate the GHG and non-GHG emission impacts (tailpipe and
upstream) of the proposed standards. EPA then builds on the estimated
changes in emissions and fuel consumption to calculate expected net
economic impacts from these changes. Key economic inputs include: The
social costs of GHGs; measures of health impacts from changes in
criteria pollutant emissions; a value for the vehicle miles traveled
``rebound effect;'' estimates of energy security impacts of changes in
fuel consumption; and costs associated with crashes, noise, and
congestion from additional rebound driving.
Our overall analytical approach generates key results for the
following metrics: Incremental costs per vehicle (industry-wide
averages and by manufacturer); total vehicle technology costs for the
auto industry; GHG emissions reductions and criteria pollutant
emissions reductions; penetration of key GHG-reducing technologies
across the fleet; consumer fuel savings; oil reductions; and net
societal costs and benefits. We discuss these analyses in Sections III,
IV, V, and VII below as well as in the DRIA.
2. History of Similar Analyses
At several points during the past decade, EPA has performed
detailed analyses to evaluate the technological feasibility, as well as
to project program costs and benefits, of the national light-duty
vehicle GHG emissions control program. Although the purposes of these
analyses varied, and EPA used somewhat different modeling approaches
and tools, in each case these analyses included assessments of the
program in the later years of the standards, i.e., MYs 2022 through
2025 or 2026. As we describe in more detail in Chapter 1 of the DRIA,
EPA performed similar analyses in support of the 2011 proposal and 2012
final rule establishing the original MY 2017-2025 light-duty vehicle
GHG standards; in 2016-January 2017 in support of the Midterm
Evaluation process and Determination concerning the MY 2022-2025
standards; and in 2018 during the development of the SAFE proposed
rule.
It is notable that, although each analysis is based on projections
from the then-available fleet data forward to model years 2025 or 2026,
the results of each of these earlier analyses, as well as the updated
analysis we have performed for our proposed standards, have all
produced very similar results in several key metrics. For example, the
estimated projected cost to manufacturers to implement similar
standards in 2025-2026 has remained fairly consistent since 2012. Thus,
while we believe the updated analysis presented in the DRIA provides
strong support for the
[[Page 43735]]
feasibility and appropriateness of the proposed program, the consistent
results from the earlier analyses further reinforce the robustness of
our conclusions.
D. Summary of Costs and Benefits of the Proposed Program
EPA estimates that this proposal would result in significant
present-value net benefits of $86 billion to $140 billion (annualized
net benefits of $4.2 billion to $7.3 billion)--that is, the total
benefits far exceed the total costs of the program. Table 4 below
summarizes EPA's estimates of total discounted costs, fuel savings, and
benefits. The results presented here project the monetized
environmental and economic impacts associated with the proposed
standards during each calendar year through 2050. The proposal also
would have significant benefits for consumers, as the fuel savings for
American drivers would total $120 to $250 billion through 2050. With
these fuel savings, consumers would benefit from reduced operating
costs over the vehicle lifetime.
The benefits include climate-related economic benefits from
reducing emissions of GHGs that contribute to climate change,
reductions in energy security externalities caused by U.S. petroleum
consumption and imports, the value of certain particulate matter-
related health benefits (including premature mortality), the value of
additional driving attributed to the rebound effect, and the value of
reduced refueling time needed to fill a more fuel-efficient vehicle.
The analysis also includes estimates of economic impacts stemming from
additional vehicle use, such as the economic damages caused by crashes,
congestion, and noise (from increased rebound driving). See the DRIA
for more information regarding these estimates.
Table 4--Monetized Discounted Costs, Benefits, and Net Benefits of the Proposed Program for Calendar Years
Through 2050
[Billions of 2018 dollars] a b c d e
----------------------------------------------------------------------------------------------------------------
Present value Annualized value
---------------------------------------------------------------------------
3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate
----------------------------------------------------------------------------------------------------------------
Costs............................... $240 $150 $12 $12
Fuel Savings........................ 250 120 13 9.9
Benefits............................ 130 110 6.9 6.3
Net Benefits........................ 140 86 7.3 4.2
----------------------------------------------------------------------------------------------------------------
Notes:
a Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values
are based on the stream of annual calendar year costs and benefits included in the analysis (2021-2050) and
discounted back to year 2021.
b Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different
estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates;
95th percentile at 3% discount rate), which each increase over time. In this table, we show the benefits
associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single central SC-GHG
point estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-
GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the DRIA, a
consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent and
lower, is also warranted when discounting intergenerational impacts.
c The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and
2.5 percent) is used to calculate the present and annualized values of climate benefits for internal
consistency, while all other costs and benefits are discounted at either 3% or 7%.
d Net benefits reflect the fuel savings plus benefits minus costs.
e Non-GHG impacts associated with the standards presented here do not include the full complement of health and
environmental effects that, if quantified and monetized, would increase the total monetized benefits. Instead,
the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts associated
with reductions in PM2.5 exposure.
A second way to present the net benefits of the proposal is using a
vehicle MY lifetime basis. Table 5 and Table 6 summarize EPA's
estimates of total discounted costs, fuel savings, and benefits through
the full lifetime of vehicles projected to be sold in MYs 2023-2026.
The estimated results presented here project the monetized
environmental and economic impacts associated with the proposed
standards. Note that standards continue at their MY2026 levels beyond
MY2026 in any scenario. At both a 3% and 7% discount rate all model
years show substantial fuel savings and net benefits.
Table 5--GHG Analysis of Lifetime Costs & Benefits To Meet the Proposed MYs 2023-2026 GHG Standards, 3% Discount
Rate
[For vehicles produced in MY 2023-2026]a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $4.8 $3.6 $1.9 $0.68
2024............................................ 5.9 7 3.6 4.7
2025............................................ 6.7 8.6 4.4 6.2
2026............................................ 8.1 13 7.2 12
---------------------------------------------------------------
Sum......................................... 26 33 17 24
----------------------------------------------------------------------------------------------------------------
[[Page 43736]]
Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.21 0.16 0.08 0.029
2024............................................ 0.26 0.3 0.16 0.2
2025............................................ 0.29 0.37 0.19 0.27
2026............................................ 0.35 0.58 0.31 0.54
---------------------------------------------------------------
Sum......................................... 1.1 1.4 0.74 1
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 3% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.
Table 6--GHG Analysis of Lifetime Costs & Benefits To Meet the Proposed MYs 2023-2026 GHG Standards, 7% Discount
Rate
[For vehicles produced in MY 2023-2026]a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $4.4 $2.6 $1.7 -$0.14
2024............................................ 5.5 4.7 3.3 2.4
2025............................................ 6.1 5.5 3.9 3.4
2026............................................ 7.3 8.2 6.2 7.2
---------------------------------------------------------------
Sum......................................... 23 21 15 13
----------------------------------------------------------------------------------------------------------------
Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.33 0.19 0.085 -0.053
2024............................................ 0.41 0.35 0.16 0.1
2025............................................ 0.45 0.41 0.19 0.15
2026............................................ 0.55 0.62 0.31 0.38
---------------------------------------------------------------
Sum......................................... 1.7 1.6 0.75 0.58
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 7% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.
E. How has EPA considered environmental justice in this proposal?
Executive Orders 12898 (59 FR 7629, February 16, 1994) and 14008
(86 FR 7619, February 1, 2021) direct federal agencies, to the greatest
extent practicable and permitted by law, to make achieving
environmental justice (EJ) 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. Chapter 8.3 discusses the potential environmental
justice concerns associated with this proposal. EPA defines
environmental justice as the fair treatment and meaningful
[[Page 43737]]
involvement of all people regardless of race, color, national origin,
or income with respect to the development, implementation, and
enforcement of environmental laws, regulations, and policies. Executive
Order 14008 also calls on federal agencies to make achieving
environmental justice part of their missions ``by developing programs,
policies, and activities to address the disproportionately high and
adverse human health, environmental, climate-related and other
cumulative impacts on disadvantaged communities, as well as the
accompanying economic challenges of such impacts.'' It declares a
policy ``to secure environmental justice and spur economic opportunity
for disadvantaged communities that have been historically marginalized
and overburdened by pollution and under-investment in housing,
transportation, water and wastewater infrastructure and health care.''
Under Executive Order 13563 (76 FR 3821), federal agencies may consider
equity, human dignity, fairness, and distributional considerations,
where appropriate and permitted by law.
EPA's 2016 ``Technical Guidance for Assessing Environmental Justice
in Regulatory Analysis'' provides recommendations on conducting the
highest quality analysis feasible, recognizing that data limitations,
time and resource constraints, and analytic challenges will vary by
media and regulatory context. \40\
---------------------------------------------------------------------------
\40\ ``Technical Guidance for Assessing Environmental Justice in
Regulatory Analysis.'' Epa.gov, Environmental Protection Agency,
https://www.epa.gov/sites/production/files/2016-06/documents/ejtg_5_6_16_v5.1.pdf. (June 2016).
---------------------------------------------------------------------------
EPA's mobile source regulatory program has historically reduced
significant amounts of both GHG and non-GHG pollutants to the benefit
of all U.S. residents, including populations that live near roads and
in communities with EJ concerns. EJ concerns may arise in the context
of this rulemaking in two key areas.
First, minority populations and low-income populations may be
especially vulnerable to the impacts of climate change. As discussed in
Section IV.C, this proposed rulemaking would mitigate the impacts of
climate change by achieving significant GHG emission reductions, which
would benefit populations that may be especially vulnerable to various
forms of damages associated with climate change.
Second, in addition to significant climate-change benefits, the
proposed standards would also impact non-GHG emissions. As discussed in
Section VII.L.2, numerous studies have found that environmental hazards
such as air pollution are more prevalent in areas where minority
populations and low-income populations represent a higher fraction of
the population compared with the general population. There is
substantial evidence, for example, that people who live or attend
school near major roadways are more likely to be of a racial minority,
Hispanic ethnicity, and/or low socioeconomic status (see Section
VII.L.2).
We expect this proposed rule would result in both small reductions
and small increases of non-GHG emissions. These effects could
potentially impact communities with EJ concerns, though not necessarily
immediately and not equally in all locations. For this proposal, the
air quality information needed to perform a quantified analysis of the
distribution of such impacts was not available. We therefore recommend
caution when interpreting these broad, qualitative observations.
We note that EPA intends to develop a future rule to control
emissions of GHGs as well as criteria and air toxic pollutants from
light-duty vehicles for MYs beyond 2026. We are considering how to
project air quality impacts from the changes in non-GHG emissions for
that future rulemaking (see Section V.C).
F. Affordability and Equity
In addition to considering environmental justice impacts, we have
examined the effects of the proposed standards on affordability of
vehicles and transportation services for low-income households in
Section VII.L of this Preamble and Chapter 8.4 of the DRIA. As with the
effects of the proposed standards on vehicle sales discussed in Section
VII.B, the effects of the proposed standards on affordability and
equity depend in part on two countervailing effects: The increase in
the up-front costs of new vehicles subject to more stringent standards,
and the decrease in operating costs from reduced fuel consumption over
time. The increase in up-front new vehicle costs has the potential to
increase the prices of used vehicles, to make credit more difficult to
obtain, and to make the least expensive new vehicles less desirable
compared to used vehicles. The reduction in operating costs over time
has the potential to mitigate or reverse all these effects. Lower
operating costs on their own increase mobility (see DRIA Chapter 3.1
for a discussion of rebound driving).
While social equity involves issues beyond income and
affordability, including race, ethnicity, gender, gender
identification, and residential location, the potential effects of the
proposed standards on lower-income households are of great importance
for social equity and reflect these contrasting forces. The overall
effects on vehicle ownership, including for lower-income households,
depend heavily on the role of fuel consumption in vehicle sales
decisions, as discussed in Section VII.M. At the same time, lower-
income households own fewer vehicles per household, are more likely to
buy used vehicles than new, and spend more on fuel than on vehicles on
an annual basis than higher-income households. In addition, for lower-
income households, fuel expenditures are a larger portion of household
income, so the fuel savings that would result from this proposal may be
more impactful to these consumers. Thus, the benefits of this proposal
may be stronger for lower-income households even if they buy used
vehicles: As vehicles meeting the proposed standards enter the used
vehicle market, they will retain the fuel economy/GHG-reduction
benefits, and associated fuel savings, while facing a smaller portion
of the upfront vehicle costs. The reduction in operating costs may also
increase access to transportation services, such as ride-hailing and
ride-sharing, where the lower per-mile costs may play a larger role
than up-front costs in pricing. As a result, lower-income consumers may
be affected more from the reduction in operating costs than the
increase in up-front costs.
New electric vehicles currently have higher up-front costs and
lower operating costs than gasoline vehicles and require access to
charging infrastructure that may not be readily available to many. EPA
has heard from some environmental justice groups and Tribes that
limited access to electric vehicles and charging infrastructure can be
a barrier for purchasing EVs. This proposal projects that the vast
majority of vehicles produced in the time frame of the proposed
standards will be gasoline-fueled vehicles (with EVs and PHEVs
gradually increasing to about 8 percent total market share by MY 2026
compared to about 4 percent in the No Action scenario, see DRIA Chapter
4.1.3, Table 4-30). However, EPA will monitor and study affordability
issues related to electric vehicles as their prevalence in the vehicle
fleet increases.
G. What alternatives is EPA considering?
1. Description of the Alternatives
Along with the proposed standards, EPA analyzed both a more
stringent and a less stringent alternative. For the less stringent
alternative, Alternative 1, EPA used the coefficients in the California
[[Page 43738]]
Framework for the 2.7 percent effective stringency level (as described
in Section II.B.1) as the basis for the MY 2023 stringency level and
the 2012 rule's MY 2025 standards as the basis for the MY 2026
stringency level, with linear year-over-year reductions between the two
points for MYs 2024 and 2025. EPA views the California Framework as a
reasonable basis for the least stringent alternative that EPA would
consider finalizing, since it represents a level of stringency that
five manufacturers have already committed to achieving. EPA did not
include incentive multipliers for Alternative 1, as doing so would only
further reduce the effective stringency of this Alternative, and EPA
views Alternative 1 as the lower end of stringency that it believes is
appropriate through 2026.
For the more stringent alternative, Alternative 2, EPA used the
2012 rule standards as the basis for MY 2023-2025 targets, with the
standards continuing to increase in stringency in a linear fashion for
MY 2026. Alternative 2 adopts the 2012 rule stringency levels in MY
2023 and follows the 2012 rule standard target levels through MY 2025.
EPA extended the same linear average year-over-year trajectory for MYs
2023-2025 to MY 2026 for the final standards under Alternative 2. As
noted in Section II.A.1, EPA believes that it is important to continue
to make progress in MY 2026 beyond the MY 2025 standard levels in the
2012 rule. As with the proposal, Alternative 2 meets this objective.
EPA did not include in Alternative 2 the proposed incentive multipliers
with the proposed cumulative credit cap in MYs 2022-2025, which would
have the effect of making Alternative 2 less stringent. As discussed in
Section II.B.1, EPA is requesting comment on whether or not to include
the proposed multipliers, and our request for comments extends to
whether to include multipliers both for the proposal and for
Alternative 2.\41\
---------------------------------------------------------------------------
\41\ 41 See ``Benefits and Costs of the EPA Light-duty Vehicle
GHG Proposal with and without Advanced Technology Multipliers,''
memorandum to Docket.
---------------------------------------------------------------------------
As previously noted in Section I.B.2, EPA is proposing several
modifications to program flexibilities. These proposed program changes,
except for the advanced technology multipliers, would also apply to the
alternatives. Table 7 below provides a list of the proposed
flexibilities and their applicability to the proposed and alternative
standards.
Table 7--Applicability of Revised Flexibility Provisions to the Proposal and Alternatives
----------------------------------------------------------------------------------------------------------------
Provision Proposal Alternative 1 Alternative 2
----------------------------------------------------------------------------------------------------------------
Extension of credit carry-forward Yes...................... Yes..................... Yes.
for MY 2016-2020 credits.
Advanced technology incentive Yes...................... No...................... No.
multipliers for MYs 2022-2025
with cap.
Increase of off-cycle menu cap Yes...................... Yes..................... Yes.
from 10 to 15 g/mile.
Reinstatement of full-size pickup Yes...................... Yes..................... Yes.
incentives for strong hybrids or
equivalent technologies for MYs
2022-2025.
----------------------------------------------------------------------------------------------------------------
EPA's technical analysis, presented in Section III, consists of model runs using a model capable of reflecting
some but not all of these provisions. The modeling includes consideration of advanced technology incentive
multipliers for the proposal but not for the alternatives. The model runs also include the 15 grams per mile
off-cycle menu cap as appropriate given the standards or targets to which a fleet being modeled is complying.
Not included in the model runs are the full-size pickup truck technology incentive credit or the extension of
the emissions credit carry-forward.
The fleet average targets for the two alternatives compared to the
proposed standards are provided in Table 8 below. EPA also requests
comment on the level of stringency for MY 2026 for the alternatives and
the proposed standards. Specifically, EPA requests comment on standards
for MY 2026 that would result in fleet average target levels that are
in the range of 5-10 g/mile lower (i.e., more stringent) than the
levels shown for MY 2026 in Table 8. EPA is requesting specific comment
on whether the level of stringency for MY 2026 should be greater in
keeping with the additional lead time available for this out-year
compared to MYs 2023-2025, and because EPA may determine that it is
appropriate, particularly in light of the accelerating transition to
electrified vehicles, to require additional reductions in this
timeframe. As discussed in detail in Section A.3 of the Executive
Summary, there has been a proliferation of recent announcements from
automakers signaling a rapidly growing shift in investment away from
internal-combustion technologies and toward high levels of
electrification. EPA has also heard from a wide range of stakeholders
over the past several months, including but not limited to the
automotive manufacturers and the automotive suppliers, that the
significant investments being made now to develop and launch new EV
product offerings and in the expansion of EV charging infrastructure
could enable higher levels of EV penetration to occur in the
marketplace by the MY 2026 time frame than EPA has projected in this
proposal for both the proposed MY 2026 standards and the Alternative 2
MY 2026 standards. The information concerning the investment landscape
potentially accelerating to an even greater extent of market
penetration of EV products helps inform EPA's request for comment on
the potential for a more stringent MY 2026 standard that would reflect
this information and related considerations, including any additional
information provided by commenters. In light of these stakeholder views
and other available information, EPA is soliciting comment on the
appropriateness of more stringent MY 2026 standards.
Table 8--Projected Fleet Average Target Levels for Proposed Standards and Alternatives
[CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
Proposal Alternative 1 Alternative 2
Model year projected projected projected
targets targets targets
----------------------------------------------------------------------------------------------------------------
2021............................................................ * 223 * 223 * 224
2022............................................................ * 220 * 220 * 220
[[Page 43739]]
2023............................................................ 199 203 195
2024............................................................ 189 194 186
2025............................................................ 180 185 177
2026 **......................................................... 171 177 169
----------------------------------------------------------------------------------------------------------------
* SAFE rule standards included here for reference.
** EPA is also requesting comment on MY 2026 standards that would result in fleet average levels that are 5-10 g/
mile more stringent than the levels shown.
[GRAPHIC] [TIFF OMITTED] TP10AU21.001
As shown in Figure 2, the range of alternatives that EPA has
analyzed is fairly narrow, with the proposed standard targets differing
from the alternatives in any given MY in MYs 2023-2026 by 2 to 6 g/
mile, although EPA is requesting comment on a wider range of standards,
particularly for MY 2026 as noted above. EPA believes this approach is
reasonable and appropriate considering the relatively limited lead time
for the proposed standards, especially for MYs 2023-2025, EPA's
assessment of feasibility, the existing automaker commitments to meet
the California Framework (representing about one-third of the auto
market), the standards adopted in the 2012 rule; and the need to reduce
GHG emissions. EPA provides a discussion of the feasibility of the
proposed standard and alternatives and the selection of the proposed
standards in Section III.D. The analysis of costs and benefits of
Alternatives 1 and 2 is shown in the DRIA Chapters 4, 6, and 10. EPA
requests comments on all aspects of Alternatives 1 and 2 or other
alternatives roughly within the stringency range of the proposal and
the Alternatives.
2. Summary of Costs and Benefits of the Alternatives
EPA estimates that Alternative 1 would result in significant
present-value net benefits of $76 billion to $130 billion (annualized
net benefits of $4.1 billion to $6.6 billion)--that is, the total
benefits far exceed the total costs of the program. Table 9 below
summarizes EPA's estimates of total discounted costs, fuel savings, and
benefits for Alternative 1. The results presented here project the
monetized
[[Page 43740]]
environmental and economic impacts associated with the proposed
standards during each calendar year through 2050. Alternative 1 also
would have significant benefits for consumers, as the fuel savings for
American drivers would total $98 billion to $200 billion through 2050.
With these fuel savings, consumers would benefit from reduced operating
costs over the vehicle lifetime.
The benefits include climate-related economic benefits from
reducing emissions of GHGs that contribute to climate change,
reductions in energy security externalities caused by U.S. petroleum
consumption and imports, the value of certain particulate matter-
related health benefits (including premature mortality), the value of
additional driving attributed to the rebound effect, and the value of
reduced refueling time needed to fill a more fuel-efficient vehicle.
The analysis also includes estimates of economic impacts stemming from
additional vehicle use, such as the economic damages caused by crashes,
congestion, and noise (from increased rebound driving). See the DRIA
for more information regarding these estimates.
Table 9--Monetized Discounted Costs, Benefits, and Net Benefits of Alternative 1 for Calendar Years Through 2050
[Billions of 2018 dollars] a b c d e
----------------------------------------------------------------------------------------------------------------
Present value Annualized value
---------------------------------------------------------------------------
3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate
----------------------------------------------------------------------------------------------------------------
Costs............................... $190 $110 $9.5 $9.2
Fuel savings........................ 200 98 10 7.9
Benefits............................ 120 93 6 5.4
Net benefits........................ 130 76 6.6 4.1
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values
are based on the stream of annual calendar year costs and benefits included in the analysis (2021-2050) and
discounted back to year 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and
2.5 percent) is used to calculate the present and annualized values of climate benefits for internal
consistency, while all other costs and benefits are discounted at either 3% or 7%.
\d \ Net benefits reflect the fuel savings plus benefits minus costs.
\e\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.
A second way to present the net benefits of the proposal is using a
vehicle MY lifetime basis. Table 10 and Table 11 summarize EPA's
estimates of total discounted costs, fuel savings, and benefits through
the full lifetime of vehicles projected to be sold in MYs 2023-2026
under Alternative 1. The estimated results presented here project the
monetized environmental and economic impacts associated with the
Alternative 1 standards. Note that standards continue at their MY2026
levels beyond MY2026 in any scenario. At both a 3% and 7% discount rate
all model years show substantial fuel savings and net benefits.
Table 10--GHG Analysis of Lifetime Costs & Benefits To Meet the Alternative 1 MYs 2023-2026 GHG Standards, 3%
Discount Rate
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $3.9 $3.4 $2 $1.5
2024............................................ 4.9 6.5 3.7 5.3
2025............................................ 5.6 7.7 4.5 6.5
2026............................................ 6.4 10 6 9.7
---------------------------------------------------------------
Sum......................................... 21 28 16 23
----------------------------------------------------------------------------------------------------------------
Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.17 0.15 0.085 0.067
2024............................................ 0.21 0.28 0.16 0.23
2025............................................ 0.24 0.33 0.19 0.28
2026............................................ 0.28 0.44 0.26 0.42
---------------------------------------------------------------
Sum......................................... 0.9 1.2 0.7 1
----------------------------------------------------------------------------------------------------------------
Notes:
[[Page 43741]]
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4, and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 3% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.
Table 11--GHG Analysis of Lifetime Costs & Benefits To Meet the Alternative 1 MYs 2023-2026 GHG Standards, 7%
Discount Rate
[For Vehicles Produced in MY 2023-2026] a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $3.7 $2.4 $1.7 $0.4
2024............................................ 4.7 4.3 3.2 2.8
2025............................................ 5.1 4.9 3.8 3.6
2026............................................ 5.6 6.2 5 5.6
---------------------------------------------------------------
Sum......................................... 19 18 14 12
----------------------------------------------------------------------------------------------------------------
Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.28 0.18 0.091 -0.0084
2024............................................ 0.35 0.32 0.17 0.14
2025............................................ 0.38 0.37 0.2 0.19
2026............................................ 0.42 0.47 0.26 0.31
---------------------------------------------------------------
Sum......................................... 1.4 1.3 0.72 0.63
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 7% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.
EPA estimates that Alternative 2 would result in significant
present value net benefits of $110 billion to $180 billion (annualized
net benefits of $5.7 billion to $9.1 billion)--that is, the total
benefits far exceed the total costs of the program. Table 12 below
summarizes EPA's estimates of total discounted costs, fuel savings, and
benefits for Alternative 2. The results presented here project the
monetized environmental and economic impacts associated with the
proposed standards during each calendar year through 2050. Alternative
2 also would have significant benefits for consumers, as the fuel
savings for American drivers would total $150 billion to $290 billion
through 2050. With these fuel savings, consumers would benefit from
reduced operating costs over the vehicle lifetime.
The benefits include climate-related economic benefits from
reducing emissions of GHGs that contribute to climate change,
reductions in energy security externalities caused by U.S. petroleum
consumption and imports, the value of certain particulate matter-
related health benefits (including premature mortality), the value of
additional driving attributed to the rebound effect, and the value of
reduced time needed to refuel a more fuel efficient vehicle. The
analysis also includes estimates of economic impacts stemming from
additional vehicle use, such as the economic damages caused by crashes,
congestion, and noise (from increased rebound driving). See the DRIA
for more information regarding these estimates.
[[Page 43742]]
Table 12--Monetized Discounted Costs, Benefits, and Net Benefits of Alternative 2 for Calendar Years Through
2050
[Billions of 2018 dollars] a b c d e
----------------------------------------------------------------------------------------------------------------
Present value Annualized value
---------------------------------------------------------------------------
3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate
----------------------------------------------------------------------------------------------------------------
Costs............................... $290 $180 $15 $14
Fuel Savings........................ 290 150 15 12
Benefits............................ 170 140 8.8 8
Net Benefits........................ 180 110 9.1 5.7
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values
are based on the stream of annual calendar year costs and benefits included in the analysis (2021-2050) and
discounted back to year 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and
2.5 percent) is used to calculate the present and annualized values of climate benefits for internal
consistency, while all other costs and benefits are discounted at either 3% or 7%.
\d\ Net benefits reflect the fuel savings plus benefits minus costs.
\e\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.
A second way to present the net benefits of the proposal is using a
vehicle MY lifetime basis. Table 13 and Table 14 summarize EPA's
estimates of total discounted costs, fuel savings, and benefits through
the full lifetime of vehicles projected to be sold in MYs 2023-2026
under Alternative 2. The estimated results presented here project the
monetized environmental and economic impacts associated with the
proposed standards. Note that standards continue at their MY2026 levels
beyond MY2026 in any scenario. At both a 3% and 7% discount rate all
model years show substantial fuel savings and net benefits.
Table 13--GHG Analysis of Lifetime Costs & Benefits To Meet the Alternative 2 MY 2023-2026 GHG Standards, 3%
Discount Rate
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $6.8 $7.7 $4.6 $5.5
2024............................................ 7.7 9.8 5.7 7.8
2025............................................ 8.4 11 6.5 9.1
2026............................................ 9.2 13 7.8 12
---------------------------------------------------------------
Sum......................................... 32 42 25 34
----------------------------------------------------------------------------------------------------------------
Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ $0.3 $0.33 $0.2 $0.24
2024............................................ 0.33 0.42 0.25 0.34
2025............................................ 0.37 0.48 0.28 0.39
2026............................................ 0.4 0.57 0.34 0.51
---------------------------------------------------------------
Sum......................................... 1.4 1.8 1.1 1.5
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 3% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.
[[Page 43743]]
Table 14--GHG Analysis of Lifetime Costs & Benefits To Meet the Alternative 2 MY 2023-2026 GHG Standards, 7%
Discount Rate
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $6.3 $5.4 $4 $3.1
2024............................................ 7 6.5 5 4.4
2025............................................ 7.4 7.1 5.5 5.2
2026............................................ 7.9 8.2 6.6 6.9
---------------------------------------------------------------
Sum......................................... 29 27 21 20
----------------------------------------------------------------------------------------------------------------
Annualized Values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.48 0.4 0.21 0.14
2024............................................ 0.53 0.49 0.26 0.22
2025............................................ 0.56 0.54 0.29 0.27
2026............................................ 0.59 0.61 0.34 0.37
---------------------------------------------------------------
Sum......................................... 2.2 2 1.1 1
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 7% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.
3. Summary of the Proposal's Costs and Benefits Compared to the
Alternatives
Here we present the proposal's costs and benefits (as summarized
previously in Section I.D) alongside the costs and benefits of the
alternatives (as summarized previously in Section I.G.2).
Table 15 below summarizes EPA's estimates of present value total
discounted costs, fuel savings, and benefits. Table 16 below summarizes
EPA's estimates of annualized values of the total discounted costs,
fuel savings, and benefits. The results presented in these tables
project the monetized environmental and economic impacts associated
with the proposed standards during each calendar year through 2050. The
benefits include climate-related economic benefits from reducing
emissions of GHGs that contribute to climate change, reductions in
energy security externalities caused by U.S. petroleum consumption and
imports, the value of certain particulate matter-related health
benefits (including premature mortality), the value of additional
driving attributed to the rebound effect, and the value of reduced
refueling time needed to fill a more fuel efficient vehicle. The
analysis also includes estimates of economic impacts stemming from
additional vehicle use, such as the economic damages caused by crashes,
congestion, and noise (from increased rebound driving). See the DRIA
for more information regarding these estimates.
Table 15--Present Value Monetized Discounted Costs, Benefits, and Net Benefits of the Proposed Program and Alternatives for Calendar Years Through 2050
[Billions of 2018 dollars] a b c d e
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate
-----------------------------------------------------------------------------------------------------------------
Proposal Alternative 1 Alternative 2 Proposal Alternative 1 Alternative 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs................................. $240 $190 $290 $150 $110 $180
Fuel Savings.......................... 250 200 290 120 98 150
Benefits.............................. 130 120 170 110 93 140
Net Benefits.......................... 140 130 180 86 76 110
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values are based on the stream of annual
calendar year costs and benefits included in the analysis (2021-2050) and discounted back to year 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different estimates of the social cost of each
greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates; 95th percentile at 3% discount rate), which each increase over time. In this
table, we show the benefits associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single central SC-GHG point
estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-GHG estimates and present them later in this
preamble. As discussed in Chapter 3.3 of the DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2
percent and lower, is also warranted when discounting intergenerational impacts.
[[Page 43744]]
\c\ The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and 2.5 percent) is used to calculate the
present and annualized values of climate benefits for internal consistency, while all other costs and benefits are discounted at either 3% or 7%.
\d\ Net benefits reflect the fuel savings plus benefits minus costs.
\e\ Non-GHG impacts associated with the standards presented here do not include the full complement of health and environmental effects that, if
quantified and monetized, would increase the total monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect
only human health impacts associated with reductions in PM2.5 exposure.
Table 16--Annualized Monetized Discounted Costs, Benefits, and Net Benefits of the Proposed Program and Alternatives for Calendar Years Through 2050
[Billions of 2018 dollars] a b c d e
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate
-----------------------------------------------------------------------------------------------------------------
Proposal Alternative 1 Alternative 2 Proposal Alternative 1 Alternative 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs................................. $12 $9.5 $15 $12 $9.2 $14
Fuel Savings.......................... 13 10 15 9.9 7.9 12
Benefits.............................. 6.9 6 8.8 6.3 5.4 8
Net Benefits.......................... 7.3 6.6 9.1 4.2 4.1 5.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values are based on the stream of annual
calendar year costs and benefits included in the analysis (2021-2050) and discounted back to year 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different estimates of the social cost of each
greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates; 95th percentile at 3% discount rate), which each increase over time. In this
table, we show the benefits associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single central SC-GHG point
estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-GHG estimates and present them later in this
preamble. As discussed in Chapter 3.3 of the DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2
percent and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and 2.5 percent) is used to calculate the
present and annualized values of climate benefits for internal consistency, while all other costs and benefits are discounted at either 3% or 7%.
\d\ Net benefits reflect the fuel savings plus benefits minus costs.
\e\ Non-GHG impacts associated with the standards presented here do not include the full complement of health and environmental effects that, if
quantified and monetized, would increase the total monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect
only human health impacts associated with reductions in PM2.5 exposure.
A second way to present the net benefits is using a vehicle MY
lifetime basis. Table 17 and Table 18 summarize EPA's estimates of
total discounted costs, fuel savings, and benefits through the full
lifetime of vehicles projected to be sold in MYs 2023-2026. The
estimated results presented here project the monetized environmental
and economic impacts associated with the proposed standards. Note that
standards continue at their MY2026 levels beyond MY2026 in any
scenario. At both a 3% and 7% discount rate all model years show
substantial fuel savings and net benefits.
Table 17--Present Value GHG Analysis of Lifetime Costs & Benefits for MY 2023-2026 GHG Standards Under the Proposal and Alternatives
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fuel Net Fuel Net
MY Costs savings Benefits benefits Costs savings Benefits benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposal
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023............................................................ $4.8 $3.6 $1.9 $0.68 $4.4 $2.6 $1.7 -$0.14
2024............................................................ 5.9 7 3.6 4.7 5.5 4.7 3.3 2.4
2025............................................................ 6.7 8.6 4.4 6.2 6.1 5.5 3.9 3.4
2026............................................................ 8.1 13 7.2 12 7.3 8.2 6.2 7.2
---------------------------------------------------------------------------------------
Sum......................................................... 26 33 17 24 23 21 15 13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alternative 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023............................................................ $3.9 $3.4 $2 $1.5 $3.7 $2.4 $1.7 $0.4
2024............................................................ 4.9 6.5 3.7 5.3 4.7 4.3 3.2 2.8
2025............................................................ 5.6 7.7 4.5 6.5 5.1 4.9 3.8 3.6
2026............................................................ 6.4 10 6 9.7 5.6 6.2 5 5.6
---------------------------------------------------------------------------------------
Sum......................................................... 21 28 16 23 19 18 14 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alternative 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023............................................................ $6.8 $7.7 $4.6 $5.5 $6.3 $5.4 $4 $3.1
[[Page 43745]]
2024............................................................ 7.7 9.8 5.7 7.8 7 6.5 5 4.4
2025............................................................ 8.4 11 6.5 9.1 7.4 7.1 5.5 5.2
2026............................................................ 9.2 13 7.8 12 7.9 8.2 6.6 6.9
---------------------------------------------------------------------------------------
Sum......................................................... 32 42 25 34 29 27 21 20
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different estimates of the social cost of each
greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates; 95th percentile at 3% discount rate), which each increase over time. In this
table, we show the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single central SC-GHG point
estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-GHG estimates and present them later in this
preamble. As discussed in Chapter 3.3 of the DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2
percent and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate the present and annualized value of SC-
GHGs for internal consistency, while all other costs and benefits are discounted at 3% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health and environmental effects that, if
quantified and monetized, would increase the total monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect
only human health impacts associated with reductions in PM2.5 exposure.
Table 18--Annualized GHG Analysis of Lifetime Costs & Benefits for MY 2023-2026 GHG Standards Under the Proposal and Alternatives
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fuel Net Fuel Net
MY Costs savings Benefits benefits Costs savings Benefits benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposal
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.......................................................... $0.21 $0.16 $0.08 $0.029 $0.33 $0.19 $0.085 -$0.053
2024.......................................................... 0.26 0.3 0.16 0.2 0.41 0.35 0.16 0.1
2025.......................................................... 0.29 0.37 0.19 0.27 0.45 0.41 0.19 0.15
2026.......................................................... 0.35 0.58 0.31 0.54 0.55 0.62 0.31 0.38
-----------------------------------------------------------------------------------------
Sum....................................................... 1.1 1.4 0.74 1 1.7 1.6 0.75 0.58
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alternative 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.......................................................... $0.17 $0.15 $0.085 $0.067 $0.28 $0.18 $0.091 -$0.0084
2024.......................................................... 0.21 0.28 0.16 0.23 0.35 0.32 0.17 0.14
2025.......................................................... 0.24 0.33 0.19 0.28 0.38 0.37 0.2 0.19
2026.......................................................... 0.28 0.44 0.26 0.42 0.42 0.47 0.26 0.31
-----------------------------------------------------------------------------------------
Sum....................................................... 0.9 1.2 0.7 1 1.4 1.3 0.72 0.63
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alternative 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.......................................................... $0.3 $0.33 $0.2 $0.24 $0.48 $0.4 $0.21 $0.14
2024.......................................................... 0.33 0.42 0.25 0.34 0.53 0.49 0.26 0.22
2025.......................................................... 0.37 0.48 0.28 0.39 0.56 0.54 0.29 0.27
2026.......................................................... 0.4 0.57 0.34 0.51 0.59 0.61 0.34 0.37
-----------------------------------------------------------------------------------------
Sum....................................................... 1.4 1.8 1.1 1.5 2.2 2 1.1 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different estimates of the social cost of each
greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates; 95th percentile at 3% discount rate), which each increase over time. For the
presentational purposes of this table, we show the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a
single central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-GHG estimates and
present them later in this preamble. As discussed in Chapter 3.3 of the RIA, a consideration of climate benefits calculated using discount rates below
3 percent, including 2 percent and lower, are also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate the present and annualized value of SC-
GHGs for internal consistency, while all other costs and benefits are discounted at 3% in this table.
[[Page 43746]]
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health and environmental effects that, if
quantified and monetized, would increase the total monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect
only human health impacts associated with reductions in PM2.5 exposure.
II. EPA Proposal for MY 2023-2026 Light-Duty Vehicle GHG Standards
A. Proposed Model Year 2023-2026 GHG Standards for Light-Duty Vehicles,
Light-Duty Trucks, and Medium Duty Passenger Vehicles
As noted, the transportation sector is the largest U.S. source of
GHG emissions, making up 29 percent of all emissions.\42\ Within the
transportation sector, light-duty vehicles are the largest contributor,
58 percent, to transportation GHG emissions in the U.S.\43\ EPA has
concluded that more stringent standards are appropriate in light of our
reassessment of the need to reduce GHG emissions, technological
feasibility, costs, lead time, and other factors. The program that EPA
is proposing through MY 2026 in this notice does not represent the
level of GHG reductions that will ultimately be achievable and
appropriate for the light-duty sector, but it does serve as an
important stepping off point for a longer-term program beyond 2026. The
following section provides the details of EPA's proposed standards and
related provisions, followed by a discussion of the alternatives EPA
considered. EPA requests comments on all of the proposed provisions and
alternatives.
---------------------------------------------------------------------------
\42\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2019 (EPA-430-R-21-005, published April 2021).
\43\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2019 (EPA-430-R-21-005, published April 2021).
---------------------------------------------------------------------------
EPA is proposing revised, more stringent standards to control the
emissions of greenhouse gases (GHGs) from MY 2023 and later light-duty
vehicles.\44\ Carbon dioxide (CO2) is the primary greenhouse
gas resulting from the combustion of vehicular fuels. The standards
regulate CO2 on a gram per mile (g/mile) basis, which EPA
defines by separate footprint curves for a manufacturer's car and truck
fleets.\45\ Based on complying with these proposed standards, the
industry-wide average emissions target for new light-duty vehicles is
projected to be 171 g/mile of CO2 in MY 2026.\46\ Also, as
discussed in Section II.C below, EPA is requesting comment on standards
for MY 2026 that are in the range of 5-10 g/mile lower (i.e., more
stringent) than the levels proposed, resulting in fleet average target
levels that are in the range of 166-161 g/mile. EPA is not proposing to
change existing averaging, banking, and trading program elements,
except for a proposed limited extension of credit carry-forward for one
or two years for credits generated in MYs 2016-2020, as discussed in
Section II.B.4. The proposed standards would apply to passenger cars,
light-duty trucks, and medium-duty passenger vehicles (MDPVs).\47\ As
an overall group, they are referred to in this preamble as light-duty
vehicles or simply as vehicles. In this preamble, passenger cars may be
referred to simply as ``cars,'' and light-duty trucks and MDPVs as
``light trucks'' or ``trucks.''
---------------------------------------------------------------------------
\44\ See Sections III and VI for a discussion of lead time.
\45\ Footprint curves are graphical representations of the
algebraic formulae defining the emission standards in the regulatory
text.
\46\ The reference to CO2 here refers to
CO2 equivalent reductions, as this level includes some
reductions in emissions of greenhouse gases other than
CO2, from refrigerant leakage, as one part of the A/C
related reductions.
\47\ As with the previous GHG emissions standards, EPA will
continue to use the same vehicle category definitions as in the CAFE
program. MDPVs are grouped with light trucks for fleet average
compliance determinations.
---------------------------------------------------------------------------
As discussed in section II.B, EPA is proposing several revised
provisions that would allow manufacturers to generate credits or that
provide additional incentives for use of advanced emission reduction
technologies. These include ``off-cycle'' credits for technologies that
reduce CO2 emissions during off-cycle operation that are not
reasonably accounted for by the 2-cycle tests used for compliance
purposes. EPA is proposing to increase the existing credit cap for
menu-based credits from 10 g/mile to 15 g/mile and is proposing a
number of program revisions and clarifications to address issues that
have been identified as EPA has implemented the program. In addition,
EPA is proposing to extend multiplier incentives for EVs, PHEVs, and
FCVs, with a cumulative cap on credits. Multiplier incentives allow
these low-emitting vehicles to count as more than one vehicle in a
manufacturer's compliance calculation. EPA is proposing to eliminate
multiplier incentives for natural gas vehicles adopted in the SAFE rule
after MY 2022. EPA is also proposing to reinstate full size pick-up
truck incentives through MY 2025 for vehicles that meet efficiency
performance criteria or include strong hybrid technology at a minimum
level of production volumes. The SAFE rule removed the full-size pickup
incentives for MYs 2022-2025.
The current program includes several program elements that will
remain in place, without change. EPA is not proposing to change the
fundamental structure of the standards, which are based on the
footprint attribute with separate footprint curves for cars and trucks.
EPA is not proposing to change the existing CH4 and
N2O emissions standards. EPA is not proposing changes to the
program structure in terms of vehicle certification, compliance, and
enforcement. These aspects of the program continue to function as
intended and EPA does not currently believe changes are needed. EPA is
continuing to use tailpipe-only values to determine vehicle GHG
emissions, without accounting for upstream emissions (EVs and PHEVs
will continue to use 0 g/mile through MY 2026). EPA is also not
proposing changes to current program opportunities to earn credits
toward the fleet-wide average CO2 standards for improvements
to air conditioning systems. The current A/C credits program provides
credits for improvements to address both hydrofluorocarbon (HFC)
refrigerant direct losses (i.e., system ``leakage'') and indirect
CO2 emissions related to the increased load on the engine
(also referred to as ``A/C efficiency'' related emissions).
1. What fleet-wide emissions levels correspond to the CO2
standards?
EPA is proposing revised more stringent standards for MYs 2023-2026
that are projected to result in an industry-wide average target for the
light-duty fleet of 171 g/mile of CO2 in MY 2026. The
proposed standards are designed to reach the same level of stringency
as the California Framework emission reduction targets in MY 2023, and
then ramp down in a linear fashion with year over year average
stringency increases of 4.7-5.0 percent. For MY 2026, the proposal goes
beyond the 2012 rule level of stringency for MY 2025, by about 3
percent more stringent, making the proposed MY 2026 standard the most
stringent vehicle GHG standard that EPA has proposed to date. EPA
believes that is possible and worthwhile to make additional progress in
MY 2026 by surpassing the level of stringency of the original MY 2025
standards established nine years ago in the 2012 rule. EPA is proposing
an ambitious and reasonable approach that would take the initial steps
towards making needed
[[Page 43747]]
reductions in GHG emissions. EPA does not propose any change to the
approach of having separate standards for cars and light trucks under
existing program definitions.
The industry fleet average and car/truck year-over-year percent
reductions for the proposed standards compared to the existing SAFE
rule standards are provided in Table 19 below. For passenger cars, the
proposed footprint curves call for reducing CO2 by 8.3
percent in MY 2023 followed by year over year reductions of 4.7 to 5.1
percent from the MY 2023 passenger car standard through MY 2026. For
light-duty trucks, the proposed footprint curves standards would
require reducing CO2 by 10.8 percent in MY 2023 followed by
year over year reductions of 4.7 to 5.2 percent on average from the MY
2023 light-duty truck standard through MY 2026.
Table 19--Projected Industry Fleet Average Target Year-Over-Year Percent Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
SAFE rule Proposal
-----------------------------------------------------------------------------------------------
Cars (%) Trucks (%) Combined (%) Cars (%) Trucks (%) Combined (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.................................................... 1.7 1.5 1.6 8.3 10.8 9.8
2024.................................................... 1.1 1.2 1.2 4.8 4.7 4.7
2025.................................................... 2.3 2.0 2.2 5.1 5.0 4.9
2026.................................................... 1.8 1.6 1.7 * 4.7 * 5.2 * 5.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The percentages shown do not include EPA's request for comments on MY 2026 standards that are 5-10 g/mile more stringent than proposed.
For light-trucks, EPA is proposing to change the upper right
cutpoints of the CO2-footprint curves (i.e., the footprint
sizes in sq. ft. at which the CO2 standards level off as
flat CO2 target values for larger vehicle footprints. See
Figure 5 below). The SAFE rule altered these cutpoints and EPA is now
proposing to restore them to the original upper right cutpoints
initially established in the 2012 rule, for MYs 2023-2026, essentially
requiring increasingly more stringent CO2 targets at the
higher footprint range up to the revised cutpoint levels. The shapes of
the curves and the cutpoints are discussed in Section II.A.2.
