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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49503 

differences in how agencies apply 

technologies to vehicles in their 

respective models, we report the ranges 

for the effectiveness values used in each 

model. While the agencies believe that 

the ideal estimates for the final rule 

would be based on tear down studies or 

BOM approach and subjected to a 

transparent peer-reviewed process, 

NHTSA and EPA are confident that the 

thorough review conducted, led to the 

best available conclusion regarding 

technology costs and effectiveness 

estimates for the current rulemaking and 

resulted in excellent consistency 

between the agencies’ respective 

analyses for developing the CAFE and 

CO2 standards. 

The agencies note that the 

effectiveness values estimated for the 

technologies considered in the modeling 

analyses may represent average values, 

and do not reflect the potentiallylimitless spectrum of possible values 

that could result from adding the 

technology to different vehicles. For 

example, while the agencies have 

estimated an effectiveness of 0.5 percent 

for low friction lubricants, each vehicle 

could have a unique effectiveness 

estimate depending on the baseline 

vehicle’s oil viscosity rating. Similarly, 

the reduction in rolling resistance (and 

thus the improvement in fuel economy 

and the reduction in CO2 emissions) due 

to the application of low rolling 

resistance tires depends not only on the 

unique characteristics of the tires 

originally on the vehicle, but on the 

unique characteristics of the tires being 

applied, characteristics which must be 

balanced between fuel efficiency, safety, 

and performance. Aerodynamic drag 

reduction is much the same—it can 

improve fuel economy and reduce CO2 

emissions, but it is also highly 

dependent on vehicle-specific 

functional objectives. For purposes of 

this NPRM, NHTSA and EPA believe 

that employing average values for 

technology effectiveness estimates, as 

adjusted depending on vehicle subclass, 

is an appropriate way of recognizing the 

potential variation in the specific 

benefits that individual manufacturers 

(and individual vehicles) might obtain 

from adding a fuel-saving technology. 

However, the agencies seek comment on 

whether additional levels of specificity 

beyond that already provided would 

improve the analysis for the final rule, 

and if so, how those levels of specificity 

should be analyzed. 

Chapter 3 of the draft Joint Technical 

Support Document contains a detailed 

description of our assessment of vehicle 

technology cost and effectiveness 

estimates. The agencies note that the 

technology costs included in this NPRM 

take into account only those associated 

with the initial build of the vehicle. The 

agencies seek comment on the 

additional lifetime costs, if any, 

associated with the implementation of 

advanced technologies including 

warranty costs, and maintenance and 

replacement costs such as replacement 

costs for low rolling resistance tires, low 

friction lubricants, and hybrid batteries, 

and maintenance on diesel 

aftertreatment components. 

F. Joint Economic Assumptions 

The agencies’ preliminary analysis of 

alternative CAFE and GHG standards for 

the model years covered by this 

proposed rulemaking rely on a range of 

forecast information, economic 

estimates, and input parameters. This 

section briefly describes the agencies’ 

preliminary choices of specific 

parameter values. These proposed 

economic values play a significant role 

in determining the benefits of both 

CAFE and GHG standards. 

In reviewing these variables and the 

agency’s estimates of their values for 

purposes of this NPRM, NHTSA and 

EPA reconsidered previous comments 

that NHTSA had received and reviewed 

newly available literature. As a 

consequence, the agencies elected to 

revise some economic assumptions and 

parameter estimates, while retaining 

others. Some of the most important 

changes, which are discussed in greater 

detail in the agencies’ respective 

sections below, as well as in Chapter 4 

of the joint TSD and in Chapter VIII of 

NHTSA’s PRIA and Chapter 8 of EPA’s 

DRIA, include significant revisions to 

the markup factors for technology costs; 

reducing the rebound effect from 15 to 

10 percent; and revising the value of 

reducing CO2 emissions based on recent 

interagency efforts to develop estimates 

of this value for government-wide use. 

The agencies seek comment on the 

economic assumptions described below.

• Costs of fuel economy-improving 

technologies—These estimates are 

presented in summary form above and 

in more detail in the agencies’ 

respective sections of this preamble, in 

Chapter 3 of the joint TSD, and in the 

agencies’ respective RIAs. The 

technology cost estimates used in this 

analysis are intended to represent 

manufacturers’ direct costs for highvolume production of vehicles with 

these technologies and sufficient 

experience with their application so that 

all cost reductions due to ‘‘learning 

curve’’ effects have been fully realized. 

Costs are then modified by applying 

near-term indirect cost multipliers 

ranging from 1.11 to 1.64 to the 

estimates of vehicle manufacturers’ 

direct costs for producing or acquiring 

each technology to improve fuel 

economy, depending on the complexity 

of the technology and the time frame 

over which costs are estimated. 

• Potential opportunity costs of 

improved fuel economy—This estimate 

addresses the possibility that achieving 

the fuel economy improvements 

required by alternative CAFE or GHG 

standards would require manufacturers 

to compromise the performance, 

carrying capacity, safety, or comfort of 

their vehicle models. If it did so, the 

resulting sacrifice in the value of these 

attributes to consumers would represent 

an additional cost of achieving the 

required improvements, and thus of 

manufacturers’ compliance with stricter 

standards. Currently the agencies 

assume that these vehicle attributes do 

not change, and include the cost of 

maintaining these attributes as part of 

the cost estimates for technologies. 

However, it is possible that the 

technology cost estimates do not 

include adequate allowance for the 

necessary efforts by manufacturers to 

maintain vehicle performance, carrying 

capacity, and utility while improving 

fuel economy and reducing GHG 

emissions. While, in principle, 

consumer vehicle demand models can 

measure these effects, these models do 

not appear to be robust across 

specifications, since authors derive a 

wide range of willingness-to-pay values 

for fuel economy from these models, 

and there is not clear guidance from the 

literature on whether one specification 

is clearly preferred over another. Thus, 

the agencies seek comment on how to 

estimate explicitly the changes in 

vehicle buyers’ welfare from the 

combination of higher prices for new 

vehicle models, increases in their fuel 

economy, and any accompanying 

changes in vehicle attributes such as 

performance, passenger- and cargocarrying capacity, or other dimensions 

of utility. 

• The on-road fuel economy ‘‘gap’’— 

Actual fuel economy levels achieved by 

light-duty vehicles in on-road driving 

fall somewhat short of their levels 

measured under the laboratory-like test 

conditions used by NHTSA and EPA to 

establish compliance with the proposed 

CAFE and GHG standards. The agencies 

use an on-road fuel economy gap for 

light-duty vehicles of 20 percent lower 

than published fuel economy levels. For 

example, if the measured CAFE fuel 

economy value of a light truck is 20 

mpg, the on-road fuel economy actually 

achieved by a typical driver of that 

vehicle is expected to be 16 mpg 
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49504 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

(20*.80).92 NHTSA previously used this 

estimate in its MY 2011 final rule, and 

the agencies confirmed it based on 

independent analysis for use in this 

NPRM. 

• Fuel prices and the value of saving 

fuel—Projected future fuel prices are a 

critical input into the preliminary 

economic analysis of alternative 

standards, because they determine the 

value of fuel savings both to new 

vehicle buyers and to society. The 

agencies relied on the most recent fuel 

price projections from the U.S. Energy 

Information Administration’s (EIA) 

Annual Energy Outlook (AEO) for this 

analysis. Specifically, the agencies used 

the AEO 2009 (April 2009 release) 

Reference Case forecasts of inflationadjusted (constant-dollar) retail gasoline 

and diesel fuel prices, which represent 

the EIA’s most up-to-date estimate of the 

most likely course of future prices for 

petroleum products.93 

EIA’s Updated Reference Case reflects 

the effects of the American 

Reinvestment and Recovery Act of 2009, 

as well as the most recent revisions to 

the U.S. and global economic outlook. 

In addition, it also reflects the 

provisions of the Energy Independence 

and Security Act of 2007 (EISA), 

including the requirement that the 

combined mpg level of U.S. cars and 

light trucks reach 35 miles per gallon by 

model year 2020. Because this provision 

would be expected to reduce future U.S. 

demand for gasoline and other fuels, 

there is some concern about whether the 

AEO 2009 forecast of fuel prices already 

partly reflects the increases in CAFE 

standards considered in this rule, and 

thus whether it is suitable for valuing 

the projected reductions in fuel use. In 

response to this concern, the agencies 

note that EIA issued a revised version of 

AEO 2008 in June 2008, which modified 

its previous December 2007 Early 

Release of AEO 2008 to reflect the 

effects of the recently-passed EISA 

legislation.94 The fuel price forecasts 

reported in EIA’s Revised Release of 

AEO 2008 differed by less than one cent 

per gallon over the entire forecast period 

(2008–230) from those previously issued 

92 U.S. Environmental Protection Agency, Final 

Technical Support Document, Fuel Economy 

Labeling of Motor Vehicle Revisions to Improve 

Calculation of Fuel Economy Estimates, EPA420–R– 

06–017, December 2006. 

93 Energy Information Administration, Annual 

Energy Outlook 2009, Revised Updated Reference 

Case (April 2009), Table 12. Available at http:// 

www.eia.doe.gov/oiaf/servicerpt/stimulus/excel/ 

aeostimtab_12.xls (last accessed July 26, 2009). 

94 Energy Information Administration, Annual 

Energy Outlook 2008, Revised Early Release (June 

2008), Table 12. Available at http:// 

www.eia.doe.gov/oiaf/archive/aeo08/excel/ 

aeotab_12.xls (last accessed September 12, 2009). 

as part of its initial release of AEO 2008. 

Thus, the agencies are reasonably 

confident that the fuel price forecasts 

presented in AEO 2009 and used to 

analyze the value of fuel savings 

projected to result from this rule are not 

unduly affected by the CAFE provisions 

of EISA, and therefore do not cause a 

baseline problem. Nevertheless, the 

agencies request comment on the use of 

the AEO 2009 fuel price forecasts, and 

particularly on the potential impact of 

the EISA-mandated CAFE 

improvements on these projections. 

• Consumer valuation of fuel 

economy and payback period—In 

estimating the value of fuel economy 

improvements that would result from 

alternative CAFE and GHG standards to 

potential vehicle buyers, the agencies 

assume that buyers value the resulting 

fuel savings over only part of the 

expected lifetime of the vehicles they 

purchase. Specifically, we assume that 

buyers value fuel savings over the first 

five years of a new vehicle’s lifetime, 

and that buyers discount the value of 

these future fuel savings using rates of 

3% and 7%. The five-year figure 

represents the current average term of 

consumer loans to finance the purchase 

of new vehicles. 

• Vehicle sales assumptions—The 

first step in estimating lifetime fuel 

consumption by vehicles produced 

during a model year is to calculate the 

number that are expected to be 

produced and sold.95 The agencies 

relied on the AEO 2009 Reference Case 

for forecasts of total vehicle sales, while 

the baseline market forecast developed 

by the agencies (see Section II.B) 

divided total projected sales into sales 

of cars and light trucks. 

• Vehicle survival assumptions—We 

then applied updated values of agespecific survival rates for cars and light 

trucks to these adjusted forecasts of 

passenger car and light truck sales to 

determine the number of these vehicles 

remaining in use during each year of 

their expected lifetimes. 

95 Vehicles are defined to be of age 1 during the 

calendar year corresponding to the model year in 

which they are produced; thus for example, model 

year 2000 vehicles are considered to be of age 1 

during calendar year 2000, age 2 during calendar 

year 2001, and to reach their maximum age of 26 

years during calendar year 2025. NHTSA considers 

the maximum lifetime of vehicles to be the age after 

which less than 2 percent of the vehicles originally 

produced during a model year remain in service. 

Applying these conventions to vehicle registration 

data indicates that passenger cars have a maximum 

age of 26 years, while light trucks have a maximum 

lifetime of 36 years. See Lu, S., NHTSA, Regulatory 

Analysis and Evaluation Division, ‘‘Vehicle 

Survivability and Travel Mileage Schedules,’’ DOT 

HS 809 952, 8–11 (January 2006). Available at 

http://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf 

(last accessed July 27, 2009). 

• Total vehicle use—We then 

calculated the total number of miles that 

cars and light trucks produced in each 

model year will be driven during each 

year of their lifetimes using estimates of 

annual vehicle use by age tabulated 

from the Federal Highway 

Administration’s 2001 National 

Household Transportation Survey 

(NHTS),96 adjusted to account for the 

effect on vehicle use of subsequent 

increases in fuel prices. In order to 

insure that the resulting mileage 

schedules imply reasonable estimates of 

future growth in total car and light truck 

use, we calculated the rate of growth in 

annual car and light truck mileage at 

each age that is necessary for total car 

and light truck travel to increase at the 

rates forecast in the AEO 2009 Reference 

Case. The growth rate in average annual 

car and light truck use produced by this 

calculation is approximately 1.1 percent 

per year.97 This rate was applied to the 

mileage figures derived from the 2001 

NHTS to estimate annual mileage 

during each year of the expected 

lifetimes of MY 2012–2016 cars and 

light trucks.98 

• Accounting for the rebound effect of 

higher fuel economy—The rebound 

effect refers to the fraction of fuel 

savings expected to result from an 

increase in vehicle fuel economy— 

particularly an increase required by the 

adoption of higher CAFE and GHG 

standards—that is offset by additional 

vehicle use. The increase in vehicle use 

occurs because higher fuel economy 

reduces the fuel cost of driving, 

typically the largest single component of 

the monetary cost of operating a vehicle, 

and vehicle owners respond to this 

reduction in operating costs by driving 

slightly more. For purposes of this 

NPRM, the agencies have elected to use 

a 10 percent rebound effect in their 

analyses of fuel savings and other 

benefits from higher standards. 

• Benefits from increased vehicle 

use—The increase in vehicle use from 

the rebound effect provides additional 

benefits to their owners, who may make 

more frequent trips or travel farther to 

reach more desirable destinations. This 

96 For a description of the Survey, see http:// 

nhts.ornl.gov/quickStart.shtml (last accessed July 

27, 2009). 97 It was not possible to estimate separate growth 

rates in average annual use for cars and light trucks, 

because of the significant reclassification of light 

truck models as passenger cars discussed 

previously. 98 While the adjustment for future fuel prices 

reduces average mileage at each age from the values 

derived from the 2001 NHTS, the adjustment for 

expected future growth in average vehicle use 

increases it. The net effect of these two adjustments 

is to increase expected lifetime mileage by about 18 

percent for passenger cars and about 16 percent for 

light trucks. 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49505 

additional travel provides benefits to 

drivers and their passengers by 

improving their access to social and 

economic opportunities away from 

home. The benefits from increased 

vehicle use include both the fuel 

expenses associated with this additional 

travel, and the consumer surplus it 

provides. We estimate the economic 

value of the consumer surplus provided 

by added driving using the conventional 

approximation, which is one half of the 

product of the decline in vehicle 

operating costs per vehicle-mile and the 

resulting increase in the annual number 

of miles driven. Because it depends on 

the extent of improvement in fuel 

economy, the value of benefits from 

increased vehicle use changes by model 

year and varies among alternative 

standards. 

• The value of increased driving 

range—By reducing the frequency with 

which drivers typically refuel their 

vehicles, and by extending the upper 

limit of the range they can travel before 

requiring refueling, improving fuel 

economy and reducing GHG emissions 

thus provides some additional benefits 

to their owners. No direct estimates of 

the value of extended vehicle range are 

readily available, so the agencies’ 

analysis calculates the reduction in the 

annual number of required refueling 

cycles that results from improved fuel 

economy, and applies DOTrecommended values of travel time 

savings to convert the resulting time 

savings to their economic value.99 The 

agencies invite comment on the 

assumptions used in this analysis. 

Please see the Chapter 4 of the draft 

Joint TSD for details. 

• Added costs from congestion, 

crashes and noise—Although it 

provides some benefits to drivers, 

increased vehicle use associated with 

the rebound effect also contributes to 

increased traffic congestion, motor 

vehicle accidents, and highway noise. 

Depending on how the additional travel 

is distributed over the day and on where 

it takes place, additional vehicle use can 

contribute to traffic congestion and 

delays by increasing traffic volumes on 

facilities that are already heavily 

traveled during peak periods. These 

added delays impose higher costs on 

drivers and other vehicle occupants in 

the form of increased travel time and 

operating expenses, increased costs 

99 Department of Transportation, Guidance 

Memorandum, ‘‘The Value of Saving Travel Time: 

Departmental Guidance for Conducting Economic 

Evaluations,’’ Apr. 9, 1997. http://ostpxweb.dot.gov/ 

policy/Data/VOT97guid.pdf (last accessed October 

20, 2007); update available at http://ostpxweb.dot. 

gov/policy/Data/VOTrevision1_2-11-03.pdf (last 

accessed October 20, 2007). 

associated with traffic accidents, and 

increased traffic noise. The agencies rely 

on estimates of congestion, accident, 

and noise costs caused by automobiles 

and light trucks developed by the 

Federal Highway Administration to 

estimate the increased external costs 

caused by added driving due to the 

rebound effect.100 

• Petroleum consumption and import 

externalities—U.S. consumption and 

imports of petroleum products also 

impose costs on the domestic economy 

that are not reflected in the market price 

for crude petroleum, or in the prices 

paid by consumers of petroleum 

products such as gasoline. In economics 

literature on this subject, these costs 

include (1) higher prices for petroleum 

products resulting from the effect of 

U.S. oil import demand on the world oil 

price (‘‘monopsony costs’’); (2) the risk 

of disruptions to the U.S. economy 

caused by sudden reductions in the 

supply of imported oil to the U.S.; and 

(3) expenses for maintaining a U.S. 

military presence to secure imported oil 

supplies from unstable regions, and for 

maintaining the strategic petroleum 

reserve (SPR) to cushion against 

resulting price increases.101 Reducing 

U.S. imports of crude petroleum or 

refined fuels can reduce the magnitude 

of these external costs. Any reduction in 

their total value that results from lower 

fuel consumption and petroleum 

imports represents an economic benefit 

of setting more stringent standards over 

and above the dollar value of fuel 

savings itself. The agencies do not 

include a value for monopsony costs in 

order to be consistent with their use of 

a global value for the social cost of 

carbon. Based on a recently-updated 

ORNL study, we estimate that each 

gallon of fuel saved that results in a 

reduction in U.S. petroleum imports 

(either crude petroleum or refined fuel) 

will reduce the expected costs of oil 

supply disruptions to the U.S. economy 

by $0.169 (2007$). The agencies do not 

include savings in budgetary outlays to 

support U.S. military activities among 

the benefits of higher fuel economy and 

the resulting fuel savings. Each gallon of 

100 These estimates were developed by FHWA for 

use in its 1997 Federal Highway Cost Allocation 

Study; http://www.fhwa.dot.gov/policy/hcas/final/ 

index.htm (last accessed July 29, 2009). 101 See, e.g., Bohi, Douglas R. and W. David 

Montgomery (1982). Oil Prices, Energy Security, 

and Import Policy Washington, DC: Resources for 

the Future, Johns Hopkins University Press; Bohi, 

D. R., and M. A. Toman (1993). ‘‘Energy and 

Security: Externalities and Policies,’’ Energy Policy 

21:1093–1109; and Toman, M. A. (1993). ‘‘The 

Economics of Energy Security: Theory, Evidence, 

Policy,’’ in A. V. Kneese and J. L. Sweeney, eds. 

(1993). Handbook of Natural Resource and Energy 

Economics, Vol. III. Amsterdam: North-Holland, pp. 

1167–1218. 

fuel saved as a consequence of higher 

standards is anticipated to reduce total 

U.S. imports of crude petroleum or 

refined fuel by 0.95 gallons.102 

• Air pollutant emissions 

Æ Impacts on criteria air pollutant 

emissions—While reductions in 

domestic fuel refining and distribution 

that result from lower fuel consumption 

will reduce U.S. emissions of criteria 

pollutants, additional vehicle use 

associated with the rebound effect will 

increase emissions of these pollutants. 

Thus the net effect of stricter standards 

on emissions of each criteria pollutant 

depends on the relative magnitudes of 

reduced emissions from fuel refining 

and distribution, and increases in 

emissions resulting from added vehicle 

use. Criteria air pollutants emitted by 

vehicles and during fuel production 

include carbon monoxide (CO), 

hydrocarbon compounds (usually 

referred to as ‘‘volatile organic 

compounds,’’ or VOC), nitrogen oxides 

(NOX), fine particulate matter (PM2.5), 

and sulfur oxides (SOX). It is assumed 

that the emission rates (per mile) stay 

constant for future year vehicles. 

Æ EPA and NHTSA estimate the 

economic value of the human health 

benefits associated with reducing 

exposure to PM2.5 using a ‘‘benefit-perton’’ method. These PM2.5-related 

benefit-per-ton estimates provide the 

total monetized benefits to human 

health (the sum of reductions in 

premature mortality and premature 

morbidity) that result from eliminating 

one ton of directly emitted PM2.5, or one 

ton of a pollutant that contributes to 

secondarily-formed PM2.5 (such as NOX, 

SOX, and VOCs), from a specified 

source. Chapter 4.2.9 of the Technical 

Support Document that accompanies 

this proposal includes a description of 

these values. 

Reductions in GHG emissions— 

Emissions of carbon dioxide and other 

greenhouse gases (GHGs) occur 

throughout the process of producing 

and distributing transportation fuels, as 

well as from fuel combustion itself. By 

reducing the volume of fuel consumed 

by passenger cars and light trucks, 

higher standards will thus reduce GHG 

emissions generated by fuel use, as well 

as throughout the fuel supply cycle. The 

agencies estimated the increases of 

GHGs other than CO2, including 

102 Each gallon of fuel saved is assumed to reduce 

imports of refined fuel by 0.5 gallons, and the 

volume of fuel refined domestically by 0.5 gallons. 

Domestic fuel refining is assumed to utilize 90% 

imported crude petroleum and 10% domesticallyproduced crude petroleum as feedstocks. Together, 

these assumptions imply that each gallon of fuel 

saved will reduce imports of refined fuel and crude 

petroleum by 0.50 gallons + 0.50 gallons*90% = 

0.50 gallons + 0.45 gallons = 0.95 gallons. 
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49506 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

methane and nitrous oxide, from result of uncertainties about future values used in the agencies’ respective 

additional vehicle use by multiplying economic growth, climate sensitivity to analyses may be aggregated, expanded, 

the increase in total miles driven by cars GHG emissions, procedures used to or have other relevant adjustments. See 

and light trucks of each model year and model the economic impacts of climate the respective RIAs for details. The 

age by emission rates per vehicle-mile change, and the choice of discount rates. agencies seek comment on the economic for these GHGs. These emission rates, EPA and NHTSA’s coordinated assumptions presented in the table and which differ between cars and light proposals present a set of interim SCC discussed below. 

trucks as well as between gasoline and values reflecting a Federal interagency In addition, the agencies have diesel vehicles, were estimated by EPA group’s interpretation of the relevant conducted a range of sensitivities and using its recently-developed Motor climate economics literature. Sections present them in their respective RIAs. Vehicle Emission Simulator (Draft III.H and IV.C.3 provide more detail 

MOVES 2009).103 For example, NHTSA has conducted a Increases in emissions about SCC. sensitivity analysis on several of non-CO2 GHGs are converted to • Discounting future benefits and assumptions including (1) forecasts of equivalent increases in CO2 emissions costs—Discounting future fuel savings future fuel prices, (2) the discount rate using estimates of the Global Warming and other benefits is intended to 

applied to future benefits and costs, (3) Potential (GWP) of methane and nitrous account for the reduction in their value 

the magnitude of the rebound effect, (4) oxide. to society when they are deferred until 

Æ Economic value of reductions in the value to the U.S. economy of some future date, rather than received 

CO2 emissions—EPA and NHTSA immediately. The discount rate reducing carbon dioxide emissions, (5) 

assigned a dollar value to reductions in expresses the percent decline in the the monopsony effect, and (6) the 

CO2 emissions using the marginal dollar value of these benefits—as viewed from reduction in external economic costs 

value (i.e., cost) of climate-related today’s perspective—for each year they resulting from lower U.S. oil imports. 

damages resulting from carbon are deferred into the future. In This information is provided in 

emissions, also referred to as ‘‘social evaluating the non-climate related NHTSA’s PRIA. The agencies will 

cost of carbon’’ (SCC). The SCC is benefits of the proposed standards, the consider additional sensitivities for the 

intended to measure the monetary value agencies have employed discount rates final rule as appropriate, including 

society places on impacts resulting from of both 3 percent and 7 percent. sensitivities on the markup factors 

increased GHGs, such as property For the reader’s reference, Table applied to direct manufacturing costs to 

damage from sea level rise, forced II.F.1–1 below summarizes the values account for indirect costs (i.e., the 

migration due to dry land loss, and used to calculate the impacts of each Indirect Cost Markups (ICMs) which are 

mortality changes associated with proposed standard. The values discussed in Sections III and IV), and 

vector-borne diseases. Published presented in this table are summaries of the learning curve estimates used in this 

estimates of the SCC vary widely as a the inputs used for the models; specific analysis. 

TABLE II.F.1–1—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2007$) 

Fuel Economy Rebound Effect ............................................................................................................................................................
 

‘‘Gap’’ between test and on-road MPG ...............................................................................................................................................
 

Value of refueling time per ($ per vehicle-hour) .................................................................................................................................
 

Annual growth in average vehicle use ................................................................................................................................................
 

Fuel Prices (2012–50 average, $/gallon): 


Retail gasoline price .....................................................................................................................................................................
 

Pre-tax gasoline price ...................................................................................................................................................................
 

Economic Benefits from Reducing Oil Imports ($/gallon): 


‘‘Monopsony’’ Component ............................................................................................................................................................
 

Price Shock Component ...............................................................................................................................................................
 

Military Security Component ........................................................................................................................................................
 

Total Economic Costs ($/gallon) ..................................................................................................................................................
 

Emission Damage Costs (2020, $/ton or $/metric ton): 


Carbon monoxide .........................................................................................................................................................................
 

Volatile organic compounds (VOC) ..............................................................................................................................................
 

Nitrogen oxides (NOX)—vehicle use ............................................................................................................................................
 

Nitrogen oxides (NOX)—fuel production and distribution ............................................................................................................
 

Particulate matter (PM2.5)—vehicle use .......................................................................................................................................
 

Particulate matter (PM2.5)—fuel production and distribution ........................................................................................................
 

Sulfur dioxide (SO2) ......................................................................................................................................................................
 

Carbon dioxide (CO2) ...................................................................................................................................................................
 

Annual Increase in CO2 Damage Cost ........................................................................................................................................
 

External Costs from Additional Automobile Use ($/vehicle-mile): 


Congestion ....................................................................................................................................................................................
 

Accidents ......................................................................................................................................................................................
 

Noise .............................................................................................................................................................................................
 

Total External Costs .....................................................................................................................................................................
 

External Costs from Additional Light Truck Use ($/vehicle-mile): 

10% 

20% 

24.64 

1.1% 

3.77 

3.40 

0.00 

0.17 

0.00 

0.17 

0 

1,283 

5,116 

5,339 

238,432 

292,180 

30,896 

5 

10 

20 

34 

56 

3% 

0.054 

0.023 

0.001 

0.078 

........................ 

103 The MOVES model assumes that the per-mile occur during catalytic after-treatment of engine vehicle travel, are assumed to be unaffected by 

rates at which cars and light trucks emit these GHGs exhaust, and are thus independent of vehicles’ fuel changes in fuel economy. 

are determined by the efficiency of fuel combustion consumption rates. Thus MOVES’ emission factors 

during engine operation and chemical reactions that for these GHGs, which are expressed per mile of 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49507 

TABLE II.F.1–1—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2007$)—Continued 

Congestion ....................................................................................................................................................................................
 

Accidents ......................................................................................................................................................................................
 

Noise .............................................................................................................................................................................................
 

Total External Costs .....................................................................................................................................................................
 

Discount Rates Applied to Future Benefits .........................................................................................................................................
 

0.048 

0.026 

0.001 

0.075 

3%, 7% 

III. EPA Proposal for Greenhouse Gas 

Vehicle Standards 

A. Executive Overview of EPA Proposal 

1. Introduction 

The Environmental Protection Agency 

(EPA) is proposing to establish 

greenhouse gas emissions standards for 

the largest sources of transportation 

greenhouse gases—light-duty vehicles, 

light-duty trucks, and medium-duty 

passenger vehicles (hereafter light 

vehicles). These vehicle categories, 

which include cars, sport utility 

vehicles, minivans, and pickup trucks 

used for personal transportation, are 

responsible for almost 60% of all U.S. 

transportation related greenhouse gas 

emissions. This action represents the 

first-ever proposal by EPA to regulate 

vehicle greenhouse gas emissions under 

the Clean Air Act (CAA) and would 

establish standards for model years 2012 

and later light vehicles sold in the U.S. 

EPA is proposing three separate 

standards. The first and most important 

is a set of fleet-wide average carbon 

dioxide (CO2) emission standards for 

cars and trucks. These standards are 

based on CO2 emissions-footprint 

curves, where each vehicle has a 

different CO2 emissions compliance 

target depending on its footprint value. 

Vehicle CO2 emissions would be 

measured over the EPA city and 

highway tests. The proposed standard 

allows for credits based on 

demonstrated improvements in vehicle 

air conditioner systems, including both 

efficiency and refrigerant leakage 

improvement, which are not captured 

by the EPA tests. The EPA projects that 

the average light vehicle tailpipe CO2 

level in model year 2011 will be 326 

grams per mile while the average 

vehicle tailpipe CO2 emissions 

compliance level for the proposed 

model year 2016 standard will be 250 

grams per mile, an average reduction of 

23 percent from today’s CO2 levels. 

EPA is also proposing standards that 

will cap tailpipe nitrous oxide (N2O) 

and methane (CH4) emissions at 0.010 

and 0.030 grams per mile, respectively. 

Even after adjusting for the higher 

relative global warming potencies of 

these two compounds, nitrous oxide 

and methane emissions represent less 

than one percent of overall vehicle 

greenhouse gas emissions from new 

vehicles. Accordingly, the goal of these 

two proposed standards is to limit any 

potential increases in the future and not 

to force reductions relative to today’s 

low levels. 

This proposal represents the secondphase of EPA’s response to the Supreme 

Court’s 2007 decision in Massachusetts 

v. EPA 104 which found that greenhouse 

gases were air pollutants for purposes of 

the Clean Air Act. The Court held that 

the Administrator must determine 

whether or not emissions from new 

motor vehicles cause or contribute to air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare, or whether the science is too 

uncertain to make a reasoned decision. 

The Court further ruled that, in make 

these decisions, the EPA Administrator 

is required to follow the language of 

section 202(a) of the CAA. The Court 

remanded the case back to the Agency 

for reconsideration in light of its 

finding. 

The Administrator responded to the 

Court’s remand by issuing two proposed 

findings under section 202(a) of the 

Clean Air Act.105 First, the 

Administrator proposed to find that the 

science supports a positive 

endangerment finding that a mix of 

certain greenhouse gases in the 

atmosphere endangers the public health 

and welfare of current and future 

generations. This is referred to as the 

endangerment finding. Second, the 

Administrator proposed to find that the 

emissions of four of these gases—carbon 

dioxide, methane, nitrous oxide, and 

hydrofluorocarbons—from new motor 

vehicles and new motor vehicle engines 

contribute to the atmospheric 

concentrations of these key greenhouse 

gases and hence to the threat of climate 

change. This is referred to as the cause 

and contribute finding. Finalizing this 

proposed light vehicle regulations is 

contingent upon EPA finalizing both the 

endangerment finding and cause or 

104 549 U.S. 497 (2007). For further information 

on Massachusetts v. EPA see the July 30, 2008 

Advance Notice of Proposed Rulemaking, 

‘‘Regulating Greenhouse Gas Emissions under the 

Clean Air Act’’, 73 FR 44354 at 44397. There is a 

comprehensive discussion of the litigation’s history, 

the Supreme Court’s findings, and subsequent 

actions undertaken by the Bush Administration and 

the EPA from 2007–2008 in response to the 

Supreme Court remand. 

105 74 FR 18886, April 24, 2009. 

contribute finding. Sections III.B.1 

through III.B.4 below provide more 

details on the legal and scientific bases 

for this proposal. 

As discussed in Section I, this GHG 

proposal is part of a joint National 

Program such that a large majority of the 

projected benefits are achieved jointly 

with NHTSA’s proposed CAFE rule 

which is described in detail in Section 

IV of this preamble. EPA’s proposal 

projects total carbon dioxide emissions 

savings of nearly 950 million metric 

tons, and oil savings of 1.8 billion 

barrels over the lifetimes of the vehicles 

sold in model years 2012–2016. EPA 

projects net societal benefits of $192 

billion at a 3 percent discount rate for 

these same vehicles, or $136 billion at 

a 7 percent discount rate (both values 

assume a $20/ton SCC value). 

Accordingly, these proposed light 

vehicle greenhouse gas emissions 

standards would make an important 

‘‘first step’’ contribution as part of the 

National Program toward meeting longterm greenhouse gas emissions and 

import oil reduction goals, while 

providing important economic benefits 

as well. 

2. Why is EPA Proposing this Rule? 

This proposal addresses only light 

vehicles. EPA is addressing light 

vehicles as a first step in control of 

greenhouse gas emissions under the 

Clean Air Act for four reasons. First, 

light vehicles are responsible for almost 

60% of all mobile source greenhouse gas 

emissions, a share three times larger 

than any other mobile source subsector, 

and represent about one-sixth of all U.S. 

greenhouse gas emissions. Second, 

technology exists that can be readily 

and cost-effectively applied to these 

vehicles to reduce greenhouse gas 

emissions in the near term. Third, EPA 

already has an existing testing and 

compliance program for these vehicles, 

refined since the mid-1970s for 

emissions certification and fuel 

economy compliance, which would 

require only minor modifications to 

accommodate greenhouse gas emissions 

regulations. Finally, this proposal is an 

important first step in responding to the 

Supreme Court’s ruling in 

Massachusetts vs. EPA. In addition, 

EPA is currently evaluating controls for 

motor vehicles other than those covered 
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49508 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

by this proposal, and is reviewing seven 

petitions submitted by various States 

and organizations requesting that EPA 

use its Clean Air Act authorities to take 

action to reduce greenhouse gas 

emissions from aircraft (under 

§ 231(a)(2)), ocean-going vessels (under 

§ 213(a)(4)), and other nonroad engines 

and vehicle sources (also under 

§ 213(a)(4)). 

a. Light Vehicle Emissions Contribute to 

Greenhouse Gases and the Threat of 

Climate Change 

Greenhouse gases are gases in the 

atmosphere that effectively trap some of 

the Earth’s heat that would otherwise 

escape to space. Greenhouse gases are 

both naturally occurring and 

anthropogenic. The primary greenhouse 

gases of concern are directly emitted by 

human activities and include carbon 

dioxide, methane, nitrous oxide, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride. 

These gases, once emitted, remain in 

the atmosphere for decades to centuries. 

Thus, they become well mixed globally 

in the atmosphere and their 

concentrations accumulate when 

emissions exceed the rate at which 

natural processes remove greenhouse 

gases from the atmosphere. The heating 

effect caused by the human-induced 

buildup of greenhouse gases in the 

atmosphere is very likely106 the cause of 

most of the observed global warming 

over the last 50 years. The key effects of 

climate change observed to date and 

projected to occur in the future include, 

but are not limited to, more frequent 

and intense heat waves, more severe 

wildfires, degraded air quality, heavier 

and more frequent downpours and 

flooding, increased drought, greater sea 

level rise, more intense storms, harm to 

water resources, continued ocean 

acidification, harm to agriculture, and 

harm to wildlife and ecosystems. A 

detailed explanation of observed and 

projected changes in greenhouse gases 

and climate change and its impact on 

health, society, and the environment is 

included in EPA’s technical support 

document for the recently released 

Proposed Endangerment and Cause or 

Contribute Findings for Greenhouse 

Gases Under Section 202(a) of the Clean 

Air Act.107 

106 According to Intergovernmental Panel on 

Climate Change (IPCC) terminology, ‘‘very likely’’ 

conveys a 90 to 99 percent probability of 

occurrence. ‘‘Virtually certain’’ conveys a greater 

than 99 percent probability, ‘‘likely’’ conveys a 66 

to 90 percent probability, and ‘‘about as likely as 

not’’ conveys a 33 to 66 percent probability. 

