EA~ United States ._.,.,~ Environmental Protection 

"' Agency 

EPA Decision Document: 

Off-Cycle Credits for Volkswagen 

Group of America 
ft EA~United States ..... ~ Environmental Protection ,., Agency 

EPA Decision Document: 

Off-Cycle Credits for Volkswagen 

Group of America 

Compliance Division 

Offce of Transportation and Air Quality 

U.S. Environmental Protection Agency 

EPA-420-R-19-001 

February 2019 
 

 

 

 

 

 

 

 

 

EPA Decision Document: Off-Cycle Credits for 

Volkswagen Group of America 

I. Introduction 

EPA’s light-duty vehicle greenhouse gas (GHG) rules include opportunities for manufacturers to generate 

CO2 credits for technologies that provide CO2 reductions not captured by the 2-cycle emissions test. 

There are three pathways by which manufacturers can generate off-cycle credits: (1) a pre-determined 

“menu” of technologies and credits that is available for 2014 and later model years, (2) a testing based 

option, and (3) an alternative methodology that includes opportunity for public comment. These are 

described in more detail in Section II. 

Pursuant to those rules, Volkswagen Group of America (VW) submitted applications requesting off-cycle 

credits for a variety of technologies and model years. The credits requested are for technologies 

described in EPA regulations for which there are default credits available for 2014 and later model year 

vehicles. However, use of the alternative methodology approach, involving public notice and comment, 

does not preclude seeking these credits for model years prior to 2014. 

The present decision document evaluates demonstrations for credits made using the public process 

pathway, where those credits are generally equivalent to those described in EPA regulations for the 

2014 and later model years. VW has applied for off-cycle credits using the alternative demonstration 

methodology pathway for the following technologies: high efficiency exterior lighting, active 

aerodynamics, active transmission warmup, active engine warmup, and several thermal control 

technologies. The application covers 2010-2011 model year vehicles. 

EPA published a notice in the Federal Register on October 1, 2018 announcing a 30-day public comment 

period for these applications.1 EPA received no adverse comments regarding the methodologies 

presented for determining the credits sought from these technologies by VW, and is hereby approving 

the technologies, methodologies for determining credits, and credit levels as described in the 

application from VW and in the Federal Register. EPA received comments from the Alliance of 

Automobile Manufacturers (AAM).

2 The comments from AAM were supportive and recommended 

timely approval of the methodologies for determining off-cycle credits. 

Section II of this document provides background on EPA’s off-cycle credits program. Section III provides 

EPA’s decision. This decision document applies only to the applications referenced herein. 

1 83 FR 49380, October 1, 2018. 2 The Alliance of Automobile Manufacturers is a trade group representing 12 vehicle manufacturers, including 

BMW, Ford, GM, and VW, 

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II. EPA’s Off-cycle Credits Program 

EPA’s light-duty vehicle greenhouse gas (GHG) program provides three pathways by which a 

manufacturer may accrue off-cycle carbon dioxide (CO2) credits for those off-cycle technologies that 

achieve CO2 reductions in the real world but where those reductions are not adequately captured on the 

test procedure used to determine compliance with the CO2 standards. The first is a predetermined list of 

credit values for specific off-cycle technologies that may be used beginning in model year 2014.3 This 

pathway allows manufacturers to use conservative credit values established by EPA for a wide range of 

technologies, with minimal data submittal or testing requirements. In cases where additional laboratory 

testing can demonstrate emission benefits of an off-cycle technology, a second pathway allows 

manufacturers to use a broader array of emission tests (known as “5-cycle” testing because the 

methodology uses five different testing procedures) to demonstrate and justify off-cycle CO2 credits.4 

The additional emission tests allow emission benefits to be demonstrated over some elements of realworld driving not captured by the GHG compliance tests, including high speeds, hard accelerations, and 

cold temperatures. Credits determined according to this methodology do not undergo additional public 

review. The third and last pathway allows manufacturers to seek EPA approval to use an alternative 

methodology for determining the off-cycle CO2 credits.5 This option is only available if the benefit of the 

off-cycle technology cannot be adequately demonstrated using the 5-cycle methodology. Manufacturers 

may also use this option for model years prior to 2014 to demonstrate off-cycle CO2 reductions for 

technologies that are on the predetermined list, or to demonstrate reductions that exceed those 

available via use of the predetermined list. 

