[Federal Register Volume 88, Number 69 (Tuesday, April 11, 2023)]
[Proposed Rules]
[Pages 21525-21540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06869]


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DEPARTMENT OF ENERGY

10 CFR Part 474

[EERE-2021-VT-0033]
RIN 1904-AF47


Petroleum-Equivalent Fuel Economy Calculation

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Notice of proposed rulemaking; request for comment.

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SUMMARY: The U.S. Department of Energy (``DOE'') proposes to revise its 
regulations regarding procedures for calculating a value for the 
petroleum-equivalent fuel economy of electric vehicles (or ``EVs'') for 
use in the Corporate Average Fuel Economy (CAFE) program administered 
by the Department of Transportation (DOT). This Notice of proposed 
rulemaking (``NOPR'') also grants a petition for rulemaking submitted 
by the Natural Resources Defense Council (NRDC) and Sierra Club and 
responds to comments submitted on that petition.

DATES: DOE will accept comments regarding this NOPR on or before June 
12, 2023. See section IV, ``Public Participation,'' for details.

ADDRESSES: Interested persons are encouraged to submit comments using 
the Federal eRulemaking Portal at www.regulations.gov. Follow the 
instructions for submitting comments. Alternatively, interested persons 
may submit comments, identified by RIN 1904-AF47, by any of the 
following methods:
    Federal eRulemaking Portal: www.regulations.gov/docket/EERE-2021-VT-0033. Follow the instructions for submitting comments.
    Email: [email protected]. Include the RIN 1904-AF47 
in the subject line of the message.
    Postal Mail: U.S. Department of Energy, 1904-AF47, 1000 
Independence Avenue SW, Washington, DC 20585. If possible, please 
submit all items on a compact disc (``CD''), in which case it is not 
necessary to include printed copies.
    Hand Delivery/Courier: U.S. Department of Energy, Attention: Kevin 
Stork, 1000 Independence Avenue SW, Room 5G-030, Washington, DC 20585. 
If possible, please submit all items on a CD, in which case it is not 
necessary to include printed copies.
    No telefacsimilies (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information on the 
rulemaking process, see section IV, Public Participation, for details.
    Docket: The docket, which includes Federal Register notices, 
comments, and other supporting documents/materials, is available for 
review at www.regulations.gov. All documents in the docket are listed 
in the www.regulations.gov index. However, some documents listed in the 
index, such as those containing information that is exempt from public 
disclosure, may not be publicly available.
    The docket web page can be found at the www.regulations.gov web 
page associated with RIN 1904-AF47. The docket web page contains simple 
instructions on how to access all documents, including public comments, 
in the docket. See Public Participation for information on how to 
submit comments through www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: 
    Mr. Kevin Stork, U.S. Department of Energy, Vehicle Technologies 
Office, EE-3V, 1000 Independence Avenue SW, Washington, DC 20585. 
Telephone: (202) 586-8306. Email: [email protected].
    Mr. Matthew Ring, U.S. Department of Energy, Office of the General 
Counsel, Forrestal Building, GC-33, 1000 Independence Avenue SW, 
Washington, DC 20585. Telephone: (202) 586-2555. Email: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Introduction
II. Discussion of the Proposed Rule
    A. Review Factors
    B. Discussion of DOE Analysis of PEF and New Approach
    C. Responses to Comments Received on the NRDC and Sierra Club 
Petition for Rulemaking
    D. Alternative Approaches for Calculation of PEF
III. Procedural Issues and Regulatory Review
IV. Public Participation
V. Approval of the Office of the Secretary

I. Introduction

    In an effort to conserve energy through improvements in the energy 
efficiency of motor vehicles, Congress, in 1975, passed the Energy 
Policy and Conservation Act (EPCA), Public Law 94-163. Title III of 
EPCA amended the Motor Vehicle Information and Cost Savings Act (15 
U.S.C. 1901 et seq.) (the Motor Vehicle Act) by mandating fuel economy 
standards for automobiles produced in, or imported into, the United 
States. This legislation, as amended, requires that every manufacturer 
meet applicable specified corporate average fuel economy (CAFE) 
standards for their fleets of light-duty vehicles under 8,500 lbs. that 
the

[[Page 21526]]

manufacturer manufactures in any model year.\1\ The Secretary of 
Transportation (through the National Highway Traffic Safety 
Administration, or NHTSA) is responsible for prescribing the CAFE 
standards and enforcing the penalties for failure to meet these 
standards. (49 U.S.C. 32902). The Administrator of the Environmental 
Protection Agency (EPA) is responsible for calculating a manufacturer's 
CAFE value. (49 U.S.C. 32902 and 32904)
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    \1\ The relevant provisions of the CAFE program, including DOE's 
establishment of equivalent petroleum-based fuel economy values were 
transferred to Title 49 of the U.S. Code by Public Law 103-272 (July 
5, 1984). See 49 U.S.C. 32901 et seq. The authority for DOE's 
establishment of equivalent petroleum-based fuel economy values was 
transferred to 49 U.S.C. 32904(a)(2)(B).
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    On January 7, 1980, President Carter signed the Chrysler 
Corporation Loan Guarantee Act of 1979 (Pub. L. 96-185). Section 18 of 
the Chrysler Corporation Loan Guarantee Act of 1979 added a new 
paragraph (2) to section 13(c) of the Electric and Hybrid Vehicle 
Research, Development, and Demonstration Act of 1976 (Pub. L. 94-413). 
Part of the new section 13(c) added paragraph (a)(3) to section 503 of 
the Motor Vehicle Act. That subsection, now codified at 49 U.S.C. 
32904(a)(2), provides that, if a manufacturer manufactures an electric 
vehicle, \2\ the Administrator of EPA must include in the calculation 
of average fuel economy the equivalent petroleum-based fuel economy 
values determined by the Secretary of Energy for various classes of 
electric vehicles. (49 U.S.C. 32904(a)(2)(B)) The Secretary of Energy 
must review those values each year and determine and propose necessary 
revisions based on the following factors:
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    \2\ For purposes of paragraph (a)(2) of 49 U.S.C. 32904, EPCA 
defines an ``electric vehicle'' as ``a vehicle powered primarily by 
an electric motor drawing electrical current from a portable 
source.''


    (i) The approximate electrical energy efficiency of the vehicle, 
considering the kind of vehicle and the mission and weight of the 
vehicle.
    (ii) The national average electrical generation and transmission 
efficiencies.
    (iii) The need of the United States to conserve all forms of 
energy and the relative scarcity and value to the United States of 
all fuel used to generate electricity.
    (iv) The specific patterns of use of electric vehicles compared 
to petroleum-fueled vehicles.

Id.
    Section 18 of the Chrysler Corporation Loan Guarantee Act of 1979 
further amended the Electric and Hybrid Vehicle Research, Development 
and Demonstration Act of 1976 by adding a new paragraph (3) to section 
13(c) that directed the Secretary of Energy, in consultation with the 
Secretary of Transportation and the Administrator of the Environmental 
Protection Agency, to conduct a seven-year evaluation program of the 
inclusion of electric vehicles in the calculation of average fuel 
economy. In May 1980, as required by section 503(a)(3) of the Motor 
Vehicle Act, DOE proposed a method of calculating the petroleum-
equivalent fuel economy of electric vehicles utilizing a ``petroleum 
equivalency factor'' or ``PEF'' in a new 10 CFR part 474 on May 21, 
1980. 45 FR 34008. The rule was finalized on April 21, 1981, and 
effective May 21, 1981. 46 FR 22747. The seven-year evaluation program 
was completed in 1987, and the calculation of the annual petroleum 
equivalency factors was not extended past 1987.
    DOE published a proposed rule for a permanent PEF for use in 
calculating petroleum-equivalent fuel economy values of electric 
vehicles on February 4, 1994 (59 FR 5336) and obtained oral and written 
comments from interested parties. Following consideration of comments, 
DOE's own internal re-examination of the assumptions underlying the 
proposed rule, and existing regulations for other classes of 
alternative fuel vehicles, DOE decided to modify the PEF calculation 
approach proposed in 1994. The 1994 proposed rule was withdrawn, and 
DOE proposed a modified approach in a July 14, 1999, notice of proposed 
rulemaking (1999 NOPR). 64 FR 37905. DOE published a final rule on June 
12, 2000, amending 10 CFR part 474 (June 2000 Final Rule). 65 FR 36985. 
The PEF adopted by DOE in the 2000 Final Rule is based, in part, on the 
existing regulatory approach at 49 U.S.C. 32905, which provides 
procedures determining the petroleum-equivalent fuel economy of non-EV 
alternative fueled vehicles.\3\ The calculation procedure converts the 
measured electrical energy consumption of an electric vehicle into a 
raw gasoline-equivalent fuel economy value, and then divides this value 
by 0.15 to arrive at a final petroleum-equivalent fuel economy value 
which may then be included in the calculation of the manufacturer's 
corporate average fuel economy. 65 FR 36985, 36987. DOE also included a 
provision for DOE to review part 474 five years after the date of 
publication of the June 2000 Final Rule to determine whether any 
updates and/or revisions are necessary. See 10 CFR 474.5. DOE has not 
updated part 474 since the June 2000 Final Rule.
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    \3\ 49 U.S.C. 32905 prescribes procedures for determining the 
petroleum-equivalent fuel economy of non-EV alternative fuel 
vehicles. Under section 32905, the petroleum equivalent fuel economy 
of E85 and M85 powered vehicles is determined by dividing the 
measured fuel economy value by a fuel content factor of 0.15. 
Section 32905 extends this approach to gaseous fueled vehicles 
(e.g., compressed natural gas), whereby a conversion factor is 
applied, and the resulting figure divided by 0.15 to obtain the 
petroleum equivalent fuel economy.
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    On October 22, 2021, DOE received a petition for rulemaking from 
the Natural Resources Defense Council (NRDC) and Sierra Club 
(Petitioners) requesting that DOE update its regulations at 10 CFR part 
474. In their petition, the Petitioners propose that DOE should update 
its regulations for calculating the PEF for electric vehicles. 
Petitioners assert that the data underlying the current regulation are 
outdated, resulting in higher imputed values of fuel economy for 
electric vehicles. The Petitioners assert that with this higher imputed 
value, a smaller number of Evs enable fleetwide compliance at lower 
real-world average fuel economy across an automaker's overall fleet. 
The Petitioners assert that the PEF should be based upon statutory 
factors at 49 U.S.C 32904, rather than the existing regulatory approach 
based upon 49 U.S.C. 32905. The Petitioners requested that DOE review 
the PEF calculation and approach and work with NHTSA to ensure PEF 
regulations support the goals of the CAFE program (as described by the 
Petitioners). DOE published notice of receipt of the petition on 
December 29, 2021 and solicited comment on the petition and whether DOE 
should proceed with a rulemaking. 86 FR 73992. DOE received 10 comments 
on the petition from interested stakeholders.
    In light of the petition and supporting comments, and for reasons 
discussed later in this document, DOE grants the petition from NRDC and 
Sierra Club and is undertaking this proposed rulemaking to update part 
474. DOE agrees with the Petitioners that the inputs upon which the 
calculations and PEF values in current part 474 are based are outdated, 
and the technology and market penetration of electric vehicles has 
significantly changed since part 474 was last updated in the 2000 Final 
Rule. As discussed further in section II of this document, DOE is 
proposing to update part 474 and the PEF values to reflect these 
changes in accordance with the statutory factors in 49 U.S.C. 
32904(a)(2)(B).