107 74 FR18886, April 24, 2009. Both the Federal 

Register Notice and the Technical Support 

Document for this rulemaking are found in the 

Transportation sources represent a 

large and growing share of United States 

greenhouse gases and include 

automobiles, highway heavy duty 

trucks, airplanes, railroads, marine 

vessels and a variety of other sources. In 

2006, all transportation sources emitted 

31.5% of all U.S. greenhouse gases, and 

were the fastest-growing source of 

greenhouse gases in the U.S., accounting 

for 47% of the net increase in total U.S. 

greenhouse gas emissions from 1990– 

2006.108 The only sector with larger 

greenhouse gas emissions was 

electricity generation which emitted 

33.7% of all U.S. greenhouse gases. 

Light vehicles emit four greenhouse 

gases: carbon dioxide, methane, nitrous 

oxide and hydrofluorocarbons. Carbon 

dioxide (CO2) is the end product of 

fossil fuel combustion. During 

combustion, the carbon stored in the 

fuels is oxidized and emitted as CO2 and 

smaller amounts of other carbon 

compounds.109 Methane (CH4) 

emissions are a function of the methane 

content of the motor fuel, the amount of 

hydrocarbons passing uncombusted 

through the engine, and any postcombustion control of hydrocarbon 

emissions (such as catalytic 

converters).110 Nitrous oxide (N2O) (and 

nitrogen oxide (NOX)) emissions from 

vehicles and their engines are closely 

related to air-fuel ratios, combustion 

temperatures, and the use of pollution 

control equipment. For example, some 

types of catalytic converters installed to 

reduce motor vehicle NOX, carbon 

monoxide (CO) and hydrocarbon 

emissions can promote the formation of 

N2O.111 Hydrofluorocarbons (HFC) 

emissions are progressively replacing 

chlorofluorocarbons (CFC) and 

hydrochlorofluorocarbons (HCFC) in 

these vehicles’ cooling and refrigeration 

systems as CFCs and HCFCs are being 

phased out under the Montreal Protocol 

and Title VI of the CAA. There are 

multiple emissions pathways for HFCs 

with emissions occurring during 

charging of cooling and refrigeration 

public docket for this rulemaking. Docket is EPA– 

OAR–2009–0171. 

108 Inventory of U.S. Greenhouse Gases and Sinks: 

1990–2006. 

109 Mobile source carbon dioxide emissions in 

2006 equaled 26 percent of total U.S. CO2 

emissions. 

110 In 2006, methane emissions equaled 0.32 

percent of total U.S. methane emissions Nitrous 

oxide is a product of the reaction that occurs 

between nitrogen and oxygen during fuel 

combustion. 

111 In 2006, nitrous oxide emissions for these 

sources accounted for 8 percent of total U.S. nitrous 

oxide emissions. 

systems, during operations, and during 

decommissioning and disposal.112 

b. Basis for Action Under Clean Air Act 

Section 202(a)(1) of the Clean Air Act 

(CAA) states that ‘‘the Administrator 

shall by regulation prescribe (and from 

time to time revise) * * * standards 

applicable to the emission of any air 

pollutant from any class or classes of 

new motor vehicles * * *, which in his 

judgment cause, or contribute to, air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare.’’ As noted above, the 

Administrator has proposed to find that 

the air pollution of elevated levels of 

greenhouse gas concentrations may 

reasonably be anticipated to endanger 

public health and welfare.113 The 

Administrator has proposed to define 

the air pollution to be the elevated 

concentrations of the mix of six GHGs: 

carbon dioxide (CO2), methane (CH4), 

nitrous oxide (N2O), hydrofluorocarbons 

(HFCs), perfluorocarbons (PFCs), and 

sulfur hexafluoride (SF6). The 

Administrator has further proposed to 

find under CAA section 202(a) that CO2, 

methane, N2O and HFC emissions from 

new motor vehicles and engines 

contribute to this air pollution. This 

preamble describes proposed standards 

that would control emissions of CO2, 

HFCs, nitrous oxide, and methane. 

Standards for these GHGs would only be 

finalized if EPA determines that the 

criteria have been met for endangerment 

by the air pollution, and that emissions 

of GHGs from new motor vehicles or 

engines ‘‘cause or contribute’’ to that air 

pollution. In that case, section 202(a) 

would authorize EPA to issue standards 

applicable to emissions of those 

pollutants. For further discussion of 

EPA’s authority under section 202(a), 

see Section I.C.2 of the proposal. 

There are a variety of other CAA Title 

II provisions that are relevant to 

standards established under section 

202(a). As noted above, the standards 

are applicable to motor vehicles for their 

useful life. EPA has the discretion in 

determining what standard applies over 

the useful life. For example, EPA may 

set a single standard that applies both 

when the vehicles are new and 

throughout the useful life, or where 

appropriate may set a standard that 

varies during the term of useful life, 

such as a standard that is more stringent 

in the early years of the useful life and 

less stringent in the later years. 

112 In 2006 HFC from these source categories 

equaled 56 percent of total U.S. HFC emissions, 

making it the single largest source category of U.S. 

HFC emissions. 

113 74 FR18886, April 24, 2009. 
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The standards established under CAA 

section 202(a) are implemented and 

enforced through various mechanisms. 

Manufacturers are required to obtain an 

EPA certificate of conformity with the 

section 202 regulations before they may 

sell or introduce their new motor 

vehicle into commerce, according to 

CAA section 206(a). The introduction 

into commerce of vehicles without a 

certificate of conformity is a prohibited 

act under CAA section 203 that may 

subject a manufacturer to civil penalties 

and injunctive actions (see CAA 

sections 204 and 205). Under CAA 

section 206(b), EPA may conduct testing 

of new production vehicles to determine 

compliance with the standards. For inuse vehicles, if EPA determines that a 

substantial number of vehicles do not 

conform to the applicable regulations 

then the manufacturer must submit and 

implement a remedial plan to address 

the problem (see CAA section 207(c)). 

There are also emissions-based 

warranties that the manufacturer must 

implement under CAA section 207(a). 

c. EPA’s Greenhouse Gas Proposal 

Under Section 202(a) Concerning 

Endangerment and Cause or Contribute 

Findings 

EPA’s Administrator recently signed a 

proposed action with two distinct 

findings regarding greenhouse gases 

under section 202(a) of the Clean Air 

Act. This action is called the Proposed 

Endangerment and Cause or Contribute 

Findings for Greenhouse Gases under 

the Clean Air Act (Endangerment 

Proposal).114 The Administrator 

proposed an affirmative endangerment 

finding that the current and projected 

concentrations of a mix of six key 

greenhouse gases—carbon dioxide 

(CO2), methane (CH4), nitrous oxide 

(N2O), hydrofluorocarbons (HFCs), 

perfluorocarbons (PFCs), and sulfur 

hexafluoride(SF6)—in the atmosphere 

threaten the public health and welfare 

of current and future generations. She 

also proposed to find that the combined 

emissions of four of the gases—carbon 

dioxide, methane, nitrous oxide and 

hydrofluorocarbons from new motor 

vehicles and motor vehicle engines— 

contribute to the atmospheric 

concentrations of these greenhouse 

gases and therefore to the climate 

change problem. 

Specifically, the Administrator 

proposed, after a thorough examination 

of the scientific evidence on the causes 

and impact of current and future climate 

change, to find that the science 

compellingly supports a positive finding 

that atmospheric concentrations of these 

greenhouse gases result in air pollution 

which may reasonably be anticipated to 

endanger both public health and 

welfare. In her proposed finding, the 

Administrator relied heavily upon the 

major findings and conclusions from the 

recent assessments of the U.S. Climate 

Change Science Program and the U.N. 

Intergovernmental Panel on Climate 

Change.115 The Administrator proposed 

a positive endangerment finding after 

considering both observed and projected 

future effects of climate change, key 

uncertainties, and the full range of risks 

and impacts to public health and 

welfare occurring within the United 

States. In addition, the proposed finding 

noted that the evidence concerning risks 

and impacts occurring outside the U.S. 

provided further support for the 

proposed finding. 

The key scientific findings supporting 

the proposed endangerment finding are 

that: 

—Concentrations of greenhouse gases 

are at unprecedented levels compared 

to recent and distant past. These high 

concentrations are the unambiguous 

result of anthropogenic emissions and 

are very likely the cause of the 

observed increase in average 

temperatures and other climatic 

changes. 

—The effects of climate change 

observed to date and projected to 

occur in the future include more 

frequent and intense heat waves, more 

severe wildfires, degraded air quality, 

heavier downpours and flooding, 

increasing drought, greater sea level 

rise, more intense storms, harm to 

water resources, harm to agriculture, 

and harm to wildlife and ecosystems. 

These impacts are effects on public 

health and welfare within the 

meaning of the Clean Air Act. 

With regard to new motor vehicles 

and engines, the Administrator also 

proposed a finding that the combined 

emissions of four greenhouse gases— 

carbon dioxide, methane, nitrous oxide 

and hydrofluorocarbons—from new 

motor vehicles and engines contributes 

to this air pollution, i.e., the 

atmospheric concentrations of the mix 

of six greenhouse gases which create the 

threat of climate change and its impacts. 

Key facts supporting the proposed cause 

and contribute finding for on-highway 

vehicles regulated under section 202(a) 

of the Clean Air Act are that these 

sources are responsible for 24% of total 

U.S. greenhouse gas emissions, and 

more than 4% of total global greenhouse 

gas emissions.116 The Administrator 

also considered whether emissions of 

each greenhouse gas individually, as a 

separate air pollutant, would contribute 

to this air pollution. 

If the Administrator makes affirmative 

findings under section 202(a) on both 

endangerment and cause or contribute, 

then EPA is to issue standards 

‘‘applicable to emission’’ of the air 

pollutant or pollutants that EPA finds 

causes or contributes to the air pollution 

that endangers public health and 

welfare. The Endangerment Proposal 

invited public comment on whether the 

air pollutant should be considered the 

group of GHGs, or whether each GHG 

should be treated as a separate air 

pollutant. Either way, the emissions 

standards proposed today would satisfy 

the requirements of section 202(a) as the 

Administrator has significant discretion 

in how to structure the standards that 

apply to the emission of the air 

pollutant or air pollutants at issue. For 

example, under either approach EPA 

would have the discretion under section 

202(a) to adopt separate standards for 

each GHG, a single composite standard 

covering various gases, or any 

combination of these. In this rulemaking 

EPA is proposing separate standards for 

nitrous oxide and methane, and a CO2 

standard that provides for credits based 

on reductions of HFCs, as the 

appropriate way to issue standards 

applicable to emissions of these GHGs. 

3. What is EPA Proposing? 

a. Proposed Light-Duty Vehicle, LightDuty Truck, and Medium-Duty 

Passenger Vehicle Greenhouse Gas 

Emission Standards and Projected 

Compliance Levels 

The CO2 emissions standards are by 

far the most important of the three 

standards and are the primary focus of 

this summary. EPA is proposing an 

attribute-based approach for the CO2 

fleet-wide standard (one for cars and 

one for trucks), based on vehicle 

footprint as the attribute. These curves 

establish different CO2 emissions targets 

for each unique car and truck footprint. 

Generally, the larger the vehicle 

footprint, the higher the corresponding 

vehicle CO2 emissions target. Table 

III.A.3–1 shows the greenhouse gas 

standards for light vehicles that EPA is 

proposing for model years (MY) 2012 

and later: 

114 74 FR 18886 (April 24, 2009). 115 The U.S. Climate Change Science Program 116 This figure includes the greenhouse gas 

(CCSP) is now called the U.S. Global Change contributions of light vehicles, heavy duty vehicles, 

Research Program (GCRP). and remaining on-highway mobile sources. 
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49510 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

TABLE III.A.3–1—PROPOSED INDUSTRY-WIDE GREENHOUSE GAS EMISSIONS STANDARDS 

Standard/covered 

pollutants 

Form of 

standard 

Level of 

standard Credits Test cycles 

CO2 Standard 117: Tailpipe CO2 ................ 

N2O Standard: Tailpipe N2O ..................... 

CH4 Standard: Tailpipe CH4 ...................... 

Fleetwide average 

footprint CO2-curves 

for cars and trucks. 

Cap per vehicle ........... 

Cap per vehicle ........... 

See footprint—CO2 

curves in Figure I.C– 

1 for cars and Figure 

I.C–2 for trucks. 

0.010 g/mi ................... 

0.030 g/mi ................... 

CO2-e credits 118 ......... 

None ........................... 

None ........................... 

EPA 2-cycle (FTP and 

HFET test cycles), 

with separate mechanisms for A/C credits.119 

EPA FTP test. 

EPA FTP test. 

One important flexibility associated 

with the proposed CO2 standard is the 

proposed option for manufacturers to 

obtain credits associated with 

improvements in their air conditioning 

systems. As will be discussed in greater 

detail in later sections, EPA is 

establishing test procedures and design 

criteria by which manufacturers can 

demonstrate improvements in both air 

conditioner efficiency (which reduces 

vehicle tailpipe CO2 by reducing the 

load on the engine) and air conditioner 

refrigerants (using lower global warming 

potency refrigerants and/or improving 

system design to reduce GHG emissions 

associated with leaks). Neither of these 

strategies to reduce GHG emissions from 

air conditioners would be reflected in 

the EPA FTP or HFET tests. These 

improvements would be translated to a 

g/mi CO2-equivalent credit that can be 

subtracted from the manufacturer’s 

tailpipe CO2 compliance value. EPA 

expects a high percentage of 

manufacturers to take advantage of this 

flexibility to earn air conditioningrelated credits for MY2012–2016 

vehicles such that the average credit 

earned is about 11 grams per mile CO2– 

equivalent in 2016. 

A second flexibility being proposed is 

CO2 credits for flexible and dual fuel 

vehicles, similar to the CAFE credits for 

such vehicles which allow 

manufacturers to gain up to 1.2 mpg in 

their overall CAFE ratings. The Energy 

Independence and Security Act of 2007 

(EISA) mandated a phase-out of these 

flexible fuel vehicle CAFE credits 

beginning in 2015, and ending after 

2019. EPA is proposing to allow 

comparable CO2 credits for flexible fuel 

vehicles through MY 2015, but for MY 

2016 and beyond, EPA is proposing to 

treat flexible and dual fuel vehicles on 

a CO2-performance basis, calculating the 

overall CO2 emissions for flexible and 

dual fuel vehicles based on a fuel useweighted average of the CO2 levels on 

gasoline and on a manufacturer’s 

demonstrated actual usage of the 

alternative fuel in its vehicle fleet. 

Table III.A.3–2 summarizes EPA 

projections of industry-wide 2-cycle 

CO2 emissions and fuel economy levels 

that would be achieved by manufacturer 

compliance with the proposed GHG 

standards for MY2012–2016. 

For MY2011, Table III.A.3–2 uses the 

projected NHTSA compliance values for 

its MY2011 CAFE standards of 30.2 mpg 

for cars and 24.1 mpg for trucks, 

converted to an equivalent combined 

car and truck CO2 level of 325 grams per 

mile.120 EPA believes this is a 

reasonable estimate with which to 

compare the proposed MY2012–2016 

CO2 emission standards. Identifying the 

proper MY2011 estimate is complicated 

for many reasons, among them being the 

turmoil in the current automotive 

market for consumers and 

manufacturers, uncertain and volatile 

oil and gasoline prices, the ability of 

manufacturers to use flexible fuel 

vehicle credits to meet MY2011 CAFE 

standards, and the fact that most 

manufacturers have been surpassing 

CAFE standards (particularly the car 

standard) in recent years. Taking all of 

these considerations into account, EPA 

believes that the MY2011 projected 

CAFE compliance values, converted to 

CO2 emissions levels, represent a 

reasonable estimate. 

Table III.A.3–2 shows projected 

industry-wide average CO2 emissions 

values. The Projected CO2 Emissions for 

the Footprint-Based Standard column 

shows the CO2 g/mi level corresponding 

with the footprint standard that must be 

met. It is based on the proposed CO2-

footprint curves and projected footprint 

values, and will decrease each year to 

250 grams per mile (g/mi) in MY2016. 

For MY2012–2015, the emissions 

impact of the projected utilization of 

flexible fuel vehicle (FFV) credits and 

the temporary lead-time allowance 

alternative standard (TLAAS, discussed 

below) are shown in the next two 

columns. Neither of these programs is 

proposed to be available in MY2016. 

The Projected CO2 Emissions column 

gives the CO2 emissions levels projected 

to be achieved given use of the flexible 

fuel credits and temporary lead-time 

allowance program. This column shows 

that, relative to the MY 2011 estimate, 

EPA projects that MY2016 CO2 

emissions will be reduced by 23 percent 

over five years. The Projected A/C 

Credit column represents the industry 

wide average air conditioner credit 

manufacturers are expected to earn on 

an equivalent CO2 gram per mile basis 

in a given model year. In MY2016, the 

projected A/C credit of 10.6 g/mi 

represents 14 percent of the 75 g/mi CO2 

emissions reductions associated with 

the proposed standards. The Projected 

2-cycle CO2 Emissions column shows 

the projected CO2 emissions as 

measured over the EPA 2-cycle tests, 

which would allow compliance with the 

standard assuming utilization of the 

projected FFV, TLAAS, and A/C credits. 

117 While over 99 percent of the carbon in 

automotive fuels is converted to CO2 in a properly 

functioning engine, compliance with the CO2 

standard will also account for the very small levels 

of carbon associated with vehicle tailpipe 

hydrocarbon (HC) and carbon monoxide (CO) 

emissions, converted to CO2 on a mass basis, as 

discussed further in section x. 

118 CO2-e refers to CO2-equivalent, and is a metric 

that allows non-CO2 greenhouse gases (such as 

hydrofluorocarbons used as automotive air 

conditioning refrigerants) to be expressed as an 

equivalent mass (i.e., corrected for relative global 

warming potency) of CO2 emissions. 119 FTP is the Federal Test Procedure which uses 

what is commonly referred to as the ‘‘city’’ driving 

schedule, and HFET is the Highway Fuel Economy 

Test which uses the ‘‘highway’’ driving schedule. 

Compliance with the CO2 standard will be based on 

the same 2-cycle values that are currently used for 

CAFE standards compliance; EPA projects that 

fleet-wide in-use or real world CO2 emissions are 

approximately 25 percent higher, on average, than 

2-cycle CO2 values. 

120 74 FR 14196. 
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TABLE III.A.3–2—PROJECTED FLEETWIDE CO2 EMISSIONS VALUES (GRAMS PER MILE) 

Projected 

Model year 

CO2 emissions for the 

footprintbased 

Projected 

FFV credit 

Projected 

TLAAS 

credit 

Projected 

CO2 emissions 

Projected 

A/C credit 

Projected 

2-cycle CO2 

emissions 

standard 

2011 ................................................................................. .................... .................... .................... (325) .................... (325) 

2012 ................................................................................. 295 6 0.3 302 3.1 305 

2013 ................................................................................. 286 5.7 0.2 291 5.0 296 

2014 ................................................................................. 276 5.4 0.2 281 7.5 289 

2015 ................................................................................. 263 4.1 0.1 267 10.0 277 

2016 ................................................................................. 250 0 0 250 10.6 261 

EPA is also proposing a series of 

flexibilities for compliance with the CO2 

standard which are not expected to 

significantly affect the projected 

compliance and achieved values shown 

above, but which should significantly 

reduce the costs of achieving those 

reductions. These flexibilities include 

the ability to earn: annual credits for a 

manufacturer’s over-compliance with its 

unique fleet-wide average standard, 

early credits from MY2009–2011, 

credits for early introduction of 

advanced technology vehicles, credit for 

‘‘off-cycle’’ CO2 reductions not reflected 

in CO2/fuel economy tests, as well as 

the carry-forward and carry-backward of 

credits, the ability to transfer credits 

between a manufacturer’s car and truck 

fleets, and a temporary lead-time 

allowance alternative standard 

(included in the tables above) that will 

permit manufacturers with less than 

400,000 vehicles produced in MY 2009 

to designate a fraction of their vehicles 

to meet a 25% higher CO2 standard for 

MY 2012–2015. All of these proposed 

flexibilities are discussed in greater 

detail in later sections. 

EPA is also proposing caps on the 

tailpipe emissions of nitrous oxide 

(N2O) and methane (CH4)—0.010 g/mi 

for N2O and 0.030 g/mi for CH4—over 

the EPA FTP test. While N2O and CH4 

can be potent greenhouse gases on a 

relative mass basis, their emission levels 

from modern vehicle designs are 

extremely low and represent only about 

1% of total light vehicle GHG emissions. 

These cap standards are designed to 

ensure that N2O and CH4 emissions 

levels do not rise in the future, rather 

than to force reductions in the already 

low emissions levels. Accordingly, these 

standards are not designed to require 

automakers to make any changes in 

current vehicle designs, and thus EPA is 

not projecting any environmental or 

economic impacts associated with these 

proposed standards. 

EPA has attempted to build on 

existing practice wherever possible in 

designing a compliance program for the 

proposed GHG standards. In particular, 

the program structure proposed will 

streamline the compliance process for 

both manufacturers and EPA by 

enabling manufacturers to use a single 

data set to satisfy both the new GHG and 

CAFE testing and reporting 

requirements. Timing of certification, 

model-level testing, and other 

compliance activities also follow 

current practices established under the 

Tier 2 and CAFE programs. 

b. Environmental and Economic 

Benefits and Costs of EPA’s Proposed 

Standards 

In Table III.A.3–3 EPA presents 

estimated annual net benefits for the 

indicated calendar years. The table also 

shows the net present values of those 

benefits for the calendar years 2012– 

2050 using both a 3% and a 7% 

discount rate. As discussed previously, 

EPA recognizes that much of these same 

costs and benefits are also attributed to 

the proposed CAFE standard contained 

in this joint proposal. 

TABLE III.A.3–3—PROJECTED QUANTIFIABLE BENEFITS AND COSTS FOR PROPOSED CO2 STANDARD 

[(In million 2007 $s) [Note: B = unquantified benefits] 

2020 2030 2040 2050 NPV, 3% NPV, 7% 

Quantified Annual Costs a ........................ ¥$25,100 ¥$72,500 ¥$105,700 ¥$146,100 ¥$1,287,600 ¥$529,500 

Benefits from Reduced GHG Emissions at each assumed SCC value: 

SCC 5% ............................................ 1,200 3,300 5,700 9,500 69,200 28,600 

SCC 5% Newell-Pizer ....................... 2,500 6,600 11,000 19,000 138,400 57,100 

SCC from 3% and 5% ...................... 4,700 12,000 22,000 36,000 263,000 108,500 

SCC 3% ............................................ 8,200 22,000 38,000 63,000 456,900 188,500 

SCC 3% Newell-Pizer ....................... 14,000 36,000 63,000 100,000 761,400 314,200 

Other Quantified Externalities 

PM2.5 Related Benefits bcd ...................... 1,400 3,000 4,600 6,700 59,800 26,300 

Energy Security Impacts (price shock) .... 2,300 4,800 6,200 7,800 85,800 38,800 

Reduced Refueling .................................. 2,500 4,900 6,400 8,000 89,600 41,000 

Value of Increased Driving e .................... 4,900 10,000 13,600 18,000 184,700 82,700 

Accidents, Noise, Congestion .................. ¥2,400 ¥4,900 ¥6,300 ¥7,900 ¥88,200 ¥40,200 

Quantified Net Benefits at each assumed SCC value: 

SCC 5% ............................................
 35,000 93,600 135,900 188,200 1,688,500 706,700 

SCC 5% Newell-Pizer .......................
 36,300 96,900 141,200 197,700 1,757,700 735,200 

SCC from 3% and 5% ......................
 38,500 102,300 152,200 214,700 1,882,300 786,600 
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49512 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

TABLE III.A.3–3—PROJECTED QUANTIFIABLE BENEFITS AND COSTS FOR PROPOSED CO2 STANDARD—Continued 

[(In million 2007 $s) [Note: B = unquantified benefits] 

2020 2030 2040 2050 NPV, 3% NPV, 7% 

SCC 3% ............................................ 42,000 112,300 168,200 241,700 2,076,200 866,600 

SCC 3% Newell-Pizer ....................... 47,800 126,300 193,200 278,700 2,380,700 992,300 

a Quantified annual costs are negative because fuel savings are included as negative costs (i.e., positive savings). Since the fuel savings outweigh the vehicle technology costs, the costs of as presented here are actually negative (i.e., they represent savings). b Note that the co-pollutant impacts associated with the standards presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. Instead, the co-pollutant benefits are based on benefitper-ton values that reflect only human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and environmental 

benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale air quality modeling. However, EPA was unable to 

conduct a full-scale air quality modeling analysis in time for the proposal. EPA does intend to more fully capture the co-pollutant benefits for the 

analysis of the final standards. c The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on the Six Cities study (Laden et al., 2006), the values 

would be approximately 145% (nearly two-and-a-half times) larger. d The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate had been used, the values would be approximately 

9% lower. e Calculated using pre-tax fuel prices. 

4. Basis for the Proposed GHG 

Standards Under Section 202(a) 

EPA statutory authority under section 

202(a)(1) of the Clean Air Act (CAA) is 

discussed in more detail in Section 

I.C.2. The following is a summary of the 

basis for the proposed standards under 

section 202(a), which is discussed in 

more detail in the following portions of 

Section III. 

With respect to CO2 and HFCs, EPA 

is proposing attribute-based light-duty 

car and truck standards that achieve 

large and important emissions 

reductions of GHGs. EPA has evaluated 

the technological feasibility of the 

proposed standards, and the 

information and analysis performed by 

EPA indicates that these standards are 

feasible in the lead time provided. EPA 

and NHTSA have carefully evaluated 

the effectiveness of individual 

technologies as well as the interactions 

when technologies are combined. EPA’s 

projection of the technology that would 

be used to comply with the proposed 

standards indicates that manufacturers 

will be able to meet the proposed 

standards by employing a wide variety 

of technology that is already 

commercially available and can be 

incorporated into their vehicle at the 

time of redesign. In addition to the use 

of the manufacturers’ redesign cycle, 

EPA’s analysis also takes into account 

certain flexibilities that will facilitate 

compliance especially in the early years 

of the program when potential lead time 

constraints are most challenging. These 

flexibilities include averaging, banking, 

and trading of various types of credits. 

For the industry as a whole, EPA’s 

projections indicate that the proposed 

standards can be met using technology 

that will be available in the lead-time 

provided. 

To account for additional lead-time 

concerns for various manufacturers of 

typically higher performance vehicles, 

EPA is proposing a Temporary Leadtime Allowance that will further 

facilitate compliance for limited 

volumes of such vehicles in the 

program’s initial years. For a few very 

small volume manufacturers, EPA 

projects that manufacturers will likely 

comply using a combination of credits 

and technology. 

EPA has also carefully considered the 

cost to manufacturers of meeting the 

standards, estimating piece costs for all 

candidate technologies, direct 

manufacturing costs, cost markups to 

account for manufacturers’ indirect 

costs, and manufacturer cost reductions 

attributable to learning. In estimating 

manufacturer costs, EPA took into 

account manufacturers’ own standard 

practices such as making major changes 

to model technology packages during a 

planned redesign cycle. EPA then 

projected the average cost across the 

industry to employ this technology, as 

well as manufacturer-by-manufacturer 

costs. EPA considers the per vehicle 

costs estimated from this analysis to be 

well within a reasonable range in light 

of the emissions reductions and benefits 

received. EPA projects, for example, that 

the fuel savings over the life of the 

vehicles will more than offset the 

increase in cost associated with the 

technology used to meet the standards. 

EPA has also evaluated the impacts of 

these standards with respect to 

reductions in GHGs and reductions in 

oil usage. For the lifetime of the model 

year 2012–2016 vehicles we estimate 

GHG reductions of approximately 950 

million metric tons CO2 eq. and fuel 

reductions of 1.8 billion barrels of oil. 

These are important and significant 

reductions that would be achieved by 

the proposed standards. EPA has also 

analyzed a variety of other impacts of 

the standards, ranging from the 

standards’ effects on emissions of nonGHG pollutants, impacts on noise, 

energy, safety and congestion. EPA has 

also quantified the cost and benefits of 

the proposed standards, to the extent 

practicable. Our analysis to date 

indicates that the overall quantified 

benefits of the proposed standards far 

outweigh the projected costs. Utilizing a 

3% discount rate and a $20 per ton 

social cost of carbon we estimate the 

total net social benefits over the life of 

the model year 2012–2016 vehicles is 

$192 billion, and the net present value 

of the net social benefits of the 

standards through the year 2050 is $1.9 

trillion dollars. These values are 

estimated at $136 billion and $787 

billion, respectively, using a 7% 

discount rate and the $20 per ton SCC 

value. 

Under section 202(a) EPA is called 

upon to set standards that provide 

adequate lead-time for the development 

and application of technology to meet 

the standards. EPA’s proposed 

standards satisfy this requirement, as 

discussed above. In setting the 

standards, EPA is called upon to weigh 

and balance various factors, and to 

exercise judgment in setting standards 

that are a reasonable balance of the 

relevant factors. In this case, EPA has 

considered many factors, such as cost, 

impacts on emissions (both GHG and 

non-GHG), impacts on oil conservation, 

impacts on noise, energy, safety, and 

other factors, and has where practicable 

quantified the costs and benefits of the 

rule. In summary, given the technical 

feasibility of the standard, the moderate 

cost per vehicle in light of the savings 

in fuel costs over the life time of the 

vehicle, the very significant reductions 
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in emissions and in oil usage, and the 

significantly greater quantified benefits 

compared to quantified costs, EPA is 

confident that the proposed standards 

are an appropriate and reasonable 

balance of the factors to consider under 

section 202(a). See Husqvarna AB v. 

EPA, 254 F.3d 195, 200 (D.C. Cir. 2001) 

(great discretion to balance statutory 

factors in considering level of 

technology-based standard, and 

statutory requirement ‘‘to [give 

appropriate] consideration to the cost of 

applying * * * technology’’ does not 

mandate a specific method of cost 

analysis); see also Hercules Inc. v. EPA, 

598 F.2d 91, 106 (D.C. Cir. 1978) (‘‘In 

reviewing a numerical standard we 

must ask whether the agency’s numbers 

are within a zone of reasonableness, not 

whether its numbers are precisely 

right’’); Permian Basin Area Rate Cases, 

390 U.S. 747, 797 (1968) (same); Federal 

Power Commission v. Conway Corp., 

426 U.S. 271, 278 (1976) (same); Exxon 

Mobil Gas Marketing Co. v. FERC, 297 

F.3d 1071, 1084 (D.C. Cir. 2002) (same). 

EPA recognizes that the vast majority 

of technology which we are considering 

for purposes of setting standards under 

section 202(a) is commercially available 

and already being utilized to a limited 

extent across the fleet. The vast majority 

of the emission reductions which would 

result from this proposed rule would 

result from the increased use of these 

technologies. EPA also recognizes that 

this proposed rule would enhance the 

development and limited use of more 

advanced technologies, such as PHEVs 

and EVs. In this technological context, 

there is no clear cut line that indicates 

that only one projection of technology 

penetration could potentially be 

considered feasible for purposes of 

section 202(a), or only one standard that 

could potentially be considered a 

reasonable balancing of the factors 

relevant under section 202(a). EPA has 

therefore evaluated two sets of 

alternative standards, one more 

stringent than the proposed standards 

and one less stringent. 

The alternatives are 4% per year 

increase in standards which would be 

less stringent than our proposal and a 

6% per year increase in the standards 

which would be more stringent than our 

proposal. EPA is not proposing either of 

these. As discussed in Section III.D.7, 

the 4% per year compared to the 

proposal forgoes CO2 reductions which 

can be achieved at reasonable costs and 

are achievable by the industry within 

the rule’s timeframe. The 6% per year 

alternative requires a significant 

increase in the projected required 

technology which may not be 

achievable in this timeframe due to the 

limited available lead time and the 

current difficult financial condition of 

the automotive industry. (See Section 

III.D.7 for a detailed discussion of why 

EPA is not proposing either of the 

alternatives.) EPA thus believes that it is 

appropriate to propose the CO2 

standards discussed above. EPA invites 

comment on all aspects of this 

judgment, as well as comment on the 

alternative standards. 

EPA is also proposing standards for 

N2O and CH4. EPA has designed these 

standards to act as emission rate (i.e., 

gram per mile) caps and to avoid future 

increases in light duty vehicle 

emissions. As discussed in Section 

III.B.6, N2O and CH4 emissions are 

already generally well controlled by 

current emissions standards, and EPA 

has not identified clear technological 

steps available to manufacturers today 

that would significantly reduce current 

emission levels for the vast majority of 

vehicles manufactured today (i.e., 

stoichiometric gasoline vehicles). 

However, for both N2O and CH4, some 

vehicle technologies (and, for CH4, use 

of natural gas fuel) could potentially 

increase emissions of these GHGs in the 

future, and EPA believes it is important 

that this be avoided. EPA expects that, 

almost universally across current car 

and truck designs, manufacturers will 

be able to meet the ‘‘cap’’ standards 

with little if any technological 

improvements or cost. EPA has 

designed the level of the N2O and CH4 

standards with the intent that 

manufacturers would be able to meet 

them without the need for technological 

improvement; in other words, these 

emission standards are designed to be 

‘‘anti-backsliding’’ standards. 

B. Proposed GHG Standards for LightDuty Vehicles, Light-Duty Trucks, and 

Medium-Duty Passenger Vehicles 

EPA is proposing new emission 

standards to control greenhouse gases 

(GHGs) from light-duty vehicles. First, 

EPA is proposing emission standards for 

carbon dioxide (CO2) on a gram per mile 

(g/mile) basis that would apply to a 

manufacturer’s fleet of cars, and a 

separate standard that would apply to a 

manufacturer’s fleet of trucks. CO2 is the 

primary pollutant resulting from the 

combustion of vehicular fuels, and the 

amount of CO2 emitted is directly 

correlated to the amount of fuel 

consumed. Second, EPA is providing 

auto manufacturers with the 

opportunity to earn credits toward the 

fleet-wide average CO2 standards for 

improvements to air conditioning 

systems, including both 

hydrofluorocarbon (HFC) refrigerant 

losses (i.e., system leakage) and indirect 

CO2 emissions related to the increased 

load on the engine. Third, EPA is 

proposing separate emissions standards 

for two other GHG pollutants: Methane 

(CH4) and nitrous oxide (N2O). CH4 and 

N2O emissions relate closely to the 

design and efficient use of emission 

control hardware (i.e., catalytic 

converters). The standards for CH4 and 

N2O would be set as a cap that would 

limit emissions increases and prevent 

backsliding from current emission 

levels. The proposed standards 

described below would apply to 

passenger cars, light-duty trucks, and 

medium-duty passenger vehicles 

(MDPVs). As an overall group, they are 

referred to in this preamble as light 

vehicles or simply as vehicles. In this 

preamble section passenger cars may be 

referred to simply as ‘‘cars’’, and lightduty trucks and MDPVs as ‘‘light 

trucks’’ or ‘‘trucks.’’ 121 

EPA is establishing a system of 

averaging, banking, and trading of 

credits integral to the fleet averaging 

approach, based on manufacturer fleet 

average CO2 performance, as discussed 

in Section III.B.4. This approach is 

similar to averaging, banking, and 

trading (ABT) programs EPA has 

established in other programs and is 

also similar to provisions in the CAFE 

program. In addition to traditional ABT 

credits based on the fleet emissions 

average, EPA is also proposing to 

include A/C credits as an aspect of the 

standards, as mentioned above. EPA is 

also proposing several additional credit 

provisions that apply only in the initial 

model years of the program. These 

include flex fuel vehicle credits, credits 

based on the use of advanced 

technologies, and generation of credits 

prior to model year 2012. The proposed 

A/C credits and additional credit 

opportunities are described in Section 

III.C. These credit programs would 

provide flexibility to manufacturers, 

which may be especially important 

during the early transition years of the 

program. EPA is also proposing to allow 

a manufacturer to carry a deficit into the 

future for a limited number of model 

years. A parallel provision, referred to 

as credit carry-back, is proposed as part 

of the CAFE program. 

1. What Fleet-Wide Emissions Levels 

Correspond to the CO2 Standards? 