The 171 g/mile estimated industry-wide target for MY 2026 noted
above is based on EPA's current fleet mix projections for MY 2026
(approximately 50 percent cars and 50 percent trucks, with only slight
variations from MY 2023-2026). As discussed below, the final fleet
average standards for each manufacturer ultimately will depend on each
manufacturer's actual rather than projected production in each MY from
MY 2023 to MY 2026 under the sales-weighted footprint-based standard
curves for the car and truck regulatory classes. In the 2012 rule, EPA
estimated that the fleet average target would be 163 g/mile in MY 2025
based on the projected fleet mix for MY 2025 (67 percent car and 33
percent trucks) based on information available at the time of the 2012
rulemaking. Primarily due to the historical and ongoing shift in fleet
mix that included more crossover and small and mid-size SUVs and fewer
passenger cars, EPA's projection in the Midterm Evaluation (MTE)
January 2017 Final Determination for the original MY 2025 fleet average
target level increased to 173 g/mile.\48\ EPA has again updated its
fleet mix projections and now projects that the original 2012 rule MY
2025 footprint curves standards would result in an industry-wide fleet
average target level of 177 g/mile. The projected fleet average targets
under the 2012 rule, using the updated fleet mix projections and the
projected fleet average targets for the proposal are provided in Table
20 below. Figure 3 below, based on the values in Table 20, shows the
proposed standards target levels along with estimated targets for the
2012 rule, SAFE rule, and California Framework for comparison.\49\
---------------------------------------------------------------------------
\48\ ``Final Determination on the Appropriateness of the Model
Year 2022-2025 Light-Duty Vehicle Greenhouse Gas Emissions Standards
under the Midterm Evaluation,'' EPA-420-R-17-001, January 2017.
\49\ For comparison purposes, the California Framework estimates
are based on a scenario in which all manufacturers meet the
California Framework in MYs 2021-2026 (not only the manufacturers
that agreed to the California Framework).
Table 20--Fleet Average Target Projections for the Proposed Standards Compared to Updated Fleet Average Target
Projections for the 2012 Rule, SAFE Rule and California Framework
[CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
2012 Rule SAFE rule California
Proposal projected projected framework
MY projected targets targets projected
targets (updated) (updated) targets
----------------------------------------------------------------------------------------------------------------
2021............................................ * 223 214 223 214
2022............................................ * 220 205 220 206
2023............................................ 199 195 216 199
2024............................................ 189 186 214 191
2025............................................ 180 177 209 184
[[Page 43748]]
2026............................................ * 171 177 205 177
----------------------------------------------------------------------------------------------------------------
* Projected targets under the SAFE rule standards.
** EPA is also requesting comment on MY 2026 standards that would result in fleet average levels that are 5-10 g/
mile more stringent than the level shown.
[GRAPHIC] [TIFF OMITTED] TP10AU21.002
EPA's standards are based in part on EPA's projection of average
industry wide CO2-equivalent emission reductions from A/C
improvements, where the footprint curves are made numerically more
stringent by an amount equivalent to this projection of A/C refrigerant
leakage credits.\50\ Including this projection of A/C credits for
purposes of setting GHG standards levels is consistent with the 2012
rule and the SAFE rule.
---------------------------------------------------------------------------
\50\ The total A/C adjustment is 18.8 g/mile for cars and 24.4
g/mile for trucks.
---------------------------------------------------------------------------
Table 21 below shows overall fleet average target levels for both
cars and light trucks that are projected over the implementation period
of the proposed standards. A more detailed manufacturer by manufacturer
break down of the projected target and achieved levels is provided in
Section III.B.1 below. The actual fleet-wide average g/mile level that
would be achieved in any year for cars and trucks will depend on the
actual production of vehicles for that year, as well as the use of the
various credit and averaging, banking, and trading provisions. For
example, in any year, manufacturers would be able to generate credits
from cars and use them for compliance with the truck standard, or vice
versa. In Section V, EPA discusses the year-by-year estimate of
emissions reductions that are projected to be achieved by the proposed
standards.
In general, the schedule of the proposed standards allows an
incremental phase-in to the MY 2026 level and reflects consideration of
the appropriate lead time for manufacturers to take actions necessary
to meet the
[[Page 43749]]
proposed standards.\51\ The technical feasibility of the standards is
discussed in Section III below and in the DRIA. Note that MY 2026 is
the final MY in which the proposed standards become more stringent. The
MY 2026 CO2 standards would remain in place for later MYs,
unless and until revised by EPA in a future rulemaking for those MYs.
---------------------------------------------------------------------------
\51\ As discussed in Section III, EPA has used the Corporate
Average Fuel Economy (CAFE) Compliance and Effects Modeling System
(CCEMS) to support the technical assessment. Among the ways EPA has
considered lead time in the proposal is by using the constraints
built into the CCEMS model which are designed to represent lead-time
constraints, including the use of redesign and refresh cycles. See
CCEMS Model Documentation on web page https://www.nhtsa.gov/corporate-average-fuel-economy/compliance-and-effects-modeling-system and contained in the docket for this rule.
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EPA has estimated the overall fleet-wide CO2 emission
levels that correspond with the attribute-based footprint standards,
based on projections of the composition of each manufacturer's fleet in
each year of the program. As noted above, EPA estimates that, on a
combined fleet-wide national basis, the 2026 MY standards would result
in a level of 171 g/mile CO2. The derivation of the 171 g/
mile estimate is described in Section III.A. EPA aggregated the
estimates for individual manufacturers based on projected production
volumes into the fleet-wide averages for cars, trucks, and the entire
fleet, shown in Table 21.\52\ As discussed above, the combined fleet
estimates are based on projected fleet mix of cars and trucks that
varies over the MY 2023-2026 timeframe. This fleet mix distribution can
also be found in Section III.A.
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\52\ Due to rounding during calculations, the estimated fleet-
wide CO2 target levels may vary by plus or minus 1 gram.
Table 21--Estimated Fleet-Wide CO2 Target Levels Corresponding to the Proposed Standards
----------------------------------------------------------------------------------------------------------------
Cars CO2 (g/ Trucks CO2 (g/ Fleet CO2 (g/
Model year mile) mile) mile)
----------------------------------------------------------------------------------------------------------------
2023............................................................ 165 232 199
2024............................................................ 157 221 189
2025............................................................ 149 210 180
2026 and later *................................................ 142 199 171
----------------------------------------------------------------------------------------------------------------
** EPA is also requesting comment on MY 2026 standards that would result in fleet average levels that are 5-10 g/
mile more stringent than the levels shown.
As shown in Table 21, fleet-wide CO2 emission target
levels for cars under the proposed standards are projected to decrease
from 165 to 142 g/mile between MY 2023 and MY 2026. Similarly, fleet-
wide CO2 target levels for trucks are projected to decrease
from 232 to 199 g/mile. These numbers do not reflect the effects of
flexibilities and credits in the program.\53\ The estimated fleetwide
achieved values can be found in Section V.
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\53\ Nor do they reflect flexibilities under the ABT program.
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As noted above, EPA is proposing standards that set increasingly
stringent levels of CO2 control from MY 2023 though MY 2026.
Applying the CO2 footprint curves applicable in each MY to
the vehicles (and their footprint distributions) expected to be sold in
each MY produces progressively more stringent estimates of fleet-wide
CO2 emission standards. EPA believes manufacturers can
achieve the proposed standards' important CO2 emissions
reductions through the application of available control technology at
reasonable cost, as well as the use of program flexibilities.
The existing program includes several provisions that we are not
proposing to change and so would continue during the implementation
timeframe of this proposed rule. Consistent with the requirement of CAA
section 202(a)(1) that standards be applicable to vehicles ``for their
useful life,'' the proposed MY 2023-2026 vehicle standards will apply
for the useful life of the vehicle.\54\ Also, EPA is not proposing any
changes to the test procedures over which emissions are measured and
weighted to determine compliance with the GHG standards. These
procedures are the Federal Test Procedure (FTP or ``city'' test) and
the Highway Fuel Economy Test (HFET or ``highway'' test). While EPA may
consider requiring the use of test procedures other than the 2-cycle
test procedures in a future rulemaking, EPA is not considering any test
procedure changes in this rulemaking.
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\54\ The GHG emission standards apply for a useful life of 10
years or 120,000 miles for LDVs and LLDTs and 11 years or 120,000
miles for HLDTs and MDPVs. See 40 CFR 86.1805-17.
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EPA has analyzed the feasibility of achieving the proposed
CO2 standards through the application of currently available
technologies, based on projections of the technology and technology
penetration rates to reduce emissions of CO2, during the
normal redesign process for cars and trucks, taking into account the
effectiveness and cost of the technology. The results of the analysis
are discussed in detail in Section III below and in the DRIA. EPA also
presents the overall estimated costs and benefits of the proposed car
and truck CO2 standards in Section VII.I.
2. What are the proposed CO2 attribute-based standards?
As with the existing GHG standards, EPA is proposing separate car
and truck standards--that is, vehicles defined as cars would have one
set of footprint-based curves, and vehicles defined as trucks would
have a different set.\55\ In general, for a given footprint, the
CO2 g/mile target \56\ for trucks is higher than the target
for a car with the same footprint. The curves are described
mathematically in EPA's regulations by a family of piecewise linear
functions (with respect to vehicle footprint) that gradually and
continually ramp down from the MY 2022 curves established in the SAFE
rule. EPA's proposed minimum and maximum footprint targets and the
corresponding cutpoints are provided below in Table 22 for MYs 2023-
2026 along with the slope and intercept defining the linear function
for footprints falling between the minimum and maximum footprint
values. For footprints falling between the minimum and maximum, the
targets are calculated as follows: Slope x Footprint + Intercept =
Target. Figure 4 and Figure 5 provide the existing MY 2021-2022 and
proposed MY 2023-2026 footprint curves graphically for both car and
light trucks, respectively.
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\55\ See 49 CFR part 523. Generally, passenger cars include cars
and smaller cross-overs and SUVs, while the truck category includes
larger cross-overs and SUVs, minivans, and pickup trucks.
\56\ Because compliance is based on a sales-weighting of the
full range of vehicles in a manufacturer's car and truck fleets, the
foot-print based CO2 emission levels of specific vehicles
within the fleet are referred to as targets, rather than standards.
[[Page 43750]]
Table 22--Proposed Footprint-Based CO2 Standard Curve Coefficients
--------------------------------------------------------------------------------------------------------------------------------------------------------
Car Truck
---------------------------------------------------------------------------------------
2023 2024 2025 2026 2023 2024 2025 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
MIN CO2 (g/mi).................................................. 145.6 138.6 131.9 125.6 181.1 172.1 163.5 155.4
MAX CO2 (g/mi).................................................. 199.1 189.5 180.3 171.6 312.1 296.5 281.8 267.8
Slope (g/mi/ft2)................................................ 3.56 3.39 3.23 3.07 3.97 3.77 3.58 3.41
Intercept (g/mi)................................................ -0.4 -0.4 -0.3 -0.3 18.4 17.4 16.6 15.8
MIN footprint (ft2)............................................. 41 41 41 41 41 41 41 41
MAX footprint (ft2)............................................. 56 56 56 56 74 74 74 74
--------------------------------------------------------------------------------------------------------------------------------------------------------
BILLING CODE 6560-01-P
[GRAPHIC] [TIFF OMITTED] TP10AU21.003
[[Page 43751]]
[GRAPHIC] [TIFF OMITTED] TP10AU21.004
BILLING CODE 6560-01-C
The shapes of the proposed MY 2023-2026 car curves are similar to
the MY 2022 curve. By contrast, the proposed MY 2023-2026 truck curves
return to the cutpoint of 74.0 sq ft originally established in the 2012
rule, but changed in the SAFE rule.\57\ The gap between the 2022 curves
and the 2023 curves is indicative of the design of the proposed
standards as described earlier, where the gap between the MY 2022 and
MY 2023 curves is roughly double the gap between the curves for MYs
2024-2026.
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\57\ 77 FR 62781.
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3. EPA's Statutory Authority Under the CAA
i. Standards-Setting Authority Under CAA Section 202(a)
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, when setting GHG standards for light-duty
vehicles, EPA considers such issues as technology effectiveness,
technology cost (per vehicle, per manufacturer, and per consumer), the
lead time necessary to implement the technology, and--based on these
considerations--the feasibility and practicability of potential
standards; as weel as 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; and other relevant factors such as impacts on
safety.
Pursuant to Title II of the Clean Air Act, EPA has taken a
comprehensive, integrated approach to mobile source emission control
that has produced benefits well in excess of the costs of regulation.
In developing the Title II program, the Agency's historic, initial
focus was on personal vehicles since that category represented the
largest source of mobile source emissions.
Title II emission standards have stimulated the development of a
broad set of advanced automotive technologies, such as on-board
computers and fuel injection systems, which have been the building
blocks of automotive designs and have yielded not only lower pollutant
emissions, but improved vehicle performance, reliability, and
durability. In response to EPA's adoption of Title II emission
standards for GHGs from light-duty vehicles in 2010 and later,
manufacturers have continued to significantly ramp up their development
and application of a wide range of new and improved technologies,
including more fuel-efficient engine designs, transmissions,
aerodynamics, and tires, air conditioning systems that contribute to
lower GHG emissions, and various levels of electrified vehicle
technologies.
This proposed rule implements a specific provision from Title II,
section 202(a). Section 202(a)(1) of the CAA, 42 U.S.C. 7521(a)(1),
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.'' Once
EPA makes the appropriate endangerment and cause or contribute
findings,\58\ then section 202(a) authorizes EPA to issue standards
applicable to emissions of those pollutants. Indeed, EPA's obligation
to do so is mandatory. See Coalition for Responsible Regulation v.
[[Page 43752]]
EPA, 684 F.3d 102, 126-27 (D.C. Cir. 2012); Massachusetts v. EPA, 549
U.S. 497, 533 (2007). Moreover, EPA's mandatory legal duty to
promulgate these emission standards derives from ``a statutory
obligation wholly independent of DOT's mandate to promote energy
efficiency.'' Massachusetts, 549 U.S. at 532. Consequently, EPA has no
discretion to decline to issue greenhouse gas standards under section
202(a), or to defer issuing such standards due to NHTSA's regulatory
authority to establish fuel economy standards. Rather, ``[j]ust as EPA
lacks authority to refuse to regulate on the grounds of NHTSA's
regulatory authority, EPA cannot defer regulation on that basis.''
Coalition for Responsible Regulation, 684 F.3d at 127.
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\58\ EPA did so in 2009 for the group of six well-mixed
greenhouse gases--carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride--which
taken in combination endanger both the public health and the public
welfare of current and future generations. EPA further found that
the combined emissions of these greenhouse gases from new motor
vehicles and new motor vehicle engines contribute to greenhouse gas
air pollution that endangers public health and welfare. 74 FR 66496
(Dec. 15, 2009).
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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
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 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.'' CAA section 202(a)(2); see also NRDC v. EPA, 655 F. 2d 318,
322 (D.C. Cir. 1981). EPA must consider costs to those entities which
are directly subject to the standards. Motor & Equipment Mfrs. Ass'n
Inc. v. EPA, 627 F. 2d 1095, 1118 (D.C. Cir. 1979). Thus, ``the
[s]ection 202(a)(2) reference to compliance costs encompasses only the
cost to the motor-vehicle industry to come into compliance with the new
emission standards, and does not mandate consideration of costs to
other entities not directly subject to the proposed standards.'' See
Coalition for Responsible Regulation, 684 F.3d at 128.
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 [a particular device].
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. Finally,
with respect to regulation of vehicular greenhouse gas emissions, EPA
is not ``required to treat NHTSA's . . . regulations as establishing
the baseline for the [section 202(a) standards].'' Coalition for
Responsible Regulation, 684 F.3d at 127 (noting that the section 202(a)
standards provide ``benefits above and beyond those resulting from
NHTSA's fuel-economy standards.'')
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 (section
202(a)(2)), lead time necessary for compliance (section 202(a)(2)),
safety (see NRDC, 655 F. 2d at 336 n. 31) \59\ 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).
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\59\ Since its earliest Title II regulations, EPA has considered
the safety of pollution control technologies. See 45 FR 14496, 14503
(1980) (``EPA would not require a particulate control technology
that was known to involve serious safety problems. If during the
development of the trap-oxidizer safety problems are discovered, EPA
would reconsider the control requirements implemented by this
rulemaking'').
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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 EPA is not required to do so (as distinguished from
standards under provisions such as section 202(a)(3) and section
213(a)(3)). Section 202(a) of the CAA 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' ''); NPRA v.
EPA, 287 F.3d 1130, 1135 (D.C. Cir. 2002) (EPA decisions, under CAA
provision authorizing technology-forcing standards, based on complex
scientific or technical analysis are accorded particularly great
deference); see also 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);
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).
ii. 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 CAA,
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)).
EPA establishes the test procedures under which compliance with the
CAA GHG standards is measured. EPA's testing authority under the CAA is
broad and flexible. EPA has also developed tests with additional cycles
(the so-called 5-cycle tests) which are used for purposes of fuel
economy labeling and are also used in the EPA program for extending
off-cycle credits under the light-duty vehicle GHG program.
[[Page 43753]]
iii. Compliance and Enforcement Authority
EPA oversees testing, collects and processes test data, and
performs calculations to determine compliance with CAA standards. CAA
standards apply not only at certification but also throughout the
vehicle's useful life. The CAA provides for penalties should
manufacturers fail to comply with their fleet average standards, and
there is no option for manufacturers to pay fines in lieu of compliance
with the standards. Under the CAA, penalties for violation of a fleet
average standard are typically determined on a vehicle-specific basis
by determining the number of a manufacturer's highest emitting vehicles
that cause the fleet average standard violation. Penalties for
reporting requirements under Title II of the CAA apply per day of
violation, and other violations apply on a per vehicle, or a per part
or component basis. See CAA sections 203(a) and 205(a) and 40 CFR 19.4.
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 $48,762 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.'' The CAA does not authorize vehicle
manufacturers to pay fines in lieu of meeting emission standards.
4. Averaging, Banking, and Trading Provisions for CO2
Standards
i. Background
Averaging, banking, and trading (ABT) is an important compliance
flexibility and ABT has been built into various highway engine and
vehicle programs (and nonroad engines and equipment programs) to
support emissions standards that through the introduction of new
technologies, result in reductions in air pollution. The light-duty ABT
program for GHG standards includes existing provisions initially
established in the 2010 rule for how credits may be generated and used
within the program.\60\ These provisions include credit carry-forward,
credit carry-back (also called deficit carry-forward), credit transfers
(within a manufacturer), and credit trading (across manufacturers).
---------------------------------------------------------------------------
\60\ 40 CFR 86.1865-12.
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Credit carry-forward refers to banking (saving) credits for future
use, after satisfying any needs to offset prior MY debits within a
vehicle category (car fleet or truck fleet). Credit carry-back refers
to using credits to offset any deficit in meeting the fleet average
standards that had accrued in a prior MY. A manufacturer may have a
deficit at the end of a MY (after averaging across its fleet using
credit transfers between cars and trucks)--that is, a manufacturer's
fleet average level may fail to meet the required fleet average
standard for the MY. The CAA does not expressly limit the duration of
such credit provisions, and in the MY 2012-2016 and 2017-2025 programs,
EPA chose to adopt 5-year credit carry-forward (generally, with an
exception noted below) and 3-year credit carry-back provisions as a
reasonable approach that maintained consistency between the EPA GHG and
NHTSA's CAFE provisions.\61\ While some stakeholders had suggested that
light-duty GHG credits should have an unlimited credit life, EPA did
not adopt that suggestion for the light-duty GHG program because it
would pose enforcement challenges and could lead to some manufacturers
accumulating large banks of credits that could interfere with the
program's goal to develop and transition to progressively more advanced
emissions control technologies in the future.
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\61\ The EPCA/EISA statutory framework for the CAFE program
limits credit carry-forward to 5 years and credit carry-back to 3
years.
---------------------------------------------------------------------------
Although the credit carry-forward and carry-back provisions
generally remained in place for MY 2017 and later standards, EPA
finalized provisions allowing all unused (banked) credits generated in
MY 2010-2016 (but not MY 2009 early credits) to be carried forward
through MY 2021. See Sec. 86.1865-12(k)(6)(ii); 77 FR 62788 October
15, 2012. This is the normal 5-year carry-forward for MY 2016 and later
credits but provides additional carry-forward years for credits
generated in MYs 2010-2015. Extending the life of MY 2010-2015 credits
provided greater flexibility for manufacturers in using the credits.
This provision was intended to facilitate the transition to
increasingly stringent standards through MY 2021 by helping
manufacturers resolve lead time issues they might face in the early MYs
of the program. This extension of credit carry-forward also provided
additional incentive for manufacturers to generate credits earlier, for
example in MYs 2014 and 2015, thereby encouraging the earlier use of
additional CO2 reducing technologies.
Transferring credits in the EPA program refers to exchanging
credits between the two averaging sets--passenger cars and light
trucks--within a manufacturer. For example, credits accrued by
overcompliance with a manufacturer's car fleet average standard can be
used to offset debits accrued due to that manufacturer not meeting the
truck fleet average standard in a given year. (Put another way, a
manufacturer's car and truck fleets are, in essence, a single averaging
set in the EPA program). Finally, accumulated credits may be traded to
another manufacturer. Credit trading has occurred on a regular basis in
EPA's vehicle program.\62\ Manufacturers acquiring credits may offset
credit shortfalls and bank credits for use toward future compliance
within the carry-forward constraints of the program.
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\62\ EPA provides general information on credit trades annually
as part of its annual Automotive Trends and GHG Compliance Report.
The latest report is available at: https://www.epa.gov/automotive-trends and the docket for this rulemaking.
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The ABT provisions are an integral part of the vehicle GHG program
and the agency expects that manufacturers will continue to utilize
these provisions into the future. EPA's annual Automotive Trends Report
provides details on the use of these provisions in the GHG program.\63\
ABT allows EPA to consider standards more stringent than we would
otherwise consider by giving manufacturers an important tool to resolve
lead time and feasibility issues. EPA believes the targeted extension
of credit carry-forward that we are proposing, discussed below, is
appropriate considering the stringency and implementation timeframe of
the proposed standards.
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\63\ ``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-21-
003 January 2021.
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ii. Extended Credit Carry-Forward Proposal
As in the transition to more stringent standards under the 2012
rule, EPA recognizes that auto manufacturers are again facing a
transition to more stringent standards with our MY 2023-2026 standards
proposal. We also recognize that the stringency increase from MY 2022
to MY 2023 is the steepest step in our proposed program with relatively
limited lead time. Therefore, we believe it is again appropriate in the
current context to provide a targeted, limited amount of additional
flexibility to carry-forward
[[Page 43754]]
credits into the 2023-2026 MYs, to ease the manufacturers' transition
to these more stringent standards.
EPA is proposing to temporarily increase the number of years that
MY 2016-2020 vintage credits that may be carried-forward to provide
additional flexibility for manufacturers in the transition to more
stringent standards. EPA proposes to increase credit carry-forward for
MY 2016 credits by two years such that they would not expire until
after MY 2023. For MY 2017-2020 credits, EPA proposes to extend the
credit life by one year, so that those banked credits can be used
through MYs 2023-2026, depending on the MY in which the credits are
banked. For MY 2021 and later credits, EPA is not proposing any
modification to credit carry-forward in this notice. Credit carry-
forward would return to the normal 5 years in the existing ABT
regulations. Table 23 below provides an illustration of the proposed
credit carry-forward provisions.
Table 23--Proposed Extension of Credit Carry-Forward for MY 2016-2020 Credits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
MYs credits are valid under EPA's proposed extension
MY credits are banked -----------------------------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2016........................................................ .......... x x x x x + + .......... .......... ..........
2017........................................................ .......... .......... x x x x x + .......... .......... ..........
2018........................................................ .......... .......... .......... x x x x x + .......... ..........
2019........................................................ .......... .......... .......... .......... x x x x x + ..........
2020........................................................ .......... .......... .......... .......... .......... x x x x x +
2021........................................................ .......... .......... .......... .......... .......... .......... x x x x x
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
x = Current program. + = Proposed additional years.
Extending the life for MY 2016-2020 credits provides greater
flexibility for manufacturers in using the credits they have generated
through overcompliance with the stringent standards in those MYs. These
credits would help manufacturers to ease the transition to the more
stringent proposed standards. Providing the extended credit carry-
forward will help some manufacturers to lower overall costs and address
any potential lead time issues they may face during these MYs,
especially in the first year of the proposed standards (MY 2023).
EPA is proposing to extend credit life only for credits generated
against standards established in the 2012 rule for MYs 2016-2020. EPA
views these credits as a reflection of manufacturers' having achieved
reductions beyond and earlier than those required by the standards. EPA
is not proposing to extend credit life for credits generated in MYs
2021-2022 against the SAFE standards, as we view these credits as
windfall credits, accumulated by manufacturers mostly because of the
large reduction in the stringency of standards under the SAFE rule, as
compared to the 2012 rule standards previously in effect, rather than
for technology-based actions taken by a manufacturer to reduce fleet
emissions.
As noted above, there is precedent for extending credit carry-
forward temporarily beyond five years to help manufacturers transition
to more stringent standards. In the 2012 rule, EPA extended carry-
forward for MY 2010-2015 credits to MY 2021 for similar reasons, to
provide more flexibility for a limited time during a transition to more
stringent standards.\64\ ABT is an important compliance flexibility and
has been built into various highway engine and vehicle programs to
support emissions standards programs that through the introduction of
new technologies result in reductions in air pollution. While the
normal five-year credit life in the light-duty GHG program is generally
sufficient to address the need for manufacturer flexibility while
considering the practical challenges of properly tracking credits over
an extended period of time for compliance and enforcement purposes,
there are occasions--such as when the industry is transitioning to
significantly more stringent standards--where more flexibility is
appropriate. As noted above, ABT allows EPA to consider standards more
stringent than we would otherwise consider by giving manufacturers an
important tool to resolve lead time and feasibility issues, and EPA
believes the targeted extension of credit life that we are proposing is
appropriate given the stringency and implementation timeframe of the
proposed standards.
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\64\ 77 FR 62788.
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5. Certification, Compliance, and Enforcement
EPA established comprehensive vehicle certification, compliance,
and enforcement provisions for the GHG standards as part of the
rulemaking establishing the initial GHG standards for MY 2012-2016
vehicles.\65\ Manufacturers have been using these provisions since MY
2012 and EPA is not proposing or seeking comment on changes in the
areas of certification, compliance, or enforcement.
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\65\ See 75 FR 25468-25488 and 77 FR 62884-62887 for a
description of these provisions. See also ``The 2020 EPA Automotive
Trends Report, Greenhouse Gas Emissions, Fuel Economy, and
Technology since 1975,'' EPA-420-R-21-003 January 2021 for
additional information regarding EPA compliance determinations.
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6. On-Board Diagnostics Program Updates
EPA regulations state that onboard diagnostics (OBD) systems must
generally detect malfunctions in the emission control system, store
trouble codes corresponding to detected malfunctions, and alert
operators appropriately. EPA adopted (as a requirement for an EPA
certificate) the 2013 California Air Resources Board (CARB) OBD
regulation, with certain additional provisions, clarifications and
exceptions, in the Tier 3 Motor Vehicle Emission and Fuel Standards
final rulemaking (40 CFR 86.1806-17; 79 FR 23414, April 28, 2014).
Since that time, CARB has made several updates to their OBD regulations
and continues to consider changes periodically.\66\ Manufacturers may
find it difficult to meet both the 2013 OBD regulation adopted in the
EPA regulations and the currently applicable CARB OBD regulation on the
same vehicles. This may result in different calibrations being required
for vehicles sold in states subject to Federal OBD (2013 CARB OBD) and
vehicles sold in states subject to current CARB OBD.
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\66\ See https://ww2.arb.ca.gov/our-work/programs/obd-board-diagnostic-program/obd-workshops.
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To provide clarity and regulatory certainty to manufacturers, EPA
is proposing a limited regulatory change to
[[Page 43755]]
streamline OBD requirements. Under the proposed change, EPA could find
that a manufacturer met OBD requirements for purposes of the EPA
certification process if the manufacturer could show that the vehicles
meet newer CARB OBD regulations than the 2013 CARB regulation which
currently establishes the core OBD requirements for EPA certification
and that the OBD system meets the intent of the EPA regulation,
including provisions that are in addition to or different from the
applicable CARB regulation. The intent of the proposed provision is to
allow manufacturers to produce vehicles with one OBD system (software,
calibration, and hardware) for all 50 states.
7. Stakeholder Engagement
In developing this proposal, EPA conducted outreach with a wide
range of stakeholders, including auto manufacturers, automotive
suppliers, labor groups, state/local governments, environmental and
public interest groups, public health professionals, consumer groups,
and other organizations. We also coordinated extensively with the
California Air Resources Board as we considered this proposal.
Consistent with Executive Order 13990, in developing this proposal EPA
has considered the views from labor unions, states, and industry, as
well as other stakeholders.
EPA looks forward to hearing from all stakeholders through comments
on this proposal and during the public hearing. Looking ahead, we also
plan to continue engagement with interested stakeholders as we embark
on a future rulemaking to set standards beyond 2026, so diverse views
can continue to be considered in our development of a longer-term
program.
8. How do EPA's proposed standards relate to NHTSA's CAFE proposal and
to California's GHG program?
i. EPA and NHTSA Rulemaking Coordination
In Executive Order 13990, President Biden directed NHTSA and EPA to
consider whether to propose suspending, revising, or rescinding the
SAFE Rule standards for MYs 2021-2026.\67\ Both agencies have
determined that it is appropriate to propose revisions to their
respective standards; EPA is proposing to revise its GHG standards and,
in a separate rulemaking action, NHTSA will propose to revise its CAFE
standards. Since 2010, EPA and NHTSA have adopted fuel economy and
greenhouse gas standards in joint rulemakings. In the 2010 joint rule,
EPA and NHTSA explained the purpose of the joint rulemaking effort was
to develop a coordinated and harmonized approach to implementing the
two agencies' statutes. The joint rule approach was one appropriate
mechanism for the agencies to coordinate closely, given the common
technical issues both agencies needed to consider and the importance of
avoiding inconsistency between the programs. However, in light of
additional experience as the GHG and CAFE standards have co-existed
since the 2010 rule and the agencies have engaged in several joint
rulemakings, EPA has concluded that, while it remains committed to
ensuring that GHG emissions standards for light duty vehicles are
coordinated with fuel economy standards for those vehicles, it is
unnecessary for EPA to do so specifically through a joint rulemaking.
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\67\ 86 FR 7037, January 25, 2021.
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In reaching this conclusion, EPA notes that the agencies have
different statutory mandates and their respective programs have always
reflected those differences. As the Supreme Court has noted ``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.'' \68\ The agencies have recognized these different
mandates, and the fact that they have produced different analytical
approaches and standards. For example, since EPA's responsibility is to
address air pollution, it sets standards not only for carbon dioxide
(measured as grams per mile), but also for methane and nitrous oxide.
Even more significantly, EPA regulates leakage of fluorocarbons from
air conditioning units by providing a credit against the tailpipe
CO2 standard for leakage reduction and adjusting those
standards numerically downwards to reflect the anticipated availability
of those credits. NHTSA, given its responsibility for fuel economy
(measured as miles per gallon), does not have these elements in the
CAFE program. There have always been other differences between the
programs as well, which generally can be traced back to differences in
statutory mandates.
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\68\ Massachusetts v. EPA, 549 U.S. at 532.
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Finally, EPA notes that EPA may coordinate with NHTSA, and has done
so, regardless of the formality of joint rulemaking. EPA has consulted
significantly with NHTSA in the development of this proposal.
Consultation is the usual approach Congress specifies when it
recognizes that EPA and another agency share expertise and equities in
an area. Indeed, the Clean Air Act does not require joint rulemaking
for its many provisions that require EPA's consultation with other
agencies on topics such as the impacts of ozone-depleting substances on
the atmosphere, renewable fuels, the importance of visibility on public
lands, regulation of aerospace coatings, and federal procurement. For
example, for aircraft emissions standards, where EPA sets the standards
in consultation with the Federal Aviation Administration (FAA), and FAA
implements the standards, the two agencies may undertake, and have
undertaken, separate rulemakings. Likewise, when EPA revises tests
procedures for NHTSA's fuel economy standards, those rules are not done
as joint rulemaking (unless they were included as part of a larger
joint rulemaking on GHG and fuel economy standards). Thus, EPA
concludes that joint rulemaking is unnecessary, particularly to the
extent it was originally intended to ensure that the agencies work
together and coordinate their rules.
ii. California GHG Program
California has long been a partner in reducing light-duty vehicle
emissions, often leading the nation by setting more stringent standards
before similar standards are adopted by EPA. This historically has been
the case with GHG emissions standards in past federal rulemakings,
where California provided technical support to EPA's nationwide
programs. Prior to EPA's 2010 rule establishing the first nationwide
GHG standards for MY 2012-2016 vehicles, California had adopted GHG
standards for MYs 2009-2016.\69\ After EPA adopted its standards in the
2012 rule for MYs 2017-2025, California also adopted similar standards
for these MYs.\70\ California also assisted and worked with EPA in the
development of the 2016 Draft Technical Assessment Report for the Mid-
term Evaluation,\71\ issued jointly by EPA, CARB and NHTSA, that served
as an important technical basis for EPA's original January 2017 Final
Determination that the standards adopted in the 2012 rule
[[Page 43756]]
for MYs 2022-2025 remained appropriate. California also conducted its
own Midterm Review that arrived at a similar conclusion.\72\
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\69\ https://ww2.arb.ca.gov/our-work/programs/advanced-clean-cars-program/lev-program/low-emission-vehicle-greenhouse-gas.
\70\ The California Air Resources Board (CARB) received a waiver
of Clean Air Act preemption on January 9, 2013 (78 FR 2211) for its
Advanced Clean Car (ACC) program. CARB's ACC program includes the
MYs 2017-2025 greenhouse gas (GHG) standards as well as regulations
for zero-emission vehicle (ZEV) sales requirements and California's
low emission vehicle (LEV) III requirements.
\71\ Draft Technical Assessment Report: Midterm Evaluation of
Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate
Average Fuel Economy Standards for Model Years 2022-2025, EPA-420-D-
16-900 July 2016.
\72\ https://ww2.arb.ca.gov/our-work/programs/advanced-clean-cars-program/advanced-clean-cars-midterm-review.
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In August 2018, EPA and NHTSA jointly issued the SAFE rule
proposal, which included an EPA proposal to withdraw CARB's Advanced
Clean Car (ACC) waiver as it related to California GHG emission
standards and ZEV sales requirements (that would preclude California
from enforcing its own program) as well as a proposal to sharply reduce
the stringency of the national standards.\73\ In September 2019, EPA
and NHTSA then jointly issued a final SAFE ``Part One'' rule, which
included a final EPA action withdrawing CARB's ACC waiver as it related
to California GHG emission standards and ZEV sales requirements.\74\ In
response to the SAFE rule proposal, California and five auto
manufacturers entered into identical agreements commonly referred to as
the California Framework Agreements. The Framework Agreements included
GHG emission reduction targets for MYs 2021-2026 that in terms of
stringency are about halfway between the original 2012 rule standards
and those adopted in the final SAFE rule. The Framework Agreements also
included additional flexibilities such as additional incentive
multipliers for advanced technologies, off-cycle credits, and full-size
pickup strong hybrid incentives. These flexibilities are discussed
further in Section II.B, below.
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\73\ EPA's waiver for CARB's Advanced Clean Car regulations is
at 78 FR 2211 (January 9, 2013). The SAFE NPRM is at 83 FR 42986
(August 24, 2018).
\74\ 84 FR 51310 (Sept. 27, 2019).
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EPA has considered California standards in past vehicle standards
rules as we considered the factors of feasibility, costs of compliance
and lead time. The California Framework Agreement provisions, and the
fact that five automakers representing about a third of U.S. vehicle
sales voluntarily committed to them, at a minimum provide a clear
indication of manufacturers' capabilities to produce cleaner vehicles
than required by the SAFE rule standards in the implementation
timeframe of this proposed rule.\75\ The Framework Agreements'
emissions reduction targets therefore served as one starting point for
EPA's assessment of potential standards and other provisions for the
proposal. EPA conducted extensive outreach with the California Air
Resources Board, Framework manufacturers, and manufacturers that have
not entered into California Framework Agreements, along with numerous
other stakeholders in developing this proposed rule, as further
described in Section II.A.7. As discussed further below, EPA is
proposing standards that are equivalent to the stringency of the
California Framework Agreements emission reduction targets in MY 2023
and increasingly more stringent than the Framework Agreements from MY
2024 through 2026.
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\75\ The five California Framework Agreements may be found in
the docket for this rulemaking and at: https://ww2.arb.ca.gov/news/framework-agreements-clean-cars.
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In a separate but related action, on April 28, 2021, EPA issued a
Notice of Reconsideration for the previous withdrawal of the California
ACC waiver, requesting comments on whether the withdrawal should be
rescinded, which would reinstate the waiver.\76\ EPA conducted a
virtual public hearing on June 2, 2021 and the comment period closed on
July 6, 2021. EPA is currently reviewing comments, after which EPA
plans to take final action.
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\76\ 80 FR 22421 (April 28, 2021).
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B. Additional Manufacturer Compliance Flexibilities
As discussed previously in Section II.A.4, the ABT provisions,
including credit carry-forward and carry-back provisions, define how
credits may be used and are an important part of the program. The
program also includes several additional credit and incentive program
elements that allow manufacturer flexibility in deciding how to comply
with the standards laid out in Section II.A. This section provides an
overview of those provisions as well as areas where EPA is proposing
changes or is seeking comment.
The current GHG program includes temporary incentives through MY
2021 that encourage the use of advanced technologies such as all
electric, plug-in hybrid, and fuel cell vehicles, as well as incentives
for full-size pickups using either strong hybridization or technologies
providing similar emissions reductions. When EPA established these
incentives in the 2012 rule, EPA recognized that temporary regulatory
incentives would reduce the overall emission reductions required by the
standards, but the agency believed that it was worthwhile to have a
limited short-term loss of emission reductions to increase the
potential for far-greater emissions reductions in the longer run.\77\
EPA understood that the temporary regulatory incentives may help bring
some technologies to market more quickly than in the absence of
incentives.\78\ EPA continues to believe that temporary regulatory
incentives will help accomplish those goals, which supported those
incentives in the 2012 rule. As such, EPA is proposing to increase and
extend multiplier incentives though MY 2025 and to reinstate the full-
size pickup incentives that were removed from the program by the SAFE
rule for MYs 2022-2025. Also, EPA is proposing to remove the multiplier
incentives for natural gas vehicles for MYs 2023-2026 established by
the SAFE rule. Multipliers and full-size pickup incentives are
discussed in Sections II.B.1 and II.B.2, respectively.
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\77\ See Tables III-2 and III-3, 77 FR 62772, October 15, 2012.
\78\ 77 FR 62812, October 15, 2012.
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The current program also includes credits for real-world emissions
reductions not reflected on the test cycles used for measuring
CO2 emissions for compliance with the fleet average GHG
standards. Credits for using technologies that reduce emissions that
are not captured on EPA tests (``off-cycle'' technologies) and
improvements to air conditioning (A/C) systems that increase efficiency
and reduce refrigerant leakage (``A/C credits'') are discussed below in
sections II.B.3 and II.B.1, respectively. These credit opportunities
currently do not sunset, remaining a part of the program through MY
2026 and beyond unless the program is changed as part of a future
regulatory action. EPA is not proposing any changes for the A/C credits
but is proposing to modify the off-cycle credit program.
The use of the optional credit and incentive provisions has varied,
and EPA continues to expect it to vary, from manufacturer to
manufacturer. However, most manufacturers are currently using at least
some of the flexibilities.\79\ Although a manufacturer's use of the
credit and incentive provisions is optional, EPA projects that the
proposed standards would be met fleet-wide by using a combination of
reductions in tailpipe CO2 and some use of the optional
credit and incentive provisions. These projections are discussed in
Section III, below and in the Draft RIA.
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\79\ See ``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-21-
003 January 2021 for additional information regarding manufacturer
use of program flexibilities.
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[[Page 43757]]
1. Multiplier Incentives for Advanced Technology Vehicles
i. Background
In the 2012 rule, EPA included incentives for advanced technologies
to promote the commercialization of technologies that have the
potential to transform the light-duty vehicle sector by achieving zero
or near-zero GHG emissions in the longer term, but which faced major
near-term market barriers. EPA recognized that providing temporary
regulatory incentives for certain advanced technologies would decrease
the overall GHG emissions reductions associated with the program in the
near term, by reducing the effective stringency of the standards in
years in which the incentives were available, to the extent the
incentives were used. However, in setting the 2017-2025 standards, EPA
believed it was worthwhile to forego modest additional emissions
reductions in the near term in order to lay the foundation for much
larger GHG emissions reductions in the longer term. EPA also believed
that the temporary regulatory incentives may help bring some
technologies to market more quickly than in the absence of
incentives.\80\
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\80\ See 77 FR 62811 et seq.
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EPA established multiplier incentives for MYs 2017-2021 electric
vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), fuel cell
vehicles (FCVs), and natural gas vehicles (NGVs).\81\ The multiplier
allows a vehicle to ``count'' as more than one vehicle in the
manufacturer's compliance calculation. Table 24 provides the
multipliers for the various vehicle technologies included in the 2012
final rule for MY 2017-2021 vehicles.\82\ Since the GHG performance for
these vehicle types is significantly better than that of conventional
vehicles, the multiplier provides a significant benefit to the
manufacturer. EPA chose the magnitude of the multiplier levels to be
large enough to provide a meaningful incentive, but not be so large as
to provide a windfall for vehicles that still would have been produced
even at lower multiplier levels. The multipliers for EVs and FCVs were
larger because these technologies faced greater market barriers.
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\81\ 77 FR 62810, October 15, 2012.
\82\ 77 FR 62813-62816, October 15, 2012.
Table 24--Incentive Multipliers for EV, FCV, PHEVs, and NGVs Established
in 2012 Rule
------------------------------------------------------------------------
EVs and PHEVs and
Model years FCVs NGVs
------------------------------------------------------------------------
2017-2019......................................... 2.0 1.6
2020.............................................. 1.75 1.45
2021.............................................. 1.5 1.3
------------------------------------------------------------------------
EPA requested comments in the SAFE rule proposal on increasing and/
or extending CNG multiplier incentives. After considering comments, EPA
adopted a multiplier of 2.0 for MYs 2022-2026 NGVs, noting that no NGVs
were being sold by auto manufacturers at that time. EPA did not extend
multipliers for other vehicle types in the SAFE rule, as the SAFE
standards did not contemplate the extensive use of these technologies
in the future so there was no need to continue the incentives.
ii. Proposed Multiplier Extension and Cap
EPA is proposing to extend multipliers for EVs, PHEVs, and FCVs for
MYs 2022-2025, but with a cap to limit the magnitude of resulting
emissions reduction losses and to provide a means to more definitively
project the impact of the multipliers on the overall stringency of the
program. Although EPA chose not to include additional multipliers in
the SAFE rule except for natural gas vehicles, EPA is now proposing
standards significantly more stringent than in the SAFE rule and
therefore EPA believes limited additional multiplier incentives are
appropriate for the purposes of encouraging manufacturers to accelerate
the introduction of zero and near-zero emissions vehicles and
maintaining momentum for that market transition. EPA requests comment
on all aspects of the proposed extension of multipliers, including the
proposed multiplier levels, model years when multipliers are available,
and the size and structure of the multiplier credit cap.
Given that the previously established multipliers only run through
MY 2021, EPA proposes to start the new multipliers in MY 2022 to
provide continuity for the incentives over MYs 2021-2025. The
multipliers would function in the same way as they have in the past,
allowing manufacturers to count eligible vehicles as more than one
vehicle in their fleet average calculations. The levels of the proposed
multipliers, shown in Table 25 below, are the same as those contained
in the California Framework Agreements for MY 2022-2025. EPA is
proposing to sunset the multipliers after MY 2025, rather than
extending them to MY 2026, because EPA has always intended them to be a
temporary part of the program to incentivize technology in the near-
term. Sunsetting the multipliers in MY 2025 helps signal that EPA does
not intend to include multipliers in its proposal for standards for MY
2027 and later MYs, where these technologies are likely to be integral
to the feasibility of the standards, as the goal of a long-term program
would be to quickly transition the light-duty fleet to zero-emission
technology, in which case ``incentives'' would no longer be
appropriate. As zero-emissions technologies become more mainstream, EPA
believes it is appropriate to transition away from multiplier
incentives. EPA also believes sunsetting multipliers would simplify
programmatically a transition to a more stringent program for MY 2027.
The MY 2025 sunset date combined with the cap, discussed below, begins
the process of transitioning away from auto manufacturers' ability to
make use of the incentive multipliers. While EPA is proposing to end
multipliers after MY 2025 for these reasons, EPA requests comments on
whether it would be more appropriate to allow multiplier credits to be
generated in MY 2026 without an increase in the cap. This may provide
an additional incentive for manufacturers who have not yet produced
advanced technology vehicles by MY 2026 to do so but could also
potentially complicate transitioning to MY 2027 standards for some
manufacturers.
Table 25--EPA Proposed Multiplier Incentives for MYs 2022-2025
----------------------------------------------------------------------------------------------------------------
Model years EVs and FCVs PHEVs
----------------------------------------------------------------------------------------------------------------
2022-2024............................ 2.0.................... 1.6.
2025................................. 1.75................... 1.45.
2026+................................ 1.0 (no multiplier 1.0 (no multiplier credits).
credits).
----------------------------------------------------------------------------------------------------------------
[[Page 43758]]
EPA believes that an important element of this incentive program is
to limit the potential effect of the multipliers on reducing the
effective stringency of the standards. Therefore, EPA proposes to cap
the credits generated by a manufacturer's use of the multipliers to the
Megagram (Mg) equivalent of 2.5 g/mile for their car and light truck
fleets per MY for MYs 2022-2025 or 10.0 g/mile on a cumulative
basis.\83\ Above the cap, the multiplier is effectively a value of
1.0--in other words, after a manufacturer reaches the cap, the
multiplier is no longer available and has no further effect on credit
calculations. A manufacturer would sum the Mg values calculated for
each of its car and light truck fleets at the end of a MY into a single
cap value that would serve as the overall multiplier cap for the
combined car and light truck fleets for that MY. This approach would
limit the effect on stringency of the standards for manufacturers that
use the multipliers to no greater than 2.5 g/mile less stringent each
year on average over MYs 2022-2025. EPA proposes that manufacturers
would be able to choose how to apply the cap within the four-year span
of MYs 2022-2025 to best fit their product plans. Manufacturers may opt
to use values other than 2.5 g/mile in the cap calculation as long as
the sum of those values over MYs 2022-2025 does not exceed 10.0 g/mile
(e.g., 0.0, 2.5, 2.5, 5.0 g/mile in MYs 2022-2025).
