Chairman J. MENDEL Honda

President M. STANTON

VEHICLE

MANUFACTURERS

Aston Martin

Ferrari/Maserati

Honda
Hyundai

Isuzu

Kia

Mitsubishi

Nissan
Peugeot

Renault

Subaru

Suzuki
Toyota

AFFILIATES

ADVICS

Bosch
Delphi

Denso

JAMA

ASSOCIATION OF INTERNATIONAL AUTOMOBILE MANUFACTURERS, INC. 2111 W ILSON B OULEVARD

- S UITE 1150

- A RLINGTON

, V IRGINIA 22201 703.525.7788 P HONE

- 703.525.8817 F AX

- WWW

. AIAM

. ORG October 3, 2007

Ms. Deborah Rabin Regulations Coordinator Air and Radiation Management Administration Department of Environment 1800 Washington Boulevard, Suite 730 Baltimore, MD 21230-1720

Re: Comments Regarding Maryla nd Regulations .01—.14, COMAR 26.11.34, Low Emissions Vehicle Program

Dear Ms. Rabin:

The Association of Internati onal Automobile Manufacturers 1 (AIAM) is a trade association representing 14 international motor vehicl e manufacturers that account for about 40 percent of the passenger cars and 20 percent of light trucks sold annually in the United States. In 2006, our member companies represented over 50 percent of new motor vehicles registered in the State of Maryland. Nationwide, AIAM members have invested over $35 billion in U.S.-based production facilities, have a combined domestic production capacity of over 4 million vehicles, directly employ over 92 thousand Americans, and ge nerate well over half a million U.S. jobs in dealerships and suppliers. 2

Companies represented by AIAM are leader s in bringing advanced fuel-efficient technologies to market. Nearly all of the vehicles sold by AIAM member companies throughout the United States are “50-state vehicles” that already meet both California’s LEV II emissions standard s and EPA’s tier 2 emissions standards. In addition, our members actively support th e federal efforts currently underway to improve fuel economy and lower greenhouse gas emissions. Nevertheless, AIAM opposed the “Maryland Clean Cars Ac t of 2007” which adopted California emissions and greenhouse gas standards be cause we do not believe such actions will have any significant favorable impact on the local air quality in Maryland. In addition, we view a uniform federal gree nhouse gas or fuel economy standard as a better way to obtain the environmental goals intended by the statute’s greenhouse

1 AIAM member companies includ e American Honda Mo tor Co., American Suzuki Motor Corp., Aston Martin Lagonda of North America, Inc., Ferrari North America, Inc., Hyundai Motor America, Isuzu Motors America, Inc., Kia Mo tors America, Maserati North America, Inc., Mitsubishi Motors North America, Inc., Nissan No rth America, Inc. Peugeot Motors of America, Renault, SA, Subaru of America and Toyota Moto r North America, Inc. AIAM also represents original equipment suppliers and other automotive-related trade associations.

2 For more information, visit our website at www.aiam.org

.ASSOCIATION OF INTERNATIONAL AUTOMOBILE MANUFACTURERS, INC. 2111 W ILSON B OULEVARD

- S UITE 1150

- A RLINGTON

, V IRGINIA 22201 703.525.7788 P HONE

- 703.525.8817 F AX

- WWW

. AIAM

. ORG gas standards without creating a patchwork of differing state-by- state requirements that will harm consumers, dealers and automobile manufacturers.

AIAM recognizes, however, that adoption of Ca lifornia emissions and greenhouse gas standards is now the law in Maryland and that the Maryland Air and Radiation Management Administration, Department of the Environmen t (“ARMA”), is dutifully implementing the program as directed by statute. Therefore, these comments will be limited to addressing various administrative aspects of the proposed regulations to assist the ARMA in promulgating fair and equitable regulations.

Our primary concern is that the implementation timing of the California programs in Maryland is much different from the timing of the programs in California. In the case of the LEV standards, the California program has existed for over a decade. For the greenhouse gas standards, California plans to adopt the pr ogram for the 2009 model year if EPA decides to grant California a waiver of preemption under sectio n 209 of the Clean Air Act. Of course, the earliest Maryland can adopt the California standards is the 2011 model year as you ha ve proposed. However, these timing differences cause problems with other aspects of the program, such as the NMOG averaging, ZEV credits averaging, and the greenhouse gas fleet aver aging. In order to avoid unfair impacts on individual vehi cle manufacturers due to these timing and market differences between Maryland and California, the Maryland regulations need to contain provisions to properly adjust the relevant credits averagi ng and banking provisions of the program. Other states which have recently adopted the Californi a programs have made such adjustments for at least the NMOG and ZEV credits programs; th erefore, we recommend that you consult and coordinate with your colleagues in Connecticut, New Jersey, a nd Rhode Island, among others to address these inequities.

Thank you for the opportunity to comment on th is proposed regulation. Should you have any questions about AIAM’s view s on this or other matters of interest to the industry, please feel free to contact me at (703) 525-7788. We look forwar d to working constructively with you as this regulatory action proceeds.

Sincerely,

Michael J. Stanton President and CEO**From:** "Jennifer T. Cole" <jtcole@autoalliance.org>

**To:** <drabin@mde.state.md.us>

**Date:** 10/4/07 4:18PM **Subject:** Alliance comments on LEV program

Dear Ms. Rabin,

Attached are the Alliance of Automobile Manufacturers' comments on the proposal by the Maryland Department of Environment to adopt the Low Emissions Vehicle Program in MD. I sincerely apologize for the delay in submitting them however, I was unexpectedly called out of the office yesterday and was unable to present them at ye sterday's public hearing. The Alliance would greatly appreciate the Department's consideration of our views. Please let me know if you have any questions or need
additional information.

Sincerely,

Jennifer Cole

Jennifer Thomas Cole

Manager, State Government Affairs

Alliance of Automobile Manufacturers

1401 Eye Street, NW, Ste. 900

Washington, DC 20005

P: 202

- 326

- 5538

F: 202

- 326

- 5589

C: 202

- 329

- 7823

jtcole@autoalliance.orgAlliance of Automobile Manufacturers Page i of 33 October 3 , 2007

MARYLAND

DEPARTMENT OF THE ENVIRONMENT

Comments of the Alliance of Automobile Manufacturers

On Rulemaking to Adopt California LEV, ZEV and Greenhouse Gas Regulations

October 3 , 2007

For More Information Contact:

Steven Douglas J ulie C. Becker Director, Environmental Affairs Assistant General Counsel Alliance of Automobile Manufacturers Alliance of Automobile Manufacturers 1415 L Street, Suite 1190 1401 Eye Street, N.M., Suite 900 Sacramento, CA 95814 Washington, DC 20005 (91 6) 266

- 4532 (202) 326

- 5511 sdouglas@autoalliance.org jbecker@autoalliance.orgAlliance of Automobile Manufacturers Page i of 33 October 3 , 2007

Executive Summary

The Alliance of Automobile Manufacturers is providing comments on the proposal by the

Maryland Department of the Environment (“the Department ” ) to adopt the California motor

vehicle LEV, ZEV and CO2 (or greenhouse gas ) regulations in Maryland . As currently proposed

the adoption of the LEV and ZEV regulations suffer from several faults, namely violations of the

Clean Air Act and the Commerce Clause

. Unfortunately, adopting California’s costly vehicle

emission program will increase cost to Maryland residents, limit vehicle availability, and degrade

air quality

.

As to the greenhouse gas regulation, some of the principal points about that propos al that

the Alliance considers important for the Department to consider are as follows:

1. There is no evidence that adoption of the California greenhouse gas rule in Ma ryland

would have ANY effect on the climate of Maryland

. Any claim that the California rule would

change the climate of Maryland or have any related public

- health benefit is unsupportable on a

scientific basis or even by California’s own admission . If th e goal of the regulation is to address

climate change in Maryland , the only purpose served by adopting the California rule would be

symbolic.

2. Adopting the California regulation will INCREASE emissions of ozone precursors and

other pollutants in Maryla nd

. Due to high cost of new vehicles will inhibit fleet turnover,

increasing the age of the vehicle fleet

. B y encouraging more driving, the California rule in

Maryland would increase smog

- forming emissions and hinder the state ’s efforts to improve air

qua lity. The state cannot afford to take symbolic action on the issue of climate change at such aAlliance of Automobile Manufacturers Page ii of 33 October 3 , 2007

cost to its efforts to reduce smog

- forming emissions from motor vehicles , especially when EPA

has proposed lowering the ozone air quality standards

.

3. The California greenhouse gas rule would needlessly inject the government into

consumers’ choices about the types of vehicles that best suit their needs . Some supporters of the

California rule claim that the rule is beneficial because it will mandate higher f uel economy.

That claim assumes, contrary to common sense and experience, that a regulatory agency in

California can better define the private economic interests of Maryland consumers than the

consumers themselves. Consumers in Maryland or other state s i nterested in buy ing high

- mileage

vehicles can do so today without the need for specific regulations that require them to do so.

4. The greenhouse gas regulation under consideration by the Department would conflict

with state and federal law

. The Depart ment has no authority from the Legislature to adopt

regulations that will increase air pollution levels in Maryland , and for that reason, adoption of the

California rule would be inconsistent with state law. Such an action would also conflict with

federal law, which reserves to the national government the sole power to regulate motor vehicle

fuel economy, as well as other provisions of federal law.Alliance of Automobile Manufacturers Page iii of 33 October 3 , 2007

Table of Contents

Page

Introduction 1

I. Issues Relating to Maryland’s Adoption of the California LEV II Standards

___________ 2

A. Emission Benefits of California LEV II versus Federal Tier II

____________________________ 2

B. Legal Issues Regarding the Adoption of the LEV and ZEV Standards

_____________________ 2

1. Maryland’s Proposed Fleet Average NMOG Requirement Violates Section 177

___________________ 3

2. Maryland’s Proposed ZEV Credit Bank

________________________________ ____________________ 4

a. Type III Transfer:

________________________________ ________________________________ ___ 5

b. Non

- Type III Transfer

________________________________ _______________________________ 5

II. The California Greenhouse Gas Regulation

________________________________ ____ 5

A. Regulatory Background

________________________________ _________________________ 6

B. Issues of Controversy

________________________________ __________________________ 9

1. Nationwide Deployment of the C alifornia Greenhouse Gas Technologies

________________________ 9

2. Reliance on the NESCCAF and CARB Technological Assessments

______________________________ 11

3. Credits and Alternat ive Compliance Mechanism s

________________________________ __________ 15

4. Grid

- Connected Hybrid Vehicles

________________________________ ________________________ 16

III. Environmental Assessment of the Greenhouse Gas Rule in Ma ryland

______________ 18

A. Increases in Air Pollutants

________________________________ _____________________ 19

B. Safety Issues Related to the Rebound Effect

________________________________ _______ 20

IV. Economic Issues Raised by the Proposed Regulation

__________________________ 20Alliance of Automobile Manufacturers Page iv of 33 October 3 , 2007

A. Consumer Valuation of Future Operating Cost Reductions

____________________________ 20

B. Opportunity Costs and Losses in Vehicle Utility

________________________________ ____ 22

V. Legal Issues Presented by the Greenhouse Gas Regulation

_______________________ 22

A. The Energy Policy and Conservation Act.

________________________________ __________ 23

B. Other Provisions of Federal Law

________________________________ _________________ 24

Conclusion

________________________________ ________________________________ __ 25Comments of the Alliance of Automobile Manufacturers

On the Proposed Rulemaking to Adopt California Motor Vehicle LEV, ZEV and

Greenhouse Gas Regulations

Introduction

The Alliance of Automobile Manufacturers 1 respectfully submits these comme nts on the

proposal by the Department to adopt the California motor vehicle LEV, ZEV and greenhouse gas

regulations. 2 The California LEV program contains three basic elements

– emissions

regulations, a zero emissions vehicles (“ZEV”) mandate, and greenhou se gas regulation. The

emissions element of the regulatory program, known as the LEV II program, contains

requirements for exhaust and evaporative emissions as well as on

- board diagnostics to monitor

the emission control system and components. The ZEV ma ndate requires that automakers power

a specified percentage of their new vehicle fleet with only battery electricity or hydrogen fuel

cell power. The last element of California’s regulation calls for the control of greenhouse gases

from new motor vehicles , commonly known as California’s AB 1493 rule.

Part I of these comments discusses the proposed adoption of the LEV II standards and

ZEV mandate and identifies several issues that the Department must consi der prior to adoption.

1 The members of the Alliance of Automobile Manufacturer s (“the Alliance”) are BMW Group of North America, In c., DaimlerChrysler Corporation, Ford Motor Company, General Motors Corporation, Mazda North American Operations, Mitsubi shi Motors North America , Porsche Cars North America, Inc., Toyota Motor North America, Inc., and Volkswagen of America, Inc.

2 The Dep artment’s proposal is contained in: Notice of Proposed Action Title 26, Subtitle 11, Air Quality, 26.11.34, Low Emissions Vehicle Program. Maryland Register, Vol. 34, Issue 18, Friday, August 31, 2007, page 1609.Alliance of Automobile Manufacturers Page 2 of 33 October 3 , 2007

Part II provides an overvi ew of the proposed greenhouse gas reg ulation. Parts III and I V

examine the environmental effects of the proposed greenhouse gas regulation in Maryland and

the impact of the rule on Maryland consumers. Part V evaluates the legal issues presented by the

gr eenhouse gas proposal. Several attachments accompany these comments.

I. Issues Relating to Maryland ’s Adoption of the California LEV II Standards

A. Emission Benefits of California LEV II versus Federal Tier II

The Department should decline to adopt the Calif ornia standards for reasons of good

public policy. Recently, the Alliance asked a team of experts from Sierra Research, Air

Improvement Resource, Inc., and NERA Economic Consulting to evaluate the emissions impacts

of the entire California vehicle emissio ns program, including the greenhouse gas standards, on

emissions from new light

- duty vehicles in California, relative to those that would occur in

California under the federal vehicle emissions standards. To our knowledge, this is the first and

only study of this kind. The study

– a copy of which is enclosed as Attachment 1

- concludes

that the California standards result in higher levels of a variety of pollutants, including exhaust

PM 2.5 , NOx, hydrocarbons (HCs) , carbon monoxide, and air toxics. We bel ieve this is critical

information for the Department to consider , particularly in light of the fact that individuals who

wrote the California regulation have, in sworn testimony, admitted that it will not measurably

impact global climate.

B. Legal Issues Rega rding the Adoption of the LEV and ZEV Standards

Section 177 of the Clean Air Act, 42 U.S.C. § 7507, allows for states to adopt alternative

emissions standards that would otherwise be preempted by S ection 209 of the Act. For a state toAlliance of Automobile Manufacturers Page 3 of 33 October 3 , 2007

promulgate a standa rd under S ection 177 it (1) must “adopt such standards at least two years

before commencement of such model year”; and (2) must adopt standards that “are identical to

the California standards for which a waiver has been granted for such model year.” The

i denticality requirement means that no state may modify the California regulations. Section 177

goes on to specify that no state may “prohibit or limit, directly or indirectly, the manufacture or

sale of a new motor vehicle or motor vehicle engine that is certified in California as meeting

California standards.” Id

. Furthermore, no state may “take any action of any kind to create, or

have the effect of creating, a motor vehicle or motor vehicle engine different than a motor

vehicle or engine certified in California under California standards (a ‘third vehicle’).” Id.

1. Maryland ’s Proposed Fleet Average NMOG Requirement Violates

Section 177

Both California and the Federal Government control motor vehicle emissions using a

sales

- weighted average that each ma nufacturer is required to meet for its new vehicle fleet. By

virtue of this fleet average scheme, a manufacturer can sell some vehicles with emissions that are

higher than the required average provided that such sales are offset by the sale of vehicles wi th

emissions that are lower than the required average. The regulations as currently proposed adopt

California’s fleet NMOG average , see Department’s proposal § .06, Fleet NMOG Requirements

.

However, by adopting and attempting to enforce the California fle et NMOG average Maryland

will likely violate the Clean Air Act. This potential violation could be corrected if the

Department simply required reporting rather than compliance with

, the fleet average NMOG.

The Alliance recommends this approach. Without k nowing or attempting to speculate on future

product placement in Maryland , it is equally possible that this approach could result in fleetAlliance of Automobile Manufacturers Page 4 of 33 October 3 , 2007

average NMOG slightly higher than California or slightly lower, but in either case, the difference

is likely small an d would certainly not result in any measureable air quality difference. The

following summarizes how mandatory compliance with the fleet NMOG requirement could

violate the Clean Air Act.

A manufacturer’s fleet NMOG average in Maryland will depend on its particular sales

mix in Maryland

, as determined by Maryland consumers. By virtue of the differences between

the Maryland and California markets, it is highly unlikely that a manufacturer will sell exactly

the same products in exactly the same proportions in Maryland as it will in California. If

Maryland consumers demand a particular manufacturer’s sales mix in Maryland that results in a

higher fleet NMOG average, the manufacturer may be required to artificially limit sales of

certain California certified vehicles that Maryland consumers prefer in order to comply with

Maryland ’s fleet average requirement. Such a limitation on the sale of California certified

vehicles would, at a minimum, be an indirect limit on the sale of a motor vehicle that is certified

to California standards and thus would violate S ection 177.

This S ection 177 problem do es not arise if Maryland only requires manufacturers to

report fleet NMOG averages.

2. Maryland ’s Proposed ZEV Credit Bank

The Alliance appreciates Maryland ’s efforts to include proportional ZEV credits into §.10

of the regulation. However, one change is needed to properly account for the Section 177

provision of California’s regulation ( Title 13, 1962, §(d)(3)(D), “Counting a Type III ZEV

Placed in a Section 177 State ”). In developing its ZEV standards, the California Air Resources

Board (“ CARB ”) recognized that in light of current technology, mandating a large number ofAlliance of Automobile Manufacturers Page 5 of 33 October 3 , 2007

ZEV vehicles would hamper, rather than help, technology. To accommodate this conclusion, the

Cali fornia regulation included a “Section 177 Provision” that effectively counts all “Type III”

ZEVs (fuel cell vehicles) in any state that adopts the California regulation as if it was placed in

service in all California states. Thus, under the California re gulation manufacturers need to only

produce the number specified by California regardless of how many states adopt the California

regulation. To account for the Section 177 provision of the California regulation, the

Department should:

a. Type III Credit Es tablishment :

Remove the Type III credits from the manufacturer’s ZEV credit

bank and establish those credits in the Maryland ZEV credit bank

directly and without proportionality, since these credits count as if

they were earned in Maryland.

b. Non

- Type III Cr edit Establishment

Establish the remaining ZEV credits in the Maryland ZEV credit

bank using the proportionality requirement specified in the

proposed regulation.

II. The California Greenhouse Gas Regulation

The motor vehicle greenhouse gas regulation unde r consideration by the Department was

adopted by CARB in 2004. This section of the Alliance’s comments begins by providing some

necessary background on the requirements of the California rule, drawn from the CARBAlliance of Automobile Manufacturers Page 6 of 33 October 3 , 2007

rulemaking record. It then presents some specific technical issues that the Department should

address in evaluating the proposal to adopt the California rule in Maryland

.

A. Regulatory Background

Emissions from a wide variety of sources, including power plants, manufacturing

facilities and automob iles, contribute to air quality concerns. In the case of motor vehicles, the

principal emissions of concern are unburned hydrocarbons (“HC”) and oxides of nitrogen

(“NOx”). HC and NOx undergo photochemical reactions in the atmosphere in the presence of

s unlight to produce ozone, a respiratory system irritant and the principal ingredient of “smog.”

Carbon monoxide (“CO”) is another pollutant caused by incomplete combustion. Although CO

slightly contributes to ozone formation, it is primarily regulated be cause of its direct effect on

human health, which includes increased stress on the cardiovascular system.

In order to protect public health, the U.S. Environmental Protection Agency (“EPA”) has

established primary National Ambient Air Quality Standards (“NAAQS”) for ozone, CO and

other pollutants. 3 These standards define the level of these pollutants that EPA has determined

to be consistent with the protection of human health with a margin of safety.

Another byproduct of the combustion of carbon

- bas ed fuels, such as wood, coal and

gasoline, is carbon dioxide (“CO 2 ”). Carbon dioxide is a naturally occurring gas in the air, is

exhaled by all animals, and is essential to life as we know it. Exposure to carbon dioxide is not

harmful to human health at concentrations found in the ambient air, and EPA has established no

3 NOx emissions from motor vehicles also form nitrogen dioxide (“NO 2 ”), a pollutant that causes a brownish atmospheric coloration and is associated with an increased risk of respiratory infection. Emissions of HC and NOx also may be converted to particulate matter (“PM”) in the atmosphere.Alliance of Automobile Manufacturers Page 7 of 33 October 3 , 2007

NAAQS for carbon dioxide. The level of carbon dioxide in the atmosphere is an environmental

issue because it is considered a greenhouse gas. Carbon dioxide and other greenhouse gases in

the atmosphere reduce the dispersal of solar heat that reaches the surface of the earth. This effect

is suspected of causing or contributing to global warming.

In the case of motor vehicles, carbon dioxide emissions are directly related to fuel

consump tion. The only method for significantly reducing carbon dioxide emissions from a

gasoline

- powered motor vehicle is to reduce fuel consumption. The official test procedure used

to determine compliance with the federal corporate average fuel economy (“CAFE ”) standards

depends on the measurement of carbon dioxide emissions, which is the primary greenhouse gas

emitted from motor vehicles. The combustion of gasoline is the only source of carbon dioxide

emissions from motor vehicles, and carbon dioxide emissio ns constitute the vast majority of

greenhouse gas emissions from motor vehicles. The table below shows the various categories of

greenhouse gas emissions from a typical passenger car, adjusted to account for the “global

warming potential” of each category

. 4 The adjusted value is expressed in the last column of the

table in “CO 2 equivalent emissions,” as specified in the CARB regulation.

Baseline Greenhouse Gas Emissions from a Typical Passenger Car

Source Emissions CO 2 equivalent emissions

Exhaust CO 2 322.48 g/mi 322.48 g/mi

4 “ Global warming potential” (or “GWP”) is a measure of the heat

- trapping potential of a particular compound relative to the heat trapping potential of the same mass of carbon dioxide. For example, if one pound of the air conditioning refrigerant HFC

- 134a tr aps 1300 times more heat than one pound of carbon dioxide, then HFC

- 134a has a GWP of 1300.Alliance of Automobile Manufacturers Page 8 of 33 October 3 , 2007

Exhaust Methane 0.005 g/mi 0.12 g/mi

Exhaust Nitrous Oxide 0.006 g/mi 1.78 g/mi

Direct HFC

- 134a Emissions 0.007 g/mi 9.00 g/mi

“Indirect” A/C Emissions (CO 2 ) 15.40 g/mi 15.40 g/mi

TOTAL 337.90 348.78 g/mi

CO 2 as a Percent of Total 99.99% 96.87%

As indicated on the table, when the estimated greenhouse gas emissions of a typical

passenger car are weighted for global warming potential, carbon dioxide emissions account for

nearly 97 percent of the greenhouse gas emissions from passenger cars and light

- duty trucks on a

CO 2 - equivalent basis. Based on the table, the maximum reduction in CO 2 - equivalent

greenhouse gas emissions that can be accomplished without improving fuel economy is just over

3 percent (100%

- 96.87% = 3.13%). The CARB standards require a reduction in CO 2 -

equivalent greenhouse gas emissions from passenger cars of more than 30 percent. 5 For typical

gasoline

- powered vehicles, it will therefore be impossible to meet the CARB regulation without

reliance on higher f uel economy.

The de facto fuel economy standards being set by CARB are much more stringent than

the average fuel economy levels required by the federal fuel economy standards. For example,

CARB has set a “mid

- term” CO 2 - equivalent (“ CO 2 e”) standard for passenger cars and some

light

- duty trucks of 205 grams per mile (“g/mi”) CO 2 e. Converted to fuel economy as measured

5 The CARB staff estimated in 2004 that the average CO 2 - equivalent emissions for passenger cars produced by the largest six manufacturers were 312 g/mi for model ye ar 2002. The
205 g/mi standard applicable in 2016 is 34 percent lower.Alliance of Automobile Manufacturers Page 9 of 33 October 3 , 2007

by the federal regulations, which is equivalent to 43.7 miles per gallon (“mpg”) for a vehicle that

uses a conventional air conditioning s ystem and that is not designed to reduce nitrous oxide

(N 2 O) or methane tailpipe emissions. CARB’s rule mandates 59 percent higher fuel economy

than required under the Corporate Average Fuel Economy (“CAFE”) standards for passenger

cars, which is 27.5 mpg . CARB’s regulatory analysis assumes that, but for its new greenhouse

gas standards, there would be no change in the fuel economy of passenger cars or light

- duty

trucks in the absence of its regulation, through at least 2030.

B. Issues of Controversy

The fo regoing summary of the California rule covers the main features of the regulation

that cannot be considered controversial. Much of the underlying analysis used to support the

regulation in California, however, involves issues that are in dispute in federa l courts in

California, Vermont, and Rhode Island

. T he Department needs to take a definitive and fully

explained position on those issues as they relate to Maryland . Three issues of particular

importance to the proposal under consideration by the Departm ent are identified below.

1. Nationwide Deployment of the California Greenhouse Gas

Technologies

CARB has assumed that once its greenhouse gas rule is implemented, the automobile

industry will choose to deploy the technologies needed to meet the California standards on at

least a nationwide (if not global) basis . That assumption is critical to CARB’s estimates of the

costs for compliance with the California regulation in California and in other states that enforce

the California rule. If CARB’s assumption is incorrect, then the costs of the California rule for

consumers in California and other states that enforce the California rule will be much higher thanAlliance of Automobile Manufacturers Page 10 of 33 October 3 , 2007

estimated by CARB. Because the costs of new regulation is important in Maryland

, the

Department need s to make an independent assessment of CARB’s assumption that the industry

will respond to the regulation by producing vehicles that use all the necessary greenhouse gas

technologies nationwide.

CARB’s assumption that the industry would deploy greenhou se gas control technologies

nationwide, to an extent approaching full penetration of those technologies across the country, is

certainly not entitled to deference. As CARB has recognized, the greenhouse gas rule will raise

new

- vehicle costs and prices, an d will also reduce demand for new vehicles. In one regulatory

analysis that CARB published prior to its decision to approve the greenhouse gas rule in

September 2004, the CARB staff estimated that once the greenhouse gas standards were fully

implemented, new

- vehicle sales in California would decline by four to five percent. Other

estimates predicted larger reductions in sales.

It would be illogical and contrary to their customers’ interests for automobile

manufacturers to produce vehicles for which th ere is less demand, in the absence of a regulatory

requirement to do so. For that reason, it is unlikely that the industry will try to comply with the

California greenhouse gas rule by producing all or even most of the necessary technologies at

nationwide volumes. This means that the cost of the regulation for Maryland consumers will be

substantially higher than estimated by CARB.

The Department needs to examine this issue in more detail. Because the industry will not

pursue nationwide deployment of t he greenhouse gas technologies, the Department should

develop more accurate estimates of the costs of compliance with the regulation for residents of

Maryland

.Alliance of Automobile Manufacturers Page 11 of 33 October 3 , 2007

2. Reliance on the NESCCAF and CARB Technological Assessments

The Department also needs to co nfront serious errors in some analyses of the California

rule arising from the technological assessment prepared by the Northeast States Center for a

Clean Air Future (“NESCCAF”), on which CARB has relied in part. Significant

misunderstandings have arisen in the debate about the California rule and its costs. These are

among the points that the Department needs to consider:

• To date, neither NESCCAF nor the CARB staff have specifically assessed (1) the

performance of any specific vehicle actually expec ted to be in the market when the new rule

would take effect, or (2) the full range of vehicle types expected in the market. The

NESCCAF/CARB analysis was limited to vehicle types that the CARB staff or NESCCAF

considered “representative.” This point was acknowledged in the CARB staff’s Final Statement

of Reasons, published in August 2005, which stated that “the agency could not reasonably model

all vehicles with all of the potential climate change emission reduction technologies” identified

by CARB staff or NESCCAF. The predicted costs and fuel economy impacts of the regulation

estimated by the CARB staff and NESCCAF are thus no better than the selection of vehicle types

that the CARB staff or NESCCAF considered “representative.”

• The vehicles that the CARB staff and NESCCAF decided to include in their analysis

were hardly “representative” of the U.S. motor vehicle fleet, either today or in the future. All or

nearly all the vehicles included in the analysis had significantly downsized, turbocharged

engi nes, which sacrifice reserve power, launch feel and some acceleration performance features,

and which were based on tests of engines operated on European

- specification premium gasoline.

The hypothetical vehicles were also equipped with automatic manual tr ansmissions. SuchAlliance of Automobile Manufacturers Page 12 of 33 October 3 , 2007

vehicles are hardly typical of the U.S. fleet today or in the future. In particular, it is unrealistic to

suppose that in the future, most Americans will buy vehicles designed for optimal performance

on gasoline grades higher than regul ar unleaded.

• The principal contractor for the vehicle performance analysis prepared for NESCCAF

and then used by CARB, a firm called AVL Powertrain Engineering, has confirmed that it was

not asked to undertake, nor did it undertake, any detailed consi deration of launch feel, drive

quality or the transient response of the engine, transmission and turbocharger, in connection with

the work for NESCCAF and CARB. The only reported metric for performance was 0

- 60 mph

acceleration, and it appears the CARB st aff ignored available information from AVL involving

other acceleration metrics. The Department can confirm the limitations placed on AVL’s work

by contacting AVL. 6

• Some confusion may arise from the fact that the CARB staff has not always fully

pr esented the impact of the regulation on the vehicle powertrain or vehicle performance. For

example, the CARB staff’s Final Statement of Reasons asserts that in the CARB staff’s

regulatory analysis, “technology packages that included engine downsizing were not generally

considered for the truck classes,” and “engine downsizing [was] used primarily for the small car,

large car, and minivan vehicle classes where vehicle performance can be maintained under all

driving conditions.” To the contrary, CARB’s regul atory scenario assumed the use of downsized

6 The only apparent issue in controversy with AVL is whether the test data on which its modeling is based is representative of vehicles operated on U.S. regular unleaded gasoline as

we ll as higher

- specification European gasoline. While AVL claims that the modeling is representative of operation on U.S. regular unleaded, neither NESCCAF, AVL nor the CARB staff has provided data to demonstrate this. The Department should request any suc h data if it plans to rely on the NESCCAF or CARB work.Alliance of Automobile Manufacturers Page 13 of 33 October 3 , 2007

engines for the truck engines included in the CARB analysis. For one set of standards, the large

truck engines were assumed to be downsized by 9 to 11 percent. For another set of standards,

large truck engines were assumed to be downsized by 11 to 15 percent. Small truck engines

were assumed to be downsized by as much as 19 percent. But common sense indicates that truck

purchasers are generally not willing to accept downsized engines at the same price as full

- size

engine s . If it wants to rely on the analyses prepared in California, the Department needs to

examine this issue further because it cannot rely on the summary statements from the CARB

staff.

• Along the same lines, the CARB staff’s Final Statement o f Reasons claims that “[i]n

assessing smoothness and refinement ... staff assumed in the analysis that 6 cylinder engines

would be replaced by 5 cylinder turbocharged models rather than 4 cylinder versions in order to

preserve 6 cylinder

- like characteristi cs.” That is incorrect. For the “Large Car” analysis

performed for NESCCAF, a three

- liter, six

- cylinder was replaced by a four

- cylinder engine with

a much smaller displacement of 1.77 liters. For the “Minivan” case, a 3.3 liter, six

- cylinder was

replace d by another much smaller 1.85 liter four

- cylinder engine. For the “Small Truck” case in

the NESCCAF study, a 3.4 liter six

- cylinder engine was replaced by a smaller 1.64 liter four

cylinder. In addition to “smoothness and refinement,” engines need suffi cient reserve power for

responsive acceleration, full cargo loads, towing, and acceptable “launch” at the start of driving.

Neither NESCCAF, its contractors, nor the CARB staff, can credibly claim that such radical

downsizing would have no impact on consu mer demand for the redesigned engines.

Elsewhere in the Final Statement of Reasons, however, the CARB staff admits that some

of the technologies that were evaluated would degrade vehicle performance. This is anAlliance of Automobile Manufacturers Page 14 of 33 October 3 , 2007

important admission that any proponent of t he California rule or any regulatory agency

considering the California rule needs to address. The assumptions that were actually made in the

development of the California regulatory analysis are critical because consumer demand will be

affected by losses in various performance features that are important in the market. The

consumer demand model used by California in its analysis assumed no loss in any performance

attribute, which is clearly an invalid assumption for the reasons summarized above. The

Depa rtment therefore cannot appropriately rely on the consumer impacts projected by the CARB

staff in the California rulemaking

-- who, it should be noted, predicted a reduction in consumer

demand and in sales. 7 Because the CARB consumer demand model would ha ve predicted even

larger reductions in demand and in sales if the degradations in performance had been considered,

the Department should begin its analysis of the issue by treating the existing CARB estimates as

the floor, not the ceiling, for cost impacts

. 8

7 Regarding the consumer demand model used by CARB, see pp. 2 8

- 30 below.

8 Some proponents of the California rule rely on simplistic assumptions that all or nearly all consumers will apply an es timated long

- term cost reduction analysis to a new

- car purchase decision. The appropriateness of the discount rate assumed in such an analysis needs careful

rev iew, as explained on pages 28

- 30 of these comments. Equally important, however, CARB commissio ned studies for its own rulemaking that demonstrated tha t such a simplistic analysis is not realistic for the new

- vehicle market. There is no uniform or average “pay

- back” period that can be assumed in assessing how this regulation will affect the new

- veh icle market

-- hence the need for the consumer demand models like CARBITS and the models developed for the Alliance. If, on the other hand, the Department believes that simple “pay

- back” analyses are valid or useful, it should supply any available empiric al evidence supporting the use of such analyses.Alliance of Automobile Manufacturers Page 15 of 33 October 3 , 2007

3. Credits and Alternative Compliance Mechanism s

Another issue of controversy involves the portions of the CARB rule that describe the

provisions that supposedly add flexibility for the industry in developing compliance strategies.

The implication is tha t the industry can use those features of the California regulation to reduce

the costs of compliance with the regulation and ease the burden for Maryland consumers.

While the Alliance does not have access to confidential compliance plans of its members

or other manufacturers, it questions the assumption that the inter

- manufacturer credit provisions

and alternative compliance features of the California rule will play a significant role in

compliance with the regulation, either in California or in Maryland . Indeed, the alternative

compliance features of the California greenhouse gas rule exist in name only

-- they are so

stringent that they appear designed to discourage efforts to comply using any means other than

the types of fuel economy technologies env isioned in CARB’s main regulatory analysis, and they

probably could not be used by any major full

- line manufacturer. If the Department believes that

alternative compliance plans will be part of the compliance strategy for manufacturers in

Maryland , it sho uld provide examples of the types of plans that are both economically

practicable and approvable under the regulation.

With regard to inter

- company trading, the notion that companies that can accumulate

credits will sell those credits to other companies is illogical. Such companies will use any such

credits to reduce their own future compliance costs. Because the regulation will be ultimately

constraining for all large

- volume manufacturers, each such credit

- generating company will

certainly need to use those credits for that purpose in order to minimize its costs of compliance.Alliance of Automobile Manufacturers Page 16 of 33 October 3 , 2007

It is also critical to note that vehicle manufacturers must plan their fuel economy and

emissions compliance strategies for a given model year many years in advance. While tha t

planning is under way, a manufacturer has no access to the fuel economy strategy or planning

activities of other unaffiliated manufacturers. Given the competitive nature of the industry, the

uncertainty that any specific company would have a specific nu mber of credits available to sell,

and the lead

- times required to develop and produce new technologies, it is implausible to

suppose that any company will be able to include a plan to acquire credits from another company

in its CO 2 compliance strategy. If the Department believes that the industry will be able to

reduce its compliance burdens significantly with inter

- company trading, it should explain why.

4. Grid

- Connected Hybrid Vehicles

A third and more technically complex issue of controversy involves th e use of a

particular type of technology to meet the CARB standards. The relevant technology is called

grid

- connected hybrid vehicle technology, or “ GHEV” technology. The CARB regulation

defines a grid

- connected hybrid electric vehicle as “a hybrid elect ric vehicle that has the capacity

for the battery to be recharged from an off

- board source of electricity and has some all

- electric

range.” Such vehicles can be driven without the use of gasoline to the extent that their batteries

are recharged from the e lectrical grid and the distance they are driven between recharging is

equal to or less than their “all electric range” (i.e., the driving range available from the battery

alone). Beyond the all electric range, the combustion engine is used.