The proposed attribute-based CO2 

standards, if made final, are projected to 

achieve a national fleet-wide average, 

covering both light cars and trucks, of 

121 As described in Section III.B.2., EPA is 

proposing for purposes of GHG emissions standards 

to use the same vehicle category definitions as are 

used in the CAFE program. 
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49514 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

250 grams/mile of CO2 in model year 

(MY) 2016. This includes CO2-

equivalent emission reductions from 

A/C improvements, reflected as credits 

in the standard. The standards would 

begin with MY 2012, with a generally 

linear increase in stringency from MY 

2012 through MY 2016. EPA is 

proposing separate standards for cars 

and light trucks. The tables in this 

section below provide overall fleet 

average levels that are projected for both 

cars and light trucks over the phase-in 

period which is estimated to correspond 

with the proposed standards. The actual 

fleet-wide average g/mi level that will 

be achieved in any year for cars and 

trucks will depend on the actual 

production for that year, as well as the 

use of the various credit and averaging, 

banking, and trading provisions. For 

example, in any year, manufacturers 

may generate credits from cars and use 

them for compliance with the truck 

standard. Such transfer of credits 

between cars and trucks is not reflected 

in the table below. In Section III.F, the 

year-by-year estimate of emissions 

reductions that are projected to be 

achieved by the proposed standards are 

discussed. 

In general, the proposed schedule of 

standards acts as a phase-in to the MY 

2016 standards, and reflects 

consideration of the appropriate leadtime for each manufacturer to 

implement the requisite emission 

reductions technology across its product 

line.122 Note that 2016 is the final model 

year in which standards become more 

stringent. The 2016 CO2 standards 

would remain in place for 2017 and 

later model years, until revised by EPA 

in a future rulemaking. 

EPA estimates that, on a combined 

fleet-wide national basis, the proposed 

2016 MY standards would achieve a 

level of 250 g/mile CO2, including CO2-

equivalent credits from A/C related 

reductions. The derivation of the 250 g/ 

mile estimate is described in Section 

III.B.2. 

EPA has estimated the overall fleetwide CO2-equivalent emission levels 

that correspond with the proposed 

attribute-based standards, based on the 

projections of the composition of each 

manufacturer’s fleet in each year of the 

program. Tables III.B.1–1 and III.B.1–2 

provide these estimates for each 

manufacturer.123 

TABLE III.B.1–1—ESTIMATED FLEET CO2-EQUIVALENT LEVELS CORRESPONDING TO THE PROPOSED STANDARDS FOR
 

CARS
 

Manufacturer 

Model year 

2012 2013 2014 2015 2016 

BMW .......................................................................................................................................................... 265 257 249 238 227 

Chrysler ...................................................................................................................................................... 266 259 251 242 231 

Daimler ....................................................................................................................................................... 270 263 257 245 234 

Ford ............................................................................................................................................................ 266 259 251 239 228 

General Motors .......................................................................................................................................... 266 258 250 239 228 

Honda ........................................................................................................................................................ 259 251 244 232 221 

Hyundai ...................................................................................................................................................... 260 252 244 233 221 

Kia .............................................................................................................................................................. 262 253 246 235 223 

Mazda ........................................................................................................................................................ 258 250 243 231 220 

Mitsubishi ................................................................................................................................................... 255 247 240 228 217 

Nissan ........................................................................................................................................................ 263 255 247 236 225 

Porsche ...................................................................................................................................................... 242 234 227 215 204 

Subaru ....................................................................................................................................................... 252 244 237 225 214 

Suzuki ........................................................................................................................................................ 244 236 229 217 206 

Tata ............................................................................................................................................................ 286 278 271 259 248 

Toyota ........................................................................................................................................................ 257 250 242 231 220 

Volkswagen ................................................................................................................................................ 254 246 239 228 217 

TABLE III.B.1–2—ESTIMATED FLEET CO2-EQUIVALENT LEVELS CORRESPONDING TO THE PROPOSED STANDARDS FOR
 

LIGHT TRUCKS
 

Manufacturer 

Model year 

2012 2013 2014 2015 2016 

BMW .......................................................................................................................................................... 334 324 313 298 283 

Chrysler ...................................................................................................................................................... 349 339 329 315 300 

Daimler ....................................................................................................................................................... 346 334 323 308 293 

Ford ............................................................................................................................................................ 363 352 343 329 314 

General Motors .......................................................................................................................................... 372 361 351 337 322 

Honda ........................................................................................................................................................ 333 322 311 295 280 

Hyundai ...................................................................................................................................................... 330 320 308 293 278 

Kia .............................................................................................................................................................. 341 330 319 303 288 

Mazda ........................................................................................................................................................ 321 311 300 286 271 

Mitsubishi ................................................................................................................................................... 320 310 299 284 269 

Nissan ........................................................................................................................................................ 352 341 332 318 303 

Porsche ...................................................................................................................................................... 338 327 316 301 286 

Subaru ....................................................................................................................................................... 319 308 297 282 267 

Suzuki ........................................................................................................................................................ 324 313 301 286 271 

Tata ............................................................................................................................................................ 326 316 305 289 275 

Toyota ........................................................................................................................................................ 342 332 320 305 291 

122 See CAA section 202(a)(2). 123 These levels do not include the effect of and trucks, temporary lead time allowance, or any 

flexible fuel credits, transfer of credits between cars other credits. 
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TABLE III.B.1–2—ESTIMATED FLEET CO2-EQUIVALENT LEVELS CORRESPONDING TO THE PROPOSED STANDARDS FOR
 

LIGHT TRUCKS—Continued 


Manufacturer 

Model year 

2012 2013 2014 2015 2016 

Volkswagen ................................................................................................................................................ 344 333 322 307 292 

These estimates were aggregated 

based on projected production volumes 

into the fleet-wide averages for cars and 

trucks (Table III.B.1–3).124 

TABLE III.B.1–3—ESTIMATED FLEETWIDE CO2-EQUIVALENT LEVELS 

CORRESPONDING TO THE PROPOSED 

STANDARDS 

Cars Trucks 

Model year CO2 (g/mi) CO2 (g/mi) 

2012 .......... 261 352 

2013 .......... 254 341 

2014 .......... 245 331 

2015 .......... 234 317 

2016 and 

later ....... 224 303 

As shown in Table III.B.1–3, fleetwide CO2-equivalent emission levels for 

cars under the proposed approach are 

projected to decrease from 261 to 224 

grams per mile between MY 2012 and 

MY 2016. Similarly, fleet-wide CO2-

equivalent emission levels for trucks are 

projected to decrease from 352 to 303 

grams per mile. These numbers do not 

include the effects of other flexibilities 

and credits in the program. The 

estimated achieved values can be found 

in Chapter 5 of the Draft Regulatory 

Impact Analysis (DRIA). 

EPA has also estimated the average 

fleet-wide levels for the combined car 

and truck fleets. These levels are 

provided in Table III.B.1–4. As shown, 

the overall fleet average CO2 level is 

expected to be 250 g/mile in 2016. 

TABLE III.B.1–4—ESTIMATED FLEETWIDE COMBINED CO2-EQUIVALENT 

LEVELS CORRESPONDING TO THE 

PROPOSED STANDARDS 

Combined car 

and truck 

Model year CO2 (g/mi) 

2012 ...................................... 

2013 ...................................... 

2014 ...................................... 

2015 ...................................... 

2016 ...................................... 

295 

286 

276 

263 

250 

124 Due to rounding during calculations, the 

estimated fleet-wide CO2-equivalent levels may 

vary by plus or minus 1 gram. 

As noted above, EPA is proposing 

standards that would result in 

increasingly stringent levels of CO2 

control from MY 2012 though MY 

2016—applying the CO2 footprint 

curves applicable in each model year to 

the vehicles expected to be sold in each 

model year produces fleet-wide annual 

reductions in CO2 emissions. As 

explained in Section III.D below and the 

relevant support documents, EPA 

believes that the proposed level of 

improvement achieves important CO2 

emissions reductions through the 

application of feasible control 

technology at reasonable cost, 

considering the needed lead time for 

this program. EPA further believes that 

the proposed averaging, banking and 

trading provisions, as well as other 

credit-generating mechanisms, allow 

manufacturers further flexibilities 

which reduce the cost of the proposed 

CO2 standards and help to provide 

adequate lead time. EPA believes this 

approach is justified under section 

202(a) of the Clean Air Act. 

EPA has analyzed the feasibility 

under the CAA of achieving the 

proposed CO2 standards, based on 

projections of what actions 

manufacturers are expected to take to 

reduce emissions. The results of the 

analysis are discussed in detail in 

Section III.D below and in the DRIA. 

EPA also presents the estimated costs 

and benefits of the proposed car and 

truck CO2 standards in Section III.H. In 

developing the proposal, EPA has 

evaluated the kinds of technologies that 

could be utilized by the automobile 

industry, as well as the associated costs 

for the industry and fuel savings for the 

consumer, the magnitude of the GHG 

reductions that may be achieved, and 

other factors relevant under the CAA. 

With respect to the lead time and cost 

of incorporating technology 

improvements that reduce GHG 

emissions, EPA and NHTSA place 

important weight on the fact that during 

MYs 2012–2016 manufacturers are 

expected to redesign and upgrade their 

light-duty vehicle products (and in 

some cases introduce entirely new 

vehicles not on the market today). Over 

these five model years there would be 

an opportunity for manufacturers to 

evaluate almost every one of their 

vehicle model platforms and add 

technology in a cost-effective way to 

control GHG emissions and improve 

fuel economy. This includes redesign of 

the air conditioner systems in ways that 

will further reduce GHG emissions. The 

time-frame and levels for the proposed 

standards, as well as the ability to 

average, bank and trade credits and 

carry a deficit forward for a limited 

time, are expected to provide 

manufacturers the time needed to 

incorporate technology that will achieve 

GHG reductions, and to do this as part 

of the normal vehicle redesign process. 

This is an important aspect of the 

proposal, as it would avoid the much 

higher costs that would occur if 

manufacturers needed to add or change 

technology at times other than these 

scheduled redesigns. This time period 

would also provide manufacturers the 

opportunity to plan for compliance 

using a multi-year time frame, again in 

accord with their normal business 

practice. 

Consistent with the requirement of 

CAA section 202(a)(1) that standards be 

applicable to vehicles ‘‘for their useful 

life,’’ EPA is proposing CO2 vehicle 

standards that would apply for the 

useful life of the vehicle. Under section 

202(i) of the Act, which authorized the 

Tier 2 standards, EPA established a 

useful life period of 10 years or 120,000 

miles, whichever first occurs, for all 

Tier 2 light-duty vehicles and light-duty 

trucks.125 Tier 2 refers to EPA’s 

standards for criteria pollutants such as 

NOX, HC, and CO. EPA is proposing 

new CO2 standards for the same group 

of vehicles, and therefore the Tier 2 

useful life would apply for CO2 

standards as well. The in-use emission 

standard will be 10% higher than the 

certification standard, to address issues 

of production variability and test-to-test 

variability. The in-use standard is 

discussed in Section III.E. 

EPA is proposing to measure CO2 for 

certification and compliance purposes 

using the same test procedures currently 

used by EPA for measuring fuel 

economy. These procedures are the 

Federal Test Procedure (FTP or ‘‘city’’ 

test) and the Highway Fuel Economy 

125 See 65 FR 6698 (February 10, 2000). 
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49516 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

Test (HFET or ‘‘highway’’ test).126 This 

corresponds with the data used to 

develop the footprint-based CO2 

standards, since the data on control 

technology efficiency was also 

developed in reference to these test 

procedures. Although EPA recently 

updated the test procedures used for 

fuel economy labeling, to better reflect 

the actual in-use fuel economy achieved 

by vehicles, EPA is not proposing to use 

these test procedures for the CO2 

standards proposed here, given the lack 

of data on control technology 

effectiveness under these procedures.127 

As stated in Section I, EPA and NHTSA 

invite comments on potential 

amendments to the CAFE and GHG test 

procedures, including but not limited to 

air conditioner-related emissions, that 

could be implemented beginning in MY 

2017. 

EPA proposes to include 

hydrocarbons (HC) and carbon 

monoxide (CO) in its CO2 emissions 

calculations on a CO2-equivalent basis. 

It is well accepted that HC and CO are 

typically oxidized to CO2 in the 

atmosphere in a relatively short period 

of time and so are effectively part of the 

CO2 emitted by a vehicle. In terms of 

standard stringency, accounting for the 

carbon content of tailpipe HC and CO 

emissions and expressing it as CO2-

equivalent emissions would add less 

than one percent to the overall CO2-

equivalent emissions level. This will 

also ensure consistency with CAFE 

calculations since HC and CO are 

included in the ‘‘carbon balance’’ 

methodology that EPA uses to 

determine fuel usage as part of 

calculating vehicle fuel economy levels. 

2. What Are the CO2 Attribute-Based 

Standards? 

EPA proposes to use the same vehicle 

category definitions that are used in the 

CAFE program for the 2011 model year 

standards.128 The CAFE vehicle 

category definitions differ slightly from 

the EPA definitions for cars and light 

trucks used for the Tier 2 program, as 

well as other EPA vehicle programs. 

Specifically, NHTSA’s reconsideration 

of the CAFE program statutory language 

has resulted in many two-wheel drive 

SUVs under 6000 pounds gross vehicle 

weight being reclassified as cars under 

the CAFE program. The proposed 

approach of using CAFE definitions 

allows EPA’s proposed CO2 standards 

and the proposed CAFE standards to be 

harmonized across all vehicles. In other 

words, vehicles would be subject to 

either car standards or truck standards 

under both programs, and not car 

standards under one program and trucks 

standards under the other. 

EPA is proposing separate car and 

truck standards, that is, vehicles defined 

as cars have one set of footprint-based 

curves for MY 2012–2016 and vehicles 

defined as trucks have a different set for 

MY 2012–2016. In general, for a given 

footprint the CO2 g/mi target for trucks 

is less stringent then for a car with the 

same footprint. 

EPA is not proposing a single fleet 

standard where all cars and trucks are 

measured against the same footprint 

curve for several reasons. First, some 

vehicles classified as trucks (such as 

pick-up trucks) have certain attributes 

not common on cars which attributes 

contribute to higher CO2 emissions— 

notably high load carrying capability 

and/or high towing capability. Due to 

these differences, it is reasonable to 

separate the light-duty vehicle fleet into 

two groups. Second, EPA would like to 

harmonize key program design elements 

of the GHG standards with NHTSA’s 

CAFE program where it is reasonable to 

do so. NHTSA is required by statute to 

set separate standards for passenger cars 

and for non-passenger cars. 

Finally, most of the advantages of a 

single standard for all light duty 

vehicles are also present in the two-fleet 

standards proposed here. Because EPA 

is proposing to allow unlimited credit 

transfer between a manufacturer’s car 

and truck fleets, the two fleets can 

essentially be viewed as a single fleet 

when manufacturers consider 

compliance strategies. Manufacturers 

can thus choose on which vehicles 

within their fleet to focus GHG reducing 

technology and then use credit transfers 

as needed to demonstrate compliance, 

just as they would if there was a single 

fleet standard. The one benefit of a 

single light-duty fleet not captured by a 

two-fleet approach is that a single fleet 

prevents potential ‘‘gaming’’ of the car 

and truck definitions to try and design 

vehicles which are more similar to 

passenger cars but which may meet the 

regulatory definition of trucks. Although 

this is of concern to EPA, we do not 

believe at this time that concern is 

sufficient to outweigh the other reasons 

for proposing separate car and truck 

fleet standards. EPA requests comment 

on this approach. 

For model years 2012 and later, EPA 

is proposing a series of CO2 standards 

that are described mathematically by a 

family of piecewise linear functions 

(with respect to vehicle footprint). The 

form of the function is as follows: 

CO2 = a, if x ≤ l 

CO2 = cx + d, if l < x ≤ h 

CO2 = b, if x > h 

Where: 


CO2 = the CO2 target value for a given 


footprint (in g/mi) 

a = the minimum CO2 target value (in g/mi) 

b = the maximum CO2 target value (in g/mi) 

c = the slope of the linear function (in g/mi 

per sq ft) 

d = is the zero-offset for the line (in g/mi CO2) 

x = footprint of the vehicle model (in square 

feet, rounded to the nearest tenth) 

l & h are the lower and higher footprint 

limits, constraints, or the boundary 

(‘‘kinks’’) between the flat regions and 

the intermediate sloped line. 

EPA’s proposed parameter values that 

define the family of functions for the 

proposed CO2 fleetwide average car and 

truck standards are as follows: 

TABLE III.B.2–1—PARAMETER VALUES FOR CARS 

[For CO2 gram per mile targets] 

Model year a b c d Lower 

constraint 

Upper 

constraint 

2012 ......................................................... 242 313 4.72 48.8 41 56 

2013 ......................................................... 234 305 4.72 40.8 41 56 

2014 ......................................................... 227 297 4.72 33.2 41 56 

2015 ......................................................... 215 286 4.72 22.0 41 56 

2016 and later .......................................... 204 275 4.72 10.9 41 56 

126 EPA established the FTP for emissions to fuel economy measurement and added the procedures to calculate fuel economy values both 

measurement in the early 1970s. In 1976, in HFET.126 The provisions in the 1976 regulation, for labeling and for CAFE purposes. 

response to the Energy Policy and Conservation Act effective with the 1977 model year, established 127 See 71 FR 77872, December 27, 2006. 

(EPCA) statute, EPA extended the use of the FTP 128 See 49 CFR part 523. 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49517 

TABLE III.B.2–2—PARAMETER VALUES FOR TRUCKS 

[For CO2 gram per mile targets] 

Model year a b c d Lower 

constraint 

Upper 

constraint 

2012 ......................................................... 298 399 4.04 132.6 41 66 

2013 ......................................................... 287 388 4.04 121.6 41 66 

2014 ......................................................... 276 377 4.04 110.3 41 66 

2015 ......................................................... 261 362 4.04 95.2 41 66 

2016 and later .......................................... 246 347 4.04 80.4 41 66 

The equations can be shown 

graphically for each vehicle category, as 

shown in Figures III.B.2–1 and III.B.2– 

2. These standards (or functions) 

decrease from 2012–2016 with a vertical 

shift. A more detailed description of the 

development of the attribute based 

standard can be found in Chapter 2 of 

the Draft Joint TSD. More background 

discussion on other alternative 

attributes and curves EPA explored can 

be found in the EPA DRIA. EPA 

recognizes that the CAA does not 

mandate that EPA use an attribute based 

standard, as compared to NHTSA’s 

obligations under EPCA. The EPA 

believes that proposing a footprintbased program will harmonize EPA’s 

proposed program and the proposed 

CAFE program as a single national 

program, resulting in reduced 

compliance complexity for 

manufacturers. EPA’s reasons for 

proposing to use an attribute based 

standard are discussed in more detail in 

the Joint TSD. Comments are requested 

on this proposal to use the attributebased approach for regulating tailpipe 

CO2 emissions. 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49519 

BILLING CODE 4910–59–C CO2 standards. Section III.E explains profile of various models, and in-use 

3. Overview of How EPA’s Proposed EPA’s proposed approach for standards that would apply to the 

CO2 Standards Would Be Implemented certification and compliance in detail. various models that make up the 

for Individual Manufacturers EPA is proposing two kinds of manufacturer’s fleet. Although this is 

standards—fleet average standards similar in concept to the current light- This section provides a brief overview determined by a manufacturer’s fleet duty vehicle Tier 2 program, there are of how EPA proposes to implement the 
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49520 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

important differences. In explaining 

EPA’s proposal for the CO2 standards, it 

is useful to summarize how the Tier 2 

program works. 

Under Tier 2, manufacturers select a 

test vehicle prior to certification and test 

the vehicle and/or its emissions 

hardware to determine both its 

emissions performance when new and 

the emissions performance expected at 

the end of its useful life. Based on this 

testing, the vehicle is assigned to one of 

several specified bins of emissions 

levels, identified in the Tier 2 rule, and 

this bin level becomes the emissions 

standard for the test group the test 

vehicle represents. All of the vehicles in 

the group must meet the emissions level 

for that bin throughout their useful life. 

The emissions level assigned to the bin 

is also used in calculating the 

manufacturer’s fleet average emissions 

performance. 

Since compliance with the Tier 2 fleet 

average depends on actual test group 

sales volumes and bin levels, it is not 

possible to determine compliance at the 

time the manufacturer applies for and 

receives a certificate of conformity for a 

test group. Instead, at certification, the 

manufacturer demonstrates that the 

vehicles in the test group are expected 

to comply throughout their useful life 

with the emissions bin assigned to that 

test group, and makes a good faith 

demonstration that its fleet is expected 

to comply with the Tier 2 average when 

the model year is over. EPA issues a 

certificate for the vehicles covered by 

the test group based on this 

demonstration, and includes a condition 

in the certificate that if the manufacturer 

does not comply with the fleet average 

then production vehicles from that test 

group will be treated as not covered by 

the certificate to the extent needed to 

bring the manufacturer’s fleet average 

into compliance with Tier 2. 

EPA proposes to retain the Tier 2 

approach of requiring manufacturers to 

demonstrate in good faith at the time of 

certification that models in a test group 

will meet applicable standards 

throughout useful life. EPA also 

proposes to retain the practice of 

conditioning certificates upon 

attainment of the fleet average standard. 

However, there are several important 

differences between a Tier 2 type of 

program and the CO2 standards program 

EPA is proposing. These differences and 

resulting modifications to certification 

are summarized below and are 

described in detail in Section III.E. 

EPA is proposing to certify test groups 

as it does for Tier 2, with the CO2 

emission results for the test vehicle as 

the initial or default standard for all of 

the models in the test group. However, 

manufacturers would later substitute 

test data for individual models in that 

test group, based on the model level fuel 

economy testing that typically occurs 

through the course of the model year. 

This model level data would then be 

used to assign a distinct certification 

level for that model, instead of the 

initial test group level. These model 

level results would then be used to 

calculate the fleet average after the end 

of production.129 The option to 

substitute model level test data for the 

test group data is at the manufacturer’s 

discretion, except they are required as 

under the CAFE test protocols to test, at 

a minimum, enough models to represent 

90 percent of their production. The test 

group level would continue to apply for 

any model that is not covered by model 

level testing. A related difference is that 

the fleet average calculation for Tier 2 

is based on test group bin levels and test 

group sales whereas under this proposal 

the CO2 fleet level would be based on 

a combination of test group and modellevel emissions and model-level 

production. For the new CO2 standards, 

EPA is proposing to use production 

rather than sales in calculating the fleet 

average in order to more closely 

conform with CAFE, which is a 

production-based program. EPA does 

not expect any significant 

environmental effect because there is 

little difference between production and 

sales, and this will reduce the 

complexity of the program for 

manufacturers. 

4. Averaging, Banking, and Trading 

Provisions for CO2 Standards 

As explained above, a fleet average 

CO2 program for passenger cars and 

light trucks is proposed. EPA has 

implemented similar averaging 

programs for a range of motor vehicle 

types and pollutants, from the Tier 2 

fleet average for NOX to motorcycle 

hydrocarbon (HC) plus oxides of 

nitrogen (NOX) emissions to NOX and 

particulate matter (PM) emissions from 

heavy-duty engines.130 The proposed 

program would operate much like EPA’s 

existing averaging programs in that 

manufacturers would calculate 

129 The final in-use vehicle standards for each 

model would also be based on the model-level fuel 

economy testing. As discussed in Section III.E.4, an 

in-use adjustment factor would be applied to the 

model level results to determine the in-use standard 

that would apply during the useful life of the 

vehicle. 

130 For example, see the Tier 2 light-duty vehicle 

emission standards program (65 FR 6698, February 

10, 2000), the 2010 and later model year motorcycle 

emissions program (69 FR 2398, January 15, 2004), 

and the 2007 and later model year heavy-duty 

engine and vehicle standards program (66 FR 5001, 

January 18, 2001). 

production-weighted fleet average 

emissions at the end of the model year 

and compare their fleet average with a 

fleet average standard to determine 

compliance. As in other EPA averaging 

programs, the Agency is also proposing 

a comprehensive program for averaging, 

banking, and trading of credits which 

together will help manufacturers in 

planning and implementing the orderly 

phase-in of emissions control 

technology in their production, using 

their typical redesign schedules. 

Averaging, Banking, and Trading 

(ABT) of emissions credits has been an 

important part of many mobile source 

programs under CAA Title II, both for 

fuels programs as well as for engine and 

vehicle programs. ABT is important 

because it can help to address many 

issues of technological feasibility and 

lead-time, as well as considerations of 

cost. ABT is an integral part of the 

standard setting itself, and is not just an 

add-on to help reduce costs. In many 

cases, ABT resolves issues of lead-time 

or technical feasibility, allowing EPA to 

set a standard that is either numerically 

more stringent or goes into effect earlier 

than could have been justified 

otherwise. This provides important 

environmental benefits at the same time 

it increases flexibility and reduces costs 

for the regulated industry. 

This section discusses generation of 

credits by achieving a fleet average CO2 

level that is lower than the 

manufacturer’s CO2 fleet average 

standard. EPA is proposing a variety of 

additional ways credits may be 

generated by manufacturers. Section 

III.C describes these additional 

opportunities to generate credits in 

detail. EPA is proposing that credits 

could be earned through A/C system 

improvements beyond a specified 

baseline. Credits can also be generated 

by producing alternative fuel vehicles, 

by producing advanced technology 

vehicles including electric vehicles, 

plug-in hybrids, and fuel cell vehicles, 

and by using technologies that improve 

off-cycle emissions. In addition, EPA is 

proposing that early credits could be 

generated prior to the proposed 

program’s MY 2012 start date. The 

credits would be used in calculating the 

fleet averages at the end of the model 

year, with the exception of early credits 

which would be tracked separately. 

These proposed credit generating 

opportunities are described below in 

Section III.C. 

As explained earlier, manufacturers 

would determine the fleet average 

standard that would apply to their car 

fleet and the standard for their truck 

fleet from the applicable attribute-based 

curve. A manufacturer’s credit or debit 
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balance would be determined by 

comparing their fleet average with the 

manufacturer’s CO2 standard for that 

model year. The standard would be 

calculated from footprint values on the 

attribute curve and actual production 

levels of vehicles at each footprint. A 

manufacturer would generate credits if 

its car or truck fleet achieves a fleet 

average CO2 level lower than its 

standard and would generate debits if 

its fleet average CO2 level is above that 

standard. At the end of the model year, 

each manufacturer would calculate a 

production-weighted fleet average for 

each averaging set, cars and trucks. A 

manufacturer’s car or truck fleet that 

achieves a fleet average CO2 level lower 

than its standard would generate 

credits, and if its fleet average CO2 level 

is above that standard its fleet would 

generate debits. 

EPA is proposing to account for the 

difference in expected lifetime vehicle 

miles traveled (VMT) between cars and 

trucks in order to preserve CO2 

reductions when credits are transferred 

between cars and trucks. As directed by 

EISA, NHTSA accomplishes this in the 

CAFE program by using an adjustment 

factor that is applied to credits when 

they are transferred between car and 

truck compliance categories. The CAFE 

adjustment factor accounts for two 

different influences that can cause the 

transfer of car and truck credits 

(expressed in tenths of a mpg), if left 

unadjusted, to potentially negate fuel 

reductions. First, mpg is not linear with 

fuel consumption, i.e., a 1 mpg 

improvement above a standard will 

imply a different amount of actual fuel 

consumed depending on the level of the 

standard. Second, NHTSA’s conversion 

corrects for the fact that the typical 

lifetime miles for cars is less than that 

for trucks, meaning that credits earned 

for cars and trucks are not necessarily 

equal. NHTSA’s adjustment factor 

essentially converts credits into vehicle 

lifetime gallons to ensure preservation 

of fuel savings and the transfer credits 

on an equal basis, and then converts 

back to the statutorily required credit 

units of tenths of a mile per gallon. To 

convert to gallons NHTSA’s conversion 

must take into account the expected 

lifetime mileage for cars and trucks. 

Because EPA is proposing standards 

that are expressed on a CO2 gram per 

mile basis, which is linear with fuel 

consumption, EPA’s credit calculations 

do not need to account for the first issue 

noted above. However, EPA is 

proposing to account for the second 

issue by expressing credits when they 

are generated in total lifetime 

megagrams (metric tons), rather than 

through the use of conversion factors 

that would apply at certain times. In 

this way credits could be freely 

exchanged between car and truck 

compliance categories without 

adjustment. Additional detail regarding 

this approach, including a discussion of 

the vehicle lifetime mileage estimates 

for cars and trucks can be found in 

Section III.E.5. A discussion of the 

estimated vehicle lifetime miles traveled 

can be found in Chapter 4 of the draft 

Joint Technical Support Document. EPA 

requests comment on the proposed 

approach. 

A manufacturer that generates credits 

in a given year and vehicle category 

could use those credits in essentially 

four ways, although with some 

limitations. These provisions are very 

similar to those of other EPA averaging, 

banking, and trading programs. These 

provisions have the potential to reduce 

costs and compliance burden, and 

support the feasibility of the standards 

being proposed in terms of lead time 

and orderly redesign by a manufacturer, 

thus promoting and not reducing the 

environmental benefits of the program. 

First, the manufacturer would have to 

offset any deficit that had accrued in 

that averaging set in a prior model year 

and had been carried over to the current 

model year. In such a case, the 

manufacturer would be obligated to use 

any current model year credits to offset 

that deficit. This is referred to in the 

CAFE program as credit carry-back. 

EPA’s proposed deficit carry-forward, or 

credit carry-back provisions are 

described further, below. 

Second, after satisfying any needs to 

offset pre-existing deficits within a 

vehicle category, remaining credits 

could be banked, or saved for use in 

future years. EPA is proposing that 

credits generated in this program be 

available to the manufacturer for use in 

any of the five years after the year in 

which they were generated, consistent 

with the CAFE program under EISA. 

This is also referred to as a credit carryforward provision. For other new 

emission control programs, EPA has 

sometimes initially restricted credit life 

to allow time for the Agency to assess 

whether the credit program is 

functioning as intended. When EPA first 

offered averaging and banking 

provisions in its light-duty emissions 

control program (the National Low 

Emission Vehicle Program), credit life 

was restricted to three years. The same 

is true of EPA’s early averaging and 

banking program for heavy-duty 

engines. As these programs matured and 

were subsequently revised, EPA became 

confident that the programs were 

functioning as intended and that the 

standards were sufficiently stringent to 

remove the restrictions on credit life. 

EPA is therefore acting consistently 

with our past practice in proposing to 

reasonably restrict credit life in this new 

program. The Agency believes, subject 

to consideration of public comment, 

that a credit life of five years represents 

an appropriate balance between 

promoting orderly redesign and upgrade 

of the emissions control technology in 

the manufacturer’s fleet and the policy 

goal of preventing large numbers of 

credits accumulated early in the 

program from interfering with the 

incentive to develop and transition to 

other more advanced emissions control 

technologies. As discussed below in 

Section III.C, EPA is proposing that any 

early credits generated by a 

manufacturer, beginning as soon as MY 

2009, would also be subject to the fiveyear credit carry-forward restriction 

based on the year in which they are 

generated. This would limit the effect of 

the early credits on the long-term 

emissions reductions anticipated to 

result from the proposed new standards. 

Third, EPA is proposing to allow 

manufacturers to transfer credits 

between the two averaging sets, 

passenger cars and trucks, within a 

manufacturer. For example, credits 

accrued by over-compliance with a 

manufacturer’s car fleet average 

standard could be used to offset debits 

accrued due to that manufacturer’s not 

meeting the truck fleet average standard 

in a given year. EPA believes that such 

cross-category use of credits by a 

manufacturer would provide important 

additional flexibility in the transition to 

emissions control technology without 

affecting overall emission reductions. 

Finally, accumulated credits could be 

traded to another vehicle manufacturer. 

As with intra-company credit use, such 

inter-company credit trading would 

provide flexibility in the transition to 

emissions control technology without 

affecting overall emission reductions. 

Trading credits to another vehicle 

manufacturer would be a 

straightforward process between the two 

manufacturers, but could also involve 

third parties that could serve as credit 

brokers. Brokers would not own the 

credits at any time. These sorts of 

exchanges are typically allowed under 

EPA’s current emission credit programs, 

e.g., the Tier 2 light-duty vehicle NOX 

fleet average standard and the heavyduty engine NOX fleet average 

standards, although manufacturers have 

seldom made such exchanges. EPA 

seeks comment on enhanced reporting 

requirements or other methods that 

could help EPA assess validity of 
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49522 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

credits, especially those obtained from 

third-party credit brokers 

If a manufacturer had a deficit at the 

end of a model year—that is, its fleet 

average level failed to meet the required 

fleet average standard—EPA proposes 

that the manufacturer could carry that 

deficit forward (also referred to credit 

carry-back) for a total of three model 

years after the model year in which that 

deficit was generated. As noted above, 

such a deficit carry-forward could only 

occur after the manufacturer applied 

any banked credits or credits from 

another averaging set. If a deficit still 

remained after the manufacturer had 

applied all available credits, and the 

manufacturer did not obtain credits 

elsewhere, the deficit could be carried 

over for up to three model years. No 

deficit could be carried into the fourth 

model year after the model year in 

which the deficit occurred. Any deficit 

from the first model year that remained 

after the third model year would thus 

constitute a violation of the condition 

on the certificate, which would 

constitute a violation of the Clean Air 

Act and would be subject to 

enforcement action. 

In the Tier 2 rulemaking proposal, 

EPA proposed to allow deficits to be 

carried forward for one year. In their 

comments on that proposal, 

manufacturers argued persuasively that 

by the time they can tabulate their 

average emissions for a particular model 

year, the next model year is likely to be 

well underway and it is too late to make 

calibration, marketing, or production 

mix changes to adjust that year’s credit 

generation. Based on those comments, 

in the Tier 2 final rule EPA finalized 

provisions that allowed the deficit to be 

carried forward for a total of three years. 

EPA continues to believe that three 

years is an appropriate amount of time 

that gives the manufacturers adequate 

time to respond to a deficit situation but 

does not create a lengthy period of 

prolonged non-compliance with the 

fleet average standards.131 Subsequent 

EPA emission control programs that 

incorporate ABT provisions (e.g., the 

Mobile Source Air Toxics rule) have 

provided this three-year deficit carryforward provision for this reason.132 

The proposed averaging, banking, and 

trading provisions are generally 

consistent with those included in the 

CAFE program, with a few notable 

exceptions. As with EPA’s proposed 

approach, CAFE allows five year carryforward of credits and three year carryback. Transfers of credits across a 

manufacturer’s car and truck averaging 

131 See 65 FR 6745 (February 10, 2000). 


132 See 71 FR 8427 (February 26, 2007). 


sets are also allowed, but with limits 

established by EISA on the use of 

transferred credits. The amount of 

transferred credits that can be used in a 

year is limited, and transferred credits 

may not be used to meet the CAFE 

minimum domestic passenger car 

standard. CAFE allows credit trading, 

but again, traded credits cannot be used 

to meet the minimum domestic 

passenger car standard. EPA is not 

proposing these constraints on the use 

of transferred credits. 

Additional details regarding the 

averaging, banking, and trading 

provisions and how EPA proposes to 

implement these provisions can be 

found in Section III.E. 

5. CO2 Optional Temporary Lead-time 

Allowance Alternative Standards 

EPA is proposing a limited and 

narrowly prescribed option, called the 

Temporary Lead-time Allowance 

Alternative Standards (TLAAS), to 

provide additional lead time for a 

certain subset of manufacturers. This 

option is designed to address two 

different situations where we project 

that more lead time is needed, based on 

the level of emissions control 

technology and emissions control 

performance currently exhibited by 

certain vehicles. One situation involves 

manufacturers who have traditionally 

paid CAFE fines instead of complying 

with the CAFE fleet average, and as a 

result at least part of their vehicle 

production currently has significantly 

higher CO2 and lower fuel economy 

levels than the industry average. More 

lead time is needed in the program’s 

initial years to upgrade these vehicles to 

meet the aggressive CO2 emissions 

performance levels required by the 

proposal. The other situation involves 

manufacturers who have a limited line 

of vehicles and are unable to take 

advantage of averaging of emissions 

performance across a full line of 

production. For example, some smaller 

volume manufacturers focus on high 

performance vehicles with higher CO2 

emissions, above the CO2 emissions 

target for that vehicle footprint, but do 

not have other types of vehicles in their 

production mix with which to average. 

Often, these manufacturers also pay 

fines under the CAFE program rather 

than meeting the applicable CAFE 

standard. Because voluntary noncompliance is impermissible for the 

GHG standards proposed under the 

CAA, both of these types of 

manufacturers need additional lead time 

to upgrade vehicles and meet the 

proposed standards. EPA is proposing 

an optional, temporary alternative 

standard, which is only slightly less 

stringent, and limited to the first four 

model years (2012—2015) of the 

National Program, so that these 

manufacturers can have sufficient lead 

time to meet the tougher MY 2016 GHG 

standards, while preserving consumer 

choice of vehicles during this time. 