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\83\ Proposed Multiplier Credit Cap [Mg] = (2.5 g/mile CO2 x VMT
x Actual Annual Production)/1,000,000 calculated annually for each
fleet and summed. Manufacturers may use values higher than 2.5 g/
mile in the calculation as long as the sum of the cumulative values
over MYs 2022-2025 does not exceed 10.0 g/mile. The vehicle miles
traveled (VMT) used in credit calculations in the GHG program, as
specified in the regulations, are 195,264 miles for cars and 225,865
for trucks. See 40 CFR 86.1866-12. See also 40 CFR 86.1866-12(c) for
the calculation of multiplier credits to be compared to the cap.
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In the 2012 rule, EPA did not cap the use of multipliers. At that
time, the advanced technologies incentivized by the multipliers were in
their relative infancy and EPA believed it was appropriate to encourage
manufacturers to continue to develop and introduce those vehicles for
the long-term benefits of the program. We are now in a transitional
period where manufacturers are actively increasing their zero-emission
vehicle offerings. In MY 2019, almost all manufacturers made use of
advanced technology credits.\84\ EPA believes extending the multipliers
is important to encourage manufacturers to accelerate bringing these
technologies to the market to help sustain market momentum for the
long-term. However, EPA also believes that if left uncapped, the
multiplier credits have the potential to lead to stagnation or even
backsliding for internal combustion engine vehicles for some
manufacturers in the near-term as sales of advanced technology vehicles
continue to increase. If EPA were to consider a significantly more
generous cap or even uncapped credits, EPA would tighten the standards
beyond the levels EPA is proposing to rebalance the overall stringency
of the program. Therefore, as under the California Framework
Agreements, EPA is proposing to extend multiplier credits but also to
include a multiplier cap to balance these considerations.
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\84 \ See ``The 2020 EPA Automotive Trends Report, Greenhouse
Gas Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-
21-003 January 2021.
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The proposed cap differs from and limits the effective stringency
loss more than the cap contained in the California Framework
Agreements. The cumulative cap in the Framework Agreements is based on
the area between the 2.7 percent and 3.7 percent year over year
reduction in the standards from MY 2021 levels, as shown for an average
fleet in Figure 6 below. This is equivalent to 27 percent (1%/3.7%) of
the total increase in stringency from MY 2021 through MY 2026 in the
Framework Agreements.
BILLING CODE 6560-50-P
[[Page 43759]]
[GRAPHIC] [TIFF OMITTED] TP10AU21.005
EPA is proposing a cap that extends over fewer MYs and is less
generous than the cap in the California Framework Agreements. The EPA
proposed cap would provide additional flexibility in the near term, as
shown in Figure 7. This is equivalent to about 6 percent of the total
increase in stringency relative to the MY 2021 level from MY 2021
through MY 2026.
[[Page 43760]]
[GRAPHIC] [TIFF OMITTED] TP10AU21.006
BILLING CODE 6560-50-C
To estimate the potential impact of multipliers on the tons of
CO2 reduction provided by the proposed program, EPA modeled
scenarios with and without multipliers. As shown, EPA estimates that
the proposed multipliers, if fully utilized by manufacturers, would
result in roughly 46 MMT (596 minus 550 MMT) fewer tons of
CO2 reduced over the lifetimes of MY 2021-2026 vehicles.\85\
We have also analyzed the impact of the advanced technology multipliers
on BEV and PHEV penetration rates and have found that the impact on the
fleet is less than 0.5 percent in any MY 2023 through 2026 (see RIA
Chapter 4.1.3). EPA believes such an approach represents a reasonable
balance of providing an incentive for advanced technology vehicles in
the timeframe of the rulemaking while limiting the impact on effective
stringency of the proposed program. EPA requests comment on the
proposed extension of multipliers, including the proposed multiplier
levels, model years when multipliers are available, size and structure
of the multiplier credit cap. EPA also requests comments on whether the
proposed extension of multipliers is appropriate in light of the
stringency level of the proposed standards or whether there should be
no multipliers beyond those in the current program that are scheduled
to end after MY 2021.
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\85\ EPA analyzed the MY 2021-2026 timeframe to allow for a more
direct comparison of the estimated emissions loss in tons of the
proposed multipliers and cap with the impact of the California
Framework multiplier cap.
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iii. Natural Gas Vehicle Multipliers
As noted above, the SAFE rule did not extend multipliers for
advanced technology vehicles but did extend and increase multiplier
incentives for dual-fuel and dedicated natural gas vehicles (NGVs). The
current regulations include a multiplier of 2.0, uncapped, for MY 2022-
2026 NGVs. In the SAFE rule, EPA said it was extending the multipliers
for NGVs because ``NGVs could be an important part of the overall
light-duty vehicle fleet mix, and such offerings would enhance the
diversity of potentially cleaner alternative fueled vehicles available
to consumers.'' \86\ After further considering the issue, EPA now
proposes to remove the extended multiplier incentives added by the SAFE
rule from the GHG program after MY 2022. EPA is proposing to end
multipliers for NGVs in this manner because NGVs are not a near-zero
emissions technology and EPA no longer believes it is appropriate to
incentivize these vehicles to encourage manufacturers to introduce them
in the light-duty vehicle market. EPA does not view NGVs as a pathway
for significant vehicle GHG emissions reductions in the future. Any NGV
multiplier credits generated in MY 2022 would be included under the
proposed multiplier cap. There are no NGVs currently offered by
manufacturers in the light-duty market and EPA is unaware of any plans
to introduce NGVs, so EPA does not expect the removal of multipliers
for NGVs to have an impact on manufacturers' ability to meet
standards.\87\ EPA requests comment on its proposed treatment of
multipliers for NGVs including whether they should be eliminated
altogether for MYs 2023-2026 as proposed or retained partially or at a
lower level for MYs 2023-2025.
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\86\ 85 FR 25211.
\87\ The last vehicle to be offered, a CNG Honda Civic, was
discontinued after MY 2015. It had approximately 20 percent lower
CO2 than the gasoline Civic. For more recent advanced
internal combustion engines, the difference may be less than 20% due
to lower emissions of the gasoline-fueled vehicles.
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2. Advanced Technology Incentives for Full-Size Pickups
In the 2012 rule, EPA included a per-vehicle credit provision for
manufacturers that hybridize a significant number of their full-size
[[Page 43761]]
pickup trucks or use other technologies that comparably reduce
CO2 emissions. EPA's goal was to incentivize the penetration
into the marketplace of low-emissions technologies for these pickups.
The incentives were intended to provide an opportunity in the program's
early years to begin penetration of advanced technologies into this
category of vehicles, which face unique challenges in the costs of
applying advanced technologies due to the need to maintain vehicle
utility and meet consumer expectations. In turn, the introduction of
low-emissions technologies in this market segment creates more
opportunities for achieving the more stringent later year standards.
Under the existing program, full-size pickup trucks using mild hybrid
technology are eligible for a per-truck 10 g/mile CO2 credit
during MYs 2017-2021.\88\ Full-size pickup trucks using strong hybrid
technology are eligible for a per-truck 20 g/mile CO2 credit
during MYs 2017-2021, if certain minimum production thresholds are
met.\89\ EPA established definitions in the 2012 rule for full-size
pickup and mild and strong hybrid for the program.\90\
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\88\ As with multiplier credits, full-size pickup credits are in
Megagrams (Mg). Full-size pickup credits are derived by multiplying
the number of full-size pickups produced with the eligible
technology by the incentive credit (either 10 or 20 g/mile) and a
vehicle miles traveled (VMT) value for trucks of 225,865, as
specified in the regulations. The resulting value is divided by
1,000,000 to convert it from grams to Mg. EPA is not proposing a cap
for these credits and they are only available for full-size pickups,
rather than the entire fleet, so the calculation is simpler than
that for multiplier credits.
\89\ 77 FR 62825, October 15, 2012.
\90\ 77 FR 62825, October 15, 2012. Mild and strong hybrid
definitions as based on energy flow to the high-voltage battery
during testing. Both types of vehicles must have start/stop and
regenerative braking capability. Mild hybrid is a vehicle where the
recovered energy over the Federal Test Procedure is at least 15
percent but less than 65 percent of the total braking energy. Strong
hybrid means a hybrid vehicle where the recovered energy over the
Federal Test Procedure is at least 65 percent of the total braking
energy.
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Alternatively, manufacturers may generate performance-based credits
for full-size pickups. This performance-based credit is 10 g/mile
CO2 or 20 g/mile CO2 for full-size pickups
achieving 15 percent or 20 percent, respectively, better CO2
performance than their footprint-based targets in a given MY.\91\ This
second option incentivizes other, non-hybrid, advanced technologies
that can reduce pickup truck GHG emissions and fuel consumption at
rates comparable to strong and mild hybrid technology. These
performance-based credits have no specific technology or design
requirements; automakers can use any technology or set of technologies
as long as the vehicle's CO2 performance is at least 15 or
20 percent below the vehicle's footprint-based target. However, a
vehicle cannot receive both hybrid and performance-based credits, since
that would be double-counting.
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\91\ 77 FR 62826, October 15, 2012. For additional discussion of
the performance requirements, see Section 5.3.4 of the ``Joint
Technical Support Document: Final Rulemaking for 2017-2025 Light-
duty Vehicle Greenhouse Gas Emission Standards and Corporate Average
Fuel Economy Standards'' for the Final Rule,'' EPA-420-R-12-901,
August 2012.
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Access to any of these large pickup credits requires that the
technology be used on a minimum percentage of a manufacturer's full-
size pickups. These minimum percentages, established in the 2012 final
rule, are set to encourage significant penetration of these
technologies, leading to long-term market acceptance. Meeting the
penetration threshold in one MY does not ensure credits in subsequent
years; if the production level in a MY drops below the required
threshold, the credit is not earned for that MY. The required
penetration levels are shown in Table 26 below.\92\
---------------------------------------------------------------------------
\92\ 40 CFR 86.1870-12.
Table 26--Penetration Rate Requirements by Model Year for Full-Size Pickup Credits
[% of production]
----------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021
----------------------------------------------------------------------------------------------------------------
Strong hybrid................... 10 10 10 10 10
Mild Hybrid..................... 20 30 55 70 80
20% better performance.......... 10 10 10 10 10
15% better performance.......... 15 20 28 35 40
----------------------------------------------------------------------------------------------------------------
Under the 2012 rule, the strong hybrid/20% better performance
incentives initially extended out through MY 2025, the same as the 10
percent production threshold. However, the SAFE rule removed these
incentives after MY 2021. The mild hybrid/15% better performance
incentive was not affected by the SAFE rule, as those provisions end
after MY 2021. EPA proposes to reinstate the full-size pickup credits
as they existed before the SAFE rule, for MYs 2022 through 2025. While
no manufacturer has yet claimed these credits, the rationale for
establishing them in the 2012 rule remains valid. At the time of the
SAFE rule, EPA did not envision significantly more stringent standards
in the future and so did not believe the incentives were useful. In the
context of this proposal that includes significantly more stringent
standards for MY 2023-2026, EPA believes these full-size pickup truck
credits are appropriate to further incentivize advanced technologies
penetrating this particularly challenging segment of the market. As
with the original program, EPA is limiting this incentive to full-size
pickups rather than broadening it to other vehicle types. Introducing
advanced technologies with very low CO2 emissions in the
full-size pickup market segment remains a challenge due to the need to
preserve the towing and hauling capabilities of the vehicles. The full-
size pickup credits incentivize advanced technologies into the full-
size pickup truck segment to help address cost, utility, and consumer
acceptance challenges. EPA requests comments on whether or not to
reinstate the previously existing full-size pickup strong hybrid/20%
better performance incentives and the proposed approach for doing so.
EPA notes for this proposal our analysis does not include the impacts
of this incentive on the projected GHG emissions, costs, benefits and
other program effects. EPA requests comment on the potential impacts of
the full-size pickup incentive credit, and whether, and how, EPA should
take the projected effects into account in the final rulemaking.
In the 2012 rule, EPA included a provision that prevents a
manufacturer from using both the full-size pickup performance-based
credit pathway and the multiplier credits for the same vehicles. This
would prevent, for example, an EV full-size pickup from generating both
credits. EPA did not include the same restriction for vehicles
qualifying for the full-size pickup
[[Page 43762]]
hybrid credit pathway. For example, a PHEV could qualify for both the
strong hybrid credit and the multiplier credits under the prior
regulations as they were established in the 2012 rule. With our
proposal to extend the multiplier credits and reinstate the full-size
pickup credit, EPA believes allowing both credits would in a sense be
double-counting and inappropriate. Therefore, EPA proposes to modify
the regulations such that manufacturers may choose between the two
credits in instances where full-size pickups qualify for both but may
not use both credits for the same vehicles. A manufacturer may choose
to use the full-size pickup strong hybrid credit, for example, if the
manufacturer either has reached the multiplier credit cap or intends to
do so with other qualifying vehicles. Or a manufacturer may instead
decide to forego the strong hybrid credit in cases where the
manufacturer does not expect to reach the multiplier cap and the
multiplier provides more credits than the strong hybrid credit. EPA
requests comments on this approach to avoid double-counting of credits,
by restricting the use of the two types of credits for the same
vehicles.
3. Off-Cycle Technology Credits
i. Background
Starting with MY 2008, EPA started employing a ``five-cycle'' test
methodology to measure fuel economy for purposes of new car window
stickers (labels) to give consumers better information on the fuel
economy they could more reasonably expect under real-world driving
conditions.\93\ However, for GHG compliance, EPA continues to use the
established ``two-cycle'' (city and highway test cycles, also known as
the FTP and HFET) test methodology.\94\ As learned through development
of the ``five-cycle'' methodology and prior rulemakings, there are
technologies that provide real-world GHG emissions improvements, but
whose improvements are not fully reflected on the ``two-cycle'' test.
EPA established the off-cycle credit program to provide an appropriate
level of CO2 credit for technologies that achieve
CO2 reductions, but may not otherwise be chosen as a GHG
control strategy, as their GHG benefits are not measured on the
specified 2-cycle test. For example: High efficiency lighting is not
measured on the EPA 2-cycle tests because lighting is not turned on as
part of the test procedure but reduces CO2 emissions by
decreasing the electrical load on the alternator and engine. The key
difference between the credits discussed below and the incentives
discussed in the previous two sections is that off-cycle credits--as
well as A/C credits, discussed in the next section--represent real-
world emissions reductions if appropriately sized and therefore their
use should not result in deterioration of program benefits, and should
not be viewed as cutting into the effective stringency of the program.
---------------------------------------------------------------------------
\93\ https://www.epa.gov/vehicle-and-fuel-emissions-testing/dynamometer-drive-schedules. See also 75 FR 25439 for a discussion
of 5-cycle testing.
\94\ The city and highway test cycles, commonly referred to
together as the ``2-cycle tests'' are laboratory compliance tests
are effectively required by law for CAFE, and also used for
determining compliance with the GHG standards. 49 U.S.C. 32904(c).
---------------------------------------------------------------------------
Under EPA's existing regulations, there are three pathways by which
a manufacturer may accrue off-cycle technology credits.\95\ The first
pathway is a predetermined list or ``menu'' of credit values for
specific off-cycle technologies that was effective starting in MY
2014.\96\ This pathway allows manufacturers to use credit values
established by EPA for a wide range of off-cycle technologies, with
minimal or no data submittal or testing requirements. The menu includes
a fleetwide cap on credits of 10 g/mile to address the uncertainty of a
one-size-fits-all credit level for all vehicles and the limitations of
the data and analysis used as the basis of the menu credits. A second
pathway allows manufacturers to use 5-cycle testing to demonstrate and
justify off-cycle CO2 credits.\97\ The additional emissions
tests allow emission benefits to be demonstrated over some elements of
real-world driving not captured by the GHG compliance tests, including
high speeds, rapid accelerations, and cold temperatures. Under this
pathway, manufacturers submit test data to EPA, and EPA determines
whether there is sufficient technical basis to approve the off-cycle
credits. The third pathway allows manufacturers to seek EPA approval,
through a notice and comment process, to use an alternative methodology
other than the menu or 5-cycle methodology for determining the off-
cycle technology CO2 credits.\98\ This option is only
available if the benefit of the technology cannot be adequately
demonstrated using the 5-cycle methodology.
---------------------------------------------------------------------------
\95\ See ``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-21-
003 January 2021 for information regarding the use of each pathway
by manufacturers.
\96\ See 40 CFR 86.1869-12(b).
\97\ See 40 CFR 86.1869-12(c).
\98\ See 40 CFR 86.1869-12(d).
---------------------------------------------------------------------------
ii. EPA Proposal To Increase Menu Credit Cap
EPA has received comments from manufacturers on multiple occasions
requesting that EPA increase the menu credit cap. Previously, EPA has
opted not to increase the cap for several reasons.\99\ First, the cap
is necessary given the uncertainty in the menu values for any given
vehicle. Menu credits are values EPA established to be used across the
fleet rather than vehicle-specific values. When EPA established the
menu credits in the 2012 rule, EPA included a cap because of the
uncertainty inherent in using limited data and modeling as the basis of
a single credit value for either cars or trucks. While off-cycle
technologies should directionally provide an off-cycle emissions
reduction, quantifying the reductions and setting an appropriate credit
values based on limited data was difficult. Manufacturers wanting to
generate credits beyond the cap may do so by bringing in their own test
data as the basis for the credits. Credits established under the second
and third pathways do not count against the menu cap. Also, until
recently most manufacturers still had significant headroom under the
cap allowing them to continue to introduce additional menu
technologies.\100\ Finally, during the implementation of the program,
EPA has expended significantly more effort than anticipated on
scrutinizing menu credits to determine if a manufacturer's technology
approach was eligible under the technology definitions contained in the
regulations. This further added to concerns about whether the
technology could reasonably be expected to provide the real-world
benefits that credits are meant to represent. For these reasons, EPA
has been reluctant to consider increasing the cap.
---------------------------------------------------------------------------
\99\ 85 FR 25237.
\100\ See ``The 2020 EPA Automotive Trends Report, Greenhouse
Gas Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-
21-003 January 2021 for information on the use of menu credits.
---------------------------------------------------------------------------
EPA may make changes to the test procedures for the GHG program in
the future that could change the need for an off-cycle credits program,
but there are no such test procedure changes proposed in this rule.
Off-cycle credits, therefore, will likely remain an important source of
emissions reductions under the program, at least through MY 2026. Off-
cycle technologies are often more cost effective than other available
technologies that reduce vehicle GHG emissions over the 2-cycle tests
and
[[Page 43763]]
manufacturer use of the program continues to grow. Off-cycle credits
reduce program costs and provide additional flexibility in terms of
technology choices to manufacturers which has resulted in many
manufacturers using the program. Multiple manufacturers were at or
approaching the 10 g/mile credit cap in MY 2019.\101\ Also, in the SAFE
rule, EPA added menu credits for high efficiency alternators but did
not increase the credit cap for the reasons noted above.\102\ While
adding the technology to the menu has the potential to reduce the
burden associated with the credits for both manufacturers and EPA, it
further exacerbates the credit cap issue for some manufacturers.
---------------------------------------------------------------------------
\101\ In MY 2019, Ford, FCA, and Jaguar Land Rover reached the
10 g/mile cap and three other manufacturers were within 3 g/mile of
the cap. See ``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-21-
003 January 2021.
\102\ 85 FR 25236.
---------------------------------------------------------------------------
After considering the above points further in the context of the
proposed standards, EPA is proposing to increase the cap on menu-based
credits from the current 10 g/mile to 15 g/mile beginning as early as
MY 2020. As a companion to increasing the credit cap, though, EPA is
also proposing modifications to some of the off-cycle technology
definitions to improve program implementation and to better accomplish
the goal of the off-cycle credits program: To ensure emissions
reductions occur in the real-world from the use of the off-cycle
technologies. Manufacturers wanting to claim menu credits between 10
and 15 g/mile in MYs 2020-2022 would need to meet all revised
technology definitions across both the car and truck fleets. For MYs
2023 and later, the revised definitions would apply exclusively, and
the current definitions would no longer be used in the program. EPA is
proposing this approach as a reasonable transition to the new
definitions.
EPA is proposing not to require the use of the revised definitions
prior to MY 2023 for manufacturers not opting into the 15 g/mile credit
cap. Requiring their use for MYs 2020 and earlier for all manufacturers
would potentially affect credits already awarded to manufacturers,
causing significant problems in program implementation and manufacturer
plans to comply with the proposed MY 2023-2026 standards. Similarly, MY
2021 is underway, and some manufacturers are already producing MY 2022
vehicles. EPA believes credits that were generated in a manner
consistent with the applicable regulatory definitions in place at the
time the vehicles were produced should continue to be allowed in
compliance determinations for the proposed MY 2023-2026 standards. The
10 g/mile cap EPA adopted to address uncertainties around the menu
credits, including the definitions, is acting as intended and the
proposed approach of allowing menu credits beyond the 10 g/mile cap
only for manufacturers meeting the revised definitions is the
appropriate approach until the 15 g/mile menu cap and revised
definitions are fully implemented in MY 2023. EPA views the proposed
definition updates as refinements to the ongoing off-cycle program to
improve its implementation and help ensure that the program produces
real-world benefits as intended and believes that it is reasonable to
make these updates in parallel with the proposed cap increase.
Manufacturers that utilized technologies in MY 2020 that meet the
proposed revised definitions, in addition to the unchanged current
definitions, would be able to claim menu credits up to the 15 g/mile
cap.
EPA requests comment on whether the menu credit cap should be
increased to 15 g/mile, EPA's proposed approach for implementing the
increased credit cap, including the start date of MY 2020, as well as
the proposed application of revised technology definitions, discussed
below. EPA specifically requests comment on whether an increased credit
cap, if finalized, should begin in MY 2020 as proposed or a later MY
such as MY 2021, 2022, or 2023. Commenters supporting off-cycle
provisions that differ from EPA's proposal are encouraged to address
how such differences could be implemented to improve real-world
emissions benefits and how such provisions could be effectively
implemented.
iii. EPA Proposed Modifications to Menu Technology Definitions
Some stakeholders have previously raised concerns about whether the
off-cycle credit program produces the real-world emissions reductions
as intended, or results in a loss of emissions benefits.\103\ EPA
shares these concerns, as noted above, and believes it is important to
address to the extent possible the issues that the agency has
experienced in implementing the menu credits, alongside proposing to
raise the menu cap. EPA believes that raising the menu cap is
appropriate so long as the agency can improve the program and
reasonably expect the use of menu technologies to provide real-world
emissions reductions, consistent with the intent of the program.
Providing additional opportunities for menu credits may allow for more
emissions reductions sooner and at a lower cost than would otherwise be
possible under a program without off-cycle credits. Indeed, the
additional credits are fully incorporated as an element of the cost and
feasibility analysis of the proposed standards. With that in mind, EPA
proposes to modify the menu definitions discussed below to coincide
with increasing the menu cap.
---------------------------------------------------------------------------
\103\ 85 FR 25237.
---------------------------------------------------------------------------
The existing menu technologies and associated credits are provided
below in Table 27 and Table 28 for reference.\104\
---------------------------------------------------------------------------
\104\ See 40 CFR 86.1869-12(b). See also ``Joint Technical
Support Document: Final Rulemaking for 2017-2025 Light-duty Vehicle
Greenhouse Gas Emission Standards and Corporate Average Fuel Economy
Standards for the Final Rule,'' EPA-420-R-12-901, August 2012, for
further information on the definitions and derivation of the credits
values.
Table 27--Existing Off-Cycle Technologies and Credits for Cars and Light
Trucks
------------------------------------------------------------------------
Credit for cars g/ Credit for light
Technology mi trucks g/mi
------------------------------------------------------------------------
High Efficiency Alternator (at 1.0................ 1.0.
73%; scalable).
High Efficiency Exterior 1.0................ 1.0.
Lighting (at 100W).
Waste Heat Recovery (at 100W; 0.7................ 0.7.
scalable).
Solar Roof Panels (for 75W, 3.3................ 3.3.
battery charging only).
Solar Roof Panels (for 75W, 2.5................ 2.5.
active cabin ventilation plus
battery charging).
Active Aerodynamic Improvements 0.6................ 1.0.
(scalable).
Engine Idle Start-Stop with 2.5................ 4.4.
heater circulation system.
[[Page 43764]]
Engine Idle Start-Stop without 1.5................ 2.9.
heater circulation system.
Active Transmission Warm-Up.... 1.5................ 3.2.
Active Engine Warm-Up.......... 1.5................ 3.2.
Solar/Thermal Control.......... Up to 3.0.......... Up to 4.3.
------------------------------------------------------------------------
Table 28--Off-Cycle Technologies and Credits for Solar/Thermal Control
Technologies for Cars and Light Trucks
------------------------------------------------------------------------
Truck credit (g/
Thermal control technology Car credit (g/mi) mi)
------------------------------------------------------------------------
Glass or Glazing............... Up to 2.9.......... Up to 3.9.
Active Seat Ventilation........ 1.0................ 1.3.
Solar Reflective Paint......... 0.4................ 0.5.
Passive Cabin Ventilation...... 1.7................ 2.3.
Active Cabin Ventilation....... 2.1................ 2.8.
------------------------------------------------------------------------
a. Passive Cabin Ventilation
Some manufacturers have claimed the passive cabin ventilation
credits based on the addition of software logic to their HVAC system
that sets the interior climate control outside air/recirculation vent
to the open position when the power to vehicle is turned off at higher
ambient temperatures. The manufacturers have claimed that the opening
of the vent allows for the flow of ambient temperature air into the
cabin. While opening the vent may ensure that the interior of the
vehicle is open for flow into the cabin, no other action is taken to
improve the flow of heated air out of the vehicle. This technology
relies on the pressure in the cabin to reach a sufficient level for the
heated air in the interior to flow out through body leaks or the body
exhausters to open and vent heated air out of the cabin.
The credits for passive cabin ventilation were determined based on
an NREL study that strategically opened a sunroof to allow for the
unrestricted flow of heated air to exit the interior of the vehicle
while combined with additional floor openings to provide a minimally
restricted entry for cooler ambient air to enter the cabin. The
modifications that NREL performed on the vehicle reduced the flow
restrictions for both heated cabin air to exit the vehicle and cooler
ambient air to enter the vehicle, creating a convective airflow path
through the vehicle cabin.
Analytical studies performed by manufacturers to evaluate the
performance of the open dash vent demonstrate that while the dash vent
may allow for additional airflow of ambient temperature air entering
the cabin, it does not reduce the existing restrictions on heated cabin
air exiting the vehicle, particularly in the target areas of the
occupant's upper torso. That hotter air generally must escape through
restrictive (by design to prevent water and exhaust fumes from entering
the cabin) body leaks and occasional venting of the heated cabin air
through the body exhausters. While this may provide some minimal
reduction in cabin temperatures, this open dash vent technology is not
as effective as the combination of vents used by the NREL researchers
to allow additional ambient temperature air to enter the cabin and also
to reduce the restriction of heated air exiting the cabin.
As noted in the Joint Technical Support Document: Final Rulemaking
for 2017-2025 Light-Duty Vehicle Greenhouse Gas Emission Standards and
Corporate Average Fuel Economy Standards, pg. 584, ``For passive
ventilation technologies, such as opening of windows and/or sunroofs
and use of floor vents to supply fresh air to the cabin (which enhances
convective airflow), (1.7 grams/mile for LDVs and 2.3 grams/mile for
LDTs) a cabin air temperature reduction of 5.7 [deg]C can be
realized.'' The passive cabin ventilation credit values were based on
achieving the 5.7 [deg]C cabin temperature reduction.
The Agency has decided to revise the passive cabin ventilation
definition to make it consistent with the technology used to generate
the credit value. The Agency continues to allow for innovation as the
definition includes demonstrating equivalence to the methods described
in the Joint TSD.
EPA proposes to revise the definition of passive cabin ventilation
to only include methods that create and maintain convective airflow
through the body's cabin by opening windows or a sunroof, or equivalent
means of creating and maintaining convective airflow, when the vehicle
is parked outside in direct sunlight.
Current systems claiming the passive ventilation credit by opening
the dash vent would not meet the updated definition. Manufacturers
seeking to claim credits for the open dash vent system will be eligible
to petition the Agency for credits for this technology using the
alternative EPA approved method outlined in Sec. 86.1869-12(d).
b. Active Engine and Transmission Warm-Up
In the NPRM for the 2012 rule (76 FR 74854) EPA proposed capturing
waste heat from the exhaust and using that heat to actively warm-up
targeted parts of the engine and the transmission fluid. The exhaust
waste heat from an internal combustion engine is heat that is not being
used as it is exhausted to the atmosphere.
In the 2012 Final Rule (77 FR 62624), the Agency revised the
definitions for active engine and transmission warm-up by replacing
exhaust waste heat with the waste heat from the vehicle. As noted in
the Joint TSD, pages 5-98 and 5-99, the Alliance of Automobile
Manufacturers and Volkswagen recommended the definition be broadened to
account for other methods of warm-up besides exhaust heat such as a
secondary coolant loop.
EPA concluded that other methods, in addition to waste heat from
the exhaust, that could provide similar performance--such as coolant
loops or direct heating elements--may prove to be more effective
alternative to direct exhaust heat. Therefore, the Agency
[[Page 43765]]
expanded the definition in the 2012 Final Rule.
In the 2012 Final Rule the Agency also required two unique heat
exchanger loops--one for the engine and one for the transmission--for a
manufacturer to claim both the Active Engine Warm-up and Active
Transmission Warm-up credits. EPA stated in the Joint TSD that
manufacturers utilizing a single heat exchanging loop would need to
demonstrate that the performance of the single loop would be equivalent
to two dedicated loops in order for the manufacturer to claim both
credits, and that this test program would need to be performed using
the alternative method off-cycle GHG credit application described in
Sec. 86.1869-12(d).
All Agency analysis regarding active engine and transmission warm-
up through the 2012 Final Rule (77 FR 62624) was performed assuming the
waste heat utilized for these technologies would be obtained directly
from the exhaust prior to being released into the atmosphere and not
from any engine-coolant-related loops. At this time no manufacturer has
introduced an exhaust waste heat exchanger to be used to warm up the
engine or transmission. The systems in use are engine-coolant-loop-
based and are taking heat from the coolant to warm-up the engine oil
and transmission fluid.
EPA provided additional clarification on the use of waste heat from
the engine coolant in preamble to SAFE rule (85 FR 24174). EPA focused
on systems using heat from the exhaust as a primary source of waste
heat because that heat would be available quickly and also would be
exhausted by the vehicle and otherwise unused (85 FR 25240). Heat from
the engine coolant already may be used by design to warm up the
internal engine oil and components. That heat is traditionally not
considered ``waste heat'' until the engine reaches normal operating
temperature and subsequently requires it to be cooled in the radiator
or other heat exchanger.
EPA allowed for the possible use of other sources of heat such as
engine coolant circuits, as the basis for the credits as long as those
methods would ``provide similar performance'' as extracting the heat
directly from the exhaust system and would not compromise how the
engine systems would heat up normally absent the added heat source.
However, the SAFE rule also allowed EPA to require manufacturers to
demonstrate that the system is based on ``waste heat'' or heat that is
not being preferentially used by the engine or other systems to warm up
other areas like engine oil or the interior cabin. Systems using waste
heat from the coolant do not qualify for credits if their operation
depends on, and is delayed by, engine oil temperature or interior cabin
temperature. As the engine and transmission components are warming up,
the engine coolant and transmission oil typically do not have any
``waste'' heat available for warming up anything else on the vehicle
since they are both absorbing any heat from combustion cylinder walls
or from friction between moving parts in order to achieve normal
operating temperatures. During engine and transmission warm-up, the
only waste heat source in a vehicle with an internal combustion engine
is the engine exhaust, as the transmission and coolant have not reached
warmed-up operating temperature and therefore do not have any heat to
share (85 FR 25240).
EPA proposes to revise the menu definitions of active engine and
transmission warm-up to no longer allow systems that capture heat from
the coolant circulating in the engine block to qualify for the Active
Engine and Active Transmission warm-up menu credits. EPA would allow
credit for coolant systems that capture heat from a liquid-cooled
exhaust manifold if the system is segregated from the coolant loop in
the engine block until the engine has reached fully warmed-up
operation. The Agency would also allow system design that captures and
routes waste heat from the exhaust to the engine or transmission, as
this was the basis for these two credits as originally proposed in the
proposal for the 2012 rule. EPA's proposed approach would help ensure
that the level of menu credit is consistent with the technology design
envisioned by EPA when it established the credit in the 2012 rule.
Manufacturers seeking to utilize their existing systems that
capture coolant heat before the engine is fully warmed-up and transfer
this heat to the engine oil and transmission fluid would remain
eligible to seek credits through the alternative method application
process outlined in Sec. 86.1869-12(d). EPA expects that these
technologies may provide some benefit. But, as noted above since these
system designs remove heat that is needed to warm-up the engine the
Agency expects that these technologies will be less effective than
those that capture and utilize exhaust waste heat.
iv. Clarification Regarding Use of Menu Credits
Finally, EPA proposes to clarify that manufacturers claiming
credits for a menu technology must use the menu pathway rather than
claim credits through the public process or 5-cycle testing pathways.
EPA views this as addressing a potential loophole around the menu cap.
As is currently the case, a new technology that represents an
advancement compared to the technology represented by the menu credit--
that is, by providing significantly more emissions reductions than the
menu credit technology--would be eligible for the other two pathways.
4. Air Conditioning System Credits
There are two mechanisms by which A/C systems contribute to the
emissions of GHGs: Through leakage of hydrofluorocarbon refrigerants
into the atmosphere (sometimes called ``direct emissions'') and through
the consumption of fuel to provide mechanical power to the A/C system
(sometimes called ``indirect emissions'').\105\ The high global warming
potential of the previously most common automotive refrigerant, HFC-
134a, means that leakage of a small amount of refrigerant will have a
far greater impact on global warming than emissions of a similar amount
of CO2. The impacts of refrigerant leakage can be reduced
significantly by systems that incorporate leak-tight components, or,
ultimately, by using a refrigerant with a lower global warming
potential. The A/C system also contributes to increased tailpipe
CO2 emissions through the additional work required to
operate the compressor, fans, and blowers. This additional power demand
is ultimately met by using additional fuel, which is converted into
CO2 by the engine during combustion and exhausted through
the tailpipe. These emissions can be reduced by increasing the overall
efficiency of an A/C system, thus reducing the additional load on the
engine from A/C operation, which in turn means a reduction in fuel
consumption and a commensurate reduction in GHG emissions.
---------------------------------------------------------------------------
\105\ 40 CFR 1867-12 and 40 CFR 86.1868-12.
---------------------------------------------------------------------------
Manufacturers may generate credits for improved A/C systems to help
them comply with the CO2 fleet average standards since the
MY 2012 and later MYs. Because A/C credits represent a low-cost and
effective technology pathway, EPA expected manufacturers to generate
both A/C refrigerant and efficiency credits, and EPA accounted for
those credits in developing the final CO2 standards for the
2012 and SAFE rules, by adjusting the standards to make them more
stringent. EPA believes it is important to encourage manufacturers to
continue to implement low GWP refrigerants or low leak systems. Thus,
EPA is not proposing
[[Page 43766]]
any changes for its A/C credit provisions and is taking the same
approach in adjusting the level of the proposed standards to reflect
the use of the A/C credits. However, if EPA were to remove the
refrigerant credits from the program, the proposed standards would need
to be adjusted or increased by the amount of the credit to reflect its
elimination from the program.
5. Natural Gas Vehicles Technical Correction
In the SAFE proposal, EPA sought comment on whether it should adopt
additional incentives for natural gas-fueled light-duty vehicles.\106\
After considering comments, EPA finalized additional incentive
multipliers for MYs 2022-2026 natural gas vehicles.\107\ EPA also
received comments recommending that EPA adopt an additional incentive
for natural gas vehicles in the form of a 0.15 multiplicative factor
that would be applied to the CO2 emissions measured from the
vehicle when tested on natural gas. Commenters recommended the 0.15
factor as an appropriate way to account for the potential use of
renewable natural gas (RNG) in the vehicles.\108\
---------------------------------------------------------------------------
\106\ 83 FR 43464, August 24, 2018.
\107\ 85 FR 25211, April 30, 2020.
\108\ 85 FR 25210-25211.
---------------------------------------------------------------------------
EPA decided not to adopt the additional 0.15 factor incentive, as
discussed in the preamble to the SAFE Rule.\109\ EPA provided a
detailed rationale for its decision not to implement a 0.15 factor
recommended by commenters in the SAFE Rule.\110\ EPA is not revisiting
or reopening its decision regarding the 0.15 factor. However, the
regulatory text adopted in the SAFE rule contains an inadvertent
clerical error that conflicts with EPA's decision and rationale in the
final SAFE rule preamble and provides an option for manufacturers to
use this additional incentive in MYs 2022-2026 by multiplying the
measured CO2 emissions measured during natural gas operation
by the 0.15 factor.\111\ EPA is proposing narrow technical amendments
to its regulations to correct this clerical error by removing the
option to use the 0.15 factor in MY 2022 (as discussed in Section
II.B.1.iii, EPA is proposing to eliminate multipliers for NGVs after MY
2022). This will ensure the regulations are consistent with the
decision and rationale in the SAFE final rule. EPA likely would not
have granted credits under the erroneous regulatory text if such
credits were sought by a manufacturer because the intent of the agency
was clear in the preamble text. In addition, natural gas vehicles are
not currently offered by any manufacturer and EPA is not aware of any
plans to do so. Therefore, there are no significant impacts associated
with the correction of this clerical error.
---------------------------------------------------------------------------
\109\ 85 FR 25211.
\110\ Ibid.
\111\ See 40 CFR 600.510-12(j)(2)(v) and (j)(2)(vii)(A).
---------------------------------------------------------------------------
C. What alternatives is EPA considering?
Along with the proposed standards, EPA analyzed both a more
stringent and a less stringent alternative. For the less stringent
alternative, Alternative 1, EPA used the coefficients in the California
Framework for the 2.7 percent effective stringency level (as described
previously in Section II.B.1) as the basis for the MY 2023 stringency
level and the 2012 rule MY 2025 standards as the basis for the MY 2026
stringency level, with linear year-over-year reductions between the two
points for MYs 2024 and 2025. EPA views the California Framework as a
reasonable basis for the least stringent alternative that EPA would
consider finalizing, since it represents a level of stringency that
five manufacturers have already committed to achieving. EPA did not
include incentive multipliers for Alternative 1, as doing so would only
further reduce the effective stringency of this Alternative, and EPA
views Alternative 1 as the lower end of stringency that it believes is
appropriate through MY 2026.
For the more stringent alternative, Alternative 2, EPA used the
2012 rule standards as the basis for MY 2023-2025 targets, with the
standards continuing to increase in stringency in a linear fashion for
MY 2026. Alternative 2 adopts the 2012 rule stringency levels in MY
2023 and follows the 2012 rule standard target levels through MY 2025.
EPA extended the same linear average year-over-year trajectory for MYs
2023-2025 to MY 2026 for the final standards under Alternative 2. As
noted in Section II.A.1, EPA believes it is important to continue to
make progress in MY 2026 beyond the MY 2025 standard levels in the 2012
rule. As with the proposal, Alternative 2 meets this objective. EPA
also did not include in Alternative 2 the proposed incentive
multipliers with the proposed cumulative credit cap in MYs 2022-2025,
which would have the effect of making Alternative 2 less stringent. As
noted in Section II.B.1, EPA is requesting comment on whether or not to
include the proposed multipliers, and our request for comments extends
to whether to include multipliers both for the proposal and for
Alternative 2.
The fleet average targets for the two alternatives compared to the
proposed standards are provided in Table 29 below. EPA also requests
comment on the level of stringency for MY 2026 for the alternatives and
the proposed standards. Specifically, EPA requests comment on standards
for MY 2026 that would result in fleet average target levels that are
in the range of 5-10 g/mile lower (i.e., more stringent) than the
levels shown for MY 2026 in Table 29. EPA is requesting specific
comment on whether the level of stringency for MY 2026 should be
greater in keeping with the additional lead time available for this
out-year compared to MYs 2023-2025, and because EPA may determine that
it is appropriate, particularly in light of the accelerating transition
to electrified vehicles, to require additional reductions in this time
frame. As discussed in detail in Section A.3 of the Executive Summary,
there has been a proliferation of recent announcements from automakers
signaling a rapidly growing shift in investment away from internal-
combustion technologies and toward high levels of electrification. EPA
has also heard from a wide range of stakeholders over the past several
months, including but not limited to the automotive manufacturers and
the automotive suppliers, that the significant investments being made
now to develop and launch new EV product offerings and in the expansion
of EV charging infrastructure could enable higher levels of EV
penetration to occur in the marketplace by the MY 2026 time frame than
EPA has projected as the basis for both the proposed MY 2026 standards
and the Alternative 2 MY 2026 standards. The information concerning the
investment landscape potentially accelerating to an even greater extent
of market penetration of EV products is the basis on which EPA is
relying in soliciting comment on the potential for a more stringent MY
2026 standard that would reflect this information and related
considerations, including any additional information provided by
commenters.
[[Page 43767]]
Table 29--Projected Fleet Average Target Levels for Proposed Standards and Alternatives
[CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
Proposal Alternative 1 Alternative 2
Model year projected targets projected targets projected targets
----------------------------------------------------------------------------------------------------------------
2021................................................... * 223 * 223 * 224
2022................................................... * 220 * 220 * 220
2023................................................... 199 203 195
2024................................................... 189 194 186
2025................................................... 180 185 177
2026 **................................................ 171 177 169
----------------------------------------------------------------------------------------------------------------
* SAFE rule standards included here for reference.
** EPA is also requesting comment on MY 2026 standards and alternatives that would result in fleet average
levels that are 5-10 g/mile more stringent than the levels shown.
[GRAPHIC] [TIFF OMITTED] TP10AU21.007
As shown in Figure 8, the range of alternatives that EPA is
considering is fairly narrow, with the proposed standard targets
differing from the alternatives in any given MY in MYs 2023-2026 by 2
to 6 g/mile, notwithstanding EPA's request for comment on more
stringent standards for MY 2026 standards noted above. EPA believes
this approach is reasonable and appropriate considering the relatively
short lead time for the proposed standards, especially for MYs 2023-
2025; our assessment of feasibility, the existing automaker commitments
to meet the California Framework (representing about one-third of the
auto market), the standards adopted in the 2012 rule; and the need to
reduce GHG emissions. EPA provides a discussion of the feasibility of
the proposed standard and alternatives and the selection of the
proposed standards in Section III.D. The analysis of costs and benefits
of Alternatives 1 and 2 is shown in the DRIA Chapters 4, 6, and 10. EPA
requests comments on all aspects of Alternatives 1 and 2 or other
alternatives roughly within the stringency range of the proposal and
the Alternatives.
III. Technical Assessment of the Proposed CO2 Standards
Section II provided a description of EPA's proposed standards and
related program elements and industry-wide estimates of projected GHG
emissions targets. This Section III provides an overview of EPA's
technical assessment of the proposed standards including the approach
EPA used for its analysis,
[[Page 43768]]
EPA's projected target levels by manufacturer, projected per vehicle
cost for each manufacturer, EPA's projections of EV and PHEV technology
penetration rates, and a discussion of why EPA believes the proposed
standards are technologically feasible, drawing from these analyses.
Finally, this section discusses the alternative standards EPA analyzed
in developing the proposal. The DRIA presents further details of the
analysis including a full assessment of technology penetration rate and
cost projections. EPA discusses the basis for our proposed standards
under CAA section 202(a) in Section VI, and Section VII presents
aggregate cost and benefit projections as well as other program
impacts.
a. What approach did EPA use in analyzing potential standards?
The proposed standards are based on the extensive light-duty GHG
technical analytical record developed over the past dozen years, as
represented by the EPA supporting analyses for the 2010 and 2012 final
rules, the Mid-Term Evaluation (including the Draft TAR, Proposed
Determination and Final Determinations), as well as the updated
analysis for this proposed rule and the supporting analysis for the
SAFE rule. The updated analysis for this proposed rule is intended to
allow direct comparison to the analysis used in the SAFE FRM and is not
intended to be the sole technical basis of the proposed standards.
EPA's extensive record is consistent and makes clear that GHG standards
at the level of stringency and in the time frame of this proposed rule
are feasible at reasonable costs and result in significant GHG emission
reductions and public health and welfare benefits. The updated analysis
also shows that, consistent with past analyses, when modeling standards
of similar stringency to those set forth in the 2012 rule, the results
are similar to those results presented previously. In particular, the
estimated costs for manufacturers to meet standards similar to those
proposed have been roughly consistent since EPA first estimated them in
2012. The DRIA Chapter 1 further discusses and synthesizes EPA's record
supporting stringent GHG standards through the MY 2025/2026 time frame.
To confirm that these past analyses continue to provide valid
results for consideration by the Administrator in selecting the most
appropriate level of stringency and other aspects of the proposed
standards, we have conducted an updated analysis of the proposed
standards. In the past, EPA has traditionally used its OMEGA
(Optimization Model for reducing Emissions of Greenhouse gases from
Automobiles) model as the basis for setting light-duty GHG emissions
standards. EPA's OMEGA model was not used to support the analysis of
the GHG standards for the SAFE FRM; instead, NHTSA's Corporate Average
Fuel Economy (CAFE) Compliance and Effects Modeling System (CCEMS)
model was used.
In considering modeling tools to support the analysis for today's
proposed GHG standards, EPA has chosen to use the peer reviewed CCEMS
model and to use the same version of that model used in support of the
SAFE FRM. EPA has made this choice specific to this proposal for the
purpose of enabling direct comparison to the SAFE FRM analysis, which
addressed a model-year timespan consistent with this proposal.