II. Discussion of the Proposed Rule

A. Review Factors

    In accordance with 49 U.S.C. 32904, DOE has reviewed the current 
PEF value and approach in 10 CFR part 474. DOE's approach used to 
calculate the current

[[Page 21527]]

PEF value is described in the June 2000 Final Rule. 65 FR 36987-36988. 
As discussed previously, in reviewing the PEF value, DOE must consider 
four factors, as enumerated in 49 U.S.C. 32904:

    a. Energy efficiency of the electric vehicle,
    b. National average electricity generation and transmission 
efficiency,
    c. The need of the United States to conserve all forms of energy 
and the relative scarcity and value to the United States of all fuel 
used to generate electricity, and,
    d. Driving patterns of electric vehicles compared to those of 
gasoline vehicles.

    DOE reviewed the methodology used to develop the current PEF value 
and its approach in light of these factors and has tentatively 
concluded that some inputs should be updated to reflect more recent 
data, and that some components of the derived PEF value are not 
relevant to today's vehicles. DOE addresses its consideration of the 
statutory factors and DOE's conclusions in the following sections.
1. Energy Efficiency of the Electric Vehicle
    In the June 2000 Final Rule, DOE established a methodology to 
measure the energy consumption of an EV in terms of gallons of gasoline 
based upon the electricity consumption quantified by using the Highway 
Fuel Economy Driving Schedule (HFEDS) and Urban Dynamometer Driving 
Schedule (UDDS) test cycles established by EPA at 40 CFR parts 86 and 
600. See 10 CFR 474.3 and 474.4. Obtaining the value of electric 
efficiency (measured in Watt-hours per mile) is critical to translating 
the electrical energy efficiency of the EV into a petroleum-equivalent 
fuel economy using the PEF equation. See, e.g., Example 1 of appendix A 
in 10 CFR part 474. DOE is proposing not to amend the testing 
requirements and use of the resulting value in the PEF equation. DOE 
believes the current methodology provides an accurate measure of the 
electrical energy efficiency of the relevant EV during typical use and 
is appropriately utilized in the PEF equation. DOE requests comment on 
its proposal not to amend the testing methodology under 10 CFR 474.4 
and use of the resulting value for purposes of the PEF equation.
    Additionally, the June 2000 Final Rule incorporated an accessory 
factor into the PEF calculation. This factor was added to the PEF 
calculation to account for petroleum-fueled on-board accessories, such 
as cabin heaters, defrosters, or air-conditioning. These accessories 
were envisioned as an approach to avoid low energy-density and/or low 
power-density limitations of battery technology at the time.\4\ No EVs 
currently produced include such accessories, nor are future EVs likely 
to include them. Petroleum-fueled on-board accessories are distinct 
from gasoline consumption in plug-in hybrid electric vehicles, which 
are rated for fuel economy separately for charge-depleting and charge-
sustaining modes of operation, with a fuel economy weighted according 
to the expected percentage of driving attributed to each mode. In this 
NOPR, DOE proposes to set this factor equal to 1.00 in its calculation. 
DOE may adjust this factor in the future if market conditions merit 
updates. DOE requests comment on its proposal to set the accessory 
factor at 1.00.
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    \4\ For example, in the mid-1990s, the experimental Ford Ecostar 
vehicle, a two-door, small van, included a diesel-powered heater 
while being powered primarily by a sodium-sulfur battery with 
notable power density limitations and a very high operating 
temperature.
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2. National Average Electricity Generation and Transmission Efficiency
    To compare electricity and gasoline on an equivalent basis it is 
necessary to consider the full energy-cycle energy efficiency from the 
point of primary energy production through end-use to power a vehicle 
for both gasoline and electricity. This approach is necessary because 
electricity is generated upstream of the vehicle and stored onboard 
whereas conventional vehicles convert fuel to useful energy onboard the 
vehicle. Assessing the full energy cycle of electricity and 
conventional fuel requires a holistic approach to address energy 
conservation when energy losses occur at different stages of an energy 
cycle for different energy products and fuels, such as electricity and 
gasoline. In the June 2000 Final Rule, DOE included a term for 
expressing the relative energy efficiency of the full energy cycles of 
gasoline and electricity, the gasoline-equivalent energy content of 
electricity factor, which included factors to account for average 
fossil-fuel electricity generation efficiency, average electricity 
transmission efficiency, and petroleum refining and distribution 
efficiency. 65 FR 36987.
    DOE agrees with the Petitioners that the inputs to account for the 
generation and transmission efficiency factor should be updated to 
reflect the most recent data. Therefore, DOE is proposing to update the 
inputs for generation and transmission efficiencies and relative grid 
mix projections to account for updated data and recent policy changes. 
Further description of DOE's proposed changes may be found in section 
II.B of this document. DOE requests comment on its proposal concerning 
the generation and transmission efficiency factor.
3. Need of the U.S. To Conserve Energy and Relative Scarcity and Value 
of Fuels
    In handling the consideration of scarcity of resources, DOE focuses 
on the primary energy sources used to power conventional, hybrid-
electric, and battery-electric vehicles--such as crude oil, natural 
gas, fissile nuclear material, sunlight, water, and wind--and considers 
their potential scarcity implications. Some energy sources are mined or 
otherwise produced (crude oil, natural gas, coal, uranium); others, 
such as sunlight and wind, are captured passively. Some sources are 
finite with energy resource depletion as a societal concern (e.g., the 
fossil resources). Other primary energy sources are renewable and are 
not subject to resource depletion (e.g., solar or wind energy). Yet 
other primary energy sources, such as uranium, are naturally abundant 
on a global basis, though not necessarily abundant domestically.\5\
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    \5\ The most recent ``Red Book'' assessment of uranium 
resources, periodically published jointly by the OECD Nuclear Energy 
Agency and the International Atomic Energy Agency, concludes that 
conventional uranium resources are sufficient ``to support even the 
most aggressive scenarios of growth in nuclear generating capacity. 
However, the majority of this in-ground uranium cannot be brought to 
the market without improved market conditions. Unattractive market 
conditions also slow uranium exploration investment, which, in turn, 
can affect further delineation of additional identified resources in 
the short term.'' (NEA (2020), Uranium 2020: Resources, Production 
and Demand, OECD Publishing, Paris, p.72). The same study assesses 
unconventional uranium resources, such as that in sea water, as 
``almost inexhaustible'' (Ibid., p. 38.)
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    In the 1999 NOPR and June 2000 Final Rule, DOE concluded that 
scarcity did not appear to be a concern and should not be a guiding 
factor in the PEF at that time. DOE arrived at this conclusion after 
conducting research on the issue based on comments received on the 1994 
NOPR that were critical of DOE's prior consideration of scarcity. 64 FR 
37907. In the 1994 NOPR, DOE included a scarcity factor as an 
intermediate factor that used a complex approach to quantify the 
relative scarcity and value of all fuels used to generate electricity 
in the United States. This proposed scarcity factor was based on 
estimates of the U.S. share of world reserves of fossil fuels and 
estimated rates of depletion of world reserves. The scarcity factor was 
derived by determining the U.S. percent and numeric share of the world 
reserve market and calculating the rate at which the United States is 
depleting each fuel

[[Page 21528]]

source's reserves. These values were then normalized to obtain the 
relative scarcity value for each fuel source. 59 FR 5338-5339. 
Nevertheless, DOE re-examined the scarcity issue in response to these 
comments, which led to DOE's removal of the scarcity factor from the 
1999 NOPR and June 2000 Final Rule.
    While DOE did not expressly incorporate scarcity in the 1999 NOPR 
and the June 2000 Final Rule, DOE added the current 1.0/0.15 fuel-
content factor, in part, to help address scarcity issues by rewarding 
electric vehicles' benefits to the Nation relative to petroleum-fueled 
vehicles, in a manner consistent with the regulatory treatment of other 
types of alternative fueled vehicles and the authorizing legislation. 
Id. at 65 FR 36988. DOE explained that it chose the 1.0/0.15 ratio for 
the fuel-content factor (1) for consistency with existing regulatory 
and statutory procedures for alternative fuel vehicles under 49 U.S.C. 
32905, (2) to provide similar treatment of all types of alternative 
fueled vehicles, and (3) for simplicity and ease of use in calculating 
the PEF. In the July 1999 NOPR, DOE examined 49 U.S.C. 32905, which 
prescribes procedures for determining the petroleum-equivalent fuel 
economy of non-EV alternative fueled vehicles. DOE noted that two of 
the most common light-duty liquid alternative fuels at that time were 
M85 (85 percent methanol and 15 percent unleaded gasoline by volume) 
and E85 (85 percent ethanol and 15 percent unleaded gasoline by 
volume).\6\ Under section 32905, the petroleum equivalent fuel economy 
of E85 and M85 powered vehicles is determined by dividing the measured 
fuel economy value by 0.15. DOE also noted that section 32905 extends 
this approach to gaseous fueled vehicles (e.g., compressed natural 
gas), whereby a conversion factor is applied, and the resulting figure 
divided by 0.15 to obtain the petroleum equivalent fuel economy. DOE 
commented in the July 1999 NOPR that the true energy efficiency of both 
liquid and gaseous fueled alternative fuel vehicles is intentionally 
and substantially overstated by the methods specified in section 32905, 
since only 15 percent of their actual energy consumption is accounted 
for in determining their petroleum-equivalent fuel economy, and that 
the use of the 0.15 factor for both vehicle types provides a similar 
regulatory treatment to both types of alternative fuel vehicles. DOE 
then determined to include the 1.0/0.15 factor into its PEF 
calculation, noting that this would be the most equitable approach 
among alternative fuel vehicles and that all alternative fuel types 
help the Nation avoid having all its transportation ``eggs'' in the 
petroleum ``basket.'' Id. DOE noted, however, that EVs would still 
enjoy favorable regulatory treatment under DOE's proposal because EVs 
are exempt from caps on the amount alternative fuel vehicles are 
allowed to contribute to raising a manufacturer's overall fleet fuel 
economy. Id. at 65 FR 36989.
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    \6\ These percentages are nominal values not usually seen in 
practice. The percentage alcohol can vary widely due to gasoline 
volatility requirements. E85, for example, is typically a mixture of 
between 51% and 83% ethanol with the balance being gasoline. With 
specialized gasoline blendstocks 85% ethanol blending is possible. 
M85 fuel and vehicles are no longer available in the U.S.
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    Consistent with the requirements of section 32904, in this proposed 
rule, DOE has considered the need of the United States to conserve all 
forms of energy and the relative scarcity and value to the United 
States of all fuel used to generate electricity.\7\ DOE recognizes the 
need of the nation to conserve all forms of energy, and more 
specifically, finite resources such as fossil fuels, including 
petroleum consumed by ICE vehicles. Supply and demand of fossil fuels 
can change rapidly and be subject to market constraints. In contrast, 
DOE notes that current and future sources of electricity generation are 
and will be in relative abundance, most notably due to recent market 
and policy changes (e.g., the Infrastructure Investment and Jobs Act 
(Pub. L. 117-58) and the Inflation Reduction Act (117-169)) resulting 
in, and likely to further result in, growth and reliance on renewable 
sources of electricity generation which are not subject to resource 
depletion like fossil fuels.\8\ See section II.B of this document for 
further discussion of these policy changes. DOE has preliminarily 
determined that there is a need to conserve finite energy resources, 
such as petroleum, given their limited nature and susceptibility to 
changing market constraints. Oil and petroleum fuels are a global 
market, and the nation is exposed to fluctuations in that global 
market. That the United States may produce more petroleum in a given 
period does not in and of itself protect the nation from the exposures 
it faces on the global market. Accordingly, the nation must conserve 
petroleum to guard against the exposures it faces in the global market. 
Moreover, DOE believes the current and future addition of renewable 
generation sources onto the grid allows for greater conservation of the 
finite resources, as renewable generation replaces those sources on the 
grid for use in electrified end uses, such as EVs. In this proposed 
rule, DOE is proposing changes to the PEF calculation (described more 
in this section) to address the need of the nation to conserve energy 
and the relative scarcity of fuels used to generate electricity 
consistent with these determinations.
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    \7\ DOE also explored a ``scarcity approach'' based on proved 
reserves of primary energy resources to deriving the PEF value but 
is not proposing to use that approach due to significant 
uncertainties and typically high volatility in proved reserves data. 
See section II.D.5 of this document.
    \8\ DOE notes that, for purposes of this proposed rule, DOE 
views scarcity and the need to conserve energy mainly as a 
consideration of depletion of energy resources (e.g., fossil fuels), 
and has not necessarily considered other concerns, such as 
environmental impacts, in reviewing this factor.
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    As part of its review of the need to conserve all forms of energy 
and relative scarcity of fuels used to generate electricity, DOE 
reconsidered the inclusion of the fuel-content factor in the PEF 
equation and determined that the fuel-content factor is no longer 
warranted in deriving the PEF value. As noted previously, DOE added the 
current 1.0/0.15 fuel-content factor, in part, to help address scarcity 
issues by rewarding electric vehicles' benefits to the Nation relative 
to petroleum-fueled vehicles, in a manner consistent with the treatment 
of other types of alternative fueled vehicles. For the following 
reasons DOE believes the fuel content factor no longer accurately 
addresses the need to conserve energy and relative scarcity issues and 
is no longer appropriate for use in the PEF derivation:
     The fuel content factor does not accurately represent 
current EV technology or market penetration.
    With the fuel content factor, the current PEF value is not 
representative of current EV technology, capabilities, and market 
penetration, and leads to overvaluation of EVs in determining CAFE 
fleet compliance that is not related to their actual fuel saving 
capabilities. Since the 2000 Final Rule, EV technology has matured 
substantially and the market share of EVs is now significant and 
growing. For example, sales of both plug-in hybrid-electric vehicles 
(PHEVs) and battery-electric vehicles (BEVs) combined in the United 
States have increased significantly in the past decade (from 18,000 per 
year in 2011 to over 600,000 per year in 2021),\9\ while there have 
also been significant advances in driving range and available charging