In MY 2016, the TLAAS option ends, 

and all manufacturers, regardless of 

size, and domestic sales volume, must 

comply with the same CO2 standards, 

while under the CAFE program 

companies would continue to be 

allowed to pay civil penalties in lieu of 

complying with the CAFE standards. 

However, because companies must meet 

both the CAFE standards and the EPA 

CO2 standards, the National Program 

will have the practical impact of 

providing a level playing field for all 

companies beginning in MY 2016—a 

situation which has never existed under 

the CAFE program. This option thereby 

results in more fuel savings and CO2 

reductions than would be the case 

under the CAFE program. 

EPA projects that the environmental 

impact of the proposed TLAAS program 

will be very small. If all companies 

eligible to use the TLAAS use it to the 

maximum extent allowed, total GHG 

emissions from the proposal will 

increase by less than 0.4% over the 

lifetime of the MY 2012–2016 vehicles. 

EPA believes the impact will be even 

smaller, as we do not expect all of the 

eligible companies to use this option, 

and we do not expect all companies 

who do use the program will use it to 

the maximum extent allowed, as we 

have included provisions which 

discourage companies from using the 

TLAAS any longer than it is needed. 

EPA has structured the TLAAS option 

to provide more lead time in these kinds 

of situations, but to limit the program so 

that it would only be used in situations 

where these kinds of lead time concerns 

arise. Based on historic data on sales, 

EPA is using a specific historic U.S. 

sales volume as the best way to identify 

the subset of production that falls into 

this situation. Under the TLAAS, these 

manufacturers would be allowed to 

produce up to but no more than 100,000 

vehicles that would be subject to a 

somewhat less stringent CO2 standard. 

This 100,000 volume is not an annual 

limit, but is an absolute limit for the 

total number of vehicles which can use 

the TLAAS program over the model 

years 2012–2015. Any additional 

production would be subject to the same 

standards as any other manufacturer. In 

addition, EPA is imposing a variety of 

restrictions on the use of the TLAAS 

program, discussed in more detail 

below, to ensure that only 

manufacturers who need more lead-time 
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for the kinds of reasons noted above are 

likely to use the program. Finally, the 

program is temporary and expires at the 

end of MY 2015. A more complete 

discussion of the program is provided 

below. EPA believes the proposed 

program reasonably addresses a real 

world lead time constraint, and does it 

in a way that balances the need for more 

lead time with the need to minimize any 

resulting loss in potential emissions 

reductions. EPA invites comment as to 

whether its proposal is the best way to 

balance these concerns. 

EPA proposes to establish a TLAAS 

for a specified subset of manufacturers. 

There are two types of companies who 

would make use of TLAAS—those 

manufacturers who have paid CAFE 

fines in recent years, and who need 

additional lead-time to incorporate the 

needed technology; and those 

companies who are not full-line 

manufacturers, who have a smaller 

range of models and vehicle types, who 

may need additional lead-time as well. 

This alternative standard would apply 

to manufacturers with total U.S. sales of 

less than 400,000 vehicles per year, 

using 2009 model year final sales 

numbers to determine eligibility for 

these alternative standards. EPA 

reviewed the sales volumes of 

manufacturers over the last few years, 

and determined that manufacturers 

below this level typically fit the 

characteristics discussed above, and 

manufacturers above this level did not. 

Thus, EPA chose this level because it 

functionally identifies the group of 

manufacturers described above, 

recognizing that there is nothing 

intrinsic in the sales volume itself that 

warrants this allowance. EPA was not 

able to identify any other objective 

criteria that would more appropriately 

identify the manufacturers and vehicle 

fleets described above. 

EPA is proposing that manufacturers 

qualifying for TLAAS would be allowed 

to meet slightly less stringent standards 

for a limited number of vehicles for 

model years 2012–2015. Specifically, an 

eligible manufacturer could have a total 

of up to 100,000 units of cars and trucks 

combined over model years 2012–2015, 

and during those model years those 

vehicles would be subject to a standard 

1.25 times the standard that would 

otherwise apply to those vehicles under 

the primary program. In other words, 

the footprint curves upon which the 

individual manufacturer standards for 

the TLAAS fleets are based would be 

less stringent by a factor of 1.25 for up 

to 100,000 of an eligible manufacturer’s 

vehicles for model years 2012–2015. As 

noted, this approach seeks to balance 

the need to provide additional lead-time 

without reducing the environmental 

benefits of the proposed program. EPA 

believes that 100,000 units over four 

model years achieves an appropriate 

balance as the emissions impact is quite 

small, but does provide companies with 

some flexibility during MY 2012–2015. 

For example, for a manufacturer 

producing 400,000 vehicles per year, 

this would be a total of up to 100,000 

vehicles out of a total production of up 

to 1.6 million vehicles over the four year 

period, or about 6 percent of total 

production. 

Manufacturers with no U.S. sales in 

model year 2009 would not qualify for 

the TLAAS program. Manufacturers 

meeting the cut-point of 400,000 for MY 

2009 but with U.S. directed production 

above 400,000 in any subsequent model 

years would remain eligible for the 

TLAAS program. Also, the total sales 

number applies at the corporate level, so 

if a corporation owns several vehicle 

brands the aggregate sales for the 

corporation would be used. These 

provisions would help prevent gaming 

of the provisions through corporate 

restructuring. Corporate ownership or 

control relationships would be based on 

determinations made under CAFE for 

model year 2009. In other words, 

corporations grouped together for 

purposes of meeting CAFE standards, 

would be grouped together for 

determining whether or not they are 

eligible under the 400,000 vehicle cut 

point. 

EPA derived the 100,000 maximum 

unit set aside number based on a 

gradual phase-out schedule shown in 

Table III.B.5–1, below. However, 

individual manufacturers’ situations 

will vary significantly and so EPA 

believes a flexible approach that allows 

manufacturers to use the allowance as 

they see fit during these model years 

would be most appropriate. As another 

example, an eligible manufacturer could 

also choose to apply the TLAAS 

program to an average of 25,000 vehicles 

per year, over the four-year period. 

Therefore, EPA is proposing that a total 

of 100,000 vehicles of an eligible 

manufacturer, with any combination of 

cars or trucks, could be subject to the 

alternative standard over the four year 

period without restrictions. 

TABLE III.B.5–1—TLAAS EXAMPLE VEHICLE PRODUCTION VOLUMES 

Model year 2012 2013 2014 2015 

Sales Volume ........................................................................... 40,000 30,000 20,000 10,000 

The TLAAS vehicles would be 

separate car and truck fleets for that 

model year and would be subject to the 

less stringent footprint-based standards 

of 1.25 times the primary fleet average 

that would otherwise apply. The 

manufacturer would determine what 

vehicles are assigned to these separate 

averaging sets for each model year. EPA 

is proposing that credits from the 

primary fleet average program can be 

transferred and used in the TLAAS 

program. Credits within the TLAAS 

program may also be transferred 

between the TLAAS car and truck 

averaging sets for use through 2015 

when the TLAAS would end. However, 

credits generated under TLAAS would 

not be allowed to be transferred or 

traded to the primary program. 

Therefore, any unused credits under 

TLAAS would expire after model year 

2015. EPA believes that this is necessary 

to limit the program to situations where 

it is needed and to prevent the 

allowance from being inappropriately 

transferred to the long-term primary 

program. 

EPA is concerned that some 

manufacturers would be able to place 

relatively clean vehicles in the TLAAS 

to maximize TLAAS credits if credit use 

was unrestricted. However, any credits 

generated from the primary program 

that are not needed for compliance in 

the primary program, should be used to 

offset the TLAAS vehicles. EPA is thus 

proposing to restrict the use of banking 

and trading between companies of 

credits in the primary program in years 

in which the TLAAS is being used. For 

example, manufacturers using the 

TLAAS in MY 2012 could not bank 

credits in the primary program during 

MY 2012 for use in MY 2013 and later. 

No such restriction would be in place 

for years when the TLAAS is not being 

used. EPA also believes this provision is 

necessary to prevent credits from being 

earned simply by removing some highemitting vehicles from the primary fleet. 

Absent this restriction, manufacturers 

would be able to choose to use the 

TLAAS for these vehicles and also be 
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49524 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

able to earn credits under the primary 

program that could be banked or traded 

under the primary program without 

restriction. EPA is proposing two 

additional restrictions regarding the use 

of the TLAAS by requiring that for any 

of the 2012–2015 model years for which 

an eligible manufacturer would like to 

use the TLAAS, the manufacturer must 

use two of the available flexibilities in 

the GHG program first in order to try 

and show compliance with the primary 

standard before accessing the TLAAS. 

Specifically, before using the TLAAS 

the manufacturer must: (1) use any 

banked emission credits from a previous 

model year; and, (2) use any available 

credits from the companies’ car or truck 

fleet for the specific model year (i.e., use 

credit transfer from cars to trucks or 

from trucks to cars, that is, before using 

the TLAAS for either the car fleet or the 

truck fleet, make use of any available 

credit transfers first). EPA is requesting 

comments on all aspects of the proposed 

TLAAS program including comments 

on other provisions that might be 

needed to ensure that the TLAAS 

program is being used as intended and 

to ensure no gaming occurs. 

Finally, EPA recognizes that there 

will be a wide range of companies 

within the eligible manufacturers with 

sales less than 400,000 vehicles in 

model year 2009. Some of these 

companies, while having relatively 

small U.S. sales volumes, are large 

global automotive firms, including 

companies such as Mercedes and 

Volkswagen. Other companies are 

significantly smaller niche firms, with 

sales volumes closer to 10,000 vehicles 

per year worldwide; an example of this 

type of firm is Aston Martin. EPA 

anticipates that there are a small 

number of such smaller volume 

manufacturers, which have claimed that 

they may face greater challenges in 

meeting the proposed standards due to 

their limited product lines across which 

to average. EPA requests comment on 

whether the proposed TLAAS program, 

as described above, provides sufficient 

lead-time for these smaller firms to 

incorporate the technology needed to 

comply with the proposed GHG 

standards. 

6. Proposed Nitrous Oxide and Methane 

Standards 

In addition to fleet-average CO2 

standards, EPA is proposing separate 

per-vehicle standards for nitrous oxide 

(N2O) and methane (CH4) emissions. 

Standards are being proposed that 

would cap vehicle N2O and CH4 

emissions at current levels. Our 

intention is to set emissions standards 

that act to cap emissions to ensure that 

future vehicles do not increase their 

N2O and CH4 emissions above levels 

that would be allowed under the 

proposal. 

EPA considered an approach of 

expressing each of these standards in 

common terms of CO2-equivalent 

emissions and combining them into a 

single standard along with CO2 and HFC 

emissions. California’s ‘‘Pavley’’ 

program adopted such a CO2-equivalent 

emissions standards approach to GHG 

emissions in their program.133 However, 

these pollutants are largely independent 

of one another in terms of how they are 

generated by the vehicle and how they 

are tested for during implementation. 

Potential control technologies and 

strategies for each pollutant also differ. 

Moreover, an approach that provided for 

averaging of these pollutants could 

undermine the stringency of the CO2 

standards, as at this time we are 

proposing standards which ‘‘cap’’ N2O 

and CH4 emissions, rather then 

proposing a level which is either at the 

industry fleet-wide average or which 

would result in reductions from these 

pollutants. It is possible that once EPA 

begins to receive more detailed 

information on the N2O and CH4 

performance of the new vehicle fleet as 

a result of this proposed rule (if it were 

to be finalized as proposed) that for a 

future action for model years 2017 and 

later EPA could consider a CO2-

equivalent standard which would not 

result in any increases in GHG 

emissions due to the current lack of 

detailed data on N2O and CH4 emissions 

performance. In addition, EPA seeks 

comment on whether a CO2-equivalent 

emissions standard should be 

considered for model years 2012 

through 2016, and whether there are 

advantages or disadvantages to such an 

approach, including potential impacts 

on harmonization with CAFE standards. 

Almost universally across current car 

and truck designs, both gasoline- and 

diesel-fueled, these emissions are 

relatively low, and our intent is to not 

require manufacturers to make 

technological improvements in order to 

reduce N2O and CH4 at this time. 

However, it is important that future 

vehicle technologies or fuels do not 

result in increases in these emissions, 

and this is the intent of the proposed 

‘‘cap’’ standards. 

EPA requests comments on our 

approach to regulating N2O and CH4 

emissions including the appropriateness 

133 California Environmental Protection Agency 

Air Resources Board, Staff Report: Initial Statement 

of Reasons for Proposed Rulemaking Public Hearing 

To Consider Adoption Of Regulations To Control 

Greenhouse Gas Emissions From Motor Vehicles, 

August 6, 2004. 

of ‘‘cap’’ standards as opposed to 

‘‘technology-forcing’’ standards, the 

technical bases for the proposed N2O 

and CH4 standards, the proposed test 

procedures, and timing. Specifically, 

EPA seeks comment on the 

appropriateness of the proposed levels 

of the N2O and CH4 standards to 

accomplish our stated intent. In 

addition, EPA seeks comment on any 

additional emissions data on N2O and 

CH4 from current technology vehicles. 

a. Nitrous Oxide (N2O) Exhaust 

Emission Standard 

N2O is a global warming gas with a 

high global warming potential.134 It 

accounts for about 2.7% of the current 

greenhouse gas emissions from cars and 

light trucks. EPA is proposing a pervehicle N2O emission standard of 0.010 

g/mi, measured over the traditional FTP 

vehicle laboratory test cycles. The 

standard would become effective in 

model year 2012 for all light-duty cars 

and trucks. Averaging between vehicles 

would not be allowed. The standard is 

designed to prevent increases in N2O 

emissions from current levels, i.e. a nobacksliding standard. 

N2O is emitted from gasoline and 

diesel vehicles mainly during specific 

catalyst temperature conditions 

conducive to N2O formation. 

Specifically, N2O can be generated 

during periods of emission hardware 

warm-up when rising catalyst 

temperatures pass through the 

temperature window when N2O 

formation potential is possible. For 

current Tier 2 compatible gasoline 

engines with conventional three-way 

catalyst technology, N2O is not generally 

produced in significant amounts 

because the time the catalyst spends at 

the critical temperatures during warmup is short. This is largely due to the 

need to quickly reach the higher 

temperatures necessary for high catalyst 

efficiency to achieve emission 

compliance of criteria pollutants. N2O is 

a more significant concern with diesel 

vehicles, and potentially future gasoline 

lean-burn engines, equipped with 

advanced catalytic NOX emissions 

control systems. These systems can but 

need not be designed in a way that 

emphasizes efficient NOX control while 

allowing the formation of significant 

quantities of N2O. Excess oxygen 

present in the exhaust during lean-burn 

conditions in diesel or lean-burn 

gasoline engines equipped with these 

advanced systems can favor N2O 

formation if catalyst temperatures are 

not carefully controlled. Without 

134 N2O has a GWP of 310 according to the IPCC 

Second Assessment Report (SAR). 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49525 

specific attention to controlling N2O 

emissions in the development of such 

new NOX control systems, vehicles 

could have N2O emissions many times 

greater than are emitted by current 

gasoline vehicles. 

EPA is proposing an N2O emission 

standard that EPA believes would be 

met by current-technology gasoline 

vehicles at essentially no cost. As noted, 

N2O formation in current catalyst 

systems occurs, but the emission levels 

are low, because the time the catalyst 

spends at the critical temperatures 

during warm-up when N2O can form is 

short. At the same time, EPA believes 

that the proposed standard would 

ensure that the design of advanced NOX 

control systems, especially for future 

diesel and lean-burn gasoline vehicles, 

would control N2O emission levels. 

While current NOX control approaches 

used on current Tier 2 diesel vehicles 

do not tend to form N2O emissions, EPA 

believes that the proposed standards 

would discourage any new emission 

control designs that achieve criteria 

emissions compliance at the cost of 

increased N2O emissions. Thus, the 

proposed standard would cap N2O 

emission levels, with the expectation 

that current gasoline and diesel vehicle 

control approaches that comply with the 

Tier 2 vehicle emission standards for 

NOX would not increase their emission 

levels, and that the cap would ensure 

that future vehicle designs would 

appropriately control their emissions of 

N2O. The proposed N2O level is 

approximately two times the average 

N2O level of current gasoline passenger 

cars and light-duty trucks that meet the 

Tier 2 NOX standards.135 Manufacturers 

typically use design targets for NOX 

emission levels of about 50% of the 

standard, to account for in-use 

emissions deterioration and normal 

testing and production variability, and 

manufacturers are expected to utilize a 

similar approach for N2O emission 

compliance. EPA is not proposing a 

more stringent standard for current 

gasoline and diesel vehicles because the 

stringent Tier 2 program and the 

associated NOX fleet average 

requirement already result in significant 

N2O control, and does not expect 

current N2O levels to rise for these 

vehicles. EPA requests comment on this 

technical assessment of current and 

potential future N2O formation in cars 

and trucks. 

While EPA believes that 

manufacturers will likely be able to 

acquire and install N2O analytical 

135 Memo to docket ‘‘Deriving the standard from 

EPA’s MOVES model emission factors, ’’ December 

2007. 

equipment, the agency also recognizes 

that some companies may face 

challenges. Given the short lead-time for 

this rule, EPA proposes that 

manufacturers be able to apply for a 

certificate of conformity with the N2O 

standard for model year 2012 based on 

a compliance statement based on good 

engineering judgment. For 2013 and 

later model years, manufacturers would 

need to submit measurements of N2O for 

compliance purposes. 

Diesel cars and light trucks with 

advanced emission control technology 

are in the early stages of development 

and commercialization. As this segment 

of the vehicle market develops, the 

proposed N2O standard would require 

manufacturers to incorporate control 

strategies that minimize N2O formation. 

Available approaches include using 

electronic controls to limit catalyst 

conditions that might favor N2O 

formation and consider different 

catalyst formulations. While some of 

these approaches may have modest 

associated costs, EPA believes that they 

will be small compared to the overall 

costs of the advanced NOX control 

technologies already required to meet 

Tier 2 standards. 

Vehicle emissions regulations do not 

currently require testing for N2O, and 

most test facilities do not have 

equipment for its measurement. 

Manufacturers without this capability 

would need to acquire and install 

appropriate measurement equipment. 

However, EPA is proposing four N2O 

measurement methods, all of which are 

commercially available today. EPA 

expects that most manufacturers would 

use photo-acoustic measurement 

equipment, which the Agency estimates 

would result in a one-time cost of about 

$50,000–$60,000 for each test cell that 

would need to be upgraded. 

Overall, EPA believes that 

manufacturers of cars and light trucks, 

both gasoline and diesel, would meet 

the proposed standard without 

implementing any significantly new 

technologies, and there are not expected 

to be any significant costs associated 

with this proposed standard. 

b. Methane (CH4) Exhaust Emission 

Standard 

CH4 (or methane) is greenhouse gas 

with a high global warming potential.136 

It accounts for about 0.2% of the 

greenhouse gases from cars and light 

trucks. 

EPA is proposing a CH4 emission 

standard of 0.030 g/mi as measured on 

the FTP, to apply beginning with model 

136 CH4 has a GWP of 21 according to the IPCC 

Second Assessment Report (SAR). 

year 2012 for both cars and trucks. EPA 

believes that this level for the standard 

would be met by current gasoline and 

diesel vehicles, and would prevent large 

increases in future CH4 emissions in the 

event that alternative fueled vehicles 

with high methane emissions, like some 

past dedicated compressed natural gas 

(CNG) vehicles, become a significant 

part of the vehicle fleet. Currently EPA 

does not have separate CH4 standards 

because unlike other hydrocarbons it 

does not contribute significantly to 

ozone formation,137 However CH4 

emissions levels in the gasoline and 

diesel car and light truck fleet have 

nevertheless generally been controlled 

by the Tier 2 non-methane organic gases 

(NMOG) emission standards. However, 

without an emission standard for CH4, 

future emission levels of CH4 cannot be 

guaranteed to remain at current levels as 

vehicle technologies and fuels evolve. 

The proposed standard would cap 

CH4 emission levels, with the 

expectation that current gasoline 

vehicles meeting the Tier 2 emission 

standards would not increase their 

levels, and that it would ensure that 

emissions would be addressed if in the 

future there are increases in the use of 

natural gas or any other alternative fuel. 

The level of the standard would 

generally be achievable through normal 

emission control methods already 

required to meet Tier 2 program 

emission standards for NMOG and EPA 

is therefore not attributing any cost to 

this part of this proposal. Since CH4 is 

produced in gasoline and diesel engines 

similar to other hydrocarbon 

components, controls targeted at 

reducing overall NMOG levels generally 

also work at reducing CH4 emissions. 

Therefore, for gasoline and diesel 

vehicles, the Tier 2 NMOG standards 

will generally prevent increases in CH4 

emissions levels from today. CH4 from 

Tier 2 light-duty vehicles is relatively 

low compared to other GHGs largely 

due to the high effectiveness of previous 

National Low Emission Vehicle (NLEV) 

and current Tier 2 programs in 

controlling overall HC emissions. 

The level of the proposed standard is 

approximately two times the average 

Tier 2 gasoline passenger cars and lightduty trucks level.138 As with N2O, this 

proposed level recognizes that 

manufacturers typically set emission 

design targets at about 50% of the 

standard. Thus, EPA believes the 

proposed standard would be met by 

137 But see Ford Motor Co. v. EPA, 604 F. 2d 685 

(D.C. Cir. 1979) (permissible for EPA to regulate 

CH4 under CAA section 202 (b)). 138 Memo to docket ‘‘Deriving the standard from 

EPA’s MOVES model emission factors, ’’ December 

2007. 
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49526 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

current gasoline vehicles. Similarly, 

since current diesel vehicles generally 

have even lower CH4 emissions than 

gasoline vehicles, EPA believes that 

diesels would also meet the proposed 

standard. However, EPA also believes 

that to set a CH4 emission standard more 

stringent than the proposed standard 

could effectively make the Tier 2 NMOG 

standard more stringent. 

In recent model years, a small number 

of cars and light trucks were sold that 

were designed for dedicated use of 

compressed natural gas (CNG) that met 

Tier 2 emission standards. While 

emission control designs on these recent 

dedicated CNG-fueled vehicles 

demonstrate CH4 control as effective as 

gasoline or diesel equivalent vehicles, 

CNG-fueled vehicles have historically 

produced significantly higher CH4 

emissions than gasoline or diesel 

vehicles. This is because their CNG fuel 

is essentially methane and any 

unburned fuel that escapes combustion 

and not oxidized by the catalyst is 

emitted as methane. However, even if 

these vehicles meet the Tier 2 NMOG 

standard and appear to have effective 

CH4 control by nature of the NMOG 

controls, Tier 2 standards do not require 

CH4 control. While the proposed CH4 

cap standard should not require any 

different emission control designs 

beyond what is already required to meet 

Tier 2 NMOG standards on a dedicated 

CNG vehicle, the cap will ensure that 

systems maintain the current level of 

CH4 control. EPA is not proposing more 

stringent CH4 standards because the 

same controls that are used to meet Tier 

2 NMOG standards should result in 

effective CH4 control. Increased CH4 

stringency beyond proposed levels 

could inadvertently result in increased 

Tier 2 NMOG stringency absent an 

emission control technology unique to 

CH4. Since CH4 is already measured 

under the current Tier 2 regulations (so 

that it may be subtracted to calculate 

non-methane hydrocarbons), the 

proposed standard would not result in 

additional testing costs. EPA requests 

comment on whether the proposed cap 

standard would result in any significant 

technological challenges for makers of 

CNG vehicles. 

7. Small Entity Deferment 

EPA is proposing to defer setting GHG 

emissions standards for small entities 

meeting the Small Business 

Administration (SBA) criteria of a small 

business as described in 13 CFR 

121.201. EPA would instead consider 

appropriate GHG standards for these 

entities as part of a future regulatory 

action. This includes small entities in 

three distinct categories of businesses 

for light-duty vehicles: small volume 

manufacturers, independent commercial 

importers (ICIs), and alternative fuel 

vehicle converters. EPA has identified 

about 13 entities that fit the Small 

Business Administration (SBA) criterion 

of a small business. EPA estimates there 

are 2 small volume manufacturers, 8 

ICIs, and 3 alternative fuel vehicle 

converters currently in the light-duty 

vehicle market. EPA estimates that these 

small entities comprise less than 0.1 

percent of the total light-duty vehicle 

sales in the U.S., and therefore the 

proposed deferment will have a 

negligible impact on the GHG emissions 

reductions from the proposed standards. 

Further detail is provided in Section 

III.I.3, below. 

To ensure that EPA is aware of which 

companies would be deferred, EPA is 

proposing that such entities submit a 

declaration to EPA containing a detailed 

written description of how that 

manufacturer qualifies as a small entity 

under the provisions of 13 CFR 121.201. 

Because such entities are not 

automatically exempted from other EPA 

regulations for light-duty vehicles and 

light-duty trucks, absent such a 

declaration, EPA would assume that the 

entity was subject to the greenhouse gas 

control requirements in this GHG 

proposal. The declaration would need to 

be submitted at time of vehicle 

emissions certification under the EPA 

Tier 2 program. Small entities are 

currently covered by a number of EPA 

motor vehicle emission regulations, and 

they routinely submit information and 

data on an annual basis as part of their 

compliance responsibilities. EPA 

expects that the additional paperwork 

burden associated with completing and 

submitting a small entity declaration to 

gain deferral from the proposed GHG 

standards would be negligible and 

easily done in the context of other 

routine submittals to EPA. However, 

EPA has accounted for this cost with a 

nominal estimate included in the 

Information Collection Request 

completed under the Paperwork 

Reduction Act. Additional information 

can be found in the Paperwork 

Reduction Act discussion in Section 

III.I.2. 

C. Additional Credit Opportunities for 

CO2 Fleet Average Program 

The standards being proposed 

represent a significant multi-year 

challenge for manufacturers, especially 

in the early years of the program. 

Section III.B.4 described EPA proposals 

for how manufacturers could generate 

credits by achieving fleet average CO2 

emissions below the fleet average 

standard, and also how manufacturers 

could use credits to comply with 

standards. As described in Section 

III.B.4, credits could be carried forward 

five years, carried back three years, 

transferred between vehicle categories, 

and traded between manufacturers. The 

credits provisions proposed below 

would provide manufacturers with 

additional ways to earn credits starting 

in MY 2012. EPA is also proposing early 

credits provisions for the 2009–2011 

model years, as described below in 

Section III.C.5. 

The provisions proposed below 

would provide additional flexibility, 

especially in the early years of the 

program. This flexibility helps to 

address issues of lead-time or technical 

feasibility for various manufacturers and 

in several cases provides an incentive 

for promotion of technology pathways 

that warrant further development, 

whether or not they are an important or 

central technology on which critical 

features of this program are premised. 

EPA is proposing a variety of credit 

opportunities because manufacturers are 

not likely to be in a position to use 

every credit provision. EPA expects that 

manufacturers are likely to select the 

credit opportunities that best fit their 

future plans. EPA believes it is critical 

that manufacturers have options to ease 

the transition to the final MY 2016 

standards. At the same time, EPA 

believes these credit programs must be 

designed in a way to ensure that they 

achieve emission reductions that 

achieve real-world reductions over the 

full useful life of the vehicle (or, in the 

case of FFV credits and Advanced 

Technology credits, to incentivize the 

introduction of those vehicle 

technologies) and are verifiable. In 

addition, EPA wants to ensure these 

credit programs do not provide an 

opportunity for manufacturers to earn 

‘‘windfall’’ credits. EPA seeks comments 

on how to best ensure these objectives 

are achieved in the design of the credit 

programs. EPA requests comment on all 

aspects of these proposed credits 

provisions. 

1. Air Conditioning Related Credits 

EPA proposes that manufacturers be 

able to generate and use credits for 

improved air conditioner (A/C) systems 

in complying with the CO2 fleetwide 

average standards described above. EPA 

expects that most manufacturers will 

choose to utilize the A/C provisions as 

part of its compliance demonstration 

(and for this reason cost of compliance 

with A/C related emission reductions 

are assumed in the cost analysis). The 

A/C provisions are structured as credits, 

unlike the CO2 standards for which 

manufacturers will demonstrate 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49527 

compliance using 2-cycle tests (see 

Sections III.B and III.E.). Those tests do 

not measure either A/C leakage or 

tailpipe CO2 emissions attributable to 

A/C load (see Section III.C.1.b below 

describing proposed alternative test 

procedures for assessing tailpipe CO2 

emission attributable to 

A/C engine load). Thus, it is a 

manufacturer’s option to include A/C 

GHG emission reductions as an aspect 

of its compliance demonstration. Since 

this is an elective alternative, EPA is 

referring to the A/C part of the proposal 

as a credit. 

EPA estimates that direct A/C GHG 

emissions—emissions due to the leakage 

of the hydrofluorocarbon refrigerant in 

common use today—account for 4.3% of 

CO2-equivalent GHGs from light-duty 

cars and trucks. This includes the direct 

leakage of refrigerant as well as the 

subsequent leakage associated with 

maintenance and servicing, and with 

disposal at the end of the vehicle’s life. 

The emissions that are impacted by 

leakage reductions are the direct leakage 

and the maintenance and servicing. 

Together these are equivalent to CO2 

emissions of approximately 13.6 g/mi 

per vehicle (this is 14.9 g/mi if end of 

life emissions are also included). EPA 

also estimates that indirect GHG 

emissions (additional CO2 emitted due 

to the load of the A/C system on the 

engine) account for another 3.9% of 

light-duty GHGs.139 This is equivalent 

to CO2 emissions of approximately 14.2 

g/mi per vehicle. The derivation of these 

figures can be found in the EPA DRIA. 

EPA believes that it is important to 

address A/C direct and indirect 

emissions because the technologies that 

manufacturers will employ to reduce 

vehicle exhaust CO2 will have little or 

no impact on A/C related emissions. 

Without addressing A/C-related 

emissions, as vehicles become more 

efficient, the A/C related contribution 

will become a much larger portion of 

the overall vehicle GHG emissions. 

Over 95% of the new cars and light 

trucks in the United States are equipped 

with A/C systems and, as noted, there 

are two mechanisms by which A/C 

systems contribute to the emissions of 

greenhouse gases: through leakage of 

refrigerant into the atmosphere and 

through the consumption of fuel to 

provide power to the A/C system. With 

leakage, it is the high global warming 

potential (GWP) of the current 

automotive refrigerant—R134a, with a 

GWP of 1430—that results in the CO2-

equivalent impact of 13.6 g/mi.140 Due 

139 See Chapter 2, section 2.2.1.2 of the DRIA. 

140 The global warming potentials (GWP) used in 

the NPRM analysis are consistent with 

to the high GWP of this HFC, a small 

leakage of the refrigerant has a much 

greater global warming impact than a 

similar amount of emissions of CO2 or 

other mobile source GHGs. 

Manufacturers can choose to reduce 

A/C leakage emissions by using leaktight components. Also, manufacturers 

can largely eliminate the global 

warming impact of leakage emissions by 

adopting systems that use an alternative, 

low-GWP refrigerant.141 The A/C system 

also contributes to increased CO2 

emissions through the additional work 

required to operate the compressor, 

fans, and blowers. This additional work 

typically is provided through the 

engine’s crankshaft, and delivered via 

belt drive to the alternator (which 

provides electric energy for powering 

the fans and blowers) and A/C 

compressor (which pressurizes the 

refrigerant during A/C operation). The 

additional fuel used to supply the 

power through the crankshaft necessary 

to operate the A/C system is converted 

into CO2 by the engine during 

combustion. This incremental CO2 

produced from A/C operation can thus 

be reduced by increasing the overall 

efficiency of the vehicle’s A/C system, 

which in turn will reduce the additional 

load on the engine from A/C 

operation.142 

Manufacturers can make very feasible 

improvements to their 

A/C systems to address A/C system 

leakage and efficiency. EPA proposes 

two separate credit approaches to 

address leakage reductions and 

efficiency improvements independently. 

A proposed leakage reduction credit 

would take into account the various 

technologies that could be used to 

reduce the GHG impact of refrigerant 

leakage, including the use of an 

alternative refrigerant with a lower 

GWP. A proposed efficiency 

improvement credit would account for 

the various types of hardware and 

control of that hardware available to 

Intergovernmental Panel on Climate Change (IPCC) 

Fourth Assessment Report (AR4). At this time, the 

IPCC Second Assessment Report (SAR) global 

warming potential values have been agreed upon as 

the official U.S. framework for addressing climate 

change. The IPCC SAR GWP values are used in the 

official U.S. greenhouse gas inventory submission 

to the climate change framework. When inventories 

are recalculated for the final rule, changes in GWP 

used may lead to adjustments. 

141 Refrigerant emissions during maintenance and 

at the end of the vehicle’s life (as well as emissions 

during the initial charging of the system with 

refrigerant) are also addressed by the CAA Title VI 

stratospheric ozone program, as described below. 142 We will not be addressing changes to the 

weight of the A/C system, since the issue of CO2 

emissions from the fuel consumption of normal 

(non-A/C) operation, including basic vehicle 

weight, is inherently addressed with the primary 

CO2 standards (See III.B above). 

increase the A/C system efficiency. 

Manufacturers would be required to 

attest the durability of the leakage 

reduction and the efficiency 

improvement technologies over the full 

useful life of the vehicle. 

EPA believes that both reducing A/C 

system leakage and increasing efficiency 

are highly cost-effective and 

technologically feasible. EPA expects 

most manufacturers will choose to use 

these A/C credit provisions, although 

some may not find it necessary to do so. 

a. A/C Leakage Credits 

The refrigerant used in vehicle A/C 

systems can get into the atmosphere by 

many different means. These refrigerant 

emissions occur from the slow leakage 

over time that all closed high pressure 

systems will experience. Refrigerant loss 

occurs from permeation through hoses 

and leakage at connectors and other 

parts where the containment of the 

system is compromised. The rate of 

leakage can increase due to 

deterioration of parts and connections 

as well. In addition, there are emissions 

that occur during accidents and 

maintenance and servicing events. 

Finally, there are end-of-life emissions 

if, at the time of vehicle scrappage, 

refrigerant is not fully recovered. 

Because the process of refrigerant 

leakage has similar root causes as those 

that cause fuel evaporative emissions 

from the fuel system, some of the 

control technologies are similar 

(including hose materials and 

connections). There are however, some 

fundamental differences between the 

systems that require a different 

approach. The most notable difference 

is that A/C systems are completely 

closed systems, whereas the fuel system 

is not. Fuel systems are meant to be 

refilled as liquid fuel is consumed by 

the engine, while the A/C system ideally 

should never require ‘‘recharging’’ of the 

contained refrigerant. Thus it is critical 

that the A/C system leakages be kept to 

an absolute minimum. These emissions 

are typically too low to accurately 

measure in most current SHED 

chambers designed for fuel evaporative 

emissions measurement, especially for 

systems that are new or early in life. 

Therefore, if leakage emissions were to 

be measured directly, new measurement 

facilities would need to be built by the 

OEM manufacturers and very accurate 

new test procedures would need to be 

developed. Especially because there are 

indications that much of the industry is 

moving toward alternative refrigerants 

(post-2016 for most manufacturers), EPA 

is not proposing such a direct 

measurement approach to addressing 

refrigerant leakage. 
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49528 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

Instead, EPA proposes that 

manufacturers demonstrate 

improvements in their A/C system 

designs and components through a 

design-based method. Manufacturers 

implementing systems expected to 

result in reduced refrigerant leakage 

would be eligible for credits that could 

then be used to meet their CO2 emission 

compliance requirements. The proposed 

‘‘A/C Leakage Credit’’ provisions would 

generally assign larger credits to system 

designs that are expected to result in 

greater leakage reduction. In addition, 

EPA proposes that proportionately 

larger A/C Leakage Credits be available 

to manufacturers that substitute a lowerGWP refrigerant for the current R134a 

refrigerant. 

Our proposed method for calculating 

A/C Leakage Credits is based closely on 

an industry-consensus leakage scoring 

method, described below. This leakage 

scoring method is correlated to 

experimentally-measured leakage rates 

from a number of vehicles using the 

different available A/C components. 