Given that the SAFE FRM was published only a year ago, direct
comparisons between the analysis presented here and the analysis
presented in support of the SAFE FRM are made more direct if the same
modeling tool is used. For example, CCEMS has categorizations of
technologies and model output formats that are distinct to the model,
so continuing use of CCEMS for this proposal facilitates comparisons to
the SAFE FRM. Also, by using the same modeling tool as used in the SAFE
rule, we can more clearly illustrate the influence of some of the key
updates to the inputs used in the SAFE FRM. EPA believes that using
that same tool, with changes to some of the critical inputs as
discussed below (see Table 30), provides a better apples-to-apples
comparison and serves to strengthen the basis for why we are proposing
changes to the standards.
Some public comments received on the SAFE NPRM argued that EPA
should use its own modeling tools to support the EPA action. In
addition to the reasoning described above on the value of comparing
results to the SAFE FRM, our decision here to utilize the CCEMS model
as an appropriate tool for this analysis is informed by our
consideration of the significant revisions made to the model between
the SAFE proposal and the SAFE FRM and carried over here, and by the
opportunity this analysis provides to incorporate additional updates to
key inputs and assumptions.
Other commenters expressed concerns about technical issues with the
NPRM analysis. During EPA's own review and after consideration of
public comments, we concluded that a number of these concerns were well
founded, and potentially significant enough to merit revisions to the
analysis. Some key revisions made for the SAFE FRM version of the CCEMS
model include changes to the decision logic for technology application
by manufacturers and changes related to the SAFE NPRM's unrealistic
changes in VMT associated with the scrappage modeling. Similarly, a
number of revisions were also made to the model inputs for the SAFE
FRM, including the adjustment of some technology effectiveness values.
In considering what revisions to the analysis were needed from the
SAFE NRPM to the SAFE FRM, and from the SAFE FRM to this proposal, we
are careful to make a distinction between the model and the inputs. As
stated in the SAFE FRM preamble, ``[I]nputs do not define models;
models use inputs. Therefore, disagreements about inputs do not
logically extend to disagreements about models. Similarly, while models
determine resulting outputs, they do so based on inputs.'' \112\ To
illustrate, while CCEMS and OMEGA are different models, they both
provide comparable results when comparable inputs are used. For
example, as discussed in Chapter 1.2.2 of the DRIA, EPA's OMEGA model
runs conducted for the MTE show a MY2025 technology cost for the 2012
rule relative to the SAFE FRM of between $922 to $1,228 per vehicle,
depending on the specific analysis. Thus, the MY2025 per vehicle costs
of $942 (see RIA Chapter 4.1.2.1) from CCEMS modeling runs for this
proposal relative to a full fleet meeting the SAFE FRM are comparable
to our past analyses of standards for the similar level of stringency
and are within the bounds of previous EPA analyses and sensitivity
studies conducted for the MTE using OMEGA (see DRIA Chapter 1.2.2).
---------------------------------------------------------------------------
\112\ See 85 FR 24218.
---------------------------------------------------------------------------
Throughout the development of the SAFE FRM, EPA had significant
input on revisions to the analysis and EPA considered the FRM version
of the CCEMS model, given changes made in response to public comments
and our own input, to be an effective modeling tool for purposes of
assessing standards through the MY 2026 timeframe.
While we believe the SAFE FRM model and inputs, together with the
key changes that we have made since the SAFE FRM, are appropriate for
the particular analysis at hand in assessing standards through MY2026,
we welcome comments on other changes to the inputs that may be more
appropriate for use in the final rule.
[[Page 43769]]
Finally, EPA recognizes that in the Revised Final Determination
\113\ and the SAFE rule, the agency expressed concerns that were based
at least in part on comments from certain stakeholders about
uncertainties, lack of rigor and certain technical issues in the
analyses used for the 2016 Proposed Determination and 2017 Final
Determination. However, EPA has reconsidered those criticisms, as well
as the prior analyses, and concludes that the prior concerns expressed
do not undermine the utility and relevance of the prior analyses for
this rulemaking. Our consideration of such analyses is reasonable
because EPA no longer agrees with those concerns and/or because the
concerns raised technical issues that we believe do not significantly
impact the analyses. Additionally, the updated modeling for this
rulemaking addresses many of the concerns previously identified.
---------------------------------------------------------------------------
\113\ See 83 FR 16077.
---------------------------------------------------------------------------
For use in future vehicle standards analyses, EPA is developing an
updated version of its OMEGA model. This updated model, OMEGA2, is
being developed to better account for the significant evolution over
the past decade in vehicle markets, technologies, and mobility
services. In particular, the recent advancements in battery electric
vehicles (BEVs), and their introduction into the full range of market
segments provides strong evidence that vehicle electrification can play
a central role in achieving greater levels of emissions reduction in
the future. In developing OMEGA2, EPA is exploring the interaction
between consumer and producer decisions when modeling compliance
pathways and the associated technology penetration into the vehicle
fleet. OMEGA2 also is being designed to have expanded capability to
model a wider range of GHG program options than are possible using
existing tools, which will be especially important for the assessment
of policies that are designed to address future GHG reduction goals.
While the OMEGA2 model is not available for use in this proposal, we
plan to begin peer review of the draft model in the fall of 2021.
As noted, to allow for direct comparison to the analytical results
used to support the recent SAFE FRM, our updated analysis is based on
the same version of the CCEMS model that was used for the SAFE FRM. The
CCEMS model was extensively documented by NHTSA for the SAFE FRM and
the documentation also applies to the updated analysis for this
proposed rule.\114\ While the CCEMS model itself remains unchanged from
the version used in the SAFE rule, EPA has made the following changes
(shown in Table 30) to the inputs for this analysis. Additional
information concerning the changes in model inputs can be found in the
sections of the preamble and DRIA cited in the table. EPA invites
public comment on the input changes noted below, as well as on whether
there are other input choices that EPA should consider making for the
final rule. In offering comments on the modeling inputs, EPA encourages
stakeholders to provide technical support for any suggestions in
changes to modeling inputs.
---------------------------------------------------------------------------
\114\ See CCEMS Model Documentation on web page https://www.nhtsa.gov/corporate-average-fuel-economy/compliance-and-effects-modeling-system.
Table 30--Changes Made to CCEMS Model Inputs for This Proposal, Relative
to the SAFE FRM Analysis
------------------------------------------------------------------------
Input file Changes
------------------------------------------------------------------------
parameters file................... Global social cost of carbon $/ton
values in place of domestic values
(see DRIA Chapter 3.3).
Inclusion of global social cost of
methane (CH4) and nitrous oxide
(N2O) $/ton values (see Section
IV).
Updated PM2.5 cost factors (benefit
per ton values, see Section VII.E).
Rebound effect of -0.10 rather than
0.20 (see DRIA Chapter 3.1).
AEO2021 fuel prices (expressed in
2018 dollars) rather than AEO2019.
Updated energy security cost per
gallon factors (see Section VII.F).
Congestion cost factors of 6.34/6.34/
5.66 (car/van-SUV/truck) cents/mile
rather than 15.4/15/4/13.75 (see
RIA Chapter 5).
Discounting values to calendar year
2021 rather than calendar year
2019.
The following fuel import and
refining inputs have been changed
based on AEO2021 (see DRIA Chapter
3.2):
Share of fuel savings leading to
lower fuel imports:
Gasoline 7%; E85 19%; Diesel 7%
rather than 50%; 7.5%; 50%.
Share of fuel savings leading to
reduced domestic fuel refining:
Gasoline 93%; E85 25.1%; Diesel
93% rather than 50%; 7.5%; 50%.
Share of reduced domestic refining
from domestic crude:
Gasoline 9%; E85 2.4%; Diesel 9%
rather than 10%; 1.5%; 10%.
Share of reduced domestic refining
from imported crude:
Gasoline 91%; E85 24.6%; Diesel
91% rather than 90%; 13.5%; 90%.
technology file................... High compression ratio level 2
(HCR2, sometimes referred to as
Atkinson cycle) technology
allowance set to TRUE for all
engines beginning in 2018 (see DRIA
Chapter 2).
market file....................... On the Engines sheet, we allow high
compression ratio level 1 (HCR1)
and HCR2 technology on all 6-
cyclinder and smaller engines
rather than allowing it on no
engines (see DRIA Chapter 2).
Change the off-cycle credit values
on the Credits and Adjustments
sheet to 15 grams/mile for 2020
through 2026 (for the CA Framework)
or to 15 gram/mile for 2023 through
2026 (for the proposed option)
depending on the model run.
------------------------------------------------------------------------
Consistent with the SAFE FRM, EPA is using the MY2017 base year
fleet, which is projected to a future fleet based on the CCEMS model's
sales, scrappage, and fleet mix responses to the standards being
analyzed. When performing compliance analyses, EPA will often attempt
to utilize the most recent base year data that is available as
finalized compliance data, which at the time of this analysis was for
MY2019. It is important to note that because the model applies
technologies to future vehicles for all alternatives being analyzed,
including the ``No Action'' scenario, the vintage of the base year
normally will not have a significant impact on the model results for
[[Page 43770]]
projected fleets. There might be additional reason to update the base
year fleet in cases where a broad shift has occurred in vehicle power-
to-weight ratios, since that can impact the incremental cost
effectiveness of emissions-reducing technologies. EPA's annual
Automotive Trends Report \115\ shows only a modest increase
(approximately 3 percent) in the average vehicle power-to-weight ratio
between MYs 2017 and 2019, and therefore we have concluded that the
MY2017 base year remains a sound basis for this analysis. EPA requests
comment on the use of the MY2017 base year fleet and whether it would
be more appropriate to update the base year fleet for the final rule,
for example by using a base year fleet reflecting the most recent final
compliance data. Accordingly, we are using the data contained in the
SAFE FRM market file (the base year fleet) except as described in Table
30 and splitting the market file into separate California Framework OEM
(FW-OEM) and non-Framework OEM (NonFW-OEM) fleets for some model runs.
Note that the scrappage model received many negative comments in
response to the SAFE NPRM, but changes made for the FRM version of the
CCEMS model were responsive to the identified issues involving sales
and VMT results of the SAFE NPRM version of the CCEMS model.\116\
---------------------------------------------------------------------------
\115\ See Table 3.1, U.S. Environmental Protection Agency
(2021). 2020 EPA Automotive Trends Report: Greenhouse Gas Emissions,
Fuel Economy, and Technology since 1975. EPA-420-R-21-003.
\116\ See 85 FR 24647.
---------------------------------------------------------------------------
As mentioned, for some model runs we have split the fleet in two,
one fleet consisting of California Framework OEMs (FW-OEMs) and the
other consisting of the non-Framework OEMs (NonFW-OEMs). This was done
because the FW-OEMs would be meeting more stringent emission reduction
targets (as set in the scenarios file) and would have access to more
(15 g/mi rather than 10 g/mi) off-cycle credits (as set in the market
and scenarios file) and more advanced technology incentive multipliers,
while the NonFW-OEMs would be meeting less stringent standards and
would have access to 10 g/mi off-cycle credits and would not have
access to any advanced technology multipliers. For such model runs, a
post-processing step was necessary to properly sales-weight the two
sets of model outputs into a single fleet of results. This post-
processing tool is in the docket for this rule.\117\
---------------------------------------------------------------------------
\117\ See EPA_CCEMS_PostProcessingTool, Release 0.3.1 July 21,
2021.
---------------------------------------------------------------------------
Importantly, our primary model runs consist of a ``No Action''
scenario and an ``action'' scenario. The results, or impact of our
proposed standards, are measured relative to the no action scenario.
Our No Action scenario consists of the Framework OEMs (roughly 29
percent of fleet sales) meeting the Framework emission reduction
targets and the Non-Framework OEMs (roughly 71 percent of fleet sales)
meeting the SAFE FRM standards. Our action scenario consists of the
whole fleet meeting our proposed standards for MYs 2023 and later.
Throughout this preamble, our ``No Action scenario'' refers to this
Framework-OEM/NonFramework-OEM compliance split. EPA may consider a
different No Action scenario for the final rule. For example, currently
the No Action baseline includes the California Framework Agreement
emission targets for those automakers who have committed to them, but
does not include California's GHG or ZEV standards, because California
does not currently have a waiver to enforce those standards. If, after
consideration of public comment, EPA were to rescind the withdrawal of
California's Advanced Clean Car waiver, then it might be appropriate to
update the No Action scenario to reflect California's GHG and ZEV
standards. EPA seeks comment on potential adjustments to the No Action
scenario.
In our updated analysis, as indicated in Table 18, we are using a
vehicle-miles-traveled (VMT) rebound effect of 10 percent. The 10
percent value has been used in EPA supporting analyses for the 2010 and
2012 final rules as well as the MTE. The SAFE rule used a VMT rebound
effect of 20 percent. Our assessment indicates that a rebound effect of
10 percent is appropriate and supported by the body of research on the
rebound effect for light-duty vehicle driving, as described further in
the DRIA Chapter 3.1. We are requesting comment on the use of the 10
percent VMT rebound value, or an alternative value such as 5 or 15
percent, for our analysis of the MY2023 through 2026 standards.
EPA has chosen to change a select number of the SAFE FRM model
inputs, as listed in Table 30, largely because we concluded that other
potential updates, regardless of their potential merit, such as the
continued use of the MY2017 base year fleet, would not have a
significant impact on the assessment of the proposed standards. In
addition, while the technology effectiveness estimates used in the
CCEMS model to support the SAFE FRM could have been updated with more
recent engine maps, the incremental effectiveness values are of primary
importance within the CCEMS model and, while the maps are somewhat
dated, the incremental effectiveness values derived from them are in
rough agreement with incremental values derived from more up-to-date
engine maps (see DRIA Chapter 2). Likewise, while the electrified
vehicle battery costs used in the SAFE FRM could have been lower based
on EPA's latest assessment, we concluded that updating those costs for
this proposal would not have a notable impact on overall cost
estimates, although we may consider doing so for the final rule. The
past EPA analyses described above generally have estimated EV
penetrations of less than 5 percent, and electrification continues to
play a relatively modest role in our projections of compliance paths
for the proposed standards. In contrast to the model inputs unchanged
from the SAFE rule as described above, the treatment of HCR1 and HCR2
technologies in the CCEMS model, specifically a broader availability of
those technologies as a compliance choice within the model, was
considered by EPA to be significant and we made an update to the
model's inputs relative to the SAFE FRM. We made that choice because
these are a very cost-effective ICE technology that is in-use today and
ready for broader application. In short, there are many modeling inputs
that EPA has chosen not to change out of the very large number of
inputs required to run a model as complex as the CCEMS model, but there
are others we have updated with most of those updated because of the
way they value the effects of emissions on public health. EPA seeks
comment on our choice of modeling inputs, including whether additional
inputs should be modified for the final rule analysis.
B. Projected Compliance Costs and Technology Penetrations
1. GHG Targets and Compliance Levels
The proposed curve coefficients were presented in Table 22. Here we
present the projected fleet targets for each manufacturer. These
targets are projected based on each manufacturer's car/truck fleets and
their sales weighted footprints. As such, each manufacturer has a set
of targets unique to them. The projected targets are shown by
manufacturer for MYs 2023 through 2026 in Table 31 for cars, Table 32
for trucks, and Table 33 for the combined fleets.\118\
---------------------------------------------------------------------------
\118\ Note that these targets are projected based on both
projected future sales in applicable MYs and our proposed standards;
after the standards are finalized the targets will change depending
on each manufacturer's actual sales.
[[Page 43771]]
Table 31--Car Targets
[CO2 gram/mile]
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW............................................. 166 158 150 143
Daimler......................................... 173 165 157 149
FCA............................................. 169 161 153 146
Ford............................................ 167 159 151 144
General Motors.................................. 166 158 151 143
Honda........................................... 163 155 147 140
Hyundai Kia-H................................... 165 157 149 142
Hyundai Kia-K................................... 164 156 149 142
JLR............................................. 174 166 158 150
Mazda........................................... 163 155 147 140
Mitsubishi...................................... 151 143 136 130
Nissan.......................................... 164 156 148 141
Subaru.......................................... 160 152 145 138
Tesla........................................... 191 182 173 165
Toyota.......................................... 162 154 147 140
Volvo........................................... 172 164 156 148
VWA............................................. 160 152 145 138
---------------------------------------------------------------
Total....................................... 165 157 149 142
----------------------------------------------------------------------------------------------------------------
Table 32--Truck Targets
[CO2 gram/mile]
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW............................................. 219 208 198 188
Daimler......................................... 225 214 203 193
FCA............................................. 233 222 211 200
Ford............................................ 246 234 222 211
General Motors.................................. 252 239 228 216
Honda........................................... 215 205 195 185
Hyundai Kia-H................................... 214 203 193 183
Hyundai Kia-K................................... 217 206 196 186
JLR............................................. 221 210 199 190
Mazda........................................... 206 196 186 177
Mitsubishi...................................... 194 184 175 166
Nissan.......................................... 225 214 203 193
Subaru.......................................... 197 187 178 169
Tesla........................................... .............. .............. .............. ..............
Toyota.......................................... 227 216 205 195
Volvo........................................... 222 211 200 190
VWA............................................. 218 207 196 187
---------------------------------------------------------------
Total....................................... 232 221 210 199
----------------------------------------------------------------------------------------------------------------
Table 33--Combined Fleet Targets
[CO2 gram/mile]
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW............................................. 187 178 169 161
Daimler......................................... 195 186 177 168
FCA............................................. 221 210 200 190
Ford............................................ 215 205 195 185
General Motors.................................. 215 204 195 185
Honda........................................... 185 176 167 159
Hyundai Kia-H................................... 168 160 152 145
Hyundai Kia-K................................... 177 169 161 153
JLR............................................. 211 200 190 181
Mazda........................................... 176 167 159 151
Mitsubishi...................................... 168 160 152 145
Nissan.......................................... 185 176 167 159
Subaru.......................................... 187 178 169 161
Tesla........................................... 191 182 173 165
Toyota.......................................... 194 185 176 167
Volvo........................................... 205 195 185 176
VWA............................................. 179 171 162 155
---------------------------------------------------------------
[[Page 43772]]
Total....................................... 198 189 180 171
----------------------------------------------------------------------------------------------------------------
The modeled achieved CO2-equivalent (CO2e)
levels for the proposed standards are shown in Table 34 for cars, Table
35 for trucks, and Table 36 for the combined fleets. These values were
produced by the modeling analysis and represent the projected
certification emissions values for possible compliance approaches with
the proposed standards for each manufacturer. These achieved values,
shown as averages over the respective car, truck and combined fleets,
include the 2-cycle tailpipe emissions based on the modeled application
of emissions-reduction technologies minus the modeled application of
off-cycle credit technologies and the full A/C efficiency credits. The
values also reflect any application of the proposed advanced technology
multipliers, up to the cap. Hybrid pickup truck incentive credits were
not modeled (the CCEMS version used does not have this capability) and
are therefore not included in the achieved values.
Comparing the target and achieved values, it can be seen that some
manufacturers are projected to have achieved values that are over
target (higher emissions) on trucks, and under target (lower emissions)
on cars, and vice versa for other manufacturers. This is a feature of
the unlimited credit transfer provision, which results in a compliance
determination that is based on the combined car and truck fleet credits
rather than a separate determination of each fleet's compliance. The
application of technologies is influenced by the relative cost-
effectiveness of technologies among each manufacturer's vehicles, which
explains why different manufacturers exhibit different compliance
approaches in the modeling results. For the combined fleet, the
achieved values are typically close to, or slightly under the target
values, which would represent the banking of credits that can be
carried over into other model years. For all manufacturers, the total
achieved values for MYs 2023 to 2026 are within -1 to +3 grams/mile of
the total target values. This indicates that overall, the modeled fleet
tracks the standards very closely from year-to-year. Note that an
achieved value for a manufacturer's combined fleet that is above the
target in a given model year does not indicate a likely failure to
comply with the standards, since the model includes the GHG program
credit banking provisions that allow credits from one year to be
carried into another year.
Table 34--Car Achieved Levels
[CO2e gram/mile]
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW............................................. 173 168 168 131
Daimler......................................... 184 169 166 168
FCA............................................. 183 178 178 171
Ford............................................ 168 160 159 151
General Motors.................................. 152 136 133 132
Honda........................................... 161 161 161 130
Hyundai Kia-H................................... 162 147 146 145
Hyundai Kia-K................................... 138 134 134 137
JLR............................................. 217 162 158 165
Mazda........................................... 156 156 156 146
Mitsubishi...................................... 136 136 129 129
Nissan.......................................... 165 153 147 147
Subaru.......................................... 193 193 193 174
Tesla........................................... -20 -20 -20 -20
Toyota.......................................... 161 143 135 133
Volvo........................................... 185 185 184 145
VWA............................................. 146 144 143 135
---------------------------------------------------------------
Total....................................... 161 150 147 141
----------------------------------------------------------------------------------------------------------------
Table 35--Truck Achieved Levels
[CO2e gram/mile]
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW............................................. 220 210 156 161
Daimler......................................... 206 206 151 126
FCA............................................. 218 217 217 207
Ford............................................ 245 234 234 216
General Motors.................................. 270 261 245 224
Honda........................................... 212 210 210 210
Hyundai Kia-H................................... 222 129 129 140
Hyundai Kia-K................................... 225 209 209 209
JLR............................................. 210 210 176 187
Mazda........................................... 177 177 177 176
[[Page 43773]]
Mitsubishi...................................... 194 194 185 185
Nissan.......................................... 220 218 198 192
Subaru.......................................... 187 187 187 168
Tesla........................................... .............. .............. .............. ..............
Toyota.......................................... 239 231 224 204
Volvo........................................... 181 180 176 183
VWA............................................. 240 200 173 122
---------------------------------------------------------------
Total....................................... 233 226 218 203
----------------------------------------------------------------------------------------------------------------
Table 36--Combined Fleet Achieved Levels
[CO2e gram/mile]
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW............................................. 192 184 163 143
Daimler......................................... 194 185 159 150
FCA............................................. 211 210 210 200
Ford............................................ 215 205 205 190
General Motors.................................. 220 208 197 185
Honda........................................... 183 181 182 164
Hyundai Kia-H................................... 166 146 145 145
Hyundai Kia-K................................... 160 153 153 156
JLR............................................. 212 200 172 182
Mazda........................................... 162 162 162 155
Mitsubishi...................................... 159 160 152 152
Nissan.......................................... 184 175 164 163
Subaru.......................................... 189 189 189 170
Tesla........................................... -20 -20 -20 -20
Toyota.......................................... 199 186 179 168
Volvo........................................... 182 182 179 170
VWA............................................. 178 163 153 131
---------------------------------------------------------------
Total....................................... 197 188 183 172
----------------------------------------------------------------------------------------------------------------
2. Projected Compliance Costs per Vehicle
EPA has performed an updated assessment of the estimated per
vehicle costs for manufacturers to meet the proposed MY2023-2026
standards. The car costs per vehicle from this analysis are shown in
Table 37, followed by truck costs in Table 38 and combined fleet costs
in Table 39.\119\
---------------------------------------------------------------------------
\119\ As shown in Table 23, Tesla incurs nearly $400 in costs
per vehicle despite being a pure electric vehicle maker (0 grams/
mile) and despite there being no upstream emissions accounting under
the proposal. The costs shown for Tesla represent the costs of 15
grams/mile of off-cycle credit.
---------------------------------------------------------------------------
As shown in these tables, the combined cost for car and truck
fleets, averaged over all manufacturers, increases from MY 2023 to MY
2026 as the proposed standards become more stringent. The costs for
trucks tend to be somewhat higher than for cars--many technology costs
scale with engine and vehicle size--but it is important to note that
the absolute emissions, and therefore emissions reductions, also tend
to be higher for trucks. Projected costs for individual manufacturers
vary based on the composition of vehicles produced. The estimated costs
for California Framework Agreement manufacturers in MY 2026 range from
approximately $500-$850 dollars per vehicle--because the proposed
standards are more stringent than the Framework emission reduction
targets--and fall within the wider cost range of non-Framework
manufacturers. The estimated costs for Framework manufacturers are
somewhat lower than the overall industry average costs of approximately
$1,000 per vehicle in MY 2026.
Table 37--Car Costs per Vehicle Relative to the No Action Scenario
[2018 dollars]
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW *........................................... $64 $40 $42 $254
Daimler......................................... 37 414 490 487
FCA............................................. 465 525 511 823
Ford *.......................................... 22 234 228 458
General Motors.................................. 662 1,351 1,354 1,512
Honda *......................................... 39 44 43 766
Hyundai Kia-H................................... 457 845 847 878
[[Page 43774]]
Hyundai Kia-K................................... 395 406 396 416
JLR............................................. -510 1,075 1,076 1,006
Mazda........................................... 510 522 517 745
Mitsubishi...................................... 870 860 993 985
Nissan.......................................... 614 825 940 912
Subaru.......................................... 403 397 392 710
Tesla........................................... 398 393 387 382
Toyota.......................................... 470 822 958 979
Volvo *......................................... 212 210 222 211
VWA *........................................... 158 168 177 185
---------------------------------------------------------------
Total....................................... 383 643 682 846
----------------------------------------------------------------------------------------------------------------
* Framework Manufacturer.
Table 38--Truck Cost per Vehicle Relative to the No Action Scenario
[2018 dollars]
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW *........................................... $270 $264 $1,080 $1,037
Daimler......................................... 1,641 1,582 2,964 4,233
FCA............................................. 1,074 1,022 974 1,423
Ford *.......................................... 34 279 267 500
General Motors.................................. 786 977 1,350 2,100
Honda *......................................... 25 64 63 62
Hyundai Kia-H................................... 398 3,370 3,170 2,995
Hyundai Kia-K................................... 435 482 475 468
JLR............................................. 752 740 2,140 2,007
Mazda........................................... 787 783 777 788
Mitsubishi...................................... 440 434 599 592
Nissan.......................................... 556 590 978 1,178
Subaru.......................................... 415 410 404 808
Tesla........................................... 0 0 0 0
Toyota.......................................... 440 590 763 1,081
Volvo *......................................... 1,193 1,140 1,040 997
VWA *........................................... 35 1,028 1,595 2,148
---------------------------------------------------------------
Total....................................... 546 682 855 1,232
----------------------------------------------------------------------------------------------------------------
* Framework Manufacturer.
Table 39--Fleet Average Cost per Vehicle Relative to the No Action Scenario
[2018 dollars]
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW *........................................... $145 $129 $459 $566
Daimler......................................... 727 917 1,567 2,123
FCA............................................. 957 927 886 1,309
Ford *.......................................... 29 261 252 485
General Motors.................................. 733 1,138 1,353 1,854
Honda *......................................... 33 52 52 467
Hyundai Kia-H................................... 454 1,006 997 1,015
Hyundai Kia-K................................... 404 424 413 426
JLR............................................. 471 813 1,904 1,784
Mazda........................................... 591 599 595 758
Mitsubishi...................................... 697 688 833 825
Nissan.......................................... 595 746 954 1,005
Subaru.......................................... 412 406 401 783
Tesla........................................... 398 393 387 382
Toyota.......................................... 456 709 863 1,033
Volvo *......................................... 860 827 766 731
VWA *........................................... 116 456 656 853
---------------------------------------------------------------
Total....................................... 465 663 771 1,044
----------------------------------------------------------------------------------------------------------------
* Framework Manufacturer.
[[Page 43775]]
Overall, EPA estimates the average costs of today's proposal at
$1,044 per vehicle in MY2026 relative to meeting the No Action scenario
in MY2026. As discussed in Section VII, there are benefits resulting
from these costs including savings to consumers in the form of lower
fuel costs.
3. Technology Penetration Rates
In this section we discuss the projected new sales technology
penetration rates from EPA's updated analysis for the proposed
standards. Additional detail on this topic can be found in the DRIA.
EPA's assessment for the proposal, consistent with past EPA
assessments, shows that the proposed standards can largely be met with
increased sales of advanced gasoline vehicle technologies, and
relatively low penetration rates of electrified vehicle technology.
Table 40, Table 41, and Table 42 show the EPA projected penetration
rates of BEV+PHEV technology under today's proposal with the remaining
share being traditional or advanced ICE technology. Values shown
reflect absolute values of fleet penetration and are not increments
from the No Action scenario or other standards. It is important to note
that this is a projection and represents one out of many possible
compliance pathways for the industry. The proposed standards are
performance-based and do not mandate any specific technology for any
manufacturer or any vehicles. As the proposed standards become more
stringent over MYs 2023 to 2026, the projected penetration of
electrified vehicles increases by approximately 4 percent over this 4-
year period (from 3.6 percent to 7.8 percent), reaching nearly 8
percent of overall vehicle production in MY2026. While this is not an
insignificant change, it is notable that we estimate that over 92
percent of new light-duty vehicle sales will continue to utilize ICE
technology under our updated analysis. This conclusion that ICE
vehicles will continue to play an important role in meeting GHG
standards is consistent with EPA's prior analyses for this timeframe.
Table 40--Car BEV+PHEV Penetration Rates Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW............................................. 8.4% 8.4% 8.4% 19.5%
Daimler......................................... 7.2 8.0 8.0 8.0
FCA............................................. 4.3 6.3 6.2 6.2
Ford............................................ 7.7 9.3 9.6 9.6
General Motors.................................. 6.1 12.2 12.1 13.3
Honda........................................... 0.1 0.1 0.1 12.7
Hyundai Kia-H................................... 0.3 3.4 3.8 3.8
Hyundai Kia-K................................... 9.2 9.2 9.1 9.1
JLR............................................. 0.5 11.2 11.2 11.2
Mazda........................................... 0.0 0.0 0.0 0.0
Mitsubishi...................................... 0.0 0.0 0.0 0.0
Nissan.......................................... 1.0 1.2 1.2 1.2
Subaru.......................................... 0.0 0.0 0.0 0.0
Tesla........................................... 100.0 100.0 100.0 100.0
Toyota.......................................... 2.6 4.0 4.4 4.4
Volvo........................................... 0.0 0.0 0.0 16.6
VWA............................................. 15.4 15.5 15.5 17.2
---------------------------------------------------------------
Total....................................... 4.6 6.3 6.4 8.4
----------------------------------------------------------------------------------------------------------------
Table 41--Truck BEV+PHEV Penetration Rates Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW............................................. 4.3% 4.3% 8.9% 8.9%
Daimler......................................... 28.8 28.8 38.3 39.6
FCA............................................. 5.6 5.6 5.6 5.6
Ford............................................ 1.8 4.8 4.8 7.3
General Motors.................................. 2.3 3.7 5.0 11.0
Honda........................................... 0.0 0.0 0.0 0.0
Hyundai Kia-H................................... 0.0 20.6 20.6 20.6
Hyundai Kia-K................................... 0.0 0.0 0.0 0.0
JLR............................................. 13.0 13.0 24.6 24.6
Mazda........................................... 0.0 0.0 0.0 0.0
Mitsubishi...................................... 0.0 0.0 0.0 0.0
Nissan.......................................... 0.0 0.0 3.7 5.9
Subaru.......................................... 0.0 0.0 0.0 0.0
Tesla........................................... 0.0 0.0 0.0 0.0
Toyota.......................................... 0.0 0.0 1.9 1.9
Volvo........................................... 15.6 15.6 17.3 17.3
VWA............................................. 1.2 20.8 20.8 39.5
---------------------------------------------------------------
Total....................................... 2.6 4.0 5.1 7.2
----------------------------------------------------------------------------------------------------------------
Table 42--Fleet BEV+PHEV Penetration Rates Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
BMW............................................. 6.8% 6.8% 8.6% 15.2%
[[Page 43776]]
Daimler......................................... 16.5 17.0 21.2 21.8
FCA............................................. 5.3 5.7 5.7 5.7
Ford............................................ 4.1 6.5 6.7 8.2
General Motors.................................. 3.9 7.4 8.0 12.0
Honda........................................... 0.1 0.1 0.1 7.3
Hyundai Kia-H................................... 0.2 4.5 4.9 4.9
Hyundai Kia-K................................... 6.9 6.9 6.8 6.8
JLR............................................. 10.2 12.6 21.7 21.7
Mazda........................................... 0.0 0.0 0.0 0.0
Mitsubishi...................................... 0.0 0.0 0.0 0.0
Nissan.......................................... 0.6 0.8 2.1 2.8
Subaru.......................................... 0.0 0.0 0.0 0.0
Tesla........................................... 100.0 100.0 100.0 100.0
Toyota.......................................... 1.3 2.0 3.1 3.1
Volvo........................................... 10.3 10.3 11.5 17.0
VWA............................................. 10.7 17.3 17.3 24.7
---------------------------------------------------------------
Total....................................... 3.6 5.1 5.8 7.8
----------------------------------------------------------------------------------------------------------------
C. Are the proposed standards feasible?
The proposed standards are based on the extensive light-duty GHG
technical analytical record developed over the past dozen years, as
represented by the EPA supporting analyses for the 2010 and 2012 final
rules, the Mid-Term Evaluation (including the Draft TAR, Proposed
Determination and Final Determinations), as well as the updated
analysis for this proposed rule and the supporting analysis for the
SAFE rule.\120\ Our conclusion that the proposed program is
technologically feasible is based in part on a projection that the
standards will be met using the same advances in light-duty vehicle
engine technologies, transmission technologies, electric drive systems,
aerodynamics, tires, and vehicle mass reduction that have gradually
entered the light-duty vehicle fleet over the past decade and that are
already in place in today's vehicles. This conclusion is also supported
by the analysis performed by NHTSA that served as the basis for the
SAFE final rule. In the SAFE final rule, the NHTSA analysis showed that
the 2012 CO2 standards could be met primarily with
improvements in gasoline vehicle and hybrid technology and with only 6
percent penetration of EV+PHEV, which is very similar to today's
projection.\121\ The feasibility of the proposed standards does not
rely on dramatically increased penetration of electric vehicles into
the fleet during the 2023-2026 model years. Our updated analysis
projects that the proposed standards can be met with a gradually
increasing market share of EVs and PHEVs up to approximately 8 percent
by MY 2026 (see Section III.B.3 of this preamble and the following
paragraph).
---------------------------------------------------------------------------
\120\ Although the MTE 2018 Revised Final Determination
``withdrew'' the 2017 Final Determination, the D.C. Circuit Court
has noted that EPA did ``not erase[ ] the Draft Technical Assessment
Report, Technical Support Document, or any of the other prior
evidence [EPA] collected.'' California v. EPA, 940 F.3d 1342, 1351
(D.C. Cir. 2019).
\121\ See the SAFE Final Rule preamble: ``The levels of
electrified vehicle technologies projected in this final rule to
meet the baseline Alternative (the previous GHG standards) differ
slightly from those projected in the 2017 Final Determination. In
this final rule, EPA projects a combined strong and mild hybrid
penetration of 16 percent (compared to 20 percent in the 2017 Final
Determination), with the share of mild hybrids somewhat lower (7
percent compared to 18 percent in the 2017 Final Determination) and
the share of strong hybrids higher (9 percent compared to 2 percent
in the 2017 Final Determination). EPA projects a total level of
plug-in vehicles of 6 percent, similar to the 5 percent total
projected in the 2017 Final Determination, but with a slightly
different mix of plug-in hybrid electric vehicles (0.4 percent
compared to 2 percent in the 2017 Final Determination) and dedicated
electric vehicles (5.7 percent compared to 3 percent in the 2017
Final Determination). 85 FR 25107, April 30, 2020.
---------------------------------------------------------------------------
The percentage share of specific MY2015 to MY2020 engine and
transmission technologies are summarized from EPA Automotive Trends
Report data within Chapter 2.2 of the DRIA. The introduction of GHG
reducing technologies has been steadily increasing within the light-
duty vehicle fleet. As of MY2020, more than half of light-duty gasoline
spark ignition engines now use direct injection (GDI) engines and more
than a third are turbocharged. Nearly half of all light-duty vehicles
have planetary automatic transmissions with 8 or more gear ratios, and
one-quarter are using continuously variable transmissions (CVT). The
sales of vehicles with 12V start/stop systems has increased from
approximately 7 percent to approximately 42 percent between MY2015 and
MY2020. Significant levels of powertrain electrification of all types
(HEV, PHEV, and EV) have increased more than 3-fold from MY2015 to
MY2020. In MY2015, hybrid electric vehicles accounted for approximately
2.4 percent of vehicle sales, which increased to approximately 6.5
percent of vehicle sales in MY2020. Sales of plug-in hybrid electric
vehicles (PHEVs) and battery electric vehicles (EVs) together comprised
0.7 percent of vehicle sales in MY2015 and increased to about 2 percent
of sales for MY2019.\122\ The pace of introduction of new EV and PHEV
models is rapidly increasing. For example, the number of EV and PHEV
models available for sale in the U.S. has more than doubled from about
24 in MY 2015 to about 60 in MY 2021.\123\ Even in the absence of more
stringent standards, manufacturers have indicated that the number of EV
and PHEV models will increase to more than 80 by MY 2023, with many
more expected to reach production before the end of the decade.\124\
Although our analysis projects that approximately 8 percent of new
vehicles meeting the MY 2026 proposed standards would be EVs or PHEVs,
it is possible that an even higher percentage may be electrified during
the time period of our proposed MY 2023-2026 standards, when taking
into account the pace at which new EV and PHEV models are being
announced for introduction by automakers, under
[[Page 43777]]
current policy, over the next three to five years.\125\
---------------------------------------------------------------------------
\122\ ``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-21-
003, January 2021.
\123\ Fueleconomy.gov, 2015 Fuel Economy Guide and 2021 Fuel
Economy Guide.
\124\ Environmental Defense Fund and M.J. Bradley & Associates,
``Electric Vehicle Market Status--Update, Manufacturer Commitments
to Future Electric Mobility in the U.S. and Worldwide,'' April 2021.
\125\ Rhodium Group, ``Pathways to Build Back Better: Investing
in Transportation Decarbonization,'' May 13, 2021.
---------------------------------------------------------------------------
EPA believes that the proposed program is technologically feasible
based on our projection that the standards can be met largely with the
kinds of advanced gasoline vehicle technologies already in place in
vehicles within today's new vehicle fleet and relies on a penetration
of plug-in electric vehicles into the fleet during the 2023-2026 model
years that is commensurate with current trends in the industry. This
conclusion, which is supported by EPA's updated analysis, is consistent
with EPA's past analyses of standards similar to those proposed in this
notice, see Section III.B and Chapter 2 of the DRIA. The analysis
confirms EPA's previous conclusions that a wide variety of emission
reducing technologies are already available at reasonable costs for
manufacturers to incorporate into their vehicles within the timeframe
of the proposed standards.
D. How did EPA consider the two alternatives in choosing the proposed
program?
In Section II.C, we described two alternative stringency levels
that we considered in developing the level of stringency of the
proposed program--Alternative 1 (less stringent than the proposed
program) and Alternative 2 (more stringent). All three potential
programs would incorporate year-over-year increases in GHG stringency,
with varying starting stringencies in MY2023, and varying ending
stringencies in MY2026, and with fairly linear increases in stringency
between MY2023 and 2026 that would essentially follow the same slope as
the 2012 program. All three potential programs would also result, by
MY2026, in standards at least as stringent as the last year (MY2025) of
the 2012 program. See Figure 8 and Table 16 in Section II.C.
In determining the stringency of the proposed standards, our
primary focus was on the first and last model years of the proposed
program, 2023 and 2026. Some stakeholders have encouraged EPA to
propose standards that would closely follow the stringency levels of
the California Framework Agreements, or that would represent less
stringent standards (between the California Framework emission
reduction targets and the relaxed standards of the SAFE rule). In
Section VI below, we discuss why we believe the auto industry's
technological achievements over the past decade, and the availability
of a range of existing and proposed compliance flexibilities, puts
automakers in a strong position to meet the proposed revised standards
for model years 2023 through 2026 on a year-by-year trajectory close to
the standards in the 2012 program. Given our conclusion that standards
more stringent than those in Alternative 1 are clearly feasible
considering available technology and compliance costs, and in light of
the critical national need to quickly and substantially reduce light-
duty GHG emissions, we believe at this time that a program of the
stringency of Alternative 1 (and any less stringent alternative) would
not be appropriate given EPA's consideration of the public health and
welfare benefits of potential standards. Nonetheless, we invite comment
on Alternative 1 and may consider it in determining the standards for
the final rule.
Similarly, we considered the implications of a more stringent
program in Alternative 2. In this alternative program, the standards
would more quickly return to the 2012 program's trajectory, in model
year 2023. While we believe, given the combination of factors discussed
in Section VI, reaching the 2012 program's levels in 2023 may be
feasible industrywide, we are proposing a slightly less stringent
standard for that first year to provide a more gradual transition to
the 2012 trajectory.
All three alternative programs after MY2023 would essentially
follow the same slope of increasing year-over-year stringency of the
2012 program. For Alternative 1, this would mean that the standards
would reach the model year 2025 level of the 2012 rule (the final
increase in stringency of the 2012 program) in model year 2026,
resulting in a less stringent program compared to the 2012 rule until
MY2026. Chapter 5.1.1.2 of the DRIA shows the associated lower amount
of GHG reductions achieved under Alternative 1 compared to the
proposal. Again, given the urgent need for GHG reductions to address
the climate challenge, we believe Alternative 1 does not go far enough
and would be inappropriate, as discussed above.
For Alternative 2, the standards by MY2025 would nearly match the
stringency level of the MY2025 standards in the 2012 rule and would
continue to increase in stringency for one additional year in MY2026.
Consistent with EPA's previous discussions regarding feasibility,
compliance costs, and lead time, we believe that Alternative 2 may be
feasible. Several arguments can be made in support of Alternative 2
that are similar to those that support the proposed standards. In terms
of technology penetrations, Alternative 2 projects that nearly 10
percent of the fleet would need to be made up of EV/PHEVs compared with
about 8 percent for the proposed standards. See Table 4-23, and Table
4-28 of the DRIA. Several automakers have made public announcements
regarding electrification of the light-duty fleet, particularly
regarding the latter years of the proposed program. These electrified
products will provide a significant contribution to the ability of
these manufacturers to comply with more stringent standards. However,
EPA recognizes that the additional penetration of electrification by
2026 could be challenging for any manufacturers that are not currently
investing in advanced technologies, such as EVs, for this timeframe,
although with additional investment and product development, or greater
reliance on the emissions ABT program including credit trading, this
level of stringency may be achievable. EPA also recognizes Alternative
2 is more stringent than the proposal in MY2023, and EPA believes a
lower level of stringency increase for 2023 may be appropriate taking
into consideration lead time.
Projected costs and technology penetrations associated with
Alternatives 1 and 2 are available in Chapter 4 of the DRIA.
We invite comment on our assessment of Alternatives.
IV. How would this proposal reduce GHG emissions and their associated
effects?
A. Impact on GHG Emissions
EPA used the CCEMS to estimate GHG emissions inventories including
tailpipe emissions from light-duty cars and trucks and the upstream
emissions associated with the fuels used to power those vehicles (both
at the refinery and the electricity generating unit). The upstream
emission factors used in the modeling are identical to those used for
the SAFE FRM and were generated using the DOE/Argonne GREET model as
described in the SAFE FRM (See DRIA Chapter 5.1.1, referencing the SAFE
FRM).
The resultant annual GHG inventory estimates are shown in Table 43
for the calendar years 2023 through 2050. The table shows our proposed
program would result in net GHG reductions compared to the No Action
scenario. The CO2, CH4 and N2O
emissions
[[Page 43778]]
reductions from the proposed program total 2,205 MMT, 2.7 MMT and 0.072
MMT, respectively, by 2050.
Table 43--Estimated GHG Impacts of the Proposed Standards Relative to the No Action Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emission impacts relative to no action Percent change from no action
-----------------------------------------------------------------------------------------------
Year CO2 (million
metric tons) CH4 (metric N2O (metric CO2 (%) CH4 (%) N2O (%)
tons) tons)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.................................................... -4 -4,821 -105 0 0 0
2024.................................................... -7 -8,560 -200 0 0 0
2025.................................................... -11 -13,412 -330 -1 -1 -1
2026.................................................... -17 -21,154 -534 -1 -1 -1
2027.................................................... -25 -30,702 -785 -2 -2 -1
2028.................................................... -33 -41,019 -1,051 -2 -2 -2
2029.................................................... -42 -51,607 -1,325 -3 -3 -2
2030.................................................... -50 -62,014 -1,591 -4 -3 -3
2031.................................................... -58 -72,138 -1,847 -4 -4 -3
2032.................................................... -66 -81,872 -2,096 -5 -5 -4
2033.................................................... -74 -91,079 -2,332 -6 -5 -4
2034.................................................... -81 -99,597 -2,555 -6 -6 -5
2035.................................................... -86 -106,981 -2,739 -7 -6 -5
2036.................................................... -92 -113,813 -2,915 -7 -7 -6
2037.................................................... -97 -119,952 -3,090 -8 -7 -6
2038.................................................... -101 -125,292 -3,245 -8 -7 -6
2039.................................................... -105 -129,675 -3,368 -9 -8 -7
2040.................................................... -108 -133,346 -3,474 -9 -8 -7
2041.................................................... -110 -136,405 -3,564 -9 -8 -7
2042.................................................... -112 -138,441 -3,630 -9 -8 -7
2043.................................................... -113 -140,060 -3,693 -9 -9 -7
2044.................................................... -114 -141,230 -3,745 -10 -9 -8
2045.................................................... -115 -141,929 -3,790 -10 -9 -8
2046.................................................... -116 -142,314 -3,826 -10 -9 -8
2047.................................................... -116 -142,870 -3,872 -10 -9 -8
2048.................................................... -116 -142,942 -3,901 -10 -9 -8
2049.................................................... -117 -143,167 -3,938 -10 -9 -8
2050.................................................... -117 -143,681 -4,001 -10 -9 -8
-----------------------------------------------------------------------------------------------
Sum................................................. -2,205 -2,720,073 -71,543 -6 -6 -5
--------------------------------------------------------------------------------------------------------------------------------------------------------
B. Climate Change Impacts From GHG Emissions
Elevated concentrations of GHGs have been warming the planet,
leading to changes in the Earth's climate including changes in the
frequency and intensity of heat waves, precipitation, and extreme
weather events, rising seas, and retreating snow and ice. The changes
taking place in the atmosphere as a result of the well-documented
buildup of GHGs due to human activities are changing the climate at a
pace and in a way that threatens human health, society, and the natural
environment. While EPA is not making any new scientific or factual
findings with regard to the well-documented impact of GHG emissions on
public health and welfare in support of this proposal, EPA is providing
some scientific background on climate change to offer additional
context for this rulemaking and to increase the public's understanding
of the environmental impacts of GHGs.