[[Page 21529]]

infrastructure.\10\ Over the past 20 years, electrification technology 
for light-duty vehicles has seen significant advances in performance, 
efficiency, and cost reduction. Twenty years ago, battery electric 
vehicles were not generally available for mass-market sale in all U.S. 
markets, with models being limited to a handful of low-production 
vehicles generally only offered in California (such as the Toyota RAV4 
EV, Chevrolet S-10 EV, and Ford Ranger EV) to meet state ZEV 
regulations,\11\ or the GM EV-1, which could only be leased in select 
markets. Vehicles of this era were capable of less than 100 miles of 
range \12\ and charging power was typically limited to 6.6kW \13\ to 
8kW.\14\ Sales volumes were low, with the first-generation RAV4 EV 
selling a total of 328 units over six years of production.\15\ Battery 
technology has improved significantly from early lead-acid and nickel-
based chemistries, seeing energy density improve by more than four 
times, from 28 Wh/kg \16\ to nearly 120 Wh/kg,\17\ and pack costs 
reduced by 90% since 2008.\18\ Vehicles with DC fast charging 
capability have begun to penetrate the market at an increasing 
rate,\19\ with charge power levels of 150kW+ being common.\20\ Recent 
trends in market penetration of plug-in electric vehicles (PHEVs and 
BEVs) suggest that demand for these vehicles is rapidly increasing, 
with monthly sales reaching 7.4% of all light-duty sales,\21\ and with 
32 BEV models available across eight manufacturers in September of 
2022,\22\ 14 with a range of 300 miles or greater.\23\
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    \9\ See Gohlke, David, Yan Zhou, Xinyi Wu, and Calista Courtney. 
``Assessment of Light-Duty Plug-in Electric Vehicles in the United 
States, 2010-2021.'' Argonne National Laboratory technical report 
ANL-22/71. November 2022. Available at https://www.osti.gov/biblio/1898424.
    \10\ In 2021, the sales-weighted range for new BEVs was 290 
miles--which is the highest value to date that it has ever been. 
Additionally, there are 49,509 public EV charging stations in the 
United States in the AFDC database. Id.
    \11\ https://www.cnn.com/interactive/2019/07/business/electric-car-timeline/index.html.
    \12\ https://www.fueleconomy.gov/feg/Find.do?action=sbs&id=19296.
    \13\ https://www.thedrive.com/tech/38331/the-toyota-rav4-ev-was-a-breakthrough-electric-crossover-20-years-before-that-was-a-thing.
    \14\ https://www.motortrend.com/features/mercedes-benz-eqxx-gm-ev1-feature/.
    \15\ https://www.thedrive.com/tech/38331/the-toyota-rav4-ev-was-a-breakthrough-electric-crossover-20-years-before-that-was-a-thing.
    \16\ http://www.evchargernews.com/CD-A/gm_ev1_web_site/specs/specs_specs_top.htm.
    \17\ https://ev-database.org/car/1555/Tesla-Model-3.
    \18\ https://www.energy.gov/eere/vehicles/articles/fotw-1272-january-9-2023-electric-vehicle-battery-pack-costs-2022-are-nearly.
    \19\ https://electrek.co/2022/07/08/fastest-charging-evs/.
    \20\ Rapid charging electric vehicles--EV Database (ev-database.org) (https://ev-database.org/uk/compare/rapid-charging-
electric-vehicle-
quickest#sort:path~type~order=.fastcharge_speed~number~desc[verbar]ra
nge-slider-range:prev~next=0~600[verbar]range-slider-
towweight:prev~next=0~2500[verbar]range-slider-
acceleration:prev~next=2~23[verbar]range-slider-
fastcharge:prev~next=0~1100[verbar]range-slider-
eff:prev~next=150~500[verbar]range-slider-
topspeed:prev~next=60~260[verbar]paging:currentPage=0[verbar]paging:n
umber=9).
    \21\ https://www.energy.gov/eere/vehicles/articles/fotw-1275-january-30-2023-monthly-plug-electric-vehicle-sales-united-states.
    \22\ https://evadoption.com/ev-models/bev-models-currently-available-in-the-us/.
    \23\ https://www.energy.gov/eere/vehicles/articles/fotw-1253-august-29-2022-fourteen-model-year-2022-light-duty-electric.
---------------------------------------------------------------------------

    As zero-emission transportation policies have begun to be 
implemented across the world, some U.S. states have taken action to 
transition the light-duty vehicle fleet to zero-emissions technologies. 
In 2022, California finalized the Advanced Clean Cars II rule \24\ that 
will require all new light-duty vehicles sold in the state to be zero-
emission by 2035, with New York, Massachusetts, and Washington state 
following suit. Internationally, countries that have set a target of 
100 percent light-duty zero-emission vehicle sales by 2035 represent at 
least 25 percent of today's global light-duty vehicle market,\25\ and 
in late 2022 the European Union approved a measure to phase out sales 
of internal combustion engine (ICE) passenger vehicles in its 27 member 
countries by 2035.\26\
---------------------------------------------------------------------------

    \24\ California Air Resources Board, ``California moves to 
accelerate to 100% new zero-emission vehicle sales by 2035,'' Press 
Release, August 25, 2022. Accessed on Nov. 3, 2022 at https://ww2.arb.ca.gov/news/california-moves-accelerate-100-new-zero-emission-vehicle-sales-2035.
    \25\ International Energy Agency, ``Global EV Outlook 2022,'' p. 
57, May 2022. Accessed on November 18, 2022 at https://iea.blob.core.windows.net/assets/e0d2081d-487d-4818-8c59-69b638969f9e/GlobalElectricVehicleOutlook2022.pdf.
    \26\ Reuters, ``EU approves effective ban on new fossil fuel 
cars from 2035,'' October 28, 2022. Accessed on Nov. 2, 2022 at 
https://www.reuters.com/markets/europe/eu-approves-effective-ban-new-fossil-fuel-cars-2035-2022-10-27/.
---------------------------------------------------------------------------

    Additionally, recent Federal policy changes such as the Inflation 
Reduction Act \27\ and the Infrastructure Investment and Jobs Act \28\ 
provide significant incentives for EVs and other alternative fueled 
vehicles (as well as additional sources of non-petroleum energy) that 
make the current fuel-content factor redundant for purposes of 
incentivizing manufacture of such vehicles and conserving the energy 
resources of the nation.\29\
---------------------------------------------------------------------------

    \27\ Public Law 117-169 (2022).
    \28\ Public Law 117-58 (2021).
    \29\ See also Executive Order 14037, ``Strengthening American 
Leadership in Clean Cars and Trucks'' (August 5, 2021). 86 FR 43583.
---------------------------------------------------------------------------

    Over the past several years, automakers have increasingly 
incorporated a higher degree of electrification in their vehicle 
powertrains. All indications are that this trend will accelerate in the 
future. The diversity of partially- and fully-electrified vehicle 
offerings is increasing,\30\ with combined offerings of PHEVs and BEVs 
nearly doubling from 31 models in 2016 to 60 models in 2021 \31\ and 
expected to double again between 2022 and 2024.\32\ Recent 
announcements from GM,\33\ VW,\34\ Honda,\35\ Ford,\36\ and 
Stellantis,\37\ further attest to the trend of increasing 
electrification.
---------------------------------------------------------------------------

    \30\ Muratori, Matteo, et al., ``The rise of electric vehicles--
2020 status and future expectations,'' Progress in Energy, v3n2 
(2021), March 25, 2021. Available at https://iopscience.iop.org/article/10.1088/2516-1083/abe0ad.
    \31\ See Fueleconomy.gov website: https://fueleconomy.gov/feg/pdfs/guides/FEG2016.pdf pp. 31-35 and https://fueleconomy.gov/FEG/pdfs/guides/FEG2021.pdf pp. 40-46.
    \32\ https://www.visualcapitalist.com/the-number-of-ev-models-will-double-by-2024/.
    \33\ General Motors, ``General Motors, the Largest U.S. 
Automaker, Plans to be Carbon Neutral by 2040,'' Press Release, 
January 28, 2021.
    \34\ Volkswagen Newsroom, ``Strategy update at Volkswagen: The 
transformation to electromobility was only the beginning,'' March 5, 
2021. Available at https://www.volkswagen-newsroom.com/en/stories/strategy-update-at-volkswagen-the-transformation-to-electromobility-was-only-the-beginning-6875.
    \35\ Honda News Room, ``Summary of Honda Global CEO Inaugural 
Press Conference,'' Available at https://global.honda/newsroom/news/2021/c210423eng.html.
    \36\ 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.
    \37\ Stellantis, ``Stellantis Intensifies Electrification While 
Targeting Sustainable Double-Digit Adjusted Operating Income Margins 
in the Mid-Term,'' Press Release, July 8, 2021.
---------------------------------------------------------------------------

    As used in the PEF value determination, the fuel content factor is 
not representative of this current EV technology nor current market 
penetration, but is instead based upon the fuel content of non-EV 
alternative fuel vehicles, which have significantly different 
technologies and penetration in the current market. As described more 
below in this section, counter to the need of the nation to conserve 
energy, including the fuel content factor in the PEF determination can 
lead to increased petroleum consumption. Moreover, as noted throughout 
this document, incentives for EV production and EV infrastructure have 
changed markedly since 2000, and DOE believes that treating EVs 
similarly to other alternative fuel vehicles in DOE's PEF rule is no 
longer appropriate.
     The fuel content factor allows for continued production of 
inefficient ICE vehicles, thereby encouraging increased petroleum 
usage.
    Applying the current PEF value and equation to EVs results in miles 
per gallon equivalent ratings significantly higher than a similar ICE 
vehicle. For

[[Page 21530]]

example, applying the PEF to the current EV version of the Kia Niro 
results in a rating of 394.3 miles per gallon equivalent. The Hyundai 
Kona, a very similar ICE vehicle,\38\ is rated at 41.2 miles per 
gallon.
---------------------------------------------------------------------------

    \38\ There is no ICEV version of the Kia Niro so the Hyundai 
Kona is used in the example.
---------------------------------------------------------------------------