Under the CARB rule, t he formula for calculating the CO 2 - equivalent emissions of

GHEVs is [A*E*B*C] + [(1

– A*E*B)*D], where A is the percentage of the vehicles that are

operated on electricity from the grid; E is 0.9; B is the percent of miles travelled using elect ricityAlliance of Automobile Manufacturers Page 17 of 33 October 3 , 2007

from the grid; C is the CO 2 - equivalent value when the vehicle is operating on electricity from the

grid; and D is the CO 2 - equivalent value when the vehicle is operating on gasoline. Although the

CARB regulation is not clear, it appears that grid

- co nnected HEVs are able to use a value of 130

g/mi CO 2 - equivalent when running on battery power (which is the value specified in the

regulation for “electric vehicles”). Nothing in the regulation provides guidance on the value of

“B.” The average value of B will be less than 100% because motorists will not be willing to pay

for a combustion engine if it were never used. Nevertheless, a value of 100% can be used to

establish a “best case” estimate of the economic feasibility of grid

- connected HEVs. One can

estimate the battery size required for a grid

- connected HEV assuming a relatively short 20

- mile

all electric range, at 0.34 kWh per mile as the energy requirement for a compact size vehicle.

That would require a battery capacity of 7 kWh.

R ecent ly, To m Austin, Senior Partner of Sierra Research, provided an expert critique of

various vehicle technology cost s for submittal in the litigation before the U.S. District Court.

This analysis, enclosed as Attachment 2

, explains that the retail price increase n eeded to cover

the cost of such a battery in a GHEV is about $5,812 . Combined with a 100 kW

motor/generator, inverter, brake

- by

- wire, electric power steering, electric accessory drive, high

voltage wiring system, and weight reduction measures, the total r etail price increase to cover the

cost for a GHEV would be approximately $ 12,634

. 9 This is far greater than the cost of other

technologies that CARB has identified as capable of meeting the California standards.

The available evidence thus indicates th at grid

- connected hybrid vehicles will be

commercially infeasible for anything other than niche markets that receive substantial public

9 Attachment 2 , Expert Rebuttal Report of Thomas C. Austin, p. 12.Alliance of Automobile Manufacturers Page 18 of 33 October 3 , 2007

subsidies

. 10 If the Department believes that GHEVs will be a significant factor in

manufacturers’ compliance plans, it n eeds to explain why; if not, it should so indicate. To the

extent that the Department believes that GHEVs will play a significant role, the Department

should explain why the cost estimates presented above are inaccurate or unpersuasive, or why it

believes that there will be sufficient public subsidies to support the use of GHEVs.

III. Environmental Assessment of the Greenhouse Gas Rule in Maryland

It is also important for the Department to address some basic issues about the

environmental impacts of the C alifornia greenhouse gas rule in Maryland . At the outset, it is

important for the Department to recognize that it cannot attribute any significant reduction in

global warming, or any other discrete impact on climate, to the implementation of the Californi a

greenhouse gas rule in Maryland . Even under very optimistic assumptions about the impact of

the proposed greenhouse gas rule in Maryland , there would be no significant impact on the

global or Maryland climate. Any theoretical change in temperatures tha t a rule of this nature

could produce would, in turn, have no measurable effect on ozone levels in Maryland

-- even if

the proposed greenhouse gas rule were implemented nationwide, if only because the rule will not

10 Others have claimed that GHEVs would provide economic benefits to motorists because they can be used to store electrical energy and sel l it back to the utilities during periods of peak demand. However, analyses of this concept have failed to account for the cost of reducing battery life by exposing it to additional charge/discharge cycles. Those analyses also ignore the effect of chargi ng/discharging efficiency, which would further increase the cost. In addition, the fact that periods of peak electricity demand coincide with peak commute periods means that vehicles will be unavailable to sell power back to the grid.Alliance of Automobile Manufacturers Page 19 of 33 October 3 , 2007

have any measurable effect on temperature s

. If the Department believes that there is any

evidence of a positive impact on climate or ozone levels, it needs to identify that evidence.

A. Increases in Air Pollutants

In addition to having no identifiable impact on global warming, the California r ule will

have adverse impacts on Maryland ’s efforts to reduce criteria and precursor pollutants. Two

important factors will cause the proposed rule to have the unintended effect of increasing

pollution. The first factor is called the “rebound effect.” W hen vehicle fuel economy increases,

the cost of driving declines and vehicle operation increases. That increase in vehicle operation

increases fleet

- wide emissions of criteria and precursor pollutants. The other important factor

that must be considered i s the “fleet turnover effect.” When vehicle prices are increased as a

result of additional regulation, older vehicles with less effective pollution controls than new

vehicles remain in operation for longer periods of time than if there were no additional

regulation.

Analyses conducted by Sierra Research, NERA, and AIR, filed with U.S. EPA by the

Alliance on California’s request for a waiver of federal preemption for the AB 1493 regulation,

and included as Attachment 1 , demonstrate that, in the aggregate , California's vehicle emission

program increases air pollution and is therefore less protective of public health than the federal

program. Any emissions increases should be unacceptable as a matter of policy, particularly

when there is no scientific or ot her evidence that the greenhouse gas rule will have any

measurable positive effect on the climate of Maryland or any other predictable public

- health

benefit.Alliance of Automobile Manufacturers Page 20 of 33 October 3 , 2007

B. Safety Issues Related to the Rebound Effect

The Alliance recently challenged Vermont’s adoption o f the California greenhouse gas

rule. Expert testimony at that trial demonstrated that a major impact of the regulation is the

increased traffic safety risk associated with increased driving

-- the “rebound effect.” Dr.

Laurentius Marais testified that t he regulations would have the unintended effect of increasing

travel congestion, and thus highway accidents, serious injuries and fatalities. Dr. Marais’ expert

report is included at Attachment 3

.

IV. Economic Issues Raised by the Proposed Regulation

The De partment appears to have done no analysis of the major cost of comp liance with

the California rule. Other states have incorrectly assumed that cost increases will be confined to

the increase in the retail price of a new vehicle, and that future savings fr om reduced gasoline

consumption will exceed the up

- front costs for the purchaser of a new vehicle. Other states have

also mistakenly assumed that the only costs incurred by consumers will be reflected in higher

retail prices.

A. Consumer Valuation of Futu re Operating Cost Reductions

Proponents of the greenhouse gas rule sometimes claim that increases in initial purchase

prices for new automobiles subject to the regulation might be offset by the reduced operating

cost, such as fuel savings, and thus could result in a net savings to the purchaser. Such an

assumption is not consistent with mainstream economic analysis of how consumers value energy

cost savings, which recognizes that most consumers apply steep discount rates to the value ofAlliance of Automobile Manufacturers Page 21 of 33 October 3 , 2007

future energy cost reductions. One of the most detailed empirical studies indicates that “only 35

percent of the present

- value cost savings provided by improved energy efficiency is capitalized

in the purchase price of vehicles.” 11 The discount rate used in some of the fue l economy benefit

calculations in the National Research Council study published in 2002 was 12 percent. 12 None

of these studies has been specifically addressed by the Department or (to the Alliance’s

knowledge) by the proponents of the proposed regulation in Maryland . If the Department

believes that a lower discount than one in the 12

- percent range is appropriate, it should explain

why, and should address each of the studies cited here in detail.

Assuming that a new

- vehicle purchaser is behaving rationall y, the new

- vehicle purchaser

will not assume that when she is ready to sell the vehicle into the used

- vehicle market, the

prospective purchasers will be able to obtain credit at the same loan rate that she can obtain in

the new

- vehicle market. Particularl y in the used

- vehicle market, “many automobile purchasers

are liquidity constrained, and therefore face implicit discount rates higher than the market

level.” 13 She will therefore discount the future value of her vehicle in the used

- vehicle market

using a rate higher than the prevailing rates in the new

- vehicle market.

11 Howarth, “Fuel Ec onomy Standards,” in Journal of Economic Perspectives, vol. 18 at 272 (2004), describing Dreyfus et al. , “Rates of Time Preference and Consumer Valuations of Automobile Safety and Fuel Efficiency,” Journal of Law & Economics , vol. 38, at 79

- 105 (1995). Ac cording to Prof. Howarth, Dreyfus and Viscusi calculate implicit discount rates for safety and fuel economy attributes that range from 11 to 17 percent.

12 National Research Council, “Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) St andards,” Washington D.C. National Academy Press (2002) at 66. The NRC notes that its calculations and their results “are not recommended fuel economy goals.” Id. ( Emphasis in original).

13 Kleit et al. , “Increasing CAFE Standards; Still a Very Bad I dea” at 4 (Brookings, June 2004).Alliance of Automobile Manufacturers Page 22 of 33 October 3 , 2007

B. Opportunity Costs and Loss es in Vehicle Utility

The proponents of the greenhouse gas rule also ignore opportunity costs, which are

important in any mainstream economic analysis of measur es like the California rule. The total

costs of such a rule include, for example, the value of the f oregon e opportunity to purchase a

vehicle which may be less fuel

- efficient but has other features that a consumer desires more than

enhanced fuel efficienc y. Such features obviously include vehicle performance, safety, capacity,

comfort and aesthetics. The mainstream economic studies that consider these costs are identified

in an Attachment 4 to these comments ( see pp. 8

- 13)

. Those studies are the work of leading

analysts in the field of environmental regulation. They establish the importance of estimating

consumer welfare losses when assessing the costs of regulations related to fuel consumption.

The Department cannot properly ignore such costs that wil l be borne by Maryland residents.

Consumers who buy a vehicle, but who are forced to purchase technology or other features

added or subtracted from the vehicle to meet standards that they would not otherwise prefer,

incur costs that are real and quantifia ble. The Department needs to account for those costs in its

regulatory assessment.

V. Legal Issues Presented by the Greenhouse Gas Regulation

The California rule also raises important legal issues that need to be addressed by the

Department as it decides what action to take. As explained below, adoption of the California

rule in Maryland would not be consistent with federal law.Alliance of Automobile Manufacturers Page 23 of 33 October 3 , 2007

The Alliance recently challenged Vermont’s adoption of the California greenhouse gas

rule. The federal legal issues in Maryland are identical to those recently litigated in Vermont

.

The main issues arising under federal law are briefly summarized below.

A. The Energy Policy and Conservation Act.

The federal fuel economy statute, the Energy Policy and Conservation Act (“EPCA”),

provi des that “ no s tate ... shall have authority to adopt or enforce any law or regulation related to

fuel economy standards” once the federal regulations are in place

, 49 U.S.C. § 32919(a). The

Supreme Court has authoritatively construed such use of the term “s tandards” to mean “that

which ‘is established by authority, custom, or general consent, as a model or example; criterion;

test

, ’” Engine Mfrs. Ass’n v. S. Coast Air Quality Mgmt. Dist., 541 U.S. 246, 252

- 53 ( quoting

Webster’s Second New International Dicti onary 2455 (1945)). Thus, any regulation “related to”

a fuel economy “model,” “criterion” or “test” is expressly preempted by EPCA. The California

greenhouse gas standard is such a regulation

.

The attempts by some proponents to respond to EPCA’s preempt ion provisions generally

emphasize the claim that the intent of the California rule is not to regulate fuel economy directly,

but instead to achieve other objectives. Those arguments ignore the practical, real

- world impacts

of the regulations on the indus try and on consumers. In this connection, the Department needs to

take a position on several fundamental issues, and explain its position in full.

First, the Department needs to state whether it does or does not expect the California rule

to require any change in the fuel economy of vehicles that will be sold in Maryland

-- either on

an individual model basis, or fleet

- wide. The Alliance assumes from the work performed to date

that the Department expects such changes because the Department is predicting reductions in

greenhouse gases. In addition, the Department needs to explain whether it expects suchAlliance of Automobile Manufacturers Page 24 of 33 October 3 , 2007

reductions in the future from both passenger car s and truck models or fleets. Again, it appears

that the Department expects such changes from both cars and trucks.

Second, the Department needs to take a position on the scope of preemption under the

federal fuel economy statute. In particular, the Department needs to explain whether it believes

that the federal law permits a s tate to establish requiremen ts that have the effect of creating more

stringent fuel economy requirements within a s tate than those that would obtain in the absence of

the s tate requirements. In addition, the Department would need to explain under what

circumstances, if any, the fede ral fuel economy could impliedly, rather than expressly, preempt a

state regulation that had the effect of requiring fuel economy levels different from those that

would obtain under federal law.

The issues presented above are important because some prop onents of the California rule

have suggested that California’s authority under the Clean Air Act, and Section 177 of the Clean

Air Act, permit adoption of a rule denominated as an “emission standard” so long as the rule

does not refer expressly to fuel eco nomy standards, and/or if the rule only sets requirements

more stringent than those under the federal fuel economy law. Those proponents of the

California rule

-- or the Department, if it decides to proceed with the regulation

-- need to

indicate whether federal preemption under the fuel economy statute can be avoided simply by the

terminology used in the rule or by a determination by the relevant state agency that the rule is no

less stringent than federal standards.

B. Other Provisions of Federal Law

Bec ause greenhouse gas emissions pose a global problem, the United States has

recognized the need for a global solution. Over the past two decades, the United States, throughAlliance of Automobile Manufacturers Page 25 of 33 October 3 , 2007

statutes, treaties, and executive action, has determined that international commitm ents represent

the only effective way to reduce the global production of CO 2 emissions and to share that burden

fairly throughout the world. Unilateral efforts by individual states to reduce motor vehicle CO 2

emissions will frustrate established foreign p olicy. The foreign affairs power and the Supremacy

Clause of the U.S. Constitution therefore preempt the proposed regulation. In addition, the

California motor vehicle greenhouse gas regulation is invalid under the Dormant Commerce

Clause of the U.S. Con stitution because it excessively burdens interstate commerce in “relation

to [its] putative local benefits

, ” Pike v. Bruce Church, Inc. 397 U.S. 137, 142 (1970). In Pike

,

the Supreme Court held that when a state regulation

-- even a facially neutral regu lation

-- effects

interstate commerce, the detriments to interstate commerce cannot “clearly outweigh the benefits

to legitimate local public interests.” Id. The question becomes one of degree: “the extent of the

burden that will be tolerated will of cou rse depend on the nature of the local interest involved.”

Id. The California greenhouse gas standards would not pass the test in Pike

.

Conclusion

The proposed amendment to Maryland ’s motor vehicle emissions regulation will not

have any significant ef fect on the condition of concern

-- global climate change

-- and would

unlawfully interfere with the CAFE program and with national management of the country’s

efforts to coordinate greenhouse gas policies at the international level. In addition,

implemen tation of the rule would substantially increase emissions of criteria pollutants from

motor vehicles in Maryland , and would conflict with state and federal law. For the foregoingAlliance of Automobile Manufacturers Page 26 of 33 October 3 , 2007

reasons, the Alliance recommends that the Department withdraw the proposed r egulation, and

rely instead on the federal motor vehicle control program.

Respectfully submitted,

ALLIANCE OF AUTOMOBILE MANUFACTURERSOctober 3, 2007

M s. Debra Rabin Regulation s Coordinator

D epartment of Environment

1800 Washington Boulevard

, Ste 730 Baltimore, MD 212 30-1720

Subject:	 Public Hearing to Consider Adoption of Regulations to
Control Greenhouse Gas Emissions from Motor Vehicles

Dear M s. Rabin:

The Alliance of Aut omobile Manufacturers ( Alliance)! re spectfully s ubmits the att ached

comments in re spon se to the Notice of Public Action to con sider adoption of the Low
Emission s Vehicle Program

, Subtitle 11, Section 26.11.34

, dated August 31 ,2007.

Although much of the att ached comment s a ddr ess the prudence of adopting the Low
Emissions Vehicle Program (e.g., the costs, benefits, legal concerns , etc .), we recogniz e the Maryl and legi slature directed the Department of Environment (the Department) to implement
the Low Emis sion Vehicle Program rather th an det ermine wh ether to implement the progr am

.

Reco gnizing this

, we sincerely appreciate the Department 's eff ort to work with the Alli ance member companies to develop regulations that incorporate automaker comm ent s, but still comply with the dir ection given the Department. With perhaps only one e xception ( and this

i s not an is sue of controv ersy but rather one of cl arification in Section I.B .2 of the attached),
the department ha s incorporated all of the is sue s rai sed by manufacturer s during the regulatory development. The corporation and the re sulting regul ation s s hould ensure a

s moother tr ansiti on for both manufacturer s and the Department.

[ The me mbers o f th e Alli ance o f Aut omobile M anufacturers ("th e Allian ce") a re BMW Gr oup o f N orth
Am erica, Inc

. , D aimlerChr ysler C orporation , F ord M otor C ompany , G eneral M otors C orporation , M azda North
Am erican Op eration s, Mit subishi M otor S ales o f America

, In c., Pors che Car s North Am erica, Inc

. , T oyota Mot or North Am erica, Inc.

, and V olkswagen of Amer ica. In c.Alliance of Automobile Manufacturers Page 2of2 October 3, 2007

I f you h ave any qu estions or need addit ional inform ation

, plea se do not he sitate to call me at (20 2) 3 26 -5538 or Ste ve Dougl as at ( 9 16) 266 -4532.

# \S:**=t** 

# c.:

C ole Manager, State Go vernment Affair s Alliance of Automobile M anufacturers
1 401 Eye Street

, NW
Suite 900
Wa shington, DC 2 0005

Enclo sures

2

### J un e 1 5

, 2 0 0 7

E ff ect i v ene s s o f the C a li f orn i a L i ght

D ut y V eh i c l e R egu l at i o n s A s
C o m pared to Federa l R eg u l at i o n s

P r e p a r e d f o r : A lli a n ce o f A u t o m ob il e M a nu f ac t u r e r s

### P r o j e c t T ea m

T h i s N E R A

/ S i e rr a / A I R s t u d y w a s d i

r ec t e d b y D a v i d H a r r i s o n , J r ., P h

. D

., a t N E R A

E c o n o mi c C o n s u l

t i n g , I n c

. ( “ N E R A ” )

, b y J a m e s L y o n s a t S i e rr a R e s ea r c h

, I n c

. ( “ S i e rr a” )

, a n d b y T h o m a s D a r li ng t o n a t A i r I m p r o v e m

e n t R e s o u r ce , I n c

. ( “ A I R ” )

.
O t h e r N E R A p a r t i c i p a n t s ( i n a l p h a b e t i c a l o r d e r) a r e J a m e s J o h n d r o w , D a n i e l R a d o v ,
B e r n a r d R e d d y , P h

. D

., P a u l R e s c h k e , a n d S v e t l a T ze n o v a , P h

. D

. O t h e r S i e rr a

p a r t i c i p a n t s ( i n a l p h a b e t i c a l o r d e r) a r e T o m C a r l s o n , J e r e m

y H e i k e n , a n d P h il i p

H e i r i g s . T h e o t h e r A I R p a r t i c i p a n t i s D e nn i s K a h l b a u m

.

A i r I m p r o v e m en t R e s ou r c e
, I n c

. 4 7 2 9 8 S u nn y b r oo k L a n e N o v i

, M I

4 8 3 7 4

. N E R A E c o n o m i c C on s ul t i n g
2 0 0 C l a r e nd on S t r e e t
35 t h F l oo r
B o s t on
, M a s s a c hu s e tt s
0 2 1 1 6 S i e r r a R e s e a r c h

, I n c

. 1 8 01 J S t r ee t
S a c r a m en t o
, C a l i f o r n i a
9 5 8 1 1A- 1 

### A b s t r a c t

T h i s s t ud y c o m

p a r e s t h e p r o t ec t i v e n e s s o f C a l i f o r n i a ’ s c u rr e n t li g h t

- du t y v e h i c l e e mi ss i o n

r e g u l a t i o n s ( t h e “ C a l i f

o r n i a P r o g r a m

” ) t o a n a l o gou s f

e d e r a l r e g u l a t i o n s ( t h e “ F e d e r a l P r o g r a m ” )

p r o m u l g a t e d b y t h e U

. S

. E n v i r o n m e n t a l P r o t e c t i o n A g e n c y ( “ U

. S

. E P A ” )

. T h e C a l i f o r n i a P r o g r a m a n d t h e F e d e r a l P r o g r a m s p e c i f y s imil a r r e qu i

r e m e n t s f

o r e x h a u s t a n d e v a p o r a t i v e

e mi ss i o n s

. T h e r e a r e t w o p r im a r y d i f f e r e n c e s b e t w ee n t h e C a li f o r n i a P r o g r a m a n d t h e F e d e r a l
P r o g r a m : ( 1 ) C a l i f

o r n i a ’ s Z e r o E mi s s i o n V e h i c l e ( “ Z E V ” ) S t a n d a r d s ( “ Z E V S t a n d a r d s ” o r “ Z E V
M a n d a t e” )

, w h i c h r e q u i r e t h a t m a n u f a c t u r e r s p r o du ce a n d s e l l s p ec i f i e d a m ou n t s o f v e h i c l e s

ce r t i f i e d t o s p e c i f

i c s t a n d a r d s f

o r a i r p o ll u t a n t s ( t h e F e d e r a l P r o g r a m d o e s n o t s e t Z E V S t a n d a r d s ) ; a n d ( 2 ) C a l i f o r n i a ’ s g r ee n h o u s e g a s ( “ GHG ” ) e x h a u s t e mi ss i o n s t a n d a r d s ( “ GH G
S t a n d a r d s ” )

, w h i c h e s t a b l i s h lim i t s o n GHG e mi ss i o n r a t e s f o r n e w v e h i c l e s i n a cc o r d a n ce w it h C a l i f o r n i a A s s e m

b l y B il l 1493 ( “ A B 1493 ” )

. T o e v a l u a t e t h e Z E V a n d GHG S t a n d a r d s , w e r e l y

o n d o c u m

e n t a t i o n d e v e l o p e d b y C a l i f o r n i a A i r R e s o u r ce s B o a r d ( “ C A R B ” ) s t a ff d e s c r i b i ng t h e

s p e c i f i c r e q u i r e m e n t s a n d im

p l e m e n t a t i o n p r o ce s s e s o f t h e S t a n d a r d s

. T h u s , f o r t h e pu r p o s e s o f

t h i s s t u d y , t h e C a li f

o r n i a P r o g r a m i n c l ud e s t h e e x h a u s t a n d e v a p o r a t i v e e m i s s i o n s t a n d a r d s , t h e Z E V S t a n d a r d s , a n d t h e GHG S t a n d a r d s

. I n c o n t r a s t

, t h e F e d e r a l P r o g r a m i n c l ud e s o n l y t h e

e x h a u s t a n d e v a p o r a t i v e e m i s s i o n s t a n d a r d s

.

W e a n a l y ze t h e c o m

b i n e d e ff e c t s o f t h e Z E V a n d GHG s t a n d a r d s , a l o n g w it h a l l o t h e r p r o v i s i o n s

o f t h e C a li f

o r n i a P r o g r a m , o n c r i t e r i a p o ll u t a n t e m i ss i o n s f r o m l i g h t

- du t y v e h i c l e s i n C a li f o r n i a

o v e r t h e p e r i o d f

r o m 2009 t o 2023

. E mi ss i o n s u nd e r t h e C a l i f o r n i a P r o g r a m a r e c o m

p a r e d t o a f l ee t a n d e m i ss i o n s “ b a s e li n e ” t h a t r e f l e c t s im p l e m e n t a t i o n o f t h e F e d e r a l P r o g r a m

. D e t e r mi n i n g
t h e e ff e c t s o f t h e C a l i f

o r n i a P r o g r a m r e l a t i v e t o t h e F e d e r a l P r o g r a m i s i m p o r t a n t

, a s o n e o f t h e

n e c e s s a r y c o n d i t i o n s f

o r t h e U

. S

. E P A t o g r a n t a w a i v e r t o C a li f o r n i a t o a d o p t d i f

f e r e n t v e h i c l e

e mi ss i o n s t a n d a r d s

— u n d e r S ec t i o n 209 o f t h e C l e a n A i r A c t

— i s t h a t t h e C a l i f o r n i a s t a n d a r d s b e

“

... i n t h e a gg r e g a t e a

t l e a s t a s p r o t e c t i v e o f p u b l i c h e a l t h a s a p p li ca b l e F e d e r a l s t a n d a r d s

. ”

O u r r e s u lt s i n d i c a t e t h a t t h e C a li f o r n i a P r o g r a m , i n t h e agg r e ga t e , i s l e ss p r o t ec ti ve o f p u b li c h e a lt h t h a n t h e F e d e r a l P r og r a m w it h r e s p ec t t o e m i ss i o n s o f o z o n e p r

ec u rs o r s a n d s eve r

a l

o t h e r c r it e r i a po ll u t a n t s.

T h e e mi ss i o n s r e s u l

t s i n t h i s r e p o r t a r e b a s e d up o n m o d e l s t h a t e v a l u a t e , a m

o n g o t h e r t h i n g s , t h e

e ff ec t s o f t h e C a li f

o r n i a P r o g r a m o n t h e C a li f o r n i a m o t o r v e h i c l e f

l e e t a n d o n v e h i c l e mi l e s
t r a v e l e d ( “ V M T ” ) b y t h e f l ee t r e l a t i v e t o c o n d it i o n s t h a t w o u l d e x i s t w it h t h e F e d e r a l P r o g r a m i n

e ff ec t i n C a li f

o r n i a

. T h e m

o d e l i ng b e g i n s w it h d e t a il e d a s s e ss m e n t s o f Z E V

- c r e d it

- g e n e r a t i n g
t ec hn o l og i e s a n d GHG -r e du c i ng t ec h n o l og i e s t h a t c o u l d b e a p p l i e d t o v a r i o u s t y p e s o f m o t o r

v e h i c l e s t o ac h i e v e c o m p l i a n ce w i t h t h e C a li f

o r n i a P r o g r a m

. T h e s e a ss e s s m e n t s r e s u l t i n

e s t im a t e s o f t h e im

p a c t s o f t h e C a li f

o r n i a P r o g r a

m o n c o s t s , p r i ce s , e mi ss i o n r a t e s , a n d o t h e r

a t t r i b u t e s ( e

. g

. , f

u e l e c o n o m

y ) o f n ew v e h i c l e s s o l d i n e a c h y ea r f r o m 2009 t o 2023

. T h e s e

e s t im a t e s a r e b a s e d up o n a d e t a il e d m o d e l o f t h e m a r k e t s f

o r n e w m o t o r v e h i c l e s i n C a l i f

o r n i a

. I n p e r f o r mi ng t h e s e a s s e ss m e n t s , w e h a v e u s e d c o n s e r v a t i v e a s s u m p t i o n s t h a t li k e l y u n d e r s t a t e
t h e im p ac t s o f t h e C a li f

o r n i a P r o g r a m o n b o t h n e w v e h i c l e p r i c e s a n d v e h i c l e f l e e t e mi ss i o n s

.

C h a n g e s i n n e w v e h i c l e p r i c e s a n d a tt r i b u t e s du e t o t h e C a l i f o r n i a P r o g r a m w il l l ea d t o d ec r ea s e s i n t h e r a t e s a t w h i c h u s ed v e h i c l e s a r e r e t i r e d f r o m s e r v i c e ( “ s c r a pp e d ” )

. O u r a n a l y s i s o f t h i sA- 2

e ff ec t i s b a s e d up o n t h e r e s u l t s o f a d e t a il e d s t a t i s t i c a l m o d e l li n k i ng v e h i c l e s c r a pp a g e r a t e s f o r d i ff e r e n t v i n t a g e s t o n e w v e h i c l e p r i c e s ( a m o n g o t h e r f

ac t o r s )

. A d ec r ea s e i n s c r a pp a g e o f u s e d

v e h i c l e s l ea d s t o a n i n c r e a s e i n t h e a v e r a g e a g e o f t h e v e h i c l e f l e e t a n d t h u s t o i n c r e a s e d

e mi ss i o n s , s i n ce o l d e r v e h i c l e s h a v e h i g h e r e m i ss i o n r a t e s t h a n n e w e r v e h i c l e s

. T h e m o d e l i n g

a l s o t a k e s i n t o acc o u n t t h e e ff ec t o f i m p r o v e m e n t s i n f u e l ec o n o m

y o n V M T ( a n e ff

ec t k n o w n a s
t h e “ r e b o u n d e f

f ec t ” ) t h a t l ea d s t o i n c r ea s e s i n e m i ss i o n s du e t o t h e g r ea t e r n u m b e r o f m i l e s
t r a v e l e d

. T h e e m i ss i o n s e s t im a t e s a l s o i n c l ud e e ff ec t s o n e mi ss i o n s o f c h a n g e s i n g a s o li n e

c o n s u m p t i o n a s s o c i a t e d w i t h t h e e x t r ac t i o n , p r o ce s s i ng , a n d t r a n s p o r t o f g a s o li n e (r e f e rr e d t o a s

“ u p s t r ea m ” e mi ss i o n s )

.

F i gu r e A

- 1 s h o w s t h e r e s u l t s o f o u r a n a l y s e s o f t h e e ff e c t o f t h e C a l i f

o r n i a P r o g r a m r e l a t i v e t o
t h e F e d e r a l P r o g r a m o n e mi ss i o n s o f o z o n e p r ec u r s o r s

— t h e s u m o f v o l a t il e o r g a n i c c o m p o u n d s ( “ VO C ” ) a n d n i t r o g e n o x i d e s ( “ NO
x ” )

— f o r t h e S t a

t e o f C a li f

o r n i a f r o m 2009 t o 2023

. T h e s e

r e s u l t s w e r e d e v e l op e d u s i ng t h e U

. S

. E P A ’ s M O B I L E 6

. 2 e mi ss i o n f ac t o r m o d e l

. A s F i gu r e A -1

s h o w s , o u r a n a l y s i s i n d i ca t e s t h a t t h e C a li f o r n i a P r o g r a m w il l r e s u l t i n h i g h e r VO C + NO
x
e mi ss i o n s i n C a l i f

o r n i a t h a n w ou l d o cc u r u n d e r t h e F e d e r a l P r o g r a m

. W e p e r f o r m e d t h e s a m e

a n a l y s i s u s i n g C A R B ’ s E M F A C 2007 e m i ss i o n i n v e n t o r y m o d e l

, a n d g e n e r a t e d s i mi l a r r e s u l t s

. R e s u l t s f o r t h e S o u t h C o a s t A i r B a s i n a l s o s h o w t h e s a m e e f f ec t

, m o d e l e d w it h e it h e r M O B I L E 6

. 2 o r E M F A C 2007

. I n a d d it i o n t o VO C + NO
x , w e a n a l y z e d e m i ss i o n s o f s e v e r a l o t h e r

c r i t e r i a a i r p o ll u t a n t s a n d a i

r t o x i c s

. I n g e n e r a l

, w e f o u n d t h a t t h e s e e mi ss i o n s w ou l d b e h i g h e r

u n d e r t h e C a l i f

o r n i a P r o g r a m , m

o d e l e d w it h e it h e r M O B I L E 6

. 2 o r E M F A C 2007

. T h e o n l y

e x c e p t i o n i s e m i ss i o n s o f s u l f u r o x i d e s , w h i c h d e c r ea s e a s a r e s u l t o f l o w e r g a s o li n e

c o n s u m p t i o n u n d e r t h e C a l i f

o r n i a P r o g r a m

.

T h e s e r e s u l

t s r e f l e c t t h e h i g h e r c o s t s a ss o c i a t e d w it h c o m p l i a n ce w it h t h e C a l i f

o r n i a P r o g r a m

r e l a t i v e t o t h e c o s t s r e q u i r e d t o c o m

p l y w it h t h e F e d e r a l P r o g r a m , w h i c h l ea d t o h i g h e r n e w S t a t e wi d e V O C + NO x ( M O B I L E)

0 5 10 15 20 25 30 35 40200620072008200920102011201220132014201520162017201820192020202120222023

C a l e n d a r Y e arStatewideInventoryDifference(tpd)

Di ff e r e n c e i n E m i s s i o n s U n d e r C a li fo r n i a P r og r am

F i g u re A -1

. Ch a n g e i n e m i ss i o ns o f V O C + NO
x u nd er t h e c om b i n e d C a li f o r n i a P r o g r a m , r e l a t

i v e t o

e m i ss i o ns u nd er t h e F e d e r a l P r o g r a m
.A- 3

v e h i c l e p r i c e s , r e du ce d n e w v e h i c l e s a l e s , a n d i n c r ea s e d r e t e n t i o n o f u s e d v e h i c l e s

. T h e r e s u l t s

a l s o r e f l ec t t h e im

p r o v e m e n t s i n f

u e l e c o n o m

y du e t o t h e C a l i f

o r n i a P r o g r a m t h a t r e s u l t i n i n c r e a s e d V M T a n d t h u s i n c r e a s e d e m i s s i o n s

.

I n s u mm a r

y , o u r r e s u lt s i n d i c a t e t h a t t h e C a li f o r n i a P r og r a m , i n t h e agg r e ga t e , i s l e ss
p r o t ec ti ve o f p u b li c h e a lt

h t h a n t h e F e d e r a l P r og r a m w it h r e s p ec t t o e m i ss i o n s o f o z o n e
p r ec u r s o rs a n d s ev e r

a l o t h e r c r it e r i a po ll u t a n t s.C o n t e n ts

i 

### C o n t e n t s

I

. I n t r o du c t i o n

............................................................................................................................ . 1
A

. B ac kg r o u n d

..................................................................................................................... . 1
B

. O b j ec t i v e s........................................................................................................................

. 3
C

. O u t li n e o f R e p o r t

............................................................................................................. . 4

II

. M e t h o d o l og i e s a n d D a t a

........................................................................................................ . 5
A

. O v e r v i e w o f Z E V a n d GHG S t a n d a r d s

............................................................................ . 5
1

. Z E V S t a n d a r d s

........................................................................................................... . 6
2

. GHG S t a n d a r d s

.......................................................................................................... . 9
B

. O v e r v i e w o f M e t h o d o l o g y

............................................................................................. . 11
C

. C o m p li a n ce P l a n s a n d C o s t E s t im a t e s

............................................................................ . 12
1

. P Z E V C o s t s

.............................................................................................................. . 12
2

. A T P Z E V C o s t s

......................................................................................................... . 13 3

. P u r e Z E V C o s t s

........................................................................................................ . 13
4

. S e l ec t i o n o f C o m

p l i a n ce P l a n s..................................................................................

. 14
D

. N e w V e h i c l e M a r k e t M o d e l

........................................................................................... . 15
1 . E f f ec t s M o d e l e d

....................................................................................................... . 15
2

. N e s t e d L o g i t M o d e l

.................................................................................................. . 16
3

. P r i c i n g D e c i s i o n s b y M a n u f ac t u r e r s

......................................................................... . 18
E. S c r a pp a g e M o d e l

........................................................................................................... . 18
F

. F l ee t P o pu l a t i o n M o d e l

.................................................................................................. . 19 G

. M o d e li ng o f

E ff ec t s o n V e h i c l e M i l e s T r a v e l e d ( “ V M T ” )

............................................. . 20
H

. P o ll u t a n t E mi s s i o n s M o d e l s

........................................................................................... . 20
1 . E mi s s i o n s I n c r ea s e s du e t o F l e e t P o pu l a t i o n E f f ec t s

................................................. . 21
2 . E mi s s i o n s I n c r ea s e s D u e t o R e b o u n d E ff ec t

............................................................. . 21

II I

. S t ud y R e s u l

t s

..................................................................................................................... . 22
A

. M o t o r V e h i c l e F l e e t E f f ec t s

........................................................................................... . 22
B

. V M T E ff

ec t s..................................................................................................................