Under the proposed approach, 

manufacturers would choose from a 

menu of A/C equipment and 

components used in their vehicles in 

order to establish leakage scores which 

would characterize their A/C system 

leakage performance. The leakage score 

can be compared to expected fleetwide 

leakage rates in order to quantify 

improvements for a given A/C system. 

Credits would be generated from leakage 

reduction improvements that exceeded 

average fleetwide leakage rates. 

EPA believes that the design-based 

approach would result in estimates of 

likely leakage emissions reductions that 

would be comparable to those that 

would eventually result from 

performance-based testing. At the same 

time, comments are encouraged on all 

developments that may lead to a robust, 

practical, performance-based test for 

measuring A/C refrigerant leakage 

emissions. 

The cooperative industry and 

government Improved Mobile Air 

Conditioning (IMAC) program 143 has 

demonstrated that new-vehicle leakage 

emissions can be reduced by 50%. This 

program has shown that this level of 

improvement can be accomplished by 

reducing the number and improving the 

quality of the components, fittings, 

seals, and hoses of the A/C system. All 

of these technologies are already in 

commercial use and exist on some of 

today’s systems. 

EPA is proposing that a manufacturer 

wishing to earn A/C Leakage Credits 

143 Team 1–Refrigerant Leakage Reduction: Final 

Report to Sponsors, SAE, 2007. 

would compare the components of its 

A/C system with a set of leakagereduction technologies and actions that 

is based closely on that being developed 

through IMAC and the Society of 

Automotive Engineers (as SAE Surface 

Vehicle Standard J2727, August 2008 

version). The J2727 approach is 

developed from laboratory testing of a 

variety of A/C related components, and 

EPA believes that the J2727 leakage 

scoring system generally represents a 

reasonable correlation with average realworld leakage in new vehicles. Like the 

IMAC approach, our proposed credit 

approach would associate each 

component with a specific leakage rate 

in grams per year identical to the values 

in J2727. A manufacturer choosing to 

claim Leakage Credits would sum the 

leakage values for an A/C system for a 

total A/C leakage score. EPA is 

proposing a formula for converting the 

grams-per-year leakage score to a gramsper-mile CO2eq value, taking vehicle 

miles traveled (VMT) and the GWP of 

the refrigerant into account. This 

formula is: 

Credit = (MaxCredit) * [1 ¥ (LeakScore/ 

AvgImpact) * (GWPRefrigerant/ 

1430)] 

Where: 

MaxCredit is 12.6 and 15.7 g/mi CO2eq for 

cars and trucks respectively. These 

become 13.8 and 17.2 for cars and trucks 

if alternative refrigerants are used since 

they get additional credits for end-of-life 

emissions reductions. 

LeakScore is the leakage score of the A/C 

system as measured according to 

methods similar to the J2727 procedure 

in units of g/yr. The minimum score 

which is deemed feasible is fixed at 8.3 

and 10.4 g/yr for cars and trucks 

respectively. 

AvgImpact is the average impact of A/C 

leakage, which is 16.6 and 20.7 g/yr for 

cars and trucks respectively. 

GWPRefrigerant is the global warming 

potential for direct radiative forcing of 

the refrigerant as defined by EPA (or 

IPCC). 

All of the parameters and limits of the 

equation are derived in the EPA DRIA. 

For systems using the current 

refrigerant, EPA proposes that these 

emission rates could at most be feasibly 

reduced by half, based on the 

conclusions of the IMAC study, and 

consideration of emission over the full 

life of the vehicle. (This latter point is 

discussed further in the DRIA.) 

As discussed above, EPA recognizes 

that substituting an alternative 

refrigerant (one with a significantly 

lower global warming potential, GWP), 

would potentially be a very effective 

way to reduce the impact of all forms of 

refrigerant emissions, including 

maintenance, accidents, and vehicle 

scrappage. To address future GHG 

regulations in Europe and California, 

systems using alternative refrigerants— 

including HFO1234yf, with a GWP of 

4—are under serious development and 

have been demonstrated in prototypes 

by A/C component suppliers. These 

alternative refrigerants have remaining 

cost, safety and feasibility hurdles for 

commercial applications.144 However, 

the European Union has enacted 

regulations phasing in alternative 

refrigerants with GWP less than 150 

starting in 2010, and the State of 

California proposed providing credits 

for alternative refrigerant use in its GHG 

rule. 

Within the timeframe of 2012–2016, 

EPA is not expecting the use of lowGWP refrigerants to be widespread. 

However, EPA believes that these 

developments are promising, and have 

included in our proposed A/C Leakage 

Credit system provisions to account for 

the effective refrigerant reductions that 

could be expected from refrigerant 

substitution. The quantity of A/C 

Leakage Credits that would be available 

would be a function of the GWP of the 

alternative refrigerant, with the largest 

credits being available for refrigerants 

approaching a GWP of zero.145 For a 

hypothetical alternative refrigerant with 

a GWP of 1, effectively eliminating 

leakage as a GHG concern, our proposed 

credit calculation method could result 

in maximum credits equal total average 

emissions, or credits of 13.4 and 17.8 

g/mi CO2eq for cars and trucks, 

respectively. This option is also 

captured in the equation above. 

It is possible that alternative 

refrigerants could, without 

compensating action by the 

manufacturer, reduce the efficiency of 

the A/C system (see discussion of the A/ 

C Efficiency Credit below.) However, 

EPA believes that manufacturers will 

have substantial incentives to design 

their systems to maintain the efficiency 

of the A/C system, therefore EPA is not 

accounting for any potential efficiency 

degradation. 

EPA requests comment on all aspects 

of our proposed A/C Leakage Credit 

system. 

144 Although see 71 FR 55140 (Sept. 21, 2006) 

(proposal pursuant to section 612 of the CAA 

finding CO2 and HFC 152a as acceptable refrigerant 

substitutes as replacements for CFC–12 in motor 

vehicle air conditioning systems, and stating (at 

55142) that ‘‘data ... indicate that use of CO2 and 

HFC 152a with risk mitigation technologies does 

not pose greater risks compared to other 

substitutes’’). 

145 For example, the GWP for R152a is 120, the 

GWP of HFO–1234yf is 4, and the GWP of CO2 as 

a refrigerant is 1. 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49529 

b. A/C Efficiency Credits 

EPA is proposing that manufacturers 

that make improvements in their A/C 

systems to increase efficiency and thus 

reduce CO2 emissions due to A/C 

system operation be eligible for A/C 

Efficiency Credits. As with A/C Leakage 

Credits, manufacturers could apply A/C 

Efficiency Credits toward compliance 

with their overall CO2 standards. 

As mentioned above, EPA estimates 

that the CO2 emissions due to A/C 

related loads on the engine account for 

approximately 3.9% of total greenhouse 

gas emissions from passenger vehicles 

in the United States. Usage of A/C 

systems is inherently higher in hotter 

and more humid months and climates; 

however, vehicle owners may use their 

A/C systems all year round in all parts 

of the nation. For example, people 

commonly use A/C systems to cool and 

dehumidify the cabin air for passenger 

comfort on hot humid days, but they 

also use the systems to de-humidify 

cabin air to assist in defogging/de-icing 

the front windshield and side glass in 

cooler weather conditions for improved 

visibility. A more detailed discussion of 

seasonal and geographical A/C usage 

rates can be found in the DRIA. 

Most of the additional load on the 

engine from A/C system operation 

comes from the compressor, which 

pumps the refrigerant around the system 

loop. Significant additional load on the 

engine may also come from electric or 

hydraulic fans, which are used to move 

air across the condenser, and from the 

electric blower, which is used to move 

air across the evaporator and into the 

cabin. Manufacturers have several 

currently-existing technology options 

for improving efficiency, including 

more efficient compressors, fans, and 

motors, and systems controls that avoid 

over-chilling the air (and subsequently 

re-heating it to provide the desired air 

temperature with an associated loss of 

efficiency). For vehicles equipped with 

automatic climate-control systems, realtime adjustment of several aspects of the 

overall system (such as engaging the full 

capacity of the cooling system only 

when it is needed, and maximizing the 

use of recirculated air) can result in 

improved efficiency. Table III.C.1–1 

below lists some of these technologies 

and their respective efficiency 

improvements. 

As with the A/C Leakage Credit 

program, EPA is interested in 

performance-based standards (or 

credits) based on measurement 

procedures whenever possible. While 

design-based assessments of expected 

emissions can be a reasonably robust 

way of quantifying emission 

improvements, these approaches have 

inherent shortcomings, as discussed for 

the case of A/C leakage above. Designbased approaches depend on the quality 

of the data from which they are 

calibrated, and it is possible that 

apparently proper equipment may 

function less effectively than expected. 

Therefore, while the proposal uses a 

design-based menu approach to quantify 

improvements in A/C efficiency, it is 

also proposed to begin requiring 

manufacturers to confirm that 

technologies applying for Efficiency 

Credits are measurably improving 

system efficiency. 

EPA believes that there is a more 

critical need for a test procedure to 

quantify A/C Efficiency Credits than for 

Leakage Credits, for two reasons. First, 

the efficiency gains for various 

technologies are more difficult to 

quantify using a design-based program 

(like the SAEJ2727-based procedure 

used to generate Leakage Credits). 

Second, while leakage may disappear as 

a significant source of GHG emissions if 

a shift toward alternate refrigerants 

develops, no parallel factor exists in the 

case of efficiency improvements. EPA is 

thus proposing to phase-in a 

performance-based test procedure over 

time beginning in 2014, as discussed 

below. In the interim, EPA proposes a 

design-based ‘‘menu’’ approach for 

estimating efficiency improvements 

and, thus, quantifying A/C Efficiency 

Credits. 

For model years 2012 and 2013, EPA 

proposes that a manufacturer wishing to 

generate A/C Efficiency Credits for a 

group of its vehicles with similar A/C 

systems would compare several of its 

vehicle A/C-related components and 

systems with a ‘‘menu’’ of efficiencyrelated technology improvements (see 

Table III.C.1–1 below). Based on the 

technologies the manufacturer chooses, 

an A/C Efficiency Credit value would be 

established. This design-based approach 

would recognize the relationships and 

synergies among efficiency-related 

technologies. Manufacturers could 

receive credit based on the technologies 

they chose to incorporate in their A/C 

systems and the associated credit value 

for each technology. The total A/C 

Efficiency Credit would be the total of 

these values, up to a maximum feasible 

credit of 5.7 g/mi CO2eq. This would be 

the maximum improvement from 

current average efficiencies for A/C 

systems (see the DRIA for a full 

discussion of our derivation of the 

proposed reductions and credit values 

for individual technologies and for the 

maximum total credit available). 

Although the total of the individual 

technology credit values may exceed 5.7 

g/mi CO2eq, synergies among the 

technologies mean that the values are 

not additive, and thus A/C Efficiency 

credit could not exceed 5.7 g/mi CO2eq. 

The EPA requests comment on 

adjusting the A/C efficiency credit to 

account for potential decreases (or 

increases) in efficiency when using an 

alternative refrigerant by using the 

change in the coefficient of 

performance. The effects may include 

the impact of a secondary loop system 

(including the incremental effect on 

tailpipe CO2 emissions that the added 

weight of such a system would incur). 

TABLE III.C.1–1 EFFICIENCY-IMPROVING A/C TECHNOLOGIES AND CREDITS 

Technology description 

Estimated reduction in A/C CO2 

emissions 

(percent) 

A/C Efficiency 

credit 

(g/mi CO2) 

Reduced reheat, with externally-controlled, variable-displacement compressor ........................................ 30 1.7 

Reduced reheat, with externally-controlled, fixed-displacement or pneumatic variable-displacement 

compressor ............................................................................................................................................... 20 1.1 

Default to recirculated air whenever ambient temperature is greater than 75 °F ...................................... 30 1.7 

Blower motor and cooling fan controls which limit waste energy (e.g. pulse width modulated power 

controller) ................................................................................................................................................. 15 0.9 

Electronic expansion valve .......................................................................................................................... 20 1.1 

Improved evaporators and condensers (with system analysis on each component indicating a COP improvement greater than 10%, when compared to previous design) ....................................................... 20 1.1 

Oil Separator ................................................................................................................................................ 10 0.6 
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49530 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

For model years 2014 and later, EPA 

proposes that manufacturers seeking to 

generate A/C Efficiency Credits would 

need to use a specific performance test 

to confirm that the design changes were 

also improving A/C efficiency. 

Manufacturers would need to perform 

an A/C CO2 Idle Test for each A/C 

system (family) for which it desired to 

generate Efficiency Credits. 

Manufacturers would need to 

demonstrate at least a 30% 

improvement over current average 

efficiency levels to qualify for credits. 

Upon qualifying on the Idle Test, the 

manufacturer would be eligible to use 

the menu approach above to quantify 

the credits it would earn. 

The proposed A/C CO2 Idle Test 

procedure, which EPA has designed 

specifically to measure A/C CO2 

emissions, would be performed while 

the vehicle engine is at idle. This 

proposed laboratory idle test would be 

similar to the idle carbon monoxide 

(CO) test that was once a part of EPA 

vehicle certification. The test would 

determine the additional CO2 generated 

at idle when the A/C system is operated. 

The A/C CO2 Idle Test would be run 

with and without the A/C system 

cooling the interior cabin while the 

vehicle’s engine is operating at idle and 

with the system under complete control 

of the engine and climate control system 

The proposed A/C CO2 Idle Test is 

similar to that proposed in April 2009 

for the Mandatory GHG Reporting Rule, 

with several improvements. These 

improvements include tighter 

restrictions on test cell temperatures 

and humidity levels in order to more 

closely control the loads from operation 

of the A/C system. EPA also made 

additional refinements to the required 

in-vehicle blower fan settings for 

manually controlled systems to more 

closely represent ‘‘real world’’ usage 

patterns. These details can be found in 

the DRIA and the regulations. 

The design of the A/C CO2 Idle Test 

represents a balancing of the need for 

performance tests whenever possible to 

ensure the most accurate quantification 

of efficiency improvements, with 

practical concerns for testing burden 

and facility requirements. EPA believes 

that the proposed Idle Test adds to the 

robust quantification of A/C credits that 

will result in real-world efficiency 

improvements and reductions in A/Crelated CO2 emissions. EPA is proposing 

that the Idle Test be required in order 

to qualify for A/C Efficiency Credits 

beginning in 2014 to allow sufficient 

time for manufacturers to make the 

necessary facilities improvements and 

to establish a comfort level with the test. 

EPA also considered a more 

comprehensive testing approach to 

quantifying A/C CO2 emissions that 

could be somewhat more technically 

robust, but would require more test time 

and test facility improvements for many 

manufacturers. This approach would be 

to adapt an existing test procedure, the 

Supplemental Federal Test Procedure 

(SFTP) for A/C operation, called the 

SC03, in specific ways for it to function 

as a tool to evaluate A/C CO2 emissions. 

The potential test method is described 

in some detail here, and EPA 

encourages comment on how this type 

of test might or might not accomplish 

the goals of robust performance-based 

testing and reasonable test burdens. 

EPA designed the SC03 test to 

measure criteria pollutants under severe 

air conditioning conditions not 

represented in the FTP and Highway 

Fuel Economy Tests. EPA did not 

specifically design the SC03 to measure 

incremental reductions in CO2 

emissions from more efficient A/C 

technologies. For example, due to the 

severity of the SC03 test environmental 

conditions and the relatively short 

duration of the SC03 cycle, it is difficult 

for the A/C system to achieve a 

stabilized interior cabin condition that 

reflects incremental improvements. 

Many potential efficiency improvements 

in the A/C components and controls 

(i.e., automatic recirculation and heat 

exchanger fan control) are specifically 

measured only during stabilized 

conditions, and therefore become 

difficult or impossible to measure and 

quantify during this test. In addition, 

SC03 testing is also somewhat 

constrained and costly due to limited 

number of test facilities currently 

capable of performing testing under the 

required environmental conditions. 

One value of using the SC03 as the 

basis for a new test to quantify A/Crelated efficiency improvements would 

be the significant degree of control of 

test cell ambient conditions. The load 

placed on an A/C system, and thus the 

incremental CO2 emissions, are highly 

dependent on the ambient conditions in 

the test cell, especially temperature and 

humidity, as well as simulated solar 

load. Thus, as with the proposed Idle 

Test, a new SC03-based test would need 

to accurately and reliably control these 

conditions. (This contrasts with FTP 

testing for criteria pollutants, which 

does not require precise control of cell 

conditions because test results are 

generally much less sensitive to changes 

in cell temperature or humidity). 

However, for the purpose of 

quantifying A/C system efficiency 

improvements, EPA believes a test cell 

temperature less severe than the 95°F 

required by the SC03 would be 

appropriate. A cell temperature of 85°F 

would better align the initial cooling 

phase (‘‘pull-down’’) as well as the 

stabilized phase of A/C operation with 

real-world driving conditions. 

Another value of an SC03-based test 

would be the opportunity to create 

operating conditions for vehicle A/C 

systems that in some ways would better 

simulate ‘‘real world’’ operation than 

either the proposed Idle Test or the 

current SC03. The SC03 test cycle, 

roughly 10 minutes in length, has a 

similar average speed, maximum speed, 

and percentage of time at idle as the 

FTP. However, since the SC03 test cycle 

was designed principally to measure 

criteria pollutants under maximum A/C 

load conditions, it is not long enough to 

allow temperatures in the passenger 

cabin to consistently stabilize. EPA 

believes that once the pull-down phase 

has occurred and cabin temperatures 

have dropped dramatically to a suitable 

interior comfort level, additional test 

cycle time would be needed to measure 

how efficiently the A/C system operates 

under stabilized conditions. 

To capture the A/C operation during 

stabilized operation, EPA would 

consider adding two phases to the SC03 

test of roughly 10 minutes each. Each 

additional phase would simply be 

repeats of the SC03 drive cycle, with 

two exceptions. During the second 

phase, the A/C system would now be 

operating at cabin temperature at or 

approaching a stabilized condition. 

During the third phase, the A/C system 

would be turned off. The purpose of the 

third phase would be to establish the 

base CO2 emissions with no A/C loads 

on the engine, which would provide a 

baseline for the incremental CO2 due to 

A/C use. EPA would likely weight the 

CO2 g/mi results for the first and second 

phases of the test as follows: 50% for 

phase 1, and 50% for phase 2. From this 

average CO2 the methodology would 

subtract the CO2 result from phase 3, 

yielding an incremental CO2 (in g/mi) 

due to A/C use. 

EPA expects to continue working with 

industry, the California Air Resources 

Board, and other stakeholders to move 

toward increasingly robust performance 

tests for A/C and may include such 

changes in this final rule. EPA requests 

comment on all aspects of our proposed 

A/C Efficiency Credits program. 

c. Interaction With Title VI Refrigerant 

Regulations 

Title VI of the Clean Air Act deals 

with the protection of stratospheric 

ozone. Section 608 establishes a 

comprehensive program to limit 

emissions of certain ozone-depleting 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49531 

substances (ODS). The rules 

promulgated under section 608 regulate 

the use and disposal of such substances 

during the service, repair or disposal of 

appliances and industrial process 

refrigeration. In addition, section 608 

and the regulations promulgated under 

it, prohibit knowingly venting or 

releasing ODS during the course of 

maintaining, servicing, repairing or 

disposing of an appliance or industrial 

process refrigeration equipment. Section 

609 governs the servicing of motor 

vehicle air conditioners (MVACs). The 

regulations promulgated under section 

609 (40 CFR part 82, subpart B) 

establish standards and requirements 

regarding the servicing of MVACs. 

These regulations include establishing 

standards for equipment that recovers 

and recycles or only recovers refrigerant 

(CFC–12, HFC 134a, and for blends only 

recovers) from MVACs; requiring 

technician training and certification by 

an EPA-approved organization; 

establishing recordkeeping 

requirements; imposing sales 

restrictions; and prohibiting the venting 

of refrigerants. Section 612 requires EPA 

to review substitutes for class I and class 

II ozone depleting substances and to 

consider whether such substitutes will 

cause an adverse effect to human health 

or the environment as compared with 

other substitutes that are currently or 

potentially available. EPA promulgated 

regulations for this program in 1992 and 

those regulations are located at 40 CFR 

part 82, subpart G. When reviewing 

substitutes, in addition to finding them 

acceptable or unacceptable, EPA may 

also find them acceptable so long as the 

user meets certain use conditions. For 

example, all motor vehicle air 

conditioning system must have unique 

fittings and a uniquely colored label for 

the refrigerant being used in the system. 

EPA views this proposed rule as 

complementing these Title VI programs, 

and not conflicting with them. To the 

extent that manufacturers choose to 

reduce refrigerant leakage in order to 

earn A/C Leakage Credits, this would 

dovetail with the Title VI section 609 

standards which apply to maintenance 

events, and to end-of-vehicle life 

disposal. In fact, as noted, a benefit of 

the proposed A/C credit provisions is 

that there should be fewer and less 

impactive maintenance events for 

MVACs, since there will be less leakage. 

In addition, the credit provisions would 

not conflict (or overlap) with the Title 

VI section 609 standards. EPA also 

believes the menu of leak control 

technologies proposed today would 

complement the section 612 

requirements, because these control 

technologies would help ensure that 

R134a (or other refrigerants) would be 

used in a manner that further minimizes 

potential adverse effects on human 

health and the environment. 

2. Flex Fuel and Alternative Fuel 

Vehicle Credits 

As described in this section, EPA is 

proposing credits for flexible-fuel 

vehicles (FFVs) and alternative fuel 

vehicles starting in the 2012 model year. 

FFVs are vehicles that can run both on 

an alternative fuel and conventional 

fuel. Most FFVs are E–85 vehicles, 

which can run on a mixture of up to 85 

percent ethanol and gasoline. Dedicated 

alternative fuel vehicles are vehicles 

that run exclusively on an alternative 

fuel (e.g., compressed natural gas). 

EPCA includes an incentive under the 

CAFE program for production of dualfueled vehicles or FFVs, and dedicated 

alternative fuel vehicles.146 EPCA’s 

provisions were amended by the EISA 

to extend the period of availability of 

the FFV credits, but to begin phasing 

them out by annually reducing the 

amount of FFV credits that can be used 

in demonstrating compliance with the 

CAFE standards.147 EPCA does not 

premise the availability of the FFV 

credits on actual use of alternative fuel. 

Under EPCA, after MY 2019 no FFV 

credits will be available for CAFE 

compliance.148 Under EPCA, for 

dedicated alternative fuel vehicles, there 

are no limits or phase-out. EPA is 

proposing that FFV and Alternative Fuel 

Vehicle Credits be calculated as a part 

of the calculation of a manufacturer’s 

overall fleet average fuel economy and 

fleet average carbon-related exhaust 

emissions (§ 600.510–12). 

EPA is not proposing to include 

electric vehicles (EVs) or plug-in hybrid 

electric vehicles (PHEVs) in these flex 

fuel and alternative fuel provisions. 

These vehicles would be covered by the 

proposed advanced technology vehicle 

credits provisions described in Section 

III.C.3, so including them here would 

lead to a double counting of credits. 

a. Model Year 2012—2015 Credits 

i. FFVs 

For the GHG program, EPA is 

proposing to allow FFV credits 

corresponding to the amounts allowed 

by the amended EPCA only during the 

146 49 U.S.C 32905. 

147 See 49 U.S.C 32906. The mechanism by which 

EPCA provides an incentive for production of FFVs 

is by specifying that their fuel economy is 

determined using a special calculation procedure 

that results in those vehicles being assigned a 

higher fuel economy level than would otherwise 

occur. 49 U.S.C. section 32905(b). This is typically 

referred to as an FFV credit. 

148 49 U.S.C 32906. 

period from MYs 2012 to 2015. (As 

discussed below in Section III.E., EPA is 

proposing that CAFE-based FFV credits 

would not be permitted as part of the 

early credits program.) Several 

manufacturers have already taken the 

availability of FFV credits into account 

in their near-term future planning for 

CAFE and this reliance indicates that 

these credits need to be considered in 

considering adequacy of lead time for 

the CO2 standards. EPA thus believes 

that allowing these credits, in the near 

term, would help provide adequate lead 

time for manufacturers to implement the 

new multi-year standards, but that for 

the longer term there is adequate lead 

time without the use of such credits. 

This will also tend to harmonize the 

GHG and the CAFE program during 

these interim years. As discussed below, 

EPA is proposing for MY 2016 and later 

that manufacturers would not receive 

FFV credits unless they reliably 

estimate the extent the alternative fuel 

is actually being used by vehicles in 

order to count the alternative fuel use in 

the vehicle’s CO2 emissions level 

determination. 

As with the CAFE program, EPA 

proposes to base credits on the 

assumption that the vehicles would 

operate 50% of the time on the 

alternative fuel and 50% of the time on 

conventional fuel, resulting in CO2 

emissions that are based on an 

arithmetic average of alternative fuel 

and conventional fuel CO2 emissions.149 

The measured CO2 emissions on the 

alternative fuel would be multiplied by 

a 0.15 volumetric conversion factor 

which is included in the CAFE 

calculation as provided by EPCA. 

Through this mechanism a gallon of 

alternative fuel is deemed to contain 

0.15 gallons of fuel. EPA is proposing to 

take the same approach for 2012–2015 

model years. For example, for a flexiblefuel vehicle that emitted 330 g/mi CO2 

operating on E–85 and 350 g/mi CO2 

operating on gasoline, the resulting CO2 

level to be used in the manufacturer’s 

fleet average calculation would be: 

330× 0 15 ) + ⎤

⎦ ⎡⎣( . 350 

CO2 = 2 = 199 8 . / g mi

EPA understands that by using the 

CAFE approach—including the 0.15 

factor—the CO2 emissions value for the 

vehicle is calculated to be significantly 

lower than it actually would be 

otherwise, even if the vehicle were 

assumed to operate on the alternative 

fuel at all times. This represents a 

‘‘credit’’ being provided to FFVs. 

149 49 U.S.C 32905 (b). 
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EPA notes also that the above 

equation and example are based on an 

FFV that is an E–85 vehicle. EPCA, as 

amended by EISA, also establishes the 

use of this approach, including the 0.15 

factor, for all alternative fuels, not just 

E–85.150 The 0.15 factor is used for B– 

20 (20 percent biofuel and 80 percent 

diesel) FFVs. EPCA also establishes this 

approach, including the 0.15 factor, for 

gaseous-fueled FFVs such as a vehicle 

able to operate on gasoline and CNG.151 

(For natural gas FFVs, EPCA establishes 

a factor of 0.823 gallons of fuel for every 

100 cubic feet a natural gas used to 

calculate a gallons equivalent.) 152 The 

EISA statute’s use of the 0.15 factor in 

this way provides a similar regulatory 

treatment across the various types of 

alternative fuel vehicles. EPA also 

proposes to use the 0.15 factor for all 

FFVs in keeping with the goal of not 

disrupting manufacturers’ near-term 

compliance planning. EPA, in any case, 

expects the vast majority of FFVs to be 

E–85 vehicles, as is the case today. 

The FFV credit limits for CAFE are 

1.2 mpg for model years 2012–2014 and 

1.0 mpg for model year 2015.153 In CO2 

terms, these CAFE limits translate to 

declining CO2 credit limits over the four 

model years, as the CAFE standards 

increase in stringency (as the CAFE 

standard increases numerically, the 

limit becomes a smaller fraction of the 

standard). EPA proposes credit limits 

shown in Table III.C.2–1 based on the 

proposed average CO2 standards for cars 

and trucks. These have been calculated 

by comparing the average proposed 

CAFE standards with and without the 

FFV credits, converted to CO2. EPA 

requests comments on this proposed 

approach. 

TABLE III.C.2–1—FFV CO2 STANDARD 

CREDIT LIMITS (G/MILE) 

Model year Cars Trucks 

2012 .......................... 9.8 17.9 

2013 .......................... 9.3 17.1 

2014 .......................... 8.9 16.3 

2015 .......................... 6.9 12.6 

EPA also requests comments on 

basing the calculated CO2 credit limit on 

the individual manufacturer standards 

calculated from the footprint curves. For 

example, if a manufacturer’s 2012 car 

standard was 260 g/mile, the credit limit 

in CO2 terms would be 9.5 g/mile and 

if it were 270 g/mile the limit would be 

10.2 g/mile. This approach would be 

somewhat more complex and would 

150 49 U.S.C 32905 (c). 
 151 49 U.S.C 32905 (d). 
 152 49 U.S.C section 32905 (c). 
 153 49 U.S.C section 32906 (a). 


mean that the FFV CO2 credit limits 

would vary by manufacturer as their 

footprint based standards vary. 

However, it would more closely track 

CAFE FFV credit limits. 

ii. Dedicated Alternative Fuel 

Vehicles 

EPA proposes to calculate CO2 

emissions from dedicated alternative 

fuel vehicles for MY 2012—2015 by 

measuring the CO2 emissions over the 

test procedure and multiplying the 

results by the 0.15 conversion factor 

described above. For example, for a 

dedicated alternative fuel vehicle that 

would achieve 330 g/mi CO2 while 

operating on alcohol (ethanol or 

methanol), the effective CO2 emissions 

of the vehicle for use in determining the 

vehicle’s CO2) emissions would be 

calculated as follows: 

CO2 = 330 × 0.15 = 49.5 g/mi 

b. Model Years 2016 and Later 

i. FFVs 

For 2016 and later model years, EPA 

proposes to treat FFVs similarly to 

conventional fueled vehicles in that 

FFV emissions would be based on 

actual CO2 results from emission testing 

on the alternative fuel. The 

manufacturer would also be required to 

demonstrate that the alternative fuel is 

actually being used in the vehicles. The 

manufacturer would need to establish 

the ratio of operation that is on the 

alternative fuel compared to the 

conventional fuel. The ratio would be 

used to weight the CO2 emissions 

performance over the 2-cycle test on the 

two fuels. The 0.15 conversion factor 

would no longer be included in the CO2 

emissions calculation. For example, for 

a flexible-fuel vehicle that emitted 300 

g/mi CO2 operating on E–85 ten percent 

of the time and 350 g/mi CO2 operating 

on gasoline ninety percent of the time, 

the CO2 emissions for the vehicles to be 

used in the manufacturer’s fleet average 

would be calculated as follows: 

CO2 = (300 × 0.10) + (350 × 0.90)= 345 

g/mi 

The most complex part of this 

approach is to establish what data are 

needed for a manufacturer to accurately 

demonstrate use of the alternative fuel. 

One option EPA is considering is 

establishing a rebuttable presumption 

using a ‘‘top-down’’ approach based on 

national E–85 fuel use to assign credits 

to FFVs sold by manufacturers under 

this program. For example, national E– 

85 volumes and national FFV sales 

could be used to prorate E–85 use by 

manufacturer sales volumes and FFVs 

already in-use. EPA would conduct an 

analysis of vehicle miles travelled 

(VMT) by year for all FFVs using its 

emissions inventory MOVES model. 

Using the VMT ratios and the overall E– 

85 sales, E–85 usage could be assigned 

to each vehicle. This method would 

account for the VMT of new FFVs and 

FFVs already in the existing fleet using 

VMT data in the model. The model 

could then be used to determine the 

ratio of E–85 and gasoline for new 

vehicles being sold. Fluctuations in E– 

85 sales and FFV sales would be taken 

into account to adjust the credits 

annually. EPA believes this is a 

reasonable way to apportion E–85 use 

across the fleet. 

If manufacturers decided not to use 

EPA’s assigned credits based on the topdown analysis, they would have a 

second option of presenting their own 

data for consideration as the basis for 

credits. Manufacturers have suggested 

demonstrations using vehicle on-board 

data gathering through the use of onboard sensors and computers. 

California’s program allows FFV credits 

based on FFV use and envisioned 

manufacturers collecting fuel use data 

from vehicles in fleets with on-site 

refueling. Any approach must 

reasonably ensure that no CO2 

emissions reductions anticipated under 

the program are lost. 

EPA proposes that manufacturers 

would need to present a statistical 

analysis of alternative fuel usage data 

collected on actual vehicle operation. 

EPA is not attempting to specify how 

the data is collected or the amount of 

data needed. However, the analysis 

must be based on sound statistical 

methodology. Uncertainty in the 

analysis must be accounted for in a way 

that provides reasonable certainty that 

the program does not result in loss of 

emissions reductions. EPA requests 

comment on how this demonstration 

could reasonably be made. 

EPA recognizes that under EPCA FFV 

credits are entirely phased-out of the 

CAFE program by MY 2020, and apply 

in the prior years with certain 

limitations, but without a requirement 

that the manufacturers demonstrate 

actual use of the alternative fuel. Under 

this proposal EPA would treat FFV 

credits the same as under EPCA for 

model years 2012–2015, but would 

apply a different approach starting with 

model year 2016. Unlike EPCA, CAA 

section 202(a) does not mandate that 

EPA treat FFVs in a specific way. 

Instead EPA is required to exercise its 

own judgment and determine an 

appropriate approach that best promotes 

the goals of this CAA section. Under 

these circumstances, EPA proposes to 

treat FFVs for model years 2012–2015 

the same as under EPCA, for the lead 

time reasons described above. Starting 
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with model year 2016, EPA believes the 

appropriate approach is to ensure that 

emissions reduction credits are based 

upon a demonstration that emissions 

reductions have been achieved, to 

ensure the credits are for real reductions 

instead of reductions that have not 

likely occurred. This will promote the 

environmental goals of this proposal. At 

the same time, the ability to generate 

credits upon a demonstration of usage of 

the alternative fuel will provide an 

actual incentive to see that such fuels 

are used. Under the EPCA credit 

provision, there is an incentive to 

produce FFVs but no actual incentive to 

ensure that the alternative fuels are 

used. GHG and energy security benefits 

are only achieved if the alternative fuel 

is actually used, and EPA’s approach 

will now provide such an incentive. 

This approach will promote greater use 

of renewable fuels, as compared to a 

situation where there is a credit but no 

usage requirement. This is also 

consistent with the agency’s overall 

commitment to the expanded use of 

renewable fuels. Therefore EPA is not 

proposing to phase-out the FFV program 

for MYs 2016 and later but instead to 

base the program on real-world 

reductions (i.e., actual vehicle CO2 

emissions levels based on actual use of 

the two fuels, without the 0.15 

conversion factor specified under EISA). 

Based on existing certification data, E– 

85 FFV CO2 emissions are typically 

about 5 percent lower on E–85 than CO2 

emissions on 100 percent gasoline. 

However, currently there is little 

incentive to optimize CO2 performance 

for vehicles when running on E–85. EPA 

believes the above approach would 

provide such an incentive to 

manufacturers and that E–85 vehicles 

could be optimized through engine 

redesign and calibration to provide 

additional CO2 reductions. EPA requests 

comments on the above. 

ii. Dedicated Alternative Fuel 

Vehicles 

EPA proposes that for model years 

2016 and later dedicated alternative fuel 

vehicles, CO2 would be measured over 

the 2-cycle test in order to be included 

in a manufacturer’s fleet average CO2 

calculations. As noted above, this is 

different than CAFE methodology which 

provides a methodology for calculating 

a petroleum-based mpg equivalent for 

alternative fuel vehicles so they can be 

included in CAFE. However, because 

CO2 can be measured directly from 

alternative fuel vehicles over the test 

procedure, EPA believes this is the 

simplest and best approach since it is 

consistent with all other vehicle testing 

under the proposed CO2 program. 

3. Advanced Technology Vehicle 

Credits for Electric Vehicles, Plug-in 

Hybrids, and Fuel Cells 

EPA is proposing additional credit 

opportunities to encourage the early 

commercialization of advanced vehicle 

powertrains, including electric vehicles 

(EVs), plug-in hybrid electric vehicles 

(PHEVs), and fuel cell vehicles. These 

technologies have the potential for more 

significant reductions of GHG emissions 

than any technology currently in 

commercial use, and EPA believes that 

encouraging early introduction of such 

technologies will help to enable their 

wider use in the future, promoting the 

technology-based emission reduction 

goals of section 202(a)(1) of the Clean 

Air Act. 

EPA proposes that these advanced 

technology credits would take the form 

of a multiplier that would be applied to 

the number of vehicles sold such that 

they would count as more than one 

vehicle in the manufacturer’s fleet 

average. These advanced technology 

vehicles would then count more heavily 

when calculating fleet average CO2 

levels. The multiplier would not be 

applied when calculating the 

manufacturer’s foot-print-based 

standard, only when calculating the 

manufacturer’s fleet average levels. EPA 

proposes to use a multiplier in the range 

of 1.2 to 2.0 for all EVs, PHEVs, and fuel 

cell vehicles produced from MY 2012 

through MY 2016. EPA proposes that 

starting in MY 2017, the multiplier 

would no longer be used. As described 

in Section III.C.5, EPA is also proposing 

to allow early advanced technology 

vehicle credits to be generated for model 

years 2009–2011. EPA requests 

comment on the level of the multiplier 

and whether it should be the same value 

for each of these three technologies. 