    This approach demonstrates how the current PEF value leads to 
overvaluation of EVs in determining fleetwide CAFE compliance, which 
allows manufacturers to maintain less efficient ICE vehicles in their 
fleet by utilizing a few EV models to comply with the CAFE standards. 
As noted in the Petition, ``excessively high imputed fuel economy 
values for EVs means that a relatively small number of EVs [could] 
mathematically guarantee compliance without meaningful improvements in 
the real-world average fuel economy of automakers' overall fleets.'' 86 
FR 73995. This runs counter to the need of the nation to conserve 
energy, particularly petroleum. Encouraging adoption of EVs can reduce 
petroleum consumption but giving too much credit for that adoption can 
lead to increased net petroleum use because it enables lower fuel 
economy among conventional vehicles, which represent by far the 
majority of vehicles sold. Moreover, contrary to the original intent 
behind the fuel content factor, ``excessively high imputed fuel economy 
values for EVs'' can also act as a disincentive to manufacturers to 
produce additional EVs if manufacturers can achieve CAFE compliance 
with a relatively small number of EVs.
    As DOE stated in the 1999 NOPR, the ``true energy efficiency of 
both liquid and gaseous fueled alternative fuel vehicles is 
intentionally and substantially overstated by the methods specified in 
49 U.S.C. 32905'' (i.e., the 1.0/015 fuel content factor). With current 
EV technology, using those same methods for the PEF calculation 
overstates the PEF value and encourages increased consumption of 
petroleum, which is counter to the need of the nation to conserve 
energy.
     The current fuel content factor lacks legal support.
    The basis for the current fuel content factor is attached to 
statutory provisions not pertinent to EVs. As noted, the 1.0/0.15 fuel 
content factor is based on that same factor for non-EV alternative fuel 
vehicles under section 32905. Section 32905 does not apply that factor 
to EVs, nor do the relevant provisions of section 32904. Accordingly, 
while DOE sought to treat EVs the same as other alternative fuel 
vehicles by using the same fuel content factor in the 2000 Final Rule, 
there is no basis in 32905 or 32904 to do so. While DOE could 
potentially utilize a fuel content factor under the four factors of 
section 32904, that is not the basis for the current 1.0/0.15 fuel 
content factor.
    For the foregoing reasons, DOE proposes to remove this factor from 
the PEF determination. DOE requests comment on its treatment of the 
need of the Nation to conserve energy and relative scarcity and value 
of fuels. DOE requests comment on its proposal to remove the fuel-
content factor from its derivation of the PEF value.
4. Driving Patterns of Electric Vehicles Compared to Those of Gasoline 
Vehicles
    In the June 2000 Final Rule, DOE established a driving pattern 
factor to account for the statutory criterion in 49 U.S.C. 
32904(a)(2)(B)(iv). The purpose of the driving pattern factor is to 
recognize the fact that electric vehicles may be used differently than 
gasoline vehicles, primarily due to their shorter range and longer 
``refueling'' times. However, then-existing EPA regulations did not 
make driving-pattern-based adjustments to the fuel economy of various 
classes of gasoline vehicles when calculating a manufacturer's CAFE 
value, even though gasoline-powered vehicles are also used in a large 
variety of different ways. 64 FR 37908. Therefore, DOE set the driving 
pattern factor at 1.00 because it believed that EVs offer capabilities 
like those of conventional gasoline-powered vehicles. 65 FR 36987.
    DOE continues to believe that current EVs are equivalently capable 
vehicles that are likely to be used similarly to gasoline-powered or 
hybrid-electric vehicles. In addition, the deployment of a national 
charging network, enabled by the DOT's National Electric Vehicle 
Infrastructure program along with additional private investment, will 
help meet the President's goal of 500,000 chargers \39\ and ensure 
vehicles can match the utility and driving demands of an ICE vehicle. 
Therefore, DOE is not proposing a change to the driving pattern factor 
and proposes to continue setting this factor at 1.00. DOE may adjust 
this factor in the future if market conditions merit updates.\40\
---------------------------------------------------------------------------

    \39\ FACT SHEET: Biden-Harris Administration Announces New 
Standards and Major Progress for a Made-in-America National Network 
of Electric Vehicle Chargers--The White House.
    \40\ An example of a situation in which an EV might merit 
application of the driving factor would be a low-range EV, sometimes 
called a ``neighborhood electric vehicle'', which lacks full range 
and functionality of a passenger car.
---------------------------------------------------------------------------

    DOE requests comment on its proposal to keep the driving pattern 
factor at a value of 1.00.

B. Discussion of DOE Analysis of PEF and New Approach

    To compare electricity and gasoline on an equivalent basis, DOE 
considers the full energy-cycle energy efficiency from the point of 
primary energy production through end-use to power a vehicle for both 
gasoline and electricity. DOE does not consider the conversion 
efficiency from primary energy to electricity for renewable energy 
sources.\41\ That is, renewable energy sources are treated as 
effectively 100% efficient. For fossil and nuclear energy, DOE 
considers the energy required to mine or otherwise produce the primary 
energy as part of the life-cycle energy. However, in this analysis, DOE 
treats nuclear electricity generation as effectively 100% efficient--
that is, DOE does not use the thermal efficiency of steam to 
electricity in nuclear power plants--because like solar and wind, there 
is no practical, aggregate resource-availability limitation for nuclear 
materials. On the other hand, fossil energy sources used to generate 
electricity are large but finite and are non-renewable. DOE considers 
the combustion efficiency of electric generation as part of the full 
energy lifecycle. Renewable gaseous fuel burned for electricity, though 
expected to be a small contributor to renewable electricity, are 
treated similarly to fossil natural gas with respect to combustion 
efficiency.
---------------------------------------------------------------------------

    \41\ Note that while the conversion equipment has varying 
efficiency, this should be reflected in the cost of the electricity 
and use of renewables, such as solar or wind, does not effectively 
diminish the available resource.
---------------------------------------------------------------------------

    Energy conversion and transmission efficiencies are derived from 
Argonne National Laboratory's GREET model (https://greet.anl.gov). The 
GREET[supreg] (Greenhouse gases, Regulated Emissions, and Energy use in 
Technologies) model has been developed by Argonne National Laboratory 
with the support of DOE. GREET is a life-cycle analysis tool, 
structured to systematically examine the energy and environmental 
effects of a wide variety of transportation fuels and vehicle 
technologies in major transportation sectors (i.e., road, air, marine, 
and rail) and other end-use sectors, and energy systems. Development of 
GREET has been supported by multiple offices of DOE, DOT, and other 
agencies over the past 28 years. It is a widely used life-cycle 
analysis model for vehicle technologies and transportation fuels and 
has more

[[Page 21531]]

than 50,000 registered GREET users worldwide. It has been used in 
regulation development and evaluation by DOE, EPA, DOT, and California 
Air Resources Board. Conversion and transmission efficiency values from 
GREET have been incorporated into a spreadsheet-based PEF calculation 
tool that implements the calculation and allows use of various 
projections of electric generation. (The PEF calculation tool is 
included in the docket for this rule.)
    After setting the driving pattern and accessory factors to 1.00 and 
removing the fuel-content factor as described previously, the remaining 
PEF equation is simply the gasoline-equivalent energy content of 
electricity on a full life-cycle basis. The units of the PEF remain the 
same (Wh/gal-equivalent) and the CAFE calculation would be conducted as 
before.
    Although DOE will conduct the required annual reviews, consistent 
with 42 U.S.C. 32904(a)(2)(B) (discussed more in following sections), 
the Department does not anticipate that the result of that review will 
be particularly significant at least as compared to the revisions 
proposed today. The primary factor that would change the PEF 
calculation is a change in projected grid mix. However, DOE believes 
the grid mix projections that DOE has considered in this proposed rule 
provide the best projections available, and DOE believes it unlikely 
that grid mix projections would deviate so significantly from the 
projected values as to result in significant changes in the PEF value 
in a given year, particularly for the dates for which this proposed 
rule would take effect (i.e., model years 2027-2031).
    DOE is proposing that the new PEF take effect with model year 2027 
vehicles. NHTSA's next CAFE regulation is expected to cover the model 
years 2027-2031.\42\ The proposed PEF value would be the applicable PEF 
for calculating electric vehicle fuel economy in those model years,\43\ 
subject to DOE's annual reviews. In order to calculate a PEF usable in 
the next CAFE regulation, DOE calculations consider a forward-looking 
approach based on projections for the electricity generation grid in 
the future. As such, the average of the annually calculated value of 
the PEF, based on calendar-year projections for the electric grid,\44\ 
will be applied for model years 2027 through 2031 over the entire CAFE 
compliance period. Having a fixed value for the CAFE standards period 
improves the ability of DOT to determine CAFE standards that are ``the 
maximum feasible average fuel economy level'' and provides greater 
certainty to stakeholders from year to year. DOE requests comment on 
this approach.
---------------------------------------------------------------------------

    \42\ NHTSA last finalized CAFE standards for model years 2024-
2026 in May 2022. In accordance with 49 U.S.C. 32902, NHTSA will 
propose standards for MYs 2027 and beyond in an upcoming notice.
    \43\ In accordance with 49 U.S.C. 32904, the Administrator of 
the Environmental Protection Agency is responsible for measuring 
manufacturer's fuel economy levels in each model year.
    \44\ DOE used grid projections based on calendar years, which do 
not perfectly align with the model years used for CAFE compliance. 
However, DOE believes that the impacts of the calendar and model 
year differential is negligible for purposes of calculating the PEF 
value.
---------------------------------------------------------------------------

Grid Mix Projections
    An important variable impacting the value of the PEF under the new 
approach is the mix of electricity sources. DOE considered numerous 
projections available in 2022 and selected the projection model 2021 
Electrification 95 by 2050, Standard Scenario, from the National 
Renewable Energy Laboratory (NREL),\45\ in which the United States 
achieves 95% renewable generation of electricity by 2050 and increasing 
electrification economy-wide.\46\ This projection accounts for the 
anticipated improvements in generation efficiency of electricity 
generating units. Transmission efficiency is not expected to improve 
over this time and thus remain constant in this projection. DOE 
selected this projection to better account for recent policy changes 
with respect to renewable energy penetration and electrification, such 
as the Inflation Reduction Act \47\ and the Infrastructure Investment 
and Jobs Act.\48\ DOE believes the NREL 95 by 2050 model provides a 
projection more representative of the likely future grid mix after 
these recent policy changes become impactful, particularly with the 
likelihood that these changes will result in a substantial addition of 
renewable resources onto the grid.
---------------------------------------------------------------------------

    \45\ DOE used the 2021 version of the NREL 95 by 2050 projection 
scenario. The 2022 versions of these scenarios were made available 
in December of 2022. See https://www.nrel.gov/news/program/2022/the-2022-standard-scenarios-are-now-available.html. DOE will consider 
the 2022 version of the NREL scenarios in the final rule.
    \46\ The specific scenario is the Electrification 95 by 2050 
scenario in the Standard Scenarios 2021 dataset publicly available 
at https://scenarioviewer.nrel.gov/.
    \47\ Public Law 117-169 (2022).
    \48\ Public Law 117-58 (2021).
---------------------------------------------------------------------------

    DOE also considered several scenarios from the Annual Energy 
Outlook (AEO) 2022 as developed by the Energy Information 
Administration (EIA)--i.e., the reference case and the low-renewables-
cost case. While DOE generally regards AEO as one of the best available 
projections for future grid mix and energy prices, the AEO 2022 cases 
(prepared in early 2022) are not representative of more recent policy 
changes (e.g., the Inflation Reduction Act), and therefore do not fully 
address DOE's current expectations for the development of the grid due 
to subsequent developments. DOE notes that the PEF value using the AEO 
2022 model is fairly close to the proposed PEF value using the NREL 95 
by 2050 projection.\49\ Ultimately, this proposed rule uses the 95 by 
2050 model because DOE believes it is more representative of the most 
recent policy changes affecting grid mix projections, particularly the 
likely addition of more renewables into the grid mix in the near term. 
DOE is aware that AEO 2023 is expected to be published in the Spring of 
2023 and may be more reflective of recent policy changes than AEO 2022. 
DOE will consider AEO 2023 for possible use in the final PEF rule.
---------------------------------------------------------------------------