Extensive additional information on climate change is available in
the scientific assessments and the EPA documents that are briefly
described in this section, as well as in the technical and scientific
information supporting them. One of those documents is EPA's 2009
Endangerment and Cause or Contribute Findings for Greenhouse Gases
Under Section 202(a) of the CAA (74 FR 66496, December 15, 2009). In
the 2009 Endangerment Finding, the Administrator found under section
202(a) of the CAA that elevated atmospheric concentrations of six key
well-mixed GHGs--CO2, methane (CH4), nitrous
oxide (N2O), HFCs, perfluorocarbons (PFCs), and sulfur
hexafluoride (SF6)--``may reasonably be anticipated to
endanger the public health and welfare of current and future
generations'' (74 FR 66523). The 2009 Endangerment Finding, together
with the extensive scientific and technical evidence in the supporting
record, documented that climate change caused by human emissions of
GHGs (including HFCs) threatens the public health of the U.S.
population. It explained that by raising average temperatures, climate
change increases the likelihood of heat waves, which are associated
with increased deaths and illnesses (74 FR 66497). While climate change
also increases the likelihood of reductions in cold-related mortality,
evidence indicates that the increases in heat mortality will be larger
than the decreases in cold mortality in the United States (74 FR
66525). The 2009 Endangerment Finding further explained that compared
with a future without climate change, climate change is expected to
increase tropospheric ozone pollution over broad areas of the United
States, including in the largest metropolitan areas with the worst
tropospheric ozone problems, and thereby increase the risk of adverse
effects on public health (74 FR 66525). Climate change is also expected
to cause more intense hurricanes and more frequent and intense storms
of other types and heavy precipitation, with impacts on other areas of
public health, such as the potential for increased deaths, injuries,
infectious and waterborne diseases, and stress-related disorders (74 FR
66525). Children, the elderly, and the poor are among the most
vulnerable to these climate-related health effects (74 FR 66498).
[[Page 43779]]
The 2009 Endangerment Finding also documented, together with the
extensive scientific and technical evidence in the supporting record,
that climate change touches nearly every aspect of public welfare \126\
in the United States with resulting economic costs, including: Changes
in water supply and quality due to changes in drought and extreme
rainfall events; increased risk of storm surge and flooding in coastal
areas and land loss due to inundation; increases in peak electricity
demand and risks to electricity infrastructure; and the potential for
significant agricultural disruptions and crop failures (though offset
to some extent by carbon fertilization). These impacts are also global
and may exacerbate problems outside the United States that raise
humanitarian, trade, and national security issues for the United States
(74 FR 66530).
---------------------------------------------------------------------------
\126\ The CAA states in section 302(h) that ``[a]ll language
referring to effects on welfare includes, but is not limited to,
effects on soils, water, crops, vegetation, manmade materials,
animals, wildlife, weather, visibility, and climate, damage to and
deterioration of property, and hazards to transportation, as well as
effects on economic values and on personal comfort and well-being,
whether caused by transformation, conversion, or combination with
other air pollutants.'' 42 U.S.C. 7602(h).
---------------------------------------------------------------------------
In 2016, the Administrator similarly issued Endangerment and Cause
or Contribute Findings for greenhouse gas emissions from aircraft under
section 231(a)(2)(A) of the CAA (81 FR 54422, August 15, 2016). In the
2016 Endangerment Finding, the Administrator found that the body of
scientific evidence amassed in the record for the 2009 Endangerment
Finding compellingly supported a similar endangerment finding under CAA
section 231(a)(2)(A), and also found that the science assessments
released between the 2009 and the 2016 Findings ``strengthen and
further support the judgment that GHGs in the atmosphere may reasonably
be anticipated to endanger the public health and welfare of current and
future generations'' (81 FR 54424).
Since the 2016 Endangerment Finding, the climate has continued to
change, with new observational records being set for several climate
indicators such as global average surface temperatures, GHG
concentrations, and sea level rise. Additionally, major scientific
assessments continue to be released that further advance our
understanding of the climate system and the impacts that GHGs have on
public health and welfare both for current and future generations.
These updated observations and projections document the rapid rate
of current and future climate change both globally and in the United
States.127 128 129 130
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\127\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
https://nca2018.globalchange.gov.
\128\ Roy, J., P. Tschakert, H. Waisman, S. Abdul Halim, P.
Antwi-Agyei, P. Dasgupta, B. Hayward, M. Kanninen, D. Liverman, C.
Okereke, P.F. Pinho, K. Riahi, and A.G. Suarez Rodriguez, 2018:
Sustainable Development, Poverty Eradication and Reducing
Inequalities. In: Global Warming of 1.5[deg]C. An IPCC Special
Report on the impacts of global warming of 1.5 [deg]C above pre-
industrial levels and related global greenhouse gas emission
pathways, in the context of strengthening the global response to the
threat of climate change, sustainable development, and efforts to
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner,
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C.
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X.
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T.
Waterfield (eds.)]. In Press. https://www.ipcc.ch/sr15/chapter/chapter-5.
\129\ National Academies of Sciences, Engineering, and Medicine.
2019. Climate Change and Ecosystems. Washington, DC: The National
Academies Press. https://doi.org/10.17226/25504.
\130\ NOAA National Centers for Environmental Information, State
of the Climate: Global Climate Report for Annual 2020, published
online January 2021, retrieved on February 10, 2021, from https://www.ncdc.noaa.gov/sotc/global/202013.
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C. Global Climate Impacts and Benefits Associated With the Proposal's
GHG Emissions Reductions
Transportation is the largest source of GHG emissions in the United
States, making up 29 percent of all emissions. Within the
transportation sector, light-duty vehicles are the largest contributor,
58 percent, to transportation GHG emissions in the U.S, and 17 percent
of all emissions.\131\ Reducing GHG emissions, including the four GHGs
affected by the proposed program, will contribute toward the goal of
holding the increase in the global average temperature to well below 2
[deg]C above pre-industrial levels, and subsequently reducing the
probability of severe climate change related impacts including heat
waves, drought, sea level rise, extreme climate and weather events,
coastal flooding, and wildfires. While EPA did not conduct modeling to
specifically quantify changes in climate impacts resulting from this
proposal in terms of avoided temperature change or sea-level rise, we
did quantify the climate benefits by monetizing the emission reductions
through the application of the social cost of greenhouse gases (SC-
GHGs), as described in Section VII.D.
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\131\ Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990-2019 (EPA-430-R-21-005, published April 2021).
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V. How would the proposal impact non-GHG emissions and their associated
effects?
A. Impact on Non-GHG Emissions
The model runs that EPA conducted estimated the inventories of non-
GHG air pollutants resulting from tailpipe emissions from light-duty
cars and trucks, and the upstream emissions associated with the fuels
used to power those vehicles (both at the refinery and the electricity
generating unit). The tailpipe emissions of PM2.5,
NOX, VOCs, CO and SO2 are estimated using
emission factors from EPA's Midterm model. The emission factors used
are identical to those used in the SAFE FRM. The upstream emissions are
then calculated using emission factors applied to the gallons of liquid
fuels projected to be consumed and the kilowatt hours of electricity
projected to be consumed. The upstream emission factors used in the
modeling are identical to those used for the SAFE FRM and were
generated using the DOE/Argonne GREET model as described in the SAFE
FRM.
On the whole, the proposed standards reduce non-GHG emissions.
Table 44 presents the annual tailpipe and upstream inventory impacts
for years 2023 through 2050 and Table 45 presents the net annual
inventory impacts for those same years. Specifically, we project
reductions in emissions of non-GHG pollutants from upstream sources,
except for SO2. For tailpipe emissions we project initial
increases from most non-GHG pollutants, except SO2, followed
by decreases in all non-GHG pollutants over time. The increases in non-
GHG tailpipe emissions are due to increased driving, and the increases
in upstream SO2 are due to increased EGU emissions.
[[Page 43780]]
Table 44--Estimated Non-GHG Emission Impacts of the Proposed Standards Relative to the No Action Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upstream (U.S. tons) Tailpipe emissions (U.S. tons)
Year --------------------------------------------------------------------------------------------------------------
PM2.5 NOX SO2 VOC CO PM2.5 NOX SO2 VOC CO
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023..................................... -56 -628 -36 -1,211 -334 17 1,037 -24 1,345 12,884
2024..................................... -97 -1,040 282 -2,245 -539 37 2,385 -45 3,255 29,814
2025..................................... -150 -1,570 699 -3,595 -802 50 3,270 -72 4,501 41,380
2026..................................... -236 -2,454 1,183 -5,699 -1,251 58 4,032 -114 5,583 50,655
2027..................................... -342 -3,546 1,730 -8,279 -1,807 57 4,356 -166 6,183 52,764
2028..................................... -457 -4,747 2,167 -11,023 -2,429 40 4,010 -220 5,817 43,400
2029..................................... -575 -5,973 2,611 -13,840 -3,065 24 3,656 -276 5,491 34,336
2030..................................... -690 -7,182 2,963 -16,588 -3,699 5 3,072 -331 4,889 21,673
2031..................................... -806 -8,419 3,094 -19,228 -4,342 -16 2,359 -383 4,105 7,504
2032..................................... -917 -9,601 3,248 -21,779 -4,952 -41 1,506 -433 3,137 -8,754
2033..................................... -1,023 -10,726 3,340 -24,183 -5,533 -70 573 -480 2,048 -26,420
2034..................................... -1,121 -11,756 3,468 -26,425 -6,058 -101 -401 -525 904 -44,195
2035..................................... -1,207 -12,685 3,364 -28,315 -6,542 -128 -1,265 -561 -116 -59,229
2036..................................... -1,286 -13,520 3,349 -30,084 -6,969 -156 -2,094 -596 -1,085 -74,202
2037..................................... -1,355 -14,232 3,506 -31,727 -7,319 -188 -2,951 -629 -2,088 -90,292
2038..................................... -1,416 -14,846 3,646 -33,163 -7,616 -219 -3,746 -657 -3,021 -105,517
2039..................................... -1,466 -15,374 3,601 -34,301 -7,878 -246 -4,394 -679 -3,809 -117,461
2040..................................... -1,508 -15,804 3,594 -35,264 -8,085 -272 -4,963 -699 -4,502 -127,860
2041..................................... -1,544 -16,174 3,571 -36,067 -8,264 -295 -5,463 -714 -5,091 -138,174
2042..................................... -1,569 -16,411 3,581 -36,619 -8,371 -316 -5,901 -726 -5,600 -147,394
2043..................................... -1,588 -16,573 3,706 -37,098 -8,429 -336 -6,304 -735 -6,065 -156,119
2044..................................... -1,602 -16,679 3,831 -37,464 -8,458 -356 -6,662 -743 -6,472 -164,134
2045..................................... -1,610 -16,714 4,022 -37,729 -8,443 -374 -6,983 -749 -6,834 -171,092
2046..................................... -1,615 -16,711 4,249 -37,913 -8,381 -390 -7,269 -753 -7,153 -177,417
2047..................................... -1,622 -16,708 4,571 -38,172 -8,310 -408 -7,590 -759 -7,507 -185,213
2048..................................... -1,624 -16,659 4,821 -38,284 -8,219 -424 -7,855 -762 -7,801 -191,667
2049..................................... -1,627 -16,620 5,110 -38,450 -8,129 -440 -8,138 -766 -8,100 -198,645
2050..................................... -1,632 -16,556 5,686 -38,781 -8,000 -460 -8,501 -774 -8,475 -207,606
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 45--Estimated Non-GHG Emission Impacts of the Proposed Standards Relative to the No Action Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upstream (U.S. tons) Tailpipe emissions (U.S. tons)
--------------------------------------------------------------------------------------------------------------
Year PM2.5 (%) NOX (%) SO2 (%)
PM2.5 NOX SO2 VOC CO VOC (%) CO (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023..................................... -40 409 -59 134 12,550 0 0 0 0 0
2024..................................... -60 1,345 237 1,010 29,275 0 0 0 0 0
2025..................................... -101 1,700 627 907 40,578 0 0 0 0 0
2026..................................... -179 1,578 1,068 -116 49,405 0 0 1 0 0
2027..................................... -285 810 1,565 -2,096 50,956 -1 0 1 0 0
2028..................................... -417 -737 1,947 -5,207 40,971 -1 0 1 0 0
2029..................................... -550 -2,316 2,334 -8,349 31,271 -1 0 1 -1 0
2030..................................... -685 -4,109 2,632 -11,699 17,974 -2 -1 1 -1 0
2031..................................... -822 -6,060 2,711 -15,123 3,162 -2 -1 1 -2 0
2032..................................... -959 -8,095 2,815 -18,642 -13,706 -3 -1 1 -2 0
2033..................................... -1,093 -10,153 2,860 -22,136 -31,953 -3 -1 1 -3 0
2034..................................... -1,222 -12,156 2,943 -25,522 -50,254 -3 -2 1 -3 -1
2035..................................... -1,335 -13,949 2,802 -28,431 -65,771 -4 -2 1 -4 -1
2036..................................... -1,442 -15,614 2,753 -31,169 -81,171 -4 -3 1 -4 -1
2037..................................... -1,543 -17,183 2,877 -33,815 -97,611 -4 -3 1 -5 -1
2038..................................... -1,635 -18,592 2,989 -36,184 -113,133 -5 -3 2 -5 -2
2039..................................... -1,712 -19,769 2,921 -38,110 -125,338 -5 -4 1 -6 -2
2040..................................... -1,779 -20,767 2,895 -39,766 -135,945 -5 -4 1 -6 -2
2041..................................... -1,839 -21,637 2,857 -41,158 -146,438 -5 -4 1 -7 -2
2042..................................... -1,885 -22,312 2,856 -42,219 -155,765 -6 -5 1 -7 -3
2043..................................... -1,924 -22,877 2,971 -43,164 -164,548 -6 -5 2 -7 -3
2044..................................... -1,958 -23,341 3,088 -43,935 -172,591 -6 -5 2 -8 -3
2045..................................... -1,984 -23,697 3,273 -44,563 -179,535 -6 -5 2 -8 -3
2046..................................... -2,005 -23,979 3,496 -45,066 -185,798 -6 -5 2 -8 -3
2047..................................... -2,031 -24,298 3,812 -45,678 -193,523 -6 -5 2 -8 -4
2048..................................... -2,047 -24,515 4,060 -46,086 -199,886 -6 -6 2 -9 -4
2049..................................... -2,067 -24,758 4,344 -46,550 -206,774 -7 -6 2 -9 -4
2050..................................... -2,093 -25,057 4,912 -47,256 -215,607 -7 -6 2 -9 -4
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 43781]]
B. Health and Environmental Effects Associated With Exposure to Non-GHG
Pollutants Impacted by the Proposed Standards
Along with reducing GHG emissions, these proposed standards would
also have an impact on non-GHG (criteria and air toxic pollutant)
emissions from vehicles and non-GHG emissions that occur during the
extraction, transport, distribution and refining of fuel and from power
plants. The non-GHG emissions that would be impacted by the proposed
standards contribute, directly or via secondary formation, to
concentrations of pollutants in the air which affect human and
environmental health. These pollutants include particulate matter,
ozone, nitrogen oxides, sulfur oxides, carbon monoxide and air toxics.
Chapter 7 of the DRIA includes more detailed information about the
health and environmental effects associated with exposure to these non-
GHG pollutants. This includes pollutant specific health effect
information, discussion of exposure to the mixture of traffic-related
pollutants in the near road environment, and effects of particulate
matter and gases on visibility, effects of ozone on ecosystems, and the
effect of deposition of pollutants from the atmosphere to the surface.
C. Air Quality Impacts of Non-GHG Pollutants
Photochemical air quality modeling is necessary to accurately
project levels of most criteria and air toxic pollutants, including
ozone and PM. Air quality models use mathematical and numerical
techniques to simulate the physical and chemical processes that affect
air pollutants as they disperse and react in the atmosphere. Based on
inputs of meteorological data and source information, these models are
designed to characterize primary pollutants that are emitted directly
into the atmosphere and secondary pollutants that are formed through
complex chemical reactions within the atmosphere. Photochemical air
quality models have become widely recognized and routinely utilized
tools in regulatory analysis for assessing the impacts of control
strategies.
Section V.A of the preamble presents projections of the changes in
non-GHG emissions due to the proposed standards. Section VII.E
describes the monetized non-GHG health impacts of this proposal which
are estimated using a reduced-form benefit-per-ton approach. 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 standards, we expect that there will be very
small changes in ambient air quality in most places. The changes in
tailpipe and upstream non-GHG emissions that were inputs to the air
quality modeling analysis for the 2012 rule were larger than the
changes in non-GHG emissions projected for this proposal. The air
quality modeling for the 2012 rule projected very small impacts across
most of the country, with the direction of the small impact (increase
or decrease) dependent on location.\132\ For the next phase of LD GHG
standards to be considered in a separate, future rulemaking for model
years 2027 and beyond, we expect that impacts may be considerably
larger and are considering how best to project air quality impacts from
changes in non-GHG emissions.
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\132\ Insert 2012 rule RIA ref, EPA-420-R-12-016.
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VI. Basis for the Proposed GHG Standards Under CAA Section 202(a)
In this section, EPA discusses the basis for our proposed standards
under our authority in CAA section 202(a), how we are balancing the
factors considered in our assessment that the proposed standards are
appropriate, and how this balancing of factors differs from that used
in the SAFE rule. This section draws from information presented
elsewhere in this preamble, including EPA's statutory authority in
Section II, our presentation of compliance costs and technology
penetrations in Section III, GHG emissions impacts in Section IV, non-
GHG emissions impacts in Section V, and the total costs and benefits of
the proposal in Section VII.
EPA has considered the technological feasibility and cost of the
proposed standards, available lead time for manufacturers, and other
relevant factors under section 202(a) of the CAA. Based on our
analyses, discussed in greater detail in other sections of this
preamble and in Chapter 2 of the DRIA, we believe that the proposed
standards are reasonable and appropriate. Greater reductions in GHG
emissions from light duty vehicles over these model years are both
feasible and warranted as a step to reduce the impacts of climate
change on public health and welfare. In addition, the proposal would
achieve reductions in emissions of some criteria pollutants and air
toxics that would achieve benefits for public health and welfare. Our
analysis for this proposed rule, as well as our earlier analyses of
similar standards, supports the conclusion that the proposed model
years 2023-2026 standards are technologically feasible and the costs of
compliance for manufacturers are reasonable. In addition, we project
that there would be a net savings to consumers over the lifetime of
vehicles meeting the proposed standards, which we think is a more
significant consideration, particularly for lower-income consumers,
than the anticipated increase in cost for new vehicles. Importantly,
the benefits of the proposed program would significantly exceed the
costs.
A. Consideration of Technological Feasibility and Lead Time
1. Technological Readiness of the Auto Industry in Meeting Revised GHG
Standards
The technological readiness of the auto industry to meet the
proposed revised standards for model years 2023-2026 is best understood
in the context of the decade-long light-duty vehicle GHG emission
reduction program in which the auto industry has introduced a wide
lineup of ever more fuel-efficient, GHG-reducing technologies. Over
this time period, the industry has been planning for increasingly
stringent GHG emissions requirements. The result has been the
widespread and continual introduction of new and improved GHG-reducing
technologies across the industry, many of which were in the early
stages of development at the beginning of the EPA program in 2012. (See
Section III.A of this preamble and Chapter 2 of the DRIA for a
discussion of technological progression, status of technology
penetration, and our assessment of continuing technology penetration
across the fleet.)
The technological achievements already developed and applied to
vehicles within the current new vehicle fleet will enable the industry
to achieve the proposed standards even without the development of new
technologies beyond those already widely available. Rather, in response
to the increased stringency of the proposed standards compared to
existing standards, automakers would be expected to adopt these
technologies at an increasing pace across more of their vehicle fleets.
In other words, the technologies needed to meet the proposed standards
are already widely available and in use on vehicles--there is no need
for development of new technologies for the time frame of these
proposed standards. Instead, compliance with the proposed standards
will necessitate
[[Page 43782]]
greater implementation and pace of technology penetration through
MY2026 using existing GHG reduction technologies. In addition, as we
discuss further below, our assessment shows that a large portion of the
current fleet (MY2021 vehicles), across a wide range of vehicle
segments, already meets their proposed MY2023 footprint-based
CO2 targets.
The availability of current models across a range of vehicle
segments meeting the standards is notable because EPA recognizes that
auto design and development is a multi-year process, which imposes some
constraints on the ability of manufacturers to immediately redesign
vehicles with new technologies. However, EPA also understands that this
multi-year process means that the industry's product plans developed in
response to EPA's 2012 GHG standards rulemaking for MYs 2017-2025 has
largely continued, notwithstanding the SAFE rule that was published on
April 30, 2020 and that did not relax standards until MY 2021. In their
past comments on EPA's light-duty GHG programs, some automakers broadly
stated that they generally require about five years to design, develop,
and produce a new vehicle model.\133\ Under that schedule, it would
follow that in most cases the vehicles that automakers will be selling
during the first years of the proposed MY 2023-26 program were already
designed under the original, more stringent GHG standards finalized in
2012 for those model years. At the time of this proposal, the relaxed
GHG standards under the SAFE rule have been in place for little more
than one year. During this time, the ability of the industry to commit
to revised plans based on the SAFE rule's relaxed standards, especially
for MYs 2023 and later, has been highly uncertain in light of pending
litigation,\134\ and concern was regularly expressed across the auto
industry over the uncertain future of the SAFE standards. In fact, due
in part to this uncertainty, five automakers voluntarily agreed to more
stringent national emission reduction targets under the California
Framework Agreements (discussed further below). Therefore, the
automakers' own past comments regarding product plan development and
the regulatory and litigation history of the GHG standards since 2012
support EPA's expectation that automakers remain largely on track in
terms of technological readiness within their product plans to meet the
approximate trajectory of increasingly stringent standards initially
promulgated in 2012. Although we do not believe that automakers have
significantly changed their product plans in response to the SAFE final
rule issued in 2020, any that did would have done so relatively
recently and there is reason to expect that, for any automakers that
changed their plans after the SAFE rule, the automakers' earlier plans
could be reinstated or adapted with little change. We also note that
some automakers may have adopted product plans to overcomply with the
prior, more stringent standards, with the intention of selling credits
to other automakers. For these automakers, the proposed standards of
this rule, if adopted, would reduce or eliminate the sudden disruption
to product plans caused by the SAFE rule. EPA invites comment on the
impact of EPA's current and recent rulemakings on automakers' product
plans. It is important to note that we have considered the need for
manufacturers to transition from the SAFE standards (or the California
Framework emission reduction targets) to standards that are closer in
stringency to the 2012 standards and we have structured the proposed
standards (including the proposed footprint curves as well as the
combination of flexibility and credit options) to be less stringent
than the 2012 standards for model years 2023, 2024, and 2025.
---------------------------------------------------------------------------
\133\ For example, in its comments on the 2012 rule, Ford stated
that manufacturers typically begin to firm up their product plans
roughly five years in advance of actual production. (Docket OAR-
2009-0472-7082.1, p. 10.)
\134\ Competitive Enterprise Institute v. NHTSA, D.C. Cir. No.
20-1145 (and consolidated cases brought by several states,
localities, environmental and public organizations, and others),
filed on May 1, 2020 and later dates.
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EPA considers this an important aspect of its analysis that
mitigates concerns about lead time for manufacturers to meet the
proposed standards beginning with the 2023 model year. We see no reason
to expect that the major GHG-reducing technologies that automakers have
already developed and introduced, or have already been planning for
near-term implementation, will not be available for model year 2023-
2026 vehicles. Thus, in contrast to the situation that existed prior to
EPA's adoption of the initial light-duty GHG standards in the 2012
rule, automakers now have had the benefit of at least 8 to 9 years of
planning and development in preparation for meeting the proposed
standards.
Another important factor in considering the feasibility of the
proposed standards is the fact that five automakers voluntarily entered
into the California Framework Agreements with the California Air
Resources Board, first announced in July 2019, to meet more stringent
GHG emission reduction targets nationwide than the relaxed standards in
the SAFE rule.\135\ These voluntary actions by automakers that
collectively represent approximately one-third of the U.S. vehicle
market speak directly to the feasibility of meeting standards at least
as stringent as the emission reduction targets under the California
Framework Agreements. As discussed in Section II.A.5, the California
Framework Agreements were a key consideration in our development and
assessment of the proposed EPA standards.
---------------------------------------------------------------------------
\135\ https://ww2.arb.ca.gov/resources/documents/framework-agreements-clean-cars (last updated on May 22, 2021).
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It is important to note that our conclusion that the proposed
program is technologically feasible is based in part on a projection
that the standards will be met largely with the kinds of advanced
gasoline vehicle technologies already in place in vehicles within
today's fleet and does not rely on a significant penetration of
electric vehicles into the fleet during the 2023-2026 model years. As
discussed above, EPA modeled auto manufacturers' decisions in choosing
among available emission reduction technologies to incorporate in their
vehicles, taking into account both the projected costs and
effectiveness of the technologies. This updated analysis is consistent
with EPA's past analyses of standards similar to those proposed in this
notice, see Section III.B and Chapter 2 of the DRIA. The analysis
demonstrates that a wide variety of emission reducing technologies are
already available for manufacturers to incorporate into their gasoline
vehicles within the time frame of the proposed standards.
We recognize that although the technology penetration rates that we
project in this rulemaking are generally similar to the technology
penetration rates that we projected in the SAFE rulemaking, in the SAFE
rulemaking EPA concluded that the projected level of advanced
technologies was ``too high from a consumer-choice perspective'' and
ultimately could lead to automakers changing the vehicle types they
offer.\136\ EPA currently does not believe this is an accurate
assessment or one that deserves weight that could overcome EPA's expert
assessment of the appropriate standards under section 202 of the CAA.
Rather, EPA's judgment is that the history of the significant
developments in automotive offerings over the last ten years supports
the conclusion that automakers are capable of deploying a
[[Page 43783]]
wide range of advanced technologies across the entire vehicle fleet,
and that consumers remain interested and willing to purchase vehicles
with advanced technologies. Reinforcing this updated judgement, the
recent announcements of BEV light-duty trucks and the introduction of
hybrid minivans and pickups exemplify such a trend, and EPA sees no
reason why the standards proposed in this rule would fundamentally
alter it.
---------------------------------------------------------------------------
\136\ 85 FR 25116.
---------------------------------------------------------------------------
Our updated analysis projects that about 8 percent of vehicles
meeting the MY 2026 proposed standards would be EV/PHEVs (See Section
III.B.3). Given manufacturers' public announcements about their
ambitious plans to transition fleets to electrified vehicles, we
believe it is possible that an even higher percentage of the industry-
wide fleet could be electrified during the time period of our proposed
model year 2023-2026 standards. Moreover, EPA is committed to
encouraging the rapid development and broad acceptance of zero-emission
vehicles, and we are proposing incentives to support this transition
(see Section II.B.2). Any acceleration in electric vehicle penetration
would be beneficial and would further expand the technology choices
available to manufacturers to meet the proposed standards.
2. Opportunities Provided Through Credits and Incentives Provisions
In considering feasibility of the proposed standards EPA also
considers the impact of available compliance flexibilities on
automakers' compliance options. As we discuss above, the advanced
technologies that automakers are continuing to incorporate in vehicle
models today directly contribute to each company's compliance plan
(i.e., these vehicle models have lower GHG emissions). In addition,
automakers widely utilize the program's established ABT provisions
which provide a variety of flexible paths to plan compliance (See more
detail in Section II.A.4). EPA's annual Automotive Trends Report
illustrates how different automakers have chosen to make use of the GHG
program's various credit features.\137\ It is clear that manufacturers
are widely utilizing the various credit programs available, and we have
every expectation that manufacturers will continue to take advantage of
the compliance flexibilities and crediting programs to their fullest
extent, thereby providing them with additional powerful tools in
finding the lowest cost compliance solutions in light of the proposed
revised standards.
---------------------------------------------------------------------------
\137\``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology issue 1975,'' EPA-420-R-21-
003 January 2021.
---------------------------------------------------------------------------
The GHG credit program was designed to recognize that automakers
typically have a multi-year redesign cycle and not every vehicle will
be redesigned every year to add GHG-reducing technology. Moreover, when
GHG-reducing technology is added, it will generally not achieve
emissions reductions corresponding exactly to a single year-over-year
change in stringency of the standards. Instead, in any given model
year, some vehicles will be ``credit generators,'' over-performing
compared to the footprint-based CO2 target in that model
year, while other vehicles will be ``debit generators'' and under-
performing against their footprint-based targets. Together, an
automaker's mix of credit-generator and debit-generator vehicles
contribute to its sales-weighted fleet average CO2
performance, compared to its standard, for that year. If a
manufacturer's sales-weighted fleet CO2 performance is
better than its fleet average standard at the end of the model year,
those credits can be banked for the automaker's future use in certain
years (under the credit carry-forward provisions) or sold to other
manufacturers (under the credit trading provisions). Likewise, if a
manufacturer's sales-weighted fleet CO2 performance falls
short of its fleet average standard at the end of a model year, the
automaker can use banked credits or purchase credits to meet the
standard. Furthermore, in recognition of the possibility that a
manufacturer might comply with a standard for a given model year with
credits earned in a future model year (under the allowance for ``credit
carryback''), a manufacturer may also choose to carry a deficit forward
up to three years before showing compliance with that model year.
EPA has examined manufacturer certification data to assess the
extent to which model year 2021 vehicles already being produced and
sold today would be credit generators compared to the proposed model
year 2023 targets (accounting for projected off-cycle and air
conditioning credits). As detailed in Chapter 2.4 of the DRIA,
automakers are selling approximately 216 vehicle models (60 percent of
them are advanced gasoline technology vehicles) that would be credit
generators compared to the proposed model year 2023 targets, and they
appear in nearly all light-duty vehicle market segments. This
information supports our conclusion about the feasibility of vehicles
with existing technologies meeting the proposed MY2023 standards. We
also considered the ability of MY2021 vehicles to generate credits
based on the MY2021 and MY2022 standards relaxed in the SAFE rule. Of
the 1370 distinct MY2021 vehicle models, EPA's analysis (DRIA, Chapter
2.4) indicates that 355 of these models are credit generators for
MY2021, with most of those also generating credits for the MY2022 SAFE
standards (25 percent of today's new vehicle fleet offerings). This
represents an opportunity for manufacturers to build their credit banks
for both MY 2021 and MY2022 and carry those credits forward to help
meet the MY2023-2026 proposed standards. These data demonstrate the
opportunities for manufacturers to sell more of the credit-generator
vehicles as another available strategy to generate credits that will
help them comply with the proposed model year 2023 and later standards.
Our analysis clearly shows this could be done within vehicle segments
to maintain consumer choice (we would not expect that overall car/truck
fleet mix would shift), as credit-generating vehicles exist across
vehicle segments, representing 95 percent of vehicle sales. Under the
fleet-average based standards, manufacturers have multiple feasible
paths to compliance, including varying sales volumes of credit
generating vehicles,\138\ adopting GHG-reducing technologies, and
implementing other credit and incentive provisions including those
proposed in this notice.
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\138\ E.g., When fuel economy standards were not footprint-
based, less efficient vehicles were priced higher than more
efficient vehicles to encourage sales of the latter. Austin, D., and
T. Dinan (2004). ``Clearing the air: The costs and consequences of
higher CAFE standards and increased gasoline taxes.'' Journal of
Environmental Economics and Management 50: 562-582. Greene, D., P.
Patterson, M. Singh, and J. Li (2005). ``Feebates, rebates, and gas-
guzzler taxes: A study of incentives for increased fuel economy.''
Energy Policy 33: 757-775 found that automakers were more likely to
add technology than use pricing mechanisms to achieve standards.
Whitefoot, K., M. Fowlie, and S. Skerlos (2017). ``Compliance by
Design: Influence of Acceleration Trade-offs on CO2
Emissions and Costs of Fuel Economy and Greenhouse Gas
Regulations.'' Environmental Science and Technology 51: 10307-10315
find evidence consistent with automakers using trade-offs with
acceleration as yet another path to comply with fuel economy
standards.
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EPA further considered the issue of generating credits against the
MY2021 and MY2022 SAFE standards in the context of lead time. In
discussions during development of this proposed rule, some stakeholders
suggested that EPA should limit automakers' ability to generate credits
against the relaxed SAFE standards or discount the value of such
credits. These stakeholders argue that the nominal 1.5 percent year-
over-
[[Page 43784]]
year stringency increase of the SAFE standards barely keeps up with a
``business as usual'' scenario of industry GHG emissions
improvements.\139\ EPA has considered that argument. EPA also
considered the recent performance of the auto industry in meeting the
GHG standards; in MY2019 the industry-wide average performance was 7 g/
mi above the industry-wide average standard and compliance was achieved
by many manufacturers through applying banked credits.\140\ In light of
the implementation timeframe of the proposed revised standards
beginning in model year 2023, we are proposing to continue allowing
manufacturers to generate credits against the SAFE standards in model
years 2021 and 2022. We are not proposing to shorten the existing 5-
year credit carry-forward provision for credits generated in model
years 2021 and 2022, so those credits can be carried forward under the
existing regulations to facilitate the transition from the SAFE
standards to the proposed more stringent standards. However, EPA seeks
comment on whether there should be any restrictions placed on credits
generated in model years 2021 and 2022, for example, discounting of
MY2021 and MY2022 credits, given the relaxed stringency of the SAFE
standards in those model years.
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\139\ We note that the 2020 SAFE FRM presented a 0 percent year-
over-year alternative for MYs 2021-2026. In that scenario with no
stringency change, the modeled fleet improved fuel economy by 0.9
percent per year from 38.3 mpg in 2021 to 40.0 mpg in 2026. (see
2020 SAFE FRIA, Table I-19, Alternative 1)
\140\ Trends Report, Figure ES-8.
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In addition, EPA is proposing a targeted set of extended credit and
compliance flexibility options for manufacturers, specifically designed
to further address any potential concerns of manufacturers about
stringency and lead time under the proposed standards (as explained in
detail in Section II.B.3 and II.C). These proposals include a limited
extension of credit carry-forward, such that credits from model years
2016-2020 would be available to carry forward for one (or two, in the
case of 2016 credits) additional model year(s) for compliance in model
years 2023-2026; an extension of the off-cycle credit menu cap from 10
grams/mile to 15 grams/mile to provide additional credit to
manufacturers who install technologies that reduce GHG emissions that
are not captured on EPA's GHG certification tests; and two forms of
incentive credits for applying advanced technologies in the
manufacturer's vehicle fleet (i.e., an extension of incentive
multipliers for EV, PHEV and FCV vehicles, and extra credits for full-
size pickup trucks that utilize strong hybrid technology or achieve
similar performance-based GHG reductions). Collectively, these proposed
flexibilities provide additional strategies manufacturers can use to
smooth their path to compliance with the proposed revised standards. In
fact, these additional credits and incentives provisions were an
important factor in EPA's consideration of the appropriate level of
stringency for this proposal, and they provide additional support for
our consideration of revised standards even more stringent than if we
were not including these provisions in the proposed program.
Just as the fleet average standard approach of the light duty
vehicle GHG program allows manufacturers to design a compliance
strategy relying on the sale of both credit-generating vehicles and
debit generating vehicles in a single year, the credit banking and
trading provisions of the program allow manufacturers to design a
compliance strategy relying on overcompliance and undercompliance in
different years, or even by different manufacturers. Credit trading is
a compliance flexibility provision that allows one vehicle manufacturer
to purchase credits from another, accommodating the ability of
manufacturers to make strategic choices in planning for and reacting to
normal fluctuations in an automotive business cycle. When credits are
available for less than the marginal cost of compliance, EPA would
anticipate that an automaker might choose to adopt a compliance
strategy relying on credits.\141\ As shown in the most recent EPA
Trends Report, more than 10 vehicle firms collectively have
participated in 70 credit trading transactions since the inception of
the EPA program through Model Year 2019, including many of the largest
automotive firms.\142\ EPA does not believe that the fact that
automakers have adopted a compliance strategy relying on credits
(whether banked or purchased) is per se evidence that standards are not
appropriate under section 202.
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\141\ ``FCA historically pursued compliance with fuel economy
and greenhouse gas regulations in the markets where it operated
through the most cost effective combination of developing,
manufacturing and selling vehicles with better fuel economy and
lower GHG emissions, purchasing compliance credits, and, as allowed
by the U.S. federal Corporate Average Fuel Economy (``CAFE'')
program, paying regulatory penalties. The cost of each of these
components of FCA's strategy has increased and is expected to
continue to increase in the future. The compliance strategy for the
combined company is currently being assessed by Stellantis
management.'' Stellantis N.V. (2020). ``Annual Report and Form 20-F
for the year ended December 31, 2020.''
\142\ EPA 2020 Trends Report, page 110 and Figure 5.15.
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EPA recognizes that several industry stakeholders suggested in
comments on the MTE and SAFE rule that underperformance compared to
CO2 targets indicated the standards were overly stringent,
EPA previously stated that a declining credit balance indicated future
compliance would be more difficult, and EPA was taking into
consideration the unwillingness of manufacturers to design a compliance
strategy around purchasing credits. However, as explained above, EPA
does not believe a declining credit balance is evidence the standards
are infeasible or less feasible than anticipated. EPA believes the more
accurate view is that manufacturers are able and willing to purchase
credits, as well as use banked credits, as part of their compliance
strategies and that significant use of credits for compliance is
indicative of EPA's flexibilities working as intended, to offer a wide
array of compliance strategies which reduce overall costs of
compliance.
In summary, there is ample evidence that, in addition to the
demonstration of technological feasibility resulting from the ``head
start'' that automakers have toward complying with the proposed
standards, there are a wide range of credit and flexibility strategies,
as well as fleet mix strategies, that manufacturers can marshal to
enable them to comply with the proposed standards.
B. Consideration of Vehicle Costs of Compliance
In addition to technological feasibility and lead time, EPA has
considered the cost for the auto industry to comply with the proposed
revised standards. See section III.B and Chapter 2 of the DRIA for our
analysis of compliance costs. As shown in Section III.B.2 and Chapter
4.1.2 of the DRIA, the average per-vehicle cost for a MY2026 vehicle is
$1,044 compared to the No Action scenario. Average per-vehicle costs
rise from $465 in MY2023 to $771 in MY2025. The $1,044 average per-
vehicle cost is consistent with prior EPA analyses (see DRIA Chapter
1.2). EPA has also evaluated costs by manufacturer (see Section
III.B.2) and finds the range of costs to be similarly consistent with
findings from prior analyses.
The estimated costs to meet the proposed standards are lower than
those projected in the 2012 rule, which EPA estimated at about $1,200
(see DRIA Table 1-4). EPA found in the 2012 rule that these (higher)
costs were reasonable, even without considering
[[Page 43785]]
the fuel savings, which more than offsets these costs. See 77 FR 62663-
62665, 62880, and 62922. This decrease in estimated per-vehicle cost
since the 2012 rule is not surprising--technology to achieve
environmental improvements has often proved to be less costly than
EPA's initial estimates.\143\
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\143\ Anderson, John F and Sherwood, ``Comparison of EPA and
Other Estimates of Mobile Source Rule Costs to Actual Price
Changes,'' SAE paper 2003-1-1980.
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As part of these cost estimates, we project significant increases
in the use of advanced gasoline technologies (including mild and strong
hybrids), comprising more than 92 percent of the fleet. (See Section
III.B.3). EPA has considered the feasibility of the standards under
several different assumptions about future fuel prices, technology
application or credit trading (see DRIA Chapters 4 and 10), which shows
very small variations in average per-vehicle cost or technology
penetration mix. Our conclusion that there are multiple ways the
MY2023-2026 standards can be met given the wide range of technologies
at reasonable cost, and predominantly with advanced gasoline engine and
vehicle technologies, holds true across all these scenarios.
These cost estimates are in the same range as EPA's earlier
analyses of similarly stringent GHG standards including the model year
2023 and later timeframe. (See Chapter 1 of the DRIA). EPA concludes
that the per-vehicle costs of the proposed standards are reasonable.
C. Consideration of Impacts on Consumers
Another important consideration for EPA is the impact of the
proposed standards on consumers. EPA concludes that the proposed
standards would be beneficial for consumers because the lower operating
costs from significant fuel savings would offset the upfront vehicle
costs. Total fuel savings for consumers through 2050 are estimated at
$120 billion to $250 billion (7 percent and 3 percent discount rates,
see Section VII.I, Table 40). Thus, the proposal would result in
significant savings for consumers, as further described in Section
VII.J.
The Administrator also carefully considered the affordability
impacts of these proposed standards, especially considering Executive
Order 14008 and EPA's increasing focus on environmental justice and
equity. EPA examined the impacts of the proposed standards on the
affordability of new and used cars and trucks in Section VII.M of this
preamble and Chapter 8.3 of the DRIA. Because lower-income households
spend more on gasoline than on vehicle purchases, the effects of
reduced operating costs may be especially important for these
households.
EPA recognizes that in the SAFE rulemaking we placed greater weight
on the upfront costs of vehicles, and little weight on total cost of
ownership. In part, that rulemaking explained that approach on the
ground that ``[n]ew vehicle purchasers are not likely to place as much
weight on fuel savings that will be realized by subsequent owners.''
\144\ However, in light of changes in policy priorities (including
concern about accounting for benefits to lower-income households), EPA
now believes in assessing the benefits of these standards it is more
appropriate to consider the total fuel savings of the vehicle, over its
lifetime, including those fuel savings that may accrue to later owners.
Disregarding those benefits, which often accrue to lower income
households, who more often purchase used cars, would provide a less
accurate picture of total benefits to society. Likewise, EPA has
reconsidered the weight placed in the SAFE rulemaking on promoting
fleet turnover as a standalone factor and is now considering the
influence of turnover in the context of the full range effects of the
proposed standards. While recognizing that standards can influence
purchasing decisions, EPA currently believes that, for the range of
appropriate emissions standards, the emissions reductions from more
stringent standards far outweigh any temporary effect from delayed
purchases.
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\144\ 85 FR 25114.
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D. Consideration of Emissions of GHGs and Other Air Pollutants
An essential factor that EPA considered in determining the
appropriate level of the proposed standards is the reductions in
emissions that would result from the program. This primarily includes
reductions in vehicle GHG emissions, given the increased urgency of the
climate crisis. We also considered the effects of the proposed
standards on criteria pollutant and air toxics emissions and associated
public health and welfare impacts.
The GHG emissions reductions from our proposed standards are
projected to exceed 2,200 MMT of CO2, 2.7 MMT of
CH4 and 71,000 metric tons of N2O, as the fleet
turns over year-by-year to new vehicles that meet the proposed
standards, in an analysis through 2050. See Section IV.A, Table 29. The
monetized benefit of these GHG reductions is estimated at $22 billion
to $280 billion across a range of discount rates and values for the
social cost of carbon (see Section VII.I). These GHG reductions are
important to continued progress in addressing climate change. In fact,
EPA believes that we will need to achieve far deeper GHG reductions
from the light-duty sector in future years beyond the compliance
timeframe for the proposed standards, which is why we will be
initiating a rulemaking in the near future to establish more stringent
standards after model year 2026.
The criteria pollutant emissions reductions expected to result from
the proposed standards are also a factor considered by the
Administrator. The proposed standards would result in emissions
reductions of some criteria pollutants and air toxics and associated
benefits for public health and welfare. Public health benefits are
estimated to total $3.3 billion to $8 billion (7 percent and 3 percent
discount rates, see Section VII.H, Table 38). EPA finds that this
proposal is important in reducing the public health impacts of air
pollution.
E. Consideration of Energy, Safety and Other Factors
EPA also evaluated the impacts of the proposed standards on energy,
in terms of fuel consumption and energy security. This proposal is
projected to reduce U.S. gasoline consumption by 291 million barrels
through 2050 (see Section VII.C). EPA considered the impacts of this
projected reduction in fuel consumption on energy security,
specifically the avoided costs of macroeconomic disruption (See Section
VII.F). We estimate the energy security benefits of the proposal in
2050 at $6.1 billion to $13 billion (7 percent and 3 percent discount
rate, see Section VII.H. Table 37). EPA considers this proposal to be
beneficial from an energy security perspective.
Section 202(a)(4)(A) of the CAA specifically prohibits the use of
an emission control device, system or element of design that will cause
or contribute to an unreasonable risk to public health, welfare, or
safety. EPA has a long history of considering the safety implications
of its emission standards,\145\ up to and including the more recent
light-duty GHG regulations: The 2010 rule which established the MY2012-
2016 light-duty vehicle GHG
[[Page 43786]]
standards, the 2012 rule which first established MY2017-2025 light-duty
vehicle GHG standards, the MTE 2016 Proposed Determination and the 2020
SAFE rule. The relationship between GHG emissions standards and safety
is multi-faceted, and can be influenced not only by control
technologies, but also by consumer decisions about vehicle ownership
and use. EPA has estimated the impacts of this proposal on safety by
accounting for changes in new vehicle purchase, changes in vehicle
scrappage, fleet turnover, and VMT, and changes in vehicle weight as an
emissions control strategy. EPA finds that under this proposal, the
estimated risk of fatal and non-fatal injuries per distance traveled
will remain virtually unchanged (see Section VII.H). This proposal also
projects that as the costs of driving declines due to the improvement
in fuel economy, consumers overall will choose to drive more miles
(this is the ``VMT rebound'' effect). As a result of this personal
decision by consumers to drive more due to the reduce cost of driving,
EPA also projects this will result in an increase in accidents,
injuries, and fatalities. EPA recognizes that in the SAFE rulemaking
EPA placed emphasis on the estimated total number of fatal and non-
fatal injuries. However, EPA currently believes it is more appropriate
to consider the risk of injuries per mile traveled. EPA requests
comment on what role these negative impacts due to consumers' decision
to drive additional miles should play in EPA's standard-setting
decision-making.
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\145\ See, e.g., 45 FR 14496, 14503 (1980) (``EPA would not
require a particulate control technology that was known to involve
serious safety problems.'').