. 24
C

. F u e l C o n s u m

p t i o n a n d U p s t r e a m E mi s s i o n s E f f ec t s

...................................................... . 24
D

. O v e r a ll P o ll u t a n t E mi ss i o n s E ff ec t s

............................................................................... . 25

I V

. C o n c l u s i o n s

....................................................................................................................... . 29

A pp e n d i x A

. C o m

p l i a n ce P l a n s a n d C o s t E s t im a t e s

................................................................. . 30

A pp e n d i x B

. N e w V e h i c l e M a r k e t M o d e l

................................................................................ . 36

A pp e n d i x C

. S c r a pp a g e M o d e l

................................................................................................. . 47

A pp e n d i x D

. R e b o u n d E ff

ec t A n a l y s i s

..................................................................................... . 56

A pp e n d i x E. E M F A C 2007 P o l l u t a n t E mi ss i o n s M o d e li n g

....................................................... . 63C o n t e n ts

ii A pp e n d i x F

. M O B I L E 6

. 2 P o ll u t a n t E mi s s i o n s M o d e li n g

......................................................... . 84

A pp e n d i x G . E mi ss i o n s I m p ac t s A s s o c i a t e d w it h R e du ce d G a s o li n e C o n s u m p t i o n

................ . 101L i s t o f F i g u r es

i i i 

### L i s t o f F i gu r e s

F i gu r e A

- 1

. C h a n g e i n e m i ss i o n s o f VO C + NO
x u n d e r t h e c o m b i n e d C a l i f

o r n i a P r o g r a m ,
r e l a t i v e t o e mi ss i o n s u n d e r t h e F e d e r a l P r o g r a m

. ............................................................ . 2

F i gu r e 1

. D i a g r a m o f m

o d e li ng f r a m e w o r k a n d p r o ce ss

. .......................................................... . 11

F i gu r e 2

. H i e r a r c h y o f N V MM n e s t i n g s t r u c t u r e

. .................................................................... . 17

F i gu r e 3

. E ff

ec t s o f c h a n g e s i n n e w v e h i c l e p r i c e s o n p r i c e s o f u s e d v e h i c l e s

. ......................... . 19

F i gu r e 4

. C h a n g e i n s t a t e w i d e 2020 v e h i c l e p o p u l a t i o n e s t im a t e s a s a r e s u l t o f t h e c o m

b i n e d C a l i f o r n i a P r o g r a m , r e l a t i v e t o p o pu l a t i o n s u n d e r t h e F e d e r a l P r o g r a m

. ........................ . 22

F i gu r e 5

. I m

p ac t s o f t h e c o m

b i n e d C a li f

o r n i a P r o g r a m o n S o u t h C o a s t 2020 V e h i c l e P o pu l a t i o n ,
r e l a t i v e t o p o pu l a t i o n s u n d e r t h e F e d e r a l P r o g r a m

. ....................................................... . 23

F i gu r e 6

. C h a n g e i n v e h i c l e mi l e s t r a v e l e d u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m r e l a t i v e t o V M T

u n d e r F e d e r a l P r o g r a m

. ................................................................................................ . 24

F i gu r e 7

. C h a n g e i n s t a t e w i d e up s t r e a m e mi ss i o n s o f N M OG + N O x du e t o t h e up s t r ea m

e mi ss i o n s e ff

e c t u n d e r c o m

b i n e d C a li f

o r n i a P r o g r a

m (r e l a t i v e t o up s t r ea m e m i s s i o n s

u n d e r F e d e r a l P r o g r a m

)

. ............................................................................................... . 25

F i gu r e 8

. C h a n g e i n s t a t e w i d e e m i ss i o n s o f VO C + NO
x ( E M F A C 2007 m o d e l i ng ) u n d e r

c o m b i n e d C a li f

o r n i a P r o g r a m , r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m

. ................ . 26

F i gu r e 9

. C h a n g e i n S o u t h C o a s t e mi ss i o n s o f V O C + NO
x ( E M F A C 2007 m o d e li ng ) u n d e r

c o m b i n e d C a li f

o r n i a P r o g r a m , r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m

. ................ . 26

F i gu r e 10

. C h a n g e i n s t a t e w i d e e mi ss i o n s o f VO C + NO
x ( M O B I L E 6

. 2 m o d e li ng ) u n d e r t h e

c o m b i n e d C a li f

o r n i a P r o g r a m , r e l a t i v e t o e mi ss i o n s u n d e r t h e F e d e r a l P r o g r a m

. .......... . 27

F i gu r e 11

. C h a n g e i n s t a t e w i d e e mi ss i o n s o f S o u t h C o a s t VO C + NO
x ( M O B I L E 6

. 2 m o d e li ng)

u n d e r c o m

b i n e d C a li f

o r n i a P r o g r a m r e l a t i v e t o F e d e r a l P r o g r a m

. ................................. . 28

F i gu r e B

- 1

. N e s t i n g s t r u c t u r e f o r NV M M

................................................................................ . 37

F i gu r e C

- 1

. V e h i c l e S u r v i v a l R a t e s b y A g e a n d M o d e l Y ea r

.................................................... . 48

F i gu r e E

- 1

. E M F A C 2007 P a s s e n g e r C a r VO C a nd NO x E mi s s i o n R a t e s ( VO C I n c l ud e s E v a p o r a t i v e E mi ss i o n s )

................................................................................................ . 64

F i gu r e E

- 2

. E x a m

p l e o f t h e C h a n g e i n S t a

t e w i d e 2020 V e h i c l e P o pu l a t i o n E s t im a t e s a s a R e s u l

t

o f t h e C o m

b i n e d C a l i f

o r n i a P r o g r a m

............................................................................ . 72

F i gu r e E

- 3

. E s t im a t e s o f t h e P e r- V e h i c l e I n c r e a s e i n V M T f r o m t h e R e b o u n d E ff

ec t

. ............. . 73L i s t o f F i g u r es

i v F i gu r e E

- 4

. D i ff

e r e n ce i n S t a t e w i d e e m i ss i o n s o f VO C + NO
x u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................... . 76

F i gu r e E

- 5

. D i ff

e r e n ce i n s t a t e w i d e e m i s s i o n s o f NO
x u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................................. . 76

F i gu r e E

- 6

. D i ff

e r e n ce i n s t a t e w i d e e mi ss i o n s o f V O C u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................................. . 77

F i gu r e E

- 7

. D i ff

e r e n ce i n S t a t e w i d e e m i ss i o n s o f C O u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................................. . 77

F i gu r e E

- 8

. D i ff

e r e n ce i n S t a t e w i d e e m i ss i o n s o f e x h a u s t PM 2 .5 u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................... . 78

F i gu r e E

- 9

. D i ff

e r e n ce i n S t a t e w i d e s u m o f e mi ss i o n s o f f i v e t o x i c s p e c i e s u n d e r c o m b i n e d C a l i f o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. .............................. . 78

F i gu r e E

- 10

. D i ff

e r e n ce i n S t a t e w i d e e m i ss i o n s o f SO
x u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................................. . 79

F i gu r e E

- 11

. D i ff

e r e n ce i n S o u t h C o a s t e mi ss i o n s o f VO C + NO
x u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................... . 80

F i gu r e E

- 12

. D i ff

e r e n ce i n S o u t h C o a s t e mi ss i o n s o f NO
x u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................................. . 81

F i gu r e E

- 13

. D i ff

e r e n ce i n S o u t h C o a s t e mi ss i o n s o f VOC u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................................. . 81

F i gu r e E

- 14

. D i ff

e r e n ce i n S o u t h C o a s t e mi ss i o n s o f CO u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................................. . 82

F i gu r e E

- 15

. D i ff

e r e n ce i n S o u t h C o a s t e x h a u s t e m i ss i o n s o f PM 2 .5 u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. ............................................... . 82

F i gu r e E

- 16

. D i ff

e r e n ce i n S o u t h C o a s t s u m o f e m i ss i o n s o f f i v e t o x i c s p e c i e s u n d e r c o m b i n e d C a l i f o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

. .............................. . 83

F i gu r e E

- 17

. D i ff

e r e n ce i n S o u t h C o a s t e mi ss i o n s o f SO
x u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m

. .............................................................. . 83

F i gu r e F

- 1

. D i ff

e r e n c e i n S o u t h C o a s t e mi ss i o n s o f V O C + N O x u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t ac c o u n t i n g f

o r f u e l c y c l e

e ff ec t s

.......................................................................................................................... . 92

F i gu r e F

- 2

. D i ff

e r e n c e i n S o u t h C o a s t e mi ss i o n s o f C O u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t acc o u n t i n g f

o r f u e l c y c l e e ff

e c t s

. .... . 93L i s t o f F i g u r es

v F i gu r e F

- 3

. D i ff

e r e n c e i n S o u t h C o a s t e mi ss i o n s o f P M 2

. 5 u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t acc o u n t i n g f

o r f u e l c y c l e e ff

e c t s

. .... . 93

F i gu r e F

- 4

. D i ff

e r e n c e i n S o u t h C o a s t e mi ss i o n s o f SO
x u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t acc o u n t i n g f

o r f u e l c y c l e e ff

e c t s

. .... . 94

F i gu r e F

- 5

. D i ff

e r e n c e i n S o u t h C o a s t e mi ss i o n s o f 5 a i r t o x i c s u n d e r c o m

b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t ac c o u n t i n g f

o r f u e l c y c l e

e ff ec t s

. ......................................................................................................................... . 94

F i gu r e F

- 6

. D i ff

e r e n c e i n S o u t h C o a s t e mi ss i o n s o f V O C + N O x u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, acc o u n t i n g f

o r f u e l c y c l e e f

f ec t s.

..................................................................................................................................... . 95

F i gu r e F

- 7

. D i ff

e r e n c e i n S o u t h C o a s t e mi ss i o n s o f C O u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, acc o u n t i n g f

o r f u e l c y c l e e ff

ec t s

. .......... . 95

F i gu r e F

- 8

. D i ff

e r e n c e i n S o u t h C o a s t e mi ss i o n s o f PM 2 .5 u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, acc o u n t i n g f

o r f u e l c y c l e e ff

ec t s

. .......... . 96

F i gu r e F

- 9

. D i ff

e r e n c e i n C a l i f

o r n i a e m i ss i o n s o f VO C + N O x u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t ac c o u n t i n g f

o r f u e l c y c l e

e ff ec t s

. ......................................................................................................................... . 96

F i gu r e F

- 10

. D i ff

e r e n c e i n C a l i f

o r n i a e m i ss i o n s o f C O u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t acc o u n t i n g f

o r f u e l c y c l e e ff

e c t s

. .... . 97

F i gu r e F

- 11

. D i ff

e r e n c e i n C a l i f

o r n i a e m i ss i o n s o f PM 2 .5 u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t acc o u n t i n g f

o r f u e l c y c l e e ff

e c t s

. .... . 97

F i gu r e F

- 12

. D i ff

e r e n c e i n C a l i f

o r n i a e m i ss i o n s o f SO
x u n d e r c o m b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t acc o u n t i n g f

o r f u e l c y c l e e ff

e c t s

. .... . 98

F i gu r e F

- 13

. D i ff

e r e n c e i n C a l i f

o r n i a e m i ss i o n s o f 5 a i

r t o x i c s u n d e r c o m

b i n e d C a l i f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, n o t ac c o u n t i n g f

o r f u e l c y c l e

e ff ec t s

. ......................................................................................................................... . 98

F i gu r e F

- 14

. D i ff

e r e n c e i n C a l i f

o r n i a e m i ss i o n s o f VO C + NO x u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, acc o u n t i n g f

o r f u e l c y c l e e f

f ec t s.

..................................................................................................................................... . 99

F i gu r e F

- 15

. D i f

f e r e n ce i n C a l i f

o r n i a e mi ss i o n s o f C O u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, acc o u n t i n g f

o r f u e l c y c l e e ff

ec t s

. .......... . 99

F i gu r e F

- 16

. D i ff

e r e n c e i n C a l i f

o r n i a e m i ss i o n s o f VO C + NO x u n d e r c o m b i n e d C a li f

o r n i a P r o g r a m (r e l a t i v e t o e mi ss i o n s u n d e r F e d e r a l P r o g r a m )

, acc o u n t i n g f

o r f u e l c y c l e e f

f ec t s.

................................................................................................................................... . 100L i s t o f F i g u r es

v i F i gu r e G

- 1

. R e du c t i o n i n S u mm e r S ea s o n C a li f o r n i a F u e l C y c l e E mi ss i o n s D u e t o t h e C a l i f o r n i a P r o g r a m ( C a l i f

o r n i a S t a t e w i d e )

.................................................................. . 107

F i gu r e G

- 2

. R e du c t i o n i n S u mm e r S ea s o n C a li f o r n i a F u e l C y c l e E mi ss i o n s D u e t o t h e C a l i f o r n i a P r o g r a m ( S o u t h C o a s t A i r B a s i n )

............................................................... . 108L i s t o f T a b l es

v ii 

### L i s t o f T a b l e s

T a b l e 1

. C a

t e g o r i za t i o n o f l a r g e a n d i n t e r m e d i a t e v o l u m e m a n u f

a c t u r e r s i n c l ud e d i n t h i s

a n a l y s i s

. ......................................................................................................................... . 6

T a b l e 2

. C a

t e g o r i e s o f Z E V

- c r e d i t

- g e n e r a t i n g v e h i c l e s , a n d r a n g e o f c r e d it v a l u e s i n t h e y ea r s 2009

- 203 0

. ................................................................................................................... . 7

T a b l e 3

. R e qu i

r e m e n t s f o r l a r g e v o l

u m e m a n u f

ac t u r e r s u n d e r t h e A l

t e r n a t i v e C o m

p l i a n ce P a t h

. 9

T a b l e 4

. R e qu i

r e m e n t s f o r l a r g e v o l

u m e m a n u f

ac t u r e r s u n d e r P r im a r y C o m p li a n ce P a t h

. ....... . 10

T a b l e 5

. GHG S t a n d a r d s

. ........................................................................................................ . 10

T a b l e A

- 1

. C o s t E s t im a t e s f o r Z E V P r o g r a m V e h i c l e s

............................................................. . 33

T a b l e A

- 2

. D o ll a r s p e r Z E V C r e d i t du r i n g t h e p e r i o d 2009

- 202 3

............................................. . 35

T a b l e C

- 1

. C o e ff

i c i e n t e s t im a t e s f

o r m o d e l o f a g e

- s p e c i f

i c v e h i c l e s c r a pp a g e r a t e s

. ................ . 52

T a b l e C

- 2

. S c r a pp a g e e l a s t i c i t i e s w i t h r e s p ec t t o n e w ca r p r i ce b y c a r a g e

. .............................. . 53

T a b l e D

- 1

. V a r i a b l e s U s e d i n t h e Ir v i n e S t ud y

......................................................................... . 58

T a b l e D

- 2 . E s t im a t i o n o f t h e V M T E qu a t i o n

............................................................................ . 61

T a b l e D

- 3

. C a l i f

o r n i a S h o r t

- a n d L o n g

- R u n R e b o u n d E ff ec t s

.................................................. . 61

T a b l e E

- 1

. S u mm a r y o f 2020 S t a t e w i d e P a ss e n g e r C a r E xh a u s t VO C I n v e n t o r y C a l c u l a t i o n

.. . 65

T a b l e E

- 2

. M O B I L E 6

. 2 T i e r 2 2009 M i x

. ............................................................................... . 67

T a b l e E

- 3

. 2009 + M i x U s e d i n EM F A C 2007 t o M o d e l T i e r 2

................................................. . 68

T a b l e E

- 4

. T ec hn o l og y F r ac t i o n s U s e d f

o r M o d e l i n g t h e C a l i f

o r n i a P r o g r a m

. ......................... . 68

T a b l e E

- 5 E xh a u s t T o x i c s F r ac t i o n s U s e d t o E s t i m a t e T o x i c s f o r E M F A C 2007 ( O b t a i n e d f r o m M O B I L E 6

- M S A T )

....................................................................................................... . 71

T a b l e G

- 1

. C a li f

o r n i a F u e l C y c l e E mi s s i o n F ac t o r s ( g r a m s / g a l l o n )

....................................... . 102

T a b l e G

- 2

. P e r ce n t I n c r ea s e i n M o d e l Y ea r F u e l E c o n o m y C a li f o r n i a P r o g r a m O v e r t h e F e d e r a l
P r o g r a m

..................................................................................................................... . 103

T a b l e G

- 3

. C a li f

o r n i a S t a t e w i d e F u e l C o n s u m

p t i o n ( G a l l o n s / D a y ) V e h i c l e s a t o r b e l o w 8

, 500
L b s GV R W

, S u mm e r S ea s o n

..................................................................................... . 104L i s t o f T a b l es

v ii i T a b l e G

- 4

. S o u t h C o a s t A i r B a s i n F u e l C o n s u m

p t i o n ( G a l l o n s / D a y ) V e h i c l e s a t o r b e l o w 8

, 500
L b s GV R W

, S u mm e r S ea s o n

..................................................................................... . 104

T a b l e G

- 5

. C a li f

o r n i a S t a t e w i d e F u e l C y c l e E mi ss i o n s R e d u c t i o n ( T o n s / D a y ) D u e t o t h e C a l i f o r n i a P r o g r a m , L o w

- E n d a n d H i g h

- E n d V a l u e s

.................................................. . 106

T a b l e G

- 6

. S o u t h C o a s t A i r B a s i n F u e l C y c l e E mi ss i o n s R e du c t i o n ( T o n s / D a y ) D u e t o t h e C a l i f o r n i a P r o g r a m , L o w

- E n d a n d H i g h

- E n d V a l u e s

.................................................. . 106I n t r odu c t i on

1 

### I. I n t r o d u c t i on

T h i s s t u d y e v a l u a t e s t h e e m i s s i o n s im p ac t s o f t h e C a l i f

o r n i a r e g u l a t i o n s , i n c l u d i ng C a l i f o r n i a ’ s

e x h a u s t a n d e v a p o r a t i v e e mi ss i o n s t a n d a r d s , t h e Z E V S t a n d a r d s a n d t h e GHG S t a n d a r d s , ( t o g e t h e r , t h e “ C a li f

o r n i a P r o g r a m

” ) o n e mi ss i o n s f

r o m n e w li g h t

- du t y v e h i c l e s i n C a l i f o r n i a

o v e r t h e p e r i o d f

r o m 2009 t o 202 3

, r e l a t i v e t o t h o s e t h a t w o u l d o cc u r i n C a l i f o r n i a u n d e r f

e d e r a l

r e g u l a t i o n s o n e m i s s i o n s f r o m n e w l i g h t

- d u t y v e h i c l e s ( t h e “ F e d e r a l P r o g r a m ” )

. T h e Z E V

S t a n d a r d s a n d t h e GHG S t a n d a r d s a r e t h e t w o p r im a r y d i ff e r e n ce s b e t w ee n t h e C a l i f o r n i a

P r o g r a m a n d t h e F e d e r a l P r o g r a m

. T o e v a l u a t e t h e Z E V a n d G HG S t a n d a r d s , w e r e l y o n

d o c u m e n t a t i o n d e v e l o p e d b y C a l i f o r n i a A i r R e s o u r ce s B o a

r d ( “ C A RB ” ) s t a ff d e s c r i b i ng t h e

s p e c i f i c r e q u i r e m e n t s a n d im

p l e m e n t a t i o n p r o ce s s e s o f t h e S t a n d a r d s . T h e 2009 m o d e l

- y ea r w a s

s e l ec t e d a s t h e s t a r t i n g p o i n t f o r o u r a n a l y s i s b eca u s e t h a t w i l l b e t h e f i r s t m o d e l

- y e a r a ff

ec t e d b y

t h e GHG S t a n d a r d s a s w e l l a s , acc o r d i n g t o C A R B s t a ff

, t h e m o d e l

- y ea r b y w h i c h

, f

o r t h e m o s t

p a r t

, m a n u f

a c t u r e r s w ill h a v e e xh a u s t e d p r e v i o u s l y b a n k e d c r e d it s u s e d f o r c o m p li a n ce w it h t h e

Z E V S t a n d a r d s

. T h e 202 3 m o d e l

- y e a r w a s s e l ec t e d a s t h e e n d i ng p o i n t f o r o u r a n a l y s i s b eca u s e

2023 i s t h e y ea r b y w h i c h t h e S o u t h C o a s t A i r B a s i n a n d a l l o t h e r a r ea s o f C a li f o r n i a m u s t b e i n

c o m p l i a n ce w i t h N a t i o n a l A m b i e n t A i r Q u a l it y S t a n d a r d f

o r o z o n e

.



### A

. Background

E mi ss i o n s f

r o m m o t o r v e h i c l e s w e r e f

i r s t a s s o c i a t e d w it h a i r p o ll u t i o n i n t h e e a r l y 1950 s w h e n

P r o f e ss o r A

. J

. H aa g e n

- S m i t d e t e r mi n e d t h a t o z o n e i s f o r m e d i n t h e a t m

o s p h e r e b y e m itt e d

v o l a t il e o r g a n i c c o m

p o u n d s ( “ VO C ” ) a n d n it r o g e n o x i d e s ( “ NO
x ” ) r eac t i n g w it h o n e a n o t h e r i n

t h e p r e s e n ce o f s u n l i g h t

. T h i s d i s c o v e r y p r e c i p it a t e d t h e f i r s t m o t o r v e h i c l e e m i ss i o n c o n t r o l s

a im e d a t r e du c i n g e m i ss i o n s o f o z o n e p r ec u r s o r s, w h i c h w e r e pu t i n p l ace i n t h e ea r l y 196 0 s , f i r s t b y t h e S t a t e o f C a li f

o r n i a , a n d s h o r

t l y t h e r e a f

t e r b y t h e f

e d e r a l g o v e r n m e n t

. M o t o r v e h i c l e s

h a v e a l s o b e e n i d e n t i f

i e d a s s o u r ce s o f ca r b o n m o n o x i d e ( “ C O ” ) a n d p a r t i c u l a t e m a t t e r ( “ P M ” )

,

a s w e ll a s s e v e r a l a i r t o x i c e m i s s i o n s

.

C o n ce r n s a b o u t “ p a t c h w o r k ” s t a t e a n d l o c a l r e g u l a t i o n o f e m i ss i o n s f r o m n e w m

o t o r v e h i c l e s l e d

t o t h e i n c l u s i o n o f S ec t i o n 209 i n t h e C l e a n A i r A c t o f 1970

. S e c t i o n 209 p r e v e n t s s t a t e s o t h e r

t h a n C a li f o r n i a f r o m a d o p t i n g e m i ss i o n s t a n d a r d s f o r n e w m o t o r v e h i c l e s t h a t d i ff

e r f r o m f e d e r a l

s t a n d a r d s , a n d a l l o w s C a l i f o r n i a t o d o s o o n l y i f a w a i v e r i s g r a n t e d b y t h e U

. S

. E n v i r o n m e n t a lI n t r odu c t i on

2 P r o t ec t i o n A g e n c y ( “ U

. S

. E P A ” )

. O v e r t h e p a s t f o r t y y ea r s , C A R B h a s , u n d e r t h e p r o v i s i o n s o f

S ec t i o n 209

, e s t a b li s h e d i t s o w n c o n t r o l p r o g r a m f o r e mi ss i o n s f

r o m n e w m

o t o r v e h i c l e s

. O n e o f

t h e n e c e s s a r y c o n d i t i o n s f o r t h e g r a n t i n g o f a w a i v e r e s t a b l i s h e d i n S ec t i o n 209 i s t h a t t h e

C a l i f o r n i a s t a n d a r d s b e “

... i n t h e a gg r e g a t e a t l e a s t a s p r o t e c t i v e o f p u b li c h e a l t h a s a p p l i ca b l e

F e d e r a l s t a n d a r d s

. ”

W h i l e t h e f

e d e r a l a n d C a l i f

o r n i a v e h i c l e c o n t r o l p r o g r a m s h a v e d i f f e r e d i n a n u m

b e r o f w a y s i n

t h e p a s t

, m a n y a s p ec t s , p a r t i c u l a r l y t h o s e a dd r e ss i ng o n -r o a d

, h ea v y

- du t y , d i e s e l e n g i n e s h a v e

r ece n t l y c o m

e i n t o a li g n m e n t

. M o r e o v e r , t h e e xh a u s t a n d e v a p o r a t i v e e m i ss i o n s t a n d a r d s u n d e r

L e v II i n t h e C a li f

o r n i a P r o g r a m a r e s imi l a r t o t h o s e u n d e r T i e r 2 i n t h e F e d e r a l P r o g r a m

.
N o n e t h e l e ss , t h e r e a r e c u rr e n t l y t w o m a j o r d i ff e r e n c e s b e t w ee n t h e C a l i f o r n i a a n d F e d e r a l

P r o g r a m s f

o r l i g h t

- d u t y v e h i c l e s ( i

. e ., v e h i c l e s w it h g r o s s v e h i c l e w e i g h t r a t i n g s o f 8

, 500 p o u n d s

o r l e ss ) :

1. C a l i f o r n i a ’ s Z e r o E mi ss i o n V e h i c l e ( “ Z E V ” ) S t a n d a r d s ( “ Z E V S t a n d a r d s ” o r “ Z E V

M a n d a t e” )

, w h i c h r e q u i

r e t h a t m a n u f

ac t u r e r s p r o d

u ce a n d s e l l s p e c i f

i e d qu a n it i e s o f v e h i c l e s

ce r t i f i e d t o C A R B ’ s P a r t i a l Z e r o E mi ss i o n V e h i c l e ( “ P Z E V ” )

, A d v a n ce d T e c h n o l og y P a r t i a l

Z e r o E mi ss i o n V e h i c l e ( “ A T P Z E V ” ) a n d Z e r o E m i ss i o n V e h i c l e r a t i n g s ; a n d

2. C a l i f o r n i a ’ s G r e e n h o u s e G a s ( “ G HG ” ) E x h a u s t E mi ss i o n S t a n d a r d s ( “ G HG S t a n d a r d s ” )

w h i c h e s t a b li s h l im i t s o n GHG e m i ss i o n r a t e s f o r n e w v e h i c l e s i n t e r m s o f ca r b o n

- d i o x i d e-
( “ CO 2 ” )- e q u i v a l e n t e mi ss i o n s

.

T h e c o s t s im

p o s e d o n m a n u f

ac t u r e r s t o c o m

p l y w it h b o t h t h e Z E V a n d GHG S t a n d a r d s a r e

c o n s i d e r a b l e , a n d

, a s d o c u m e n t e d i n a n u m

b e r o f s t ud i e s , t h e s e h i g h c o m p l i a n c e c o s t s r e s u l

t i n

d ec r ea s e d d e m a n d f

o r n e w v e h i c l e s , i n c r ea s e d r e t e n t i o n o f o l d e r v e h i c l e s , a n d i n c r ea s e d

e mi ss i o n s o f c r i t e r i a p o ll u t a n t s. 1 H o w e v e r , o u r p r e v i o u s s t u d i e s h a v e n o t a n a l y ze d t h e c o m b i n e d

i m p ac t s o f t h e e n t i

r e C a l i f o r n i a P r o g r a m c o m

p a r e d t o t h e F e d e r a l P r o g r a m

.

1 T h a t bo t h t

h e Z E V a n d G H G s t a n d a

r d s r e s u l t i n h i g h e r em i ss i o n s of c r it e r i a p o ll u ta n t s h a s b ee n e x t e n s i v e l y d o c u m e n t e d i n p r e v i o u s s t ud i e s s u b m i tt e d t o C A RB a nd a t t ac h e d t o t

h i s s t ud y a s A t t a c h m e

n t s A

, B a n d C

. A tta c h m e n t A i s a J a n u a

r y , 200 1 r e p o r t b y N E R

A a nd S i e rr a , I m pa c t s o f A l te r n a t i v e Z E V Sa l e s M

and a te s on Ca l i f o r n i a M o t o r Ve h i c l e E

m i ss i on s : a Co m

p r e h e n s i v e S t udy

. A

tta c h m e n t B i s a M a

r c h 2 3

, 200 3 r e p o r t b y N E R A

a n d S i e rr a , I

m p a ct s o f Z E V Sa l e s M

and a t e o n Ca l if

o r n i a Mo t o r V e h i c l e E m i ss i on s : I

m p l i c a t i on s o

f Ma r c h 20 0 3I n t r odu c t i on

3 

### B. Ob j ecti v es

T h i s s t u d y u t ili z e s a s e t o f s o ph i s t i ca t e d m o d e l s t h a t a l l o w f

o r a qu a n t it a t i v e c o m

p a r i s o n o f t h e

r e l a t i v e e f

f i c a c y o f t h e C a li f

o r n i a a n d F e d e r a l P r o g r a m s

. T h e e m i ss i o n e s t im a t e s p r e s e n t e d i n

t h i s s t u d y a cc o u n t f

o r s i x ca t e g o r i e s o f e ff

ec t s r e s u l t i ng f r o m t h e i m

p l e m e n t a t i o n o f t h e Z E V a n d

GHG S t a n d a r d s

.

1. E f f ec ts on c o s ts o

f n e w m o t o r ve h i c l es

. T h e s e e f f ec t s i n c l ud e c o s t s f

o r m a n u f ac t u r i n g , n e w

p a r t s, a n d o t h e r e x p e n s e s a ss o c i a t e d w it h c o m p l i a n ce w it h t h e C a l i f

o r n i a P r o g r a m , i n c r e m e n t a l t o t h o s e r e qu i r e d t o c o m

p l y w it h t h e F e d e r a l P r o g r a m

.

2. E f f ec ts on t h e m a r

ke t f o r n e w ve h i c l es

. I n c r ea s e s i n p r o du c t i o n c o s t s a n d m od i f i c a t i o n s t o

v e h i c l e c h a r ac t e r i s t i c s n ec e ss a r y t o c o m p l y w it h t h e C a l i f

o r n i a P r o g r a m w il l a ff

e c t n e w

v e h i c l e s a l e s t h

r o ug h p r i ce i n c r ea s e s a n d c h a n g e s i n v e h i c l e a t t r i b u t e s

.

3. E f f ec ts on s c r

appag e r a t e s f o r ex i s ti ng ve h i c l es

. I n c r e a s e s i n n e w v e h i c l e p r i c e s w i ll r e s u l t i n

c h a n g e s i n u s e d v e h i c l e m a r k e t s t h a t w i l l d ec r e a s e t h e r a t e s a t w h i c h u s e d v e h i c l e s a r e r e t i r e d

f r o m s e r v i c e ( “ s c r a pp e d ” )

. D ec r ea s e s i n s c r a pp a g e r a t e s w ill l e a d t o a n i n c r ea s e i n t h e

a v e r a g e a g e o f t h e v e h i c l e f l ee t a n d t o i n c r ea s e d e m i ss i o n s , s i n ce o l d e r v e h i c l e s , o n a v e r a g e ,
h a v e h i g h e r e mi ss i o n r a t e s t h a n n e w v e h i c l e s

.

4. F l ee t popu l a ti on e

f f ec ts . T h e c o m

b i n a t i o n o f l o w e r n e w v e h i c l e s a l e s a n d i n c r ea s e d r e t e n t i o n

o f o l d e r v e h i c l e s w il l a ff ec t t h e o v e r a ll c o m

p o s it i o n o f t h e m

o t o r v e h i c l e f

l ee t i n C a l i f

o r n i a ,

r e l a t i v e t o t h e f

l ee t c o m p o s i t i o n w it h t h e F e d e r a l S t a n d a r d s i n p l a ce

.

5. E f f ec ts on ve h i c l e m il e s t r

a ve l e d ( “ V

M T”) . T h e G HG S t a n d a r d s a n d t h e Z E V S t a n d a r d s w i l l

b o t h r e s u l

t i n t h e i m

p l e m e n t a t i o n o f v a r i o u s t ec h n o l og i e s t h a t im p r o v e t h e f

u e l e c o n o m

y o f

n e w v e h i c l e s

. I m

p r o v e d f u e l e c o n o m

y w il l l o w e r t h e c o s t o f d r i v i ng , l ea d i ng v e h i c l e o w n e r s

t o d r i v e m

o r e m i l e s ea c h y ea r

. T h i s e ff ec t

, r e f e rr e d t o a s t h e “ r e b o u n d e f f ec t

, ” w i l l t e n d t o

i n c r e a s e e mi ss i o n s , a s e m i s s i o n s a r e d i r ec t l y r e l a t e d t o V M T

.

P r opo s al

. A t t a c h m e n t C i s a S e p t e m b e r , 200 4 r e p o r t b y N E R A a n d S i e r r a , E n vi r on m e n t a l an d E c ono m i c I m p a ct s

o f t h e AR B S t a

f f P r opo s a l t o Con t r

o l Gr e e nh o u s e G a s E

m i ss i on s f r o m M o t o r V e h i c l es

.I n t r odu c t i on

4 6. E m i ss i on s e ff ec ts

. C h a n g e s i n t h e c o m

p o s it i o n o f t h e m

o t o r v e h i c l e f

l ee t

, f l ee t V M T, a n d f

u e l

c o n s u m p t i o n r e s u l

t i ng f r o m t h e C a l i f

o r n i a P r o g r a m w i l l r e s u l t i n c h a n g e s i n v e h i c l e

e mi ss i o n s i n C a l i f

o r n i a , r e l a t i v e t o t h o s e t h a t w o u l d o cc u r i f t h e F e d e r a l P r o g r a m w e r e i n

e ff ec t

.



### C. Outline of Report

T h e r e m a i nd e r o f t h i s r e p o r t i s o r g a n i ze d a s f o l l o w s : C h a p t e r II p r o v i d e s a n o v e r v i e w o f t h e

m e t h o d o l og i e s a n d d a t a t h a t a r e u s e d i n t h i s s t u d y ; C h a p t e r III p r e s e n t s t h e r e s u l t s o f t h e

a n a l y s e s ; a n d C h a p t e r I V p r o v i d e s b r i e f c o n c l u s i o n s

. T h e a p p e n d i ce s p r o v i d e d e t a il s o n t h e

m e t h o d o l og i e s a n d d a t a , a s w e ll a s s up p l e m e n t a l r e s u l t s

.M e t hodo l o g i e s a n d D a t a

5 

### II

. M et h o d o l o g i e s a n d D a ta

T h i s c h a p t e r p r o v i d e s s u m m a r y i n f o r m a t i o n o n t h e m e t h o d o l o g i e s a n d d a t a u s e d t o e s t im a t e t h e

e ff ec t s o f t h e C a l i f

o r n i a P r o g r a m

. T h i s c h a p t e r f o c u s e s o n l y o n t h e p r im a r y d i f f e r e n c e s b e t w ee n

t h e C a l i f o r n i a P r o g r a m a n d t h e F e d e r a l P r o g r a m

— n a m e l y t h e Z E V a n d GHG S t a n d a r d s ;

h o w e v e r , a ll m

o d e l i ng o f t h e C a l i f

o r n i a a n d F e d e r a l P r o g r a m s i n c l ud e s t h e f u l l s e t o f a p p l i c a b l e

l i g h t

- d u t y v e h i c l e e m i ss i o n s t a n d a r d s

. A s n o t e d

, t h e a pp e n d i ce s t o t h i s r e p o r t p r o v i d e d e t a il s o n

t h e m e t h o d o l o g i e s a n d d a t a

.



### A

. O v e r vie w of ZEV and GHG St a ndards

T h i s s ec t i o n s u m m a r i ze s t h e r e q u i r e m e n t s o f t h e Z E V a n d G H G S t a n d a r d s , a n d t h e i m p l i ca t i o n s

o f t h e s e s t a n d a r d s f

o r t h e p e r- v e h i c l e c o s t a n d f u e l ec o n o m

y o f n e w v e h i c l e s s o l d i n C a li f o r n i a

.
I n t h i s s t u d y , w e a s s u m e , b a s e d o n r ec e n t s t a t e m e n t s b y C A R B s t a f f, 2 t h a t m a n u f

ac t u r e r s w i l l

n o t

, i n g e n e r a l

, i n c u r s i g n i f i c a n t c o m p l i a n c e c o s t s ( b e y o n d a n y a l r ea d y i n c u rr e d ) du e t o t h e Z E V

S t a n d a r d s p r i o r t o t h e 2009 m o d e l

- y ea r

. T h e G H G S t a n d a r d s d o n o t c o v e r v e h i c l e s b e f o r e t h e

2009 m o d e l

- y ea r

. T h e r e f

o r e , f o r t h e pu r p o s e s o f t h i s s t u d y , w e h a v e m o d e l e d b o t h t h e Z E V a n d

GHG S t a n d a r d s a s t a k i n g e ff ec t w i t h t h e 2009 m

o d e l

- y ea r

.

T h e r e q u i

r e m e n t s o f b o t h t h e Z E V M a n d a t e a nd t h e GHG s t a n d a r d s v a r y d e p e n d i ng o n t h e

n u m b e r o f v e h i c l e s a m a n u f

ac t u r e r s e ll s a nn u a l l y i n C a l i f o r n i a

. A l t h o ug h t h e r e q u i

r e m e n t s a r e

c o m p l i ca t e d

, i n g e n e r a l

, l a r g e v o l u m e m a n u f

ac t u r e r s a r e d e f

i n e d a s t h o s e t h a t s e l l m o r e t h a n

60

, 000 v e h i c l e s p e r y e a r i n C a li f o r n i a , i n t e r m

e d i a t e v o l u m e m a n u f

a c t u r e r s a r e d e f

i n e d a s t h o s e

t h a t s e l l b e t w ee n 3

, 001 a n d 60

, 000 v e h i c l e s p e r y e a r a n d s m a ll v o l u m e m a n u f

a c t u r e r s a r e d e f

i n e d

a s t h o s e t h a t s e ll 3

, 000 v e h i c l e s p e r y ea r o r l e ss

. T h e p r o v i s i o n s o f t h e Z E V a n d GHG S t a n d a r d s

t h a t w i l l l ea d t o s u b s t a n t i a l c o m p l i a n ce c o s t s g e n e r a l l y a p p l y o n l y t o l a r g e v o l u m e

m a n u f ac t u r e r s

. H o w e v e r , t h o s e m a n u f a c t u r e r s acc o u n t f

o r t h e v a s t m a

j o r it y o f v e h i c l e s a l e s i n

C a l i f o r n i a

. B a s e d o n 2003 C a li f o r n i a v e h i c l e s a l e s d a t a f r o m R

. L

. P o l

k

, a n d a n t i c i p a t e d g r o w t h

i n v e h i c l e s a l e s b e t w e e n t h e n a n d t h e 2009 m o d e l

- y ea r , w e h a v e u s e d t h e m a n u f ac t u r e r

d e s i g n a t i o n s s h o w n i n T a b l e 1 t o d e t e r mi n e c o m p l i a n c e o b li g a t i o n s

. N o t e t h a t s m a l l v o l u m e

m a n u f ac t u r e r s h a v e n o o b li g a t i o n s u n d e r t h e Z E V o r GHG S t a n d a r d s

.