    \49\ Over the MY2027-2031 period, AEO22 Reference Case value 
would be 21,808 Wh/gal vs. the proposed value of 23,160 Wh/gal using 
the NREL 95-by-2050 Scenario. These represent values 26.6% and 28.2% 
of the current PEF value of 82,049 Wh/gal, respectively. For a 2022 
Kia Niro using the 2029 grid mix projections this represents a 
difference of 6.5 MPGe (104.8 MPGe vs. 111.3 MPGe, respectively).
---------------------------------------------------------------------------

    DOE also considered more renewable-aggressive grid mixes, such as 
the NREL Standard Scenarios 2021 Electrification 95 by 2035 scenario. 
However, DOE determined that the NREL 95 by 2035 scenario is a slight 
outlier for the MY2027-2031 period DOE is targeting in this proposed 
rule, primarily given lack of lead time (despite recently created 
statutory incentives) for grid mix improvements, and also given DOE's 
analysis suggesting that a PEF value using the 95 by 2035 scenario 
would be 10-15 percent higher than the PEF value using any of the other 
grid projection scenarios considered. These facts indicated to DOE that 
a more conservative approach (that still accounted for recent policy 
changes) would be more appropriate in this time frame, and thus, DOE 
chose the NREL 95 by 2050 scenario for the grid mix assumptions on 
which the current proposal is based. DOE notes that DOE will review the 
PEF value annually and can adjust the grid mix inputs if renewable 
generation increases at a faster or slower pace than DOE anticipates, 
although the agency does not anticipate that the result of that annual 
review will be particularly significant--at least as compared to the 
revisions proposed today.

[[Page 21532]]

    DOE requests comment on its selection of grid mix forecast and 
welcomes comments on alternative forecasts for the electricity grid 
mix.
PEF Value
    In consideration of all factors in the analysis and those described 
above, the proposed PEF for the anticipated period 2027-2031 is 23,160 
Wh/gal. The following discussion describes how DOE arrived at this 
value.
    For a process, GREET defines efficiency as the ratio of energy 
product output(s) to energy input(s) (including energy in both 
processing fuels and feedstock). The energy outputs and inputs for 
facilities (such as electric power plants and petroleum refineries) are 
obtained from agency statistics such as EIA and EPA databases. The 
reciprocal of efficiency is defined as the energy intensity of this 
process. Using efficiency factors developed for the GREET model, DOE 
determined that crude oil production and transportation has an 
efficiency of 93.96%, that gasoline refining has an efficiency of 
87.01%, and that gasoline transportation and distribution has an energy 
efficiency of 99.52%.\50\ Multiplying these three terms to get an 
overall well-to-tank efficiency of 81.36%. That is, the total energy, 
including the energy used to produce, transport, and distribute 
gasoline and the energy content of gasoline is 1/0.8136 = 1.2291 times 
greater than the useable energy in the final product.
---------------------------------------------------------------------------

    \50\ The GREET model includes efficiencies for electricity 
generation and transmission as well as petroleum production, 
refining, and distribution, and comparable processes for other 
alternative fuels such as biofuels, that enable full-cycle 
comparisons of the pathways from primary energy source through end-
use in vehicles, often called ``well-to-wheels'' analysis.
---------------------------------------------------------------------------

    For electricity, using the Electrification 95 by 2050 projection 
model described previously, DOE calculates an annual PEF value. As 
discussed previously, DOE is proposing to retain the PEF value for the 
period covered by the applicable CAFE standard, the most recent of 
which covers 2027 to 2031. To simplify compliance with the CAFE 
standard, DOE takes an average value of the PEF over the covered period 
to apply for the entire period. DOE will review the PEF annually to 
determine if updates are needed based on changes to the grid mix and/or 
market conditions for EVs. DOE requests comment on this approach.
    The following table shows the relative forecast generation share of 
the grid mix for nine different fuels in 2029 \51\ using the 
Electrification 95 by 2050 projection model. The fraction of 
electricity generated by source under the projection is labeled the 
Generation Share, efficiencies for production and generation for each 
source are listed, and the required input of that source of energy to 
produce that amount of electricity is labeled Energy Input Required. 
Energy Input Required is calculated as:
---------------------------------------------------------------------------

    \51\ DOE uses the 2021 Electrification 95 by 2050 Standard 
Scenario projected grid mix for 2029, the midpoint year of the 2027 
to 2031 CAFE compliance period, to illustrate its calculation of the 
PEF value because the average value over the 2027-2031 period under 
DOE's proposed methodology is within 3/100 of 1% of the calculated 
PEF value in 2029. DOE notes that the change in PEF values under the 
proposed methodology is approximately linear over the compliance 
period.
[GRAPHIC] [TIFF OMITTED] TP11AP23.015


                      Weighted Generation Efficiency Based on Fraction of Generation Source
                                          [2029 Projected electric mix]
----------------------------------------------------------------------------------------------------------------
                                          Generation share 2029     Production
                  Fuel                      \52\ (fraction of       efficiency      Generation     Energy input
                                          delivered electricity)     \53\ (%)     efficiency (%)     required
----------------------------------------------------------------------------------------------------------------
Natural gas............................                   0.3102           91.81           47.34          0.7137
Coal...................................                   0.1376           97.90           34.55          0.4068
Oil....................................                   0.0094           88.41           31.92          0.0332
Biomass................................                   0.0003           97.54           21.65          0.0016
Nuclear................................                   0.1602           97.40             100          0.1644
Solar..................................                   0.1554             100             100          0.1554
Wind...................................                   0.1569             100             100          0.1569
Hydroelectric..........................                   0.0631             100             100          0.0631
Geothermal.............................                   0.0069             100             100          0.0069
                                        ------------------------------------------------------------------------
    Total..............................                    1.000  ..............  ..............          1.7021
----------------------------------------------------------------------------------------------------------------

    The sum of the Generation Shares is 1.0. Summing the Energy Input 
Required yields the total required energy given the generation mix, as 
a fraction of energy generated. Thus, the table indicates that for 
every 1.0 units of output energy as electricity, 1.702 units of input 
energy are required (averaged across generation mix), for an 
electricity efficiency of 58.75% at the plant gate (i.e., 1/1.702 = 
0.5875). This is further multiplied by the electricity transmission and 
distribution efficiency of 95.14%, yielding a total electricity 
efficiency of 55.89%, meaning that one Watt-hour of electricity 
delivered to the user requires roughly 1.7892 Wh of primary energy 
(1/.5589 = 1.7892).
---------------------------------------------------------------------------

    \52\ Generation share taken from NREL 2021 Standard Scenario 
Electrification 95-by-2050.
    \53\ Efficiencies from GREET. ``Production'' in this table 
includes efficiencies producing the raw material and transport to 
the electricity generation facility. ``Generation'' includes 
conversion of the limited resources into electricity, e.g., by 
combustion, heating a boiler, and turning a turbine. Several non-
fossil resources are treated as 100% efficient--due to lack of 
scarcity, as explained in the text.
---------------------------------------------------------------------------

    The energy content of a gallon of gasoline is 115,000 British 
Thermal Units (Btu). With a standard conversion factor of 3.412 Btu/Wh, 
the same gallon of gasoline can be said to have an energy content of 
33,705 Wh. By a similar calculation as was used for full-cycle 
electricity, delivering one gallon of gasoline to a consumer requires 
starting

[[Page 21533]]

with 22.91% more energy. Thus, a gallon of gasoline is equivalent to 
141,347 Btu over a full fuel cycle.
    The PEF can then be calculated as the ratio of full-cycle 
efficiencies of gasoline and electricity: (141,347 Btu/gal)/(6.105 Btu/
Wh) = 23,153 Wh/gal.\54\
---------------------------------------------------------------------------

    \54\ The calculated value for 2029 in the spreadsheet model DOE 
uses results in 23,154 Wh/gal. The difference of 1 Wh/gal, or four 
one-thousandths of a percent, is due to rounding.
---------------------------------------------------------------------------

Proposed Process for Reviewing PEF on an Annual Basis
    The value of the PEF will be annually reviewed and updated, if 
needed, based on changes in the various factors impacting it. 49 U.S.C. 
32904(B). At this time, DOE intends to keep the factor stable over the 
period of the standard setting years, unless there is a compelling 
reason to change the factor as a result of this review. DOE does not 
anticipate that the result of that review will be particularly 
significant, at least as compared to the revisions proposed today. The 
primary factor that would change the PEF calculation is changes to the 
projected grid mix. However, DOE believes the grid mix projections 
considered in this proposed rule provide the best projections available 
at the time of drafting, and DOE believes it unlikely that grid mix 
projections would deviate so significantly from the projected values as 
to result in significant changes in the PEF value in a given year, 
particularly for the years affected by this proposed rule (i.e., model 
years 2027-2031). DOE requests comment on other considerations for 
DOE's review of the PEF value.
    To this end, DOE is also proposing to delete section 10 CFR 474.5. 
Section 474.5 currently states that DOE will review part 474 every five 
years to determine whether any updates and/or revisions are necessary, 
and publish notice of DOE's review, findings, and any resulting 
adjustments to part 474 in the Federal Register. DOE will review the 
PEF value annually, subject to its statutory requirements, and should 
DOE determine a change may be needed to the PEF value, DOE will engage 
in the rulemaking process to revise part 474. DOE also intends to seek 
stakeholder input for its annual reviews through available methods 
(e.g., requests for information). If a stakeholder believes the PEF 
value should be changed in a given year, stakeholders may always 
petition DOE to address such change. DOE requests comment on its 
proposal to delete Sec.  474.5.
Example PEF Calculation
    To demonstrate the PEF calculation in accordance with 10 CFR part 
474 (i.e., the PEF value divided by the combined energy consumption 
value) and provide a real-world example, DOE considered how the fuel 
economy of different powertrains would compare, using both the current 
PEF value of 82,049 Wh/gal and the proposed PEF value of 23,160 Wh/gal 
for the CAFE regulatory period of 2027-2031 (using data from 2022 
vehicle models). DOE compared the rated fuel economy for five BEVs and 
five PHEVs to their most-comparable internal combustion engine vehicle 
(ICEV) and hybrid electric vehicles (HEV). The table below shows the 
unadjusted, combined fuel economy for each vehicle. As shown in the 
table, BEVs would still have a fuel economy much greater than 
conventional gasoline-fueled vehicles for CAFE calculations. In all 
cases, the fuel economy across powertrains rises from ICEV to HEV to 
PHEV to BEV. In the left column, the vehicles being compared on a given 
row are identified. The column headings indicate which vehicle listed 
in the left column is intended, and for plug-in vehicles, under which 
PEF value the MPG-eq was calculated.