Further, if EPA determines that a 

multiplier of 2.0, or another level near 

the higher end of this range, is 

appropriate for the final rule, EPA 

requests comment on whether the 

multiplier should be phased down over 

time, such as: 2.0 for MY 2009 through 

MY 2012, 1.8 in MY 2013, 1.6 in MY 

2014, 1.4 in MY 2015, and 1.2 in MY 

2016 (i.e., the multiplier could phasedown by 0.2 per year). In addition, EPA 

requests comment on whether or not it 

would be appropriate to differentiate 

between EVs and PHEVs for advanced 

technology credits. Under such an 

approach, PHEVs could be provided a 

lesser multiplier compare to EVs. Also, 

the PHEV multiplier could be prorated 

based on the equivalent electric range 

(i.e., the extent to which the PHEV 

operates on average as an EV) of the 

vehicle in order to incentivize battery 

technology development. This approach 

would give more credits to ‘‘stronger’’ 

PHEV technology. 

EPA has provided this type of credit 

previously, in the Tier 2 program. This 

approach provides an incentive for 

manufacturers to prove out ultra-clean 

technology during the early years of the 

program. In Tier 2, early credits for Tier 

2 vehicles certified to the very cleanest 

bins (equivalent to California’s 

standards for super ultra low emissions 

vehicles (SULEVs) and zero emissions 

vehicles (ZEVs)) had a multiplier of 1.5 

or 2.0.154 The multiplier range of 1.2 to 

2.0 being proposed for GHGs is 

consistent with the Tier 2 approach. 

EPA believes it is appropriate to provide 

incentives to manufacturers to produce 

vehicles with very low emissions levels 

and that these incentives may help pave 

the way for greater and/or more cost 

effective emission reductions from 

future vehicles. EPA would like to 

finalize an approach which 

appropriately balances the benefits of 

encouraging advanced technologies 

with the overall environmental 

reductions of the proposed standards as 

a whole. 

As with other vehicles, CO2 for these 

vehicles would be determined as part of 

vehicle certification, based on emissions 

over the 2-cycle test procedures, to be 

included in the fleet average CO2 levels. 

For electric vehicles, EPA proposes 

that manufacturers would include them 

in the average with CO2 emissions of 

zero grams/mile both for early credits, 

and for the MY 2012–2016 time frame. 

Similarly, EPA proposes to include as 

zero grams/mile of CO2 the electric 

portion of PHEVs (i.e., when PHEVs are 

operating as electric vehicles) and fuel 

cell vehicles. EPA recognizes that for 

each EV that is sold, in reality the total 

emissions off-set relative to the typical 

gasoline or diesel powered vehicle is 

not zero, as there is a corresponding 

increase in upstream CO2 emissions due 

to an increase in the requirements for 

electric utility generation. However, for 

the time frame of this proposed rule, 

EPA is also interested in promoting very 

advanced technologies such as EVs 

which offer the future promise of 

significant reductions in GHG 

emissions, in particular when coupled 

with a broader context which would 

include reductions from the electricity 

generation. For the California Paley 1 

program, California assigned EVs a CO2 

performance value of 130 g/mile, which 

was intended to represent the average 

CO2 emissions required to charge an EV 

using representative CO2 values for the 

California electric utility grid. For this 

154 See 65 FR 6746, February 10, 2000. 
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49534 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

proposal, EPA is assigning an EV a 

value of zero g/mile, which should be 

viewed as an interim solution for how 

to account for the emission reduction 

potential of this type of vehicle, and 

may not be the appropriate long-term 

approach. EPA requests comment on 

this proposal and whether alternative 

approaches to address EV emissions 

should be considered, including 

approaches for considering the lifecycle 

emissions from such advanced vehicle 

technologies. 

The criteria and definitions for what 

vehicles qualify for the multiplier are 

provided in Section III.E. As described 

in Section III.E, EPA is proposing 

definitions for EVs, PHEVs, and fuel cell 

vehicles to ensure that only credible 

advanced technology vehicles are 

provided credits. 

EPA requests comments on the 

proposed approach for advanced 

technology vehicle credits. 

4. Off-Cycle Technology Credits 

EPA is proposing an optional credit 

opportunity intended to apply to new 

and innovative technologies that reduce 

vehicle CO2 emissions, but for which 

the CO2 reduction benefits are not 

captured over the 2-cycle test procedure 

used to determine compliance with the 

fleet average standards (i.e., ‘‘off-cycle’’). 

Eligible innovative technologies would 

be those that are relatively newly 

introduced in one or more vehicle 

models, but that are not yet 

implemented in widespread use in the 

light-duty fleet. EPA will not approve 

credits for technologies that are not 

innovative or novel approaches to 

reducing greenhouse gas emissions. 

Further, any credits for these off-cycle 

technologies must be based on realworld GHG reductions not captured on 

the current 2-cycle tests and verifiable 

test methods, and represent average U.S. 

driving conditions. 

Similar to the technologies used to 

reduce A/C system indirect CO2 

emissions such as compressor efficiency 

improvements, eligible technologies 

would not be active during the 2-cycle 

test and therefore the associated 

improvements in CO2 emissions would 

not be captured. EPA will not consider 

technologies to be eligible for these 

credits if the technology has a 

significant impact on CO2 emissions 

over the FTP and HFET tests. Because 

these technologies are not nearly so well 

developed and understood, EPA is not 

prepared to require their utilization to 

meet the CO2 standards. However, EPA 

is aware of some emerging and 

innovative technologies and concepts in 

various stages of development with CO2 

reduction potential that might not be 

adequately captured on the FTP or 

HFET, and that some of these 

technologies might merit some 

additional CO2 credit for the 

manufacturer. Examples include solar 

panels on hybrids or electric vehicles, 

adaptive cruise control, and active 

aerodynamics. EPA believes it would be 

appropriate to provide an incentive to 

encourage the introduction of these 

types of technologies and that a credit 

mechanism is an effective way to do 

this. This optional credit opportunity 

would be available through the 2016 

model year. 

EPA is proposing that manufacturers 

quantify CO2 reductions associated with 

the use of the off-cycle technologies 

such that the credits could be applied 

on a g/mile equivalent basis, as is 

proposed for A/C system improvements. 

Credits would have to be based on real 

additional reductions of CO2 emissions 

and would need to be quantifiable and 

verifiable with a repeatable 

methodology. Such submissions of data 

should be submitted to EPA subject to 

public scrutiny. EPA proposes that the 

technologies upon which the credits are 

based would be subject to full useful life 

compliance provisions, as with other 

emissions controls. Unless the 

manufacturer can demonstrate that the 

technology would not be subject to inuse deterioration over the useful life of 

the vehicle, the manufacturer would 

have to account for deterioration in the 

estimation of the credits in order to 

ensure that the credits are based on real 

in-use emissions reductions over the life 

of the vehicle. 

As discussed below, EPA is proposing 

a two-tiered process for demonstrating 

the CO2 reductions of an innovative and 

novel technology with benefits not 

captured by the FTP and HFET test 

procedures. First, a manufacturer would 

determine whether the benefit of the 

technology could be captured using the 

5-cycle methodology currently used to 

determine fuel economy label values. 

EPA established the 5-cycle test 

methods to better represent real-world 

factors impacting fuel economy, 

including higher speeds and more 

aggressive driving, colder temperature 

operation, and the use of air 

conditioning. If this determination is 

affirmative, the manufacturer would 

follow the protocol laid out below and 

in the proposed regulations. If the 

manufacturer finds that the technology 

is such that the benefit is not adequately 

captured using the 5-cycle approach, 

then the manufacturer would have to 

develop a robust methodology, subject 

to EPA approval, to demonstrate the 

benefit and determine the appropriate 

CO2 gram per mile credit. 

a. Technology Demonstration Using 

EPA 5-Cycle Methodology 

As noted above, the CO2 reduction 

benefit of some innovative technologies 

could be demonstrated using the 5-cycle 

approach currently used for EPA’s fuel 

economy labeling program. The 5-cycle 

methodology was finalized in EPA’s 

2006 fuel economy labeling rule,155 

which provides a more accurate fuel 

economy label estimate to consumers 

starting with 2008 model year vehicles. 

In addition to the FTP and HFET test 

procedures, the 5-cycle approach folds 

in the test results from three additional 

test procedures to determine fuel 

economy. The additional test cycles 

include cold temperature operation, 

high temperature, high humidity and 

solar loading, and aggressive and highspeed driving; thus these tests could be 

used to demonstrate the benefit of a 

technology that reduces CO2 over these 

types of driving and environmental 

conditions. Using the test results from 

these additional test cycles collectively 

with the 2-cycle data provides a more 

precise estimate of the average fuel 

economy and CO2 emissions of a vehicle 

for both the city and highway 

independently. A significant benefit of 

using the 5-cycle methodology to 

measure and quantify the CO2 

reductions is that the test cycles are 

properly weighted for the expected 

average U.S. operation, meaning that the 

test results could be used without 

further adjustments. 

The use of these supplemental cycles 

may provide a method by which 

technologies not demonstrated on the 

baseline 2-cycles can be quantified. The 

cold temperature FTP can capture new 

technologies that improve the CO2 

performance of vehicles during colder 

weather operation. These improvements 

may be related to warm-up of the engine 

or other operation during the colder 

temperature. An example of such a new, 

innovative technology is a waste heat 

capture device that provides heat to the 

cabin interior, enabling additional 

engine-off operation during colder 

weather not previously enabled due to 

heating and defrosting requirements. 

The additional engine-off time would 

result in additional CO2 reductions that 

otherwise would not have been realized 

without the heat capture technology. 

While A/C credits for efficiency 

improvements will largely be captured 

in the A/C credits proposal through the 

credit menu of known efficiency 

improving components and controls, 

155 Fuel Economy Labeling of Motor Vehicles: 

Revisions to Improve Calculation of Fuel Economy 

Estimates; Final Rule (71 FR 77872, December 27, 

2006). 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49535 

certain new technologies may be able to 

use the high temperatures, humidity, 

and solar load of the SC03 test cycle to 

accurately measure their impact. An 

example of a new technology may be a 

refrigerant storage device that 

accumulates pressurized refrigerant 

during driving operation or uses 

recovered vehicle kinetic energy during 

deceleration to pressurize the 

refrigerant. Much like the waste heat 

capture device used in cold weather, 

this device would also allow additional 

engine-off operation while maintaining 

appropriate vehicle interior occupant 

comfort levels. SC03 test data measuring 

the relative impact of innovative A/Crelated technologies could be applied to 

the 5-cycle equation to quantify the CO2 

reductions of the technology. Another 

example is glazed windows. This 

reflects sunlight away from the cabin so 

that the energy required to stabilize the 

cabin air to a comfortable level is 

decreased. The impact of these windows 

may be measureable on an SC03 test 

(with and without the window option). 

The US06 cycle may be used to 

capture innovative technologies 

designed to reduce CO2 emissions 

during higher speed and more 

aggressive acceleration conditions, but 

not reflected on the 2-cycle tests. An 

example of this is an active 

aerodynamic technology. This 

technology recognizes the benefits of 

reduced aerodynamic drag at higher 

speeds and makes changes to the 

vehicle at those speeds. The changes 

may include active front or grill air 

deflection devices designed to redirect 

frontal airflow. Certain active 

suspension devices designed primarily 

to reduce aerodynamic drag by lowering 

the vehicle at higher speeds may also be 

measured on the US06 cycle. To 

properly measure these technologies on 

the US06, the vehicle would require 

unique load coefficients with and 

without the technologies. The different 

load coefficient (properly weighted for 

the US06 cycle) could effectively result 

in reduced vehicle loads at the higher 

speeds when the technologies are active. 

Similar to the previously discussed 

cycles, the results from the US06 test 

with and without the technology could 

then use the 5-cycle methodology to 

quantify CO2 reductions. 

If the 5-cycle procedures can be used 

to demonstrate the innovative 

technology, then the process would be 

relatively simple. The manufacturer 

would simply test vehicles with and 

without the technology installed or 

operating and compare results. All 

5-cycles would be tested with the 

technology enabled and disabled, and 

the test results would be used to 

calculate a combined city/highway CO2 

value with the technology and without 

the technology. These values would be 

compared to determine the amount of 

the credit; the combined city/highway 

CO2 value with the technology operating 

would be subtracted from the combined 

city/highway CO2 value without the 

technology operating to determine the 

gram per mile CO2 credit. It is likely that 

multiple tests of each of the five test 

procedures would need to be performed 

in order to achieve the necessary strong 

degree of statistical significance of the 

credit determination results. This would 

have to be done for each model type for 

which a credit was being sought, unless 

the manufacturer could demonstrate 

that the impact of the technology was 

independent of the vehicle 

configuration on which it was installed. 

In this case, EPA may consider allowing 

the test to be performed on an engine 

family basis or other grouping. At the 

end of the model year, the manufacturer 

would determine the number of vehicles 

produced subject to each credit amount 

and report that to EPA in the final 

model year report. The gram per mile 

credit value determined with the 5-cycle 

comparison testing would be multiplied 

by the total production of vehicles 

subject to that value to determine the 

total number of credits. 

b. Alternative Off-Cycle Credit 

Methodologies 

In cases where the benefit of a 

technological approach to reducing CO2 

emissions can not be adequately 

represented using existing test cycles, 

EPA will work with and advise 

manufacturers in developing test 

procedures and analytical approaches to 

estimate the effectiveness of the 

technology for the purpose of generating 

credits. Clearly the first step should be 

a thorough assessment of whether the 5-

cycle approach can be used, but if the 

manufacturer finds that the 5-cycle 

process is fundamentally inadequate for 

the specific technology being 

considered by the manufacturer, then an 

alternative approach may be developed 

and submitted to EPA for approval. The 

demonstration program should be 

robust, verifiable, and capable of 

demonstrating the real-world emissions 

benefit of the technology with strong 

statistical significance. 

The CO2 benefit of some technologies 

may be able to be demonstrated with a 

modeling approach, using engineering 

principles. An example would be where 

a roof solar panel is used to charge the 

on-board vehicle battery. The amount of 

potential electrical power that the panel 

could supply could be modeled for 

average U.S. conditions and the units of 

electrical power translated to equivalent 

fuel energy or annualized CO2 emission 

rate reduction from the captured solar 

energy. The CO2 reductions from other 

technologies may be more challenging 

to quantify, especially if they are 

interactive with the driver, geographic 

location, environmental condition, or 

other aspect related to operation on 

actual roads. In these cases, 

manufacturers might have to design 

extensive on-road test programs. Any 

such on-road testing programs would 

need to be statistically robust and based 

on average U.S. driving conditions, 

factoring in differences in geography, 

climate, and driving behavior across the 

U.S. 

Whether the approach involves onroad testing, modeling, or some other 

analytical approach, the manufacturer 

would be required to present a proposed 

methodology to EPA. EPA would 

approve the methodology and credits 

only if certain criteria were met. 

Baseline emissions and control 

emissions would need to be clearly 

demonstrated over a wide range of real 

world driving conditions and over a 

sufficient number of vehicles to address 

issues of uncertainty with the data. Data 

would need to be on a vehicle modelspecific basis unless a manufacturer 

demonstrated model specific data was 

not necessary. Approval of the approach 

to determining a CO2 benefit would not 

imply approval of the results of the 

program or methodology; when the 

testing, modeling, or analyses are 

complete the results would likewise be 

subject to EPA review and approval. 

EPA believes that manufacturers could 

work together to develop testing, 

modeling, or analytical methods for 

certain technologies, similar to the SAE 

approach used for A/C refrigerant 

leakage credits. 

EPA requests comments on the 

proposed approach for off-cycle 

emissions credits, including comments 

on how best to structure the program. 

EPA particularly requests comments on 

how the case-by-case approach to 

assessing off-cycle innovative 

technology credits could best be 

designed, including ways to ensure the 

verification of real-world emissions 

benefits and to ensure transparency in 

the process of reviewing manufacturer’s 

proposed test methods. 

5. Early Credit Options 

EPA is proposing to allow 

manufacturers to generate early credits 

in model years 2009–2011. As described 

below, credits could be generated 

through early additional fleet average 

CO2 reductions, early A/C system 

improvements, early advanced 
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technology vehicle credits, and early 

off-cycle credits. As with other credits, 

early credits would be subject to a five 

year carry-forward limit based on the 

model year in which they are generated. 

Early credits could also be transferred 

between vehicle categories (e.g., 

between the car and truck fleet) or 

traded among manufacturers without 

limits. The agencies note that CAFE 

credits earned in MYs prior to MY 2011 

will still be available to manufacturers 

for use in the CAFE program in 

accordance with applicable regulations. 

EPA is not proposing certification, 

compliance, or in-use requirements for 

vehicles generating early credits. MY 

2009 would be complete and MY 2010 

would be well underway by the time the 

rule is promulgated. This would make 

certification, compliance, and in-use 

requirements unworkable. As discussed 

below, manufacturers would be required 

to submit an early credits report to EPA 

for approval no later than the time they 

submit their final CAFE report for MY 

2011. This report would need to include 

details on all early credits the 

manufacturer generates, why the credits 

are bona fide, how they are quantified, 

and how they can be verified. 

As a general principle, EPA believes 

these early credit programs must be 

designed in a way to ensure that they 

are capturing real-world reductions. In 

addition, EPA wants to ensure these 

credit programs do not provide an 

opportunity for manufacturers to earn 

‘‘windfall’’ credits that do not result in 

actual, surplus CO2 emission 

reductions. EPA seeks comments on 

how to best ensure these objectives are 

achieved in the design of the early 

credit program options. 

a. Credits Based on Early Fleet Average 

CO2 Reductions 

EPA is proposing opportunities for 

early credit generation in MYs 2009– 

2011 through over-compliance with a 

fleet average CO2 baseline established 

by EPA. EPA is proposing four 

pathways for doing so. Manufacturers 

would select one of the four paths for 

credit generation for the entire three 

year period and could not switch 

between pathways for different model 

years. For two pathways, the baseline 

would be set by EPA to be equivalent to 

the California standards for the relevant 

model year. Generally, manufacturers 

that over-comply with those CARB 

standards would earn credits. Two 

additional pathways, described below, 

would include credits based on overcompliance with CAFE standards in 

States that have not adopted the 

California standards. 

Pathway 1 would be to earn credits by 

over-complying with the California 

equivalent baseline over the 

manufacturer’s fleet of vehicles sold 

nationwide. Pathway 2 would be for 

manufacturers to generate credits 

against the baseline only for the fleet of 

vehicles sold in California and the CAA 

section 177 States.156 This approach 

would include any CAA 177 States as of 

the date of promulgation of the Final 

Rule in this proceeding. Manufacturers 

would be required to include both cars 

and trucks in the program. Under 

Pathways 1 and 2, EPA proposes that 

manufacturers would be required to 

cover any deficits incurred against the 

baseline levels established by EPA 

during the three year period 2009–2011 

before credits could be carried forward 

into the 2012 model year. For example, 

a deficit in 2011 would have to be 

subtracted from the sum of credits 

earned in 2009 and 2010 before any 

credits could be applied to 2012 (or 

later) model year fleets. EPA is 

proposing this provision to help ensure 

the early credits generated under this 

program are consistent with the credits 

available under the California program 

during these model years. 

Table III.C.5–1 provides the California 

equivalent baselines EPA proposes to 

use as the basis for CO2 credit 

generation under the California-based 

pathways. These are the California GHG 

standards for the model years shown, 

with a 2.0 g/mile adjustment to account 

for the exclusion of N2O and CH4, which 

are included in the California GHG 

standards, but not included in the 

credits program. Manufacturers would 

generate CO2 credits by achieving fleet 

average CO2 levels below these 

baselines. As shown in the table, the 

California-based early credit pathways 

are based on the California vehicle 

categories. Also, the California-based 

baseline levels are not footprint-based, 

but universal levels that all 

manufacturers would use. 

Manufacturers would need to achieve 

fleet levels below those shown in the 

table in order to earn credits. 

TABLE III.C.5–1—CALIFORNIA EQUIVALENT BASELINES CO2 EMISSIONS LEVELS FOR EARLY CREDIT GENERATION 

Light trucks with a LVW 

Passenger cars and light of 3,751 or more and a 

Model year trucks with an LVW of GVWR of up to 8,500 

0–3,750 lbs lbs plus medium-duty 

passenger vehicles 

2009 .........................................................................................................................................
 321 437 

2010 ......................................................................................................................................... 299 418 

2011 ......................................................................................................................................... 265 388 

EPA proposes that manufacturers 

using Pathways 1 or 2 above would use 

year end car and truck sales in each 

category. Although production data is 

used for the program starting in 2012, 

EPA is proposing to use sales data for 

the early credits program in order to 

apportion vehicles by State. This is 

described further below. Manufacturers 

would calculate actual fleet average 

emissions over the appropriate vehicle 

fleet, either for vehicles sold nationwide 

for Pathway 1, or California plus 177 

States sales for Pathway 2. Early CO2 

credits would be based on the difference 

between the baseline shown in the table 

above and the actual fleet average 

emissions level achieved. Any early 

A/C credits generated by the 

manufacturer, described below in 

Section III.C.5.b, would be included in 

the fleet average level determination. In 

model year 2009, the California CO2 

standards for cars (321 g/mi CO2) are 

only slightly more stringent than the 

2009 CAFE car standard of 27.5 mpg, 

which is approximately equivalent to 

323 g/mi CO2, and the California lighttruck standard (437 g/mi CO2) is less 

stringent than the equivalent CAFE 

standard, recognizing that there are 

some differences between the way the 

California program and the CAFE 

156 CAA 177 States refers to States that have York, Massachusetts, Maryland, Vermont, Maine, Oregon, Pennsylvania, Rhode Island, Washington, 


adopted the California GHG standards. At present, Connecticut, Arizona, New Jersey, New Mexico, and Washington, DC. 


there are thirteen CAA 177 States including New 

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program categorize vehicles. Under the 

proposed option, manufacturers would 

have to show that they over comply over 

the entire three model year time period, 

not just the 2009 model year, to generate 

early credits under either Pathways 1, 2 

or 3. A manufacturer cannot use credits 

generated in model year 2009 unless 

they offset any debits from model years 

2010 and 2011. EPA expects that the 

requirement to over comply over the 

entire time period covering these three 

model years should mean that the 

credits that are generated are real and 

are in excess of what would have 

otherwise occurred. However, because 

of the circumstances involving the 2009 

model year, in particular for companies 

with significant truck sales, there is 

some concern that under Pathways 1, 2, 

and 3, there is a potential for a large 

number of credits generated in 2009 

against the California standard, in 

particular for a number of companies 

who have significantly over-achieved on 

CAFE in recent model years. EPA wants 

to avoid a situation where, contrary to 

expectation, some part of the early 

credits generated by a manufacturer are 

in fact not excess, where companies 

could trade such credits to other 

manufacturers, risking a delay in the 

addition of new technology across the 

industry from the 2012 and later EPA 

CO2 standards. For this reason, EPA 

requests comment on the merits of 

prohibiting the trading of model year 

2009 generated early credits between 

firms. 

In addition, for Pathways 1 and 2, 

EPA proposes that manufacturers may 

also include alternative compliance 

credits earned per the California 

alternative compliance program.157 

These alternative compliance credits are 

based on the demonstrated use of 

alternative fuels in flex fuel vehicles. As 

with the California program, the credits 

would be available beginning in MY 

2010. Therefore, these early alternative 

compliance credits would be available 

under EPA’s program for the 2010 and 

2011 model years. FFVs would 

otherwise be included in the early credit 

fleet average based on their emissions 

on the conventional fuel. This would 

not apply to EVs and PHEVs. The 

emissions of EVs and PHEVs would be 

determined as described in Section III.E. 

Manufacturers could choose to either 

include their EVs and PHEVs in one of 

the four pathways described in this 

section or under the early advanced 

technology emissions credits described 

below, but not both due to issues of 

credit double counting. 

EPA is also proposing two additional 

early credit pathways manufacturers 

could select. Pathways 3 and 4 

incorporate credits based on overcompliance with CAFE standards for 

vehicles sold outside of California and 

CAA 177 States in MY 2009–2011. 

Pathway 3 would allow manufacturers 

to earn credits as under Pathway 2, plus 

earn CAFE-based credits in other States. 

Credits would not be generated for cars 

sold in California and CAA 177 States 

unless vehicle fleets in those States are 

performing better than the standards 

which otherwise would apply in those 

States, i.e. the baselines shown in Table 

III.C.5–1 above. 

Pathway 4 would be for 

manufacturers choosing to forego 

California-based early credits entirely 

and earn only CAFE-based credits 

outside of California and CAA 177 

States. EPA proposes that manufacturers 

would not be able to include FFV 

credits under the CAFE-based early 

credit pathways since those credits do 

not automatically reflect actual 

reductions in CO2 emissions. 

The proposed baselines for CAFEbased early pathways are provided in 

Table III.C.5–2 below. They are based on 

the CAFE standards for the 2009–2011 

model years. For CAFE standards in 

2009–2011 model years that are 

footprint-based, the baseline would vary 

by manufacturer. Footprint-based 

standards are in effect for the 2011 

model year CAFE standards.158 

Additionally, for Reform CAFE truck 

standards, footprint standards are 

optional for the 2009–2010 model years. 

Where CAFE footprint-based standards 

are in effect, manufacturers would 

calculate a baseline using the footprints 

and sales of vehicles outside of 

California and CAA 177 States. The 

actual fleet CO2 performance calculation 

would also only include the vehicles 

sold outside of California and CAA 177 

States, and as mentioned above, may not 

include FFV credits. 

TABLE III.C.5–2—CAFE EQUIVALENT BASELINES CO2 EMISSIONS LEVELS FOR EARLY CREDIT GENERATION 

Model year Cars Trucks 

2009 ................................................................... 323 ................................................................... 381.* 

2010 ................................................................... 323 ................................................................... 376.* 

2011 ................................................................... Footprint-based standard ................................. Footprint-based standard. 

* Would be footprint-based standard for manufacturers selecting footprint option under CAFE. 

For the CAFE-based pathways, EPA 

proposes to use the NHTSA car and 

truck definitions that are in place for the 

model year in which credits are being 

generated. EPA understands that the 

NHTSA definitions change starting in 

the 2011 model year, and would 

therefore change part way through the 

early credits program. EPA further 

recognizes that MDPVs are not part of 

the CAFE program until the 2011 model 

year, and therefore would not be part of 

the early credits calculations for 2009– 

2010 under the CAFE-based pathways. 

Pathways 2 through 4 involve 

splitting the vehicle fleet into two 

groups, vehicles sold in California and 

CAA 177 States and vehicles sold 

outside of these States. This approach 

would require a clear accounting of 

location of vehicle sales by the 

manufacturer. EPA believes it will be 

reasonable for manufacturers to 

accurately track sales by State, based on 

its experience with the National Low 

Emissions Vehicle (NLEV) Program. 

NLEV required manufacturers to meet 

separate fleet average standards for 

vehicles sold in two different regions of 

the country.159 As with NLEV, the 

determination would be based on where 

the completed vehicles are delivered as 

a point of first sale, which in most cases 

would be the dealer.160 

As noted above, EPA proposes that 

manufacturers choosing to generate 

early credits would select one of the 

four pathways for the entire early 

credits program and would not be able 

to switch among them. EPA proposes 

that manufacturers would submit their 

early credits report when they submit 

their final CAFE report for MY 2011 

(which is required to be submitted no 

157 See Section 6.6.E, California Environmental Rulemaking, Public Hearing to Consider Adoption 158 74 FR 14196, March 30, 2009. 

Protection Agency Air Resources Board, Staff of Regulations to Control Greenhouse Gas 159 62 FR 31211, June 6, 1997. 

Report: Initial Statement of Reasons For Proposed Emissions From Motor Vehicles, August 6, 2004. 160 62 FR 31212, June 6, 1997. 
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49538 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

later than 90 days after the end of the The table below provides a summary comment on whether or not any of the 

model year). Manufacturers would have of the four fleet average-based CO2 early pathways could be eliminated to 

until then to decide which pathway to credit pathways EPA is proposing. As simplify the program without 

select. This would give manufacturers noted above, EPA is concerned with diminishing its overall flexibility. For 

enough time to determine which potential ‘‘windfall’’ credits and is example, Pathway 2 may not be 

pathway works best for them. This seeking comments on how to best particularly useful to manufacturers if 

ensure the objective of achieving the California/177 State and overall timing may be necessary in cases where 

manufacturers earn credits in MY 2011 surplus, real-world reductions is national fleets are projected to be

and need time to assess data and achieved in the design of the credit similar during these model years. EPA

programs. In addition, EPA requests also requests comment on proposed prepare an early credits submittal for comments on the merits of each of these program implementation structure and final EPA approval. pathways. Specifically, EPA requests provisions. 

TABLE III.C.5–3—SUMMARY OF PROPOSED EARLY FLEET AVERAGE CO2 CREDIT PATHWAYS 

Common Elements .............................................................
 

Pathway 1: California-based Credits for National Fleet. ... 

Pathway 2: California-based Credits for vehicles sold in 

California plus CAA 177 States. 

Pathway 3: Pathway 2 plus CAFE-based Credits outside 

of California plus CAA 177 States. 

Pathway 4: Only CAFE-based Credits outside of California plus CAA 177 States. 

—Manufacturers would select a pathway. Once selected, may not switch among 

pathways. 

—All credits subject to 5 year carry-forward restrictions. 

—For Pathways 2–4, vehicles apportioned by State based on point of first sale. 

—Manufacturers earn credits based on fleet average emissions compared with California equivalent baseline set by EPA. 

—Based on nationwide CO2 sales-weighted fleet average. 

—Based on use of California vehicle categories. 

—FFV alternative compliance credits per California program may be included. 

—Once in the program, manufacturers must make up any deficits that are incurred 

prior to 2012 in order to carry credits forward to 2012 and later. 

—Same as Pathway 1, but manufacturers only includes vehicles sold in California 

and CAA 177 States in the fleet average calculation. 

—Manufacturer earns credits as provided by Pathway 2: California-based credits for 

vehicles sold in California plus CAA 177 States, plus: 

—CAFE-based credits allowed for vehicles sold outside of California and CAA 177 

States. 

—For CAFE-based credits, manufacturers earn credits based on fleet average emissions compared with baseline set by EPA. 

—CAFE-based credits based on NHTSA car and truck definitions. 

—FFV credits not allowed to be included for CAFE-based credits. 

—Manufacturer elects to only earn CAFE-based credits for vehicles sold outside of 

California and CAA 177 States. Earns no California and 177 State credits. 

—For CAFE-based credits, manufacturers earn credits based on fleet average emissions compared with baseline set by EPA. 

—CAFE-based credits based on NHTSA car and truck definitions. 

—FFV credits not allowed to be included for CAFE-based credits. 

b. Early A/C Credits 

EPA proposes that manufacturers 

could earn early A/C credits in MYs 

2009–2011 using the same A/C system 

design-based EPA provisions being 

proposed for MYs commencing in 2012, 

as described in Section III.C.1, above. 

Manufacturers would be able to earn 

early A/C CO2-equivalent credits by 

demonstrating improved A/C system 

performance, for both direct and 

indirect emissions. To earn credits for 

vehicles sold in California and CAA 177 

States, the vehicles would need to be 

included in one of the California-based 

early credit pathways described above 

in III.C.5.a. EPA is proposing this 

constraint in order to avoid credit 

double counting with the California 

program in place in those States, which 

also allows A/C system credits in this 

time frame. Manufacturers would fold 

the A/C credits into the fleet average 

CO2 calculations under the Californiabased pathway. For example, the MY 

2009 California-based program car 

baseline would be 321 g/mile (see Table 

III.C.5–1). If a manufacturer under 

Pathway 1 had a MY 2009 car fleet 

average CO2 level of 320 g/mile and 

then earned an additional 9 g/mile 

CO2-equivalent A/C credit, the 

manufacturers would earn a total of 10 

g/mile of credit. Vehicles sold outside of 

California and 177 States would be 

eligible for the early A/C credits 

whether or not the manufacturers 

participate in other aspects of the early 

credits program. 

c. Early Advanced Technology Vehicle 

Credits 

EPA is proposing to allow early 

advanced technology vehicle credits for 

sales of EVs, PHEVs, and fuel cell 

vehicles. To avoid double-counting, 

manufacturers would not be allowed to 

generate advanced technology credits 

for vehicles they choose to include in 

Pathways 1 through 4 described in 

III.C.5.a, above. EPA proposes to use a 

similar methodology to that proposed 

for MYs 2012 and later, as described in 

Section III.C.3, above. EPA proposes to 

use a multiplier in the range of 1.2 to 

2.0 for all eligible vehicles (i.e., EVs, 

PHEVs, and fuel cells). Manufacturers, 

however, would track the number of 

these vehicles sold in the model years 

2009—2011, and the emissions level of 

the vehicles, rather than a CO2 credit. 

When a manufacturer chooses to use the 

vehicle credits to comply with 2012 or 

later standards, the vehicle counts 

including the multiplier would be 

folded into the CO2 fleet average. For 

example, if a manufacturer sells 1,000 

EVs in MY 2011, and if the final 

multiplier level were 2.0, the 

manufacturer would apply the 

multiplier of 2.0 and then be able to 

include 2,000 vehicles at 0 g/mile in 

their MY 2012 fleet to decrease the fleet 

average for that model year. As with 

other early credits, these early advanced 

technology vehicle credits would be 

tracked by model year (2009, 2010, or 

2011) and would be subject to 5 year 

carry-forward restrictions. Again, 
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manufacturers would not be allowed to 

include the EVs, PHEVs, or fuel cell 

vehicles in the early credit pathways 

discussed above in Section III.C.5.a, 

otherwise the vehicles would be double 

counted. As discussed in Section III.C.3, 

EPA is requesting comment on a 

multiplier in the range of 1.2 to 2.0, 

including a potential phase-down in the 

multiplier by model year 2016, if a 

multiplier near the higher end of this 

range is determined for the final rule. 

This request for comment also extends 

to the potential for early advance 

technology vehicle credits. EPA is also 

requesting comment on the appropriate 

gram/mile metric for EVs and fuel 

cellvehicles, as well as for the EV-only 

contribution for a PHEV. 

d. Early Off-Cycle Credits 

EPA’s proposed off-cycle innovative 

technology credit provisions are 

provided in Section III.C.4. EPA 

requests comment on beginning these 

credits in the 2009–2011 time frame, 

provided manufacturers are able to 

make the necessary demonstrations 

outlined in Section III.C.4, above. 

D. Feasibility of the Proposed CO2 

Standards 

This proposal is based on the need to 

obtain significant GHG emissions 

reductions from the transportation 

sector, and the recognition that there are 

cost-effective technologies to achieve 

such reductions in the 2012–2016 time 

frame. As in many prior mobile source 

rulemakings, the decision on what 

standard to set is largely based on the 

effectiveness of the emissions control 

technology, the cost and other impacts 

of implementing the technology, and the 

lead time needed for manufacturers to 

employ the control technology. The 

standards derived from assessing these 

issues are also evaluated in terms of the 

need for reductions of greenhouse gases, 

the degree of reductions achieved by the 

standards, and the impacts of the 

standards in terms of costs, quantified 

benefits, and other impacts of the 

standards. The availability of 

technology to achieve reductions and 

the cost and other aspects of this 

technology are therefore a central focus 

of this rulemaking. 

EPA is taking the same basic approach 

in this rulemaking, although the 

technological problems and solutions 

involved in this rulemaking differ in 

some ways from prior mobile source 

rulemakings. Here, the focus of the 

emissions control technology is on 

reducing CO2 and other greenhouse 

gases. Vehicles combust fuel to perform 

two basic functions: (1) Transport the 

vehicle, its passengers and its contents, 

and (2) operate various accessories 

during the operation of the vehicle such 

as the air conditioner. Technology can 

reduce CO2 emissions by either making 

more efficient use of the energy that is 

produced through combustion of the 

fuel or reducing the energy needed to 

perform either of these functions. 