2 C a li fo r n i a A i r R e s o u r ce s B o a r d

, 2 0 07

, “ S t a t u s R e p o r t o

n t h e C a li fo r n i a A i r R e s o u r ce s B o a r d’ s Z e r o E m i ss i o n V e h i c l e P r o gr a m

. ”M e t hodo l o g i e s a n d D a t a

6 1

. Z EV S t a n d a r d s

T h e Z E V S t a n d a r d s r e qu i r e t h a t m a n u f

ac t u r e r s “ p r o du ce , d e li v e r f o r s a l e , a n d p l a c e i n s e r v i ce” a

s u f f i c i e n t n u m

b e r o f Z E V

- c r e d i t

- g e n e r a t i n g v e h i c l e s t o m ee t t h e Z E V o b l i g a t i o n s p e c i f i e d b y t h e

Z E V M a n d a t e f

o r e v e r y y ea r a f

t e r t h e Z E V M a nd a t e t a k e s e ff ec t

. T h e Z E V M a n d a t e d e f i n e s

t h r ee ca t e g o r i e s o f v e h i c l e s ca p a b l e o f g e n e r a t i n g Z E V c r e d it s :

1. P a r t i a l Z e r o E mi ss i o n V e h i c l e s ( “ P Z E V s ” )

, w h i c h i n c l ud e c o nv e n t i o n a l v e h i c l e s t h a t m ee t

v e r y s t r i n g e n t e x h a u s t a n d e v a p o r a t i v e e mi ss i o n r e q u i r e m e n t s a n d w a rr a n t y r e q u i r e m e n t s ;

2. A d v a n c e d T e c h n o l og y P Z E V s ( “ A T P Z E V s ” )

, w h i c h c o n s i s t o f v a r i o u s t y p e s o f h y b r i d

e l ec t r i c v e h i c l e s; 3 a n d

3. Z e r o E mi s s i o n s V e h i c l e s ( “ Z E V s ” )

, w h i c h i n c l u d e b a tt e r y e l ec t r i c a n d h y d r o g e n f u e l c e l l

v e h i c l e s

.

C r e d i t s g e n e r a t e d b y P Z E V s , A T P Z E V s , a n d ZE V s a r e r e f e rr e d t o a s “ B r o n ze , ” “ S i l v e r , ” a n d

“ G o l d ” c r e d i t s , r e s p ec t i v e l y

. T a b l e 2 p r o v i d e s s o m e e x a m p l e s o f t h e l e v e l s o f Z E V c r e d it s a n d

c r e d i t d e s i g n a t i o n s a s s o c i a t e d w i t h s p e c i f i c t y p e s o f v e h i c l e s o v e r t h e p e r i o d f r o m 2009 t o 2023

.

3 I t s h o u l d b e n o t e d t

h a t o t h e r t y p e s of v e h i c l e t ec h n o l o g i e s s u c h h a s h y d r o g e n f u e l e d s p a r k i g n iti o n a n d c o m p r e ss e d

n at u r a l g a s c o u l d b e ce r ti f i e d a s A T P Z E Vs

. H o w e v e r , b a s e d o n c o n f i d e n t i a l i n fo r m a

ti o n w e h a v e r ece i v e d f

r o m

v e h i c l e m a nu f

a c t u r e r s , w e d o n o t b e li e v e t h a t a n y m a nu f a c t u r e r p l a n s t o m a

rk e t s u c h v e h i c l e s i n s i g n i f i c a n t
qu a n t i t i e s

. Ta b l e 1

. C at e g o riz a t

i o n o f l a r g e a nd i n t e r m e d i at e vo l u m e m a n u fa c t u rer s i n cl u d e d i n t h i s a n a l y s i s
.

M a n u f ac t u r er C a t e g ory

B MW L a r ge V o l u me
D a i m l e r-C h r y s l er L a r ge V o l u me
F o rd L a r ge V o l u me
G ene r a l M o t o rs L a r ge V o l u me
H onda L a r ge V o l u me
H y undai L a r ge V o l u me
Mi t s ub i s hi I n t e r m ed i a t e V o l u me
N i ss an L a r ge V o l u me
S uba ru I n t e r m ed i a t e V o l u me
T o y o ta L a r ge V o l u me
V o l k s w agen* L a r ge V o l u me

* N o t e t h a t V o l k s w a g e n i n c l u d e s P o r s c h e v e h i c l e s

.M e t hodo l o g i e s a n d D a t a

7 T h e Z E V M a n d a t e s p e c i f i e s t w o w a y s i n w h i c h m a n u f ac t u r e r s m a y d e t e r mi n e t h e i r Z E V c r e d it

o b li g a t i o n

. T h e Z E V o b l i g a t i o n i s t h e m i n i m u m n u m b e r o f Z E V c r e d it s t h a t a m a n u f a c t u r e r i s

r e q u i r e d t o g e n e r a t e i n a n y g i v e n y e a r , a n d i s e xp r e ss e d a s a p e r c e n t a g e o f t h e m a n u f ac t u r e r ’ s

t o t a l s a l e s v o l

u m e o f c o v e r e d v e h i c l e s , w h i c h m a y e it h e r b e c u rr e n t y e a r s a l e s ( c u rr e n t y ea r

m e t h o d ) o r t h e a v e r a g e o f s a l e s i n f i x e d b l o c k s o f t h

r ee ea r l i e r y ea r s ( p r i o r y ea r m e t h o d )

. T h e

c o v e r e d v e h i c l e s a l e s v o l u m e a l w a y s i n c l ud e s 10 0 % o f t h e s a l e s o f P a s s e n g e r C a r s ( “ P C s ” ) a n d

C l a ss 1 L i g h t D u t y T r u c k s ( “ L D T 1 s ” )

, w h i l e t h e c o v e r a g e o f C l a ss 2 L i g h t D u t y T r u c k s
( “ L D T 2 s ” ) i n c r ea s e s n ea r l y l i n ea r l y f r o m 51 % i n 2009 t o 100 % i n 2012 a n d b e y o n d

.

I n c a l c u l a t i n g t h e i

r Z E V o b li g a t i o n s f

o r e ac h y e a r , l a r g e v o l

u m e m a n u f

a c t u r e r s m a y e it h e r u s e

t h e “ P r im a r y R e q u i

r e m e n t s ” ( o r “ P r im a r y C o m p li a n c e P a t h ” ) o r t h e “ A l t e r n a t i v e R e q u i r e m e n t s ”

( o r “ A l t e r n a t i v e C o m

p l i a n ce P a t h ” )

. T h e A l

t e r n a t i v e C o m

p l i a n ce P a t h s u n s e t s w it h t h e 201 7

m o d e l

- y ea r , a n d t h e r e a f

t e r t h e P r im a r y R e q u i r e m e n t s a p p l y t o a l l l a r g e v o l u m e m a n u f

ac t u r e r s

.
B o t h c o m p l i a n ce o p t i o n s s e t t h e s a m e f i x e d p e r c e n t a g e Z E V o b l i g a t i o n i n ea c h y ea r , a n d s p ec i f y

a mi n i m u m p o r t i o n o f t h e r e q u i

r e d Z E V c r e d it s t h a t m

u s t b e g e n e r a t e d b y pu r e Z E V s , a n d a Ta b l e 2

. C at e g o rie s o f ZE V

- c re d i t- g e n e r at i n g v e h i c le s , a nd r a n g e o f c re d i t v a l u e s i n t h e y e a r s 200 9

- 203 0

.

T e c hno l ogy C a t e gory C r e d i t R a nge ( 20 0 9

- 20 3 0)

P Z EV B r o n ze 0 .2

C l a s s A H y b r i d E l e c t r i c V e h i c l e ( A H EV) S il v er 0
C l a s s B H y b r i d E l e c t r i c V e h i c l e ( B H EV) S il v er 0

C l a s s C H y b r i d E l e c t r i c V e h i c l e ( C H EV) S il v er 0

- 0 .4
C l a s s D H y b r i d E l e c t r i c V e h i c l e ( D H EV) S il v er 0

. 6

- 0

. 45

C l a s s E H y b r i d E l e c t r i c V e h i c l e ( E H EV) S il v er 0

. 7

- 0

. 55

P l u g

- i n H y b r i d E l e c t r i c V eh i c l e ( P H EV ) 10 S il v er 1

. 88

- 2

. 03

P l u g

- i n H y b r i d E l e c t r i c V eh i c l e ( P H EV ) 20 S il v er 2

. 05

- 2

. 20

P l u g

- i n H y b r i d E l e c t r i c V eh i c l e ( P H EV ) 40 S il v er 2

. 34

- 2

. 49

N e i g h bo r ho o d E l e c t r i c V e h i c l e ( N EV) G o ld 0

. 15

T Y PE 0 E l e c t r i c V e h i c le G o ld 1 .0

T y p e I ( C i t y

E l e c t r i c V e h c i l e
, "C E V ") G o ld 2 .0

T y p e I I ( F u ll P e r f o r m a n c e B a tt e r y E l e c t r i c V e h i c l e
, " F PBE V ") G o ld 3 .0

T y p e I II ( F u e l C e ll E l e c t r i c V e h i c l e
, " F C EV ") G o ld 3

. 0

- 4 .0

S o u r ce : C al c u l a

t e d f r o m C A RB do c u m e n t a t

i o n of Z E V S t a nd a

r d s

.M e t hodo l o g i e s a n d D a t a

8 m a x i m u m p o r t i o n t h a t m a y b e g e n e r a t e d b y P Z E V s . T h e d i f f e r e n ce b e t w ee n t h e s u m o f t h e Z E V

a n d P Z E V c r e d i t s a n d t h e t o t a l Z E V r e q u i r e m e n t m a y b e m a d e up b y c r e d it s g e n e r a t e d b y A T

P Z E V s

. T h e r e a r e t h

r e e m a j o r d i f f e r e n c e s b e t w ee n t h e P r i m a r y R e q u i r e m e n t s a n d t h e

A l t e r n a t i v e R e q u i

r e m e n t s :

1. T h e mi n i m

u m Z E V r e q u i

r e m e n t i s a f

i x e d p e r c e n t a g e o f t h e t o t a l c o v e r e d s a l e s v o l u m e u n d e r

t h e P r im a r y R e q u i

r e m e n t s

. F o r e x a m

p l e , und e r t h e P r im a r y C o m p l i a n ce P a t h

, i f a

m a n u f ac t u r e r ’ s a v e r a g e y ea r l y s a l e s o f c o v e r e d v e h i c l e s f r o m 2006

- 2008 i s 200

, 000 ( r o ugh l y

t e n p e r c e n t o f y e a r l y i ndu s t r y

- w i d e s a l e s o f c o v e r e d v e h i c l e s i n C a l i f o r n i a )

, t h e n t h a t

m a n u f ac t u r e r w o u l d n ee d t o g e n e r a t e 6

, 000 G o l d Z E V c r e d it s ( t h r ee p e r c e n t o f it s c o v e r e d

s a l e s ) i n e a c h ye ar f

r o m 2012

- 2014 ( u s i n g t h e p r i o r y ea r m e t h o d t o d e t e r mi n e o b li g a t i o n )

,

w h i c h e qu a t e s t o 2

, 000 p u r e Z E V s p e r y ea r

. H o w e v e r , u n d e r t h e A l t e r n a t i v e R e q u i r e m e n t s , a

t a r g e t n u m

b e r o f t o t a l G o l d Z E V c r e d it s f o r t h e i n d u s t r y i s s p e c i f i e d f o r ea c h t h

r ee

- y ea r

p e r i o d

, a n d ea c h m a n u f

a c t u r e r ’ s G o l d Z E V c r e d it o b li g a t i o n i s c a l c u l a t e d a s t h e r a t i o o f t h e

m a n u f ac t u r e r ’ s t o t a l Z E V o b l i g a t i o n i n t h a t p e r i o d t o t h e s u m o f t h e Z E V o b li g a t i o n s f o r a l l

m a n u f ac t u r e r s du r i n g t h a t p e r i o d

, m u l t i p l i e d b y t h e t a r g e t n u m

b e r o f t o t a l G o l d Z E V c r e d it s

f o r t h e i n d u s t r y f

o r t h a t p e r i o d

. F o r e x a m p l e , u nd e r t h e A l

t e r n a t i v e C o m

p l i a n c e P a t h

, i f a

m a n u f ac t u r e r ’ s s a l e s o f c o v e r e d v e h i c l e s f r o m 2006

- 2008 acc o u n t f o r t e n p e r ce n t o f i ndu s t r yw i d e s a l e s o f c o v e r e d v e h i c l e s f r o m 2006

- 2008

, t h e n t h a t m a n u f ac t u r e r w o u l d n ee d t o

g e n e r a t e 7

, 500 G o l d Z E V c r e d i t s ( t e n p e r c e n t o f t h e G o l d Z E V c r e d it t a r g e t f o r t h e i n d u s t r y )

du r i ng t he e n ti r

e p e r i od f

r o m 2012

- 2014 ( u s i n g t h e p r i o r y ea r m e t h o d t o d e t e r mi n e

o b li g a t i o n )

, w h i c h e q u a t e s t o 2

, 500 pu r e Z E V s o v e r t h e p e r i o d

, o r a b o u t 833 pu r e Z E V s p e r

y ea r

. I n g e n e r a l

, t h e A l t e r n a t i v e R e q u i

r e m e n t s r e q u i

r e f e w e r pu r e Z E V s a l e s t h a n t h e

P r im a r y R e q u i

r e m e n t s

. U n d e r t h e A l

t e r n a t i v e C o m

p l i a n ce P a t h

, m a n u f

ac t u r e r s ca n m a k e u p

t h e r e du ce d G o l d Z E V c r e d i t o b li g a t i o n w it h c r e d it s g e n e r a t e d b y A T P Z E V s t o m ee t t h e i r

t o t a l Z E V o b li g a t i o n

.

2. U n d e r t h e P r im a r y R e q u i r e m e n t s , m a n u f ac t u r e r s a r e p e r m itt e d t o s a t i s f y t h e i r G o l d c r e d it

r e q u i r e m e n t s u s i n g a n y o f t h e G o l d ca t e go r y v e h i c l e s li s t e d i n T a b l e 2

. U n d e r t h e a l

t e r n a t i v e

r e q u i r e m e n t s , G o l d c r e d i t s m

u s t b e o b t a i n e d f

r o m F u e l C e l l E l ec t r i c V e h i c l e s ( “ F C E V s ” )

.M e t hodo l o g i e s a n d D a t a

9 3. T h e P r im a r y R e q u i r e m e n t s p e r m i t t h e u s e o f e it h e r t h e p r i o r y ea r o r c u rr e n t y ea r m e t h o d f o r

d e t e r mi n i ng Z E V o b li g a t i o n s . T h e A l t e r n a t i v e R e q u i

r e m e n t s r e qu i

r e u s e o f t h e p r i o r y e a r

m e t h o d

.

B a s e d o n t h e h i g h c o s t s a ss o c i a t e d w i t h g e n e r a t i ng G o l d Z E V c r e d it s w it h e it h e r b a tt e r y e l ec t r i c

o r f u e l c e l l v e h i c l e s , a n d b a s e d o n d i s c u s s i o n s w i t h v e h i c l e m a n u f ac t u r e r s r e g a r d i n g t h e i r Z E V

c o m p l i a n ce p l a n s , w e h a v e a ss u m e d

, f o r t h e pu r p o s e s o f t h i s s t u d y , t h a t a ll l a r g e v o l u m e

m a n u f ac t u r e r s w o u l d c h oo s e t o m ee t t h e A l

t e r n a t i v e R e q u i r e m e n t s u n t i l t h e y s u n s e t w it h t h e

2017 m o d e l

- y ea r ( s e e A

pp e n d i x A f

o r a f u l l a n a l y s i s o f c o m

p l i a n ce p l a n o p t i o n s a n d c h o i ce s )

.
T h e r e q u i r e m e n t s f o r l a r g e v o l

u m e m a n u f

ac t u r e r s u s i ng t h e A l

t e r n a t i v e C o m

p l i a n ce P a t h a r e

s u mm a r i ze d i n T a b l e 3

. I n t e r m e d i a t e v o l

u m e m a n u f

ac t u r e r s m a y m ee t t h e i r e n t i r e Z E V

o b li g a t i o n w i t h c r e d i t s g e n e r a t e d b y P Z E V s , a n d s m a l l m a n u f ac t u r e r s a r e n o t c o v e r e d b y t h e

Z E V m a n d a t e

.

T h e P r im a r y R e q u i r e m e n t s a l s o s e t a f i x e d p e r ce n t a g e Z E V o b li g a t i o n i n e ac h y e a r

. H o w e v e r ,

u n d e r t h e P r im a r y R e q u i r e m e n t s , t h e G o l d Z E V c r e d it o b li g a t i o n i s m o r e s t r i n g e n t t h a n u n d e r t h e

A l t e r n a t i v e R e q u i

r e m e n t s

. T a b l e 4 s u m m a r i z e s t h e P r im a r y R e q u i r e m e n t s

.

2 . G H G S t a n d a r d s

T h e GHG S t a n d a r d s e s t a b li s h a s e t o f CO 2 e mi s s i o n r a t e s t a n d a r d s f o r l a r g e v o l

u m e

m a n u f ac t u r e r s t h a t a p p l y t o 2009 a n d s u b s e q u e n t m o d e l

- y ea r v e h i c l e s , w it h a “ n ea r- t e r m ”

s t a n d a r d p h a s e d i n f

r o m 2009 t o 2012 a n d a “ m i d

- t e r m ” s t a n d a r d p h a s e d i n f

r o m 2013 t o 2016

.

4 N o t e t h a t t h e P u r e Z E V c r e d i t r e qu i r e m e n t i s g i v e n a s a t o t al n u m b e r of c r e d it s r e q u i r e d

, r at h e r t h a n a s a s h a

r e of

pr i o r y e a r p r o du c ti o n vo l u m e

. Ea c h ma n u f a c t u r e r ’ s s h a r e of t h e t o t a l nu m b e r of c r e d it s i s c al c u l at e d fo r e a c h

t h r ee

- y e a r b l o c k i n a cc o r d a n ce w i t h t h e m et h o d o l o g y d e s c r i b e d i n C A RB do c u m e n t a t i o n of t h e Z E V S ta n d a

rd s

. Ta b l e 3

. R e q u ire m e n t s f o r l a r g e vo l u m e m a n u fa c t u rer s u n d er t h e A l t e r n at i v e C om p li a n c e P at h

.

M od e l Y ea rs M i ni m u m Z EV R e q u i r em e n t

( a s s h a r e o f p r io r yea r
p r odu c t ion v ol u me) P e r c e n t a g e L D T 2 In c lud e d
in Z E V O blig a t io n ( R a n g e) T a r g e t N u m b e r o f
F C EV C r e di ts M ax i m u m P Z E V Cr e di t s

( as s h a r e o f p r io r yea r
p r odu c t i o n v olu m e)

2009

- 2011 11% 51 %

- 85% 1 0

, 000 6

. 00%

2012

- 2014 12% 100% 7 5

, 000 6

. 00%

2015

- 2017 14% 100% 1 5 0

, 000 6

. 00%

2018 - 16% 100% S un s e ts 6

. 00% S o u r ce : C A RB do c u m e n t a t i o n of Z E V S ta n d a

r d s. 4M e t hodo l o g i e s a n d D a t a

10 T a b l e 5 s h o w s t h e CO 2 - e qu i v a l e n t s t a n d a r d s f o r t h e t w o ca t e g o r i e s o f v e h i c l e s t o w h i c h t h e y

a p p l y : P C / L D T 1 a n d L D T 2 +

. N o t e t h a t “ L D T 2 +” i n c l ud e s L D T 2 s a n d ce r t a i n m e d i u m du t y

v e h i c l e s ( “ M DV s ” )

.

T h i s s t ud y e s t im a t e s t h e e f f ec t s o f t h e GHG S t a n d a r d s b a s e d up o n a d e t a il e d a n a l y s i s o f

m a n u f ac t u r e r t ec h n o l og y c h o i c e s a n d t h e i r c o s t s a n d e ff

e c t i v e n e s s t h a t w a s s ub m itt e d t o C A RB

i n 2004

, a n d w h i c h f

o r m e d t h e b a s i s o f o u r p r e v i o u s a n a l y s i s o f t h e e m i s s i o n s i m p ac t s a s s o c i a t e d

w i t h t h e GHG s t a n d a r d s ( s ee A t t ac h m e n t C f o r d e t a il s )

. O u r e s t im a t e s o f t h e p e r- v e h i c l e c o s t s o f

t h e GHG S t a n d a r d s w e r e d e v e l o p e d b a s e d o n t h e a ss u m p t i o n t h a t eac h c o v e r e d m a n u f ac t u r e r

m i n i mi z e s i t s c o s t s ( f

o r a l l o f i t s c o v e r e d v e h i c l e s ) o f m ee t i n g t h e f i n a l 2016 mi d

- t e r m s t a n d a r d

.
T h e c o s t s f

o r i n t e r v e n i n g y ea r s a r e b a s e d up o n a ss e s s m e n t s o f t h e mi x o f t h e f i n a l c o m p li a n c e

t ec hn o l o g i e s t h a t w o u l d b e e m p l o y e d b y ea c h m a n u f

ac t u r e r f o r d i ff e r e n t v e h i c l e t y

p e s

. W e

d e v e l o p e d a s e p a

r a t e t r a j e c t o r y o f p e r- v e h i c l e c o s t s a n d f u e l ec o n o m

y c h a n g e s f

o r eac h o f f

o u r

v e h i c l e t y p e s : ( 1 ) p a ss e n g e r ca r s ; ( 2 ) mi n i v a n s ; ( 3 ) p i c k

- up t r u c k s ; a n d ( 4 ) s po r t

- u t il it y v e h i c l e s
( “ S UV s ” )

. Ta b l e 4

. R e q u ire m e n t s f o r l a r g e vo l u m e m a n u fa c t u rer s u n d er Pr i m a r y C om p li a n c e P at h

.

M o d e l Y e a rs M i n i m u m Z E V R e qu i r e m e n t

( as s h a r e o f pr i or or sa m e
y ea r produ c t i on v o l u m e) P e r ce n t a g e L D T 2
I n c l ud e d i n Z E V
O b l i g a t i on ( R a ng e) P ur e Z E V R e qu i r e m e n t ( as

s h a r e o f pr i or or sa m e yea r produ c t i on v o l u m e) M ax i m u m P Z E V C r e d i t s ( as

s h a r e o f pr i or y e a r produ c t i on

v o l u m e)

2 009

- 2 011 1 1% 51 %

- 85% 2

. 50% 6

. 00%

2 012

- 2 014 1 2% 100% 3

. 00% 6

. 00%

2 015

- 2 017 1 4% 100% 4

. 00% 6

. 00%

2 018 - 1 6% 100% 5

. 00% 6

. 00% S o u r ce : C A RB do c u m e n t a t i o n of Z E V S ta n d a

r d s

.

Ta b l e 5

. G H G S ta nd a r d s
.

T i er Y e ar

P C / L D T1 L D T2+

2 0 09 3 23 4 39

N e a r-t e rm 2 0 10 3 01 4 20

2 0 11 2 67 3 90

2 0 12 2 33 3 61

2 0 13 2 27 3 55

M i d -t e rm 2 0 14 2 22 3 50

2 0 15 2 13 3 41

2 0 16 2 05 3 32

C O 2

- E qu i v a l e n t E m i s s i o n S t a nd a r d b y V e h i c l e C a t e g o r y

( g / m i)

S o u r ce : C A RB do c u m e n t a t i o n of G H G S t a n d a

rd s

.M e t hodo l o g i e s a n d D a t a

11 

### B. O v e r vie w of Methodolo g y

T h e o v e r a l l m e t h o d o l og y d e v e l o p e d f o r t h i s s t u d y c o n s i s t s o f a s e t o f i n t e r-r e l a t e d m o d e l s

d e s i g n e d t o e v a l

u a t e t h e e ff

ec t s o f t h e C a l i f

o r n i a P r o g r a m o n t h e C a l i f o r n i a v e h i c l e f

l ee t a n d o n

C a l i f o r n i a f l ee t e mi ss i o n s

. F i gu r e 1 s h o w s t h e p r im a r y c o m p o n e n t s o f t h e m

o d e li n g f r a m e w o r k

.
T h e s e c o m

p o n e n t s i n c l ud e : ( 1 ) t h e E n g i n ee r i n g C o s t M o d e l

, w h i c h d e v e l op s e x p ec t e d

c o m p l i a n ce p l a n s f

o r i n d i v i du a l m a n u f

ac t u r e r s b a s e d o n i n f

o r m a t i o n o n t h e a v a i l a b l e

t ec hn o l og i e s a n d s t r a t e g i e s f o r c o m p l i a n c e w it h t h e Z E V a n d GH G S t a n d a r d s , i n c l u d i ng d a t a o n

t h e c o s t s a n d e m i ss i o n s r e du c t i o n s , a s w e l l a s t h e Z E V c r e d it v a l u e , o f ea c h t e c h n o l o g y ; ( 2 ) t h e

N e w V e h i c l e M a r k e t M o d e l ( “ N V M M ” )

, w h i c h e s t im a t e s t h e im p ac t s o f t h e r e gu l a t i o n s o n t h e

p r i ce s a n d qu a n t i t i e s o f v a r i o u s n e w m o t o r v e h i c l e m

o d e l s , t a k i n g a s i npu t s t h e c o s t s a n d v e h i c l e

c h a r ac t e r i s t i c ( e

. g ., f

u e l ec o n o m

y ) e ff ec t s , a s w e ll a s t h e Z E V c r e d it v a l u e , o f t h e v a r i ou s

t ec hn o l og i e s i n m a n u f

ac t u r e r s ’ c o m

p l i a n ce p l a n s ; ( 3 ) t h e S c r a pp a g e M o d e l

, w h i c h e s t im a t e s t h e

e ff ec t s o f c h a n g e s i n t h e p r i c e s o f n e w v e h i c l e s o n t h e r a t e a t w h i c h u s e d v e h i c l e s a r e s c r a pp e d ;
( 4 ) t h e F l ee t P o pu l a t i o n M o d e l

, w h i c h e s t im a t e s t h e e ff ec t s o f c h a n g e s i n n e w v e h i c l e s a l e s a n d

t h e s c r a pp a g e r a t e s o f e x i s t i n g v e h i c l e s o n o v e r a l l v e h i c l e f l e e t p o pu l a t i o n s o v e r t im e ; ( 5 ) t h e

V M T M o d e l

, w h i c h a ss e ss e s e ff ec t s o n v e h i c l e mi l e s t r a v e l e d ; a n d ( 6 ) t h e E mi ss i o n s M o d e l

w h i c h a s s e ss e s e ff

ec t s o n p o ll u t a n t e mi ss i o n s

. T h e f o l l o w i ng s ec t i o n s p r o v i d e s u m m a r i e s o f t h e

N e w V eh i c l e M a r ke t M o d el S c r a p pa ge M o del V M T an d E m i s s i o ns M o de ls O u t pu t s f r o m E n g i n ee r i ng C o s t M o del

E n g i n e e r i ng C o st M odel C os t s a nd

e m i ss i ons

r e du c t i o n s o f

u n i v e r s e o f
p o t e n ti a l

c o m p li a n ce t e chn o l og i es

S e t o f O p ti m al C o m p li a nc e T e c hn o l og i es P r i ce s a nd Q u a n ti t i es of N e w V eh i c l es F l e e t T u r n o ve r E f f ec t s ( S c r app a ge) F l e e t V M T

a n d C r it e r i a E m i s s i o ns O u t p u t s fr o m N e w V eh i c l e M a r ke t M o del

F l e e t Po p u l a ti on M od el § O u t p u t s fr o m N e w V e h i c l e M a r k e t M od e l

a n d S c r a p p a ge M ode l

. § B a s e li n e F l ee t P op u l a t i on s.

C o m p o s i t i on / S i z e o f F l e e t O v e r T i me O u t p u t s fr o m F l e e t P o p u l a ti on M odelInputsModelOutputs

F i g u re 1

. D i a g r a m o f mo d eli n g f r a m e w o r k a nd p r o ce ss
.M e t hodo l o g i e s a n d D a t a

12 s i x m o d e l s , i n c l u d i ng v a r i o u s s u b c o m p o n e n t s a n d r e l a t e d d a t a

.



### C. Co m p l iance Pla n s and Cost E st i m ates 5

T h e s t a r t i n g p o i n t f

o r t h i s s t u d y w a s t h e d e v e l o p m e n t o f e s t im a t e s o f v e h i c l e c o s t s

a ss o c i a t e d w i t h t h e Z E V a n d GHG S t a n d a r d s

. A s d i s c u s s e d b e l o w ( a n d i n m o r e d e t a i l i n

A pp e n d i x A )

, t h e s e c o s t e s t im a t e s a r e i n c r e m e n t a l t o t h e c o s t s a ss o c i a t e d w it h t h e p r o du c t i o n o f

a c o nv e n t i o n a l g a s o li n e

- f u e l e d S up e r- U l

t r a L o w E mi ss i o n V e h i c l e ( “ S U L E V ” ) ; t h e i n c r e m e n t a l

c o s t s o f S U L E V s r e l a t i v e t o f e d e r a l T i e r 2 v e h i c l e s w e r e i g n o r e d

. T o t h e e x t e n t t h a t S U L E V s

c o s t m o r e t h a n e q u i v a l e n t T i e r 2 v e h i c l e s , t h i s w o u l d t e n d t o u n d e r s t a t e v e h i c l e c o s t s u n d e r t h e

C a l i f o r n i a P r o g r a m r e l a t i v e t o t h e F e d e r a l P r o g r a m

. E s t im a t e s o f c o s t s f

o r c o m p l i a n c e w it h t h e

Z E V M a n d a t e w e r e d e v e l o p e d f o r t h e t h r ee ca t e g o r i e s o f v e h i c l e s c a p a b l e o f g e n e r a t i n g Z E V

c r e d i t s : ( 1 ) P a r

t i a l Z e r o E mi ss i o n V e h i c l e s ( P ZE V s ) ; ( 2 ) A d v a n c e d T e c h n o l og y P a r t i a l Z e r o

E mi ss i o n V e h i c l e s ( A T P Z E V s )

, a n d ; ( 3 ) Z e r o E mi ss i o n V e h i c l e s

. W it h i n t h e s e ca t e g o r i e s ,

s e p a r a t e c o s t e s t im a t e s w e r e d e v e l o p e d f o r v e h i c l e s e m

p l o y i ng d i f

f e r e n t t ec hn o l og i e s a n d f o r

d i s t i n c t v e h i c l e c l a s s e s ( P C + L D T 1 a n d L D T 2 )

. C o m p l i a n ce c o s t s a ss o c i a t e d w it h t h e G HG

S t a n d a r d s u s e d i n t h i s a n a l y s i s w e r e d e v e l o p e d p r e v i o u s l y b y S i e rr a a n d s up p l i e d t o C A RB a t t h e

t im e t h e GHG r e gu l a t i o n s w e r e a d o p t e d i n S i e rr a ’ s 2004 r e p o r t. 6

I n e s t im a t i n g t h e c o s t s o f v e h i c l e s r e q u i r e d f o r t h e Z E V m a n d a t e , a n u m b e r o f d i f f e r e n t s o u r ce s

o f i n f o r m a t i o n w e r e u s e d

, i n c l u d i ng t h e r ec e n t l y pub l i s h e d “ R e p o r t o f t h e A RB I n d e p e n d e n t

E x p e r t P a n e l 2007

, ” c o n f i d e n t i a l c o s t i n f

o r m a t i o n s up p l i e d b y i n d i v i du a l a u t o m a n u f a c t u r e r s,

a n d c o s t e s t im a t e s p r o v i d e d b y T h e M a r t ec G r o up a n d H a r b o u r C o n s u l t i n g

. A s d e s c r i b e d b e l o w ,

w e e l ec t e d t o m a k e c o n s e r v a t i v e a s s u m p t i o n s i n p r e p a r i ng t h e s e c o s t e s t im a t e s t h a t li k e l y

u n d e r e s t im a t e t h e t r u e c o s t s

.

1

. P Z EV C o s t s

I n c r e m e n t a l c o s t e s t im a t e s f o r P Z E V t ec h n o l og y o f $350 a n d $500 p e r v e h i c l e w e r e u s e d f o r

P C + L D T 1 a n d L D T 2 v e h i c l e s , r e s p ec t i v e l y . T h e P C + L D T 1 v a l u e r e f l ec t s t h e l o w e r r a n g e o f t h e

5 A l l c o s t s r e f

e r r e d t o i n t

h i s s ec ti o n a n d i n A pp e

n d i x A a r e i n y e a r 200 4 d o ll a

r s

. T h e NVMM e s c a l at e s t h e s e t o
y e a r 20 0 5 d o l la

r s u s i n g t h e C o n s u m e

r P r i ce I n d e x i n o r d e

r t o b e c o n s i s t e n t w i t

h o t h e r d a ta u s e d i n t

h e m o d e l i n g

.

6 A u s t i n , T

. C

. , e t a l

. , 20 0 4

, “ R e v ie w o f t h e A u g u s t 200 4 P r o p o s e d C A RB R e gu lati o n s t o C o n t r o l G r e e n h o u s e G a s E m i ss i o n s f

r o m M o t o r V e

h i c l e s : C o s t E ff

ec ti v e n e ss f

o r t h e V e h i c l e O w n e

r o r O p e r a t o r ”

, S i e r r a R e s e a r c h R e p o r t N o

. S R 2004-09-04

, S e p t e m b e r , 2 0 04

.M e t hodo l o g i e s a n d D a t a

13 c o s t d a t a s up p li e d b y v e h i c l e m a n u f a c t u r e r s , w h il e t h e L D T 2 v a l u e r e f l ec t s t h e m i d d l e o f t h a t

r a n g e

. T h e u s e o f t h e h i g h e r v a l u e f o r L D T 2 r e f

l ec t s t h e h i g h e r e x p e n s e s o f a c h i e v i n g t h e ze r oe v a p o r a t i v e e m i ss i o n s t a n d a r d f o r P Z E V s u n d e r t h e Z E V M a n d a t e o n v e h i c l e s w it h l a r g e r f u e l

t a n k s a n d t h e h i g h e r e x p e n s e s o f a c h i e v i ng t h e e x h a u s t e mi ss i o n s t a n d a r d f o r P Z E V s u n d e r t h e

Z E V M a n d a t e o n l a r g e r v e h i c l e s w i t h V 8 e n g i n e s

.

2

. A T P Z EV C o s t s

I n c r e m e n t a l c o s t e s t im a t e s f o r T y p e C

, D a n d E hy b r i d e l ec t r i c v e h i c l e s w e r e $1

, 800

, $2

, 200 a n d

$5

, 500

, r e s p ec t i v e l y

. T h e s e a r e b a s e d o n t h e m e t h o d o l og y d o c u m e n t e d i n S i e rr a ’ s 2004 r e p o r t

,

w i t h t h e e s t im a t e s f

o r T y p e D a n d E v e h i c l e s r e f l ec t i n g a d d it i o n a l c o s t s a ss o c i a t e d w it h h i g h

v o l t a g e e l ec t r i c a l s y s t e m s , n i c k e l

- m e t a l h y d r i d e b a tt e r i e s , e l e c t r i c m o t o r s a n d c o n t r o l s y s t e m s

.
T h e c o s t o f p l ug

- i n h y b r i d e l ec t r i c v e h i c l e s ( P H E V s ) w it h 10

, 20 a n d 40 m i l e e l e c t r i c r a n g e i n

t h e P C + L D T 1 ca t e g o r y w a s e s t im a t e d u s i n g c o m p o n e n t c o s t e s t im a t e s p r o v i d e d b y T h e M a r t ec

G r o up ( t h e c o n s u l

t i ng f i r m r e l i e d o n b y C A RB t o p r o v i d e c o s t i n f o r m a t i o n i n s upp o r

t o f t h e

GHG r u l e m a k i ng )

, a n d d a t a f r o m t h e r e p o r

t o f t h e I n d e p e n d e n t E x p e r t P a n e l

. I n c r e m e n t a l c o s t

e s t im a t e s r a n g e d f

r o m a b o u t $1 0

, 500 f

o r a 10 m i l e a l l e l ec t r i c r a n g e t o a b o u t $15

, 000 f o r a 4 0

mi l e a l l e l ec t r i c r a n g e

. C o s t s f o r L D T 2 v e h i c l e s w e r e a g a i n e s t im a t e d b y s c a l i ng t h e P C + L D T 1

v a l u e s b y t h e r e l a t i v e s a l e s

- w e i g h e d a v e r a g e w e i g h t s o f 2003 m o d e l

- y ea r v e h i c l e s i n t h e s e

c l a ss e s

. E s t im a t e s f

o r T y p e C

, D a n d E h y b r i d e l ec t r i c v e h i c l e s a r e b a s e d o n t h e m e t h o d o l og y

d o c u m e n t e d i n S i e rr a ’ s 2004 r e po r t

, b u t h a v e b e e n upd a t e d t o r e f l ec t t h e l a t e s t a v a il a b l e c o s t

d a t a

. T h e c o s t o f p l ug

- i n h y b r i d e l ec t r i c v e h i c l e s ( P H E V s ) i n t h e P C + L D T 1 ca t e g o r y h a s b e e n

e s t im a t e d u s i ng c o m

p o n e n t c o s t e s t i m a t e s p r o v i d e d b y T h e M a r t ec G r o u p ( t h e c o n s u l t i n g f i r m

r e li e d o n b y C A RB t o p r o v i d e c o s t i n f o r m a t i o n i n s upp o r t o f t h e r u l e m a k i ng f o r t h e GH G

S t a n d a r d s )

, a n d d a t a f

r o m t h e r e p o r

t o f t h e I n d e p e n d e n t E x p e r t P a n e l

. C o s t s f o r L D T 2 v e h i c l e s

w e r e e s t im a t e d b y s c a l i ng t h e P C + L D T 1 v a l u e s by t h e r e l a t i v e s a l e s

- w e i g h e d a v e r a g e w e i g h t s o f

2003 m o d e l

- y ea r v e h i c l e s i n t h e s e c l a s s e s

.