                                    Comparison of Various MY2022 Powertrain Options Using Current and New PEF Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        2022 PHEV (MPGe)                       2022 BEV (MPGe)
                                                       2022 ICEV   2022 HEV  ---------------------------------------------------------------------------
                      Vehicles                           (MPG)      (MPGe)       Current PEF        Proposed PEF       Current PEF        Proposed PEF
                                                                               (82,049 Wh/gal)    (23,160 Wh/gal)    (82,049 Wh/gal)    (23,160 Wh/gal)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VW Tiguan ICEV vs. VW ID.4 BEV......................        34.3  ..........  .................  .................              380.6              107.4
RAV4 ICEV vs. RAV4 HEV vs. Prime PHEV...............        37.5        55.8              127.4               75.6  .................  .................
Jeep Wrangler ICEV vs. Wrangler 4xe PHEV............        31.4  ..........               47.9               35.5  .................  .................
Kia Niro HEV vs. PHEV vs. BEV.......................  ..........        71.1              113.6               79.6              390.6              110.3
Hyundai Kona ICEV vs. BEV...........................        43.2  ..........  .................  .................              426.5              120.4
Nissan Versa ICEV vs. Nissan Leaf BEV...............        48.7  ..........  .................  .................              374.4              105.7
Ford F150 ICEV vs. HEV vs. Lightning BEV............        25.9        31.2  .................  .................              237.7               67.1
BMW 330i ICEV vs. 330e PHEV.........................        40.2  ..........               66.6               50.2  .................  .................
Chrysler Pacifica ICEV vs. PHEV.....................        29.2  ..........               88.2               59.5  .................  .................
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. Responses to Comments Received on the NRDC and Sierra Club Petition 
for Rulemaking

    This section summarizes the comments received on DOE's December 28, 
2021, request for public comments on the 2021 NRDC and Sierra Club 
petition.
Comments of the Alliance for Automotive Innovation
    The Alliance for Automotive Innovation (Auto Innovators) requested 
that DOE take careful consideration in determining whether to grant the 
petition to update the PEF for electric vehicles. Auto Innovators noted 
that the PEF is included in the calculation of the maximum feasible 
standards for fleet-average fuel economy. Therefore, Auto Innovators 
requested that the PEF be updated in concert with CAFE standards, with 
a lead-time of at least 18 months. Auto Innovators also requested that 
the docket supporting the prior PEF rulemaking be made available for 
electronic public viewing.
    In general, Auto Innovators requested an increase in the PEF if it 
is changed, counter to the requests of other commenters. Auto 
Innovators noted that EPA greenhouse gas (GHG) standards treat electric 
vehicles as having zero tailpipe emissions,\55\ due to their lack of 
tailpipe emissions. For greater harmonization between the EPA GHG 
standards and the NHTSA CAFE standards, Auto Innovators suggests a 
higher PEF that would result in fuel economy approaching an equivalent 
to a zero-tailpipe emission value. Auto Innovators asserts that 
inclusion of a fuel content factor is within DOE's ``statutory 
considerations.'' Auto Innovators noted that updating factors relating 
to electricity generation and

[[Page 21534]]

transmission while maintaining the fuel content factor of 6.67 (or 1.0/
0.15) would increase the overall PEF value.
---------------------------------------------------------------------------

    \55\ DOE notes that commenter's statement seems to ignore non-
tailpipe emissions that are accounted for by EPA, such as AC 
refrigerant.
---------------------------------------------------------------------------

    Auto Innovators stated that Congress's intent has been to 
incentivize the use of alternative fuel vehicles. They suggest that an 
increased value for the PEF would result in higher sales of electric 
vehicles that would substitute for petroleum-fueled vehicles, as 
automakers would have a greater regulatory incentive to sell the 
electric vehicles.
DOE Response
    As noted previously, the Department agrees that values for 
electricity generation and transmission efficiencies, along with 
petroleum refining and transportation, should be updated, which would 
increase the value defined as the gasoline-equivalent energy content of 
electricity in the June 2000 rulemaking. However, DOE is proposing to 
remove the fuel-content factor from the PEF calculation because it 
artificially inflates the PEF value such that the current PEF value is 
not reflective of current EV efficiency or market penetration. While 
DOE could potentially include a fuel-content factor under one or more 
factors of section 32904(a)(2)(B), DOE does not believe a fuel-content 
factor is necessary to include in the PEF calculation at this time. 
While the reasons for including the factor in the 2000 Final Rule may 
have been compelling at that time, DOE believes they no longer justify 
inclusion of the fuel-content factor because of current EV technology 
and market penetration. This is particularly true in light of recent 
policy changes, such as the Inflation Reduction Act, that greatly 
incentivize the production and use of EVs and growth of EV 
infrastructure (e.g., charging stations), enabled both by the 
Bipartisan Infrastructure Law investment of $7.5B along with private 
investment to support the President's goal of a national charging 
network of 500,000 chargers.\56\ These policy changes will act as a far 
greater incentive for EVs than the fuel-content factor, while continued 
inclusion of the fuel-content factor to artificially inflate the PEF 
could hinder continued increases in combustion engine fuel economies 
under the CAFE standards. Moreover, DOE notes that the EPA regulations 
for greenhouse gases are separate from the DOT regulations for fuel 
economy, and while it may be desirable for the two sets of regulations 
to be harmonized with each other to the extent appropriate for 
regulatory simplification, the regulations ultimately have different 
purposes.
---------------------------------------------------------------------------

    \56\ FACT SHEET: Biden-Harris Administration Announces New 
Standards and Major Progress for a Made-in-America National Network 
of Electric Vehicle Chargers--The White House.
---------------------------------------------------------------------------

    With respect to the effective date of the proposed PEF changes, DOE 
notes that 49 U.S.C. 32904(a)(2)(b) requires DOE to review and propose 
necessary revisions to the PEF annually. While an immediate update of 
the PEF would be possible, DOE agrees that this would lead to a sudden 
change in the compliance determination under the CAFE standards. Such a 
quick change in the compliance determination could be problematic given 
the lead times necessary for manufacturers in creating CAFE compliant 
models. DOE notes that the Auto Innovators' suggested lead time of 18 
months before the model year for which CAFE standards are prescribed is 
based upon the requirements of 49 U.S.C. 32902(a). Section 32904(a)(2) 
does not contain a requirement for a similar compliance lead time. 
Nevertheless, DOE is establishing the PEF consistent with the period 
covered by the next round of CAFE standards for the reasons stated 
above.
    Additionally, in response to the Auto Innovators request, DOE has 
included the prior rulemaking docket (EE-RM-99-PEF) in the docket for 
this NOPR.
Comments of the American Biogas Council
    The American Biogas Council supports granting the petition to 
update the PEF for electric vehicles. Specifically, the American Biogas 
Council urges the DOE review the PEF annually and propose necessary 
revisions based on the latest available data.
DOE Response
    The agency agrees with the assessment of the American Biogas 
Council that update and continual review is important. The agency 
believes that the approach to reviewing the PEF described above 
balances the lead time necessary for automakers to plan their 
automotive fleets with the latest available data.
Comments of the American Council for an Energy-Efficient Economy
    The American Council for an Energy-Efficient Economy (ACEEE) 
supports granting the petition to update the PEF for electric vehicles. 
ACEEE believes the inclusion of the fuel-content factor (6.67 
multiplier--or 1.0/0.15) in the PEF is unacceptable. ACEEE notes that 
DOE should consider how to factor renewable electricity generation into 
the calculation of grid generation efficiency, and how to incorporate 
carbon intensity and the time of day in which EVs are charged and the 
resultant effect on energy sourcing into the PEF, if this is 
appropriate. ACEEE also notes that the national average for electricity 
consumption may not be appropriate. Additionally, ACEEE urges DOE to 
propose necessary revisions based on the latest available data, and to 
consider how changes in grid composition and technology have changed 
and may change in the near future.
DOE Response
    The Department agrees with ACEEE's assessment that updating and 
continual PEF review is important. DOE is proposing to consider updated 
values for the lifecycle energy consumption of both electricity and 
petroleum and is proposing an updated value for the PEF that does not 
include a fuel-content factor of 6.67. Moreover, DOE's proposed 
methodology considers renewable energy generation as 100 percent 
efficient, while also utilizing a grid projection scenario that better 
accounts for the likely increase in renewable generation placed on the 
grid due to recent policy changes such as the Inflation Reduction Act. 
DOE also notes that the national average electrical generation and 
transmission efficiencies is a factor specified in section 32904. 42 
U.S.C. 32904(a)(2)(B)(ii). While DOE acknowledges that charging times 
of EVs may impact the grid mix in a given region, DOE has used national 
grid mix projections based on the factor in section 32904. Therefore, 
DOE has not incorporated carbon intensity or effects on energy sourcing 
based on the time of day during which EVs are likely to be charged. DOE 
believes such considerations may introduce complexity into the PEF 
methodology that could create confusion and uncertainty for 
stakeholders, particularly during DOE's annual review process. 
Moreover, ACEEE did not provide or point to any information that might 
inform the inclusion of such considerations into the PEF methodology. 
However, DOE welcomes comments and information that could allow for the 
clear and consistent use of considerations such as carbon intensity and 
charging time of day in the PEF methodology.
Comments of the American Petroleum Institute
    The American Petroleum Institute supports granting the petition to 
update the PEF for electric vehicles. The American Petroleum Institute 
requests that DOE update the PEF based on the latest available data. 
Specifically, the

[[Page 21535]]

American Petroleum Institute suggests that the calculation of the PEF 
should not include a fuel content factor and should be updated with a 
well-to-wheels lifecycle analysis, considering both the energy and 
greenhouse gas (GHG) impacts of electric and conventional vehicles.
DOE Response
    As described previously, DOE agrees with eliminating the fuel-
content factor. In this NOPR, the agency uses a lifecycle approach for 
electricity and petroleum as the primary regulatory option for the PEF. 
The preferred lifecycle approach is one that is based on total energy 
content, including upstream energy usage, and based on updated input 
data. DOE's PEF methodology does not explicitly account for lifecycle 
GHGs. As discussed in section D.3 of this document DOE explored a GHG-
related alternative, but ultimately determined not to use such 
alternative. Further, as discussed previously, DOE must base the PEF 
value on the factors of section 32904(a)(2), which do not explicitly 
reference GHGs or lifecycle GHGs. DOE requests comment and information 
on inclusion of lifecycle GHG emissions in the PEF calculation 
methodology and data in support of using such an approach.
Comments of the International Council on Clean Transportation
    The International Council on Clean Transportation (ICCT) supports 
updating values used to calculate the PEF for electric vehicles. ICCT 
suggests that DOE use the latest values for electricity generation 
efficiency, transmission and distribution loss, petroleum refining, and 
distribution efficiency. Additionally, ICCT suggests that DOE consider 
electricity generation sources other than fossil fuels.
DOE Response
    The Department agrees with the ICCT on the need to use values that 
represent today's electricity and petroleum markets. As suggested, DOE 
uses values derived from the GREET model by Argonne National Laboratory 
for many of the inputs noted. As non-fossil fuels now comprise 
approximately 40% of the national electricity generation \57\ and are 
forecast to have higher market penetration in the future, DOE also 
considers all sources of electricity in determining electricity 
generation efficiency, rather than only using fossil fuels.
---------------------------------------------------------------------------

    \57\ Derived from EIA, ``Electric Power Monthly, November 
2022'', (published January 2023), Table 1.2.A. https://www.eia.gov/electricity/monthly/current_month/january2023.pdf.
---------------------------------------------------------------------------