Under the regulations, a manufacturer seeking to demonstrate off-cycle credits with an alternative 

methodology (i.e., under the third pathway described above) must describe a methodology that meets 

the following criteria: 

• Use modeling, on-road testing, on-road data collection, or other approved analytical or 

engineering methods; 

• Be robust, verifiable, and capable of demonstrating the real-world emissions benefit with strong 

statistical significance; 

• Result in a demonstration of baseline and controlled emissions over a wide range of driving 

conditions and number of vehicles such that issues of data uncertainty are minimized; 

• Result in data on a model type basis unless the manufacturer demonstrates that another basis is 

appropriate and adequate. 

Further, the regulations specify the following requirements regarding an application for off-cycle CO2 

credits: 

3 See 40 CFR 86.1869-12(b). 4 See 40 CFR 86.1869-12(c). 5 See 40 CFR 86.1869-12(d). 

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• A manufacturer requesting off-cycle credits must develop a methodology for demonstrating and 

determining the benefit of the off-cycle technology, and carry out any necessary testing and 

analysis required to support that methodology. 

• A manufacturer requesting off-cycle credits must conduct testing and/or prepare engineering 

analyses that demonstrate the in-use durability of the technology for the full useful life of the 

vehicle. 

• The application must contain a detailed description of the off-cycle technology and how it 

functions to reduce CO2 emissions under conditions not represented on the compliance tests. 

• The application must contain a list of the vehicle model(s) which will be equipped with the 

technology. 

• The application must contain a detailed description of the test vehicles selected and an 

engineering analysis that supports the selection of those vehicles for testing. 

• The application must contain all testing and/or simulation data required under the regulations, 

plus any other data the manufacturer has considered in the analysis. 

Finally, the alternative methodology must be approved by EPA prior to the manufacturer using it to 

generate credits. As part of the review process defined by regulation, the alternative methodology 

submitted to EPA for consideration must be made available for public comment.6 EPA will consider 

public comments as part of its final decision to approve or deny the request for off-cycle credits. 

Although these credits are requested under regulatory provisions that don’t explicitly require 

limitations, or caps, on credit values, EPA is stipulating here that credits for technologies for which there 

is a regulatory cap must be held to the applicable regulatory cap, if such credits are approved by EPA. 

For example, for reasons described in the implementing rulemaking documents and analyses, EPA 

established caps on thermal technology credits of 3.0 grams/mile for cars and 4.3 grams/mile for trucks. 

The rationale for these caps is applicable regardless of the off-cycle pathway being used to achieve such 

credits. Thus, credits approved in this Decision Document are being approved only to the extent that the 

regulatory caps on credits for certain technologies or categories of technologies are not exceeded. 

III. EPA Decisions on Off-cycle Credit Applications 

Volkswagen of North America 

Volkswagen of North America (VW) applied for off-cycle credits using the alternative demonstration 

methodology pathway for the following technologies: high efficiency exterior lighting, active 

aerodynamics, active transmission warmup, active engine warmup, and several thermal control 

technologies. All of these technologies are described in the predetermined list of credits available in the 

2014 and later model years. The methodologies described by VW are generally equivalent to those used 

by EPA to establish the predetermined list of credits in the regulations, and would result in the same 

credit values as described in the regulations. The application covers 2010-2011 model year vehicles. EPA 

6 See 40 CFR 86.1869-12(d)(2). 

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reviewed the application for completeness and made it available for public review and comment as 

required by the regulations. The VW off-cycle credit application (with confidential business information 

redacted) is available in the public docket and on EPA’s web site at https://www.epa.gov/vehicle-andengine-certification/volkswagen-compliance-materials-light-duty-greenhouse-gas-ghg. 

EPA did not receive any adverse comments on the application from VW. EPA has evaluated the 

application and finds that the methodologies described therein are sound and appropriate. Therefore, 

EPA is approving the credits requested by VW for the 2010-2011 model years. Caps or limits on credits 

that are specified in the regulations also apply to the credits being approved in this document. These 

credits must be reported to EPA not later than May 1, 2019, the date on which reporting of GHG credits 

for the 2018 model year is due. All information necessary to determine the total Megagrams of credits 

must be included in the reporting to EPA, and the total Megagrams for each fleet and model year should 

be included in a summary of credit averaging, banking, and trading. 

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