3

. P u r e Z EV C o s t s

W e e s t im a t e a c o s t f

o r N e i g h b o r h oo d E l ec t r i c V e h i c l e s ( “ N E V s ” ) o f $8

, 000

, b a s e d o n t h e

n o mi n a l $8

, 000 p r i c e o f N E V s p r o du ce d b y G l o b a l E l ec t r i c M o t o r s

. B eca u s e o f t h e i r l im it e d

r a n g e a n d p e r f

o r m a n ce , N E V s a r e un l i k e l y t o b e g e n e r a l r e p l ac e m e n t s f o r c o n v e n t i o n a l v e h i c l e s ,

a l t h o ug h t h e y w ou l d d i s p l ac e s o m e c o n v e n t i o n a l v e h i c l e t r a v e l

. T h e r e f o r e , N E V pu r c h a s e w a sM e t hodo l o g i e s a n d D a t a

14 v i e w e d a s a c o s t i n a d d i t i o n t o o w n i n g a c o nv e n t i o n a l v e h i c l e

. I n c r e m e n t a l c o s t s f

o r C it y

E l ec t r i c V e h i c l e s w e r e a ss u m e d t o b e e qu a l t o $ 1 3

, 122 w h i c h i s t h e c o s t o f t h e v e h i c l e b a tt e r y

.
U t i l i t y E V c o s t s w e r e a ss u m e d t o b e 2 / 3 t h a t o f a c it y e l e c t r i c v e h i c l e g i v e n t h e r e s p ec t i v e r a n g e

r e q u i r e m e n t s o f 50 a n d 75 m i l e s

.

T h e c o s t o f f

u l l p e r f o r m a n ce b a tt e r y e l e c t r i c v e h i c l e s ( F P B E V ) w a s a l s o e s t im a t e d u s i ng d a t a

f r o m M a r t ec

. I n t h e c a s e o f pu r e e l e c t r i c v e h i c l e s , t h e c o s t o f e l ec t r i c m o t o r s a n d p o w e r

e l ec t r o n i c s i s s o m

e t im e s a s s u m e d t o b e o ff s e t b y t h e c o s t s a v i n g s a s s o c i a t e d w it h e l i m i n a t i o n o f

t h e i n t e r n a l c o m

b u s t i o n e n g i n e a n d t r a n s m i ss i o n

. H o w e v e r , u s i ng c o s t i n f o r m a t i o n p r o v i d e d by

M a r t ec a n d H a r b o u r C o n s u l t i n g , t h e n e t c o s t o f t h e n o n

- b a t t e r y c h a n g e s i s a b o u t $ 2

, 500 f o r a

f u ll

- f u n c t i o n E V w i t h a 100 mi l e r a n g e

. U s i n g t h e s i m p l e a ss u m

p t i o n t h a t o n l y t h e b a t t e r y c o s t

n ee d b e acc o u n t e d f

o r , t h e i n c r e m e n t a l c o s t i n c r ea s e a s s o c i a t e d w it h a f u l l

- f u n c t i o n E V i s
$26

, 400

. I f t h e r a n g e i s r e du ce d t o 75 mil e s , t h e c o s t i n c r ea s e d r o p s t o a b o u t $19

, 90 0

. F o r t h i s

s t ud y , w e r e p l a ce d t h e m o r e r e a l i s t i c M a r t ec b a t t e r y c o s t e s t im a t e s w it h t h e E x p e r t P a n e l ’ s

a v e r a g e c o s t e s t im a t e s f

o r l i t h i u m

- i o n b a tt e r i e s , a n d t h e n a dd e d t h e n e t c o s t o f t h e n o n

- b a tt e r y

c h a n g e s d e s c r i b e d a b o v e

. We u s e d t h e l o w e r v o l u m e c o s t e s t im a t e t h

r o ug h t h e 2012 m

o d e l

- y ea r

a n d t h e n l i n ea r l y t r a n s i t i o n e d t o t h e h i g h v o l u m e c o s t e s t im a t e f

o r 2015 a n d l a t e r m

o d e l

- y ea r s

.
T h i s r e s u l

t e d i n a n ea r t e r m i n c r e m e n t a l c o s t e s t im a t e o f a b o u t $23

, 000 f o r a F P B E V a n d a

l o n g e r t e r m i n c r e m e n t a l c o s t o f a b o u t $17

, 00 0

.

T h e i n c r e m e n t a l c o s t o f f u e l ce ll e l e c t r i c v e h i c l e s ( F C E V s ) w a s e s t im a t e d u s i ng t h e a v e r a g e o f

t h e E x p e r t P a n e l ’ s b e s t ca s e c u rr e n t a n d 2015 e s t im a t e s f o r f u e l c e ll s y s t e m c o s t s i n h i g h v o l u m e

p r o du c t i o n , a n d a n a ss u m e d s t ac k r a t i n g o f 10 0 kW

. T h e c u rr e n t b e s t

- ca s e c o s t s w e r e u s e d

t h r o ug h t h e 2012 m

o d e l

- y ea r , a n d t h e n li n ea r l y t r a n s it i o n e d t o t h e 2015 v a l u e i n t h a t y ea r a n d

b e y o n d

. T h u s , t h e i n c r e m e n t a l c o s t s a ss u m e d f o r F C E V s w e r e a b o u t $6 0

, 000 i n t h e s h o r t t e r m

a n d a b o u t $11

, 00 0 i n t h e l o n g e r t e r m

.

4

. S e l ec t i o n o f C o m p l i a n ce P l a n s

U s i n g t h e c o s t e s t im a t e s d e s c r i b e d a b o v e , w e e s t im a t e d t h e c o s t s p e r Z E V c r e d it f o r a w i d e

v a r i e t y o f v e h i c l e s ( a s d e s c r i b e d i n d e t a il i n A p p e n d i x A )

. B a s e d o n t h i s , w e d e t e r mi n e d t h a t t h e

m o s t c o s t

- e f

f ec t i v e a pp r o ac h f

o r c o m p l i a n ce w it h t h e Z E V S t a n d a r d s w ou l d b e f o r l a r g e v o l

u m e

m a n u f ac t u r e r s t o pu r s u e t h e A l

t e r n a t i v e C o m

p l i a n ce P a t h w a y t h

r o ug h t h e 2017 m

o d e l

- y ea r , a n d

t h e n t o c o n t i n u e p r o du c t i o n o f F C E V s t o m ee t t h e i r “ G o l d ” Z E V c r e d it o b l i g a t i o n s t h e r e a f t e r

.M e t hodo l o g i e s a n d D a t a

15 W e a l s o d e t e r mi n e d t h a t

, u n d e r t h e c o n s e r v a t i v e ( e

. g ., l o w

- c o s t ) a ss u m p t i o n s u s e d i n t h i s s t u d y ,

m a n u f ac t u r e r s w o u l d n o t b e r e q u i r e d t o d e p l o y a d v a n c e d ( T y p e E ) h y b r i d e l ec t r i c v e h i c l e s i n

o r d e r t o c o m

p l y w i t h t h e GHG s t a n d a r d s

. A s a r e s u l t

, w e a ss u m

e d t h a t m a n u f

ac t u r e r s w o u l d

p r o du ce T y

p e D H E V s t h a t c o m

p l y w it h t h e A T P Z E V r e q u i r e m e n t s i n o r d e r t o g e n e r a t e

“ S i l v e r ” Z E V c r e d i t s

. W e a l s o a ss u m e d t h a t m a n u f ac t u r e r s w o u l d u s e P Z E V s t o g e n e r a t e

“ B r o n ze” Z E V c r e d i t s t o t h e e x t e n t a l l o w e d u n d e r t h e Z E V S t a n d a r d s

.

W e a s s u m e t h a t m a n u f

ac t u r e r s p r e f

e r e n t i a l l y i n c o r

p o r a t e A T P Z E V a n d P Z E V t ec h n o l og i e s i n t o

P C s a n d L D T 1 s b e ca u s e t h e c o s t s o f d o i n g s o a r e l o w e r t h a n t h e c o s t s o f i n c o r po r a t i n g t h e m i n t o

L D T 2 s

. H o w e v e r , s o m

e m a n u f ac t u r e r s w it h a r e l a t i v e l y h i g h p e r c e n t a g e o f s a l e s f r o m L D T 2 s

m u s t d e v e l o p s o m

e L D T 2 P Z E V a n d A T P Z E V p l a t f o r m s i n o r d e r t o c o m

p l y w it h t h e Z E V

S t a n d a r d s

. W e m

od e l t h e p e n e t r a t i o n o f P Z E V a n d A T P Z E V t ec h n o l og i e s i n t o L D T 2 s t o t h e

e x t e n t n ec e ss a r y f

o r m a n u f ac t u r e r s t o ac h i e v e c o m

p li a n ce.

A s n o t e d a b o v e , t h e A l t e r n a t i v e C o m

p l i a n ce P a t h r e q u i

r e s L a r g e V o l

u m e M a n u f

ac t u r e r s t o

g e n e r a t e Z E V c r e d i t s b y p r o du c i n g F u e l E l ec t r i c C e ll V e h i c l e s ( “ F C E V s ” ) b a s e d o n h y d r o g e n

f u e l c e l l s

. F C E V s f

ace m a j o r c h a l l e n g e s a ss o c i a t e d w it h t h e l ac k o f a h y d r o g e n r e f u e l i n g

i n f r a s t r u c t u r e i n a d d i t i o n t o t h e h i g h c o s t s a ss o c i a t e d w it h F C E V d e v e l op m e n t a n d p r o du c t i o n

.
A s s t a t e d a b o v e , w e h a v e r e li e d up o n h i g h l y o p t i m i s t i c ( “ b e s t ca s e” ) a ss u m p t i o n s r e g a r d i ng t h e

c o s t s o f F C E V s

. I n a d d i t i o n , w e h a v e a l s o m a d e o p t imi s t i c a s s u m p t i o n s a b o u t t h e d e m a n d f o r

F C E V s ( s ee A

pp e n d i x B )

.



### D. Ne w Vehicle Market Model

T h i s s ec t i o n s u m m a r i ze s t h e m a j o r d a t a a n d m e t h o d o l og i e s u s e d t o d e v e l o p t h e N e w V e h i c l e

M a r k e t M o d e l ( “ N V MM ” )

. A d e t a il e d d e s c r i p t i o n o f t h e N e w V e h i c l e M a r k e t M o d e l i s

p r o v i d e d i n A

pp e n d i x B

.

1

. E ff ec t s M o d e l e d

T h e Z E V a n d GHG s t a n d a r d s w il l a ff e c t t h e m a r k e t f

o r n e w v e h i c l e s i n C a li f o r n i a i n s e v e r a l

w a y s

. O u r m

o d e li ng f r a m e w o r k i n c l ud e s t h e e l e m e n t s li s t e d b e l o w

.
§ R e l e v a n t a dd i t i o n a l c o s t s i n c u rr e d b y m a n u f ac t u r e r s t o m

od i f y m o t o r v e h i c l e s t o ac h i e v e t h e

GHG e m i ss i o n r e du c t i o n s r e q u i r e d f o r c o m p l i a n c e w it h t h e GHG s t a n d a r d s a n d / o r r e l e v a n tM e t hodo l o g i e s a n d D a t a

16 a d d i t i o n a l c o s t s i n c u rr e d t o m od i f y v e h i c l e s t o qu a l i f

y a s P Z E V s , A T P Z E V s , o r Z E V s a s

r e q u i r e d b y t h e Z E V s t a n d a r d s

.

§ B e n e f i t s t o c o n s u m

e r s o f i m p r o v e m e n t s t o v e h i c l e f

u e l e c o n o m

y. 7

§ S h i f t s i n t h e m i x o f n e w m

o t o r v e h i c l e s du e t o t h e s e a d d it i o n a l c o s t s , w h i c h d i f f e r b y t y p e o f

v e h i c l e , m

o d e l

, a n d m a n u f

ac t u r e r.

§ S u b s t i t u t i o n t o w a r d s v e h i c l e s p r o du ce d b y I n t e r m e d i a t e V o l u m e M a n u f

ac t u r e r s a n d S m a ll

V o l u m e M a n u f

a c t u r e r s

. T h i s i s r e l e v a n t f o r b o t h t h e GHG S t a n d a r d s , w h i c h d o n o t r e qu i r e

I n t e r m e d i a t e V o l

u m e M a n u f

a c t u r e r s t o m

ee t t h e 2012 s t a n d a r d s u n t i l 2016

, a n d f o r t h e Z E V

S t a n d a r d s , w h i c h a l l o w I n t e r m e d i a t e V o l

u m e M a n u f

a c t u r e r s t o f

u l f il l t h e i r Z E V

r e q u i r e m e n t s u s i n g P Z E V s

. ( N e it h e r r e g u l a t i o n i m p o s e s r e q u i

r e m e n t s o n S m a l l V o l

u m e

M a n u f a c t u r e r s ).

2

. N es t e d L o g i t M o d e l

T h e NV M M i s a n e s t e d l o g i t m o d e l

. A pp e n d i x B p r o v i d e s d e t a il s o f t h e n e s t e d l og it f r a m e w o r k

a n d t h e d a t a u s e d t o d e v e l o p t h e m o d e l

. E c o n o mi s t s a n d o t h e r a n a l y s t s h a v e u s e d n e s t e d l og it

m o d e l s t o e v a l

u a t e f a c t o r s a f f e c t i n g t h e d e m a n d f

o r m o t o r v e h i c l e s a n d o t h e r go o d s. 8 N e s t e d

l og i t m o d e l s h a v e a l s o h a v e b e e n u s e d i n c o u r t p r o cee d i n g s t o e v a l

u a t e t h e e ff

ec t s o f m e r g e r s a n d

o t h e r c h a n g e s i n m a r k e t c o n d i t i o n s ( s ee , e

. g

. , W e r d e n , F r o e b a n d T a r d i ff 1996 )

, a n d i n v a r i o u s

s e t t i n g s t o e v a l

u a t e t h e po t e n t i a l m a r k e t d e m a n d f o r n e w p r o du c t s a n d s e r v i ce s ( s ee , e

. g ., T a r d i f f

1998 )

.

T h e “ n e s t s ” i n t h e n e s t e d l og i t m o d e l r e f e r t o t h e s t r u c t u r e a ss u m

e d f o r c o n s u m e r c h o i ce s i n t h e

n e w v e h i c l e m a r k e t

. O u r m o d e l a ss u m e s t h a t c o n s u m e r s f a ce d e c i s i o n s s t r u c t u r e d r e g a r d i n g t h e

pu r c h a s e o f a n e w m

o t o r v e h i c l e , a s s h o w n i n F i g u r e 2 ( d e s c r i b e d i n m o r e d e t a il i n A

pp e n d i x B )

.
C o n s u m e r s c h oo s e w h e t h e r t o pu r c h a s e a n e w v e h i c l e o r n o t

. C o n d it i o n a l o n t h e c h o i ce t o

7 T h e NVM M d o e s n o t a t t e m p t t o a cc o u n t fo r l o ss e s t o c o n s u m e r s du e t o w e i gh t r e du ct i o n s t h a t c o u l d r e s u l t i f

m a n u f a c t u r e r s c o m p l y w it h t

h e G H G S t a nd a

r d s b y i n t e n ti o

n all y r e du ci n g v e h i c l e w e i gh t ; s u c h w e i gh t r e du ct i o n s

w o u l d b e v ie w e d n e g a

ti v e l y b y c o n s u m e r s , a ss u m i ng o t h e r a t t r i b u t e s a r e h e l d c o n s t a n t

, a nd t

h e r e f o r e w o u l d b e

e xp ec t e d t o i n c

r e a s e t h e f l ee t im p a c t s du e t o t

h e G H G S ta n d a

r d s

.

8 D r

. D a n i e l M c F a dd e

n w a s a w a

r d e d t h e 200 0 N ob e l P r i z e i n E c o n o mi c s l a rg e l y f o r h i s d e v e l o p m e n t of t h e l o g i t

m o d e l

.M e t hodo l o g i e s a n d D a t a

17 pu r c h a s e a n e w v e h i c l e , t h e y s e l e c t t h e t y p e o f v e h i c l e f

r o m a m o n g t h r ee m a j o r v e h i c l e t y

p e s—

ca r s , S UV s / m i n i v a n s , a n d t r u c k s

. C o n d it i o n a l o n t h e c h o i c e o f a v e h i c l e t y p e , t h e y s e l ec t a

s p e c i f i c v e h i c l e ca t e g o r y

. O u r m o d e l i n c l ud e s a t o t a l o f 15 v e h i c l e ca t e g o r i e s , i n c l u d i ng s i x

p a ss e n g e r c a r s , s i x S UV s / m i n i v a n s , a n d t h r ee t r u c k s / v a n s ( e

. g ., p i c k

- up s a n d f u l l v a n s )

. F i n a ll y ,

c o n d i t i o n a l o n t h e c h o i c e o f a v e h i c l e c l a ss , c o n s u m e r s c h oo s e f r o m t h e v e h i c l e m

o d e l s t h a t a r e

a v a i l a b l e i n t h a t c l a s s

.

T h i s s t r u c t u r e p r o v i d e s f

o r a r i c h p a tt e r n o f o w n

- a n d c r o ss

- p r i ce e l a s t i c it i e s f o r d i f f e r e n t v e h i c l e

m o d e l s

. T h e e m

p i r i c a l e s t im a t e s p r o v i d e i n f o r m a t i o n o n m

o r e t h a n 200 s e p a r a t e v e h i c l e m od e l s

i n ea c h y e a r . T h e a gg r e g a t e n e w v e h i c l e p r i ce e l a s t i c it y i s a s s u m e d t o b e –1

. 0

, a v a l u e c o n s i s t e n t

w i t h t h e e m p i r i ca l l i t e r a t u r e. 9 N e w v e h i c l e m a n u f ac t u r e r s a r e a ss u m

e d t o b e p r o f

it

- m a x i mi z i n g

f i r m s

. T h e e m

p i r i ca l f o r m u l a t i o n o f t h e l og it m

od e l u s e d i n t h i s s t u d y i s b a s e d up o n n e w v e h i c l e

s a l e s , p r i ce , a n d c h a r ac t e r i s t i c s i n f o r m a t i o n f

o r t h e y ea r s 2001 t h

r o ug h 2005

.

T h e N V M M e s t im a t e s t h e e ff e c t s o f t h e Z E V a nd GHG s t a n d a r d s o n n e w v e h i c l e p r i c e s a n d

s a l e s. 10 T h e m

o d e l a l l o w s f

o r c o n s u m

e r s u b s t it u t i o n a m

o n g v e h i c l e s t h a t a r e a ff ec t e d

d i ff e r e n t i a ll y b y t h e r e g u l a t i o n s

. V e h i c l e s p r o du ce d b y m a n u f ac t u r e r s w it h l o w e r s a l e s v o l u m e s

a r e s ub j e c t t o l e ss s t r i n g e n t e mi ss i o n s s t a n d a r d s u n d e r t h e GHG s t a n d a r d s i n t h e e a r l y y ea r s o f

t h e r e g u l a t i o n a n d t h u s h a v e l o w e r c o s t i n c r e a s e s a n d c o rr e s p o n d i n g f u e l ec o n o m

y c h a n g e s

du r i n g t h o s e y ea r s

. U n d e r t h e Z E V S t a n d a r d s , i n t e r m e d i a t e v o l

u m e m a n u f

a c t u r e r s m a y m ee t

9 c

. f

. G r u e n s p ec h t (2 0 00 ) i n A pp e

n d i x B

.

10 A l l n i n e la

r g e vo l u m e ma n u f

a c t u r e r s , a s w e ll a s t

h e i n t e r m e d i a t e vo l u m e m a nu f

a c t u r e r s i n T a b l e 1

, a

r e m o d e l e d i n
t h e NVMM u s i ng t

h e c o s t e s ti m at e s a n d c o m p l i a n ce p l a n s d e s c r i b e d a b o v e

. B u y / D o n ’ t B uy

V e h i c l e T y pe

V e h i c l e C l a ss

V e h i c l e M od el

F i g u re 2

. H i e r a r c h y o f N V M M n e s t i n g s t r u c t u re
.M e t hodo l o g i e s a n d D a t a

18 t h e i r e n t i r e Z E V o b l i g a t i o n w i t h c r e d it s g e n e r a t e d b y P Z E V s

. T h e m o d e l a l l o w s f

o r t h e s e

d i ff e r e n c e s t o b e r e f

l ec t e d i n c h a n g e s i n v e h i c l e s a l e s b y m o d e l a n d m a n u f

ac t u r e r

.

3

. P r i c i n g D ec i s i o n s b y M a nu f ac t u r e r s

T h e C a li f

o r n i a P r o g r a m i m

p o s e s s e v e r a l r e q u i r e m

e n t s o n i n t e r m

e d i a t e a n d l a r g e v o l

u m e

m a n u f ac t u r e r s t h a t i n f

l u e n ce t h e i

r p r o f it

- m a x im i z i ng p r i c i n g s t r a t e g i e s

. F o r e x a m

p l e ,

m a n u f ac t u r e r s m

u s t g e n e r a t e a t l e a s t s o m

e n u m b e r o f Z E V c r e d it s ea c h y ea r , a n d s o m e s h a r e o f

t h e s e c r e d i

t s m u s t b e g e n e r a t e d u s i n g s p ec i f i c t ec h n o l og i e s ( e

. g

. P Z E V

, A T P Z E V

, o r Z E Vqu a l i f y i n g t ec h n o l og y c h o i c e s )

. M o r e o v e r , t h e n u m b e r o f c r e d it s r e q u i

r e d i s d e p e n d e n t o n

v e h i c l e s a l e s i n p r i o r y ea r s

. T h e NV M M a cc o u n t s f o r t h e s e i n f

l u e n c e s a n d t h e i r l a gg e d s t r u c t u r e

i n f o r ec a s t i n g t h e e ff

ec t s o f t h e Z E V a n d GHG s t a n d a r d s

. 

### E. Scrappage Model

T h e S c r a pp a g e M o d e l e s t im a t e s t h e e f f ec t o f c h a n g e s i n t h e n e w v e h i c l e m a r k e t

— i n c l u d i ng

p r i ce s a n d qu a n t i t i e s o f d i f f e r e n t t y p e s o f v e h i c l e s s o l d— o n t h e r a t e a t w h i c h u s e d v e h i c l e s a r e

r e t i r e d f r o m s e r v i ce ( “ s c r a pp e d ” )

. I t i s a s t a t i s t i ca l m o d e l t h a t e s t im a t e s h o w s c r a pp a g e r a t e s

r e s p o n d t o c h a n g e s i n t h e p r i c e s o f n e w v e h i c l e s , a s w e ll a s t o c h a n g e s i n a v a r i e t y o f o t h e r

v a r i a b l e s

.

P r e v i o u s r e s ea r c h h a s e s t a b l i s h e d t h a t n e w v e h i c l e p r i c e s a f f ec t u s e d v e h i c l e s c r a pp a g e r a t e s. 11

W h e n t h e p r i c e s o f n e w v e h i c l e s i n c r ea s e , t h e v a l u e s o f u s e d v e h i c l e s a l s o i n c r ea s e , a n d v e h i c l e

o w n e r s r e t a i n t h e m f

o r a l o n g e r p e r i od o f t im e

. F i gu r e 3 i ll u s t r a t e s h o w a c h a n g e i n n e w v e h i c l e

p r i ce s ca u s e s a n i n c r ea s e i n t h e d e m a n d f o r ( a n d t h u s t h e v a l u e o f

) u s e d v e h i c l e s

. T h i s i n c r e a s e d

d e m a n d r e s u l

t s i n a d ec r e a s e i n t h e s c r a pp a g e r a t e s o f o l d e r v e h i c l e s

.

T h e s c r a pp a g e m

o d e l i s a d e t a il e d e m

p i r i c a l m o d e l o f t h e e f

f ec t o f c h a n g e s i n n e w v e h i c l e p r i c e s

o n e x i s t i n g v e h i c l e s c r a pp a g e r a t e s

. T h e s c r a pp a g e m o d e l i s d e s c r i b e d i n d e t a i l i n A pp e n d i x C

.
U s i n g a c o n ce p t u a l f

r a m e w o r k d e v e l o p e d b y p r e v i o u s r e s ea r c h e r s , w e h a v e d e v e l o p e d a n upd a t e d s t a

t i s t i c a l m o d e l r e l a t i n g u s e d v e h i c l e s ’ s c r a pp a g e r a t e s t o n e w v e h i c l e p r i ce s

. T h e

m o d e l i n c l ud e s s t a t i s t i c a ll y e s t im a t e d r e l a t i o n s h i p s b e t w e e n s c r a pp a g e r a t e s f o r v e h i c l e s o f

d i ff e r e n t m o d e l y ea r v i n t a g e s a t ea c h a g e du r i ng t h e i r l i f e t im e s t o n e w v e h i c l e p r i ce s a n d o t h e r

r e l e v a n t f a c t o r s

.M e t hodo l o g i e s a n d D a t a

19 

### F. Fleet Population M o del

T h e F l ee t P o pu l a t i o n M o d e l c o m b i n e s t h e r e s u l

t s o f t h e N V MM a n d t h e S c r a pp a g e M o d e l

, a n d

p r o j ec t s c h a n g e s i n t h e r e l e v a n t f l e e t p o pu l a t i o n s o v e r t im e

.

T h e e m p i r i ca l r e s u l

t s f r o m t h e S c r a pp a g e M o d e l a r e u s e d i n c o m b i n a t i o n w it h t h e n e w v e h i c l e

s a l e s e ff ec t s f r o m t h e N V MM t o a ss e s s t h e n e t e ff ec t s o f t h e C a l i f

o r n i a P r o g r a m o n t h e

C a l i f o r n i a v e h i c l e f

l e e t

. W e d e v e l o p a d e t a il e d b a s e l i n e f o r eca s t o f t h e C a l i f

o r n i a v e h i c l e f

l ee t

p o pu l a t i o n b a s e d up o n t h e v e h i c l e p o p u l a t i o n s i n t h e C A R B ’ s E M F A C 200 7 e m i ss i o n i nv e n t o r y

m o d e l. 12 F l e e t p o pu l a t i o n e f f ec t s a r e m ea s u r e d r e l a t i v e t o t h e b a s e l i n e v e h i c l e p o p u l a t i o n s

. I n

t h i s s t u d y , b o t h t h e E M F A C 2007 e m i ss i o n m o d e l i ng a n d M O B I L E 6

. 2 e mi ss i o n m o d e li ng u s e

t h e s a m e b a s e li n e p o p u l a t i o n s a n d f l ee t e ff ec t s

.

A s d e s c r i b e d a b o v e , t h e NV MM e s t im a t e s t h e e ff e c t s o f t h e C a l i f

o r n i a o n n e w v e h i c l e s a l e s ,

w h i l e t h e S c r a pp a g e M o d e l e s t im a t e s t h e e ff e c t s o n e x i s t i n g v e h i c l e s t o c k s

. A p p l y i ng t h e r e s u l

t s

o f b o t h o f t h e s e m

o d e l s t o t h e b a s e l i n e s i n t h e F l e e t P o pu l a t i o n M o d e l a l l o w s u s t o s im u l a t e t h e

e ff ec t s o f t h e r e gu l a t i o n s o n t h e v e h i c l e p o p u l a t i o n s i n C a l i f o r n i a t h r o ug h t h e y ea r 2023

.

11 c

. f

. G r u e n s p ec h t i n A pp e

n d i x C

.

12 T h e E MFA C20 0 7 m o d e l i n c l ud e s t h e L E V 1 p r og r a m , t

h e L E V 2 p r og r am , a n d t

h e Z E V m a n d at e

. We u t

i l iz e t h e p o pu lati o n s b y v e h i c l e c la ss i n t

h e E MFA C 200 7 m o d e l a s o ur b a s e l i n e ( w i t h e mi ss i o n r at e s a

p p r o pr i a t e fo r t h e f e d e r a l Ti e r 2 p r og r a m )

, a n d w e e s timat e f l ee t e f f ec t s r e la t i v e t o t h e s e p o pu l a

ti o n s

. D e m a nd P r i c e I n c r e ase

S a l e s D e c r e a se Q u a n ti ty P r i ce

Q u an t i ty P r i ce N e w V e h i c l e M a r k

et

O r i g i nal D e m a nd N ew D e m a nd

I n c r e as ed Q u a n ti ty U se d V e h i c l e M a r ket

F i g u re 3

. Eff

e c t s o f c h a n g e s i n n e w v e h i c l e p r i ce s o n p ri c e s o f u s e d v e h ic l e s
.M e t hodo l o g i e s a n d D a t a

20 

### G. Modeling of Effect s on Vehicle Miles T r a v e l ed (“V M T ”)

T h e r e s u l t s o f t h e F l ee t P o pu l a t i o n M o d e l p r o v i d e a n i m p o r t a n t c o m p o n e n t f o r e s t im a t i n g t h e

o v e r a l l e ff

ec t s o f t h e r e gu l a t i o n s o n m o t o r v e h i c l e e mi s s i o n s

. I n a dd it i o n t o f l ee t e f f ec t s , t h e

e mi ss i o n s o f t h e m

o t o r v e h i c l e f

l e e t a l s o d e p e n d o n V M T. W e d e v e l o p e d a m o d e l t o e x p l a i n

o v e r a l l V M T i n o r d e r t o p r o v i d e e s t im a t e s o f c h a n g e s i n V M T du e t o t h e C a li f o r n i a P r o g r a m
(r e l a t i v e t o b a s e l i n e V M T )

.

I n c r ea s i ng t h e f

u e l e c o n o m

y o f a v e h i c l e ( w it h a l l e l s e e qu a l ) c a n l o w e r t h e v e h i c l e ’ s e mi ss i o n

r a t e s

. H o w e v e r , i t a l s o l o w e r s t h e c o s t p e r mil e o f d r i v i n g , l ea d i n g d r i v e r s t o t r a v e l m o r e mil e s

.
T h u s , i n c r ea s i n g f

u e l ec o n o m

y a l s o r a i s e s V M T. S i n ce t o t a l e mi ss i o n s d e p e n d o n b o t h e mi ss i o n

r a t e s ( i

. e ., e mi ss i o n s p e r mi l e ) a n d V M T, t h e e ff e c t o f a d ec r e a s e i n e m i s s i o n s r a t e s i s p a r t i a ll y

o ff s e t b y a n i n c r ea s e i n V M T. T h i s o ff s e t i s k n o w n a s t h e “ r e b o u n d e ff e c t

. ”

T h e V M T M o d e l e v a l u a t e s t h e e ff e c t o n V M T o f c h a n g e s i n t h e c o s t p e r m i l e o f t r a v e l i n

C a l i f o r n i a

. ( T h e V M T m

o d e l i s d e s c r i b e d i n d e t a il i n A pp e n d i x D

. ) B a s e d o n a f r a m e w o r k

d e v e l o p e d b y r e s ea r c h e r s a t t h e U n i v e r s it y o f C a l i f o r n i a , Ir v i n e , w e e s t im a t e r e l a t i o n s h i p s

b e t w e e n c o s t

- p e r- m i l e o f t r a v e l

, m i l e s t r a v e l e d

, a n d o t h e r r e l e v a n t f ac t o r s

. U s i n g t h e r e s u l

t s o f

t h i s a n a l y s i s , w e d e v e l o p e s t im a t e s o f t h e r e b o u n d e f f e c t f o r C a li f o r n i a , b o t h i n t h e s h o r

t r u n a n d

i n t h e l o n g r u n

. W e t h e n u s e t h e s e e s t im a t e s t o d e t e r mi n e t h e t o t a l c h a n g e i n V M T du e t o t h e

C a l i f o r n i a P r o g r a m. 13



### H. Pollutant E m issio n s Models

W e p e r f o r m e d e m i ss i o n m

o d e li ng w it h b o t h E M F A C 2007 e mi ss i o n r a t e s a n d M O B I L E 6

. 2

e mi ss i o n r a t e s

. B a s e l i n e v e h i c l e p o p u l a t i o n s , b a s e l i n e s c r a pp a g e r a t e s , a n d b a s e l i n e v e h i c l e mi l e s

t r a v e l e d f

o r b o t h m

o d e l s u s e d i n f

o r m a t i o n f

r o m t h e E M F A C 200 7 m o d e l

. E ff e c t s o f f l e e t

t u r n o v e r a n d r e b o u n d V M T w e r e i d e n t i c a l i n b o t h e mi ss i o n m o d e l i ng a pp r o ac h e s

. E mi ss i o n

r a t e s b y m

o d e l y ea r a n d v e h i c l e c l a s s , h o w e v e r , w e r e d e p e n d e n t o n t h e d i ff e r e n t e mi ss i o n f

ac t o r s

f o r eac h m o d e l

.

13 N o t e t h a t t h e r e bo u n d e f

f ec t i s r e l e v a n t t o bo t h t

h e Z E V S ta n d a

r d s a n d t h e G H G S t a n d a

r d s

. T h e T y

p e D H yb r i d
El ect r i c V e h i c l e s t h a t m a n u f

a c t u r e r s w i l l p r o du ce t o g e

n e r at e A T P Z E V c

r e d it s h a v e h i g h e

r f u e l ec o n o m y t h a n

c o n v e n ti o n a l g a s o l i n e v e h i c l e s

. R e du ci n g CO 2 em i ss i o n s f r o m m o t o r v e h i c l e s a s ca ll e d fo r i n t h e G H G S t a nd a

r d s

r e s u lt s i n i m p r ov e m e n t s i n f u e l ec o n o m y

.M e t hodo l o g i e s a n d D a t a

21 B e l o w w e d e s c r i b e h o w f l ee t t u r n o v e r e ff

ec t s a n d r e b o u n d e ff

e c t s w e r e i n c o r p o r a

t e d i n t o t h e t w o

e mi ss i o n s m

o d e l i ng a pp r o ac h e s

. A pp e n d i x E p r o v i d e s f u r t h e r i n f

o r m a t i o n a b o u t t h e

E M F A C 2007 e m i ss i o n r a t e s a n d c o n t a i n s d e t a i l e d r e s u l t s f r o m t h e E M F A C 2007 m o d e li ng ,

w h i l e A pp e n d i x F p r o v i d e s d e t a il e d i n f o r m a t i o n a b o u t t h e M O B I L E 6

. 2 m o d e li ng a n d d e t a il e d

M O B I L E 6

. 2 r e s u l

t s

. A pp e n d i x G d e s c r i b e s e m i ss i o n s e ff e c t s a ss o c i a t e d w it h r e du c e d g a s o li n e

c o n s u m p t i o n u n d e r t h e C a l i f

o r n i a P r o g r a m

.

1

. E m i ss i o n s I n c r eases d u e t o F l e e t P o p u l a t i o n E ff ec t s

A s n o t e d ea r li e r , t h e n e w v e h i c l e p r i ce i n c r ea s e s r e s u l t i n g f r o m t h e Z E V a n d G H G s t a n d a r d s w i l l

a ff ec t f l ee t t u r n o v e r b y r e du c i ng n e w v e h i c l e s a l e s a n d i ndu c i ng h i g h e r r a t e s o f r e t e n t i o n o f

o l d e r , h i g h e r- e m i t t i n g v e h i c l e s

. T h e s e e ff e c t s l ea d t o i n c r ea s e s i n c r it e r i a p o l l u t a n t e mi ss i o n s , a s

o l d e r v e h i c l e s i n t h e f

l ee t o f t e n h a v e e m i ss i o n r a t e s t h a t a r e m a n y t im e s h i g h e r t h a n t h o s e o f n e w

v e h i c l e s

. O u r e s t im a t e s a ss u m e t h a t o v e r a ll V M T i s n o t a f f ec t e d b y t h e s e s h i f

t s i n t h e a g e o f t h e

v e h i c l e f l e e t

.