This focus on efficiency calls for 

looking at the vehicle as an entire 

system. In addition to fuel delivery, 

combustion, and aftertreatment 

technology, any aspect of the vehicle 

that affects the need to produce energy 

must also be considered. For example, 

the efficiency of the transmission 

system, which takes the energy 

produced by the engine and transmits it 

to the wheels, and the resistance of the 

tires to rolling both have major impacts 

on the amount of fuel that is combusted 

while operating the vehicle. The braking 

system, the aerodynamics of the vehicle, 

and the efficiency of accessories, such 

as the air conditioner, all affect how 

much fuel is combusted. 

In evaluating vehicle efficiency, we 

have excluded fundamental changes in 

vehicles’ size and utility. For example, 

we did not evaluate converting 

minivans and SUVs to station wagons, 

converting vehicles with four wheel 

drive to two wheel drive, or reducing 

headroom in order to lower the roofline 

and reduce aerodynamic drag. We have 

limited our assessment of technical 

feasibility and resultant vehicle cost to 

technologies which maintain vehicle 

utility as much as possible. 

Manufacturers may decide to alter the 

utility of the vehicles which they sell in 

response to this rule. Assessing the 

societal cost of such changes is very 

difficult as it involves assessing 

consumer preference for a wide range of 

vehicle features. 

This need to focus on the efficient use 

of energy by the vehicle as a system 

leads to a broad focus on a wide variety 

of technologies that affect almost all the 

systems in the design of a vehicle. As 

discussed below, there are many 

technologies that are currently available 

which can reduce vehicle energy 

consumption. These technologies are 

already being commercially utilized to a 

limited degree in the current light-duty 

fleet. These technologies include hybrid 

technologies that use higher efficiency 

electric motors as the power source in 

combination with or instead of internal 

combustion engines. While already 

commercialized, hybrid technology 

continues to be developed and offers the 

potential for even greater efficiency 

improvements. Finally, there are other 

advanced technologies under 

development, such as lean burn gasoline 

engines, which offer the potential of 

improved energy generation through 

improvements in the basic combustion 

process. In addition, the available 

technologies are not limited to 

powertrain improvements but also 

include mass reduction, electrical 

system efficiencies, and aerodynamic 

improvements. 

The large number of possible 

technologies to consider and the breadth 

of vehicle systems that are affected 

mean that consideration of the 

manufacturer’s design and production 

process plays a major role in developing 

the proposed standards. Vehicle 

manufacturers typically develop many 

different models by basing them on a 

limited number of vehicle platforms. 

The platform typically consists of a 

common vehicle architecture and 

structural components. This allows for 

efficient use of design and 

manufacturing resources. Given the very 

large investment put into designing and 

producing each vehicle model, 

manufacturers typically plan on a major 

redesign for the models approximately 

every 5 years. At the redesign stage, the 

manufacturer will upgrade or add all of 

the technology and make most other 

changes supporting the manufacturer’s 

plans for the next several years, 

including plans related to emissions, 

fuel economy, and safety regulations. 

This redesign often involves a 

package of changes designed to work 

together to meet the various 

requirements and plans for the model 

for several model years after the 

redesign. This often involves significant 

engineering, development, 

manufacturing, and marketing resources 

to create a new product with multiple 

new features. In order to leverage this 

significant upfront investment, 

manufacturers plan vehicle redesigns 

with several model years of production 

in mind. Vehicle models are not 

completely static between redesigns as 

limited changes are often incorporated 

for each model year. This interim 

process is called a refresh of the vehicle 

and generally does not allow for major 

technology changes although more 

minor ones can be done (e.g., small 

aerodynamic improvements, valve 

timing improvements, etc). More major 

technology upgrades that affect multiple 

systems of the vehicle thus occur at the 

vehicle redesign stage and not in the 

time period between redesigns. 

As discussed below, there are a wide 

variety of CO2 reducing technologies 

involving several different systems in 

the vehicle that are available for 

consideration. Many can involve major 

changes to the vehicle, such as changes 

to the engine block and cylinder heads, 

redesign of the transmission and its 
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packaging in the vehicle, changes in 

vehicle shape to improve aerodynamic 

efficiency and the application of 

aluminum in body panels to reduce 

mass. Logically, the incorporation of 

emissions control technologies would 

be during the periodic redesign process. 

This approach would allow 

manufacturers to develop appropriate 

packages of technology upgrades that 

combine technologies in ways that work 

together and fit with the overall goals of 

the redesign. It also allows the 

manufacturer to fit the process of 

upgrading emissions control technology 

into its multi-year planning process, and 

it avoids the large increase in resources 

and costs that would occur if technology 

had to be added outside of the redesign 

process. 

This proposed rule affects five years 

of vehicle production, model years 

2012–2016. Given the now-typical five 

year redesign cycle, nearly all of a 

manufacturer’s vehicles will be 

redesigned over this period. However, 

this assumes that a manufacturer has 

sufficient lead time to redesign the first 

model year affected by this proposed 

rule with the requirements of this 

proposed rule in mind. In fact, the lead 

time available for model year 2012 is 

relatively short. The time between a 

likely final rule and the start of 2013 

model year production is likely to be 

just over two years. At the same time, 

manufacturer product plans indicate 

that they are planning on introducing 

many of the technologies EPA projects 

could be used to show compliance with 

the proposed CO2 standards in both 

2012 and 2013. In order to account for 

the relatively short lead time available 

prior to the 2012 and 2013 model years, 

albeit mitigated by their existing plans, 

EPA has factored this reality into how 

the availability is modeled for much of 

the technology being considered for 

model years 2012–2016 as a whole. If 

the technology to control greenhouse 

gas emissions is efficiently folded into 

this redesign process, then EPA projects 

that 85 percent of each manufacturer’s 

sales will be able to be redesigned with 

many of the CO2 emission reducing 

technologies by the 2016 model year, 

and as discussed below, to reduce 

emissions of HFCs from the air 

conditioner. 

In determining the level of this first 

ever GHG emissions standard under the 

CAA for light-duty vehicles, EPA 

proposes to use an approach that 

accounts for and builds on this redesign 

process. This provides the opportunity 

for several control technologies to be 

incorporated into the vehicle during 

redesign, achieving significant 

emissions reductions from the model at 

one time. This is in contrast to what 

would be a much more costly approach 

of trying to achieve small increments of 

reductions over multiple years by 

adding technology to the vehicle piece 

by piece outside of the redesign process. 

As described below, the vast majority 

of technology required by this proposal 

is commercially available and already 

being employed to a limited extent 

across the fleet. The vast majority of the 

emission reductions which would result 

from this proposed rule would result 

from the increased use of these 

technologies. EPA also believes that this 

proposed rule would encourage the 

development and limited use of more 

advanced technologies, such as PHEVs 

and EVs. 

In developing the proposed standard, 

EPA built on the technical work 

performed by the State of California 

during its development of its statewide 

GHG program. EPA began by evaluating 

a nationwide CAA standard for MY 

2016 that would require the levels of 

technology upgrade, across the country, 

which California standards would 

require for the subset of vehicles sold in 

California under Pavley 1. In essence, 

EPA evaluated the stringency of the 

California Pavley 1 program but for a 

national standard. As mentioned above, 

and as described in detail in Section II.C 

of this preamble and Chapter 3 of the 

Joint TSD, one of the important 

technical documents included in EPA 

and NHTSA’s assessment of vehicle 

technology effectiveness and costs was 

the 2004 NESCCAF report which was 

the technical foundation for California’s 

Pavley 1 standard. However, in order to 

evaluate the impact of standards with 

similar stringency on a national basis to 

the California program EPA chose not to 

evaluate the specific California 

standards for several reasons. First, 

California’s standards are universal 

standards (one for cars and one for 

trucks), while EPA is proposing 

attribute-based standards using vehicle 

footprint. Second, California’s 

definitions of what vehicles are 

classified as cars and which are 

classified as trucks are different from 

those used by NHTSA for CAFE 

purposes and different from EPA’s 

proposed classifications in this notice 

(which harmonizes with the CAFE 

definitions). In addition, there has been 

progress in the refinement of the 

estimation of the effectiveness and cost 

estimation for technologies which can 

be applied to cars and trucks since the 

California analysis in 2004 which could 

lead to different relative stringencies 

between cars and trucks than what 

California determined for its Pavley 1 

program. There have also been 

improvements in the fuel economy and 

CO2 performance of the actual new 

vehicle fleet since California’s 2004 

analysis which EPA wanted to reflect in 

our current assessment. For these 

reasons, EPA developed an assessment 

of an equivalent national new vehicle 

fleet-wide CO2 performance standards 

for model year 2016 which would result 

in the new vehicle fleet in the State of 

California having CO2 performance 

equal to the performance from the 

California Pavley 1 standards. This 

assessment is documented in Chapter 

3.1 of the DRIA. The results of this 

assessment predicts that a national 

light-duty vehicle fleet which adopts 

technology that achieves performance of 

250 g/mile CO2 for model year 2016 

would result in vehicles sold in 

California that would achieve the CO2 

performance equivalent to the Pavley 1 

standards. 

EPA then analyzed a level of 250 

g/mi CO2 in 2016 using the OMEGA 

model, and the car and truck footprint 

curves relative stringency discussed in 

Section II to determine what technology 

would be needed to achieve a fleet wide 

average of 250 g/mi CO2. As discussed 

later in this section we believe this level 

of technology application to the lightduty vehicle fleet can be achieved in 

this time frame, that such standards will 

produce significant reductions in GHG 

emissions, and that the costs for both 

the industry and the costs to the 

consumer are reasonable. EPA also 

developed standards for the model years 

2012 through 2015 that lead up to the 

2016 level. 

EPA’s independent technical 

assessment of the technical feasibility of 

the proposed MY2012–2016 standards 

is described below. EPA has also 

evaluated a set of alternative standards 

for these model years, one that is more 

stringent than the proposed standards 

and one that is less stringent. The 

technical feasibility of these alternative 

standards is discussed at the end of this 

section. 

Evaluating the feasibility of these 

standards primarily includes identifying 

available technologies and assessing 

their effectiveness, cost, and impact on 

relevant aspects of vehicle performance 

and utility. The wide number of 

technologies which are available and 

likely to be used in combination 

requires a more sophisticated 

assessment of their combined cost and 

effectiveness. An important factor is 

also the degree that these technologies 

are already being used in the current 

vehicle fleet and thus, unavailable for 

use to improve energy efficiency beyond 

current levels. Finally, the challenge for 

manufacturers to design the technology 
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into their products, and the appropriate 

lead time needed to employ the 

technology over the product line of the 

industry must be considered. 

Applying these technologies 

efficiently to the wide range of vehicles 

produced by various manufacturers is a 

challenging task. In order to assist in 

this task, EPA has developed a 

computerized model called the 

Optimization Model for reducing 

Emissions of Greenhouse gases from 

Automobiles (OMEGA) model. Broadly, 

the model starts with a description of 

the future vehicle fleet, including 

manufacturer, sales, base CO2 

emissions, footprint and the extent to 

which emission control technologies are 

already employed. For the purpose of 

this analysis, over 200 vehicle platforms 

were used to capture the important 

differences in vehicle and engine design 

and utility of future vehicle sales of 

roughly 16 million units in the 2016 

timeframe. The model is then provided 

with a list of technologies which are 

applicable to various types of vehicles, 

along with their cost and effectiveness 

and the percentage of vehicle sales 

which can receive each technology 

during the redesign cycle of interest. 

The model combines this information 

with economic parameters, such as fuel 

prices and a discount rate, to project 

how various manufacturers would apply 

the available technology in order to 

meet various levels of emission control. 

The result is a description of which 

technologies are added to each vehicle 

platform, along with the resulting cost. 

While OMEGA can apply technologies 

which reduce CO2 emissions and HFC 

refrigerant emissions associated with air 

conditioner use, this task is currently 

handled outside of the OMEGA model. 

The model can be set to account for 

various types of compliance flexibilities, 

such as FFV credits. 

EPA invites comment on all aspects of 

this feasibility assessment. Both the 

OMEGA model and its inputs have been 

placed in the docket to this proposed 

rule and available for review. 

The remainder of this section 

describes the technical feasibility 

analysis in greater detail. Section III.D.1 

describes the development of our 

projection of the MY 2012–2016 fleet in 

the absence of this proposed rule. 

Section III.D.2 describes our estimates of 

the effectiveness and cost of the control 

technologies available for application in 

the 2012–2016 timeframe. Section 

III.D.3 combines these technologies into 

packages likely to be applied at the 

same time by a manufacturer. In this 

section, the overall effectiveness of the 

technology packages vis-a`-vis their 

effectiveness when combined 

individually is described. Section III.D.4 

describes the process which 

manufacturers typically use to apply 

new technology to their vehicles. 

Section III.D.5 describes EPA’s OMEGA 

model and its approach to estimating 

how manufacturers would add 

technology to their vehicles in order to 

comply with CO2 emission standards. 

Section III.D.6 presents the results of the 

OMEGA modeling, namely the level of 

technology added to manufacturers’ 

vehicles and its cost. Section III.D.7 

discusses the feasibility of the 

alternative 4-percent-per-year and 6-

percent-per-year standards. Further 

detail on all of these issues can be found 

in EPA and NHTSA’s draft Joint 

Technical Support Document as well as 

EPA’s draft Regulatory Impact Analysis. 

1. How Did EPA Develop a Reference 

Vehicle Fleet for Evaluating Further CO2 

Reductions? 

In order to calculate the impacts of 

this proposed regulation, it is necessary 

to project the GHG emissions 

characteristics of the future vehicle fleet 

absent this proposed regulation. This is 

called the ‘‘reference’’ fleet. EPA 

developed this reference fleet by 

determining the characteristics of a 

specific model year (in this case, 2008) 

of vehicles, called the baseline fleet, and 

then projecting what changes if any 

would be made to these vehicles to 

comply with the MY2011 CAFE 

standards. Thus, the MY 2008 fleet is 

our ‘‘baseline fleet,’’ and the projection 

of the baseline to MY 2011–2016 is 

called the ‘‘reference fleet.’’ 

EPA used 2008 model year vehicles as 

the basis for its baseline fleet. 2008 

model year is the most recent model 

year for which data is publicly 

available. Sources of data for the 

baseline include the EPA vehicle 

certification data, Ward’s Automotive 

Group data, Motortrend.com, 

Edmunds.com, manufacturer product 

plans, and other sources to a lesser 

extent (such as articles about specific 

vehicles) revealed from Internet search 

engine research. EPA then projects this 

fleet out to the 2016 MY, taking into 

account factors such as changes in 

overall sales volume. Section II.B 

describes the development of the EPA 

reference fleet, and further details can 

be found in Section II.B of this preamble 

and Chapter 1 of the Draft Joint TSD. 

The light-duty vehicle market is 

currently in a state of flux due to the 

volatility in fuel prices over the past 

several years and the current economic 

downturn. These factors have changed 

the relative sales of the various types of 

light-duty vehicles marketed, as well as 

total sales volumes. EPA and NHTSA 

desire to account for these changes to 

the degree possible in our forecast of the 

make-up of the future vehicle fleet. EPA 

wants to include improvements in fuel 

economy associated with the existing 

CAFE program. It is possible that 

manufacturers could increase fuel 

economy beyond the level of the 2011 

MY CAFE standards for marketing 

purposes. However, it is difficult to 

separate fuel economy improvements in 

those years for marketing purposes from 

those designed to facilitate compliance 

with anticipated CAFE or CO2 emission 

standards. Thus, EPA limits fuel 

economy improvements in the reference 

fleet to those projected to result from the 

existing CAFE standards. The addition 

of technology to the baseline fleet so 

that it complies with the MY 2011 CAFE 

standards is described later in Section 

III.D.4, as this uses the same 

methodology used to project compliance 

with the proposed CO2 emission 

standards. In summary, the reference 

fleet represents vehicle characteristics 

and sales in the 2012 and later model 

years absent this proposed rule. 

Technology is then added to these 

vehicles in order to reduce CO2 

emissions to achieve compliance with 

the proposed CO2 standards. EPA did 

not factor in any changes to vehicle 

characteristics or sales in projecting 

manufacturers’ compliance with this 

proposal. 

After the reference fleet is created, the 

next step aggregates vehicle sales by a 

combination of manufacturer, vehicle 

platform, and engine design. As 

discussed in Section III.D.4 below, 

manufacturers implement major design 

changes at vehicle redesign and tend to 

implement these changes across a 

vehicle platform. Because the cost of 

modifying the engine depends on the 

valve train design (such as SOHC, 

DOHC, etc.), the number of cylinders 

and in some cases head design, the 

vehicle sales are broken down beyond 

the platform level to reflect relevant 

engine differences. The vehicle 

groupings are shown in Table III.D.1–1. 
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49542 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

TABLE III.D.1–1—VEHICLE GROUPINGS a 

Vehicle description Vehicle 

type Vehicle description Vehicle type 

Large SUV (Car) V8+ OHV .................................................. 13 Subcompact Auto I4 ............................................................. 1 

Large SUV (Car) V6 4v ........................................................ 16 Large Pickup V8+ DOHC ..................................................... 19 

Large SUV (Car) V6 OHV .................................................... 12 Large Pickup V8+ SOHC 3v ................................................ 14 

Large SUV (Car) V6 2v SOHC ............................................. 9 Large Pickup V8+ OHV ........................................................ 13 

Large SUV (Car) I4 and I5 ................................................... 7 Large Pickup V8+ SOHC ..................................................... 10 

Midsize SUV (Car) V6 2v SOHC .......................................... 8 Large Pickup V6 DOHC ....................................................... 18 

Midsize SUV (Car) V6 S/DOHC 4v ...................................... 5 Large Pickup V6 OHV .......................................................... 12 

Midsize SUV (Car) I4 ............................................................ 7 Large Pickup V6 SOHC 2v .................................................. 11 

Small SUV (Car) V6 OHV ..................................................... 12 Large Pickup I4 S/DOHC ..................................................... 7 

Small SUV (Car) V6 S/DOHC .............................................. 4 Small Pickup V6 OHV .......................................................... 12 

Small SUV (Car) I4 ............................................................... 3 Small Pickup V6 2v SOHC .................................................. 8 

Large Auto V8+ OHV ............................................................ 13 Small Pickup I4 .................................................................... 7 

Large Auto V8+ SOHC ......................................................... 10 Large SUV V8+ DOHC ........................................................ 17 

Large Auto V8+ DOHC, 4v SOHC ....................................... 6 Large SUV V8+ SOHC 3v ................................................... 14 

Large Auto V6 OHV .............................................................. 12 Large SUV V8+ OHV ........................................................... 13 

Large Auto V6 SOHC 2/3v ................................................... 5 Large SUV V8+ SOHC ........................................................ 10 

Midsize Auto V8+ OHV ......................................................... 13 Large SUV V6 S/DOHC 4v .................................................. 16 

Midsize Auto V8+ SOHC ...................................................... 10 Large SUV V6 OHV ............................................................. 12 

Midsize Auto V7+ DOHC, 4v SOHC .................................... 6 Large SUV V6 SOHC 2v ..................................................... 9 

Midsize Auto V6 OHV ........................................................... 12 Large SUV I4/ ...................................................................... 7 

Midsize Auto V6 2v SOHC ................................................... 8 Midsize SUV V6 OHV .......................................................... 12 

Midsize Auto V6 S/DOHC 4v ................................................ 5 Midsize SUV V6 2v SOHC .................................................. 8 

Midsize Auto I4 ..................................................................... 3 Midsize SUV V6 S/DOHC 4v ............................................... 5 

Compact Auto V7+ S/DOHC ................................................ 6 Midsize SUV I4 S/DOHC ..................................................... 7 

Compact Auto V6 OHV ......................................................... 12 Small SUV V6 OHV ............................................................. 12 

Compact Auto V6 S/DOHC 4v ............................................. 4 Minivan V6 S/DOHC ............................................................ 16 

Compact Auto I5 ................................................................... 7 Minivan V6 OHV .................................................................. 12 

Compact Auto I4 ................................................................... 2 Minivan I4 ............................................................................. 7 

Subcompact Auto V8+ OHV ................................................. 13 Cargo Van V8+ OHV ........................................................... 13 

Subcompact Auto V8+ S/DOHC ........................................... 6 Cargo Van V8+ SOHC ......................................................... 10 

Subcompact Auto V6 2v SOHC ........................................... 8 Cargo Van V6 OHV ............................................................. 12 

Subcompact Auto I5/V6 S/DOHC 4v .................................... 4 ............................................................................................... ................ 

a I4 = 4 cylinder engine, I5 = 5 cylinder engine, V6, V7, and V8 = 6, 7, and 8 cylinder engines, respectively, DOHC = Double overhead cam, 

SOHC = Single overhead cam, OHV = Overhead valve, v = number of valves per cylinder, ‘‘/’’ = and, ‘‘+’’ = or larger. 

As mentioned above, the second 

factor which needs to be considered in 

developing a reference fleet against 

which to evaluate the impacts of this 

proposed rule is the impact of the 2011 

MY CAFE standards, which were 

published earlier this year. Since the 

vehicles which comprise the above 

reference fleet are those sold in the 2008 

MY, when coupled with our sales 

projections, they do not necessarily 

meet the 2011 MY CAFE standards. 

The levels of the 2011 MY CAFE 

standards are straightforward to apply to 

future sales fleets, as is the potential 

fine-paying flexibility afforded by the 

CAFE program (i.e., $55 per mpg of 

shortfall). However, projecting some of 

the compliance flexibilities afforded by 

EISA and the CAFE program are less 

clear. Two of these compliance 

flexibilities are relevant to EPA’s 

analysis: (1) The credit for FFVs, and (2) 

the limit on the transferring of credits 

between car and truck fleets. The FFV 

credit is limited to 1.2 mpg in 2011 and 

EISA gradually reduces this credit, to 

1.0 mpg in 2015 and eventually to zero 

in 2020. In contrast, the limit on car 

truck transfer is limited to 1.0 mpg in 

2011, and EISA increases this to 1.5 

mpg beginning in 2015 and then to 2.0 

mpg beginning in 2020. The question 

here is whether to hold the 2011 MY 

CAFE provisions constant in the future 

or incorporate the changes in the FFV 

credit and car-truck credit trading limits 

contained in EISA. 

EPA decided to hold the 2011 MY 

limits on FFV credit and car-truck credit 

trading constant in projecting the fuel 

economy and CO2 emission levels of 

vehicles in our reference case. This 

approach treats the changes in the FFV 

credit and car-truck credit trading 

provisions consistently with the other 

EISA-mandated changes in the CAFE 

standards themselves. All EISA 

provisions relevant to 2011 MY vehicles 

are reflected in our reference case fleet, 

while all post-2011 MY provisions are 

not. Practically, relative to the 

alternative, this increases both the cost 

and benefit of the proposed standards. 

In our analysis of this proposed rule, 

any quantified benefits from the 

presence of FFVs in the fleet are not 

considered. Thus, the only impact of the 

FFV credit is to reduce onroad fuel 

economy. By assuming that the FFV 

credit stays at 1.2 mpg in the future 

absent this rule, the assumed level of 

onroad fuel economy that would occur 

absent this proposal is reduced. As this 

proposal eliminates the FFV credit 

starting in 2016, the net result is to 

increase the projected level of fuel 

savings from our proposed standards. 

Similarly, the higher level of FFV credit 

reduces projected compliance cost for 

manufacturers to meet the 2011 MY 

standards in our reference case. This 

increases the projected cost of meeting 

the proposed 2012 and later standards. 

As just implied, EPA needs to project 

the technology (and resultant costs) 

required for the 2008 MY vehicles to 

comply with the 2011 MY CAFE 

standards in those cases where they do 

not automatically do so. The technology 

and costs are projected using the same 

methodology that projects compliance 

with the proposed 2012 and later CO2 

standards. The description of this 

process is described in the following 

four sections. 

A more detailed description of the 

methodology used to develop these 

sales projections can be found in the 

Draft Joint TSD. Detailed sales 

projections by model year and 

manufacturer can also be found in the 

TSD. EPA requests comments on both 
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the methodology used to develop the 

reference fleet, as well as the 

characteristics of the reference fleet. 

2. What Are the Effectiveness and Costs 

of CO2-Reducing Technologies? 

EPA and NHTSA worked together to 

jointly develop information on the 

effectiveness and cost of the CO2-

reducing technologies, and fuel 

economy-improving technologies, other 

than A/C related control technologies. 

This joint work is reflected in Chapter 

3 of the Draft Joint TSD and in Section 

II of this preamble. A summary of the 

effectiveness and cost of A/C related 

technology is contained here. For more 

detailed information on the 

effectiveness and cost of A/C related 

technology, please refer to Section III.C 

of this preamble and Chapter 2 of EPA’s 

DRIA. 

A/C improvements are an integral part 

of EPA’s technology analysis and have 

been included in this section along with 

the other technology options. While 

discussed in Section III.C as a credit 

opportunity, air conditioning-related 

improvements are included in Table 

III.D.2–1.because A/C improvements are 

a very cost-effective technology at 

reducing CO2 (or CO2-equivalent) 

emissions. EPA expects most 

manufacturers will choose to use AC 

improvement credit opportunities as a 

strategy for meeting compliance with 

the CO2 standards. Note that the costs 

shown in Table III.D.2–1 do not include 

maintenance savings that would be 

expected from the new AC systems. 

Further, EPA does not include ACrelated maintenance savings in our cost 

and benefit analysis presented in 

Section III.H. EPA discusses the likely 

maintenance savings in Chapter 2 of the 

DRIA and requests comment on that 

discussion because we may include 

maintenance savings in the final rule 

and would like to have the best 

information available in order to do so. 

The EPA approximates that the level of 

the credits earned will increase from 

2012 to 2016 as more vehicles in the 

fleet are redesigned. The penetrations 

and average levels of credit are 

summarized in Table III.D.2–2, though 

the derivation of these numbers (and the 

breakdown of car vs. truck credits) is 

described in the DRIA. As demonstrated 

in the IMAC study (and described in 

Section III.C as well as the DRIA), these 

levels are feasible and achievable with 

technologies that are available and costeffective today. 

These improvements are categorized 

as either leakage reduction, including 

use of alternative refrigerants, or system 

efficiency improvements. Unlike the 

majority of the technologies described 

in this section, A/C improvements will 

not be demonstrated in the test cycles 

used to quantify CO2 reductions in this 

proposal. As described earlier, for this 

analysis A/C-related CO2 reductions are 

handled outside of OMEGA model and 

therefore their CO2 reduction potential 

is expressed in grams per mile rather 

than a percentage used by the OMEGA 

model. See Section III.C for the method 

by which potential reductions are 

calculated or measured. Further 

discussion of the technological basis for 

these improvements is included in 

Chapter 2 of the DRIA. 

TABLE III.D.2–1—TOTAL CO2 REDUCTION POTENTIAL AND 2016 COST FOR A/C RELATED TECHNOLOGIES
 

FOR ALL VEHICLE CLASSES
 

[Costs in 2007 dollars] 


CO2 reduction Incremental 

potential compliance costs 

A/C refrigerant leakage reduction ...................................................................................................................
 7.5 g/mi 161 .......
 $17 

A/C efficiency improvements ..........................................................................................................................
 5.7 g/mi .............
 53 

TABLE III.D.2–2 A/C RELATED TECHNOLOGY PENETRATION AND CREDIT 

LEVELS EXPECTED TO BE EARNED 

Average 

Technology credit 

penetration over 

(Percent) entire 

fleet 

2012 .......... 25 3.1 

2013 .......... 40 5.0 

2014 .......... 60 7.5 

2015 .......... 80 10.0 

2016 .......... 85 10.6 

3. How Can Technologies Be Combined 

into ‘‘Packages’’ and What Is the Cost 

and Effectiveness of Packages? 

Individual technologies can be used 

by manufacturers to achieve 

incremental CO2 reductions. However, 

as mentioned in Section III.D.1, EPA 

believes that manufacturers are more 

likely to bundle technologies into 

161 This represents 50% improvement in leakage 

and thus 50% of the A/C leakage impact potential 

compared to a maximum of 15 g/mi credit that can 

be achieved through the incorporation of a low very 

GWP refrigerant. 

‘‘packages’’ to capture synergistic 

aspects and reflect progressively larger 

CO2 reductions with additions or 

changes to any given package. In 

addition, manufacturers would typically 

apply new technologies in packages 

during model redesigns—which occur 

once roughly every five years—rather 

than adding new technologies one at a 

time on an annual or biennial basis. 

This way, manufacturers can more 

efficiently make use of their redesign 

resources and more effectively plan for 

changes necessary to meet future 

standards. 

Therefore, the approach taken here is 

to group technologies into packages of 

increasing cost and effectiveness. EPA 

determined that 19 different vehicle 

types provided adequate representation 

to accurately model the entire fleet. This 

was the result of analyzing the existing 

light duty fleet with respect to vehicle 

size and powertrain configurations. All 

vehicles, including cars and trucks, 

were first distributed based on their 

relative size, starting from compact cars 

and working upward to large trucks. 

Next, each vehicle was evaluated for 

powertrain, specifically the engine size, 

I4, V6, and V8, and finally by the 

number of valves per cylinder. Note that 

each of these 19 vehicle types was 

mapped into one of the five classes of 

vehicles mentioned in Section III.D.2. 

While the five classes provide adequate 

representation for the cost basis 

associated with most technology 

application, they do not adequately 

account for all existing vehicle 

attributes such as base vehicle 

powertrain configuration and mass 

reduction. As an example, costs and 

effectiveness estimates for engine 

friction reduction for the small car class 

were used to represent cost and 

effectiveness for three vehicle types: 

Subcompact cars, compact cars, and 

small multi-purpose vehicles (MPV) 

equipped with a 4-cylinder engine, 

however the mass reduction associated 

for each of these vehicle types was 

based on the vehicle type salesweighted average. In another example, a 

vehicle type for V8 single overhead cam 

3-valve engines was created to properly 

account for the incremental cost in 

moving to a dual overhead cam 4-valve 
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configuration. Note also that these 19 

vehicle types span the range of vehicle 

footprints—smaller footprints for 

smaller vehicles and larger footprints for 

larger vehicles—which serve as the 

basis for the standards proposed in this 

rule. A complete list of vehicles and 

their associated vehicle types is shown 

above in Table III.D.1–1. 

Within each of the 19 vehicle types 

multiple technology packages were 

created in increasing technology content 

and, hence, increasing effectiveness. 

Important to note is that the effort in 

creating the packages attempted to 

maintain a constant utility for each 

package as compared to the baseline 

package. As such, each package is meant 

to provide equivalent driver-perceived 

performance to the baseline package. 

The initial packages represent what a 

manufacturer will most likely 

implement on all vehicles, including 

low rolling resistance tires, low friction 

lubricants, engine friction reduction, 

aggressive shift logic, early torque 

converter lock-up, improved electrical 

accessories, and low drag brakes.162 

Subsequent packages include advanced 

gasoline engine and transmission 

technologies such as turbo/downsizing, 

GDI, and dual-clutch transmission. The 

most technologically advanced packages 

within a segment included HEV, PHEV 

and EV designs. The end result being a 

list of several packages for each of 19 

different vehicle types from which a 

manufacturer could choose in order to 

modify its fleet such that compliance 

could be achieved. 

Before using these technology 

packages as inputs to the OMEGA 

model, the cost and effectiveness for the 

package was calculated. The first step— 

mentioned briefly above—was to apply 

the scaling class for each technology 

package and vehicle type combination. 

The scaling class establishes the cost 

and effectiveness for each technology 

with respect to the vehicle size or type. 

The Large Car class was provided as an 

example in Section III.D.2. Additional 

classes include Small Car, Minivan, 

Small Truck, and Large Truck and each 

of the 19 vehicle types was mapped into 

one of those five classes. In the next 

step, the cost for a particular technology 

package, was determined as the sum of 

the costs of the applied technologies. 

The final step, determination of 

effectiveness, requires greater care due 

to the synergistic effects mentioned in 

Section III.D.2. This step is described 

immediately below. 

Usually, the benefits of the engine and 

transmission technologies can be 

combined multiplicatively. For 

example, if an engine technology 

reduces CO2 emissions by five percent 

and a transmission technology reduces 

CO2 emissions by four percent, the 

benefit of applying both technologies is 

8.8 percent (100%¥(100%¥4%) * 

(100%¥5%)). In some cases, however, 

the benefit of the transmission-related 

technologies overlaps with many of the 

engine technologies. This occurs 

because the primary goal of most of the 

transmission technologies is to shift 

operation of the engine to more efficient 

locations on the engine map. Some of 

the engine technologies have the same 

goal, such as cylinder deactivation. In 

order to account for this overlap and 

avoid over-estimating emissions 

reduction effectiveness, EPA has 

developed a set of adjustment factors 

associated with specific pairs of engine 

and transmission technologies. 

The various transmission technologies 

are generally mutually exclusive. As 

such, the effectiveness of each 

transmission technology generally 

supersedes each other. For example, the 

9.5–14.5 percent reduction in CO2 

emissions associated with the 

automated manual transmission 

includes the 4.5–6.5 percent benefit of 

a 6-speed automatic transmission. 

Exceptions are aggressive shift logic and 

early torque converter lock-up. The 

former can be applied to any vehicle 

and the latter can be applied to any 

vehicle with an automatic transmission. 

EPA has chosen to use an engineering 

approach known as the lumpedparameter technique to determine these 

adjustment factors. The results from this 

approach were then applied directly to 

the vehicle packages. The lumpedparameter technique is well 

documented in the literature, and the 

specific approach developed by EPA is 

detailed in Chapter 3 of the Draft Joint 

TSD. 

Table III.D.3–1 presents several 

examples of the reduction in the 

effectiveness of technology pairs. A 

complete list and detailed discussion of 

these synergies is presented in Chapter 

3 of the Draft Joint TSD. 

TABLE III.D.3–1—REDUCTION IN EFFECTIVENESS FOR SELECTED TECHNOLOGY PAIRS 

Reduction in 

combined Engine technology Transmission technology effectiveness 

(percent) 

Intake cam phasing ..................................................................
 5 speed automatic ..................................................................
 0.5 

Coupled cam phasing .............................................................. 5 speed automatic ...................................................................
 0.5 

Coupled cam phasing .............................................................. Aggressive shift logic ..............................................................
 0.5 

Cylinder deactivation ................................................................ 5 speed automatic ...................................................................
 1.0 

Cylinder deactivation ................................................................ Aggressive shift logic ..............................................................
 0.5 

Table III.D.3–2 presents several Similar packages were generated for detail in Chapter 3 of the Draft Joint 

examples of the CO2-reducing each of the 19 vehicle types and the TSD. 

technology vehicle packages used in the costs and effectiveness estimates for 

OMEGA model for the large car class. each of those packages are discussed in 

162 When making reference to low friction engine changes and possible durability testing that would be done to accommodate the low friction 

lubricants, the technology being referred to is the lubricants, not the lubricants themselves. 
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TABLE III.D.3–2—CO2 REDUCING TECHNOLOGY VEHICLE PACKAGES FOR A LARGE CAR EFFECTIVENESS AND COSTS IN
 

2016 


[Costs in 2007 dollars] 


Engine 

technology 

Transmission 

technology 

Additional 

technology 

CO2 

reduction 

Package 

cost 

3.3L V6 .............................................. 4 speed automatic ............................ None ................................................. Baseline 

3.0L V6 + GDI + CCP ....................... 

3.0L V6 + GDI + CCP + Deac .......... 

3.0L V6 + GDI + CCP + Deac .......... 

2.2L I4 + GDI + Turbo + DCP .......... 

6 speed automatic ............................ 

6 speed automatic ............................ 

6 speed DCT .................................... 

6 speed DCT .................................... 

3% Mass Reduction ......................... 

5% Mass Reduction ......................... 

10% Mass Reduction Start-Stop ...... 

10% Mass Reduction Start-Stop ...... 

17.9% 

20.6

34.2 

34.3 

$1,022 

1,280 

2,108 

2,245 

4. Manufacturers’ Application of 

Technology 

Vehicle manufacturers often 

introduce major product changes 

together, as a package. In this manner 

the manufacturers can optimize their 

available resources, including 

engineering, development, 

manufacturing and marketing activities 

to create a product with multiple new 

features. In addition, manufacturers 

recognize that a vehicle will need to 

remain competitive over its intended 

life, meet future regulatory 

requirements, and contribute to a 

manufacturer’s CAFE requirements. 

Furthermore, automotive manufacturers 

are largely focused on creating vehicle 

platforms to limit the development of 

entirely new vehicles and to realize 

economies of scale with regard to 

variable cost. In very limited cases, 

manufacturers may implement an 

individual technology outside of a 

vehicle’s redesign cycle. In following 

with these industry practices, EPA has 

created a set of vehicle technology 

packages that represent the entire light 

duty fleet. 