Comments of the NRDC and Sierra Club
    NRDC and Sierra Club submitted public comments supplementing their 
initial petition for rulemaking and reiterating their request to the 
petition for rulemaking to update the PEF for electric vehicles. In 
this comment, they note that the input values determining the PEF are 
out of date and that DOE has the obligation to review these values over 
time. NRDC and Sierra Club claim that maintaining a fuel content factor 
undermines the goals of the CAFE program and that the existence of the 
fuel content factor is inconsistent with statute.
DOE Response
    The agency agrees that the input values for determining PEF are out 
of date and should be updated. While DOE recognizes that a fuel-content 
factor is not specified in section 32904 as it is in section 32905, DOE 
believes that such a factor could be considered within one of the four 
enumerated factors in section 32904(a)(2)(B). As suggested in the June 
2000 Final Rule, the fuel content factor can be taken to, in part, 
represent the requirement to consider ``the relative scarcity and value 
to the United States of all fuel used to generate electricity'' (49 
U.S.C. 32904(a)(2)(iii)). However, as noted above, DOE proposes an 
updated methodology where the fuel content factor is no longer included 
in the PEF calculation.
    In their mathematical examples of the impacts of various PEF 
factors, NRDC and Sierra Club suggest that 33,705 Wh/gallon could be 
used as the appropriate value for the PEF, as this is the energy 
content contained in one gallon of gasoline used in the Monroney window 
sticker for consumer understanding. However, use of this value neglects 
upstream inefficiencies of gasoline refining and distribution and of 
electricity generation and transmission. Accordingly, DOE is proposing 
the PEF value of 23,160 Wh/gal.
Comments of Tesla
    Tesla supports granting the petition to update the PEF for electric 
vehicles. Tesla supports stringent CAFE standards for light-duty 
vehicles for efficiency gains.
DOE Response
    For the reasons described previously, DOE is proposing an updated 
PEF value which is more reflective of current EV technology and market 
penetration.
Comments of State-Level and Municipal Governments
    The States of California, Delaware, Hawaii, Illinois, Maine, 
Maryland, Michigan, Minnesota, Nevada, New York, Oregon, Rhode Island, 
and Vermont; the Commonwealth of Pennsylvania; the District of 
Columbia; and the Cities of Los Angeles, New York, and Oakland 
(collectively, ``the governments'') support granting the petition to 
update the PEF for electric vehicles. The governments note that the 
current PEF undermines the congressional intent of the CAFE program to 
conserve energy and incentivize production of electric vehicles. The 
governments' request that DOE reevaluate the expression of the need to 
conserve energy and the relative scarcity and value of fuel used for 
electricity in the PEF, replacing the existing fuel-content factor. The 
governments also note that data are available to inform DOE's 
consideration of the use of electric vehicles compared to petroleum-
fueled vehicles.
DOE Response
    The agency agrees with the governments on the need for updated 
inputs in the PEF methodology and has addressed those updates in this 
proposed rule. DOE notes that different metrics for considering 
scarcity and value were evaluated in order to develop DOE's preferred 
approach for the PEF. DOE acknowledges that there is considerably more 
data available today regarding the increased use and evolving 
technology surrounding EVs. These changes are reflected, in part, by 
DOE's removal of the fuel-content factor and update of grid mix 
projections reflective of recent policy changes. However, as previously 
noted, DOE is maintaining the driving pattern factor at 1.00 because 
DOE continues to believe that current EVs are fully capable vehicles 
which are likely to be used similarly to gasoline-powered or hybrid-
electric vehicles. DOE also notes that with the proposed lower value 
for PEF, there is little incentive for an automaker to develop an 
electric vehicle that would not be used in a manner consistent with 
conventional gasoline-fueled vehicles in order to maximize its average 
fuel economy.
Comments of Anonymous Members of the Public
    Members of the public can comment without being publicly 
identified. Two comments were received this way. Each of the commenters 
requested that DOE grant the petitioners' request to update

[[Page 21536]]

the PEF and use updated values as appropriate.
DOE Response
    The Department agrees with the commenters on the need for updated 
values and appreciates the input of the public in the regulatory 
rulemaking process.

D. Alternative Approaches for Calculation of PEF

    Section II.C of this document presents the DOE rationale for the 
selection of 23,160 Wh/gal as the updated value of the PEF for CAFE 
calculations for the 2027-2031 CAFE regulatory period. DOE considered 
other approaches to determining the PEF value based upon the four 
factors enumerated in section 32904, particularly the transmission and 
generation efficiency factor and the scarcity factor. DOE briefly 
describes below the alternative approaches it considered.
1. Approach Based on the Current Electricity Generation Mix
    A calculation for PEF similar to that proposed but based on the 
generation mix in 2020 yields a PEF of 20,136 Wh/gal, about 13% lower 
than the proposed value of 23,160 Wh/gal.\58\ DOE views this value as 
an appropriate comparison of the relative energy today, but notes that 
a typical vehicle sold today will be expected to be on the road for 
well over a decade, at which point the PEF value would not account for 
improvements in overall grid efficiency as the grid decarbonizes. In 
particular, in the latter part of this decade, during which the revised 
PEF is expected to apply, the grid mix is likely to be significantly 
different from today's grid mix. In contrast, the proposed PEF value 
and DOE's proposed review approach would better account for the 
electricity generation mix of models sold throughout the CAFE 
compliance period and over the course of the vehicle's useful life. 
Accordingly, DOE did not pursue the approach based on current 
generation mix.
---------------------------------------------------------------------------

    \58\ DOE used 2020 generation mix data for this alternative 
because it was the most recent available data at the time the 
analysis was undertaken. While there has been some change in grid 
mix since that time, DOE believes it is a relatively small 
difference in the context of comparing the current (2023) grid to a 
notional future projected grid mix used in the calculation of the 
new PEF value.
---------------------------------------------------------------------------

2. Approach Based on Fossil Energy Consumption
    As the renewables that are on the grid are not scarce in the same 
way as physical combustion fuels, DOE considered an approach which only 
accounts for fossil fuel in the calculation of the electrical grid 
efficiency, ignoring the electricity generated by renewable and nuclear 
sources. This is different than the proposed approach, which includes 
current and projected renewable generation in the projected grid mixes 
used in DOE's methodology. See section II.B of this document.
    In 2020, fossil fuel combustion supplied 60% of U.S. electricity. 
Following the same methodology in section II.C of this document, the 
PEF value would be 25,702 Wh/gal based on the 2020 grid, and 34,020 Wh/
gal, averaged from 2027-2031. However, as the electric grid 
decarbonizes, this metric would rapidly increase and present a problem 
of artificially amplifying the PEF value like the current PEF value. 
With a highly renewable grid, automakers would be able to use electric 
vehicles in their fleet to improve their average fuel economy rather 
than improving the fuel economy of conventional gasoline-fueled 
vehicles, leading to a likely increase in national fuel consumption, 
counter to the goals of both EPCA and the CAFE program. Accordingly, 
DOE did not pursue this approach based on fossil energy consumption.
3. Approach Based on Equivalent Greenhouse Gas Emissions
    It is the policy of the Biden Administration to confront the global 
climate crisis and exert leadership in addressing climate change 
impacts. See Executive Order 14008, 86 FR 7619 (Feb. 1, 2021) 
(``Tackling the Climate Crisis at Home and Abroad''). This can be 
accomplished in part by reducing emissions of greenhouse gases. As most 
electricity-related emissions are from fossil fuel combustion, the 
greenhouse gas equivalent approach that DOE considered is very similar 
to the approach based on fossil energy consumption. Like that approach, 
DOE does not consider this to be an ideal approach as the PEF value 
would eventually diverge from the actual generation mix as the grid 
decarbonized. Moreover, this approach also deviates from the approach 
of the CAFE standards, which are designed to maximize feasible average 
fuel economy, while EPA regulates emissions of greenhouse gases from 
light-duty vehicles.
4. Approach Based on the Relative Scarcity of Each Energy Carrier
    For purposes of this proposal, DOE considered energy scarcity to be 
a matter of primary energy availability. Scarcity can then be measured 
in terms of proved reserves, which is a measure of working inventory. 
By comparing total annual consumption with the quantity of proved 
reserves, we can estimate the number of years of each energy source 
available in the United States, comparing electricity sources with 
petroleum. Using the NREL Electrification 95 by 2050 projection, DOE 
calculates a PEF value of 105,039 Wh/gallon over the 2027-2031 
regulatory period using this approach. This number is much higher than 
the proposed PEF, owing to the relative scarcity of domestically 
produced oil, at 6.1 years, compared to other fuels used to generate 
electricity.\59\ Such a high value for the PEF--28% higher than the 
current level--would likely increase total petroleum usage, as 
automakers could produce less efficient gasoline-fueled vehicles and 
still meet CAFE standards by selling a small number of EVs.
---------------------------------------------------------------------------

    \59\ The United States had 44,418 million barrels of proved 
reserves of crude oil plus lease condensate at the end of 2021. In 
2021, the U.S. consumed 19.9 million barrels of petroleum-derived 
products per day. At this usage rate, the United States has reserves 
of 6.1 years of petroleum. Citations: Proved Reserves of Crude Oil 
and Natural Gas in the United States, Year-End 2021 (eia.gov) Table 
6 (https://www.eia.gov/naturalgas/crudeoilreserves/pdf/usreserves_2021.pdf see page 19); U.S. Product Supplied for Crude 
Oil and Petroleum Products (eia.gov) Data Tables (https://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_a.htm).
---------------------------------------------------------------------------

    Using proved reserves of resources also has significant drawbacks 
that make them unsuitable for use in calculating the PEF. First, future 
reserves are very difficult to predict as they are subject to commodity 
price fluctuations. Second, proved reserves change over relatively 
small timeframes,\60\ making this a source of regulatory uncertainty 
for automakers. Further, the amount of proved reserves are ill-defined 
for renewable energy. Therefore, DOE did not pursue this alternative.
---------------------------------------------------------------------------

    \60\ Proved reserves reported by EIA were up more than 16% 
between the end of 2020 and the end of 2021. Compare these values 
at: https://www.eia.gov/naturalgas/crudeoilreserves/pdf/usreserves_2021.pdf, Table 6.
---------------------------------------------------------------------------

III. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Executive Order (``E.O.'') 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by 
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821 
(Jan. 21, 2011), requires agencies, to the extent permitted by law, to 
(1) propose or adopt a regulation only upon a reasoned determination 
that its benefits justify its costs (recognizing that some

[[Page 21537]]

benefits and costs are difficult to quantify); (2) tailor regulations 
to impose the least burden on society, consistent with obtaining 
regulatory objectives, taking into account, among other things, and to 
the extent practicable, the costs of cumulative regulations; (3) 
select, in choosing among alternative regulatory approaches, those 
approaches that maximize net benefits (including potential economic, 
environmental, public health and safety, and other advantages; 
distributive impacts; and equity); (4) to the extent feasible, specify 
performance objectives, rather than specifying the behavior or manner 
of compliance that regulated entities must adopt; and (5) identify and 
assess available alternatives to direct regulation, including providing 
economic incentives to encourage the desired behavior, such as user 
fees or marketable permits, or providing information upon which choices 
can be made by the public. DOE emphasizes as well that E.O. 13563 
requires agencies to use the best available techniques to quantify 
anticipated present and future benefits and costs as accurately as 
possible. In its guidance, the Office of Information and Regulatory 
Affairs (``OIRA'') within the Office of Management and Budget (OMB) has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. For the reasons stated in the preamble, 
this proposed regulatory action is consistent with these principles.
    Section 6(a) of E.O. 12866 also requires agencies to submit 
``significant regulatory actions'' to the OIRA for review. OIRA has 
determined that this proposed action constitutes a significant 
regulatory action within the scope of section 3(f)(1) of E.O. 12866. 
Accordingly, pursuant to section 6(a)(3)(C) of E.O. 12866, Accordingly, 
this action was subject to review by OIRA.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires the 
preparation of an initial regulatory flexibility analysis (IRFA) for 
any rule that by law must be proposed for public comment, unless the 
agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by E.O. 13272, Proper Consideration of Small Entities in 
Agency Rulemaking, 67 FR 53461 (Aug. 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. (68 FR 7990). The Department 
has made its procedures and policies available on the Office of General 
Counsel's website: www.energy.gov/gc/office-general-counsel.
    The proposed rule would revise DOE's regulations on electric 
vehicles regarding procedures for calculating a value for the 
petroleum-equivalent fuel economy of (EVs for use in the CAFE program 
administered by DOT. While the PEF value is an important part of the 
CAFE compliance calculation, its use and the weight given to it are 
determined by NHTSA's implementation of the CAFE standards program. 
Moreover, the downstream effects, including effects on small 
manufacturers, are ultimately determined by NHTSA's implementation of 
the CAFE program. Because this proposed rule would not directly 
regulate small entities but instead only amends a factor used to 
calculate compliance with DOT's CAFE standards, DOE certifies that this 
proposed rule would not have a significant economic impact on a 
substantial number of small entities, and, therefore, no regulatory 
flexibility analysis is required.\61\ Mid-Tex Elec. Co-Op, Inc. v. 
F.E.R.C., 773 F.2d 327 (1985). The method for earning credits applies 
equally across manufacturers and does not place small entities at a 
significant competitive disadvantage. Accordingly, DOE did not prepare 
an IRFA for this proposed rulemaking. DOE's certification and 
supporting statement of factual basis will be provided to the Chief 
Counsel for Advocacy of the Small Business Administration for review 
under 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    \61\ DOE notes that passenger vehicle manufacturers that 
manufacture fewer than 10,000 vehicles per year can petition NHTSA 
to have alternative CAFE standards. See 49 U.S.C. 32902(d).
---------------------------------------------------------------------------

C. Review Under the Paperwork Reduction Act of 1995

    The proposed rule would impose no new information or record keeping 
requirements. Accordingly, OMB clearance is not required under the 
Paperwork Reduction Act. (44 U.S.C. 3501 et seq).