2

. E m i ss i o n s I n c r eases D u e t o R e bo un d E ff e c t

T h e r e b o u n d e f

f ec t o n l y a ff

ec t s v e h i c l e s f

o r w h i c h f

u e l ec o n o m

y u n d e r t h e C a li f

o r n i a p r o g r a m i s

i m p r o v e d r e l a t i v e t o f

u e l ec o n o m

y u n d e r t h e F e d e r a l P r o g r a m

. T h e r e b o u n d e ff e c t i s a c c o u n t e d

f o r a f t e r t h e e ff

ec t s o f f l ee t t u r n o v e r a r e i n c o r p o r a t e d i n t o t h e m o d e li ng

. T h e r e b o u n d e ff ec t i s

m o d e l e d b y e m

p l o y i ng t h e V M T m

o d e l d e s c r i b e d i n A

pp e n d i x D t o g e n e r a t e t h e i n c r e a s e d V M T

( a b o v e b a s e l i n e V M T ) f

o r v e h i c l e s w i t h im

p r o v e d f u e l e c o n o m

y

.S t ud y R e s u l t s

22 

### III

. S t ud y R e s u l t s

T h i s c h a p t e r s u mm a r i z e s t h e r e s u l t s o f o u r a n a l y s e s o f t h e e ff ec t s o f t h e C a li f

o r n i a P r o g r a m

. T h e

r e s u l t s a r e g r o up e d i n t o t h

r ee ca t e g o r i e s :

1. M o t o r v e h i c l e m a r k e t e ff ec t s ;

2. E ff ec t s o n v e h i c l e s m il e s o f t r a v e l; a n d

3. E mi ss i o n s e ff

ec t s

.

T h e g r a p h s p r e s e n t e d b e l o w r e f l ec t c h a n g e s i n v a r i o u s qu a n t it i e s u n d e r t h e C a l i f o r n i a P r o g r a m

r e l a t i v e t o w h a t t h e s e qu a n t i t i e s w o u l d h a v e b e e n u n d e r t h e F e d e r a l P r o g r a m

. A c c o r d i n g l y ,

p o s i t i v e v a l u e s i n d i ca t e t h a t t h e qu a n t it y u n d e r t h e C a l i f o r n i a P r o g r a m i s g r ea t e r t h a n u n d e r t h e

F e d e r a l P r o g r a m , w h e r e a s n e g a t i v e qu a n t it i e s i n d i ca t e t h e c o n v e r s e

. D e t a il e d e m i ss i o n r e s u l t s

a r e p r o v i d e d i n A

pp e n d i x E a n d A

pp e n d i x F

.



### A

. Motor Vehicle Fl e et Effects

I n t h i s s ec t i o n , w e p r e s e n t r e s u l t s o f o u r a n a l y s i s o f m o t o r v e h i c l e f

l e e t e ff ec t s u n d e r t h e

C a l i f o r n i a P r o g r a m

. F i gu r e 4 p r o v i d e s a n il l u s t r a t i v e s n a p s h o t o f t h e c h a n g e s i n a g e d i s t r i b u t i o n

- 100 - 80 - 60 - 40 - 20 0 20 40Thousandsof Vehicles198019821984198619881990199219941996199820002002200420062008201020122014201620182020

M o d e l Y ear

PC/LDT1 L D T2+

F i g u re 4

. Ch a n g e i n s t a t e w i d e 202 0 v e h ic le p o p u l at i o n e s t i m at e s a s a re s u l t o f t h e c om b i n e d C a li f o r n i a P r o g r a m , r el a t

i v e t o p o p u l at i o n s u nd er t h e F e d er a l P r o g r a m
.S t ud y R e s u l t s

23 o f t h e v e h i c l e f

l e e t u n d e r t h e C a l i f

o r n i a P r o g r a m r e l a t i v e t o b a s e l i n e p o pu l a t i o n s c o n s i s t e n t w it h

t h e F e d e r a l P r o g r a m f

o r b o t h t h e P C + L D T 1 v e h i c l e ca t e g o r y a n d t h e L D T 2 + v e h i c l e ca t e g o r y

.
T h e C a l i f o r n i a P r o g r a m h a s t h e e ff ec t o f c h a n g i n g t h e a g e d i s t r i b u t i o n s o f t h e f l e e t s i n b o t h

v e h i c l e c a t e go r i e s

. I n 2020

, s a l e s o f n e w v e h i c l e s i n t h e r e g u l a t e d f l ee t a r e s i g n i f

i ca n t l y l o w e r

t h a n b a s e l i n e s a l e s i n C a l i f o r n i a a s a r e s u l

t o f t h e C a l i f

o r n i a P r o g r a m

. I n c o n t r a s t

, t h e n u m b e r o f

v e h i c l e s i n t h e f

l e e t t h a t w e r e p u r c h a s e d b e f o r e t h e e ff

e c t i v e d a t e o f t h e r e g u l a t i o n s ( i

. e ., p r e2009 v i n t a g e s ) i s s i g n i f

i c a n t l y h i g h e r t h a n t h e b a s e li n e n u m b e r i n 2020

. I n t h e y ea r 2020

, t h e

n u m b e r o f v e h i c l e s o f v i n t a g e s 2008 a n d o l d e r i s h i g h e r t h a n t h e b a s e l i n e n u m b e r b eca u s e

c o n s u m e r s o p t t o r e t a i n t h e i r e x i s t i n g v e h i c l e s l o n g e r , r a t h e r t h a n r e p l a c i ng t h e m w it h m o r e

e x p e n s i v e n e w e r v e h i c l e s

.

R e s u l t s a r e s im il a r f

o r t h e S o u t h C o a s t A i

r b a s i n , a s s h o w n i n F i gu r e 5

. A s a r e s u l t o f t h e

C a l i f o r n i a P r o g r a m , t h e p o pu l a t i o n o f m o t o r v e h i c l e s o f o l d e r v i n t a g e s ( t h o s e p r o du ce d b e f o r e

2009 ) i n t h e S o u t h C o a s t v e h i c l e f l e e t i n t h e y e a r 2020 i s l a r g e r , a n d t h e p o p u l a t i o n o f m o t o r

v e h i c l e s o f m

o r e r ece n t v i n t a g e s ( t h o s e p r o du ce d a f t e r 2009 ) i n t h e f

l ee t i n 2020 i s s m a l l e r t h a n it

w o u l d b e u n d e r t h e F e d e r a l P r o g r a m

. I n 2020

, n e w v e h i c l e s a l e s o f P C / L D T 1 ’ s a n d L D T 2 + ’ s

c o m b i n e d a r e a b o u t 4 0

, 000 f e w e r a s a r e s u l

t o f t h e C a l i f

o r n i a P r o g r a m

. I n c o n t r a s t

, t h e n u m b e r

o f v e h i c l e s i n t h e f

l ee t p r o du ce d p r i o r t o t h e e ff e c t i v e d a t e o f t h e Z E V a n d GH G R e g u l a t i o n s

- 40 - 30 - 20 - 10 0 10 20Thousandsof Vehicles198019821984198619881990199219941996199820002002200420062008201020122014201620182020

M o d e l Y e ar

P C / L D T1 LD T 2+

F i g u re 5

. I m p a c t s o f t h e c om b i n e d C a l i f o r n i a P r o g r a m o n S o u t h C o a s t 2020 V e h i c le P o p u l at i o n , r e l at i v e t o
p o p u l at i o ns u nd er t h e F e d er a l P r o g r a m
.S t ud y R e s u l t s

24 ( i

. e ., p r e

- 20 0 9 m

o d e l y ea r v e h i c l e s ) i s m

o r e t h a n 2 50

, 000 g r e a

t e r i n 2020 t h a n it o t h e r w i s e w ou l d

b e u n d e r t h e F e d e r a l P r o g r a m

.



### B. VM T E ffects

F i gu r e 6 s h o w s t h e c h a n g e i n v e h i c l e mi l e s t r a v e l e d s t a t e w i d e u n d e r t h e C a l i f o r n i a P r o g r a m ,

r e l a t i v e t o b a s e l i n e V M T u n d e r t h e F e d e r a l P r o g r a m

. B y 2023

, m o t o r i s t s a r e p r o

j ec t e d t o d r i v e

a pp r o x im a t e l y 14 m i ll i o n a d d i t i o n a l mi l e s p e r d a y du e t o t h e C a l i f o r n i a P r o g r a m

. T h i s i n c r e a s e

i n V M T p a r t i a ll y o ff

s e t s a n y e mi ss i o n d ec r e a s e s d u e t o im p r o v e d f u e l ec o n o m

y

.



### C. Fuel Cons u m ption and Upstre a m E m i s sions Effects

D u e t o t h e f

u e l e c o n o m

y i m p r o v e m e n t s r e s u l

t i n g f r o m t h e C a l i f

o r n i a P r o g r a m , c o n s u m

p t i o n o f

g a s o li n e d ec r ea s e s ( a l

t h o ug h t h i s d ec r e a s e i s p a r t l y o ff s e t b y t h e i n c r ea s e i n V M T )

. T h e n e t

d ec r ea s e i n g a s o li n e c o n s u m p t i o n l e a d s t o a s m a ll d ec r ea s e i n e m i ss i o n s a s s o c i a t e d w it h t h e

r e f i n i ng a n d t r a n s p o r

t o f g a s o li n e ( up s t r e a m e m i ss i o n s )

. F i gu r e 7 s h o w s t h e c h a n g e i n s t a t e w i d e

e mi ss i o n s o f N M OG + NO
x du e t o t h e up s t r ea m e m i ss i o n s e ff ec t

. 0 2
, 0 00 4
, 0 00 6
, 0 00 8
, 0 00 1 0
, 0 00 1 2
, 0 00 1 4
, 0 00 1 6
, 0 00200920102011201220132014201520162017201820192020202120222023



### C a l e n d a r Y earThousandsofMiles/Day

C h a ng e i n V MT U nd e r C a li f o r n i a P r ogr am

F i g u re 6

. Ch a n g e i n v e h i c l e m i l e s t r a v e l e d u nd er c om b i n e d C a l i f o r n i a P r o g r a m r el a t

i v e t o V M T u nd er F e d er a l P r o g r a m
.S t ud y R e s u l t s

25 

### D. O v e r all Pollutant E m issions E ffects

B e l o w w e p r o v i d e o v e r a l l a s s e ss m e n t s o f t h e e ff e c t s o f t h e C a li f

o r n i a P r o g r a m o n e m i ss i o n s o f

o z o n e p r ec u r s o r s ( VO C + NO
x ) i n t h e S t a t e o f C a l i f o r n i a a n d t h e S o u t h C o a s t A i r B a s i n

.
A d d i t i o n a l r e s u l

t s f o r VO C + N O x , VO C

, N O x , C O

, T o x i c s , E x h a u s t PM 2 .5 , a n d SO
x , f o r b o t h

C a l i f o r n i a a n d t h e S o u t h C o a s t A i r B a s i n , a r e s h o w n i n A pp e n d i x E a n d A pp e n d i x F

. A s n o t e d

,

o u r a ss e s s m e n t s a r e b a s e d o n t w o d i ff e r e n t e m i s s i o n m

o d e l s

. T h e f

i r s t s u b

- s e c t i o n p r e s e n t s

r e s u l t s g e n e r a t e d u s i n g C A R B ’ s E M F A C 2007 e m i ss i o n i n v e n t o r y m o d e l

, a n d t h e s ec o n d s u bs ec t i o n p r e s e n t s a n a l o g o u s r e s u l t s g e n e r a t e d u s i n g t h e U

. S

. E P A ’ s M O B I L E 6

. 2 e mi ss i o n f ac t o r

m o d e l

.

a

. E M F A C 2007 M od e l R es u l t s

T h e d i f f e r e n ce s i n e m i ss i o n s u n d e r t h e C a l i f o r n i a P r o g r a m r e l a t i v e t o t h e F e d e r a l P r o g r a m b a s e d

o n s u mm e r s e a s o n i nv e n t o r i e s f r o m E M F A C 200 7 f

o r c a l e n d a r y ea r s 2006 t h r o ug h 2023— a f

t e r

acc o u n t i n g f

o r t h e f l e e t t u r n o v e r , r e b o u n d

, a n d up s t r ea m e m i ss i o n s e f f ec t s

— f o r t h e s t a t e a n d

S o u t h C o a s t A i

r B a s i n a r e s h o w n i n F i gu r e 8 a n d F i gu r e 9

, r e s p ec t i v e l y

. A s s h o w n , t h e EM F A C

2007 r e s u l

t s i n d i c a t e t h a t e mi ss i o n s o f o z o n e p r ec u r s o r s, b o t h o n a s t a t e w i d e b a s i s a n d i n t h e S t a t e w i d e U p s t r e a m E m i s s i o n s o f N M O G + N O x

- 1 .8 - 1 .6 - 1 .4 - 1 .2 -1 - 0 .8 - 0 .6 - 0 .4 - 0 .2 0200620072008200920102011201220132014201520162017201820192020202120222023

C a l e n d a r Y earFuelCycleEmissionsBenefit(tons/day)

Lo w

- E nd E s t i ma te H i gh

- E n d E s t i m a te

F i g u re 7

. Ch a n g e i n s t a t e w i d e u ps t re a m e m i ss i o ns o f N M O G + N O x d u e t o t h e u ps t re a m e m i ss i o ns e ff e c t

u n d er c om b i n e d C a li f

o r n i a P r o g r a m ( r e l at i v e t o u ps t re am e m i ss i o ns u nd er F e d e r a l P r o g r a m )

.S t ud y R e s u l t s

26 St a t e w i d e V O C + NO x ( E M F A C)

0 2 4 6 8 10 12 14 16200620072008200920102011201220132014201520162017201820192020202120222023

C alend a r YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U nd e r C a l i f o r n i a P r og r am

F i g u re 8

. Ch a n g e i n s tat e w i d e e m i ss i o ns o f V O C + NO
x ( E M F AC 2007 mo d eli n g ) u nd er

c om b i n e d C a li f

o r n i a P r o g r a m , r e l at i v e t o e m i ss i o ns u nd e r F e d e r a l P r o g r a m
.

S o u t h C o as t V O C + NO x ( E M F A C)

0 0.5 1 1.5 2 2.5 3 3.5 4200620072008200920102011201220132014201520162017201820192020202120222023

C alen d ar YearStatewide Inventory Difference(tpd)

D i f f e r e n c e i n E mi s s i on s U nd e r C a l i f orn i a P r ogr am

F i g u re 9

. Ch a n g e i n S o u t h C o a s t e m i ss i o ns o f V O C + NO
x ( E M F AC 2007 mo d eli n g ) u nd er c om b i n e d C a li f o r n i a P r o g r a m , r e l at i v e t o e m i ss i o ns u nd er F e d er a l P r o g r a m
.S t ud y R e s u l t s

27 S o u t h C o a s t A i

r B a s i n ( S C A B )

, a r e h i g h e r a s a r e s u l t o f t h e C a l i f

o r n i a P r o g r a m r e l a t i v e t o t h e

F e d e r a l P r o g r a m i n e v e r y y ea r f r o m 2009 t h

r o ug h 2023

. S i mi l a r r e s u l t s a r e o b s e r v e d f

o r C O a n d

PM 2

. 5 e mi ss i o n s

. E mi ss i o n s f o r t o x i c a i r c o n t a m i n a n t s a r e g e n e r a ll y h i g h e r u n d e r t h e C a l i f o r n i a

P r o g r a m t h

r o ug h a b o u t 2018 a n d t h e n d ec r e a s e t o e ss e n t i a ll y t h e s a m e l e v e l a s t h e f e d e r a l

p r o g r a m , o r , i n s o m e ca s e s , t o a s o m e w h a t l o w e r t h a n t h e f

e d e r a l p r o g r a m ( s ee A

pp e n d i x E f

o r

a d d i t i o n a l r e s u l

t s o f E M F A C m

o d e l i ng )

. I t m

u s t b e n o t e d

, h o w e v e r , t h a t t h e e mi ss i o n e s t im a t e s

f o r t h e F e d e r a l P r o g r a m d o n o t r e f l e c t U

. S

. E P A ’ s r ece n t l y a d o p t e d r u l e s t h a t w i l l f u r t h e r r e du c e

e mi ss i o n s o f a i

r t o x i c s f r o m m o t o r v e h i c l e s

. E mi ss i o n s o f SO
x a r e l o w e r u n d e r t h e C a l i f o r n i a

P r o g r a m t h a n u n d e r t h e F e d e r a l P r o g r a m du e t o r e du c t i o n s i n g a s o li n e c o n s u m p t i o n t h a t r e s u l

t

f r o m t h e GHG s t a n d a r d s

.

b

. M O B I L E 6

. 2 M od e l R es u l t s

T h e r e s u l t s o f t h e a n a l y s i s p e r f

o r m e d u s i ng t h e M O B I L E 6

. 2 m o d e l a r e qu a l it a t i v e l y s im il a r t o

t h e r e s u l t s o f t h e E M F A C 2007 m o d e l i ng , b u t t h e e mi ss i o n d i f f e r e n c e s b e t w ee n t h e C a l i f o r n i a

a n d F e d e r a l P r o g r a m s a r e l a r g e r i n m a g n it ud e ( a s a r e t h e e mi s s i o n i nv e n t o r i e s t h e m s e l v e s )

. A s

s h o w n i n F i gu r e 10 a n d F i gu r e 11

, t h e C a l i f o r n i a P r o g r a m l ea d s t o a n i n c r ea s e i n e m i ss i o n s o f

o z o n e p r ec u r s o r s ( VO C + NO
x ) o v e r t h e e n t i r e p e r i o d f

r o m 2009 t h

r o ug h 2023

, b o t h o n a

S t at e wi d e V O C + NO x ( M O B I L E)

0 5 10 15 20 25 30 35 40200620072008200920102011201220132014201520162017201820192020202120222023

C alendar Y earStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U nd e r C a li f o r n i a P r o g r am

F i g u re 1 0

. Ch a n g e i n s tat e w i d e e m i ss i o ns o f V O C + NO
x ( M O B I LE 6

. 2 mo d eli n g ) u nd er t h e c om b i n e d C a li f o r n i a P r o g r a m , r e l at i v e t o e m i ss i o ns u nd er t h e F e d e r a l P r o g r a m
.S t ud y R e s u l t s

28 s t a t e w i d e b a s i s a n d i n t h e S o u t h C o a s t

. T h e M O B I L E 6

. 2 r e s u l t s f o r t h e o t h e r c r it i e r i a a n d t o x i c

p o ll u t a n t s c o n s i d e r e d a r e a l s o s imi l a r t o t h o s e o b t a i n e d w it h E M F A C 2007

. ( S ee A pp e n d i x G

f o r a d d i t i o n a l r e s u l

t s o f M O B I L E 6

. 2 m

o d e li ng

. ) S o u t h C o a s t V O C + NO x ( M O B I L E)

0 2 4 6 8 10 12 14200620072008200920102011201220132014201520162017201820192020202120222023

Cale n dar YearStatewideInventory Difference (tpd)

C h a n g e i n Emi s s i on s U n d e r C a li f o r n i a P r ogr am

F i g u re 1 1

. Ch a n g e i n s tat e w i d e e m i ss i o ns o f S o u t h C o a s t V O C + NO
x ( MO B I LE 6

. 2 mo d eli n g) u nd er

c om b i n e d C a li f

o r n i a P r o g r a m r el a t

i v e t o F e d e r a l P r o g r am
.C on c l u s i o n s

29 

### I V

. C o n c l u s i o n s

T h e C a li f

o r n i a P r o g r a m w il l h a v e s u b s t a n t i a l i m p ac t s o n t h e a g e a n d c o m p o s it i o n o f t h e

C a l i f o r n i a v e h i c l e f

l ee t

. I n c r ea s e d c o s t s i n c u rr e d b y m a n u f ac t u r e r s i n o r d e r t o c o m

p l y w it h t h e

Z E V a n d GHG S t a n d a r d s w il l r e s u l t i n h i g h e r p r i ce s ( a n d d e c r ea s e d d e m a n d ) f o r n e w v e h i c l e s

.
T h i s w il l l ea d t o i n c r e a s e d r e t e n t i o n o f u s e d v e h i c l e s

. I n c r e a s e d f u e l ec o n o m

y f o r n e w v e h i c l e s

t h a t a r e s o l d w i l l l e a d t o a n i n c r e a s e i n v e h i c l e mi l e s t r a v e l e d

. T h e i n c r e a s e d a g e o f t h e v e h i c l e

f l ee t a n d t h e i n c r e a s e d v e h i c l e m i l e s t r a v e l e d r e s u l t i n g f r o m t h e i m

p l e m e n t a t i o n o f t h e C a l i f o r n i a

P r o g r a m w i l l r e s u l

t i n s u b s t a n t i a ll y g r ea t e r e m i s s i o n s o f o z o n e p r ec u r s o r s ( VO C a n d NO
x )

c o m p a r e d t o e mi ss i o n s u n d e r t h e F e d e r a l P r o g r a m

. I n a d d it i o n , e m i ss i o n s o f o t h e r c r it e r i a

p o ll u t a n t s a n d a i r t o x i c s , a t b o t h t h e s t a t e w i d e l e v e l a n d i n t h e S o u t h C o a s t A i r B a s i n , w i l l

g e n e r a ll y b e h i g h e r u n d e r t h e C a l i f o r n i a P r o g r a m t h a n u n d e r t h e F e d e r a l P r o g r a m ( s ee A pp e n d i x

E a n d A pp e n d i x F ) . T h e h i g h e r l e v e l o f o z o n e p r ec u r s o r e mi ss i o n s u n d e r t h e C a li f o r n i a P r o g r a m

r e l a t i v e t o t h e F e d e r a l b a s e li n e p e r s i s t s t h r o ug h t h e y ea r 2023

, a t w h i c h t im e t h e S o u t h C o a s t A i r

B a s i n i s r e q u i

r e d t o ac h i e v e c o m

p l i a n c e w it h t h e N a t i o n a l A m b i e n t A i r Q u a l it y S t a n d a r d f o r

o z o n e

.

T hu s , o u r r e s u lt s i n d i c a t e t h a t t h e C a li f o r n i a P r og r a m , i n t h e agg r e ga t e , i s l e ss p r o t ec ti ve o f

p u b li c h e a lt

h t h a n t h e F e d e r a l P r og r a m w it h r e s p ec t t o e m i ss i o n s o f o z o n e p r

ec u r s o r s a n d

s eve r a l o t h e r c r it e r i a po ll u t a n t s

.A ppen d i x A C o m p li an c e P l an s and C o s t E s t i m a t e s

30 

### A p p e n d i x A

. C o m p l i a n c e P l a n s a nd C o st E st i m a t es 14

C o s t e s t im a t e s w e r e d e v e l o p e d f o r a n u m b e r o f v e h i c l e t ec h n o l og i e s ca p a b l e o f g e n e r a t i n g Z E V

c r e d i t s t h a t h a v e b e e n o r a r e li k e l y t o b e c o n s i d e r e d b y v e h i c l e m a n u f ac t u r e r s a n d t h e s e w e r e i n

t u r n u s e d w i t h t h e r e g u l a t o r y c r e d it s t r u c t u r e t o d e t e r mi n e t h e m o s t li k e l y m a n u f

ac t u r e r

c o m p l i a n c e p a t h w a y w i t h t h e Z E V S t a n d a r d s

. C o m p l i a n c e c o s t s a n d a ss o c i a t e d c o m p l i a n c e

p l a n s f o r t h e GHG S t a n d a r d s u s e d i n t h i s a n a l y s i s w e r e d e v e l o p e d p r e v i o u s l y b y S i e rr a i n

S i e rr a ’ s 2004 r e p o r

t a n d s up p li e d t o C A RB a t t h e t im e t h e GHG S t a n d a r d s w e r e a d o p t e d. 15 A s

d e s c r i b e d b e l o w a n d i n t h e d o c u m e n t s s u b m itt e d t o C A R B du r i ng t h e r e g u l a t o r y p r o cee d i n g

l ea d i ng t o a d o p t i o n o f t h e GHG S t a n d a r d s , w e b e l i e v e t h a t t h e c o s t e s t im a t e s u s e d i n t h i s s t u d y

l i k e l y u n d e r s t a t e t h e ac t u a l c o s t s o f c o m p l i a n c e

. G i v e n t h a t h i g h e r i n c r e m e n t a l c o s t s f o r

C a l i f o r n i a v e h i c l e s w o u l d i n c r ea s e t h e m a g n it ud e o f t h e f l e e t t u r n o v e r e ff

ec t ( i

. e ., f u r t h e r r e du ce

n e w v e h i c l e s a l e s a n d f

u r t h e r i n c r e a s e r e t e n t i o n o f u s e d v e h i c l e s )

, o u r u s e o f t h i s a pp r o ac h i s

c o n s e r v a t i v e i n t h a t i t a l s o u n d e r s t a t e s t h e li k e l y d i ff e r e n c e s i n e m i ss i o n s u n d e r t h e C a l i f o r n i a

P r o g r a m r e l a t i v e t o t h e F e d e r a l P r o g r a m

.

C o s t e s t im a t e s f

o r c o m p l i a n ce w i t h t h e Z E V s t a n d a r d s r e p r e s e n t i n c r e m e n t a l i n c r e a s e s r e l a t i v e t o

g a s o li n e

- f u e l e d v e h i c l e s ce r t i f

i e d t o C a l i f

o r n i a ’ s S up e r- U l

t r a L o w E mi ss i o n V e h i c l e ( S U L E V )

s t a n d a r d s

. A l

t h o ugh t h e r e a r e i n c r e m e n t a l c o s t s f o r S U L E V s r e l a t i v e t o v e h i c l e s ce r t i f i e d t o

f e d e r a l e m i ss i o n s t a n d a r d s , t h e s e c o s t s w e r e n o t qu a n t i f i e d

. E s t im a t e s o f c o s t s f o r c o m p l i a n ce

w i t h t h e Z E V M a n d a t e w e r e d e v e l o p e d f o r t h e t h r ee ca t e go r i e s o f v e h i c l e s ca p a b l e o f g e n e r a t i n g

Z E V c r e d i

t s : ( 1 ) P a r

t i a l Z e r o E mi ss i o n V e h i c l e s ( P Z E V s ) ; ( 2 ) A d v a n ce d T e c h n o l og y P a r t i a l

Z e r o E mi ss i o n V e h i c l e s ( A T P Z E V s )

, a n d ; ( 3 ) Z e r o E mi s s i o n V e h i c l e s

. W it h i n t h e s e ca t e go r i e s ,

s e p a r a t e c o s t e s t im a t e s w e r e d e v e l o p e d f o r v e h i c l e s e m

p l o y i ng d i f

f e r e n t t ec hn o l og i e s a n d f o r

d i s t i n c t v e h i c l e c l a s s e s ( P C + L D T 1 a n d L D T 2 )

.

I n e s t im a t i n g t h e c o s t s o f v e h i c l e s r e q u i r e d f o r t h e Z E V m a n d a t e , a n u m b e r o f d i f f e r e n t s o u r ce s

o f i n f o r m a t i o n w e r e u s e d

, i n c l u d i ng t h e r ec e n t l y pub l i s h e d “ R e p o r t o f t h e A RB I n d e p e n d e n t

14 A l l c o s t s r e f

e r r e d t o i n t

h i s a p p e n d i x a

r e i n y e a r 200 4 d o ll a

r s

. T h e NVMM e s c al a

t e s t h e s e t o y e a r 200 5 d o ll a

r s

u s i n g t h e C o n s u m e r P r i ce I n d e x i n o

r d e r t o b e c o n s i s t e n t w i t

h o t h e r d a t a u s e d i n t

h e m o d e li ng

.

15 A u s t i n , T

. C

. , e t a l

. , 20 0 4

, “ R e v ie w o f t h e A u g u s t 200 4 P r o p o s e d C A RB R e gu lati o n s t o C o n t r o l G r e e n h o u s e G a s E m i ss i o n s f

r o m M o t o r V e

h i c l e s : C o s t E ff

ec ti v e n e ss f

o r t h e V e h i c l e O w n e

r o r O p e r a t o r ”

, S i e r r a R e s e a r c h R e p o r t N o

. S R 2004-09-04

, S e p t e m b e r , 2 0 04

.A ppen d i x A C o m p li an c e P l an s and C o s t E s t i m a t e s

31 E x p e r t P a n e l 2007 ,” 16 c o n f i d e n t i a l c o s t i n f

o r m a t i o n s up p li e d b y i n d i v i du a l a u t o m a n u f ac t u r e r s,

a n d c o s t e s t im a t e s p r o v i d e d b y T h e M a r t ec G r o up a n d H a r b o u r C o n s u l t i n g

. A s d e s c r i b e d b e l o w ,

w e e l ec t e d t o m a k e c o n s e r v a t i v e a s s u m p t i o n s i n p r e p a r i ng t h e s e c o s t e s t im a t e s t h a t li k e l y

u n d e r e s t im a t e t h e t r u e c o s t s

.



### A .1

. PZEV Costs

I n c r e m e n t a l c o s t e s t im a t e s f o r P Z E V t ec h n o l og y o f $350 a n d $500 p e r v e h i c l e w e r e u s e d f o r

P C + L D T 1 a n d L D T 2 v e h i c l e s , r e s p ec t i v e l y . T h e P C + L D T 1 v a l u e r e f l ec t s t h e l o w e r r a n g e o f t h e

c o s t d a t a s up p li e d b y v e h i c l e m a n u f a c t u r e r s , w h il e t h e L D T 2 v a l u e r e f l ec t s t h e m i d d l e o f t h a t

r a n g e

. T h e u s e o f t h e h i g h e r v a l u e f o r L D T 2 r e f

l ec t s t h e h i g h e r e x p e n s e s o f a c h i e v i n g t h e ze r oe v a p o r a t i v e e m i ss i o n s t a n d a r d f o r P Z E V s u n d e r t h e Z E V M a n d a t e o n v e h i c l e s w it h l a r g e r f u e l

t a n k s a n d t h e h i g h e r e x p e n s e s o f a c h i e v i ng t h e e x h a u s t e mi ss i o n s t a n d a r d f o r P Z E V s u n d e r t h e

Z E V M a n d a t e o n l a r g e r v e h i c l e s w i t h V 8 e n g i n e s

.



### A .2

. A TP Z EV Costs

I n c r e m e n t a l c o s t e s t im a t e s f o r T y p e C

, D a n d E hy b r i d e l ec t r i c v e h i c l e s w e r e $1

, 800

, $2

, 200 a n d

$5

, 500

, r e s p ec t i v e l y

. T h e s e a r e b a s e d o n t h e m e t h o d o l og y d o c u m e n t e d i n S i e rr a ’ s 2004 r e p o r t

,

w i t h t h e e s t im a t e s f

o r T y p e D a n d E v e h i c l e s r e f l ec t i n g a d d it i o n a l c o s t s a ss o c i a t e d w it h h i g h

v o l t a g e e l ec t r i ca l s y s t e m s , n i c k e l

- m e t a l h y d r i d e b a t t e r i e s , e l ec t r i c m o t o r s , a n d c o n t r o l s y s t e m s

.
T h e c o s t s o f p l

ug

- i n h yb r i d e l ec t r i c v e h i c l e s ( P H E V s ) w it h 10

, 20 a n d 40 m il e e l ec t r i c r a n g e i n

t h e P C + L D T 1 c a t e go r y w e r e e s t im a t e d u s i ng c o m p o n e n t c o s t e s t im a t e s p r o v i d e d b y T h e M a r t ec

G r o up ( t h e c o n s u l

t i ng f i r m r e l i e d o n b y C A RB t o p r o v i d e c o s t i n f o r m a t i o n i n s upp o r

t o f t h e

GHG r u l e m a k i ng )

, a n d d a t a f r o m t h e r e p o r

t o f t h e I n d e p e n d e n t E x p e r t P a n e l

. I n c r e m e n t a l c o s t

e s t im a t e s r a n g e d f

r o m a b o u t $1 0

, 500 f

o r a 10 m i l e a l l e l ec t r i c r a n g e t o a b o u t $15

, 000 f o r a 4 0

mi l e a l l e l ec t r i c r a n g e

. C o s t s f o r L D T 2 v e h i c l e s w e r e a g a i n e s t im a t e d b y s c a l i ng t h e P C + L D T 1

v a l u e s b y t h e r e l a t i v e s a l e s

- w e i g h e d a v e r a g e w e i g h t s o f 2003 m o d e l

- y ea r v e h i c l e s i n t h e s e

c l a ss e s

. E s t im a t e s f

o r T y p e C

, D a n d E h y b r i d e l ec t r i c v e h i c l e s a r e b a s e d o n t h e m e t h o d o l og y

d o c u m e n t e d i n S i e rr a ’ s 2004 r e po r t

, b u t h a v e b e e n upd a t e d t o r e f l ec t t h e l a t e s t a v a il a b l e c o s t

d a t a

. T h e c o s t o f p l ug

- i n h y b r i d e l ec t r i c v e h i c l e s ( P H E V s ) i n t h e P C + L D T 1 ca t e g o r y h a s b e e n

16 K a l h a mm e

r , F

. R

., et

. A l

, 2 0 07

, “ S t a

t u s a n d P r o s p ec t s f o r Ze r o E mi ss i o

n V e h i c l e T ec h n o l o g y , R e p o r t of t h e A RB
I n d e p e n d e n t E x p e r t P a n e l 2 007 ” A p r i l 1 3

, 2 007

.A ppen d i x A C o m p li an c e P l an s and C o s t E s t i m a t e s

32 e s t im a t e d u s i ng c o m

p o n e n t c o s t e s t i m a t e s p r o v i d e d b y T h e M a r t ec G r o u p ( t h e c o n s u l t i n g f i r m

r e li e d o n b y C A RB t o p r o v i d e c o s t i n f o r m a t i o n i n s upp o r t o f t h e r u l e m a k i ng f o r t h e GH G

S t a n d a r d s )

, a n d d a t a f

r o m t h e r e p o r

t o f t h e I n d e p e n d e n t E x p e r t P a n e l

. C o s t s f o r L D T 2 v e h i c l e s

w e r e e s t im a t e d b y s c a l i ng t h e P C + L D T 1 v a l u e s by t h e r e l a t i v e s a l e s

- w e i g h e d a v e r a g e w e i g h t s o f

2003 m o d e l

- y ea r v e h i c l e s i n t h e s e c l a s s e s

.



### A .3

. ZEV Costs

W e e s t im a t e a c o s t f

o r N e i g h b o r h oo d E l ec t r i c V e h i c l e s ( “ N E V s ” ) o f $8

, 000

, b a s e d o n t h e

n o mi n a l $8

, 000 p r i c e o f N E V s p r o du ce d b y G l o b a l E l ec t r i c M o t o r s. 17 B eca u s e o f t h e i r lim it e d

r a n g e a n d p e r f

o r m a n ce , N E V s a r e un l i k e l y t o b e g e n e r a l r e p l ac e m e n t s f o r c o n v e n t i o n a l v e h i c l e s ,

a l t h o ug h t h e y w ou l d d i s p l ac e s o m e c o n v e n t i o n a l v e h i c l e t r a v e l

. T h e r e f o r e , N E V pu r c h a s e w a s

v i e w e d a s a c o s t i n a d d i t i o n t o o w n i n g a c o nv e n t i o n a l v e h i c l e

. I n c r e m e n t a l c o s t s f

o r C it y

E l ec t r i c V e h i c l e s w e r e a ss u m e d t o b e e qu a l t o $13

, 122 w h i c h i s t h e R P E o f t h e v e h i c l e b a tt e r y ,

t h e c o s t o f w h i c h ( $8

, 150 ) w a s t a k e n f r o m t h e I n d e p e n d e n t E x p e r t P a n e l a n d s c a l e d u s i ng a

m u l t i p li e r o f 1

. 61

. T h i s m

u l t i p li e r i s u s e d t o a d

j u s t s upp li e r c o s t s t o R P E a n d i s d e r i v e d f r o m

w o r k p e r f o r m e d b y t h e U

. S

. D e p a r

t m e n t o f E n e r g y. 18 U t i l it y E V c o s t s w e r e a ss u m e d t o b e 2 / 3

t h a t o f a c i

t y e l ec t r i c v e h i c l e g i v e n t h e r e s p ec t i v e r a n g e r e q u i r e m e n t s o f 50 a n d 75 m i l e s

.