EPA has historically allowed 

manufacturers of new vehicles or 

nonroad equipment to phase in 

available emission control technology 

over a number of years. Examples of this 

are EPA’s Tier 2 program for cars and 

light trucks and its 2007 and later PM 

and NOX emission standards for heavyduty vehicles. In both of these rules, the 

major modifications expected from the 

rules were the addition of exhaust 

aftertreatment control technologies. 

Some changes to the engine were 

expected as well, but these were not 

expected to affect engine size, packaging 

or performance. The CO2 reduction 

technologies described above 

potentially involve much more 

significant changes to car and light truck 

designs. Many of the engine 

technologies involve changes to the 

engine block and heads. The 

transmission technologies could change 

the size and shape of the transmission 

and thus, packaging. Improvements to 

aerodynamic drag could involve body 

design and therefore, the dies used to 

produce body panels. Changes of this 

sort potentially involve new capital 

investment and the obsolescence of 

existing investment. 

At the same time, vehicle designs are 

not static, but change in major ways 

periodically. The manufacturers’ 

product plans indicate that vehicles are 

usually redesigned every 5 years on 

average. Vehicles also tend to receive a 

more modest ‘‘refresh’’ between major 

redesigns, as discussed above. Because 

manufacturers are already changing 

their tooling, equipment and designs at 

these times, further changes to vehicle 

design at these times involve a 

minimum of stranded capital 

equipment. Thus, the timing of any 

major technological changes is projected 

to coincide with changes that 

manufacturers would already tend to be 

making to their vehicles. This approach 

effectively avoids the need to quantify 

any costs associated with discarding 

equipment, tooling, emission and safety 

certification, etc. when CO2-reducing 

equipment is incorporated into a 

vehicle. 

This proposed rule affects five years 

of vehicle production, model years 

2012–2016. Given the now-typical fiveyear redesign cycle, nearly all of a 

manufacturer’s vehicles will be 

redesigned over this period. However, 

this assumes that a manufacturer has 

sufficient lead time to redesign the first 

model year affected by this proposed 

rule with the requirements of this 

proposed rule in mind. In fact, the lead 

time available for model year 2012 is 

relatively short. The time between a 

likely final rule and the start of 2013 

model year production is likely to be 

just over two years. At the same time, 

the manufacturer product plans indicate 

that they are planning on introducing 

many of the technologies projected to be 

required by this proposed rule in both 

2012 and 2013. In order to account for 

the relatively short lead time available 

prior to the 2012 and 2013 model years, 

albeit mitigated by their existing plans, 

EPA projects that only 85 percent of 

each manufacturer’s sales will be able to 

be redesigned with major CO2 emissionreducing technologies by the 2016 

model year. Less intrusive technologies 

can be introduced into essentially all a 

manufacturer’s sales. This resulted in 

three levels of technology penetration 

caps, by manufacturer. Common 

technologies (e.g., low friction lubes, 

aerodynamic improvements) had a 

penetration cap of 100%. More 

advanced powertrain technologies (e.g., 

stoichiometric GDI, turbocharging) had 

a penetration cap of 85%. The most 

advanced technologies considered in 

this analysis (e.g., diesel engines, as 

well as IMA, powersplit and 2-mode 

hybrids) had a 15% penetration cap. 

5. How Is EPA Projecting That a 

Manufacturer Would Decide Between 

Options To Improve CO2 Performance 

To Meet a Fleet Average Standard? 

There are many ways for a 

manufacturer to reduce CO2-emissions 

from its vehicles. A manufacturer can 

choose from a myriad of CO2 reducing 

technologies and can apply one or more 

of these technologies to some or all of 

its vehicles. Thus, for a variety of levels 

of CO2 emission control, there are an 

almost infinite number of technology 

combinations which produce the 

desired CO2 reduction. EPA has created 

a new vehicle model, the Optimization 

Model for Emissions of Greenhouse 

gases from Automobiles (OMEGA) in 

order to make a reasonable estimate of 

how manufacturers will add 

technologies to vehicles in order to meet 

a fleet-wide CO2 emissions level. EPA 

has described OMEGA’s specific 

methodologies and algorithms in a 

memo to the docket for this rulemaking 

(Docket EPA–HQ–OAR–2009–0472). 

The OMEGA model utilizes four basic 

sets of input data. The first is a 

description of the vehicle fleet. The key 

pieces of data required for each vehicle 

are its manufacturer, CO2 emission 

level, fuel type, projected sales and 

footprint. The model also requires that 
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each vehicle be assigned to one of the 

19 vehicle types, which tells the model 

which set of technologies can be applied 

to that vehicle. (For a description of 

how the 19 vehicle types were created, 

reference Section III.D.3.) In addition, 

the degree to which each vehicle 

already reflects the effectiveness and 

cost of each available technology must 

also be input. This avoids the situation, 

for example, where the model might try 

to add a basic engine improvement to a 

current hybrid vehicle. Except for this 

type of information, the development of 

the required data regarding the reference 

fleet was described in Section III.D.1 

above and in Chapter 1 of the Draft Joint 

TSD. 

The second type of input data used by 

the model is a description of the 

technologies available to manufacturers, 

primarily their cost and effectiveness. 

Note that the five vehicle classes are not 

explicitly used by the model, rather the 

costs and effectiveness associated with 

each vehicle package is based on the 

associated class. This information was 

described in Sections III.D.2 and III.D.3 

above as well as Chapter 3 of the Draft 

Joint TSD. In all cases, the order of the 

technologies or technology packages for 

a particular vehicle type is determined 

by the model user prior to running the 

model. Several criteria can be used to 

develop a reasonable ordering of 

technologies or packages. These are 

described in the Draft Joint TSD. 

The third type of input data describes 

vehicle operational data, such as annual 

scrap rates and mileage accumulation 

rates, and economic data, such as fuel 

prices and discount rates. These 

estimates are described in Section II.F 

above, Section III.H below and Chapter 

4 of the Draft Joint TSD. 

The fourth type of data describes the 

CO2 emission standards being modeled. 

These include the CO2 emission 

equivalents of the 2011 MY CAFE 

standards and the proposed CO2 

standards for 2016. As described in 

more detail below, the application of 

A/C technology is evaluated in a 

separate analysis from those 

technologies which impact CO2 

emissions over the 2-cycle test 

procedure. Thus, for the percent of 

vehicles that are projected to achieve 

A/C related reductions, the CO2 credit 

associated with the projected use of 

improved A/C systems is used to adjust 

the proposed CO2 standard which 

would be applicable to each 

manufacturer to develop a target for CO2 

emissions over the 2-cycle test which is 

assessed in our OMEGA modeling. 

As mentioned above for the market 

data input file utilized by OMEGA, 

which characterizes the vehicle fleet, 

our modeling must and does account for 

the fact that many 2008 MY vehicles are 

already equipped with one or more of 

the technologies discussed in Section 

III.D.2 above. Because of the choice to 

apply technologies in packages, and 

2008 vehicles are equipped with 

individual technologies in a wide 

variety of combinations, accounting for 

the presence of specific technologies in 

terms of their proportion of package cost 

and CO2 effectiveness requires careful, 

detailed analysis. The first step in this 

analysis is to develop a list of individual 

technologies which are either contained 

in each technology package, or would 

supplant the addition of the relevant 

portion of each technology package. An 

example would be a 2008 MY vehicle 

equipped with variable valve timing and 

a 6-speed automatic transmission. The 

cost and effectiveness of variable valve 

timing would be considered to be 

already present for any technology 

packages which included the addition 

of variable valve timing or technologies 

which went beyond this technology in 

terms of engine related CO2 control 

efficiency. An example of a technology 

which supplants several technologies 

would be a 2008 MY vehicle which was 

equipped with a diesel engine. The 

effectiveness of this technology would 

be considered to be present for 

technology packages which included 

improvements to a gasoline engine, 

since the resultant gasoline engines 

have a lower CO2 control efficiency than 

the diesel engine. However, if these 

packages which included improvements 

also included improvements unrelated 

to the engine, like transmission 

improvements, only the engine related 

portion of the package already present 

on the vehicle would be considered. 

The transmission related portion of the 

package’s cost and effectiveness would 

be allowed to be applied in order to 

comply with future CO2 emission 

standards. 

The second step in this process is to 

determine the total cost and CO2 

effectiveness of the technologies already 

present and relevant to each available 

package. Determining the total cost 

usually simply involves adding up the 

costs of the individual technologies 

present. In order to determine the total 

effectiveness of the technologies already 

present on each vehicle, the lumped 

parameter model described above is 

used. Because the specific technologies 

present on each 2008 vehicle are 

known, the applicable synergies and 

dis-synergies can be fully accounted for. 

The third step in this process is to 

divide the total cost and CO2 

effectiveness values determined in step 

2 by the total cost and CO2 effectiveness 

of the relevant technology packages. 

These fractions are capped at a value of 

1.0 or less, since a value of 1.0 causes 

the OMEGA model to not change either 

the cost or CO2 emissions of a vehicle 

when that technology package is added. 

As described in Section III.D.3 above, 

technology packages are applied to 

groups of vehicles which generally 

represent a single vehicle platform and 

which are equipped with a single engine 

size (e.g., compact cars with four 

cylinder engine produced by Ford). 

These groupings are described in Table 

III.D.1–1. Thus, the fourth step is to 

combine the fractions of the cost and 

effectiveness of each technology 

package already present on the 

individual 2008 vehicles models for 

each vehicle grouping. For cost, 

percentages of each package already 

present are combined using a simple 

sales-weighting procedure, since the 

cost of each package is the same for each 

vehicle in a grouping. For effectiveness, 

the individual percentages are 

combined by weighting them by both 

sales and base CO2 emission level. This 

appropriately weights vehicle models 

with either higher sales or CO2 

emissions within a grouping. Once 

again, this process prevents the model 

from adding technology which is 

already present on vehicles, and thus 

ensures that the model does not double 

count technology effectiveness and cost 

associated with complying with the 

2011 MY CAFE standards and the 

proposed CO2 standards. 

Conceptually, the OMEGA model 

begins by determining the specific CO2 

emission standard applicable for each 

manufacturer and its vehicle class (i.e., 

car or truck). Since the proposed rule 

allows for averaging across a 

manufacturer’s cars and trucks, the 

model determines the CO2 emission 

standard applicable to each 

manufacturer’s car and truck sales from 

the two sets of coefficients describing 

the piecewise linear standard functions 

for cars and trucks in the inputs, and 

creates a combined car-truck standard. 

This combined standard considers the 

difference in lifetime VMT of cars and 

trucks, as indicated in the proposed 

regulations which would govern credit 

trading between these two vehicle 

classes. For both the 2011 CAFE and 

2016 CO2 standards, these standards are 

a function of each manufacturer’s sales 

of cars and trucks and their footprint 

values. When evaluating the 2011 MY 

CAFE standards, the car-truck trading 

was limited to 1.2 mpg. When 

evaluating the proposed CO2 standards, 

the OMEGA model was run only for MY 

2016. OMEGA is designed to evaluate 

technology addition over a complete 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49547 

redesign cycle and 2016 represents the 

final year of a redesign cycle starting 

with the first year of the proposed CO2 

standards, 2012. Estimates of the 

technology and cost for the interim 

model years are developed from the 

model projections made for 2016. This 

process is discussed in Chapter 6 of 

EPA’s DRIA to this proposed rule. When 

evaluating the 2016 standards using the 

OMEGA model, the proposed CO2 

standard which manufacturers would 

otherwise have to meet to account for 

the anticipated level of A/C credits 

generated was adjusted. On an industry 

wide basis, the projection shows that 

manufacturers would generate 11 g/mi 

of A/C credit in 2016. Thus, the 2016 

CO2 target for the fleet evaluated using 

OMEGA was 261 g/mi instead of 250 

g/mi. 

The cost of the improved A/C systems 

required to generate the 11 g/mi credit 

was estimated separately. This is 

consistent with our proposed A/C credit 

procedures, which would grant 

manufacturers A/C credits based on 

their total use of improved A/C systems, 

and not on the increased use of such 

systems relative to some base model 

year fleet. Some manufacturers may 

already be using improved A/C 

technology. However, this represents a 

small fraction of current vehicle sales. 

To the degree that such systems are 

i=1 ManufCostEff = 

Where: 

ManufCostEff = Manufacturer-Based Cost 

Effectiveness (in dollars per kilogram 

CO2), 

TechCost = Marked up cost of the technology 

(dollars), 

PP = Payback period, or the number of years 

of vehicle use over which consumers 

value fuel savings when evaluating the 

value of a new vehicle at time of 

purchase, 

dFSi = Difference in fuel consumption due to 

the addition of technology times fuel 

price in year i, 

dCO2 = Difference in CO2 emissions due to 

the addition of technology 

VMTi = product of annual VMT for a vehicle 

of age i and the percentage of vehicles of 

age i still on the road, 

1- Gap = Ratio of onroad fuel economy to 

two-cycle (FTP/HFET) fuel economy 

EPA describes the technology ranking 

methodology and manufacturer-based 

cost effectiveness metric in greater 

detail in a technical memo to the Docket 

already being used, EPA is overestimating both the cost and benefit of 

the addition of improved A/C 

technology relative to the true reference 

fleet to a small degree. 

The model then works with one 

manufacturer at a time to add 

technologies until that manufacturer 

meets its applicable standard. The 

OMEGA model can utilize several 

approaches to determining the order in 

which vehicles receive technologies. For 

this analysis, EPA used a 

‘‘manufacturer-based net costeffectiveness factor’’ to rank the 

technology packages in the order in 

which a manufacturer would likely 

apply them. Conceptually, this 

approach estimates the cost of adding 

the technology from the manufacturer’s 

perspective and divides it by the mass 

of CO2 the technology will reduce. One 

component of the cost of adding a 

technology is its production cost, as 

discussed above. However, it is 

expected that new vehicle purchasers 

value improved fuel economy since it 

reduces the cost of operating the 

vehicle. Typical vehicle purchasers are 

assumed to value the fuel savings 

accrued over the period of time which 

they will own the vehicle, which is 

estimated to be roughly five years. It is 

also assumed that consumers discount 

these savings at the same rate as that 

PP

TechCost −∑[dFSi ×VMTi]× 

i+35 

∑ ⎡

⎣[dCO2]×VMTi⎤⎦ × 

1 

i (1− Gap) 

for this proposed rule (Docket EPA–HQ– 

OAR–2009–0472). 

When calculating the fuel savings, the 

full retail price of fuel, including taxes 

is used. While taxes are not generally 

included when calculating the cost or 

benefits of a regulation, the net cost 

component of the manufacturer-based 

net cost-effectiveness equation is not a 

measure of the social cost of this 

proposal, but a measure of the private 

cost, (i.e., a measure of the vehicle 

purchaser’s willingness to pay more for 

a vehicle with higher fuel efficiency). 

Since vehicle operators pay the full 

price of fuel, including taxes, they value 

fuel costs or savings at this level, and 

the manufacturers will consider this 

when choosing among the technology 

options. 

This definition of manufacturer-based 

net cost-effectiveness ignores any 

change in the residual value of the 

vehicle due to the additional technology 

used in the rest of the analysis (3 or 7 

percent). Any residual value of the 

additional technology which might 

remain when the vehicle is sold is not 

considered. The CO2 emission reduction 

is the change in CO2 emissions 

multiplied by the percentage of vehicles 

surviving after each year of use 

multiplied by the annual miles travelled 

by age, again discounted to the year of 

vehicle purchase. 

Given this definition, the higher 

priority technologies are those with the 

lowest manufacturer-based net costeffectiveness value (relatively low 

technology cost or high fuel savings 

leads to lower values). Because the 

order of technology application is set for 

each vehicle, the model uses the 

manufacturer-based net costeffectiveness primarily to decide which 

vehicle receives the next technology 

addition. Initially, technology package 

#1 is the only one available to any 

particular vehicle. However, as soon as 

a vehicle receives technology package 

#1, the model considers the 

manufacturer-based net costeffectiveness of technology package #2 

for that vehicle and so on. In general 

terms, the equation describing the 

calculation of manufacturer-based cost 

effectiveness is as follows: 

1 

(1− Gap) 

when the vehicle is five years old. As 

discussed in Chapter 1of the DRIA, 

based on historic used car pricing, 

applicable sales taxes, and insurance, 

vehicles are worth roughly 23% of their 

original cost after five years, discounted 

to year of vehicle purchase at 7% per 

annum. It is reasonable to estimate that 

the added technology to improve CO2 

level and fuel economy would retain 

this same percentage of value when the 

vehicle is five years old. However, it is 

less clear whether first purchasers, and 

thus, manufacturers would consider this 

residual value when ranking 

technologies and making vehicle 

purchases, respectively. For this 

proposal, this factor was not included in 

our determination of manufacturerbased net cost-effectiveness in the 

analyses performed in support of this 

proposed rule. Comments are requested 

on the benefit of including an increase 
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49548 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

in the vehicle’s residual value after five 

years in the calculation of effective cost. 

The values of manufacturer-based net 

cost-effectiveness for specific 

technologies will vary from vehicle to 

vehicle, often substantially. This occurs 

for three reasons. First, both the cost 

and fuel-saving component cost, 

ownership fuel-savings, and lifetime 

CO2 effectiveness of a specific 

technology all vary by the type of 

vehicle or engine to which it is being 

applied (e.g., small car versus large 

truck, or 4-cylinder versus 8-cylinder 

engine). Second, the effectiveness of a 

specific technology often depends on 

the presence of other technologies 

already being used on the vehicle (i.e., 

the dis-synergies. Third, the absolute 

fuel savings and CO2 reduction of a 

percentage an incremental reduction in 

fuel consumption depends on the CO2 

level of the vehicle prior to adding the 

technology. Chapter 1 of the DRIA of 

this proposed rule contains further 

detail on the values of manufacturerbased net cost-effectiveness for the 

various technology packages. 

EPA requests comment on the use of 

manufacturer-based net costeffectiveness to rank CO2 emission 

reduction technologies in the context of 

evaluating alternative fleet average 

standards for this rule. EPA believes this 

manufacturer-based net costeffectiveness metric is appropriate for 

ranking technology in this proposed 

program because it considers 

effectiveness values that may vary 

widely among technology packages 

when determining the order of 

technology addition. Comments are 

requested on this option and on any 

others thought to be appropriate. 

6. Why Are the Proposed CO2 Standards 

Feasible? 

The finding that the proposed 

standards would be technically feasible 

is based primarily on two factors. One 

is the level of technology needed to 

meet the proposed standards. The other 

is the cost of this technology. The focus 

is on the proposed standards for 2016, 

as this is the most stringent standard 

and requires the most extensive use of 

technology. 

With respect to the level of 

technology required to meet the 

standards, EPA established technology 

penetration caps. As described in 

Section III.D.4, EPA used two 

constraints to limit the model’s 

application of technology by 

manufacturer. The first was the 

application of common fuel economy 

enablers such as low rolling resistance 

tires and transmission logic changes. 

These were allowed to be used on all 

vehicles and hence had no penetration 

cap. The second constraint was applied 

to most other technologies and limited 

their application to 85% with the 

exception of the most advanced 

technologies (e.g., powersplit and 2-

mode hybrids) whose application was 

limited to 15%. 

EPA used the OMEGA model to 

project the technology (and resultant 

cost) required for manufacturers to meet 

the current 2011 MY CAFE standards 

and the proposed 2016 MY CO2 

emission standards. Both sets of 

standards were evaluated using the 

OMEGA model. The 2011 MY CAFE 

standards were applied to cars and 

trucks separately with the transfer of 

credits from one category to the other 

allowed up to an increase in fuel 

economy of 1.0 mpg. Chrysler, Ford and 

General Motors are assumed to utilize 

FFV credits up to the maximum of 1.2 

mpg for both their car and truck sales. 

Nissan is assumed to utilize FFV credits 

up to the maximum of 1.2 mpg for only 

their truck sales. The use of any banked 

credits from previous model years was 

not considered. The modification of the 

reference fleet to comply with the 2011 

CAFE standards through the application 

of technology by the OMEGA model is 

the final step in creating the final 

reference fleet. This final reference fleet 

forms the basis for comparison for the 

model year 2016 standards. 

Table III.D.6–1 shows the usage level 

of selected technologies in the 2008 

vehicles coupled with 2016 sales prior 

to projecting their compliance with the 

2011 MY CAFE standards. These 

technologies include converting port 

fuel-injected gasoline engines to direct 

injection (GDI), adding the ability to 

deactivate certain engine cylinders 

during low load operation (Deac), 

adding a turbocharger and downsizing 

the engine (Turbo), increasing the 

number of transmission speeds to 6 or, 

converting automatic transmissions to 

dual-clutch automated manual 

transmissions (Dual-Clutch Trans), 

adding 42 volt start-stop capability 

(Start-Stop), and converting a vehicle to 

a intermediate or strong hybrid design. 

This last category includes three current 

hybrid designs: integrated motor assist 

(IMA), power-split (PS) and 2-mode 

hybrids. 

TABLE III.D.6–1—PENETRATION OF TECHNOLOGY IN 2008 VEHICLES WITH 2016 SALES: CARS AND TRUCKS 

[Percent of sales] 

GDI GDI+ deac GDI+ turbo Diesel 6 Speed or 

CV trans 

Dual clutch 

trans Start-stop Hybrid 

BMW ................................ 6.7 0.0 0.0 0.0 98.8 0.8 0.0 0.1 

Chrysler ............................ 0.0 0.0 0.0 0.0 27.9 0.0 0.0 0.0 

Daimler ............................. 6.2 0.0 0.0 6.2 74.7 11.4 0.0 0.0 

Ford .................................. 0.6 0.0 0.0 0.0 28.1 0.0 0.0 0.0 

General Motors ................ 3.3 0.0 0.0 0.0 13.7 0.0 0.1 0.1 

Honda ............................... 1.2 0.0 0.0 0.0 4.2 0.0 0.0 2.1 

Hyundai ............................ 0.0 0.0 0.0 0.0 4.9 0.0 0.0 0.0 

Kia .................................... 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 

Mazda .............................. 11.8 0.0 0.0 0.0 37.1 0.0 0.0 0.0 

Mitsubishi ......................... 0.0 0.0 0.0 0.0 76.1 0.0 0.0 0.1 

Nissan .............................. 17.7 0.0 0.0 0.0 33.3 0.0 0.0 0.0 

Porsche ............................ 0.0 0.0 0.0 0.0 3.9 0.0 0.0 0.0 

Subaru .............................. 0.0 0.0 0.0 0.0 29.0 0.0 0.0 0.0 

Suzuki .............................. 0.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0 

Tata .................................. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Toyota .............................. 7.5 0.0 0.0 0.0 30.6 0.0 0.0 12.8 

Volkswagen ...................... 52.2 0.0 0.0 0.1 82.8 10.9 0.0 0.0 

Overall .............................. 6.4 0.0 0.0 0.1 27.1 0.6 0.0 2.8 
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As can be seen, all of these 

technologies except for the direct 

injection gasoline engines with either 

cylinder deactivation or turbocharging 

and downsizing, were already being 

used on some 2008 MY vehicles. High 

speed transmissions were the most 

prevalent, with some manufacturers 

(e.g., BMW, Suzuki) using them on 

essentially all of their vehicles. Both 

Daimler and VW equip many of their 

vehicles with automated manual 

transmissions, while VW makes 

extensive use of direct injection gasoline 

engine technology. Toyota has 

converted a significant percentage of its 

2008 vehicles to strong hybrid design. 

Table III.D.6–2 shows the usage level 

of the same technologies in the 

reference case fleet after projecting their 

compliance with the 2011 MY CAFE 

standards. Except for mass reduction, 

the figures shown represent the 

percentages of each manufacturer’s sales 

which are projected to be equipped with 

the indicated technology. For mass 

reduction, the overall mass reduction 

projected for that manufacturer’s sales is 

shown. The last row in Table III.D.6–2 

shows the increase in projected 

technology penetration due to 

compliance with the 2011 MY CAFE 

standards. The results of DOT’s Volpe 

Modeling were used to project that all 

manufacturers would comply with the 

2011 MY standards in 2016 without the 

need to pay fines, with one exception. 

This exception was Porsche in the case 

of their car fleet. When projecting 

Porsche’s compliance with the 2011 MY 

CAFE standard for cars, the car fleet was 

assumed to achieve a CO2 emission 

level of 293.2 g/mi instead of the 

required 285.2 g/mi level (30.3 mpg 

instead of 31.2 mpg). 

TABLE III.D.6–2—PENETRATION OF TECHNOLOGY UNDER 2011 MY CAFE STANDARDS IN 2016 SALES: CARS AND
 

TRUCKS
 

[Percent of sales] 


GDI GDI+ deac GDI+ turbo 6 Speed or 

CV trans 

Dual clutch 

trans Start-stop Hybrid 

Mass 

reduction 

(percent) 

BMW ................................ 7.3 11.1 0.0 86.3 11.1 11.1 0.1 0.5 

Chrysler ............................ 0.0 0.0 0.0 27.9 0.0 0.0 0.0 0.0 

Daimler ............................. 16.4 10.3 14.3 45.8 36.0 24.6 0.0 0.9 

Ford .................................. 0.6 0.0 0.0 28.1 0.0 0.0 0.0 0.0 

General Motors ................ 3.3 0.0 0.0 13.7 0.0 0.1 0.1 0.0 

Honda ............................... 1.2 0.0 0.0 4.2 0.0 0.0 2.1 0.0 

Hyundai ............................ 0.0 0.0 0.0 4.9 0.0 0.0 0.0 0.0 

Kia .................................... 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.0 

Mazda .............................. 11.8 0.0 0.0 37.1 0.0 0.0 0.0 0.0 

Mitsubishi ......................... 0.0 2.2 0.0 76.0 2.2 2.2 0.1 0.0 

Nissan .............................. 17.7 0.0 0.0 33.3 0.0 0.0 0.0 0.0 

Porsche ............................ 0.0 25.0 23.2 0.0 48.2 37.1 0.0 1.2 

Subaru .............................. 0.0 0.0 0.0 29.0 0.0 0.0 0.0 0.0 

Suzuki .............................. 4.5 0.0 0.0 100.0 0.0 0.0 0.0 0.0 

Tata .................................. 14.5 60.9 0.0 14.5 60.9 60.9 0.0 2.6 

Toyota .............................. 7.5 0.0 0.0 30.6 0.0 0.0 12.8 0.0 

Volkswagen ...................... 51.2 6.9 11.8 60.8 29.6 18.7 0.0 0.3 

Overall .............................. 6.7 1.2 0.8 25.4 2.6 2.0 2.8 0.1 

Increase over 2008 MY ... 0.3 1.2 0.8 ¥1.7 2.0 2.0 0.0 0.0 

As can be seen, the 2011 MY CAFE 

standards, when evaluated on an 

industry wide basis, require only a 

modest increase in the use of these 

technologies. Higher speed automatic 

transmission use actually decreases due 

to conversion of these units to more 

efficient designs such as automated 

manual transmissions and hybrids. 

However, the impact of the 2011 MY 

CAFE standards is much greater on 

selected manufacturers, particularly 

BMW, Daimler, Porsche, Tata (Jaguar/ 

Land Rover) and VW. All of these 

manufacturers are projected to increase 

their use of advanced direct injection 

gasoline engine technology, advanced 

transmission technology, and start-stop 

technology. It should be noted that these 

manufacturers have traditionally paid 

fines under the CAFE program. 

However, with higher fuel prices and 

the lead-time available by 2016, these 

manufacturers would likely find it in 

their best interest to improve their fuel 

economy levels instead of continuing to 

pay fines (again with the exception of 

Porsche cars). While not shown, no 

gasoline engines were projected to be 

converted to diesel technology. 

This 2008 baseline fleet, modified to 

meet 2011 standards, becomes our 

‘‘reference’’ case. This is the fleet by 

which the control program (or 2016 

rule) will be compared. Thus, it is also 

the fleet that would be assumed to exist 

in the absence of this rule. No air 

conditioning improvements are 

assumed for model year 2011 vehicles. 

The average CO2 emission levels of this 

reference fleet vary slightly from 2012– 

2016 due to small changes in the vehicle 

sales by market segments and 

manufacturer. CO2 emissions from cars 

range from 282–284 g/mi, while those 

from trucks range from 382–384 g/mi. 

CO2 emissions from the combined fleet 

range from 316–320. These estimates are 

described in greater detail in Section 

5.3.2.2 of the DRIA. 

Conceptually, both EPA and NHTSA 

perform the same projection in order to 

develop their respective reference fleets. 

However, because the two agencies use 

two different models to modify the 

baseline fleet to meet the 2011 CAFE 

standards, the technology added will be 

slightly different. The differences, 

however, are small since most 

manufacturers do not require a lot of 

additional technology to meet the 2011 

standards. 

EPA then used the OMEGA model 

once again to project the level of 

technology needed to meet the proposed 

2016 CO2 emission standards. Using the 

results of the OMEGA model, every 

manufacturer was projected to be able to 

meet the proposed 2016 standards with 

the technology described above except 

for four: BMW, VW, Porsche and Tata 

due to the OMEGA cap on technology 

penetration by manufacturer. For these 

manufacturers, the results presented 

below are those with the fully allowable 
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application of technology and not for for how these companies can achieve manufacturers are projected to improve 

the technology projected to enable compliance. The overall level of the air conditioning systems on 85% of 

compliance with the proposed technology needed to meet the proposed their 2016 sales. 

standards. Described below are a 2016 standards is shown in Table 

number of potential feasible solutions III.D.6–3. As discussed above, all 

TABLE III.D.6–3—PENETRATION OF TECHNOLOGY FOR PROPOSED 2016 CO2 STANDARDS: CARS AND TRUCKS 

[Percent of sales] 

GDI GDI+ deac GDI+ turbo 6 Speed 

auto trans 

Dual clutch 

trans Start-stop Hybrid Mass reduction 

BMW ................................ 4 35 47 15 71 71 14 5 

Chrysler ............................ 51 28 3 37 51 51 0 6 

Daimler ............................. 3 44 39 11 73 72 13 5 

Ford .................................. 29 39 13 19 67 67 0 6 

General Motors ................ 34 26 7 13 55 55 0 5 

Honda ............................... 24 1 2 10 22 22 2 2 

Hyundai ............................ 28 3 14 3 43 43 0 3 

Kia .................................... 37 0 5 7 35 35 0 3 

Mazda .............................. 54 2 16 31 43 43 0 4 

Mitsubishi ......................... 65 2 7 22 66 66 0 6 

Nissan .............................. 29 26 5 34 57 56 1 5 

Porsche ............................ 7 36 49 10 70 70 15 4 

Subaru .............................. 46 4 14 0 64 51 0 4 

Suzuki .............................. 66 5 8 9 69 69 0 4 

Tata .................................. 4 81 0 14 70 70 15 6 

Toyota .............................. 37 2 0 30 33 16 13 2 

Volkswagen ...................... 9 26 58 12 72 70 15 4 

Overall .............................. 30 18 10 19 49 45 4 4 

Increase over 2011 CAFE 24 17 9 ¥7 46 43 1 4 

As can be seen, the overall average 

reduction in vehicle weight is projected 

to be 4%. This reduction varies across 

the two vehicle classes and vehicle base 

weight. For cars below 2,950 pounds 

curb weight, the average reduction is 

2.3% (62 pounds), while the average 

was 4.4% (154 pounds) for cars above 

2,950 curb weight. For trucks below 

3,850 pounds curb weight, the average 

reduction is 3.5% (119 pounds), while 

it was 4.5% (215 pounds) for trucks 

above 3,850 curb weight. Splitting 

trucks at a higher weight, for trucks 

below 5,000 pounds curb weight, the 

average reduction is 3.3% (140 pounds), 

while it was 6.7% (352 pounds) for 

trucks above 5,000 curb weight. 

The levels of requisite technologies 

differ significantly across the various 

manufacturers. Therefore, several 

analyses were performed to ascertain 

the cause. Because the baseline case 

fleet consists of 2008 MY vehicle 

designs, these analyses were focused on 

these vehicles, their technology and 

their CO2 emission levels. 

Comparing CO2 emissions across 

manufacturers is not a simple task. In 

addition to widely varying vehicle 

styles, designs, and sizes, manufacturers 

have implemented fuel efficient 

technologies to varying degrees, as 

indicated in Table III.D.6–1. The 

projected levels of requisite technology 

to enable compliance with the proposed 

2016 standards shown in Table III.D.6– 

3 account for two of the major factors 

which can affect CO2 emissions: (1) 

Level of technology already being 

utilized and (2) vehicle size, as 

represented by footprint. 

For example, the fuel economy of a 

manufacturer’s 2008 vehicles may be 

relatively high because of the use of 

advanced technology. This is the case 

with Toyota’s high sales of their Prius 

hybrid. However, the presence of this 

technology in a 2008 vehicle eliminates 

the ability to significantly reduce CO2 

further through the use of this 

technology. In the extreme, if a 

manufacturer were to hybridize a high 

level of its sales in 2016, it doesn’t 

matter whether this technology was 

present in 2008 or whether it would be 

added in order to comply with the 

standards. The final level of hybrid 

technology would be the same. Thus, 

the level at which technology is present 

in 2008 vehicles does not explain the 

difference in requisite technology levels 

shown in Table III.D.6–3. 

Similarly, the proposed CO2 emission 

standards adjust the required CO2 level 

according to a vehicle’s footprint, 

requiring lower absolute emission levels 

from smaller vehicles. Thus, just 

because a manufacturer produces larger 

vehicles than another manufacturer 

does not explain the differences seen in 

Table III.D.6–3. 

In order to remove these two factors 

from our comparison, the EPA lumped 

parameter model described above was 

used to estimate the degree to which 

technology present on each 2008 MY 

vehicle in our reference fleet was 

improving fuel efficiency. The effect of 

this technology was removed and each 

vehicle’s CO2 emissions were estimated 

as if it utilized no additional fuel 

efficiency technology beyond the 

baseline. The differences in vehicle size 

were accounted for by determining the 

difference between the sales-weighted 

average of each manufacturer’s ‘‘no 

technology’’ CO2 levels to their required 

CO2 emission level under the proposed 

2016 standards. The industry-wide 

difference was subtracted from each 

manufacturer’s value to highlight which 

manufacturers had lower and higher 

than average ‘‘no technology’’ 

emissions. The results are shown in 

Figure III.D.6–1. 

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As can be seen in Table III.D.6–3 the 

manufacturers projected to require the 

greatest levels of technology also show 

the highest offsets relative to the 

industry. The greatest offset shown in 

Figure III.D.6–1 is for Tata’s trucks 

(Land Rover). These vehicles are 

estimated to have 100 g/mi greater CO2 

emissions than the average 2008 MY 

truck after accounting for differences in 

the use of fuel saving technology and 

footprint. The lowest adjustment is for 

Subaru’s trucks, which have 50 g/mi 

CO2 lower emissions than the average 

truck. 

While this comparison confirms the 

differences in the technology 

penetrations shown in Table III.D.6–3, it 

does not yet explain why these 

differences exist. Two well known 

factors affecting vehicle fuel efficiency 

are vehicle weight and performance. 

The footprint-based form of the 

proposed CO2 standard accounts for 

most of the difference in vehicle weight 

seen in the 2008 MY fleet. However, 

even at the same footprint, vehicles can 

have varying weights. Higher 

performing vehicles also tend to have 

higher CO2 emissions over the two-cycle 

test procedure. So manufacturers with 

higher average performance levels will 

tend to have higher average CO2 

emissions for any given footprint. 

The impact of these two factors on 

each manufacturer’s ‘‘no technology’’ 

CO2 emissions was estimated. First, the 

‘‘no technology’’ CO2 emissions levels 

were statistically analyzed to determine 

the average impact of weight and the 

ratio of horsepower to weight on CO2 

emissions. Both factors were found to be 

statistically significant at the 95 percent 

confidence level. Together, they 

explained over 80 percent of the 

variability in vehicles’ CO2 emissions 

for cars and over 70 percent for trucks. 

These relationships were then used to 

adjust each vehicle’s ‘‘no technology’’ 

CO2 emissions to the average weight for 

its footprint value and to the average 

horsepower to weight ratio of either the 

car or truck fleet. The comparison was 

repeated as shown in Figure III.D.6–1. 

The results are shown in Figure 

III.D.6–2.