D. Review Under the National Environmental Policy Act of 1969

    DOE is analyzing this proposed regulation in accordance with the 
National Environmental Policy Act of 1969 (``NEPA'') and DOE's NEPA 
implementing regulations (10 CFR part 1021). DOE's regulations include 
a categorical exclusion for amending an existing rule or regulation 
that does not change the environmental effect of the rule or regulation 
being amended. 10 CFR part 1021, subpart D, appendix A5. DOE 
anticipates that this rulemaking qualifies for categorical exclusion A5 
because it is a rulemaking that is amending an existing rule or 
regulation that does not change the environmental effect of the rule or 
regulation being amended, no extraordinary circumstances exist that 
require further environmental analysis, and it otherwise meets the 
requirements for application of a categorical exclusion. See 10 CFR 
1021.410. While the PEF value is an important aspect of the CAFE 
compliance calculation, in and of itself DOE's rulemaking to set the 
PEF value does not result in environmental effects. The use of and the 
weight given to the PEF value are determined by NHTSA, and any 
environmental effects would be from NHTSA's implementation of the CAFE 
standards program. Thus, DOE concludes that this action does not result 
in an environmental effect. DOE will complete its NEPA review before 
issuing the final rule.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have federalism 
implications. The Executive order requires agencies to examine the 
constitutional and statutory authority supporting any action that would 
limit the policymaking discretion of the States and to carefully assess 
the necessity for such actions. The E.O. also requires agencies to have 
an accountable process to ensure meaningful and timely input by State 
and local officials in the development of regulatory policies that have 
federalism implications. On March 14, 2000, DOE published a statement 
of policy describing the intergovernmental consultation process it will 
follow in the development of such regulations. (See 65 FR 13735.) DOE 
examined this proposed rule and determined that it would not preempt 
State law and would not have a substantial direct effect 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. No further action is required by E.O. 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of E.O.

[[Page 21538]]

12988, ``Civil Justice Reform,'' 61 FR 4729 (Feb. 7, 1996), imposes on 
Federal agencies the general duty to adhere to the following 
requirements: (1) eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct, rather than a general standard and 
promote simplification and burden reduction. Section 3(b) of E.O. 12988 
specifically requires that executive agencies make every reasonable 
effort to ensure that the regulation: (1) clearly specifies its 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct, while promoting simplification and burden reduction; 
(4) specifies its retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of E.O. 12988 requires executive agencies to 
review regulations in light of applicable standards in section 3(a) and 
section 3(b) to determine whether they are met, or it is unreasonable 
to meet one or more of them. DOE has completed the required review and 
determined that, to the extent permitted by law, the proposed rule 
would meet the relevant standards of E.O. 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. 
L. 104-4) requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and tribal governments and the 
private sector. For a proposed regulatory action likely to result in a 
rule that may cause the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector of $100 million 
or more in any one year (adjusted annually for inflation), section 202 
of UMRA requires a Federal agency to publish a written statement that 
estimates the resulting costs, benefits, and other effects on the 
national economy. (2 U.S.C. 1532(a) and (b)). The section of UMRA also 
requires a Federal agency to develop an effective process to permit 
timely input by elected officers of State, local, and tribal 
governments on a proposed ``significant intergovernmental mandate'' and 
requires an agency plan for giving notice and opportunity for timely 
input to potentially affected small governments before establishing any 
requirements that might significantly or uniquely affect small 
governments. On March 18, 1997, DOE published a statement of policy on 
its process for intergovernmental consultation under UMRA (62 FR 12820) 
(also available at www.energy.gov/gc/office-general-counsel). This 
proposed rule contains neither an intergovernmental mandate nor a 
mandate that may result in the expenditure of $100 million or more in 
any year by State, local, and tribal governments, in the aggregate, or 
by the private sector, so these requirements under the Unfunded 
Mandates Reform Act do not apply.

H. Review Under the Treasury and General Government Appropriations Act 
of 1999

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 (Pub. L. 105-277) requires Federal agencies to issue a 
Family Policymaking Assessment for any rule that may affect family 
well-being. This proposed rule would not have any impact on the 
autonomy or integrity of the family as an institution. Accordingly, DOE 
has concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

I. Review Under Executive Order 12630

    DOE has determined, under E.O. 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights,'' 53 FR 
8859 (Mar. 18, 1988), that this proposed rule would not result in any 
takings which might require compensation under the Fifth Amendment to 
the United States Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 
2001

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most 
disseminations of information to the public under guidelines 
established by each agency pursuant to general guidelines issued by 
OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). 
DOE has reviewed the proposed rule under the OMB and DOE guidelines and 
has concluded that it is consistent with applicable policies in those 
guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to 
OIRA, a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgated or is expected to lead to promulgation of a 
final rule, and that: (1) is a significant regulatory action under E.O. 
12866, or any successor order; and (2) is likely to have a significant 
adverse effect on the supply, distribution, or use of energy, or (3) is 
designated by the Administrator of OIRA as a significant energy action. 
For any proposed significant energy action, the agency must give a 
detailed statement of any adverse effects on energy supply, 
distribution, or use should the proposal be implemented, and of 
reasonable alternatives to the action and their expected benefits on 
energy supply, distribution, and use. The proposed rule would amend a 
factor used to calculate compliance with DOT's CAFE standards but does 
not meet the second criterion. Additionally, OIRA has not designated 
this proposed rule as a significant energy action. Accordingly, the 
requirements of E.O. 13211 do not apply.

IV. Public Participation

    DOE will accept comments, data, and information regarding this 
proposed rule on or before the date provided in the DATES section at 
the beginning of this proposed rule. Interested parties may submit 
comments, data, and other information using any of the methods 
described in the ADDRESSES section at the beginning of this document.
    Submitting comments via www.regulations.gov. The 
www.regulations.gov web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
General Counsel staff only. Your contact information will not be 
publicly viewable except for your first and last names, organization 
name (if any), and submitter representative name (if any). If your 
comment is not processed properly because of technical difficulties, 
DOE will use this information to contact you. If DOE cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence

[[Page 21539]]

containing comments, and any documents submitted with the comments.
    Do not submit to www.regulations.gov information the disclosure of 
which is restricted by statute, such as trade secrets and commercial or 
financial information (hereinafter referred to as Confidential Business 
Information (CBI)). Comments submitted through www.regulations.gov 
cannot be claimed as CBI. Comments received through the website will 
waive any CBI claims for the information submitted. For information on 
submitting CBI, see the Confidential Business Information section 
below.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or postal 
mail. Comments and documents submitted via email, hand delivery/
courier, or postal mail also will be posted to www.regulations.gov. If 
you do not want your personal contact information to be publicly 
viewable, do not include it in your comment or any accompanying 
documents. Instead, provide your contact information in a cover letter. 
Include your first and last names, email address, telephone number, and 
optional mailing address. The cover letter will not be publicly 
viewable if it does not include any comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via postal mail 
or hand delivery/courier, please provide all items on a CD, if 
feasible, in which case it is not necessary to submit printed copies. 
No telefacsimiles (faxes) will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are written in English, and that are free of any defects or viruses. 
Documents should not contain special characters or any form of 
encryption and, if possible, they should carry the electronic signature 
of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery/courier two well-marked copies: 
One copy of the document marked ``confidential'' including all the 
information believed to be confidential, and one copy of the document 
marked ``non-confidential'' that deletes the information believed to be 
confidential. Submit these documents via email or on a CD, if feasible. 
DOE will make its own determination about the confidential status of 
the information and will treat it according to its determination.
    It is DOE's policy that all comments, including any personal 
information provided in the comments, may be included in the public 
docket, without change and as received, except for information deemed 
to be exempt from public disclosure.

V. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this Notice of 
proposed rulemaking and request for comment.

List of Subjects in 10 CFR Part 474

    Corporate average fuel economy, Electric (motor) vehicle, Electric 
power, Energy conservation, Fuel economy, Motor vehicles, Research.

Signing Authority

    This document of the Department of Energy was signed on March 28, 
2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for 
Energy Efficiency and Renewable Energy, pursuant to delegated authority 
from the Secretary of Energy. That document with the original signature 
and date is maintained by DOE. For administrative purposes only, and in 
compliance with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in electronic format for publication, as 
an official document of the Department of Energy. This administrative 
process in no way alters the legal effect of this document upon 
publication in the Federal Register.

    Signed in Washington, DC, on March 29, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

    For the reasons stated in the preamble, DOE is proposing to amend 
part 474 of Chapter II of Title 10 of the Code of Federal Regulations 
as set forth below:

PART 474--ELECTRIC AND HYBRID VEHICLE RESEARCH, DEVELOPMENT, AND 
DEMONSTRATION PROGRAM; PETROLEUM-EQUIVALENT FUEL ECONOMY 
CALCULATION

0
1. The authority citation for part 474 continues to read as follows:

    Authority: 49 U.S.C. 32901 et seq.

0
2. Amend Sec.  474.3 by revising paragraph (b) and adding paragraph (c) 
to read as follows:


Sec.  474.3  Petroleum-equivalent fuel economy calculation.

* * * * *
    (b) The value of the petroleum-equivalency factor for electric 
vehicles is 23,160 Watt-hours per gallon.
    (c) The value of the petroleum-equivalency factor for electric 
vehicles in paragraph (b) of this section is effective for model year 
2027 and later model year electric vehicles.


Sec.  474.5  [Removed and Reserved]

0
3.Remove and reserve Sec.  474.5.
0
4. Appendix A to part 474 is revised to read as follows:

Appendix to Part 474--Sample Petroleum-Equivalent Fuel Economy 
Calculations

    Example 1:
    An electric vehicle is tested in accordance with Environmental 
Protection Agency procedures and is found to have an Urban 
Dynamometer Driving Schedule energy consumption value of 265 Watt-
hours per mile and a Highway Fuel Economy Driving Schedule energy 
consumption value of 220 Watt-hours per mile. The vehicle is not 
equipped with any petroleum-powered accessories. The combined 
electrical energy consumption value is determined by averaging the 
Urban Dynamometer Driving Schedule energy consumption value and the 
Highway Fuel Economy Driving Schedule energy consumption value using 
weighting factors of 55 percent urban, and 45 percent highway:

combined electrical energy consumption value = (0.55 * urban) + 
(0.45 * highway) = (0.55 * 265) + (0.45 * 220) = 244.75 Wh/mile

    The value of the petroleum equivalency factor is 23,160 Watt-
hours per gallon, and the petroleum-equivalent fuel economy is:


[[Page 21540]]


(23,160 Wh/gal) / (244.75 Wh/mile) = 94.63 mile/gal (or, mpg)

[FR Doc. 2023-06869 Filed 4-10-23; 8:45 am]
BILLING CODE 6450-01-P