T h e c o s t o f f

u l l p e r f o r m a n ce b a tt e r y e l e c t r i c v e h i c l e s ( F P B E V ) w a s a l s o e s t im a t e d u s i ng d a t a

f r o m M a r t ec

. I n t h e c a s e o f pu r e e l e c t r i c v e h i c l e s , t h e c o s t o f e l ec t r i c m o t o r s a n d p o w e r

e l ec t r o n i c s i s s o m

e t im e s a s s u m e d t o b e o ff s e t b y t h e c o s t s a v i n g s a s s o c i a t e d w it h e l i m i n a t i o n o f

t h e i n t e r n a l c o m

b u s t i o n e n g i n e a n d t r a n s m i ss i o n

. H o w e v e r , u s i ng c o s t i n f o r m a t i o n p r o v i d e d by

M a r t ec a n d H a r b o u r C o n s u l t i n g , t h e n e t c o s t o f t h e n o n

- b a t t e r y c h a n g e s i s a b o u t $ 2

, 500 f o r a

f u ll

- f u n c t i o n E V w i t h a 100 mi l e r a n g e

. U s i n g t h e s i m p l e a ss u m

p t i o n t h a t o n l y t h e b a t t e r y c o s t

n ee d b e acc o u n t e d f

o r , t h e i n c r e m e n t a l c o s t i n c r ea s e a s s o c i a t e d w it h a f u l l

- f u n c t i o n E V i s
$26

, 400

. I f t h e r a n g e i s r e du ce d t o 75 mil e s , t h e c o s t i n c r ea s e d r o p s t o a b o u t $19

, 90 0

. F o r t h i s

s t ud y , w e r e p l a ce d t h e m o r e r e a l i s t i c M a r t ec b a t t e r y c o s t e s t im a t e s w it h t h e E x p e r t P a n e l ’ s

a v e r a g e c o s t e s t im a t e s f

o r l i t h i u m

- i o n b a tt e r i e s s c a l e d t o R P E u s i n g t h e 1

. 61 m u l t i p li e r , a n d t h e n

a dd e d t h e n e t c o s t o f t h e n o n

- b a tt e r y c h a n g e s d e s c r i b e d a b o v e

. W e u s e d t h e l o w e r v o l u m e c o s t

17 S ee h tt p :// w w w

. g e m c a r

. c o m/a f f o r d a b i l it y / d e f a u lt

. a s p ? I D = 3 55

18 V y a s , a

. , S a n ti n i

, D

. , a n d Cu e n c a , R

. , 20 0 0

, “ C o m p a

r i s o n o f I n d i r ect C o s t M u l ti p li e r s fo r V e h i c l e M a n u f

a c t u r i ng , ”
A r g o n n e N a i o n a l L a bo r at o r y , A p r i l

, 20 0 0

.A ppen d i x A C o m p li an c e P l an s and C o s t E s t i m a t e s

33 e s t im a t e t h

r o ug h t h e 2012 m

o d e l

- y ea r a n d t h e n l i n ea r l y t r a n s it i o n e d t o t h e h i g h v o l u m e c o s t

e s t im a t e f o r 2015 a n d l a t e r m

o d e l

- y ea r s

. T h i s r e s u l

t e d i n a n ea r t e r m i n c r e m e n t a l c o s t e s t i m a t e

o f a b o u t $2 3

, 000 f

o r a F P B E V a n d a l o n g e r t e r m i n c r e m e n t a l c o s t o f a b o u t $17

, 00 0

.

T h e i n c r e m e n t a l c o s t o f f u e l ce ll e l e c t r i c v e h i c l e s ( F C E V s ) w a s e s t im a t e d u s i ng t h e a v e r a g e o f

t h e E x p e r t P a n e l ’ s b e s t ca s e c u rr e n t a n d 2015 e s t im a t e s f o r f u e l c e ll s y s t e m c o s t s i n h i g h v o l u m e

p r o du c t i o n , a n d a n a ss u m e d s t ac k r a t i n g o f 10 0 k W

. T h e s e v a l u e s w e r e m a r k e d u p t o R P E u s i n g

a 1

. 61 m u l t i p l i e r

. T h e c u rr e n t b e s t

- ca s e c o s t s w e r e u s e d t h r o ug h t h e 2012 m

o d e l

- y ea r , a n d t h e n

l i n ea r l y t r a n s i t i o n e d t o t h e 2015 v a l u e i n t h a t y ea r a n d b e y o n d

. T h u s , t h e i n c r e m e n t a l c o s t s

a ss u m e d f o r F C E V s w e r e a b o u t $60

, 00 0 i n t h e s h o r t t e r m a n d a b o u t $11

, 00 0 i n t h e l o n g e r t e r m

.



### A .4

. Summa r y

of Cost Est i m ates

C o s t e s t im a t e s f

o r a ll o f t h e Z E V v e h i c l e t ec h n o l og i e s c o n s i d e r e d a r e s h o w n i n T a b l e A

- 1 f o r t h e

P C + L D T 1 a n d L D T 2 ca t e go r i e s , r e s p ec t i v e l y

.



### A .5

. Per-Credit Cost E st i m ates an d Manufa c turer C o m pliance Strategies

U s i n g t h e c o s t e s t im a t e s i n T a b l e A

- 1 a n d t h e i n f o r m a t i o n r e g a r d i ng Z E V c r e d it s g e n e r a t e d b y

v e h i c l e s u t i l i z i ng v a r i o u s t ec h n o l o g i e s f r o m t h e ZE V r e gu l a t i o n s , w e e s t im a t e d t h e e ff ec t i v e c o s t

o f e ac h t ec h n o l og y i n t e r m s o f t h e d o ll a r s r e q u i r e d p e r Z E V c r e d it g e n e r a t e d

. T h e s e r e s u l t s a r e

s h o w n i n T a b l e A

- 2

.

P Z E V s g e n e r a t e Z E V c r e d i t s a t t h e l o w e s t d o ll a r p e r c r e d it v a l u e o f a n y o f t h e t e c h n o l o g i e s

c o n s i d e r e d i n b o t h t h e P C + L D T 1 a n d L D T 2 ca t e g o r i e s

. G i v e n t h i s a n d t h e f ac t t h a t P Z E V s a r e Ta b l e A

- 1

. C o s t E s t i m at e s f o r Z E V P r o g r a m V e h i c le s

T y p e Cre di t L eve l P C + L D T 1 L D T 2
P Z EV Br on z e 350 500 T y pe C H EV S il v e r 1

, 800 2

, 718 T y pe D H EV S il v e r 2

, 200 3

, 322 T y pe E H EV S il v e r 5

, 500 8

, 305 P H EV 10 S il v e r 10

, 576 15

, 970 P H EV 20 S il v e r 11

, 654 17

, 597 P H EV 40 S il v e r 14

, 977 22

, 616 N EV G o l d 8

, 000 8

, 000 T y pe 0 Z EV G o l d 8

, 748 8

, 748 T y pe 1 Z EV ( C EV) G o l d 13

, 122 19

, 813 T y pe 2 Z EV ( F P BEV) G o l d 23

, 366 / 16

, 732 a 35

, 282 / 25

, 266 a
T y pe 3 Z EV ( F C E V ) G o l d 60

, 375 / 10

, 868 a 91

, 166 / 16

, 410 a

a F i r s t v a l u e r e p r e s e n t s n e a r t e r m c o s t s w h il e s ec o n d r e f l ec t s l o n g t e r m c o s t

.A ppen d i x A C o m p li an c e P l an s and C o s t E s t i m a t e s

34 c o nv e n t i o n a l

, g a s o li n e

- p o w e r e d v e h i c l e s , w e e x p ec t t h a t m a n u f a c t u r e r s w ill g e n e r a t e t h e

m a x i m u m a m ou n t o f B r o n ze Z E V c r e d it s a l l o w e d u n d e r t h e r e g u l a t i o n s

. T u r n i n g t o v e h i c l e s

ca p a b l e o f g e n e r a t i n g S il v e r Z E V c r e d it s , T a b l e A

- 2 i n d i ca t e s t h a t

, e x ce p t du r i n g t h e p e r i o d f r o m

2009 t h r o ug h 2011

, T y

p e D H E V s p r o v i d e c r e d it s a t t h e l o w e s t p e r- c r e d it c o s t

. D u r i n g 2009 t o

2011

, P H E V c r e d i t c o s t s a r e l o w e r o w i n g t o t h e c r e d it m u l t i p l i e r s p r o v i d e d i n t h e Z E V

r e g u l a t i o n s

. H o w e v e r , a s n o t e d b y t h e I n d e p e n d e n t E x p e r t P a n e l

, b a tt e r i e s ca p a b l e o f h a n d l i n g

t h e n u m b e r o f d ee p d i s c h a r g e c y c l e s r e q u i r e d f o r P H E V a pp li ca t i o n s a r e n o t c u r r e n t l y

c o mm e r c i a ll y a v a il a b l e

. G i v e n t h i s , a n d t h e f ac t t h a t t h e i n c r e m e n t a l c o s t o f T y p e D H E V s i s

l o w e r t h a n t h a t o f P H E V s a n d t h a t T y p e D H E V s u l

t im a t e l y y i e l d S i l v e r Z E V c r e d it s a t a l o w e r

p e r v e h i c l e c o s t t h a n P H E V s i n l a t e r y ea r s , w e h a v e a s s u m e d t h a t m a n u f ac t u r e r s w o u l d s e l ec t

T y p e D H E V s o v e r P H E V s f o r g e n e r a t i n g S li v e r ZE V c r e d it s

.

A s i mi l a r a n a l y s i s f

o r t ec h n o l og i e s ca p a b l e o f g e n e r a t i n g G o l d Z E V c r e d it s i n d i ca t e s t h a t C E V s

g e n e r a t e c r e d i t s a t t h e l o w e s t p e r- c r e d it c o s t i n t h e n ea r t e r m w h il e F C E V s d o s o i n t h e l o n g e r

t e r m

. F u r t h e r , t h

r o ug h 2014

, t h e c o s t o f g e n e r a t i n g S i l v e r Z E V c r e d it s w it h T y p e D H E V s w i l l

b e a t l e a s t 50 % l o w e r t h a n t h e c o s t o f g e n e r a t i n g G o l d Z E V c r e d it s w it h a n y t e c h n o l o g y

. G i v e n

t h i s , w e h a v e a s s u m e d t h a t m a n u f a c t u r e r s w i l l e l ec t t o p u r s u e t h e A l t e r n a t i v e C o m

p li a n ce P a t h

p r o v i d e d i n t h e Z E V M a n d a t e a n d u s e e x t r a S il v e r c r e d it s g e n e r a t e d b y T y p e D H E V s t o f

u l f ill

t h e i r Z E V o b l i g a t i o n a s p r o v i d e d f o r u n d e r t h e r e g u l a t i o n

. B e g i n n i ng i n 2015

, F C E V s a r e

e s t im a t e d t o p r o v i d e G o l d Z E V c r e d i t s a t a l o w e r p e r c r e d it c o s t t h a n T y p e D H E V s

. H o w e v e r ,

t h a t e s t im a t e i s b a s e d o n w h a t a pp ea r t o b e h i gh l y o p t i m i s t i c “ b e s t

- ca s e” e s t im a t e s b y t h e

I n d e p e n d e n t R e v i e w P a n e l o f t h e c o s t s o f f u e l ce l l s y s t e m s i n 2015 a n d t h e P a n e l e s t im a t e d t h a t

h i g h v o l u m e p r o du c t i o n o f f

u e l c e l l v e h i c l e s w ou l d b e d e l a y e d r e l a t i v e t o C A R B ’ s p r e v i o u s

e x p e c t a t i o n s

. T h e r e f

o r e , w e a s s u m e d t h a t m a n u f ac t u r e r s w o u l d c o n t i n u e t o pu r s u e t h e

A l t e r n a t i v e C o m

p li a n ce P a t h t h

r o ug h t h e 201 7 m

o d e l

- y ea r

. B e y o n d 2017

, w e m a d e t h e v e r y

o p t i m i s t i c a s s u m

p t i o n t h a t m a n u f

ac t u r e r s w o u l d b e ca p a b l e o f c o m p l y i ng w it h t h e r e q u i

r e m e n t s

t o g e n e r a t e G o l d Z E V c r e d i t s u s i ng F C E V s

. A g a i n t h i s a ss u m p t i o n w a s c o n s e r v a t i v e i n t h a t it

l i k e l y u n d e r s t a t e s t h e ac t u a l c o s t s o f c o m p l i a n c e w it h t h e C a l i f

o r n i a P r o g r a m a n d t h e r e f o r e

u n d e r s t a t e s t h e e mi s s i o n s i n c r ea s e s a s s o c i a t e d w it h t h e C a li f o r n i a P r o g r a m r e l a t i v e t o t h e F e d e r a l

P r o g r a m

.A ppen d i x A C o m p li an c e P l an s and C o s t E s t i m a t e s

35 Ta b l e A

- 2

. D o ll a r s p er ZE V C re d i t d u ri n g t h e p e r i o d 20 0 9-202 3

T y p e Cre di t L eve l P C + L D T 1 L D T 2
P Z EV Br on z e 1

, 750 2

, 500 T y pe C H EV a S il v e r 4

, 500 6

, 795 T y pe D H EV S il v e r 3

, 667 / 4

, 889 5

, 537 / 7

, 382 T y pe E H EV S il v e r 7

, 857 / 10

, 000 11

, 864 / 15

, 100 P H EV 10 S il v e r 1

, 738 / 5

, 630 2

, 624 / 8

, 501 P H EV 20 S il v e r 1

, 765 / 5

, 681 2

, 665 / 8578 P H EV 40 S il v e r 2

, 700 / 6

, 408 3

, 031 / 9677 N EV G o l d 53

, 333 53

, 333 T y pe 0 Z EV G o l d 8

, 748 8

, 748 T y pe 1 Z EV ( C EV) G o l d 5

, 249 / 6561 7

, 925 / 9

, 907 T y pe 2 Z EV ( F P BEV) G o l d 5

, 577 / 7

, 789 8

, 422 / 11

, 761 T y pe 3 Z EV ( F C E V ) G o l d 3

, 623 / 20

, 125 5

, 470 / 30

, 389

a T y p e C H E Vs a r e a l l o w e d t o g e n e r a t e Z E V c r e d i t s o n l y t hr o ug h t

h e 20 1 1 m o d e l

- y e a r

.A ppen d i x B N e w V eh i c l e M a r k e t M od e l

36 

### A p p e n d i x B

. N e w V e h i c l e M a r k e t M o d e l

T h i s a pp e n d i x p r o v i d e s i n f o r m a t i o n r e g a r d i n g t h e N e w V e h i c l e M a r k e t M o d e l

. 

### B.1. Conceptual A ppro a c h : Nested L ogit M o del

L o g i t d i s c r e t e c h o i ce a n a l y s i s p r o v i d e s a m e t h o d f o r p r e d i c t i n g c o n s u m e r c h o i c e s , a n d t h e r e f o r e

d e m a n d

, b a s e d o n p r e v i o u s l y o b s e r v e d c o n s u m e r b e h a v i o r a n d o t h e r a ss u m p t i o n s a b o u t d e m a n d

( s ee , e

. g

. , B e n

- A k i v a a n d L e r m a n 1985 )

. T h e m o s t b a s i c l og it m o d e l

, a l s o r e f

e rr e d t o a s t h e

s im p l e l og i t

, g r o up s a ll p r o du c t a l

t e r n a t i v e s t o g e t h e r a n d t h e r e f o r e a l l o w s o n l y l im it e d p a tt e r n s o f

o w n

- p r i c e a n d c r o ss

- p r i ce e l a s t i c i t y b e t w e e n d i ff e r e n t a l t e r n a t i v e s

. T h i s lim it a t i o n i s o f t e n

r e f e rr e d t o a s t h e “ I n d e p e n d e n ce o f Irr e l e v a n t A l t e r n a t i v e s ” ( “ II A ” ) p r o b l e m

. T h e n e s t e d l o g it

m o d e l b u i l d s o n t h i s s im

p l e f r a m e w o r k

, w h il e a l l o w i ng f o r a m u c h r i c h e r p a tt e r n o f c r o sss ub s t i t u t i o n b e t w ee n d i f

f e r e n t a l t e r n a t i v e s t h

r o ug h t h e n e s t i n g s t r u c t u r e

.

B

. 1

. 1

. B as i c F r a m e w o r k

I n o u r n e w v e h i c l e m a r k e t m o d e l

, c o n s u m e r s c ho o s e a m o n g a s e t o f v e h i c l e m

o d e l s , a n d m a y

a l s o c h oo s e n o t t o pu r c h a s e a v e h i c l e a t a ll

. F o r a l t e r n a t i v e i

, t h e u t i l it y t h a t a g i v e n c o n s u m e r

o b t a i n s f r o m c h oo s i n g t h a t a l

t e r n a t i v e c a n b e w r it t e n a s a f u n c t i o n o f a n a l

t e r n a t i v e

- s p e c i f

i c

p a r a m e t e r a n d t h e p r i ce f

o r t h e a l t e r n a t i v e :

i i i i P U e

b a +

− = ( 1 )

A l t e r n a t i v e “ 0 ” i s d e f

i n e d a s t h e n o

- pu r c h a s e a l t e r n a t i v e , a n d t h e r e m a i n i ng a l t e r n a t i v e s r e p r e s e n t

d e c i s i o n s t o pu r c h a s e i n d i v i du a l v e h i c l e m o d e l s

. T h e p a r a m e t e r a i m e a s u r e s t h e a t t r a c t i v e n e ss o f

go o d i t o c o n s u m

e r s

. W e a s s u m e t h a t t h e p r i c e f o r t h e o u t s i d e g oo d i s ze r o

. P i i s t h e p r i c e o f

a l t e r n a t i v e i

, a n d b i s a p o s i t i v e c o e f f i c i e n t

. T h e r a n d o m e rr o r t e r m s e i a r e a s s u m e d t o b e

d i s t r i b u t e d a s a m

u l t i v a r i a t e g e n e r a li z a t i o n o f t h e s t a n d a r d e x t r e m e v a l u e d i s t r i b u t i o n

.

T h e po t e n t i a l pu r c h a s e r i s a s s u m e d t o c h o o s e t h e a l t e r n a t i v e t h a t y i e l d s t h e h i g h e s t u t il it y , t a k i n g

i n t o acc o u n t b o t h t h e d e t e r mi n i s t i c a n d r a n d o m c o m p o n e n t s o f u t il it y

. G i v e n t h e l og it d e m a n d

a ss u m p t i o n s , w e d e t e r mi n e t h e e x p ec t e d m a r k e t s h a r e f o r ea c h v e h i c l e m

o d e l

. C o n d it i o n a l up o n

t h e c o n s u m e r ’ s d e c i s i o n t o p u r c h a s e a v e h i c l e m o d e l w it h i n a v e h i c l e g r o up ( o r “ n e s t ” ) A ( a s

d e s c r i b e d b e l o w )

, t h e e x p ec t e d s h a r e f o r v e h i c l e m o d e l a l

t e r n a t i v e i ca n b e w r itt e n a s :A ppen d i x B N e w V eh i c l e M a r k e t M od e l

37 

## ∑

∈ − −

=

A j A j j A i i
A i P

P

s )

/ ) e x p (( )

/ ) e x p ((

| l

b a l b a ( 2 )

w h e r e l A i s t h e “ n e s t i n g p a r a m e t e r ” f o r t h e a pp r o p r i a t e v e h i c l e g r o u p , o r “ n e s t ” ( a s d e s c r i b e d

b e l o w ). 19

B

. 1

. 2

. N es t i n g A ss u m p t i o n s

O u r l og i t m o d e l a ss u m e s t h e n e s t i n g s t r u c t u r e s h o w n i n F i gu r e B

- 1

. W e d i v i d e t h e c h o i ce

p r o b l e m f i r s t i n t o t h e d e c i s i o n o f w h e t h e r t o b u y a n e w v e h i c l e

. C o n d it i o n a l up o n t h e c h o i ce t o

pu r c h a s e a n e w v e h i c l e , c o n s u m e r s c h oo s e t h e v e h i c l e t y p e

— i n t h i s c a s e , p a ss e n g e r ca r s , p i c ku p

19 B ec a u s e t e r m s t

h a t a r e c o n s ta n t a c r o ss a ll a l t e

r n a ti v e s d o n o t a ff

e c t t h e c h o i ce o f alt e

rn ati v e s , i t i s c o mm o n t o

n o r m al i z e t

h e a lt e r n a ti v e

- s p ec i f

i c t e r m a i . As a n o

r m a l i z ati o

n r u l e , w e s e t a i e q u a l t o z e r o fo r o n e v e h i c l e m o d e l

. A dd i n g o r s u b t

r a c t i n g a c o mm o n a m o un t t o a l l t h e a i t e r m s le a v e s t

h e c h o i ce of alt e

r n a ti v e s u n c h a n g e d

, s o a n y

o t h e r n o r m al i z a

ti o n r u l e w o u l d y

i e l d i d e n t i c a l r e s u lt s. C on s u m e r D ec i sons

S po r t s W ago n S UV D on ’ t B uy B uy

C ar

T r u c k / V an S U V / M i n i van

P r e m i u m S UV

M i n i v an L a r g e S UV M i d

- R a n ge S UV S m a ll S UV

S m a ll P i c k up

F u ll P i ck up F u ll V an S m a ll C ar

M i d

- R ang e C ar

U p s ca l e C ar S p o rt y C ar T r ad iti o na l C ar Z EV

F i g u re B

- 1

. N e s t i n g s t r u c t u re f o r N V M MA ppen d i x B N e w V eh i c l e M a r k e t M od e l

38 t r u c k s o r f

u l l

- s i z e v a n s , a n d S UV s o r mi n i v a n s. C o n d it i o n a l o n t h e c h o i c e o f v e h i c l e t y p e ,

c o n s u m e r s c h oo s e t h e v e h i c l e c l a s s

— f o r e x a m p l e , s m a l l ca r s o r mi d -r a n g e c a r s ( a m o n g o t h e r s )

i n t h e p a ss e n g e r ca r g r o up

. C o n d i t i o n a l o n t h e v e h i c l e c l a ss ( e

. g ., mi d -r a n g e c a r , s m a l l S UV

,

e t c

. )

, c o n s u m

e r s c h oo s e o n e o f t h e i n d i v i du a l v e h i c l e m o d e l s a v a i l a b l e

. T h e b o tt o m l e v e l o f t h e

n e s t i n g s t r u c t u r e i n c l ud e s o v e r 200 v e h i c l e m o d e l s f r o m w h i c h c o n s u m e r s m a y c h oo s e

.

T h e m a r k e t m

o d e l a l l o w s t h e u t il i t y t h a t c o n s u m e r s d e r i v e f r o m t h e pu r c h a s e o f d i ff

e r e n t m o d e l s

t o d e p e n d o n t h e v e h i c l e ca t e go r y a n d c l a ss v i a t h e n e s t i n g p a r a m e t e r s ( l A )

, w h i c h t a k e v a l u e s

b e t w e e n ze r o a n d o n e. 20 O n e n e s t i n g p a r a m e t e r a pp li e s t o t h e pu r c h a s e d e c i s i o n ( b u y o r d o n ’ t

b u y ) ; a n o t h e r n e s t i n g p a r a m e t e r a p p li e s t o t h e c h o i c e o f v e h i c l e t y p e ; a n d a t h i

r d a p p li e s t o t h e

c h o i ce o f v e h i c l e c l a ss e s

. T h e n e s t i n g p a r a m e t e r f o r t h e pu r c h a s e d e c i s i o n m u s t b e a t l e a s t a s

l a r g e a s t h e n e s t i n g p a r a m e t e r f o r v e h i c l e t y

p e

. F o r eac h n e s t

, t h e n e s t i n g p a r a m e t e r m u s t b e a t

l e a s t a s l a r g e a s t h e n e s t i n g p a r a m e t e r f o r a ll v e h i c l e n e s t s c o n t a i n e d w it h i n t h e “ p a r e n t ” n e s t

.
T h e n e s t i n g s t r u c t u r e im

p l i e s t h a t v e h i c l e s w it h i n o n e g r o u p a r e c l o s e r s u b s t it u t e s f o r eac h o t h e r

t h a n t h e y a r e f

o r v e h i c l e s i n d i ff

e r e n t g r o up s

. T h e c r o ss

- p r i ce e l a s t i c it i e s b e t w e e n v e h i c l e s w it h i n

t h e s a m e g r o up a r e t h e r e f o r e h i g h e r t h a n t h e c r o ss

- p r i c e e l a s t i c it i e s f o r v e h i c l e s i n d i f

f e r e n t

g r o up s

.

A s n o t e d a b o v e , o n e a d v a n t a g e o f t h e n e s t e d l og i t m o d e l o v e r t h e s i m

p l e l og it m

o d e l i s t h a t it

p r o v i d e s f

o r a r i c h e r p a tt e r n o f o w n

- a n d c r o ss

- p r i ce e l a s t i c it i e s

. I n t h e n e s t e d l og it m o d e l

, t h e

II A p r o p e r

t y n ee d n o t h o l d ac r o ss g r o up s . T h a t i s , t h e r a t i o o f t h e s h a r e f o r a p a r t i c u l a r ca r m

o d e l

i n o n e b o tt o m

- l e v e l n e s t t o t h e s h a r e o f a v e h i c l e i n a d i ff e r e n t b o tt o m

- l e v e l n e s t

, f o r e x a m p l e , d e p e n d s n o t o n l y o n t h e c h a r ac t e r i s t i c s o f t h o s e t w o v e h i c l e m o d e l s , b u t a l s o o n t h e s u b s t it u t i o n

p a t t e r n s im

p l i e d b y t h e n e s t i n g s t r u c t u r e a n d n e s t i n g p a r a m e t e r s

. T h e n e s t i n g p a r a m e t e r s

t h e r e f o r e e n r i c h t h e s i m

p l e l og i t m

o d e l

. I f a l l n e s t i n g p a r a m e t e r s e qu a l o n e , t h e n t h e n e s t e d l og it

m o d e l b ec o m

e s a s i m p l e l og i t m

o d e l

.

T h e i n c l u s i v e v a l u e t e r m I A f o r b o tt o m

- l e v e l g r o up A ( t h e v e h i c l e c l a s s ) i s d e f i n e d a s :

     

− = 

## ∑

∈ A j A j j A P I ) / ) e x p (( ln l

b a ( 3 )

T h e i n c l u s i v e v a l u e t e r m I X f o r t h e t o p

- l e v e l g r o up X ( t h e v e h i c l e t y p e ) i s d e f i n e d a s :A ppen d i x B N e w V eh i c l e M a r k e t M od e l

39      

= 

## ∑

∈ )

/ e x p( ln

X A X

A A X I I l

l

( 4 )

F i n a ll y , t h e i n c l u s i v e v a l u e t e r m I B uy f o r t h e pu r c h a s e a l

t e r n a t i v e i s d e f

i n e d a s :

     

= 

## ∑

X b uy

X X b uy I I )

/ e x p( ln l

l

( 5 )

T h e s h a r e o f t h e b o tt o m

- l e v e l g r o up A i n pu r c h a s e s w it h i n t h e t o p

- l e v e l g r o up X t o w h i c h A

b e l o n g s ca n b e w r i tt e n a s :



# ∑

∈ 

### =

X B X

B B X A A
X A 

### I

I
s )

/ exp( ) / exp(

| 

### l

l l l ( 6 )

T h e s h a r e o f t o p

- l e v e l g r o up X i n t o t a l pu r c h a s e s ca n b e w r itt e n a s :



# ∑ =

Y buy

Y Y buy X X buy X 

### I

I

s )

/ exp( ) / exp(

| 

### l

l l l ( 7 )

T h e l og i t f r a m e w o r k g i v e s a n e x p r e s s i o n f o r t h e s h a r e o f po t e n t i a l b u y e r s w h o c h oo s e t o

pu r c h a s e a v e h i c l e :



### )

e xp( ) e xp( ) e xp(

0



### a l l

+ =

buy

buy buy buy buy 

### I I

s ( 8 )

w h e r e a 0 i s t h e v a l u e d e r i v e d b y t h e c o n s u m e r f r o m a n o

- pu r c h a s e d e c i s i o n

.

T h e u n c o n d i t i o n a l s h a r e f o r a l t e r n a t i v e i ca n b e w r itt e n a s t h e p r o du c t o f t h e pu r c h a s e p r o b a b i l it y

a n d t h e c o n d i t i o n a l p r o b a b il i t i e s :

i i i i A

i X A buy X buy i 

## s

s s s s | | | 

## = ( 9 )

w h e r e A i i s t h e b o tt o m

- l e v e l g r o up t o w h i c h i b e l o n g s a n d X i i s t h e t o p

- l e v e l g r o up t o w h i c h A i

b e l o n g s

.

20 T h e n e s t i n g p a

r a m e t e r s a r e s o m e tim e s c a l l e d “i n c l u s i v e v al u e c o e ff i c i e n t s

. ”A ppen d i x B N e w V eh i c l e M a r k e t M od e l

40 

### B.2. Market S i m ulation

I n a s im p l e l og i t m

o d e l

, t h e o w n

- p r i ce e l a s t i c it y o f d e m a n d f o r a l t e r n a t i v e i ca n b e w r itt e n a s :



### ) 1 ( i i i 

### s P

− − = b h ( 10 )

w h e r e s i i s t h e u n c o n d i t i o n a l s h a r e o f a l t e r n a t i v e i ( i

. e ., it s s h a r e o v e r a ll po t e n t i a l c o n s u m e r s , n o t

o n l y t h o s e w h o c h oo s e t o p u r c h a s e a n e w v e h i c l e )

.

I n a n e s t e d l og i t m

o d e l

, t h e o w n

- p r i ce e l a s t i c it y o f d e m a n d f o r a l t e r n a t i v e i i s m

o r e c o m p l i ca t e d

,
i n c l u d i ng t e r m s t h a t r e f l e c t s u b s t i t u t i o n p o s s i b il it i e s w it h i n t h e b o tt o m

- l e v e l g r o up , ac r o ss

b o tt o m

- l e v e l g r o up s t h a t a r e w i t h i n t h e s a m e t o p

- l e v e l g r o up , a n d ac r o ss t o p

- l e v e l g r o up s

.
T a k i n g t h e n a t u r a l l o g a r i t h m o f E qu a t i o n 9

, a nd d i ff e r e n t i a t i n g w it h r e s p ec t t o t h e n a t u r a l

l o g a r i t h m o f P i y i e l d s a n e x p r e ss i o n f o r t h e o w n

- p r i ce e l a s t i c it y f o r t h e n e s t e d l og it m

o d e l :



### ) l n( ) l n(
) l n( ) l n(
) l n( ) l n(
) l n( ) l n( | | |

i A i

i X A

i b uy X

i b uy i 

### P s

P s

P s

P s
i i i i 

### ∂

∂
+ ∂ ∂
+ ∂ ∂
+ ∂ ∂

= h ( 11 )

T h e a gg r e g a t e p r i ce e l a s t i c i t y o f d e m a n d c a n b e ca l c u l a t e d b y i n c r e a s i ng t h e p r i c e s o f a ll g oo d s

b y a c o m m

o n p e r c e n t a g e , f

i n d i n g t h e p e r c e n t a g e c h a n g e i n t o t a l d e m a n d

, a n d t a k i n g t h e lim it o f

t h i s p e r c e n t a g e c h a n g e i n d e m a nd a s t h e p e r c e n t a g e c h a n g e i n p r i ce g o e s t o ze r o

. T h e a gg r e g a t e

p r i ce e l a s t i c i t y o f d e m a n d c a n b e w r i tt e n a s



### ) 1 ( buy 

### s P E

− − = b ( 12 )

w h e r e P i s t h e s h a r e

- w e i g h t e d a v e r a g e p r i ce o f n e w v e h i c l e s

.

W e a ss u m e t h a t t h e m

o t o r v e h i c l e m a r k e t i s c h a r ac t e r i ze d b y B e r t r a n d c o m p e t it i o n w h e r e ea c h

m a n u f ac t u r e r s e t s p r i c e s t o m a x i m i z e it s o v e r a l l p r o f it s , t a k i n g i n t o acc o u n t t h e f ac t t h a t it i s a

m u l t i

- p r o du c t f

i r m

. I n a N a s h e q u i l i b r i u m f o r t h i s B e r t r a n d c o m

p e t it i o n , t h e p r o f

it

- m a x im i z i n g

p r i ce f o r a s i n g l e

- p r o du c t f

i r m c a n b e w r itt e n a s f

o l l o w s ( w h e r e MC i i s t h e m a r g i n a l c o s t f o r

a l t e r n a t i v e i

, a ss u m e d t o b e c o n s t a n t ): 21

i i i i 

### P MC P
h

1

= −

, o r

i i i i 

### P MC P h + =
. ( 13 )

21 S ee , e .g., C a r lt o n a nd P e r l o ff ( 1999) f o r a d i s c u ss i o n o f t h e B e r t r a nd

- N a s h a ss u m p ti o n s.A ppen d i x B N e w V eh i c l e M a r k e t M od e l

41 I f o n e o b s e r v e s P i , t h e n k n o w i n g e i t h e r t h e m a r g i n a l c o s t o r t h e e l a s t i c it y p r o v i d e s e n o ugh

i n f o r m a t i o n t o ca l c u l a t e t h e o t h e r

.

F o r a m u l t i

- p r o du c t f

i r m ( a s i s t h e ca s e f

o r a ll m a j o r a u t o f i r m s i n t h e U n it e d S t a t e s )

, t h e p r i c i n g

e qu a t i o n s i n c l ud e a d d i t i o n a l t e r m s t h a t r e f l ec t t h e un it p r o f

it s o n o t h e r p r o du c t s m a d e b y t h e f i r m

a n d t h e c r o ss

- e l a s t i c i t i e s o f d e m a n d b e t w e e n g oo d i a n d t h e s e o t h e r p r o du c t s

. T h e b a s i c l og i c i s

t h a t a s t h e p r i ce o f g oo d i i n c r e a s e s , s o m e o f t h e l o s t s a l e s o f t h a t go o d w i l l b e r e p l ace d b y

i n c r e a s e d s a l e s o f o t h e r g o o d s s o l d b y t h e s a m e f i r m

. O u r m

o d e l t a k e s t h e s e e f

f ec t s i n t o ac c o u n t

.
A d d i t i o n a ll y , w e m

od i f i e d t h e m e t h o d o l og y t o t a ke i n t o acc o u n t h o w t h e r e qu i

r e m e n t s u n d e r t h e

Z E V M a n d a t e w o u l d a ff

ec t m a n u f ac t u r e r s ’ p r o f

it m a x im i z i ng p r i c i ng d e c i s i o n s

.



### B.3. Sol v i ng for Par a meters

A s d e s c r i b e d a b o v e , t h e n e s t e d l og i t c h o i c e f r a m e w o r k p r o v i d e s a m e t h o d t o e s t im a t e c o n s u m e r

d e m a n d f o r d i ff e r e n t i a t e d p r o du c t s , u s i n g a s d a t a t h e p r i ce s a n d p a r a m e t e r s t h a t m

e a s u r e t h e

r e l a t i v e a tt r a c t i v e n e s s o f ea c h p r o du c t

. U s i n g t h e l og it f r a m e w o r k

, w e s o l v e s i m

u l t a n e o u s l y f

o r

t h e b e t a p a r a m

e t e r s a n d “ a l

t e r n a t i v e

- s p e c i f

i c ” p a r a m

e t e r s t h a t a r e c o n s i s t e n t w it h t h e o b s e r v e d

m a r k e t s h a r e s a n d p r i c e s

. I f t w o p r o du c t s i n t h e s a m e g r o up h a v e t h e s a m e p r i ce b u t d i ff e r e n t

m a r k e t s h a r e s , t h e n t h e o n e w i t h t h e h i g h e r s h a r e m u s t b e m o r e a tt r ac t i v e t o c o n s u m e r s

.
S im i l a r l y , i f t w o p r o du c t s i n t h e s a m e g r o up h a v e t h e s a m e m a r k e t s h a r e b u t d i ff e r e n t p r i c e s ,

t h e n t h e o n e w i t h t h e h i g h e r p r i ce m u s t b e m o r e a t t r a c t i v e t o c o n s u m e r s , s i n c e c o n s u m e r s a r e

o b s e r v e d t o p a y a p r e mi u m f o r i t

.

W e u s e t h e l og i t f

r a m e w o r k t o e s t im a t e a l

t e r n a t i v e

- s p e c i f

i c p a r a m e t e r s f

o r eac h v e h i c l e m

o d e l

.
W e m a k e a ss u m

p t i o n s c o n ce r n i ng t h e n e s t i n g p a r a m e t e r s , t h e a gg r e g a t e p r i c e e l a s t i c it y o f

d e m a n d

, a n d t h e p r i ce e l a s t i c i t y o f d e m a n d f o r o n e s p e c i f

i c a l t e r n a t i v e

. G i v e n t h e s t r u c t u r e o f o u r

n e s t e d l og i

t m o d e l

, t h e s e a s s u m

p t i o n s , t h e o b s e r v e d p r i ce s , a n d t h e o b s e r v e d m a r k e t s h a r e s a r e

s u f f i c i e n t t o d e r i v e e s t im a t e s o f t h e a l t e r n a t i v e

- s p e c i f

i c p a r a m e t e r s ( i n c l

u d i ng t h o s e f

o r t h e

o u t s i d e g oo d )

.