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F. Balancing of Factors Under CAA 202(a)
Under section 202(a) EPA has statutory authority providing
considerable discretion in setting or revising vehicle emission
standards with adequate lead time for the development and application
of technology to meet the standards. EPA's proposed standards properly
implement this statutory provision, as discussed above. As discussed
throughout this preamble, the emission reduction technologies needed to
meet the proposed standards are already available at reasonable cost,
and a significant fraction of new vehicles today already meets these
standards. Moreover, the flexibilities already available under EPA's
existing regulations, including fleet average standards and the ABT
program--in effect enabling manufacturers to spread the compliance
requirement for any particular model year across multiple model years--
and the additional flexibilities being proposed in this notice further
support EPA's conclusion that the proposed standards provide sufficient
time for the development and application of technology, giving
appropriate consideration to cost.
EPA recognizes that the cost and technology penetration estimates
in this rule are similar to the estimates in the SAFE rulemaking and
that the Administrator is balancing the factors considered differently
than in the SAFE rule to reach his conclusion about what standards are
appropriate to propose. In the SAFE rulemaking, EPA promulgated relaxed
GHG standards that were projected to result in increases in GHG and
criteria pollutant emissions and adverse public health impacts (e.g.,
increases in premature mortality and illnesses due to increased air
pollution). The SAFE rulemaking was the most significant weakening of
mobile source emissions standards in EPA's history. It is particularly
notable that the rationale for the revision was not that the standards
had turned out to be technologically infeasible or, even that they
would impose unexpectedly high costs on society. As we have noted, the
estimated costs for more stringent standards in the SAFE rulemaking
were not significantly different from the costs estimated in 2012, or
for this rulemaking. Rather, in balancing the factors under
consideration for the SAFE rulemaking, EPA placed greatest weight on
reducing the cost of compliance on the regulated industry and the
upfront (but not total) cost to consumers, and placed little weight on
reductions in GHGs and other pollutants, contrary to EPA's traditional
approach to adopting standards under section 202.
Although EPA continues to believe that the Administrator has
significant discretion to weigh various factors under Section 202, the
Administrator now notes that the purpose of adopting standards under
that provision of the Clean Air Act is to address air pollution that
may reasonably be anticipated to endanger public health and welfare and
that reducing air pollution has traditionally been the focus of such
standards. In this action, the Administrator is proposing more
stringent standards based on a balancing of the factors under
consideration different from that in the SAFE rulemaking, a balancing
that the Administrator believes is more consistent with Congressional
intent and the goals of the Clean Air Act.\146\ Taking into
consideration the importance of reducing GHG emissions and the primary
purpose of CAA section 202 to reduce the threat posed to human health
and the environment by air pollution, the Administrator finds it is
appropriate to place greater weight on reducing emissions and to adopt
standards that, when implemented, would result in significant
reductions of light duty vehicle emissions both the near term and over
the longer term. As discussed above and the DRIA Chapter 1.2.2, EPA has
updated the analyses for this rule. The updated analysis shows several
key analytical results that are similar to those from the SAFE final
rule. EPA concludes that the Administrator's current approach to
considering the relevant factors would fully support the proposed
standards even if they were based solely on the technical record and
conclusions that were used to set standards in the final SAFE rule.
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\146\ See, e.g., CAA sections 101(a)(2) (finding that ``the
increasing use of motor vehicles[ ] has resulted in mounting dangers
to the public health and welfare''); 101(b)(1) (declaring one
purpose of the CAA is ``to protect and enhance the quality of the
Nation's air resources, so as to promote the public health and
welfare''); 101(c) (``a primary goal of this chapter is to encourage
or otherwise promote reasonable Federal . . . actions . . . for
pollution prevention'').
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Finally, EPA estimates net benefits of this proposal in 2050 at $93
billion to $150 billion (7 percent and 3 percent discount rates, with 3
percent SC-GHG) (see Section VII.H). In comparison, the SAFE rule
estimated net benefits at $16.1 billion to negative $13.1 billion (7
percent and 3 percent discount rates, respectively)--in other words,
the SAFE rule estimated net costs to society under a 3 percent discount
rate. Our conclusion that the estimated benefits considerably exceed
the estimated costs of the proposed program reinforces our view that
the proposed standards represent an appropriate weighing of the
statutory factors and other relevant considerations.
In summary, after consideration of a number of relevant factors,
given the technical feasibility of the proposed standards, the moderate
costs per vehicle, the savings to consumers in fuel costs over the
lifetime of the vehicle, the very significant reductions in GHG
emissions and fuel consumption, and the significantly greater
quantified benefits compared to quantified costs, EPA believes that the
proposed standards are appropriate under EPA's section 202(a)
authority.
VII. What are the estimated cost, economic, and other impacts of the
proposal?
This Section VII discusses EPA's assessment of a variety of impacts
related to the proposed standards, including impacts on vehicle sales,
fuel
[[Page 43787]]
consumption, energy security, additional driving, and safety. It
presents an overview of EPA's estimates of GHG reduction benefits and
non-GHG health impacts. This Section VII presents a summary of
aggregate costs, drawing from the per-vehicle cost estimates presented
in Section III, and estimated program benefits. Finally, the section
discusses EPA's assessment of the potential impacts on consumers and
employment impacts. The DRIA presents further details of the analyses
presented in this Section VII.
A. Conceptual Framework for Evaluating Consumer Impacts
A significant question in analyzing consumer impacts from vehicle
GHG standards has been why there have appeared to be existing
technologies that, if adopted, would reduce fuel consumption enough to
pay for themselves in short periods, but which were not widely adopted.
If the benefits to vehicle buyers outweigh the costs to those buyers of
the new technologies, conventional economic principles suggest that
automakers would provide them, and people would buy them. Yet
engineering analyses have identified a number of technologies whose
costs are quickly covered by their fuel savings, such as downsized-
turbocharged engines, gasoline direct injection, and improved
aerodynamics, that were not widely adopted before the issuance of
standards, but which were adopted rapidly afterwards.\147\ Why did
markets fail, on their own, to adopt these technologies? This question,
termed the ``energy paradox'' or ``energy efficiency gap,'' \148\ has
been discussed in detail in previous rulemakings.\149\ As discussed in
more detail in DRIA Chapter 8.1.1, EPA has evaluated whether the
efficiency gap exists, as well as potential explanations for why the
gap might exist.
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\147\ U.S. Environmental Protection Agency (2021). 2020 EPA
Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy,
and Technology since 1975, Chapter 4. EPA-420-R-21-003, https://www.epa.gov/automotive-trends/download-automotive-trends-report#Full%20Report, accessed 4/15/2021.
\148\ Jaffe, A.B., and Stavins, R.N. (1994). ``The Energy
Paradox and the Diffusion of Conservation Technology.'' Resource and
Energy Economics 16(2): 91-122.
\149\ 75 FR 25510-25513; 77 FR 62913-62917; U.S. Environmental
Protection Agency (2016), Proposed Determination on the
Appropriateness of the Model Year 2022-2025 Light-Duty Vehicle
Greenhouse Gas Emissions Standards under the Midterm Evaluation,
EPA-420-R-16-020, Appendix B.1.2; 85 FR 24603-24613.
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Whether the efficiency gap exists depends on the assessment of fuel
savings relative to technology costs and ``hidden costs,'' i.e., any
adverse effects on other vehicle attributes. In the Midterm
Evaluation,\150\ EPA evaluated both the costs and the effectiveness for
reducing fuel consumption (and GHG emissions) of technologies used to
meet the emissions standards to date; the agency found that the
estimates used in the original rulemakings were generally correct.
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\150\ https://www.epa.gov/regulations-emissions-vehicles-and-engines/midterm-evaluation-light-duty-vehicle-greenhouse-gas.
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EPA also examined the relationship between the presence of fuel-
saving technologies and negative evaluations of vehicle operating
characteristics, such as performance and noise, in auto reviews and
found that the presence of the technologies was more often correlated
with positive evaluations than negative ones.\151\ Preliminary work
with data from recent purchasers of new vehicles found similar
results.\152\ While these studies cannot prove that the technologies
pose no problems to other vehicle attributes, they suggest that it is
possible to implement the technologies without imposing hidden costs.
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\151\ Helfand, G., et al. (2016). ``Searching for Hidden Costs:
A Technology-Based Approach to the Energy Efficiency Gap in Light-
Duty Vehicles.'' Energy Policy 98: 590-606; Huang, H., et al.
(2018). ``Re-Searching for Hidden Costs: Evidence from the Adoption
of Fuel-Saving Technologies in Light-Duty Vehicles.'' Transportation
Research Part D 65: 194-212.
\152\ Huang, H., G. Helfand, and K. Bolon (2018a). ``Consumer
Satisfaction with New Vehicles Subject to Greenhouse Gas and Fuel
Economy Standards.'' Presentation at the Society for Benefit-Cost
Analysis annual conference, March. https://benefitcostanalysis.org/docs/G.4_Huang_Slides.pdf, accessed 4/7/2021.
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EPA has also evaluated the relationship between performance and
fuel economy, in light of research arguing that fuel consumption must
come at the expense of other vehicle attributes.\153\ Research in
progress from Watten et al. (2021) \154\ distinguishes between
technologies that improve, or do not adversely affect, both performance
and fuel economy and technologies that reduce engine displacement,
which does trade off improved fuel economy for performance. Following
Moskalik et al. (2018),\155\ Watten et al. observe that the ``marginal
rate of attribute substitution'' between power and fuel economy has
changed substantially over time. In particular, it has become
relatively more costly to improve efficiency by reducing power, and
relatively less costly to add technologies that improve efficiency.
These technology improvements do not reduce power and in some cases may
enhance it. It supports the concept that automakers take consumer
preferences into account in identifying where to add technology.
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\153\ Knittel, C.R. (2011). ``Automobiles on Steroids: Product
Attribute Trade-Offs and Technological Progress in the Automobile
Sector.'' American Economic Review 101(7): pp. 3368-3399; Klier, T.
and Linn, J. (2016). ``The Effect of Vehicle Fuel Economy Standards
on Technology Adoption.'' Journal of Public Economics 133: 41-63;
McKenzie, D. and Heywood, J. B. (2015). ``Quantifying efficiency
technology improvements in U.S. cars from 1975-2009.'' Applied
Energy 157: 918-928.
\154\ Watten, A., S. Anderson, and G. Helfand (2021).
``Attribute Production and Technical Change: Rethinking the
Performance and Fuel Economy Trade-off for Light-duty Vehicles.''
Working paper.
\155\ Moskalik, A., K. Bolon, K. Newman, and J. Cherry (2018).
``Representing GHG Reduction Technologies in the Future Fleet with
Full Vehicle Simulation.'' SAE Technical Paper 2018-01-1273.
doi:10.4271/2018-01-1273.
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EPA cannot reject the observation that the energy efficiency gap
has existed for light-duty vehicles--that is, it appears that markets
on their own have not led to adoption of a number of technologies whose
fuel savings quickly outweigh the costs in the absence of standards. As
discussed in DRIA Chapter 8.1.1.2, EPA has previously identified a
number of hypotheses to explain this apparent market failure.\156\ Some
relate to consumer behavior, such as putting little emphasis on future
fuel savings compared to up-front costs (a form of ``myopic loss
aversion''), not having a full understanding of potential cost savings,
or not prioritizing fuel consumption in the complex process of
selecting a vehicle. Other potential explanations relate to automaker
behaviors that grow out of the large fixed costs of investments
involved with switching to new technologies, as well as the complex and
uncertain processes involved in technological innovation and adoption.
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\156\ 75 FR 25510-25513; 77 FR 62913-62917; U.S. Environmental
Protection Agency (2016), Proposed Determination on the
Appropriateness of the Model Year 2022-2025 Light-Duty Vehicle
Greenhouse Gas Emissions Standards under the Midterm Evaluation,
EPA-420-R-16-020, Appendix B.1.2; 85 FR 24603-24613.
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It is challenging to identify which of these hypotheses for the
efficiency gap explain its apparent existence. On the consumer side,
EPA has explored the evidence on how consumers evaluate fuel economy in
their vehicle purchase decisions.\157\ As noted, there does not
[[Page 43788]]
appear to be consensus in that literature on that behavior; the
variation in estimates is very large. Even less research has been
conducted on producer-side behavior. The reason there continues to be
limited adoption of cost-effective fuel-saving technologies before the
implementation of more stringent standards remains an open question.
Yet, more stringent standards have been adopted without apparent
disruption to the vehicle market after they become effective.\158\
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\157\ U.S. Environmental Protection Agency (2010). ``How
Consumers Value Fuel Economy: A Literature Review.'' EPA-420-R-10-
008, https://cfpub.epa.gov/si/si_public_file_download.cfm?p_download_id=499454&Lab=OTAQ (accessed
4/15/2021); U.S. Environmental Protection Agency (2018). ``Consumer
Willingness to Pay for Vehicle Attributes: What is the Current State
of Knowledge?'' EPA-420-R-18-016, https://cfpub.epa.gov/si/si_public_file_download.cfm?p_download_id=536423&Lab=OTAQ (accessed
4/15/2021); Greene, D., A. Hossain, J. Hofmann, G. Helfand, and R.
Beach (2018). ``Consumer Willingness to Pay for Vehicle Attributes:
What Do We Know?'' Transportation Research Part A 118: 258-279.
\158\ ``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-21-
003 January 2021. See Table 2-1 for total vehicle production by
model year.
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B. Vehicle Sales Impacts
As discussed in Section III.A EPA utilized the CCEMS model for this
analysis. The FRIA for the SAFE rule (starting p. 871) describes the
approach used in the model for estimating vehicle sales impacts. First,
it projects future new vehicle sales in the reference case based on
projections of macroeconomic variables. Second, it applies an
elasticity of -1 (that is, a one percent increase in price produces a
one percent decrease in the quantity sold) to the change in net price,
where net price is the difference in technology costs less an estimate
of the change in fuel costs over 2.5 years. This approach assumes that
both automakers and vehicle buyers take into consideration the fuel
savings that buyers might expect to accrue over the first 2.5 years of
vehicle ownership.
As discussed in Section VII.C, and in more detail in DRIA Chapter
8.1.1.2, there does not yet appear to be consensus around the role of
fuel consumption in vehicle purchase decisions, and the assumption that
2.5 years of fuel consumption is the right number for both automakers
and vehicle buyers deserves further evaluation. As noted there, Greene
et al. (2018) provides a reference value of $1,150 for the value of
reducing fuel costs by $0.01/mile over the lifetime of an average
vehicle; for comparison, 2.5 years of fuel savings is only about 30
percent of that value, or about $334.\159\ This $334 is within the
large standard deviation in Greene et al. (2018) for the willingness to
pay to reduce fuel costs, but it is far lower than both the mean of
$1,880 (160 percent of that value) and the median of $990 (85 percent
of that value) per one cent per mile in the paper. On the other hand,
the 2015 NAS report (cited in the 2021 NAS report) observed that
automakers ``perceive that typical consumers would pay upfront for only
one to four years of fuel savings'' (pp. 9-10),\160\ a range of values
within that identified in Greene et al. (2018) for consumer response,
but well below the median or mean. Thus, it appears possible that
automakers operate under a different perception of consumer willingness
to pay for additional fuel economy than how consumers actually behave.
The CCEMS model does not differentiate between automaker perception and
consumer perception of the value of additional fuel economy in its
sales modeling.
---------------------------------------------------------------------------
\159\ See Greene et al. (2018), Footnote 157. Greene et al.
(2018) cite a ballpark value of reducing driving costs by $0.01/mile
as $1150, but does not provide enough detail to replicate their
analysis perfectly. The 30% estimate is calculated by assuming,
following assumptions in Greene et al. (2018), that a vehicle is
driven 15,000 miles per year for 13.5 years, 10% discount rate.
Those figures produce a ``present value of miles'' of 108,600; thus,
a $0.01/mile change in the cost of driving would be worth $1086. In
contrast, saving $0.01/mile for 2.5 years using these assumptions is
worth about $318, or 29% of the value over 13.5 years. Multiplying
Greene et al.'s 29 percent to $1150 = $334.
\160\ National Research Council (2015). Cost, Effectiveness, and
Deployment of Fuel Economy Technologies for Light-Duty Vehicles.
Washington, DC: The National Academies Press. https://doi.org/10.17226/21744, p. 9-10.
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In addition, setting the elasticity of demand at -1 in the SAFE
FRIA was based on literature more than 25 years old. EPA is currently
working to review more recent estimates of the elasticity of demand for
new vehicles. A smaller elasticity would not change the direction of
sales effects, but it would reduce the magnitude of the effects.
The CCEMS model also makes use of a dynamic fleet share model (SAFE
FRIA p. 877) that estimates, separately, the shares of passenger cars
and light trucks based on vehicle characteristics, and then adjusts
them so that the market shares sum to one. The model also includes the
effects of the standards on vehicle scrappage based on a statistical
analysis (FRIA starting p. 926). The model looks for associations
between vehicle age, change in new vehicle prices, fuel prices, cost
per mile of driving, and macroeconomic measures and the scrappage rate,
with different equations for cars, SUVs/vans, and pickups. EPA's
project to review new vehicle demand elasticities also includes a
review of the literature on the relationship between new and used
vehicle markets and scrappage.
For this proposal, EPA is maintaining these assumptions for its
modeling. We also examine a sensitivity case using an elasticity of -
0.4. We hope to complete our work on both the vehicle demand elasticity
and scrappage in time to be able to consider it for use in analyses
that will be developed for the final rule.
With the modeling assumptions that both automakers and vehicle
buyers consider 2.5 years of future fuel consumption in the purchase
decision and that the demand elasticity is -1, vehicle sales would
decrease by roughly 2 percent compared to sales in the SAFE rule, as
discussed in more detail in DRIA Chapter 8.1.4. In contrast, when
modeled using a demand elasticity of -0.4, sales decrease by between
0.5 and 1 percent. If, however, automakers underestimate consumers'
valuation of fuel economy, then sales may increase relative to the
baseline under the proposed standards.
C. Changes in Fuel Consumption
The proposed standards will reduce not only GHG emissions but also
fuel consumption. Reducing fuel consumption is a significant means of
reducing GHG emissions from the transportation fleet. Table 46 shows
the estimated fuel consumption changes under the proposed standards
relative to the No Action scenario and include rebound effects, credit
usage and advanced technology multiplier use.
The largest changes in fuel consumption come from gasoline, which
follows from our projection that improvements to gasoline vehicles will
be the primary way that manufacturers meet the proposed standards. By
2050, our proposal would reduce gasoline consumption by more than 290
million barrels--a nearly 10 percent reduction in U.S. gasoline
consumption. Since only about 8 percent of the fleet is projected to be
either EV or PHEV by MY2026 to meet the proposed standards, we project
smaller changes in the electricity to fuel these vehicles.
[[Page 43789]]
Table 46--Change in Fuel Consumption From the Light-Duty Fleet
----------------------------------------------------------------------------------------------------------------
Gasoline Percent of Electricity Percent of
(million 2020 U.S. (gigawatt 2020 U.S.
barrels) consumption hours) consumption
----------------------------------------------------------------------------------------------------------------
2023............................................ -9 -0.3 929 0.0
2026............................................ -43 -1.5 6,798 0.2
2030............................................ -124 -4.2 19,017 0.5
2035............................................ -211 -7.2 30,735 0.8
2040............................................ -263 -8.9 38,228 1.0
2050............................................ -291 -9.9 48,122 1.3
----------------------------------------------------------------------------------------------------------------
Notes: One barrel (BBL) contains 42 gallons of gasoline; according to the Energy Information Administration
(EIA), US gasoline consumption in 2020 was 123.49 billion gallons (see https://www.eia.gov/tools/faqs/faq.php?id=23&t=10, last accessed July 19, 2021), roughly 16 percent less (due to the coronavirus pandemic)
than the highest consumption on record (2018). According to the Department of Energy, there are 0.031 kWh of
electricity per gallon gasoline equivalent, the metric reported by the CCEMS model for electricity consumption
and used here to convert to kWh. According to statista.com, the US consumed 3,802 terawatt hours of
electricity in 2020.
With changes in fuel consumption come associated changes in the
amount of time spent refueling vehicles. Consistent with the
assumptions used in the SAFE FRM (and presented in Table 47), the costs
of time spent refueling are calculated as the total amount of time the
driver of a typical vehicle would spend refueling multiplied by the
value of their time. If less time is spent refueling vehicles under the
proposed standards, then a refueling time savings would be incurred.
Table 47--CCEMS Inputs Used To Estimate Refueling Time Costs
----------------------------------------------------------------------------------------------------------------
Cars Vans/SUVs Pickups
----------------------------------------------------------------------------------------------------------------
Fixed Component of Average Refueling Time in Minutes (by Fuel
Type)
----------------------------------------------------------------------------------------------------------------
Gasoline........................................................ 3.5 3.5 3.5
Ethanol-85...................................................... 3.5 3.5 3.5
Diesel.......................................................... 3.5 3.5 3.5
Electricity..................................................... 3.5 3.5 3.5
Hydrogen........................................................ 0 0 0
Compressed Natural Gas.......................................... 0 0 0
Average Tank Volume Refueled.................................... 65 65 65
Value of Travel Time per Vehicle (2018 $/hour).................. 20.46 20.79 20.79
----------------------------------------------------------------------------------------------------------------
D. Greenhouse Gas Emission Reduction Benefits
EPA estimated the climate benefits for this proposed rulemaking
using measures of the social cost of three GHGs: Carbon, methane, and
nitrous oxide. While the program also accounts for reduction in HFCs
through the AC credits program, EPA has not quantified the associated
emission reductions. The social cost of each gas (i.e., the social cost
of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide (SC-N2O)) is
the monetary value of the net harm to society associated with a
marginal increase in emissions in a given year, or the benefit of
avoiding that increase. Collectively, these values are referenced as
the ``social cost of greenhouse gases'' (SC-GHG). In principle, SC-GHG
includes the value of all climate change impacts, including (but not
limited to) changes in net agricultural productivity, human health
effects, property damage from increased flood risk and natural
disasters, disruption of energy systems, risk of conflict,
environmental migration, and the value of ecosystem services. The SC-
GHG therefore, reflects the societal value of reducing emissions of the
gas in question by one metric ton.
We estimate the global social benefits of CO2, CH4, and N2O
emission reductions expected from this proposed rule using the SC-GHG
estimates presented in the February 2021 Technical Support Document
(TSD): Social Cost of Carbon, Methane, and Nitrous Oxide Interim
Estimates under E.O. 13990 (IWG 2021). These SC-GHG estimates are
interim values developed under E.O. 13990 for use in benefit-cost
analyses until an improved estimate of the impacts of climate change
can be developed based on the best available climate science and
economics. As discussed in Section 3.3 of the RIA, these interim SC-GHG
estimates have a number of limitations, including that the models used
to produce them do not include all of the important physical,
ecological, and economic impacts of climate change recognized in the
climate-change literature and that several model input assumptions are
outdated. As discussed in the February 2021 TSD, the Interagency
Working Group on the Social Cost of Greenhouse Gases (IWG) finds that,
taken together, the limitations suggest that these SC-GHG estimates
likely underestimate the damages from GHG emissions. The IWG is
currently working on a comprehensive update of the SC-GHG estimates (to
be released by January 2022 under E.O. 13990) taking into consideration
recommendations from the National Academies of Sciences, Engineering
and Medicine, recent scientific literature, public comments received on
the February 2021 TSD and other input from experts and diverse
stakeholder groups. We request comment on this approach to estimating
social benefits of GHG in this rulemaking in light of the ongoing
interagency process. See Section VII.I for a summary of the monetized
GHG benefits and Section 3.3 of the RIA for more on the application of
SC-GHG estimates.
E. Non-Greenhouse Gas Health Impacts
It is important to quantify the health and environmental impacts
associated with the proposed program because a failure to adequately
consider ancillary impacts could lead to an incorrect assessment of a
program's costs and
[[Page 43790]]
benefits. Moreover, the health and other impacts of exposure to
criteria air pollutants and airborne toxics tend to occur in the near
term, while most effects from reduced climate change are likely to
occur over a time frame of several decades or longer. Ideally, human
health benefits would be estimated based on changes in ambient
PM2.5 and ozone as determined by full-scale air quality
modeling. However, the projected non-GHG emissions impacts associated
with the proposal would be expected to contribute to very small changes
in ambient air quality (see Preamble Section V.C for more detail).
In lieu of air quality modeling, we use a reduced-form benefit-per-
ton (BPT) approach to inform our assessment of health impacts, which is
conceptually consistent with EPA's use of BPT estimates in several
previous RIAs.161 162 In this approach, the
PM2.5-related BPT values are the total monetized human
health benefits (the sum of the economic value of the reduced risk of
premature death and illness) that are expected from reducing one ton of
directly-emitted PM2.5 or PM2.5 precursor such as
NOX or SO2. We note, however, that the complex,
non-linear photochemical processes that govern ozone formation prevent
us from developing reduced-form ozone BPT values. This is an important
limitation to recognize when using the BPT approach.
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\161\ U.S. Environmental Protection Agency (U.S. EPA). 2012.
Regulatory Impact Analysis for the Final Revisions to the National
Ambient Air Quality Standards for Particulate Matter. EPA452/R-12-
003. Office of Air Quality Planning and Standards, Health and
Environmental Impacts Division, Research Triangle Park, NC.
December. Available at: http://www.epa.gov/ttnecas1/regdata/RIAs/finalria.pdf.
\162\ U.S. Environmental Protection Agency (U.S. EPA). 2014.
Regulatory Impact Analysis for the Proposed Carbon Pollution
Guidelines for Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants. EPA-542/R-14-002. Office of
Air Quality Planning and Standards, Research Triangle Park, NC.
June. Available at http://www.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.
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For tailpipe emissions, we apply national PM2.5-related
BPT values that were recently derived for the ``Onroad Light Duty
Vehicle'' sector.\163\ The onroad light-duty vehicle BPT values were
derived using detailed mobile sector source-apportionment air quality
modeling, and apply EPA's existing method for using reduced-form tools
to estimate PM2.5-related benefits.164 165
Compared to values that EPA has used in the past,\166\ these BPT values
provide better resolution by mobile sector and geographic area, two
features that make them especially useful for quantifying the benefits
of reducing emissions from the onroad light-duty sector.
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\163\ Wolfe, P.; Davidson, K.; Fulcher, C.; Fann, N.; Zawacki,
M.; Baker, K. R. 2019. Monetized Health Benefits Attributable to
Mobile Source Emission Reductions across the United States in 2025.
Sci. Total Environ. 650, 2490-2498. https://doi.org/10.1016/J.SCITOTENV.2018.09.273. Also see https://www.epa.gov/benmap/mobile-sector-source-apportionment-air-quality-and-benefits-ton.
\164\ Zawacki, M.; Baker, K. R.; Phillips, S.; Davidson, K.;
Wolfe, P. 2018. Mobile Source Contributions to Ambient Ozone and
Particulate Matter in 2025. Atmos. Environ. 188, 129-141.
\165\ Fann, N.; Fulcher, C. M.; Baker, K. 2013. The Recent and
Future Health Burden of Air Pollution Apportioned across U.S.
Sectors. Environ. Sci. Technol. 47 (8), 3580-3589. https://doi.org/10.1021/es304831q.
\166\ US EPA, 2018. Technical Support Document: Estimating the
Benefit per Ton of Reducing PM2.5 Precursors from 17
Sectors. 2018. Office of Air Quality Planning and Standards.
Research Triangle Park, NC.
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To monetize the PM2.5-related impacts of upstream
emissions, we apply BPT values that were developed for the refinery
sector.\167\ While total upstream emissions also include electricity
generating unit sources, petroleum extraction, storage and transport
sources, as well as sources upstream from the refinery, the modeling
tool used to support this analysis only provides estimates of upstream
emissions impacts aggregated across all sources. Furthermore, we assume
the majority of upstream emission reductions associated with the
proposal would be related to domestic onsite refinery emissions and
domestic crude production, because the fleet penetration of electric
vehicles attributed to the proposed standards is relatively small
(i.e., the change in electric vehicle penetration is projected to
change from 4 percent in the No Action case to 8 percent under the
proposed standards). We therefore believe for purposes of this proposed
rule it is appropriate to apply the refinery values to all upstream
emissions. We solicit comment on this approach and any alternative
approaches that we should adopt for the final rule.
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\167\ U.S. Environmental Protection Agency (U.S. EPA). 2018.
Technical Support Document: Estimating the Benefit per Ton of
Reducing PM2.5 Precursors from 17 Sectors. 2018. Office
of Air Quality Planning and Standards. Research Triangle Park, NC.
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EPA bases its benefits analyses on peer-reviewed studies of air
quality and health effects and peer-reviewed studies of the monetary
values of public health and welfare improvements. Very recently, EPA
updated its approach to estimating the benefits of changes in
PM2.5 and ozone.168 169 These updates were based
on information drawn from the recent 2019 PM2.5 and 2020
Ozone Integrated Science Assessments (ISAs), which were reviewed by the
Clean Air Science Advisory Committee (CASAC) and the
public.170 171 Unfortunately, EPA has not had an opportunity
to update its BPT estimates to reflect these updates in time for this
proposal. Instead, we use PM2.5 BPT estimates that are based
on the review of the 2009 PM ISA \172\ and include a mortality risk
estimate derived from the Krewski et al. (2009) \173\ analysis of the
American Cancer Society (ACS) cohort and nonfatal illnesses consistent
with benefits analyses performed for the analysis of the final Tier 3
Vehicle Rule,\174\ the final 2012 PM NAAQS Revision,\175\ and the final
2017-2025 Light-duty Vehicle GHG Rule.\176\ We expect this lag in
updating our BPT
[[Page 43791]]
estimates to have only a minimal impact on total PM benefits, since the
underlying mortality risk estimate based on the Krewski study is
identical to an updated PM2.5 mortality risk estimate
derived from an expanded analysis of the same ACS cohort.\177\ The
Agency is currently working to update its BPT estimates to reflect
these recent updates for use in future rulemaking analyses. More
information on the BPT approach to valuing PM-related benefits can be
found in RIA Chapter 7.2 that accompanies this proposal.
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\168\ U.S. Environmental Protection Agency (U.S. EPA). 2021.
Regulatory Impact Analysis for the Final Revised Cross-State Air
Pollution Rule (CSAPR) Update for the 2008 Ozone NAAQS. EPA-452/R-
21-002. March.
\169\ U.S. Environmental Protection Agency (U.S. EPA). 2021.
Estimating PM2.5- and Ozone-Attributable Health Benefits.
Technical Support Document (TSD) for the Final Revised Cross-State
Air Pollution Rule Update for the 2008 Ozone Season NAAQS. EPA-HQ-
OAR-2020-0272. March.
\170\ U.S. Environmental Protection Agency (U.S. EPA). 2019.
Integrated Science Assessment (ISA) for Particulate Matter (Final
Report, 2019). U.S. Environmental Protection Agency, Washington, DC,
EPA/600/R-19/188, 2019.
\171\ U.S. Environmental Protection Agency (U.S. EPA). 2020.
Integrated Science Assessment (ISA) for Ozone and Related
Photochemical Oxidants (Final Report). U.S. Environmental Protection
Agency, Washington, DC, EPA/600/R-20/012, 2020.
\172\ U.S. Environmental Protection Agency (U.S. EPA). 2009.
Integrated Science Assessment for Particulate Matter (Final Report).
EPA-600-R-08-139F. National Center for Environmental Assessment--RTP
Division, Research Triangle Park, NC. December. Available at: http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546.
\173\ Krewski D., M. Jerrett, R.T. Burnett, R. Ma, E. Hughes, Y.
Shi, et al. 2009. Extended Follow-Up and Spatial Analysis of the
American Cancer Society Study Linking Particulate Air Pollution and
Mortality. HEI Research Report, 140, Health Effects Institute,
Boston, MA.
\174\ U.S. Environmental Protection Agency. (2014). Control of
Air Pollution from Motor Vehicles: Tier 3 Motor Vehicle Emission and
Fuel Standards Final Rule: Regulatory Impact Analysis, Assessment
and Standards Division, Office of Transportation and Air Quality,
EPA-420-R-14-005, March 2014. Available on the internet: http://www3.epa.gov/otaq/documents/tier3/420r14005.pdf.
\175\ U.S. Environmental Protection Agency. (2012). Regulatory
Impact Analysis for the Final Revisions to the National Ambient Air
Quality Standards for Particulate Matter, Health and Environmental
Impacts Division, Office of Air Quality Planning and Standards, EPA-
452-R-12-005, December 2012. Available on the internet: http://www3.epa.gov/ttnecas1/regdata/RIAs/finalria.pdf.
\176\ U.S. Environmental Protection Agency (U.S. EPA). (2012).
Regulatory Impact Analysis: Final Rulemaking for 2017-2025 Light-
Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average
Fuel Economy Standards, Assessment and Standards Division, Office of
Transportation and Air Quality, EPA-420-R-12-016, August 2012.
Available on the internet at: http://www3.epa.gov/otaq/climate/documents/420r12016.pdf.
\177\ Turner, MC, Jerrett, M, Pope, A, III, Krewski, D, Gapstur,
SM, Diver, WR, Beckerman, BS, Marshall, JD, Su, J, Crouse, DL and
Burnett, RT (2016). Long-term ozone exposure and mortality in a
large prospective study. Am J Respir Crit Care Med 193(10): 1134-
1142.
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The PM-related BPT estimates used in this analysis are provided in
Table 48. We multiply these BPT values by projected national changes in
NOX, SO2 and directly-emitted PM2.5,
in tons, to estimate the total PM2.5-related monetized human
health benefits associated with the proposed program. As the table
indicates, these values differ among pollutants and depend on their
original source, because emissions from different sources can result in
different degrees of population exposure and resulting health impacts.
The BPT values for emissions of non-GHG pollutants from both onroad
light-duty vehicle use and upstream sources such as fuel refineries
will increase over time. These projected increases reflect rising
income levels, which increase affected individuals' willingness to pay
for reduced exposure to health threats from air pollution. The BPT
values also reflect future population growth and increased life
expectancy, which expands the size of the population exposed to air
pollution in both urban and rural areas, especially among older age
groups with the highest mortality risk.\178\
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\178\ For more information about income growth adjustment
factors and EPA's population projections, please refer to the
following: https://www.epa.gov/sites/production/files/2015-04/documents/benmap-ce_user_manual_march_2015.pdf.
Table 48--PM2.5-Related Benefit-per-Ton Values
[2018$] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Onroad light duty vehicles \b\ Upstream Sources\c\
-----------------------------------------------------------------------------------------------
Year Direct PM2.5 Direct PM2.5
SO2 NOX SO2 NOX
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Using a 3 Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020.................................................... $600,000 $150,000 $6,400 $380,000 $81,000 $8,100
2025.................................................... 660,000 170,000 6,900 420,000 90,000 8,800
2030.................................................... 740,000 190,000 7,600 450,000 98,000 9,600
2035.................................................... 830,000 210,000 8,400 .............. .............. ..............
2040.................................................... 920,000 230,000 9,000 .............. .............. ..............
2045.................................................... 1,000,000 250,000 9,600 .............. .............. ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Using a 7 Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020.................................................... 540,000 140,000 5,800 350,000 74,000 7,300
2025.................................................... 600,000 150,000 6,200 380,000 80,000 7,900
2030.................................................... 660,000 170,000 6,800 410,000 88,000 8,600
2035.................................................... 750,000 190,000 7,500 .............. .............. ..............
2040.................................................... 830,000 210,000 8,200 .............. .............. ..............
2045.................................................... 900,000 230,000 8,600 .............. .............. ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ The benefit-per-ton estimates presented in this table are based on estimates derived from the American Cancer Society cohort study (Krewski et al.,
2009). They also assume either a 3 percent or 7 percent discount rate in the valuation of premature mortality to account for a twenty-year segmented
premature mortality cessation lag.
\b\ Benefit-per-ton values for onroad light duty vehicles were estimated for the years 2020, 2025, 2030, 2035, 2040, and 2045. We hold values constant
for intervening years (e.g., the 2020 values are assumed to apply to years 2021-2024; 2025 values for years 2026-2029; and 2045 values for years 2046
and beyond).
\c\ Benefit-per-ton values for upstream sources were estimated only for the years 2020, 2025 and 2030. We hold values constant for intervening years and
2030 values are applied to years 2031 and beyond.
\d\ We assume for the purpose of this analysis that total ``upstream emissions'' are most appropriately monetized using refinery sector benefit per-ton
values.
The monetized PM2.5 health impacts of the proposed
standards are presented in Table 54. Using PM2.5-related BPT
estimates to monetize the non-GHG impacts of the proposed standards
omits ozone-related impacts, unquantified PM-related health impacts, as
well as other impacts associated with reductions in exposure to air
toxics, ecosystem benefits, and visibility improvement. Section V of
this preamble provides a qualitative description of both the health and
environmental effects of the non-GHG pollutants impacted by the
proposed program.
F. Energy Security Impacts
This proposal is designed to require reductions in the GHG
emissions of light-duty vehicles (LDV) and thereby reduce fuel
consumption. In turn, this proposed LDV GHG (2023-2026) proposal would
help to reduce U.S. petroleum imports. A reduction of U.S. petroleum
imports reduces both financial and strategic risks caused by potential
sudden disruptions in the supply of imported petroleum to the U.S.,
thus increasing U.S. energy security.
In order to understand the energy security implications of reducing
U.S. oil imports, EPA has worked with Oak Ridge National Laboratory
(ORNL), which has developed approaches for evaluating the social costs
and energy security implications of oil use. When conducting this
analysis, ORNL considers the full cost of importing petroleum into the
U.S. The full economic cost (i.e., oil security premiums, as labeled
below) is defined to include two components in addition
[[Page 43792]]
to the purchase price of petroleum itself. These are: (1) The higher
costs/benefits for oil imports resulting from the effect of changes in
U.S. demand on the world oil price (i.e., the ``demand'' or
``monopsony'' costs/benefits); and (2) the risk of reductions in U.S.
economic output and disruption to the U.S. economy caused by sudden
disruptions in the supply of imported oil to the U.S. (i.e., the
avoided macroeconomic disruption/adjustment costs).
For this proposed rule, EPA is using oil security premiums
estimated using ORNL's methodology, which incorporates oil price
projections and energy market and economic trends from the EIA's Annual
Energy Outlook (AEO). For this analysis, we are using oil security
premiums based on AEO 2018, but for the final rule we intend to update
this analysis to AEO 2021. We only consider the avoided macroeconomic
disruption/adjustment costs oil security premiums (i.e., labeled
macroeconomic oil security premiums below), since the monopsony impacts
of this proposed rule are considered transfer payments. See previous
EPA GHG vehicle rules for a discussion of the monopsony oil security
premiums.\179\ In addition, EPA and ORNL have worked together to revise
the oil security premiums based upon recent energy security literature
(see Chapter 3.2.5 of the DRIA accompanying this proposed rule for how
the macroeconomic oil security premiums have been updated based upon a
review of recent energy security literature on this topic). We do not
consider military cost impacts from this proposed rule due to
methodological issues in quantifying these impacts (see Chapter 3.2.3
of the DRIA for a review of the literature on the military costs
impacts of U.S. oil import reductions).
---------------------------------------------------------------------------
\179\ See Energy Security Impacts. Effect of Oil Use on the
Long-Run Oil Price. Section 10. 5.2.1. pp.10-25. 2016. Draft
Technical Assessment Report: Midterm Evaluation of Light-Duty
Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel
Economy Standards for Model Years 2022-2025. EPA-420-D-16-900.
---------------------------------------------------------------------------
To calculate the energy security benefits of this proposed rule,
EPA is using the ORNL oil security premium methodology with: (1)
Estimated oil savings calculated by EPA and (2) an oil import reduction
factor of 91 percent, which shows how much U.S. oil imports are reduced
from changes in U.S. oil consumption. Each of these assumptions is
discussed in more detail in Chapter 3.2 of the accompanying DRIA. Below
EPA presents the macroeconomic oil security premiums used for the
proposed standards for selected years from 2023-2050 in Table 49.
Table 49--Macroeconomic Oil Security Premiums for Selected Years From
2023-2050
[2018$/Barrel] *
------------------------------------------------------------------------
Macroeconomic oil
Year (range) security premiums
(range)
------------------------------------------------------------------------
2023........................................... $3.63 ($1.22-$6.13)
2026........................................... $3.78 ($1.17-$6.37)
2030........................................... $3.99 ($1.13-$6.74)
2035........................................... $4.30 ($1.14-$7.35)
2040........................................... $4.66 ($1.26-$7.96)
2050........................................... $5.57 ($1.89-$9.53)
------------------------------------------------------------------------
* Top values in each cell are the midpoints, the values in parentheses
are the 90 percent confidence intervals.
G. Impacts of Additional Driving
As discussed in Chapter 3.1 of the RIA, the assumed rebound effect
might occur when an increase in vehicle fuel efficiency encourages
people to drive more as a result of the lower cost per mile of driving.
Along with the safety considerations associated with increased vehicle
miles traveled (described in Section VII.H of this preamble),
additional driving can lead to other costs and benefits that can be
monetized.
The increase in travel associated with the rebound effect produces
additional benefits to vehicle drivers, which reflect the value of the
added (or more desirable) social and economic opportunities that become
accessible with additional travel. Consistent with assumptions used in
the SAFE FRM, this analysis estimates the economic benefits from
increased rebound-effect driving as the owner/operator surplus from the
additional accessibility it provides.
The equation for the calculation of the Drive Value:
Drive Value = (1/2) (VMTrebound) [($/mile)NoAction-($/
mile)Action]
The economic value of the increased owner/operator surplus provided
by added driving 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 consumption, the value of benefits from increased
vehicle use changes by model year and varies among alternative
standards.
In contrast to the benefits of additional driving are the costs
associated with that driving. If net operating costs of the vehicle
decline, then we expect a positive rebound effect. Increased vehicle
use associated with a positive rebound effect also contributes to
increased traffic congestion and highway noise. Depending on how the
additional travel is distributed throughout the day and 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 other road users in the form of increased travel time and
operating expenses. Because drivers do not take these external costs
into account in deciding when and where to travel, they must be
accounted for separately as a cost of the added driving associated with
the rebound effect.
EPA relies on estimates of congestion and noise costs developed by
the Federal Highway Administration to estimate the increased external
costs caused by added driving due to the rebound effect. EPA employed
estimates from this source previously in the analysis accompanying the
light-duty 2010 and 2012 vehicle rulemakings and the 2016 Draft TAR and
Proposed Determination. We continue to find them appropriate for this
analysis after reviewing the procedures used by FHWA to develop them
and considering other available estimates of these values.
FHWA's congestion cost estimates focus on freeways because non-
freeway effects are less serious due to lower traffic volumes and
opportunities to re-route around the congestion. EPA, however, applied
the congestion cost to the overall VMT. The results of this analysis
potentially overestimate the congestions costs associated with
increased vehicle use, and thus lead to a conservative estimate of net
benefits.
EPA has used FHWA's ``Middle'' estimates for marginal congestion
and noise costs caused by increased travel from vehicles. This approach
is consistent with the methodology used in our prior analyses. The
values used are shown in Table 50.
These congestion costs differ from those used in the SAFE FRM and,
as stated, are consistent with those used in the 2016 Draft TAR and the
2016 Proposed Determination. For this proposal, EPA has chosen not to
adopt the approach from the SAFE FRM where scaling factors were used to
adjust the underlying FHWA congestion cost estimates. In particular,
EPA now finds that scaling the marginal per-mile congestion costs by
the change in VMT per lane-mile on U.S. highways from 1997 to 2017 does
not account for changes in average speeds and improved road design, and
may have the potential to over-estimate costs. We
[[Page 43793]]
are continuing to use the FHWA congestion estimates without scaling,
consistent with the SAFE NPRM and prior EPA rulemakings, and adjusting
to measure in 2018 dollars. EPA invites comments on the congestion cost
values and methodology.
Table 50--Costs Associated With Congestion and Noise
[2018 Dollars per vehicle mile]
------------------------------------------------------------------------
Passenger
cars Van/SUVs Pickups
------------------------------------------------------------------------
Congestion.......................... 0.0634 0.0634 0.0566
Noise............................... 0.0009 0.0009 0.0009
------------------------------------------------------------------------
H. Safety Considerations in Establishing GHG Standards
Consistent with previous light-duty GHG analyses, EPA has assessed
the potential of the proposed MY 2023-2026 standards to affect vehicle
safety. EPA applied the same historical relationships between mass,
size, and fatality risk that were established and documented in the
SAFE rulemaking. These relationships are based on the statistical
analysis of historical crash data, which included an analysis performed
by using the most recently available crash studies based on data for
model years 2007 to 2011. EPA used the findings of this analysis to
estimate safety impacts of the modeled mass reductions over the
lifetimes of new vehicles in response to MY 2023-2026 standards. As in
initially promulgating the GHG standards, the MTE Proposed
Determination and this proposal, EPA's assessment is that manufacturers
can achieve the MY 2023-2026 standards while using modest levels of
mass reduction as one technology option among many. On the whole, EPA
considers safety impacts in the context of all projected health impacts
from the proposal including public health benefits from the projected
reductions in air pollution.
The projected change in risk of fatal and non-fatal injuries is
influenced by changes in fleet mix (car/truck share), vehicle scrappage
rates, distribution of VMT among vehicles in the fleet and vehicle
mass. Because the empirical analysis described previously did not
produce any mass-safety coefficients with a statistically significant
difference from zero, we analyzed safety results over the range of
coefficient values. We project that the effect of the proposed
standards on annual fatalities per billion miles driven ranges from a
decrease of 0.25 percent to an increase of 0.38 percent, with a central
estimate of a 0.07 percent increase.\180\
---------------------------------------------------------------------------
\180\ These fatality risk values are the average of changes in
annual risk through 2050. The range of values is based on the 5% to
95% confidence interval of mass-safety coefficients presented in the
SAFE FRM.
---------------------------------------------------------------------------
In addition to changes in risk, EPA also considered the projected
impact of the proposed standards on the absolute number of fatal and
non-fatal injuries. The majority of the fatalities projected would
result from the projected increased driving--i.e., people choosing to
drive more due to the lower operating costs of more efficient vehicles.
Our cost-benefit analysis accounts for both the value of this
additional driving and its associated risk, which we assume are
considerations in the decision to drive. The risk valuation associated
with this increase in driving partially offsets the associated increase
in societal costs due to increased fatalities and non-fatal injuries.
This analysis projects that there will be an increase in vehicle
miles traveled (VMT) under the proposed standards of 449 billion miles
compared to the No Action scenario through 2050 (an increase of about
0.5 percent). EPA estimates that vehicle safety, in terms of risk
measured as the total fatalities per the total distance traveled over
this period, will remain almost unchanged at 4.642 fatalities per
billion miles under the proposal, compared to 4.640 fatalities per
billion miles for the no-action scenario. EPA has also estimated, over
the same 30 year period, that total fatalities will increase by 2,288,
with 1,952 deaths attributed to increased driving and 336 deaths
attributed to the increase in fatality risk. In other words,
approximately 85 percent of the change in fatalities under these
proposed standards is due to projected increases in VMT and mobility
(i.e., people driving more). Our analysis also considered the increase
in non-fatal injuries. Consistent with the SAFE FRM, EPA assumed that
non-fatal injuries scale with fatal injuries.
EPA also estimated the societal costs of these safety impacts using
assumptions consistent with the SAFE FRM (see Table 51.) Specifically,
we are continuing to use the cost associated with each fatality of
$10.4 million. We have also continued to use a scalar of approximately
1.6 applied to fatality costs to estimate non-fatal injury costs. In
addition, we have accounted for the driver's inherent valuation of risk
when making the decision to drive more due to rebound. This risk
valuation partially offsets the fatal and non-fatal injury costs
described previously, and, consistent with the SAFE FRM, is calculated
as 90 percent of the fatal and non-fatal injury costs due to rebound to
reflect the fact that consumers do not fully evaluate the risks
associated with this additional driving.
I. Summary of Costs and Benefits
This section presents a summary of costs, benefits, and net
benefits of the proposed program. Table 51 shows the estimated annual
monetized costs of the proposed program for the indicated calendar
years. The table also shows the present-values (PV) of those costs and
the annualized costs for the calendar years 2021-2050 using both 3
percent and 7 percent discount rates.\181\ The table includes an
estimate of foregone consumer sales surplus, which measures the loss in
benefits attributed to consumers who would have purchased a new vehicle
in the absence of the proposed standards.
---------------------------------------------------------------------------
\181\ For the estimation of the stream of costs and benefits, we
assume that after implementation of the proposed MY 2023-2026
standards, the 2026 standards apply to each year thereafter.
[[Page 43794]]
Table 51--Costs Associated With the Proposed Program
[Billions of 2018 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Foregone
consumer Non-fatal
Calendar year sales Technology Congestion Noise ($) Fatality crash costs Total costs
surplus a costs ($) ($) costs ($) ($) ($)
($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023......................................................... 0.26 6.7 0.046 0.00073 0.16 0.26 7.4
2026......................................................... 0.64 15 0.19 0.003 0.61 1 18
2030......................................................... 0.43 14 0.59 0.0095 0.58 0.96 17
2035......................................................... 0.28 12 1 0.017 0.2 0.33 14
2040......................................................... 0.21 11 1.3 0.021 -0.038 -0.062 12
2050......................................................... 0.16 9.9 1.3 0.021 -0.0093 -0.015 11
PV, 3%....................................................... 5.7 210 15 0.24 4.5 7.6 240
PV, 7%....................................................... 3.7 130 7.3 0.12 3.4 5.6 150
Annualized, 3%............................................... 0.29 11 0.75 0.012 0.23 0.39 12
Annualized, 7%............................................... 0.3 10 0.59 0.0095 0.27 0.45 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
a ``Foregone Consumer Sales Surplus'' refers to the difference between a vehicle's price and the buyer's willingness to pay for the new vehicle; the
impact reflects the reduction in new vehicle sales described in Section VII.B. See Section 8 of CAFE_Model_Documentation_FR_2020.pdf in the docket for
more information.
Table 52 shows the undiscounted annual monetized fuel savings of
the proposed program. The table also shows the present- and annualized-
values of those fuel savings for the same calendar years using both 3
percent and 7 percent discount rates. The net benefits calculations use
the aggregate value of fuel savings (calculated using pre-tax fuel
prices) since savings in fuel taxes do not represent a reduction in the
value of economic resources utilized in producing and consuming fuel.
Note that the fuel savings shown in Table 52 result from reductions in
fleet-wide fuel use and include rebound effects, credit usage and
advanced technology multiplier use. Thus, fuel savings grow over time
as an increasing fraction of the fleet is projected to meet the
proposed standards.
Table 52--Fuel Savings Associated With the Proposed Program
[Billions of 2018 dollars]
----------------------------------------------------------------------------------------------------------------
Retail fuel Fuel tax Pre-tax fuel
Calendar year savings ($) savings ($) savings ($)
----------------------------------------------------------------------------------------------------------------
2023............................................................ 0.78 0.2 0.58
2026............................................................ 3.5 0.95 2.6
2030............................................................ 12 2.7 8.9
2035............................................................ 21 4.4 17
2040............................................................ 28 5.4 23
2050............................................................ 32 5.6 26
PV, 3%.......................................................... 310 62 250
PV, 7%.......................................................... 150 32 120
Annualized, 3%.................................................. 16 3.2 13
Annualized, 7%.................................................. 12 2.5 9.9
----------------------------------------------------------------------------------------------------------------
Note: Electricity expenditure increases are included.
Table 53 presents estimated annual monetized benefits from non-
emission sources for the indicated calendar years. The table also shows
the present- and annualized-value of those benefits for the calendar
years 2021-2050 using both 3 percent and 7 percent discount rates.
Table 53--Benefits From Non-Emission Sources
[Billions of 2018 dollars]
----------------------------------------------------------------------------------------------------------------
Energy Total non-
Calendar year Drive value Refueling time security emission
($) savings ($) benefits ($) benefits ($)
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.065 -0.019 0.03 0.076
2026............................................ 0.25 -0.12 0.15 0.28
2030............................................ 0.83 -0.15 0.46 1.1
2035............................................ 1.6 -0.1 0.83 2.3
2040............................................ 2.1 -0.017 1.1 3.2
2050............................................ 2.3 0.1 1.5 3.9
PV, 3%.......................................... 23 -0.94 13 35
PV, 7%.......................................... 11 -0.72 6.1 17
Annualized, 3%.................................. 1.2 -0.048 0.64 1.8
[[Page 43795]]
Annualized, 7%.................................. 0.92 -0.058 0.49 1.4
----------------------------------------------------------------------------------------------------------------
* See Section VII.G, Section VII.C and Section VII.F for more on drive value, refueling time and energy
security, respectively.
Table 54 presents estimated annual monetized benefits from non-GHG
emission sources for the indicated calendar years. The table also shows
the present- and annualized-values of those benefits for the calendar
years 2021-2050 using both 3 percent and 7 percent discount rates.
Table 54--PM2.5-Related Emission Reduction Benefits
[Billions of 2018 dollars] a b
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tailpipe benefits ($) Upstream benefits ($) Total PM2.5-related benefits
---------------------------------------------------------------- ($)
Calendar year -------------------------------
3% DR 7% DR 3% DR 7% DR 3% DR 7% DR
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.................................................... -0.013 -0.012 0.029 0.027 0.016 0.015
2026.................................................... -0.047 -0.042 0.014 0.015 -0.033 -0.028
2030.................................................... 0.035 0.032 0.089 0.084 0.12 0.12
2035.................................................... 0.23 0.21 0.34 0.31 0.57 0.52
2040.................................................... 0.46 0.41 0.48 0.44 0.94 0.85
2050.................................................... 0.74 0.67 0.34 0.31 1.1 0.98
PV...................................................... 4.3 1.6 4.5 2 8.8 3.6
Annualized.............................................. 0.22 0.13 0.23 0.16 0.45 0.29
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Note that the non-GHG impacts associated with the standards presented here do not include the full complement of health and environmental effects
that, if quantified and monetized, would increase the total monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that
reflect only human health impacts associated with reductions in PM2.5 exposure.
\b\ Calendar year non-GHG benefits presented in this table assume either a 3 percent or 7 percent discount rate in the valuation of PM-related premature
mortality to account for a twenty-year segmented cessation lag. Note that annual benefits estimated using a 3 percent discount rate were used to
calculate the present and annualized values using a 3 percent discount rate and the annual benefits estimated using a 7 percent discount rate were
used to calculate the present and annualized values using a 7 percent discount rate.
Table 55 shows the benefits of reduced GHG emissions, and
consequently the annual quantified benefits (i.e., total GHG benefits),
for each of the four interim social cost of GHG (SC-GHG) values
estimated by the interagency working group. As discussed in the RIA
Chapter 3.3, there are some limitations to the SC-GHG analysis,
including the incomplete way in which the integrated assessment models
capture catastrophic and non-catastrophic impacts, their incomplete
treatment of adaptation and technological change, uncertainty in the
extrapolation of damages to high temperatures, and assumptions
regarding risk aversion.
Table 55--Climate Benefits From Reductions in Greenhouse Gas Emissions
[Billions of 2018 dollars]
----------------------------------------------------------------------------------------------------------------
Discount rate and statistic
---------------------------------------------------------------
Calendar year 2.5% Average 3% 95th
5% Average ($) 3% Average ($) ($) percentile ($)
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.063 0.21 0.31 0.63
2026............................................ 0.31 1 1.5 3
2030............................................ 1 3.2 4.6 9.5
2035............................................ 2 6 8.5 18
2040............................................ 2.8 8.1 11 25
2050............................................ 3.9 10 14 31
PV.............................................. 22 91 140 280
Annualized...................................... 1.4 4.7 6.7 14
----------------------------------------------------------------------------------------------------------------
Notes:
The present value of reduced GHG emissions is calculated differently than other benefits. The same discount rate
used to discount the value of damages from future emissions (SC-GHGs at 5, 3, 2.5 percent) is used to
calculate the present value of SC-GHGs for internal consistency. Annual benefits shown are undiscounted
values.
[[Page 43796]]
Table 56 presents estimated annual net benefits for the indicated
calendar years. The table also shows the present and annualized value
of those net benefits for the calendar years 2021-2050 using both 3
percent and 7 percent discount rates. The table includes the benefits
of reduced GHG emissions (and consequently the annual net benefits) for
each of the four SC-GHG values considered by EPA. We estimate that the
total benefits of the proposed program far exceed the costs and would
result in a net present value of benefits that ranges between $17-330
billion, depending on which SC-GHG and discount rate is assumed.
Table 56--Net Benefits (Emission Benefits + Non-Emission Benefits + Fuel Savings - Costs) Associated With the
Proposed Program
[Billions of 2018 dollars] a b
----------------------------------------------------------------------------------------------------------------
Net benefits,
Net benefits, Net benefits, Net benefits, with climate
with climate with climate with climate benefits based
Calendar year benefits based benefits based benefits based on 3% discount
on 5% discount on 3% discount on 2.5% rate, 95th
rate ($) rate ($) discount rate percentile SC-
($) GHG ($)
----------------------------------------------------------------------------------------------------------------
2023............................................ -6.6 -6.5 -6.4 -6.1
2026............................................ -14 -14 -13 -12
2030............................................ -5.8 -3.7 -2.3 2.7
2035............................................ 7.6 12 14 24
2040............................................ 17 22 26 39
2050............................................ 23 30 34 51
PV, 3%.......................................... 73 140 190 330
PV, 7%.......................................... 17 86 140 270
Annualized, 3%.................................. 4.1 7.3 9.4 17
Annualized, 7%.................................. 1 4.2 6.3 14
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The present value of reduced GHG emissions is calculated differently than other benefits. The same discount
rate used to discount the value of damages from future emissions (SC-GHG at 5, 3, 2.5 percent) is used to
calculate present value of SC-GHGs for internal consistency, while all other costs and benefits are discounted
at either 3% or 7%. Annual costs and benefits shown are undiscounted values.
\b\ Note that the non-GHG impacts associated with the standards presented here do not include the full
complement of health and environmental effects that, if quantified and monetized, would increase the total
monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human
health impacts associated with reductions in PM2.5 exposure.
EPA also conducted a separate analysis of the total benefits over
the model year lifetimes of the 2023 through 2026 model year vehicles.
In contrast to the calendar year analysis presented in Table 51 through
Table 56 the model year lifetime analysis below shows the impacts of
the proposed program on vehicles produced during each of the model
years 2023 through 2026 over the course of their expected lifetimes.
The net societal benefits over the full lifetimes of vehicles produced
during each of the four model years are shown in Table 57 and Table 58
at both 3 percent and 7 percent discount rates, respectively. Similar
to the calendar year analysis, the net benefits would exceed the costs
of the program.
Table 57--Monetized Vehicle Program Costs, Fuel Savings, Benefits, and Net Benefits Associated With the
Lifetimes of 2023-2026 Model Year Light-Duty Vehicles
[Billions, 2018$; 3% discount rate] a b c
----------------------------------------------------------------------------------------------------------------
Fuel savings Net benefits
MY Costs ($) ($) Benefits ($) ($)
----------------------------------------------------------------------------------------------------------------
Present-Values
----------------------------------------------------------------------------------------------------------------
2023............................................ 4.8 3.6 0.89 to 4.5 -0.29 to 3.3
2024............................................ 5.9 7 1.8 to 8.8 2.8 to 9.8
2025............................................ 6.7 8.6 2 to 11 3.9 to 13
2026............................................ 8.1 13 3.6 to 17 8.8 to 22
---------------------------------------------------------------
Sum......................................... 26 33 8.2 to 41 15 to 48
----------------------------------------------------------------------------------------------------------------
Annualized-Values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.21 0.16 0.044 to 0.19 -0.0072 to
0.14
2024............................................ 0.26 0.3 0.086 to 0.38 0.13 to 0.43
2025............................................ 0.29 0.37 0.1 to 0.46 0.18 to 0.55
2026............................................ 0.35 0.58 0.17 to 0.73 0.4 to 0.96
---------------------------------------------------------------
Sum......................................... 1.1 1.4 0.4 to 1.8 0.71 to 2.1
----------------------------------------------------------------------------------------------------------------
Notes:
[[Page 43797]]
\a\ Model year values are discounted to 2021; the ``Sum'' represents those discounted values summed across model
years.
\b\ The range of benefits and net benefits reflects the low to high range of SC-GHG values. The same discount
rate used to discount the value of damages from future GHG emissions is used to calculate net present value of
SC-GHGs for internal consistency, while all other costs and benefits are discounted at 3 percent in this
table.
\c\ Note that the non-GHG impacts associated with the standards presented here do not include the full
complement of health and environmental effects that, if quantified and monetized, would increase the total
monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human
health impacts associated with reductions in PM2.5 exposure.
Table 58--Monetized Costs, Fuel Savings, Benefits, and Net Benefits Associated With the Lifetimes of 2023-2026
Model Year Light-Duty Vehicles
[Billions, 2018$; 7% discount rate] a b c
----------------------------------------------------------------------------------------------------------------
Fuel savings Net benefits
MY Costs ($) ($) Benefits ($) ($)
----------------------------------------------------------------------------------------------------------------
Present-Values
----------------------------------------------------------------------------------------------------------------
2023............................................ 4.4 2.6 0.72 to 4.3 -1.1 to 2.5
2024............................................ 5.5 4.7 1.4 to 8.4 0.54 to 7.6
2025............................................ 6.1 5.5 1.6 to 10 1 to 9.7
2026............................................ 7.3 8.2 2.6 to 16 3.6 to 17
---------------------------------------------------------------
Sum......................................... 23 21 6.3 to 39 4 to 37
----------------------------------------------------------------------------------------------------------------
Annualized-Values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.33 0.19 0.048 to 0.2 -0.089 to
0.061
2024............................................ 0.41 0.35 0.092 to 0.39 0.029 to 0.32
2025............................................ 0.45 0.41 0.1 to 0.47 0.064 to 0.43
2026............................................ 0.55 0.62 0.18 to 0.74 0.25 to 0.81
---------------------------------------------------------------
Sum......................................... 1.7 1.6 0.42 to 1.8 0.25 to 1.6
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Model year values are discounted to 2021; the ``Sum'' represents those discounted values summed across model
years.
\b\ The range of benefits and net benefits reflects the low to high range of SC-GHG values. The same discount
rate used to discount the value of damages from future GHG emissions is used to calculate net present value of
SC-GHGs for internal consistency, while all other costs and benefits are discounted at 7 percent in this
table.
\c\ Note that the non-GHG impacts associated with the standards presented here do not include the full
complement of health and environmental effects that, if quantified and monetized, would increase the total
monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human
health impacts associated with reductions in PM2.5 exposure.
J. Impacts on Consumers of Vehicle Costs and Fuel Savings
Although the primary purpose of this regulatory action is to reduce
GHG emissions, the impact of the proposed EPA standards on consumers is
an important consideration for EPA. This chapter discusses the impact
of the proposed standards on consumer net costs for purchasing and
fueling vehicles. For further discussion of impacts on vehicle sales,
see Section VII.B; for impacts on affordability, see Section VII.M.
EPA estimates that the average cost of a new MY 2026 vehicle will
increase by $1,044 due to the proposed standards, while we estimate
that the average per-mile fuel cost in the first year will decrease by
0.59 cents.\182\ Over time, reductions in fuel consumption will offset
the increase in upfront costs. For instance, EPA estimates that, over
the lifetime of a MY 2026 vehicle,\183\ the reduction in fuel costs
will exceed the increase in vehicle costs by $883, using a 3 percent
discount rate.\184\
---------------------------------------------------------------------------
\182\ See U.S. Environmental Protection Agency, ``Fuel Savings
Offset to Vehicle Costs_20210610.xlsx,'' in the docket for this and
the other calculations in this section. Fuel prices are based on
AEO2021 and change over time; for the Reference Case, the average
retail fuel price for years 2026-2036 ranged from $2.53 to $2.98/
gallon (2020$) for gasoline and $0.118 to $0.119/kWh of electricity
(2020$). U.S. Energy Information Administration (EIA), U.S.
Department of Energy (DOE), Annual Energy Outlook, 2021. For the
analysis involving 5-year ownership periods, we use the fuel costs
associated with the initial year of purchase for each owner, i.e.,
2026, 2031, 2036. The analysis includes the program flexibilities of
credit banking, fleet averaging, advanced technology multipliers,
and air conditioning and off-cycle credits.
\183\ The CCEMS models vehicles over a 40 year lifetime;
however, it includes scrappage rates such that fewer and fewer
vehicles of any vintage remain on the road year after year, and
those vehicles that remain are driven fewer and fewer miles year
after year.
\184\ The EPA Guidelines for Preparing Economic Analysis,
Chapter 6.4, suggests that a 3 percent discount rate is appropriate
for calculations involving consumption, instead of the opportunity
cost of capital. Here, the discount rate is applied, beginning in
2026 when the vehicle is purchased new, to the stream of fuel costs
over the vehicle lifetime. U.S. Environmental Protection Agency
(2010). ``Guidelines for Preparing Economic Analysis,'' Chapter 6.
https://www.epa.gov/sites/production/files/2017-09/documents/ee-0568-06.pdf, accessed 6/14/2021.
---------------------------------------------------------------------------
Another way to look at the effects on vehicle buyers is to examine
how the costs are distributed among new and used vehicle owners.
Because depreciation occurs over the lifetime of the vehicle, the net
purchase cost to an owner will depend on the vehicle age when it was
bought, and, if sold, the length of time that the vehicle was owned. A
study from Argonne National Laboratory provides estimates for the
depreciation of light-duty vehicles by age, as summarized in Table
59.\185\ If the additional cost of fuel-saving technology depreciates
at the same rates, then a person who buys a new vehicle and sells it
after 5 years would incur 60 percent of the upfront costs (100 percent
of the original value, less 40 percent paid back). Analogously, the
person who buys the vehicle at age 5 would incur 20 percent of those
costs (40 percent, less 20 percent paid back), and the purchaser of the
10-year-old vehicle would face a net 10 percent of the cost of the
technology after it is sold five
[[Page 43798]]
years later at vehicle age 15. A person purchasing a new vehicle,
driving the average fleetwide VMT for the given age and facing the fuel
prices used in this analysis, would face an estimated net cost of $204,
shown in Table 60, which reflects fuel savings that offset 70 percent
of the depreciation cost. The buyer of that 5-year-old used vehicle
would see an estimated reduction in net cost--that is, a net saving--of
$230, while the buyer of that same 10-year-old used vehicle would see
an estimated reduction of net cost of $314. In general, the purchasers
of older vehicles will see a greater portion of their depreciation
costs offset by fuel savings.
---------------------------------------------------------------------------
\185\ Argonne National Laboratory (2021). ``Comprehensive Total
Cost of Ownership Quantification for Vehicles with Different Size
Classes and Powertrains.'' ANL/ESD-21/4, Figure ES-2. https://publications.anl.gov/anlpubs/2021/05/167399.pdf, accessed 6/8/2021.
Table 59--Depreciation Estimates for Light Duty Vehicles
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vehicle age 1 2 3 4 5 10 15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fraction of original value 0.70 0.61 0.53 0.475 0.40 0.20 0.10
retained........................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated by Argonne National Laboratory using Edmunds data for MY2013-2019 vehicles (see figure ES-2).\185\
Table 60--Impact of Proposed Standards on Depreciation and Fuel Costs
for MY 2026 Vehicle Over 5 Years of Ownership
------------------------------------------------------------------------
Portion of
Vehicle depreciation
depreciation costs offset
plus fuel by fuel
costs ($) savings (%)
------------------------------------------------------------------------
Vehicle Purchased New................... 204 70
Vehicle Purchased at Age 5.............. (230) 197
Vehicle Purchased at Age 10............. (314) 365
------------------------------------------------------------------------
Calculated using analysis VMT assumptions for proposed standards, using
a 3% discount rate from year of purchase.
Because the use of vehicles varies widely across vehicle owners,
another way to estimate the effects of the standards is to examine the
``break even'' number of miles--that is, the number of miles driven
that would result in fuel savings matching the increase in up-front
costs. For example, if operating costs of a MY 2026 vehicle decrease by
0.59 cents per mile due to reduced fuel consumption, the upfront costs
(when purchased new) would be recovered after 177,000 miles of driving,
excluding discounting.\186\ As this measure makes clear, the financial
effect on a new vehicle owner depends on the amount that the vehicle is
driven. Mobility service providers, such as taxis or ride-sharing
services, are likely to accumulate miles more quickly than most people
who use their vehicles for personal use. As discussed in Section VII.M,
the lower per-mile cost for these vehicles may reduce the importance of
up-front costs in the charge for mobility as a service, and thus
further enable use of that service.
---------------------------------------------------------------------------
\186\ This estimate is calculated as the increase in cost,
$1044, divided by the reduced per-mile cost, $0.0059, to get miles
until cost is recovered.
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Table 61 shows, for purchasers of different-age MY 2026 vehicles,
how the degree to which fuel savings offset depreciation costs will
depend on vehicle use levels.\187\ Cost recovery is again higher for
older vehicles, and faster for vehicles that accumulate VMT more
quickly. For example, a consumer who purchases a 5-year old used MY2026
vehicle would recover their vehicle costs through fuel savings after
only 31,000 miles of driving.
---------------------------------------------------------------------------
\187\ The up-front costs for each purchaser are based on the
cost to the owner based on the depreciated price for the vehicle's
age, with recovery of some further depreciated cost after 5 years of
ownership. Cost recovery per mile is $0.0059, and is multiplied by
the number of miles in the second column. The remaining columns are
cost recovery divided by the relevant cost. Discounting is not used
to abstract from the VMT occurring during a specified timeframe.
Table 61--Proportion of Depreciation Costs Offset by Fuel Savings, for New and Used Vehicle Purchasers, for a
MY2026 Vehicle
----------------------------------------------------------------------------------------------------------------
When vehicle
When vehicle When vehicle purchased at
purchased new purchased at 5 10 years old
(%) years old (%) (%)
----------------------------------------------------------------------------------------------------------------
Portion of vehicle depreciation cost At 10,000 miles......... 9 32 69
offset by fuel savings (own vehicle At 50,000 miles......... 47 161 347
for 5 years). At 100,000 miles........ 94 322 693
Miles where fuel savings fully offset Owned vehicle for 5 106,000 31,000 14,000
the vehicle owner's depreciation cost. years.
Owned vehicle for full 177,000 62,000 28,000
remaining lifetime.
----------------------------------------------------------------------------------------------------------------
Thus, the financial effects on a vehicle buyer depend on how much
that person drives, as well as whether the vehicle is bought new or
used. Importantly, all people receive the
[[Page 43799]]
benefits of reduced GHG emissions, the primary focus of this rule.
K. Employment Impacts
If the U.S. economy is at full employment, even a large-scale
environmental regulation is unlikely to have a noticeable impact on
aggregate net employment.\188\ Instead, labor would primarily be
reallocated from one productive use to another, and net national
employment effects from environmental regulation would be small and
transitory (e.g., as workers move from one job to another).\189\
Affected sectors may nevertheless experience transitory effects as
workers change jobs. Some workers may retrain or relocate in
anticipation of new requirements or require time to search for new
jobs, while shortages in some sectors or regions could bid up wages to
attract workers. These adjustment costs can lead to local labor
disruptions. Even if the net change in the national workforce is small,
localized reductions in employment may adversely impact individuals and
communities just as localized increases may have positive impacts.
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\188\ Full employment is a conceptual target for the economy
where everyone who wants to work and is available to do so at
prevailing wages is actively employed. The unemployment rate at full
employment is not zero.
\189\ Arrow et al. (1996). ``Benefit-Cost Analysis in
Environmental, Health, and Safety Regulation: A Statement of
Principles.'' American Enterprise Institute, The Annapolis Center,
and Resources for the Future. See discussion on bottom of p. 6. In
practice, distributional impacts on individual workers can be
important, as discussed later in this section.
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If the economy is operating at less than full employment, economic
theory does not clearly indicate the direction or magnitude of the net
impact of environmental regulation on employment; it could cause either
a short-run net increase or short-run net decrease.\190\ At the level
of individual companies, employers affected by environmental regulation
may increase their demand for some types of labor, decrease demand for
other types of labor, or for still other types, not change it at all.
The uncertain direction of labor impacts is due to the different
channels by which regulations affect labor demand.
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\190\ Schmalensee, Richard, and Stavins, Robert N. ``A Guide to
Economic and Policy Analysis of EPA's Transport Rule.'' White paper
commissioned by Excelon Corporation, March 2011.
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Morgenstern et al. (2002) \191\ decompose the labor consequences in
a regulated industry facing increased abatement costs into three
separate components. First, there is a demand effect caused by higher
production costs raising market prices. Higher prices reduce
consumption (and production), reducing demand for labor within the
regulated industry. Second, there is a cost effect where, as production
costs increase, plants use more of all inputs, including labor, to
produce the same level of output. Third, there is a factor-shift effect
where post-regulation production technologies may have different labor
intensities. Other researchers use different frameworks along a similar
vein.\192\
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\191\ Morgenstern, R.D.; Pizer, W.A.; and Shih, J.-S. (2002).
``Jobs Versus the Environment: An Industry-Level Perspective.''
Journal of Environmental Economics and Management 43: 412-436. 2002.
\192\ Berman, E. and Bui, L. T. M. (2001). ``Environmental
Regulation and Labor Demand: Evidence from the South Coast Air
Basin.'' Journal of Public Economics 79(2): 265-295;
Desch[ecirc]nes, O. (2018). ``Balancing the Benefits of
Environmental Regulations for Everyone and the Costs to Workers and
Firms.'' IZA World of Labor 22v2. https://wol.iza.org/uploads/articles/458/pdfs/environmental-regulations-and-labor-markets.pdf,
accessed 4/19/2021.
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DRIA Chapter 8.2 discusses the calculation of employment impacts in
the model used for this analysis. The estimates include effects on
three sectors: Automotive dealers, final assembly labor and parts
production, and fuel economy technology labor. The first two of these
are examples of Morgenstern et al.'s (2002) demand-effect employment,
while the third reflects cost-effect employment. For automotive
dealers, the model estimates the hours involved in each new vehicle
sale. To estimate the labor involved in final assembly, the model used
average labor hours per vehicle at a sample of U.S. assembly plants,
adjusted by the ratio of vehicle assembly manufacturing employment to
employment for total vehicle and equipment manufacturing for new
vehicles. Finally, for fuel economy technology labor, DOT calculated
the average revenue per job-year for automakers.
EPA's assessment of employment impacts, in DRIA Chapter 8.2.3,
using the sales assumptions of both automakers and consumers using 2.5
years of fuel consumption in vehicle decisions and a demand elasticity
of -1, shows initial very small decreases in employment of 0.1 percent,
followed by small positive gains (less than 1 percent) in employment
due to the labor involved in producing the technologies needed to meet
the proposed standards. If, instead, we use the sensitivity analysis
with a demand elasticity of -0.4, employment is higher for both the no-
action alternative and the proposed standards. Between the no-action
alternative and the proposal, with an elasticity of -0.4, the
employment impacts are positive, rising to about a 2 percent increase.
If automakers underestimate consumers' valuation of fuel economy, as
noted in Section VII.B, then demand-effect employment is likely to be
higher, and employment impacts are likely to be more positive.
Note that these are employment impacts in the directly regulated
sector, plus the impacts for automotive dealers. These do not include
economy-wide labor impacts. As discussed earlier, economy-wide impacts
on employment are generally driven by broad macroeconomic effects. It
also does not reflect employment effects due to reduced spending on
fuel consumption. Those changes may lead to some reductions in
employment in gas stations, and some increases in other sectors to
which people reallocate those expenditures.
Electrification of the vehicle fleet is likely to affect both the
number and the nature of employment in the auto and parts sectors and
related sectors, such as providers of charging infrastructure. Because
this proposal projects relatively minor increases in penetration of
plug-in electric vehicles, from 4.6 percent in MY 2023 to 8.4 percent
in MY 2026 (see Table 42), we do not predict major changes in the
composition of employment in these sectors for MYs 2023-2026. EPA will
continue to assess changes in employment as electrification of the auto
industry proceeds.
L. Environmental Justice
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes
federal executive policy on environmental justice. It directs federal
agencies, to the greatest extent practicable and permitted by law, to
make achieving 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. EPA defines environmental justice as
the fair treatment and meaningful involvement of all people regardless
of race, color, national origin, or income with respect to the
development, implementation, and enforcement of environmental laws,
regulations, and policies.\193\
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\193\ Fair treatment means that ``no group of people should bear
a disproportionate burden of environmental harms and risks,
including those resulting from the negative environmental
consequences of industrial, governmental and commercial operations
or programs and policies.'' Meaningful involvement occurs when ``(1)
potentially affected populations have an appropriate opportunity to
participate in decisions about a proposed activity [e.g.,
rulemaking] that will affect their environment and/or health; (2)
the public's contribution can influence [the EPA's rulemaking]
decision; (3) the concerns of all participants involved will be
considered in the decision-making process; and (4) [the EPA will]
seek out and facilitate the involvement of those potentially
affected'' A potential EJ concern is defined as ``the actual or
potential lack of fair treatment or meaningful involvement of
minority populations, low-income populations, tribes, and indigenous
peoples in the development, implementation and enforcement of
environmental laws, regulations and policies.'' See ``Guidance on
Considering Environmental Justice During the Development of an
Action.'' Environmental Protection Agency, www.epa.gov/environmentaljustice/guidanceconsidering-environmental-justice-duringdevelopment-action. See also https://www.epa.gov/environmentaljustice.
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[[Page 43800]]
Executive Order 14008 (86 FR 7619, February 1, 2021) also calls on
Agencies to make achieving environmental justice part of their missions
``by developing programs, policies, and activities to address the
disproportionately high and adverse human health, environmental,
climate-related and other cumulative impacts on disadvantaged
communities, as well as the accompanying economic challenges of such
impacts.'' It also declares a policy ``to secure environmental justice
and spur economic opportunity for disadvantaged communities that have
been historically marginalized and overburdened by pollution and under-
investment in housing, transportation, water and wastewater
infrastructure and health care.'' Under Executive Order 13563 (76 FR
3821), federal agencies may consider equity, human dignity, fairness,
and distributional considerations, where appropriate and permitted by
law.
EPA's 2016 ``Technical Guidance for Assessing Environmental Justice
in Regulatory Analysis'' provides recommendations on conducting the
highest quality analysis feasible, recognizing that data limitations,
time and resource constraints, and analytic challenges will vary by
media and regulatory context.\194\
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\194\ ``Technical Guidance for Assessing Environmental Justice
in Regulatory Analysis.'' Epa.gov, Environmental Protection Agency,
https://www.epa.gov/sites/production/files/2016-06/documents/ejtg_5_6_16_v5.1.pdf.
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When assessing the potential for disproportionately high and
adverse health or environmental impacts of regulatory actions on
minority populations, low-income populations, tribes, and/or indigenous
peoples, EPA strives to answer three broad questions: (1) Is there
evidence of potential EJ concerns in the baseline (the state of the
world absent the regulatory action)? Assessing the baseline will allow
EPA to determine whether pre-existing disparities are associated with
the pollutant(s) under consideration (e.g., if the effects of the
pollutant(s) are more concentrated in some population groups). (2) Is
there evidence of potential EJ concerns for the regulatory option(s)
under consideration? Specifically, how are the pollutant(s) and its
effects distributed for the regulatory options under consideration?
And, (3) Do the regulatory option(s) under consideration exacerbate or
mitigate EJ concerns relative to the baseline? It is not always
possible to quantitatively assess these questions.
EPA's 2016 Technical Guidance does not prescribe or recommend a
specific approach or methodology for conducting an environmental
justice analysis, though a key consideration is consistency with the
assumptions underlying other parts of the regulatory analysis when
evaluating the baseline and regulatory options. Where applicable and
practicable, the Agency endeavors to conduct such an analysis. Going
forward, EPA is committed to conducting environmental justice analysis
for rulemakings based on a framework similar to what is outlined in
EPA's Technical Guidance, in addition to investigating ways to further
weave environmental justice into the fabric of the rulemaking process.
EPA greatly values input from EJ stakeholders and communities and looks
forward to engagement as we consider the impacts of light-duty vehicle
emissions.
1. GHG Impacts
In 2009, under the Endangerment and Cause or Contribute Findings
for Greenhouse Gases Under Section 202(a) of the Clean Air Act
(``Endangerment Finding''), the Administrator considered how climate
change threatens the health and welfare of the U.S. population. As part
of that consideration, she also considered risks to minority and low-
income individuals and communities, finding that certain parts of the
U.S. population may be especially vulnerable based on their
characteristics or circumstances. These groups include economically and
socially disadvantaged communities; individuals at vulnerable
lifestages, such as the elderly, the very young, and pregnant or
nursing women; those already in poor health or with comorbidities; the
disabled; those experiencing homelessness, mental illness, or substance
abuse; and/or Indigenous or minority populations dependent on one or
limited resources for subsistence due to factors including but not
limited to geography, access, and mobility.
Scientific assessment reports produced over the past decade by the
U.S. Global Change Research Program (USGCRP),195 196 the
Intergovernmental Panel on Climate Change
(IPCC),197 198 199 200 and the National Academies of
Science, Engineering, and Medicine 201 202 add more evidence
that
[[Page 43801]]
the impacts of climate change raise potential environmental justice
concerns. These reports conclude that poorer or predominantly non-White
communities can be especially vulnerable to climate change impacts
because they tend to have limited adaptive capacities and are more
dependent on climate-sensitive resources such as local water and food
supplies, or have less access to social and information resources. Some
communities of color, specifically populations defined jointly by
ethnic/racial characteristics and geographic location, may be uniquely
vulnerable to climate change health impacts in the United States. In
particular, the 2016 scientific assessment on the Impacts of Climate
Change on Human Health \203\ found with high confidence that
vulnerabilities are place- and time-specific, lifestages and ages are
linked to immediate and future health impacts, and social determinants
of health are linked to greater extent and severity of climate change-
related health impacts.
---------------------------------------------------------------------------
\195\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
\196\ USGCRP, 2016: The Impacts of Climate Change on Human
Health in the United States: A Scientific Assessment. Crimmins, A.,
J. Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen, R.J.
Eisen, N. Fann, M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M.
Mills, S. Saha, M.C. Sarofim, J. Trtanj, and L. Ziska, Eds. U.S.
Global Change Research Program, Washington, DC, 312 pp. http://dx.doi.org/10.7930/J0R49NQX.
\197\ Oppenheimer, M., M. Campos, R. Warren, J. Birkmann, G.
Luber, B. O'Neill, and K. Takahashi, 2014: Emergent risks and key
vulnerabilities. In: Climate Change 2014: Impacts, Adaptation, and
Vulnerability. Part A: Global and Sectoral Aspects. Contribution of
Working Group II to the Fifth Assessment Report of the
Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros,
D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee,
K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N.
Levy, S. MacCracken, P.R. Mastrandrea, and L.L. White (eds.)].
Cambridge University Press, Cambridge, United Kingdom and New York,
NY, USA, pp. 1039-1099.
\198\ Porter, J.R., L. Xie, A.J. Challinor, K. Cochrane, S.M.
Howden, M.M. Iqbal, D.B. Lobell, and M.I. Travasso, 2014: Food
security and food production systems. In: Climate Change 2014:
Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral
Aspects. Contribution of Working Group II to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change [Field,
C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E.
Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma,
E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L.
White (eds.)]. Cambridge University Press, Cambridge, United Kingdom
and New York, NY, USA, pp. 485-533.
\199\ Smith, K.R., A. Woodward, D. Campbell-Lendrum, D.D.
Chadee, Y. Honda, Q. Liu, J.M. Olwoch, B. Revich, and R. Sauerborn,
2014: Human health: Impacts, adaptation, and co-benefits. In:
Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A:
Global and Sectoral Aspects. Contribution of Working Group II to the
Fifth Assessment Report of the Intergovernmental Panel on Climate
Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D.
Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C.
Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R.
Mastrandrea, and L.L. White (eds.)]. Cambridge University Press,
Cambridge, United Kingdom and New York, NY, USA, pp. 709-754.
\200\ IPCC, 2018: Global Warming of 1.5[deg]C. An IPCC Special
Report on the impacts of global warming of 1.5[deg]C above pre-
industrial levels and related global greenhouse gas emission
pathways, in the context of strengthening the global response to the
threat of climate change, sustainable development, and efforts to
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner,
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C.
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X.
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T.
Waterfield (eds.)]. In Press.
\201\ National Research Council. 2011. America's Climate
Choices. Washington, DC: The National Academies Press. https://doi.org/10.17226/12781.
\202\ National Academies of Sciences, Engineering, and Medicine.
2017. Communities in Action: Pathways to Health Equity. Washington,
DC: The National Academies Press. https://doi.org/10.17226/24624.
\203\ USGCRP, 2016: The Impacts of Climate Change on Human
Health in the United States: A Scientific Assessment.
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i. Effects on Specific Populations of Concern
Individuals living in socially and economically disadvantaged
communities, such as those living at or below the poverty line or who
are experiencing homelessness or social isolation, are at greater risk
of health effects from climate change. This is also true with respect
to people at vulnerable lifestages, specifically women who are pre- and
perinatal, or are nursing; in utero fetuses; children at all stages of
development; and the elderly. Per the Fourth National Climate
Assessment, ``Climate change affects human health by altering exposures
to heat waves, floods, droughts, and other extreme events; vector-,
food- and waterborne infectious diseases; changes in the quality and
safety of air, food, and water; and stresses to mental health and well-
being.'' \204\ Many health conditions such as cardiopulmonary or
respiratory illness and other health impacts are associated with and
exacerbated by an increase in GHGs and climate change outcomes, which
is problematic as these diseases occur at higher rates within
vulnerable communities. Importantly, negative public health outcomes
include those that are physical in nature, as well as mental,
emotional, social, and economic.
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\204\ Ebi, K.L., J.M. Balbus, G. Luber, A. Bole, A. Crimmins, G.
Glass, S. Saha, M.M. Shimamoto, J. Trtanj, and J.L. White-Newsome,
2018: Human Health. In Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, pp. 539-571. doi: 10.7930/
NCA4.2018.CH14.
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To this end, the scientific assessment literature, including the
aforementioned reports, demonstrates that there are myriad ways in
which these populations may be affected at the individual and community
levels. Individuals face differential exposure to criteria pollutants,
in part due to the proximities of highways, trains, factories, and
other major sources of pollutant-emitting sources to less-affluent
residential areas. Outdoor workers, such as construction or utility
crews and agricultural laborers, who frequently are comprised of
already at-risk groups, are exposed to poor air quality and extreme
temperatures without relief. Furthermore, individuals within EJ
populations of concern face greater housing and clean water insecurity
and bear disproportionate economic impacts and health burdens
associated with climate change effects. They have less or limited
access to healthcare and affordable, adequate health or homeowner
insurance. Finally, resiliency and adaptation are more difficult for
economically disadvantaged communities: They have less liquidity,
individually and collectively, to move or to make the types of
infrastructure or policy changes to limit or reduce the hazards they
face. They frequently are less able to self-advocate for resources that
would otherwise aid in resiliency and hazard reduction and mitigation.
The assessment literature cited in EPA's 2009 and 2016 Endangerment
Findings, as well as Impacts of Climate Change on Human Health, also
concluded that certain populations and life stages, including children,
are most vulnerable to climate-related health effects. The assessment
literature produced from 2016 to the present strengthens these
conclusions by providing more detailed findings regarding related
vulnerabilities and the projected impacts youth may experience. These
assessments--including the Fourth National Climate Assessment (2018)
and The Impacts of Climate Change on Human Health in the United States
(2016)--describe how children's unique physiological and developmental
factors contribute to making them particularly vulnerable to climate
change. Impacts to children are expected from heat waves, air
pollution, infectious and waterborne illnesses, and mental health
effects resulting from extreme weather events. In addition, children
are among those especially susceptible to allergens, as well as health
effects associated with heat waves, storms, and floods. Additional
health concerns may arise in low-income households, especially those
with children, if climate change reduces food availability and
increases prices, leading to food insecurity within households.
The Impacts of Climate Change on Human Health \203\ also found that
some communities of color, low-income groups, people with limited
English proficiency, and certain immigrant groups (especially those who
are undocumented) live with many of the factors that contribute to
their vulnerability to the health impacts of climate change. While
difficult to isolate from related socioeconomic factors, race appears
to be an important factor in vulnerability to climate-related stress,
with elevated risks for mortality from high temperatures reported for
Black or African American individuals compared to White individuals
after controlling for factors such as air conditioning use. Moreover,
people of color are disproportionately exposed to air pollution based
on where they live, and disproportionately vulnerable due to higher
baseline prevalence of underlying diseases such as asthma, so climate
exacerbations of air pollution are expected to have disproportionate
effects on these communities.
Native American Tribal communities possess unique vulnerabilities
to climate change, particularly those impacted by degradation of
natural and cultural resources within established reservation
boundaries and threats to traditional subsistence lifestyles. Tribal
communities whose health, economic well-being, and cultural traditions
depend upon the natural environment will likely be affected by the
degradation of ecosystem goods and services associated with climate
change. The IPCC indicates that losses of customs and historical
knowledge may cause communities to be less resilient or adaptable.\205\
The Fourth National Climate Assessment (2018) noted that while
Indigenous peoples are diverse and will be impacted by the climate
changes universal to all Americans, there are several ways in which
climate change uniquely threatens Indigenous peoples' livelihoods and
economies.\206\
[[Page 43802]]
In addition, there can institutional barriers to their management of
water, land, and other natural resources that could impede adaptive
measures.
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\205\ Porter et al., 2014: Food security and food production
systems.
\206\ Jantarasami, L.C., R. Novak, R. Delgado, E. Marino, S.
McNeeley, C. Narducci, J. Raymond-Yakoubian, L. Singletary, and K.
Powys Whyte, 2018: Tribes and Indigenous Peoples. In Impacts, Risks,
and Adaptation in the United States: Fourth National Climate
Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R.
Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C.
Stewart (eds.)]. U.S. Global Change Research Program, Washington,
DC, USA, pp. 572-603. doi: 10.7930/NCA4.2018.CH15.
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For example, Indigenous agriculture in the Southwest is already
being adversely affected by changing patterns of flooding, drought,
dust storms, and rising temperatures leading to increased soil erosion,
irrigation water demand, and decreased crop quality and herd sizes. The
Confederated Tribes of the Umatilla Indian Reservation in the Northwest
have identified climate risks to salmon, elk, deer, roots, and
huckleberry habitat. Housing and sanitary water supply infrastructure
are vulnerable to disruption from extreme precipitation events.
NCA4 noted that Indigenous peoples often have disproportionately
higher rates of asthma, cardiovascular disease, Alzheimer's, diabetes,
and obesity, which can all contribute to increased vulnerability to
climate-driven extreme heat and air pollution events. These factors
also may be exacerbated by stressful situations, such as extreme
weather events, wildfires, and other circumstances.
NCA4 and IPCC AR5 \207\ also highlighted several impacts specific
to Alaskan Indigenous Peoples. Coastal erosion and permafrost thaw will
lead to more coastal erosion, exacerbated risks of winter travel, and
damage to buildings, roads, and other infrastructure--these impacts on
archaeological sites, structures, and objects that will lead to a loss
of cultural heritage for Alaska's Indigenous people. In terms of food
security, the NCA discussed reductions in suitable ice conditions for
hunting, warmer temperatures impairing the use of traditional ice
cellars for food storage, and declining shellfish populations due to
warming and acidification. While the NCA also noted that climate change
provided more opportunity to hunt from boats later in the fall season
or earlier in the spring, the assessment found that the net impact was
an overall decrease in food security.
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\207\ Porter et al., 2014: Food security and food production
systems.
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2. Non-GHG Impacts
In addition to significant climate change benefits, the proposed
standards would also impact non-GHG emissions. In general, we expect
small non-GHG emissions reductions from the combination of ``upstream''
emissions sources related to extracting, refining, transporting, and
storing petroleum fuels. We also expect small increases in emissions
from upstream electricity generating units (EGUs). A possible increase
in emissions from coal- and NG-fired electricity generation to meet
increased EV electricity demand could result in adverse EJ impacts. For
on-road light duty vehicles, the proposed standards would reduce total
non-GHG emissions, though we expect small increases in some non-GHG
emissions in the years immediately following implementation of the
proposal, followed by growing decreases in emissions in later years.
This is due to our assumptions about increased ``rebound'' driving. See
Table 44 for more detail on the estimated non-GHG emissions impacts of
the proposal.208 As discussed in Section I.A.3 of the
Executive Summary, future EPA regulatory actions that would result in
increased zero-emission vehicles and cleaner energy generation would
more significantly change the non-GHG impacts of transportation and
electricity generation, and those impacts will be analyzed in more
detail in those future actions.
There is evidence that communities with EJ concerns are
disproportionately impacted by the non-GHG emissions associated with
this proposal.\209\ Numerous studies have found that environmental
hazards such as air pollution are more prevalent in areas where
minority populations and low-income populations represent a higher
fraction of the population compared with the general
population.210 211 212 Consistent with this evidence, a
recent study found that most anthropogenic sources of PM2.5,
including industrial sources, and light- and heavy-duty vehicle
sources, disproportionately affect people of color.\213\
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\209\ Mohai, P.; Pellow, D.; Roberts Timmons, J. (2009)
Environmental justice. Annual Reviews 34: 405-430. https://doi.org/10.1146/annurev-environ-082508-094348.
\210\ Rowangould, G.M. (2013) A census of the near-roadway
population: public health and environmental justice considerations.
Trans Res D 25: 59-67. http://dx.doi.org/10.1016/j.trd.2013.08.003.
\211\ Marshall, J.D., Swor, K.R.; Nguyen, N.P (2014)
Prioritizing environmental justice and equality: diesel emissions in
Southern California. Environ Sci Technol 48: 4063-4068. https://doi.org/10.1021/es405167f.
\212\ Marshall, J.D. (2000) Environmental inequality: air
pollution exposures in California's South Coast Air Basin. Atmos
Environ 21: 5499-5503. https://doi.org/10.1016/j.atmosenv.2008.02.005.
\213\ C.W. Tessum, D.A. Paolella, S.E. Chambliss, J.S. Apte,
J.D. Hill, J.D. Marshall, PM2.5 polluters
disproportionately and systemically affect people of color in the
United States. Sci. Adv. 7, eabf4491 (2021).
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Analyses of communities in close proximity to upstream sources,
such as EGUs, have found that a higher percentage of communities of
color and low-income communities live near these sources when compared
to national averages.\214\ Vulnerable populations near upstream
refineries may experience potential disparities in pollution-related
health risk from that source.\215\ We expect that small increases in
non-GHG emissions from EGUs and small reductions in petroleum-sector
emissions would lead to small changes in exposure to these non-GHG
pollutants for people living in the communities near these facilities.
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\214\ See 80 FR 64662, 64915-64916 (October 23, 2015).
\215\ U.S. EPA (2014). Risk and Technology Review--Analysis of
Socio-Economic Factors for Populations Living Near Petroleum
Refineries. Office of Air Quality Planning and Standards, Research
Triangle Park, North Carolina. January.
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There is also substantial evidence that people who live or attend
school near major roadways are more likely to be of a racial minority,
Hispanic ethnicity, and/or low socioeconomic status.216 217
We would expect that communities near roads will benefit from
reductions of non-GHG pollutants as fuel efficiency improves and the
use of zero-emission vehicles (such as full battery electric vehicles)
increases, though increased rebound driving may offset some of these
emission reductions, especially in the years immediately after
finalization of the proposed standards.
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\216\ Tian, N.; Xue, J.; Barzyk. T.M. (2013) Evaluating
socioeconomic and racial differences in traffic-related metrics in
the United States using a GIS approach. J Exposure Sci Environ
Epidemiol 23: 215-222.
\217\ Boehmer, T.K.; Foster, S.L.; Henry, J.R.; Woghiren-
Akinnifesi, E.L.; Yip, F.Y. (2013) Residential proximity to major
highways--United States, 2010. Morbidity and Mortality Weekly Report
62(3): 46-50.
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Although proximity to an emissions source is a useful indicator of
potential exposure, it is important to note that the impacts of
emissions from both upstream and tailpipe sources are not limited to
communities in close proximity to these sources. The effects of
potential increases and decreases in emissions from the sources
affected by this proposal might also be felt many miles away, including
in communities with EJ concerns. The spatial extent of these impacts
from upstream and tailpipe sources depend on a range of interacting and
complex factors including the amount of pollutant emitted, atmospheric
chemistry and meteorology.
[[Page 43803]]
In summary, we expect this proposed rule would result in both small
reductions and small increases of non-GHG emissions. These effects
could potentially impact communities with EJ concerns, though not
necessarily immediately and not equally in all locations. For this
proposal, the air quality information needed to perform a quantified
analysis of the distribution of such impacts was not available. We
therefore recommend caution when interpreting these broad, qualitative
observations. We note that EPA intends to develop a future rule to
control emissions of GHGs as well as criteria and air toxic pollutants
from light-duty vehicles for model years beyond 2026. We are
considering how to project air quality impacts from the changes in non-
GHG emissions for that future rulemaking (see Section V.C). EPA is also
seeking comment on how to conduct an EJ analysis of the non-GHG impacts
associated with mobile source rulemakings, including how EV penetration
in the future fleet would affect these impacts.
M. Affordability and Equity Impacts
The impacts of the proposed standards on social equity depend in
part on their effects on the affordability of vehicles and
transportation services, especially for lower-income households. Access
to transportation improves the ability of people, including those with
low income, to pursue jobs, education, health care, and necessities of
daily life such as food and housing. This section discusses how these
standards might affect affordability of vehicles. We acknowledge that
vehicles, especially household ownership of vehicles, are only a
portion of the larger issues concerning access to transportation and
mobility services, which also takes into consideration public
transportation and land use design. Though these issues are
inextricably linked, the following discussion focuses on effects
related to private vehicle ownership and use. We also acknowledge that
the emissions of vehicles, both local pollutants and GHGs, can have
disproportionate impacts on lower-income and minority communities; see
Preamble Section I.E for further discussion of these topics. Finally,
we note that social equity involves issues beyond income and
affordability, including race, ethnicity, gender, gender
identification, and residential location; EPA will continue to examine
such impacts and seeks comment on the impact of this proposal on
additional dimensions of equity.
Affordability is not a well-defined concept in academic literature.
As discussed in Cassidy et al. (2016),\218\ researchers have generally
applied the term to necessities such as food, housing, or energy, and
have identified some themes related to:
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\218\ Cassidy, A., G. Burmeister, and G. Helfand. ``Impacts of
the Model Year 2017-2025 Light-Duty Vehicle Greenhouse Gas Emission
Standards on Vehicle Affordability.'' Working paper.
Instead of focusing on the traditional economic concept of
willingness to pay, any consideration of affordability must also
consider the ability to pay for a socially defined minimum level of
a good, especially of a necessity.
Although the ability to pay is often based on the proportion of
income devoted to expenditures on a particular good, this ratio
approach is widely criticized for not considering expenditures on
other possibly necessary goods, quality differences in the good, and
heterogeneity of consumer preferences for the good.
Assessing affordability should take into account both the short-
term costs and long-term costs associated with consumption of a
particular good.
As noted in Cassidy et al. (2016), there is very little literature
applying the concept of affordability to transportation, much less to
vehicle ownership. It is not clear how to identify a socially
acceptable minimum level of transportation service. However, it seems
reasonable that some minimum level of transportation services is
necessary to enable households access to employment, education, and
basic services such as buying food. It also seems reasonable to assume
that transportation requirements vary substantially across populations
and geographic locations, and it is not clear when consumption of
transportation moves from being a necessity to optional. Normatively
defining the minimum adequate level of transportation consumption is
difficult given the heterogeneity of consumer preferences and living
situations. As a result, it is challenging to define how much residual
income should remain with each household after transportation
expenditures. It is therefore not surprising that academic and policy
literature have largely avoided attempting to define transportation
affordability.
We are following the approach in the 2016 EPA Proposed
Determination for the Midterm Evaluation \219\ of considering four
questions that relate to the effects of the LDV GHG standards on new
vehicle affordability: How the standards affect lower-income
households; how the standards affect the used vehicle market; how the
standards affect access to credit; and how the standards affect the
low-priced vehicle segment. See DRIA Chapter 8.3 for further detail.
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\219\ U.S. Environmental Protection Agency (2016). Proposed
Determination on the Appropriateness of the Model Year 2022-2025
Light-Duty Vehicle Greenhouse Gas Emissions Standards under the
Midterm Evaluation, Chapter 4.3.3. EPA-420-R-16-020. https://nepis.epa.gov/Exe/ZyPDF.cgi? Dockey=P100Q3DO.pdf, accessed 4/26/
2021.
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The effects of the standards on lower-income households depend on
the responses not just to up-front costs but also to the reduction in
fuel and operating costs associated with the standards. These responses
will affect not only the sales of new vehicles, as discussed in
Sections 0 and VII.B, but also the prices of used vehicles as well as
the costs associated with ride-hailing and ride-sharing services. A
recent study notes that lower-income households spend more on gasoline
as a proportion of their income than higher-income households.\220\ In
addition, the Proposed Determination, Appendix B.1.6, observed that
lower-income households spend more on gasoline than on either new or
used vehicles, and more on used vehicles than new ones, suggesting the
importance of operating costs for these households. If the per-mile
costs of services such as ride hailing and ride sharing decrease to
reflect lower operating costs, those who do not own vehicles may
benefit.
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\220 \ Vaidyanathan, S., P. Huether, and B. Jennings (2021).
``Understanding Transportation Energy Burdens.'' Washington, DC:
American Council for an Energy-Efficient White Paper. https://www.aceee.org/white-paper/2021-05/understanding-transportation-energy-burdens, accessed 5/24/2021.
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If sales of new vehicles decrease, then prices of used vehicles,
which are disproportionately purchased by lower-income households,
would be expected to increase; the reverse would happen if new vehicle
sales increase. These effects in the used vehicle market also affect
how long people hold onto their used vehicles. This effect, sometimes
termed the ``Gruenspecht effect'' after Gruenspecht (1982),\221\ would
lead to both slower adoption of vehicles subject to the new standards,
and more use of older vehicles not subject to the new standards, with
associated higher emissions, if new vehicle sales decrease. The
Gruenspecht effect, therefore, may have the additional consequence of
increased concentrations of older vehicles in some communities in the
short term, and may delay benefits associated with advanced vehicle
technologies for those communities. As discussed in Section VII.B, new
vehicle
[[Page 43804]]
sales are projected to show a roughly 2 percent decrease from sales
under the SAFE rule; that value depends on the uncertain assumption
that vehicle buyers consider just a small share of future fuel
consumption in the purchase decision. EPA is working with RTI
International to understand better the connections between the new and
the used vehicle market. Changes in the new vehicle market are expected
not only to have immediate effects on the prices of used vehicles, but
also to affect the market over time, as the supply of used vehicles in
the future depends on how many new vehicles are sold.
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\221\ Gruenspecht, H. (1982). ``Differentiated Regulation: The
Case of Auto Emissions Standards.'' American Economic Review 72:
328-331.
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Access to credit is a potential barrier to purchase of vehicles
whose up-front costs have increased; access may also be affected by
race, ethnicity, gender, gender identity, residential location,
religion, or other factors. If lenders are not willing to provide
financing for buyers who face higher prices, perhaps because the
potential buyers are hitting a maximum on the debt-to-income ratio
(DTI) that lenders are willing to accept, then those buyers may not be
able to purchase new vehicles. On the other hand, some lenders give
discounts on loans to purchase more fuel-efficient vehicles.\222\
Subsidies exist from the federal government, and some state
governments, for plug-in electric vehicles.\223\ In addition, as
documented in the Midterm Evaluation,\224\ the DTI does not appear to
be a fixed obstacle for access to finance; from 2007 to 2015, 28
percent of lower-income households and 7 percent of higher-income
households who both had a DTI of over 36 percent and purchased at least
one new vehicle financed their vehicle purchases.
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\222\ Helfand, Gloria (2021). ``Memorandum: Lending Institutions
that Provide Discounts for more Fuel Efficient Vehicles.'' U.S. EPA
Office of Transportation and Air Quality, Memorandum to the Docket.
\223\ U.S. Department of Energy and U.S. Environmental
Protection Agency. ``Federal Tax Credits for New All-Electric and
Plug-in Hybrid Vehicles.'' https://www.fueleconomy.gov/feg/taxevb.shtml, accessed 4/28/2021.
\224\ See Note 219, Chapter 4.3.3.4.
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Low-priced vehicles may be considered an entry point for people
into buying new vehicles instead of used ones; automakers may seek to
entice people to buy new vehicles through a low price point. It is
possible that higher costs associated with proposed standards could
affect the ability of automakers to maintain vehicles in this value
segment. At the same time, this segment historically tended to include
more fuel-efficient vehicles that assisted automakers in achieving CAFE
standards.\225\ The footprint-based standards, by encouraging
improvements in GHG emissions and fuel economy across the vehicle
fleet, reduce the need for low-priced vehicles to be a primary means of
compliance with the standards. This change in incentives for the
marketing of this segment may contribute to the increases in the prices
of vehicles previously in this category. Low-priced vehicles still
exist; the Chevrolet Spark, for example, is listed as starting at
$13,400.\226\ At the same time, this segment is gaining more content,
such as improved entertainment systems and electric windows; they may
be developing an identity as a desirable market segment without regard
to their previous purpose in enabling the sales of less efficient
vehicles and compliance with CAFE standards.\227\ Whether this segment
continues to exist, and in what form, may depend on the marketing plans
of manufacturers: Whether benefits are greater from offering basic new
vehicles to first-time new-vehicle buyers, or from making small
vehicles more attractive by adding more desirable features to them.
---------------------------------------------------------------------------
\225\ Austin, D., and T. Dinan (2005). ``Clearing the Air: The
Costs and Consequences of Higher CAFE Standards and Increased
Gasoline.'' Journal of Environmental Economics and Management 50(3):
562-82; Kleit, A. (2004). ``Impacts of Long-Range Increases in the
Fuel Economy (CAFE) Standard.'' Economic Inquiry 42(2): 279-294.
\226\ Motortrend (2021). ``These Are the 10 Cheapest Cars You
Can Buy in 2021.'' https://www.motortrend.com/features-collections/top-10-cheapest-new-cars/, accessed 4/28/2021; Chevrolet Spark,
https://www.chevrolet.com/cars/spark, accessed 5/27/2021.
\227\ See Note 218.
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New electric vehicles currently have higher up-front costs and
lower operating costs than gasoline vehicles and require access to
charging infrastructure that may not be readily available to many. This
proposal does not project major penetration of electric vehicles in
response to the proposed standards, from 3.6 percent in MY 2023 to 7.8
percent in MY 2026 (see Table 42). EPA will monitor and study
affordability issues related to electric vehicles as their prevalence
in the vehicle fleet increases.
In sum, as with the effects of the proposed standards on vehicle
sales discussed in Section VII.B, the effects of the standards on
affordability depend on two countervailing effects: The increase in the
up-front costs of the vehicles, and the decrease in operating costs.
The increase in up-front costs has the potential to increase the prices
of used vehicles, to make credit more difficult to obtain, and to make
the least expensive new vehicles less desirable compared to used
vehicles. The reduction in operating costs has the potential to
mitigate or reverse all these effects. Lower operating costs on their
own increase mobility (see DRIA Chapter 3.1 for a discussion of rebound
driving). It is possible that lower-income households may benefit more
from the reduction in operating costs than the increase in up-front
costs, because they own fewer vehicles per household, spend more on
fuel than on vehicles on an annual basis, and those fuel expenditures
represent a higher fraction of their household income.
See DRIA Chapter 8.3 for more detailed discussion of these issues.
VIII. Statutory and Executive Order Reviews
A. Executive Order 12866: ``Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review''
This action is an economically significant regulatory action that
was submitted to the Office of Management and Budget (OMB) for review.
Any changes made in response to OMB recommendations have been
documented in the docket. EPA prepared an analysis of the potential
costs and benefits associated with this action. This analysis is in the
Draft Regulatory Impact Analysis, which can be found in the docket for
this rule, and is briefly summarized in Section VII of this preamble.
B. Paperwork Reduction Act
This action does not impose any new information collection burden
under the PRA. OMB has previously approved the information collection
activities contained in the existing regulations and has assigned OMB
control number 2127-0019. This proposed rule changes the level of the
existing emission standards and revises several existing credit
provisions, but imposes no new information collection requirements.
C. Regulatory Flexibility Act
I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
action will not impose any requirements on small entities. EPA's
existing regulations exempt from the GHG standards any manufacturer,
domestic or foreign, meeting Small Business Administration's size
definitions of small business in 13 CFR 121.201. EPA is not proposing
any changes to the provisions for small businesses under this proposal,
and thus they would
[[Page 43805]]
remain exempt. For additional discussion see chapter 9 of the DRIA.
D. Unfunded Mandates Reform Act
This proposed rule contains no federal mandates under UMRA, 2
U.S.C. 1531-1538, for State, local, or tribal governments. The proposed
rule would impose no enforceable duty on any State, local or tribal
government. This proposed rule would contain a federal mandate under
UMRA that may result in expenditures of $100 million or more for the
private sector in any one year. Accordingly, the costs and benefits
associated with the proposed rule are discussed in Section VII and in
the DRIA, which are in the docket for this rule.
This action is not subject to the requirements of section 203 of
UMRA because it contains no regulatory requirements that might
significantly or uniquely affect small governments.
E. 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.
F. Executive Order 13175: ``Consultation and Coordination With Indian
Tribal Governments''
This action does not have tribal implications as specified in
Executive Order 13175. Thus, Executive Order 13175 does not apply to
this action. However, EPA plans to continue engaging with our tribal
stakeholders in the development of this rulemaking by offering a tribal
workshop and offering government-to-government consultation upon
request.
G. Executive Order 13045: ``Protection of Children From Environmental
Health Risks and Safety Risks''
With respect to GHG emissions, EPA has determined that this rule
will not have disproportionate impacts on children (62 FR 19885, April
23, 1997). This rule will reduce emissions of potent GHGs, which as
noted earlier in Section I.E of this preamble, will reduce the effects
of climate change, including the public health and welfare effects on
children.
GHGs contribute to climate change and the GHG emissions reductions
resulting from implementation of this proposal would further improve
children's health. The assessment literature cited in EPA's 2009 and
2016 Endangerment Findings concluded that certain populations and life
stages, including children, the elderly, and the poor, are most
vulnerable to climate-related health effects. The assessment literature
since 2016 strengthens these conclusions by providing more detailed
findings regarding these groups' vulnerabilities and the projected
impacts they may experience. These assessments describe how children's
unique physiological and developmental factors contribute to making
them particularly vulnerable to climate change. Impacts to children are
expected from heat waves, air pollution, infectious and waterborne
illnesses, and mental health effects resulting from extreme weather
events. In addition, children are among those especially susceptible to
most allergic diseases, as well as health effects associated with heat
waves, storms, and floods. Additional health concerns may arise in low-
income households, especially those with children, if climate change
reduces food availability and increases prices, leading to food
insecurity within households. More detailed information on the impacts
of climate change to human health and welfare is provided in Section
IV.B of this preamble.
We expect this proposed rule would, on net, result in both small
reductions and small increases in non-GHG emissions that could impact
children, though not necessarily immediately and not equally in all
locations. However, with respect to non-GHG emissions, EPA has
concluded that it is not practicable to determine whether there would
be disproportionate impacts on children. EPA intends to develop another
rule to further reduce emissions of GHGs from light-duty vehicles for
model years beyond 2026. We are considering how to project air quality
and health impacts from the changes in non-GHG emissions for that
future rulemaking (see Section V.C).
H. Executive Order 13211: ``Energy Effects''
This action is not a ``significant energy action'' because it is
not likely to have a significant adverse effect on the supply,
distribution, or use of energy. EPA has outlined the energy effects in
Table 5-7 of the Regulatory Impact Analysis (RIA), which is available
in the docket for this action and is briefly summarized here.
This action proposes to reduce CO2 for passenger cars and light
trucks under revised GHG standards, which will result in significant
reductions of the consumption of petroleum, will achieve energy
security benefits, and have no adverse energy effects. Because the GHG
emission standards result in significant fuel savings, this rule
encourages more efficient use of fuels. Table 5-7 in the RIA shows 291
million barrels of gasoline per year will be saved in 2050, which can
be summarized as a net reduction of 797,260 barrels of gasoline per day
in 2050.
I. National Technology Transfer and Advancement Act
Section 12(d) of the NTTAA, 15 U.S.C. 272 note, directs federal
agencies to use voluntary consensus standards (VCSs) in their
regulatory activities unless to do so would be ``inconsistent with
applicable law or otherwise impractical.'' VCSs are technical
standards, which include materials specifications, test methods,
sampling protocols, business practices and management systems developed
or adopted by voluntary consensus standards bodies (VCSBs), both
domestic and international. These bodies plan, develop, establish or
coordinate voluntary consensus standards using agreed-upon procedures.
In addition, the statute encourages agencies to consult with VCSBs
and participate in the development of such standards when compatible
with agency missions, authorities, priorities and budget resources. The
use of VCSs, whenever practicable and appropriate, is intended to
achieve the following goals:
To eliminate the cost to the government of developing its
own standards and decrease the cost of goods procured and the burden of
complying with agency regulation;
To provide incentives and opportunities to establish
standards that serve national needs;
To encourage long-term growth for U.S. enterprises and
promote efficiency and economic competition through harmonization of
standards; and
To further the policy of reliance upon the private sector
to supply government needs for goods and services.
The requirements apply to the use of VCSs in ``regulatory and
procurement activities.'' Regulations that do not establish or involve
technical standards do not trigger the NTTAA requirements, but it is
recommended that agencies provide a brief explanation for why the NTTAA
does not apply.
Note that agencies retain broad discretion in deciding when to use
VCSs; however, agencies are required to justify the use of government-
unique standards when potentially applicable VCSs are available. The
NTTAA also does not affect the agency's authority to determine
substantive standards as
[[Page 43806]]
opposed to technical standards (see guidance from the Office of
Management and Budget (OMB) at http://www.whitehouse.gov/omb/circulars_a119.
This rulemaking involves technical standards. The Agency conducted
a search to identify potentially applicable voluntary consensus
standards. For CO2, emissions, we identified no such
standards. For CO2 emissions, EPA is therefore collecting
data over the same tests that are used for the current CO2
standards and 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 using the test specified in
40 CFR 1066.845. EPA knows of no voluntary consensus standard for the
A/C test.
We are proposing to amend 40 CFR 86.1 to reference SAE J1711,
Recommended Practice for Measuring the Exhaust Emissions and Fuel
Economy of Hybrid-Electric Vehicles, Including Plug-in Hybrid Vehicles,
Revised June 2010. The regulation already has rulemaking provisions at
40 CFR 86.1866-12(b) that include references to SAE J1711. We rely on
the published procedure to describe test methods related to measuring
exhaust emissions from hybrid-electric vehicles. The proposed amendment
would complete the administrative steps needed to properly accomplish
this incorporation by reference. The referenced recommended practice
may be obtained from SAE International on the internet at www.sae.org,
by email at [email protected], or by calling 877-606-7323 or 724-
776-4970.
J. Executive Order 12898: ``Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations''
For this proposed action, EPA is only able to qualitatively
evaluate the extent to which this action may result in
disproportionately high and adverse human health or environmental
effects on minority populations, low income populations, and/or
indigenous peoples, as specified in Executive Order 12898 (59 FR 7629,
February 16, 1994). With respect to GHG emissions, EPA has determined
that this rule will benefit all U.S. populations, including minority
populations, low-income populations and/or indigenous peoples. While
this proposed rule would substantially reduce GHG emissions, future
impacts of climate change are still expected in the baseline and will
likely be unevenly distributed in ways that uniquely impact these
communities. EPA has not quantitatively assessed these effects.
For non-GHG pollutants EPA has concluded that it is not practicable
given the timing of this proposed action to determine the extent to
which effects on minority populations, low-income populations and/or
indigenous peoples are differentially distributed. We expect this
proposed rule would result in both small reductions and small increases
of non-GHG emissions that could impact communities with EJ concerns,
though not necessarily immediately and not equally in all locations. It
was not practicable to develop the air quality information needed to
perform a quantified analysis of the distribution of such non-GHG
impacts. EPA intends to develop a future rule to further reduce
emissions of GHGs from light-duty vehicles for model years beyond 2026.
We are considering how to project air quality impacts from the changes
in non-GHG emissions for that future rulemaking (see Section V.C). EPA
is taking comment on the types of effects that are important to
consider from an EJ perspective as well as ways in which such effects
could be quantitatively evaluated for future rulemakings. Section VII.L
describes how we considered environmental justice in this action.
IX. Statutory Provisions and Legal Authority
Statutory authority for this proposed rule 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), 7522-7525, 7541-7543, 7550, and 7601.
List of Subjects
40 CFR Part 86
Environmental protection, Administrative practice and procedure,
Confidential business information, Incorporation by reference,
Labeling, Motor vehicle pollution, Reporting and recordkeeping
requirements.
40 CFR Part 600
Environmental protection, Administrative practice and procedure,
Electric power, Fuel economy, Labeling, Reporting and recordkeeping
requirements.
Michael S. Regan,
Administrator.
For the reasons set out in the preamble, we propose to amend title
40, chapter I of the Code of Federal Regulations as set forth below.
PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES
AND ENGINES
0
1. The authority citation for part 86 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
0
2. Amend Sec. 86.1 by redesignating paragraphs (g)(3) through (27) as
(g)(4) through (28) and adding new paragraph (g)(3) to read as follows:
Sec. 86.1 Incorporation by reference.
* * * * *
(g) * * *
(3) SAE J1711, Recommended Practice for Measuring the Exhaust
Emissions and Fuel Economy of Hybrid-Electric Vehicles, Including Plug-
in Hybrid Vehicles, Revised June 2010, IBR approved for Sec. 86.1866-
12(b).
* * * * *
0
3. Amend Sec. 86.1806-17 by revising paragraph (a) introductory text
to read as follows:
Sec. 86.1806-17 Onboard diagnostics.
* * * * *
(a) Vehicles must comply with the 2013 OBD requirements adopted for
California as described in this paragraph (a). California's 2013 OBD-II
requirements are part of Title 13, Sec. 1968.2 of the California Code
of Regulations, approved on July 31, 2013 (incorporated by reference in
Sec. 86.1). We may approve your request to certify an OBD system
meeting a later version of California's OBD requirements if you
demonstrate that it complies with the intent of this section. The
following clarifications and exceptions apply for vehicles certified
under this subpart:
* * * * *
0
4. Amend Sec. 86.1818-12 by revising paragraph (c)(2)(i) and (3)(i) to
read as follows:
Sec. 86.1818-12 Greenhouse gas emission standards for light-duty
vehicles, light-duty trucks, and medium-duty passenger vehicles.
* * * * *
(c) * * *
(2) * * *
(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:
[[Page 43807]]
Table 1 to Sec. 86.1818-12(c)(2)(i)(A)
------------------------------------------------------------------------
CO2 target
Model year value (grams/
mile)
------------------------------------------------------------------------
2012.................................................... 244.0
2013.................................................... 237.0
2014.................................................... 228.0
2015.................................................... 217.0
2016.................................................... 206.0
2017.................................................... 195.0
2018.................................................... 185.0
2019.................................................... 175.0
2020.................................................... 166.0
2021.................................................... 161.8
2022.................................................... 159.0
2023.................................................... 145.6
2024.................................................... 138.6
2025.................................................... 131.9
2026 and later.......................................... 125.6
------------------------------------------------------------------------
(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:
Table 2 to Sec. 86.1818-12(c)(2)(i)(B)
------------------------------------------------------------------------
CO2 target
Model year value (grams/
mile)
------------------------------------------------------------------------
2012.................................................... 315.0
2013.................................................... 307.0
2014.................................................... 299.0
2015.................................................... 288.0
2016.................................................... 277.0
2017.................................................... 263.0
2018.................................................... 250.0
2019.................................................... 238.0
2020.................................................... 226.0
2021.................................................... 220.9
2022.................................................... 217.3
2023.................................................... 199.1
2024.................................................... 189.5
2025.................................................... 180.3
2026 and later.......................................... 171.6
------------------------------------------------------------------------
(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 and rounded to the nearest 0.1 grams/mile, except that for any
vehicle footprint the maximum CO2 target value shall be the
value specified for the same model year in paragraph (c)(2)(i)(B) of
this section:
Target CO2 = [a x f] + b
Where:
f is the vehicle footprint, as defined in Sec. 86.1803; and a and b
are selected from the following table for the appropriate model
year:
Table 3 to Sec. 86.1818-12(c)(2)(i)(C)
------------------------------------------------------------------------
Model year a b
------------------------------------------------------------------------
2012............................................ 4.72 50.5
2013............................................ 4.72 43.3
2014............................................ 4.72 34.8
2015............................................ 4.72 23.4
2016............................................ 4.72 12.7
2017............................................ 4.53 8.9
2018............................................ 4.35 6.5
2019............................................ 4.17 4.2
2020............................................ 4.01 1.9
2021............................................ 3.94 0.2
2022............................................ 3.88 -0.1
2023............................................ 3.56 -0.4
2024............................................ 3.39 -0.4
2025............................................ 3.23 -0.3
2026 and later.................................. 3.07 -0.3
------------------------------------------------------------------------
* * * * *
(3) * * *
(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:
Table 4 to Sec. 86.1818-12(c)(3)(i)(A)
------------------------------------------------------------------------
CO2 target
Model year value (grams/
mile)
------------------------------------------------------------------------
2012.................................................... 294.0
2013.................................................... 284.0
2014.................................................... 275.0
2015.................................................... 261.0
2016.................................................... 247.0
2017.................................................... 238.0
2018.................................................... 227.0
2019.................................................... 220.0
2020.................................................... 212.0
2021.................................................... 206.5
2022.................................................... 203.0
2023.................................................... 181.1
2024.................................................... 172.1
2025.................................................... 163.5
2026 and later.......................................... 155.4
------------------------------------------------------------------------
(B) For light trucks with a footprint that is greater than 41
square feet and less than or equal to the maximum footprint value
specified in the table below for each model year, the gram/mile
CO2 target value shall be calculated using the following
equation and rounded to the nearest 0.1 grams/mile, except that for any
vehicle footprint the maximum CO2 target value shall be the
value specified for the same model year in paragraph (c)(3)(i)(D) of
this section:
Target CO2 = (a x f) + b
Where:
f is the footprint, as defined in Sec. 86.1803; and a and b are
selected from the following table for the appropriate model year:
Table 5 to Sec. 86.1818-12(c)(3)(i)(B)
----------------------------------------------------------------------------------------------------------------
Maximum
Model year footprint a b
----------------------------------------------------------------------------------------------------------------
2012............................................................ 66.0 4.04 128.6
2013............................................................ 66.0 4.04 118.7
2014............................................................ 66.0 4.04 109.4
2015............................................................ 66.0 4.04 95.1
2016............................................................ 66.0 4.04 81.1
2017............................................................ 50.7 4.87 38.3
2018............................................................ 60.2 4.76 31.6
2019............................................................ 66.4 4.68 27.7
2020............................................................ 68.3 4.57 24.6
2021............................................................ 68.3 4.51 21.5
2022............................................................ 68.3 4.44 20.6
2023............................................................ 74.0 3.97 18.4
2024............................................................ 74.0 3.77 17.4
2025............................................................ 74.0 3.58 16.6
2026 and later.................................................. 74.0 3.41 15.8
----------------------------------------------------------------------------------------------------------------
(C) For light trucks with a footprint that is greater than the
minimum footprint value specified in the table below and less than or
equal to the maximum footprint value specified in the table below for
each model year, the
[[Page 43808]]
gram/mile CO2 target value shall be calculated using the
following equation and rounded to the nearest 0.1 grams/mile, except
that for any vehicle footprint the maximum CO2 target value
shall be the value specified for the same model year in paragraph
(c)(3)(i)(D) of this section:
Target CO2 = (a x f) + b
Where:
f is the footprint, as defined in Sec. 86.1803; and a and b are
selected from the following table for the appropriate model year:
Table 6 to Sec. 86.1818-12(c)(3)(i)(C)
----------------------------------------------------------------------------------------------------------------
Minimum Maximum
Model year footprint footprint a b
----------------------------------------------------------------------------------------------------------------
2017............................................ 50.7 66.0 4.04 80.5
2018............................................ 60.2 66.0 4.04 75.0
----------------------------------------------------------------------------------------------------------------
(D) For light trucks with a footprint greater than the minimum
value specified in the table below for each model year, the gram/mile
CO2 target value shall be selected for the appropriate model
year from the following table:
Table 7 to Sec. 86.1818-12(c)(3)(i)(D)
------------------------------------------------------------------------
CO2
Model year Minimum targetvalue
footprint (grams/mile)
------------------------------------------------------------------------
2012.................................... 66.0 395.0
2013.................................... 66.0 385.0
2014.................................... 66.0 376.0
2015.................................... 66.0 362.0
2016.................................... 66.0 348.0
2017.................................... 66.0 347.0
2018.................................... 66.0 342.0
2019.................................... 66.4 339.0
2020.................................... 68.3 337.0
2021.................................... 68.3 329.4
2022.................................... 68.3 324.1
2023.................................... 74.0 312.1
2024.................................... 74.0 296.5
2025.................................... 74.0 281.8
2026 and later.......................... 74.0 267.8
------------------------------------------------------------------------
* * * * *
0
5. Amend Sec. 86.1865-12 by revising paragraphs (k)(2), (3), and (6)
to read as follows:
Sec. 86.1865-12 How to comply with the fleet average CO2 standards.
* * * * *
(k) * * *
(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 shall 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 as provided in paragraphs
(k)(7)(ii), (k)(9)(iii), and (l)(1)(vi) of this section through the
certificate of conformity that allows the manufacturer to introduce any
regulated vehicles into U.S. commerce.
* * * * *
(6) Unused CO2 credits generally retain their full value
through five model years after the model year in which they were
generated. Credits remaining at the end of the fifth model year after
the model year in which they were generated may not be used to
demonstrate compliance for later model years. The following particular
provisions apply for passenger cars and light trucks:
(i) Unused CO2 credits from the 2016 model year shall
retain their full value through the 2023 model year. Credits from the
2016 model year that remain at the end of the 2023 model year may not
be used to demonstrate compliance for later model years.
(ii) Unused CO2 credits from the 2017 through 2020 model
years shall retain their full value through six model years after the
model year in which they were generated. Credits remaining from these
model years after six model years may not be used to demonstrate
compliance for later model years.
* * * * *
0
6. Amend Sec. 86.1866-12 by--
0
a. Revising paragraphs (b) introductory text and (b)(1).
0
b. Removing paragraph (b)(2)(i).
0
c. Redesignating paragraph (b)(2)(ii) as paragraph (b)(2).
0
d. Adding paragraph (c)(3).
The addition reads as follows:
Sec. 86.1866-12 CO2 credits for advanced technology vehicles.
* * * * *
(b) For electric vehicles, plug-in hybrid electric vehicles, fuel
cell vehicles, dedicated natural gas vehicles, and dual-fuel natural
gas vehicles as those terms are defined in Sec. 86.1803-01, that are
certified and produced for U.S. sale in the specified model years and
that meet the additional specifications in this section, the
manufacturer may use the production multipliers in this paragraph (b)
when determining additional credits for advanced technology vehicles.
Full size pickup trucks eligible for and using a
[[Page 43809]]
production multiplier are not eligible for the strong hybrid-based
credits described in Sec. 86.1870-12(a)(2) or the performance-based
credits described in Sec. 86.1870-12(b).
(1) The following production multipliers apply for model year 2017
through 2025 vehicles:
Table 1 to Sec. 86.1866-12(b)(1)
----------------------------------------------------------------------------------------------------------------
Electric vehicles Plug-in hybrid Dedicated and
Model year and fuel cell electric dual-fuel natural
vehicles vehicles gas vehicles
----------------------------------------------------------------------------------------------------------------
2017................................................... 2.0 1.6 1.6
2018................................................... 2.0 1.6 1.6
2019................................................... 2.0 1.6 1.6
2020................................................... 1.75 1.45 1.45
2021................................................... 1.5 1.3 1.3
2022................................................... 2.0 1.6 2.0
2023-2024.............................................. 2.0 1.6 1.0
2025................................................... 1.75 1.45 1.0
----------------------------------------------------------------------------------------------------------------
* (No multiplier credits)
* * * * *
(c) * * *
(3) Multiplier-based credits for model years 2022 through 2025 may
not exceed credit caps, as follows:
(i) Calculate a nominal annual credit cap in Mg using the following
equation, rounded to the nearest whole number:
[GRAPHIC] [TIFF OMITTED] TP10AU21.026
Where:
Pauto = total number of certified passenger automobiles the
manufacturer produced in a given model year for sale in any state or
territory of the United States.
Ptruck = total number of certified light trucks (including MDPV)
the manufacturer produced in a given model year for sale in any
state or territory of the United States.
(ii) Calculate an annual g/mile equivalent value for the
multiplier-based credits using the following equation, rounded to
the nearest 0.1 g/mile:
[GRAPHIC] [TIFF OMITTED] TP10AU21.027
Where:
annual credits = a manufacturer's total multiplier-based credits in
a given model year from all passenger automobiles and light trucks
as calculated under this paragraph (c).
(iii) Calculate a cumulative g/mile equivalent value for the
multiplier-based credits in 2022 through 2025 by adding the annual g/
mile equivalent values calculated under paragraph (c)(3)(ii) of this
section.
(iv) The cumulative g/mile equivalent value may not exceed 10.0 in
any year.
(v) The annual credit report must include for every model year from
2022 through 2025, as applicable, the calculated values for the nominal
annual credit cap in Mg and the cumulative g/mile equivalent value.
0
7. Revise the section heading for Sec. 86.1868-12 to read as follows:
Sec. 86.1868-12 CO2 credits for improving the efficiency of air
conditioning systems.
* * * * *
0
8. Amend Sec. 86.1869-12 by revising the section heading and
paragraphs (b)(2), (4)(v), (vi), and (x), and (d)(2)(ii)(A) to read as
follows:
Sec. 86.1869-12 CO2 credits for off-cycle CO2 reducing technologies.
* * * * *
(b) * * *
(2) The maximum allowable decrease in the manufacturer's combined
passenger automobile and light truck fleet average CO2
emissions attributable to use of the default credit values in paragraph
(b)(1) of this section is 10 g/mi through model year 2022, and 15 g/mi
for model years 2023 and later, except that manufacturers may use 15 g/
mi in model years 2020 through 2022 if they meet the definitions in
paragraphs (b)(4)(v)(B), (vi)(B), and (x)(B) of this section. If the
total of the CO2 g/mi credit values from paragraph (b)(1) of
this section does not exceed 10 or 15 g/mi (as applicable) for any
passenger automobile or light truck in a manufacturer's fleet, then the
total off-cycle credits may be calculated according to paragraph (f) of
this section. If the total of the CO2 g/mi credit values
from paragraph (b)(1) of this section exceeds 10 or 15 g/mi (as
applicable) for any passenger automobile or light truck in a
manufacturer's fleet, then the gram per mile decrease for the combined
passenger automobile and light truck fleet must be determined according
to paragraph (b)(2)(ii) of this section to determine whether the
applicable limitation has been exceeded.
(i) Determine the gram per mile decrease for the combined passenger
automobile and light truck fleet using the following formula:
[GRAPHIC] [TIFF OMITTED] TP10AU21.008
[[Page 43810]]
Where:
Credits = The total of passenger automobile and light truck credits,
in Megagrams, determined according to paragraph (f) of this section
and limited to those credits accrued by using the default gram per
mile values in paragraph (b)(1) of this section.
ProdC = The number of passenger automobiles produced by
the manufacturer and delivered for sale in the U.S.
ProdT = The number of light trucks produced by the
manufacturer and delivered for sale in the U.S.
(ii) If the value determined in paragraph (b)(2)(i) of this section
is greater than 10 or 15 grams per mile (as applicable), the total
credits, in Megagrams, that may be accrued by a manufacturer using the
default gram per mile values in paragraph (b)(1) of this section shall
be determined using the following formula:
[GRAPHIC] [TIFF OMITTED] TP10AU21.009
Where:
ProdC = The number of passenger automobiles produced by
the manufacturer and delivered for sale in the U.S.
ProdT = The number of light trucks produced by the
manufacturer and delivered for sale in the U.S.
(iii) If the value determined in paragraph (b)(2)(i) of this
section is not greater than 10 or 15 grams per mile (as applicable),
then the credits that may be accrued by a manufacturer using the
default gram per mile values in paragraph (b)(1) of this section do not
exceed the allowable limit, and total credits may be determined for
each category of vehicles according to paragraph (f) of this section.
(iv) If the value determined in paragraph (b)(2)(i) of this section
is greater than 10 or 15 grams per mile (as applicable), then the
combined passenger automobile and light truck credits, in Megagrams,
that may be accrued using the calculations in paragraph (f) of this
section must not exceed the value determined in paragraph (b)(2)(ii) of
this section. This limitation should generally be done by reducing the
amount of credits attributable to the vehicle category that caused the
limit to be exceeded such that the total value does not exceed the
value determined in paragraph (b)(2)(ii) of this section.
* * * * *
(4) * * *
(v) Active transmission warm-up means one of the following:
(A) Through model year 2019, and optionally for model years 2020-
2022, active transmission warm-up means a system that uses waste heat
from the vehicle to quickly warm the transmission fluid to an operating
temperature range using a heat exchanger, increasing the overall
transmission efficiency by reducing parasitic losses associated with
the transmission fluid, such as losses related to friction and fluid
viscosity.
(B) Starting in model year 2023, and optionally for model years
2020-2022, active transmission warm-up means a system that uses waste
heat from the vehicle's exhaust to warm the transmission fluid to an
operating temperature range using a dedicated heat exchanger. Active
transmission warm-up may also include coolant systems that capture heat
from a liquid-cooled exhaust manifold if the system is segregated from
the coolant loop in the engine block.
(vi) Active engine warm-up means one of the following:
(A) Through model year 2019, and optionally for model years 2020-
2022, active engine warm-up means a system that uses waste heat from
the vehicle to warm up targeted parts of the engine so that it reduces
engine friction losses and enables closed-loop fuel control more
quickly.
(B) Starting in model year 2023, and optionally for model years
2020-2022, active engine warm-up means a system that uses waste heat
from the vehicle's exhaust to warm up targeted parts of the engine so
that it reduces engine friction losses and enables closed-loop fuel
control more quickly. Active engine warm-up may also include coolant
systems that capture heat from a liquid-cooled exhaust manifold if the
system is segregated from the coolant loop in the engine block.
* * * * *
(x) Passive cabin ventilation means one of the following:
(A) Through model year 2019, and optionally for model years 2020-
2022, passive cabin ventilation means ducts, devices, or methods that
utilize convective airflow to move heated air from the cabin interior
to the exterior of the vehicle.
(B) Starting in model year 2023, and optionally for model years
2020-2022, passive cabin ventilation means methods that create and
maintain convective airflow through the body's cabin by opening windows
or sunroof when the vehicle is parked outside in direct sunlight.
* * * * *
(d) * * *
(2) * * *
(ii) * * *
(A) A citation to the appropriate previously approved methodology,
including the appropriate Federal Register Notice and any subsequent
EPA documentation of the Administrator's decision;
* * * * *
0
9. Amend Sec. 86.1870-12 by revising the section heading and
paragraphs (a)(2) and (b)(2) to read as follows:
Sec. 86.1870-12 CO2 credits for qualifying full-size light pickup
trucks.
* * * * *
(a) * * *
(2) Full size pickup trucks that are strong hybrid electric
vehicles and that are produced in the 2017 through 2025 model years are
eligible for a credit of 20 grams/mile. To receive this credit in a
model year, the manufacturer must produce a quantity of strong hybrid
electric full size pickup trucks such that the proportion of production
of such vehicles, when compared to the manufacturer's total production
of full size pickup trucks, is not less than 10 percent in that model
year. Full size pickup trucks earning credits under this paragraph
(a)(2) may not earn credits based on the production multipliers
described in Sec. 86.1866-12(b).
* * * * *
(b) * * *
(2) Full size pickup trucks that are produced in the 2017 through
2025 model years and that achieve carbon-related exhaust emissions less
than or equal to the applicable target value determined in Sec.
86.1818-12(c)(3) multiplied by 0.80 (rounded to the nearest gram/mile)
in a model year are eligible for a credit of 20 grams/mile. A pickup
truck that qualifies for this credit in a model year may claim this
credit for a maximum of four subsequent model years (a total of five
consecutive model years) if the carbon-related exhaust emissions of
that pickup truck do not increase relative to the emissions in the
model year in which the pickup truck
[[Page 43811]]
first qualified for the credit. This credit may not be claimed in any
model year after 2025. To qualify for this credit in a model year, the
manufacturer must produce a quantity of full size pickup trucks that
meet the emission requirements of this paragraph (b)(2) such that the
proportion of production of such vehicles, when compared to the
manufacturer's total production of full size pickup trucks, is not less
than 10 percent in that model year. A pickup truck that qualifies for
this credit in a model year and is subject to a major redesign in a
subsequent model year such that it qualifies for the credit in the
model year of the redesign may be allowed to qualify for an additional
five years (not to go beyond the 2025 model year) with EPA approval.
Use good engineering judgment to determine whether a pickup truck has
been subject to a major redesign.
* * * * *
0
10. Revise the section heading of Sec. 86.1871-12 to read as follows:
Sec. 86.1871-12 Optional early CO2 credit programs.
* * * * *
PART 600--FUEL ECONOMY AND GREENHOUSE GAS EXHAUST EMISSIONS OF
MOTOR VEHICLES
0
11. The authority citation for part 600 continues to read as follows:
Authority: 49 U.S.C. 32901-23919q, Pub. L. 109-58.
0
12. Amend Sec. 600.510-12 by revising paragraphs (j)(2)(v)
introductory text and (vii)(A) introductory text to read as follows:
Sec. 600.510-12 Calculation of average fuel economy and average
carbon-related exhaust emissions.
* * * * *
(j) * * *
(2) * * *
(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:
* * * * *
(vii)(A) This paragraph (j)(2)(vii) applies to model year 2016 and
later natural gas dual fuel model types. Model year 2021 and later
natural gas dual fuel model types may use a utility factor of 0.5 or
the utility factor prescribed in this paragraph (j)(2)(vii).
* * * * *
[FR Doc. 2021-16582 Filed 8-9-21; 8:45 am]
BILLING CODE 6560-50-P