T h e m o d e l e s t im a t e s m a r g i n a l c o s t s f o r eac h v e h i c l e m

o d e l b a s e d o n t h e p r o f

it

- m a x im i za t i o n

c o n d i t i o n s o u t li n e d a b o v e

. T h i s c o n d it i o n a s s u m e s t h a t eac h m a n u f ac t u r e r c h o o s e s t h e p r i ce f o r

a g i v e n v e h i c l e t h a t w ill m a x im i ze i t s p r o f it s , t a k i ng i n t o ac c o u n t t h e n e w v e h i c l e m a r g i n a l c o s t s,

t h e s e n s i t i v i t y o f c o n s u m e r d e m a n d t o c h a n g e s i n v e h i c l e p r i c e s , a n d t h e a v a i l a b il it y t o

c o n s u m e r s o f s u b s t i t u t e v e h i c l e s o ff e r e d b y t h a t m a n u f

ac t u r e r a n d it s c o m

p e t it o r s

. T h e m

o d e lA ppen d i x B N e w V eh i c l e M a r k e t M od e l

42 u s e s v e h i c l e p r i c e s a n d a s s u m p t i o n s a b o u t c o n s u m

e r r e s p o n s e s t o c h a n g e s i n t h o s e p r i ce s t o

c a l c u l a t e m a r g i n a l c o s t s t h a t a r e c o n s i s t e n t w it h b o t h p r o f it

- m a x im i z i ng b e h a v i o r a n d t h e

o b s e r v e d m a r k e t s h a r e s

. M a r g i n a l c o s t s f o r eac h v e h i c l e a r e c a l c u l a t e d b a s e d o n eac h v e h i c l e ’ s

c a l c u l a t e d e l a s t i c i t y

. 

### B.4. Estimating Cons u mer Valuati o ns of V e hicle A ttributes

O n ce t h e a l

t e r n a t i v e

- s p e c i f

i c p a r a m e t e r s im

p l i e d b y t h e o b s e r v e d v e h i c l e s h a r e s a n d p r i c e s a r e

c a l c u l a t e d

, w e e s t im a t e t h e e x t e n t t o w h i c h c o n s u m e r s v a l u e ea c h v e h i c l e a t t r i b u t e t h r o ug h a

“ s ec o n d

- s t a g e” r e g r e s s i o n f o r t h e a l t e r n a t i v e s p e c i f

i c p a r a m e t e r s

. F o r eac h v e h i c l e i n t h e s a m p l e ,

t h e a l t e r n a t i v e s p e c i f

i c p a r a m e t e r s a r e r e g r e ss e d o n v e h i c l e c h a r ac t e r i s t i c s s u c h a s h o r s e p o w e r ,

w e i g h t

, a n d f

u e l ec o n o m

y

.

W e a ss u m e ea c h v e h i c l e ’ s a l t e r n a t i v e

- s p e c i f

i c p a r a m e t e r d e p e n d s up o n t h e v e h i c l e ’ s m o d e l a n d

a t t r i b u t e s acc o r d i n g t o t h e f o l l o w i n g m

o d e l :



### e f d j a +

+ + + = d el mo d el mo ye ar ye ar 

### D D X ( 14 )

w h e r e

a i s t h e a l

t e r n a t i v e

- s p e c i f

i c c o e f f i c i e n t

,

X a r e v e h i c l e c h a r ac t e r i s t i c s ,

D ye ar a r e du m m y v a r i a b l e s c o rr e s p o n d i n g t o v e h i c l e m o d e l y e a r s ,

D m od el a r e du mm

y v a r i a b l e s c o rr e s p o n d i n g t o t h e v e h i c l e m o d e l

,

e i s a n e rr o r t e r m ca p t u r i n g u n o b s e r v e d c h a r ac t e r i s t i c s , a n d

j

, d ye ar , a n d f

m od el a r e e s t im a t e d p a r a m e t e r s.

B

. 4

. 1

. E ff ec t s o f C a li f o r n i a P r og r a m

T h e C a l i f o r n i a P r o g r a m w i l l l ea d t o h i g h e r v e h i c l e c o s t s a n d i n c r e a s e d f u e l ec o n o m

y ( m i l e s p e r

g a l l o n ) f o r v a r i o u s m

o d e l s

. T h e m a r g i n a l c o s t s o f c o v e r e d v e h i c l e s f o r ea c h m a n u f

ac t u r e r a r e

a d j u s t e d t o r e f

l ec t t h e r e l e v a n t c o s t i n c r e a s e s f o r c o v e r e d v e h i c l e s

. T h e n e w v e h i c l e m a r k e t

m o d e l c a l c u l a t e s ea c h m a n u f ac t u r e r ’ s r e s p o n s e t o t h e a d d it i o n a l c o s t s i n e ac h y ea r

.A ppen d i x B N e w V eh i c l e M a r k e t M od e l

43 B

. 4

. 2

. C a l c u l a t i n g Q u a li t y - A d j u s t e d P r i ce C h a n g es

G i v e n t h e a ss u m

p t i o n s o f t h e n e s t e d l og it m o d e l

, t h e e x p e c t e d m a x i m u m u t i l it y a v a i l a b l e f

o r a

g i v e n s e t o f p r i c e s , a u t o m o b i l e m o d e l s , a n d p a r a m e t e r s ca n b e w r itt e n a s :



### )) e xp( ) l n ( e xp( 0



### a l + = buy

buy t o t al 

### I U ( 15 )

T h e c o n s u m e r w e l f

a r e ( p e r p o t e n t i a l pu r c h a s e r ) i s c a l c u l a t e d a s t h e r a t i o o f t h e m a x i m u m

e x p e c t e d u t i l i t y t o t h e p r i ce c o e f f i c i e n t :



### b t o t al 

### U

= W e l f a re C o n s u m er ( 16 )

A s d e f i n e d a b o v e , t h e i n c l u s i v e v a l u e f o r t h e “ b u y ” a l

t e r n a t i v e d e p e n d s o n t h e p r i c e s a n d

a l t e r n a t i v e

- s p e c i f

i c c o n s t a n t s f

o r eac h ca r m

o d e l

.

T h i s u t i l i t y c a n b e c a l c u l a t e d t w i ce

- - f i r s t w it h t h e p r i ce s a n d p a r a m e t e r s f o r t h e b a s e l i n e

c o n d i t i o n s , a n d a g a i n w i t h t h e p r i c e s a n d p a r a m e t e r s f o r t h e C a l i f

o r n i a P r o g r a m . T h a t i s :



### )

, ( )

, (

CAL CAL
total CAL
total base

base
total base
total 

### P U U P U U

a

a

= = ( 17 )

T o ca l c u l a t e t h e qu a l i t y

- a d j u s t e d a gg r e g a t e p e r ce n t a g e p r i ce c h a n g e f o r t h e C a l i f

o r n i a P r o g r a m

a n a l y z e d r e l a t i v e t o t h e b a s e li n e , w e s o l v e f o r a c o m m

o n p e r c e n t a g e p r i ce c h a n g e t h a t

, i f a p p l i e d

t o t h e b a s e p r i ce s , w i t h t h e b a s e p a r a m e t e r s , w o u l d y i e l d t h e s a m e u t il it y a s u n d e r t h e r e l e v a n t

r e g u l a t o r y

s c e n a r i o . T h a t i s :



### )

, ) 1 (( t h at s u ch f i nd ba se ba se

t o t al C AL

t o t al 

### P U U a

q q +

= ( 18 )



### B.5. Specific I m pl e m e ntation Par a meters a n d Data

B

. 5

. 1

. V e h i c l e S a l es

W e u s e C a li f

o r n i a

- s p e c i f

i c v e h i c l e s a l e s d a t a f

r o m R

. L

. P o l

k a n d C o m

p a n y t o d e t e r mi n e t h e

m a r k e t s h a r e f

o r ea c h v e h i c l e m

o d e l

, a gg r e g a t e d ac r o ss t r im l e v e l s , f o r t h e y ea r s 2001

- 2005

. F o r

ea c h m o d e l y ea r , w e u s e s a l e s o v e r t h e p e r i o d O c t o b e r

– S e p t e m b e r t o r e f l ec t a s acc u r a t e l y a s

p o s s i b l e t h e t i m i ng o f n e w m o d e l a v a i l a b il it y

. I f a v e h i c l e s o l d l e ss t h a n 500 un it s i n C a l i f o r n i a ,A ppen d i x B N e w V eh i c l e M a r k e t M od e l

44 t h e v e h i c l e m

o d e l w a s e lim i n a t e d f

r o m t h e d a t a s e t. 22 T o a v o i d u n d e r- v a l u a t i o n o f m o d e l s t h a t

w e r e e i t h e r d i s c o n t i n u e d o r t h a t w e r e f i r s t i n t r o d u ce d du r i n g t h e m i d d l e o f a m o d e l y e a r b eca u s e

t h e ac t u a l s a l e s w ou l d n o t b e g oo d e s t im a t e s o f t h e i r a n n u a l s a l e s , w e e lim i n a t e d o b s e r v a t i o n s

w h e r e t h e n u m

b e r o f v e h i c l e s s o l d w a s d r a m a t i ca ll y s m a ll e r t h a n i n t h e p r e v i ou s o r s ub s e qu e n t

y ea r f o r t h e s a m e m

o d e l

.

B

. 5

. 2

. V e h i c l e P r i ces

W e u s e d a t a o n t r a n s ac t i o n p r i c e s f o r eac h m o d e l f r o m J

. D

. P o w e r a n d A ss o c i a t e s f o r t h e U n it e d

S t a t e s a n d s p ec i f

i c a ll y f o r C a li f o r n i a

. T h e t r a n s a c t i o n p r i ce s a r e s a l e s w e i g h t e d a n d r e f l ec t t h e

d i ff e r e n t p r i c e s c h a r g e d f

o r d i ff e r e n t t r i m l e v e l s

.

B

. 5

. 3

. V e h i c l e F u e l E c o n o m y D a t a a n d O t h e r V e h i c l e C h a r ac t e r i s t i cs

W e u s e v e h i c l e c h a r ac t e r i s t i c d a t a f r o m W a r d ’ s t o d e t e r mi n e t h e f u e l ec o n o m

y o f e ac h m

o d e l

.
T h e f u e l ec o n o m

y u s e d i n t h i s a n a l y s i s i s t h e E P A a d j u s t e d c o m

b i n e d ( c it y a n d h i g h w a y

c o m b i n e d ) m i l e s p e r g a l l o n

. W e a l s o r e l y o n d a t a f r o m W a r d ’ s f

o r d a t a o n o t h e r v e h i c l e

a t t r i b u t e s , i n c l u d i n g e n g i n e s i z e , n u m b e r o f c y l i n d e r s , c u r b o r t e s t w e i g h t

, h o r s e p o w e r , l e n g t h

,

a n d h e i g h t

.

B

. 5

. 4

. C a t e g o r i z a t i o n o f V e h i c l e M od e l s i n t o N e s t s

W e u s e v e h i c l e ca t e g o r i za t i o n s f r o m t h e 2005 A u t o m

o t i v e N e w s M a r k e t D a t a B o o k t o d e f i n e t h e

v e h i c l e n e s t i n g s t r u c t u r e d e p i c t e d i n F i gu r e B

- 1

. W h e r e t h e a pp r o p r i a t e ca t e g o r y f o r a p a r t i c u l a r

m o d e l c ou l d n o t b e d e t e r mi n e d b a s e d o n t h e 2005 A u t o m o t i v e N e w s M a r k e t D a

t a B o o k

, w e u s e d

o l d e r A u t o m

o t i v e N e w s M a r k e t D a

t a B o o k s o r W a r d ’ s ca t e go r i z a t i o n s

.

B

. 5

. 5

. P r i ce E l as t i c i t y

C o n s i s t e n t w i t h v a r i o u s l i t e r a t u r e s o u r ce s , w e a ss u m e a n a gg r e g a t e e l a s t i c it y f o r t h e n e w v e h i c l e

m a r k e t o f –1

. 0. 23 W e s e t t h e o w n

- p r i ce e l a s t i c it y o f t h e “ n o r m a l i ze d ” v e h i c l e m o d e l ( w h o s e

22 T h e o n e e x c e p ti o n t o t

h i s i s t h e c a s e o f pu r e Z E Vs

. We u t i liz e t h e s a m e s al e s d a t a o n t

h e T oyo ta R

AV 4 E V t h at

w a s u s e d i n o ur p r e v i o u s a n al y s i s ( s ee N E R A / S i e r r a , 200 3

, A t t a c h m e n t B )

, w i t h t h e e x ce p ti o n t

h a t

, r at h e r t h a n

a ss u m i ng i n i ti a ll y a n i n f

l at e d d e m a n d fo r Z E Vs

, w e u s e t h e R AV 4 E V s al e s d a t a t o d e v e l o p i n it i a l d ema n d fo r Z E Vs

. We t

h e n l i n e a r l y i n c r e a s e t h e at t r a c ti v e n e ss of Z E Vs e a c h y e a r i n t w o ph a s e s : f i r s t f r o m 2 005 t o 200 9

, t h e n f r o m 2 0 09 t o 2018

. B y 2018

, t h e a tt r a ct i v e n e ss o f Z E Vs i n ou r m o d e l i s s u c h t h a t

, a l l e l s e b e i n g e qu a l

, t h e d e m a n d fo r Z E Vs w o u l d b e 40 t im e s g r ea t e r t h a n t h e d e m a n d fo r t

h e R AV 4 E V

.

23 S ee , f o r e x a m p l e , G

r u e n s p ec h t ( 2 000 )

.A ppen d i x B N e w V eh i c l e M a r k e t M od e l

45 a l t e r n a t i v e

- s p e c i f

i c p a r a m e t e r i s n o r m a li z e d t o ze r o ) t o b e –4

. 0

, w h i c h i s c o n s i s t e n t w it h v a r i o u s

o t h e r l i t e r a t u r e e s t im a t e s o f i n d i v i d u a l m o d e l o w n

- p r i ce e l a s t i c it i e s. 24

T h e n e s t i n g p a r a m e t e r s f o r n e s t e d l og it m

o d e l s r e p r e s e n t t h e s i mi l a r it y b e t w ee n c h o i ce s f o r

v e h i c l e s f

a ll i ng w i t h i n t h e s a m e “ n e s t

. ” T h e n e s t i n g p a r a m e t e r s i n f l u e n c e t h e r e l a t i v e

s ub s t i t u t a b i l i t y w i t h i n ea c h n e s t

, a n d a l s o b e t w e e n d i ff e r e n t n e s t s

. N e s t i n g p a r a m e t e r s m a y t a k e

a n y v a l u e b e t w e e n ze r o a n d o n e , w i t h l o w e r v a l u e s i n d i c a t i n g g r ea t e r s i mi l a r it y b e t w ee n t h e

a l t e r n a t i v e s w i t h i n t h e r e s p ec t i v e n e s t

. F o r t h e “ B u y ” n e s t w e u s e a n e s t i n g p a r a m e t e r e qu a l t o

0

. 9

, f o r v e h i c l e t y

p e s w e u s e a n e s t i n g p a r a m e t e r e qu a l t o 0

. 6 a n d f o r v e h i c l e c l a ss e s w e u s e a

n e s t i n g p a r a m e t e r e qu a l t o 0

. 3

.



### References

A i r R e s o u r ce s B o a r d

. 2000

. “ S t a f f R e p o r t : P r o p o s e d A m e n d m e n t s t o t h e C a l i f o r n i a Z e r o E mi ss i o n V e h i c l e P r o g r a m R e g u l a t i o n s

. ” D ec e m b e r 8

.

A u t o m o t i v e N e w s

. 2001

. 2001 M a r ke t D a t a B ook

. C r a i n C o mm u n i ca t i o n s , I n c

. M a y

.

A u t o m o t i v e N e w s

. 2002

. 2002 M a r ke t D a t a B ook

. C r a i n C o mm u n i ca t i o n s , I n c

. M a y

.

A u t o m o t i v e N e w s

. 2003

. 2003 M a r ke t D a t a B ook

. C r a i n C o mm u n i ca t i o n s , I n c

. M a y

.

A u t o m o t i v e N e w s

. 2005

. 2005 M a r ke t D a t a B ook

. C r a i n C o mm u n i ca t i o n s , I n c

. M a y

.

B e n

- A k i v a , M o s h e a n d S t e v e n R

. L e r m a n

. 1985

. D i s c r e t e C ho i ce A na l

y s is

. M I T P r e ss , C a m b r i dg e

.

B e r r y , S t e v e n , J a m e s L e v i n s o h n , a n d A r i e l P a k e s

. 1995

. “ A u t o m o b i l e P r i c e s i n M a r k e t E qu i l i b r i u m , ” E c ono m e t r i ca , V o l

. 63

, N o

. 4

, J u l y 1995

, p p

. 841

- 89 0

.

C a r l t o n , D e n n i s W

. a n d J e ff

r e y M

. P e r l o f

f

. 1999

. M od e r n I ndu s t r i a l O r

gan i z a ti on. T h i

r d
E d i t i o n

. A d d i s o n

- We s l e y : N e w Y o r k

.

G o l d b e r g , P i n e l op i K

. 1995

. “ P r o du c t D i f f e r e n t i a t i o n a n d O li g o p o l y i n I n t e r n a t i o n a l M a r k e t s : T h e C a s e o f t h e U

. S

. A u t o m o b i l e I n du s t r y , ” E c ono m e t r i ca , pp

. 89 1

- 951

.

G r u e n s p e c h t

, H o w a r d K

. 2000

. C o mm e n t s o n 2000 B i e nn i a l R e v i e w o f Z e r o E mi ss i o n V e h i c l e P r o g r a m b e f

o r e t h e C a li f

o r n i a A i r R e s o u r ce s B o a r d

. S e p t e m b e r 5

.

J

. D

. P o w e r a n d A ss o c i a t e s , P o w e r I n f o r m a t i o n N e t w o r k

. P I N M a r k e t s : N a t i o n a l

, C a l i f

o r n i aS o u t h

, a n d C a li f

o r n i a

- N o r t h

. P u r c h a s e o f p r o p r i e t a r y d a t a , F e b r u a r y 2006

.

24 S ee , f o r e x a m p l e , B e r r y , Le v i n s o h n , a nd P a k e s (1995 )

.A ppen d i x B N e w V eh i c l e M a r k e t M od e l

46 R

. L

. P o l k a n d C o m

p a n y

. N e w R e t a i l a n d F l ee t C a r a n d L i g h t T r u c k ( GV W 1

- 3 ) R e g i s t r a t i o n s f o r
t h e S t a t e o f C a l i f

o r n i a , 2001

- 2005

. P u r c h a s e o f p r op r i e t a r y d a t a , F e b r u a r y 2006

.

U n i t e d S t a t e s E n v i r o n m e n t a l P r o t e c t i o n A g e n c y ( E P A )

. 2004

. F u e l E c o n o m y F ac t S h ee t

, E P A 420

- F

- 04

- 053

. O c t o b e r

. h t t p :// ww w

. e p a

. g o v / f u e l ec o n o m

y / 42 0 f 04053

. h tm

, acce s s e d A

p r i l 20

, 200 6

.

U n i t e d S t a t e s D e p a r t m e n t o f L a b o r , B u r ea u o f L a b o r S t a t i s t i c s ( B L S )

. C o n s u m e r P r i ce I n d e x— A l l U r b a n C o n s u m e r s , U

. S

. A ll I t e m s , 1966

- 2001

. h tt p : / / www

. b l s

. g o v

/ c p i / h o m e

. h tm

, acce s s e d
A p r i l 20

, 2006

.

W a r d ’ s C o mm

u n i ca t i o n s

. 2001

. W a r d ’ s ’ 01 M o d e l U

. S

. C a r a n d L i g h t T r u c k S p ec i f i ca t i o n s a n d
P r i ce s

. S u b s c r i

p t i o n s e r v i ce

.

W a r d ’ s C o mm

u n i ca t i o n s

. 2002

. W a r d ’ s ’ 02 M o d e l U

. S

. C a r a n d L i g h t T r u c k S p ec i f i ca t i o n s a n d
P r i ce s

. S u b s c r i

p t i o n s e r v i ce

.

W a r d ’ s C o mm

u n i ca t i o n s

. 2003

. W a r d ’ s ’ 03 M o d e l U

. S

. C a r a n d L i g h t T r u c k S p ec i f i ca t i o n s a n d
P r i ce s

. S u b s c r i

p t i o n s e r v i ce

.

W a r d ’ s C o mm

u n i ca t i o n s

. 2004

. W a r d ’ s ’ 04 M o d e l U

. S

. C a r a n d L i g h t T r u c k S p ec i f i ca t i o n s a n d
P r i ce s

. S u b s c r i

p t i o n s e r v i ce

.

W a r d ’ s C o mm

u n i ca t i o n s

. 2005

. W a r d ’ s ’ 05 M o d e l U

. S

. C a r a n d L i g h t T r u c k S p ec i f i ca t i o n s a n d
P r i ce s

. S u b s c r i

p t i o n s e r v i ce

.

W a r d ’ s C o mm

u n i ca t i o n s

. 2006

. W a r d ’ s ’ 06 L i g h t V e h i c l e U

. S

. M a r k e t S e g m e n t a t i o n a n d P r i ce s

. S u b s c r i p t i o n s e r v i ce

.A ppen d i x C S c r appage M od e l

47 

### A p p e n d i x C

. S c r a p p a g e M o d e l

T h i s a pp e n d i x p r o v i d e s i n f o r m a t i o n o n t h e s c r a pp a g e m o d e l u s e d i n t h i s s t u d y

.



### C.1. Vehicle Prices a nd Scrappa g e Beh a v io r

T h e i d e a t h a t ec o n o mic a s w e ll a s t ec h n i c a l c o n s i d e r a t i o n s ca n i n f l u e n ce t h e li f

e s p a n s o f

du r a b l e ca p i t a l go o d s s u c h a s m o t o r v e h i c l e s h a s l o n g b e e n r ec o gn i ze d

. S p e c i f i c a l l y , t h e l i n k

b e t w e e n a v e h i c l e ’ s m a r k e t v a l u e a n d it s s e r v i ce l i f e t im e w a s f

i r s t e x p l i c i t l y r ec o gn i z e d m o r e

t h a n t h r ee d e c a d e s a g o

. T h i s l og i c i s s t r a i g h t f o r w a r d : a v e h i c l e i s r e t i r e d f r o m s e r v i c e ( o r

s c r a pp e d ) w h e n i t i s n o l o n g e r w o r t h t h e e xp e n s e o f k e e p i ng i t i n w o r k i ng c o n d i t i o n

. T h a t

i s, w h e n t h e d i f

f e r e n c e b e t w e e n t h e v e h i c l e ’ s r e s a l e p r i c e ( i n w o r k i ng c o n d i t i o n ) a nd t h e

c o s t o f k e e p i ng i t i n t h i s c o n d i t i o n i s l e ss t h a n i t s s c r a p v a l u e , t h e v e h i c l e i s s c r a pp e d

.

B u i l d i n g o n t h i s b a s i c i n s i g h t

, ea r l y r e s ea r c h b y W a l k e r ( 196 8 ) a n d P a r k s ( 1 9 7 7 )

i nv e s t i g a t e d t h e i n f

l u e n c e o f a v e h i c l e ’ s m a r k e t v a l u e , a s w e ll a s c h a r ac t e r i s t i c s s u c h a s it s a g e ,

o n t h e v e h i c l e o w n e r’ s d e c i s i o n t o r e t i r e t h e v e h i c l e f r o m s e r v i ce r a t h e r t h a n m a i n t a i n i t i n

w o r k i n g c o n d i t i o n

. B o t h a u t h o r s p r e s e n t s t a t i s t i ca l e v i d e n ce o f t h e i n f l u e n ce o f v e h i c l e p r i ce s

o n t h e s c r a p p a g e r a t e s o f u s e d v e h i c l e s o f d i f f e r e n t m o d e l y e a r v i n t a g e s a nd a g e s , d e m o n s t r a t i n g t h a t v a r i a t i o n i n a u t o m o b i l e p r i c e s e x e r t s a d e t ec t a b l e i n f l u e n ce o n s c r a pp a g e

r a t e s o f u s e d ca r s

. B e r k o v ec ( 198 5 ) l a t e r i n c o r p o r a t e d t h e f r a m e w o r k d e v e l o p e d i n t h i s

ea r li e r r e s ea r c h i n a m o d e l e n c o m p a s s i ng n e w a u t o m

o b i l e p r o du c t i o n a n d s a l e s ac t i v it y , v e h i c l e

p r i c i ng b e h a v i o r , a n d s c r a pp a g e o f u s e d a u t o s

.

A l s o d r a w i n g o n p r e v i ou s r e s u l t s , G r u e n s p e c h t ( 1982 ) r e c o gn i z e d t h a t t h e c o nn ec t i o n b e t w ee n

n e w a n d u s e d v e h i c l e p r i ce s

— w h e r e b y r i s i n g p r i ce s f o r n e w m o d e l s e x e r t a n up w a r d “ p u l l ” o n

r e s a l e p r i ce s f

o r u s e d v e h i c l e s

— m e a n t t h a t c h a n g e s i n p r i c e s f o r n e w a u t o m

o b il e s c o u l d

i n f l u e n ce s c r a pp a g e d ec i s i o n s b y o l d e r c a r s ’ o w n e r s

. A s a r e s u l t

, h e h y po t h e s i ze d

,

e m i ss i o n s r e g u l a t i o n s t h a t r a i s e d p r o du c t i o n c o s t s a n d s a l e s p r i c e s o f n e w v e h i c l e s mi g h t r e t a r d

t h e s c r a pp a g e a n d r e p l ac e m e n t o f o l d e r m o d e l s s u ff i c i e n t l y t o o f

f s e t t h e r e du c t i o n i n

c o nv e n t i o n a l e m i ss i o n s f r o m i n t r odu c i n g c l ea n e r n e w m o d e l s i n t o t h e v e h i c l e f l ee t

.

G r u e n s p e c h t ’ s r e s e a r c h p r o d u c e d e v i d e n c e t h a t t h e i n c r e a s e i n n e w c a r p r i ce s r e s u l t i ng f r o m

m a n u f ac t u r e r s ’ c o m

p li a n ce w i t h t h e 1 9 8 0

- 81 f e d e r a l e m i s s i o n s s t a n d a r d s c ou l d b e s u f f i c i e n t t oA ppen d i x C S c r appage M od e l

48 h a v e t h i s e ff

e c t

. T h i s s t u d y c a n b e c o n s i d e r e d a n upd a t e d v e r s i o n o f G r u e n s p e c h t ’ s s t a t i s t i c a l

m o d e l r e l a t i n g u s e d v e h i c l e s ’ s c r a pp a g e r a t e s t o n e w v e h i c l e p r i ce s

.



### C.2. Model Used in this Stu d y

T h e v e h i c l e s c r a pp a g e m o d e l u s e d h e r e i s b a s e d o n w e l l

- e s t a b li s h e d ec o n o mi c t h e o r y a n d

e m p i r i c a l e v i d e n ce o n t h e r e s p o n s e o f o w n e r s ’ d e c i s i o n s a b o u t r e t i r i n g ( o r “ s c r a p p i n g ” ) u s e d

v e h i c l e s t o c h a n g e s i n e c o n o m i c f a c t o r s

. T h e m

o d e l e s t i m a t e s a r e l a t i o n s h i p b e t w ee n s c r a p p a g e

o r r e t i r e m e n t r a t e s f

o r v e h i c l e s o f d i f

f e r e n t m o d e l y ea r v i n t a g e s a t e ac h a g e du r i n g t h e i r

l i f e t im e s a n d m ac r o e c o n o m i c c o n d i t i o n s ( e

. g

. , u n e m p l o y m e n t r a t e )

, f

ac t o r s a f f e c t i n g t o t a l

m o t o r v e h i c l e o w n e r s h i p a n d u s e , a n d o t h e r f ac t o r s i n f

l u e n c i ng s c r a pp a g e r a t e s o f u s e d

v e h i c l e s

. T h i s r e l a t i o n s h i p w a s d e v e l o p e d u s i n g v a r i o u s d a t a a n d s t a t i s t i c a l p r o ce du r e s

a pp r o p r i a t e f

o r t h e s e d a t a

.

T h i s s t u d y e s t im a t e s a “ r e d u c e d

- f o r m ” s c r a pp a g e m

o d e l u s i n g a gg r e g a t e s c r a p p a g e r a t e s f o r t h e

i n d i v i du a l v e h i c l e m

o d e l y ea r s m a k i ng u p t h e U

. S

. p a ss e n g e r v e h i c l e f l e e t o v e r t h e 1970

- 2005

p e r i o d (r a t h e r t h a n t h e s c r a pp a g e r a t e s f o r i n d i v i du a l v e h i c l e m

o d e l s o r i g i n a ll y e m

p l o y e d b y

G r u e n s p ec h t )

. U p d a t i ng r e s u l t s f r o m G r u e n s p ec h t ’ s ea r l i e r m od e l i s n e c e ss i t a t e d b y d r a m a t i c

i n c r e a s e s i n t h e e x p ec t e d l i f e t im e s a n d a v e r a g e a g e s o f p a s s e n g e r v e h i c l e s t h a t h a v e o cc u rr e d

s i n c e h i s o r i g i n a l w o r k w a s p u b l i s h e d

. F i gu r e C

- 1

, w h i c h d i s p l a y s y ea r l y s u r v i v a l r a t e s o f

v e h i c l e s m a n u f

ac t u r e d du r i ng d i f

f e r e n t m o d e l y e a r s , i l l u s t r a t e s t h e s e c h a n g e s

.

7 5% 8 5% 9 5%

3 4 5 6 7 8 9 10 11 12 13 14 15 20 00

19 95

19 90

19 85

19 80

19 75

19 70

19 65

V e h i c l e a g e i n y e a rs M od e l y e a r:Percentvehiclessurvivingtothefollowingyear

S o u r ce : R

. L

. P o l k & C o m p a n y

.
F i g u re C -1

. V e h i c l e S u r v i v a l R at e s b y A g e a nd M o d el Y e a rA ppen d i x C S c r appage M od e l

49 C

. 2

. 1

. B as i c T h e o r y o f t h e M o d e l

A v e h i c l e ’ s o w n e r w i ll r e t i r e t h e v e h i c l e f

r o m s e r v i ce a n d s e l l it f

o r it s s c r a p v a l u e i f it s v a l u e i n

w o r k i n g c o n d i t i o n e x cee d s i t s s c r a p v a l u e b y l e ss t h a n t h e e x p ec t e d c o s t o f r e p a i r s n e ce s s a r y t o

m a i n t a i n i t i n w o r k i n g c o n d i t i o n

. S i n ce t h e e x p ec t e d c o s t o f t h e s e r e p a i r s d e p e n d s o n h o w l o n g a

v e h i c l e h a s b e e n i n s e r v i ce a s w e l l a s o n t h e m a t e r i a l s a n d m a n u f ac t u r i n g t ec h n o l og y e m

p l o y e d

w h e n i t w a s p r o du ce d

, t h e p r o b a b i l i t y t h a t it w i l l b e s c r a pp e d i s l i k e l y t o d e p e n d o n b o t h it s

o r i g i n a l m

o d e l y ea r a n d i t s a g e

. T o s o m e e x t e n t

, a v e h i c l e ’ s a g e m a y s i m p l y b e a s u rr o g a

t e

m e a s u r e o f i t s a c c u m

u l a t e d u s a g e , a l

t h o ug h it s a g e p e r s e m a y a l s o a f f e c t it s s a l e v a l u e i n

w o r k i n g c o n d i t i o n a n d t h u s t h e li k e li h oo d t h a t it w il l b e r e t i r e d

.

A t t h e a gg r e g a t e o r f

l ee t

- w i d e l e v e l

, t h e s c r a pp a g e r a t e a m o n g a “ c o h o r t ” o f v e h i c l e s i n s e r v i ce
( m ea s u r e d b y t h e p r o p o r

t i o n o f t h o s e i n s e r v i c e a t t h e b e g i n n i ng o f a y ea r t h a t a r e r e t i r e d o r

s c r a pp e d b e f

o r e i t e n d s ) w il l t h u s d e p e n d o n b o t h t h e i r m o d e l y ea r a n d t h e i

r a g e du r i ng t h a t y ea r

.
T h e s c r a pp a g e r a t e a l s o w i l l r e f l ec t t h e e ff

ec t s o f v e h i c l e s i n v o l v e d i n m o t o r v e h i c l e ac c i d e n t s

t h a t r e m o v e v e h i c l e s f

r o m s e r v i ce

. B e ca u s e p r i c e s f o r n e w v e h i c l e s a r e i n t u r n a n i m p o r t a n t

i n f l u e n ce o n p r i c e s f

o r u s e d v e h i c l e s o f d i f

f e r e n t a g e s , s c r a pp a g e r a t e s f o r v e h i c l e s o f ea c h m

o d e l

y ea r i n t h e f

l ee t du r i n g a ca l e n d a r y e a r a r e li k e l y t o b e a f f e c t e d b y c h a n g e s i n n e w v e h i c l e p r i c e s

a n d t h e m y

r i a d f a c t o r s t h a t d e t e r mi n e t h e m ( i n c l ud i n g m a n u f ac t u r e r s ’ c o s t s f

o r c o m p l y i ng w it h

g o v e r n m e n t r e gu l a t i o n s )

.

F i n a ll y , s c r a pp a g e r a t e s f o r a ll m od e l y ea r s i n s e r v i ce a r e a l s o li k e l y t o b e a ff e c t e d

- a l t h o ug h n o t

n e c e s s a r i l y u n i f

o r ml y

- b y c h a n g e s i n o t h e r ec o n o m i c v a r i a b l e s s u c h a s e m p l o y m e n t o r p e r s o n a l

i n c o m e s

. T h i s o cc u r s b eca u s e k ee p i n g u s e d v e h i c l e s i n s e r v i ce l o n g e r p r o v i d e s a t e m p o r a r y

m e c h a n i s m f

o r acc o m m

o d a t i n g i n c r ea s e s i n t o t a l d e m a n d f o r m o t o r v e h i c l e t r a v e l t h a t r e s u l t

f r o m c h a n g e s i n ec o n o m

y

- w i d e c o n d it i o n s

. E x t e n d i ng t h e s e r v i c e l i f e t im e o f a u s e d v e h i c l e i n

o r d e r t o acc o m m

o d a t e i n c r e a s e d t r a v e l d e m a n d i s a c c o m p l i s h e d b y d e f

e r r i ng it s r e t i

r e m e n t

b e y o n d t h e a g e a t w h i c h i t w o u l d o t h e r w i s e h a v e o cc u rr e d

, a r e s p o n s e t h a t r e du ce s t h e a gg r e g a t e

s c r a pp a g e r a t e f

o r v e h i c l e s o f v a r i o u s a g e s

.

C

. 2

. 2

. M od e l V a r i a b l es a n d D a t a S o u r ces

T h e d a t a u s e d t o d e v e l o p t h i s m o d e l o f t h e s e e m

p i r i ca l r e l a t i o n s h i p s i n c l ud e s c r a pp a g e r a t e s

c a l c u l a t e d f

r o m U

. S

. a n n u a l v e h i c l e r e g i s t r a t i o n d a t a f o r t h e y ea r s 1970 t h

r o ug h 2005

. D u r i n g

ea c h c a l e n d a r y ea r o f t h i s p e r i o d

, w e u s e r e g i s t r a t i o n d a t a f o r p a ss e n g e r v e h i c l e s r e p o r t e d b y R

. L

.A ppen d i x C S c r appage M od e l

50 P o l k & C o m p a n y t o c a l c u l a t e s c r a pp a g e r a t e s f o r v e h i c l e s o f a g e s 4 t h

r o ug h 14 y e a r s , a n d a n

o v e r a ll s c r a pp a g e r a t e f

o r v e h i c l e s t h a t a r e 15 y ea r s a n d o l d e r. 25 T h e s c r a pp a g e r a t e i s m e a s u r e d

a s t h e d e c r ea s e i n r e g i s t e r e d ca r s o v e r t h e y ea r d i v i d e d b y t h e n u m b e r o f r e g i s t e r e d ca r s a t t h e

b e g i n n i ng o f t h e y ea r. 26 W h i l e t h e s p e c i f i c t y p e s o f v e h i c l e s i n c l ud e d i n t h e s e r e g i s t r a t i o n d a t a -

a n d t h u s i n t h e s c r a pp a g e r a t e s u s e d t o d e v e l op t h i s m o d e l

- v a r y o v e r t h e e x t e n d e d p e r i od

c o v e r e d b y t h i s s t u d y , f

o r m o s t o f t h o s e p e r i o d s t h e y c l o s e l y m a t c h t h o s e e n c o m p a s s e d b y t h e

GHG a n d Z E V S t a n d a r d s , a n d t h e f e d e r a l g o v e r n m e n t ’ s C o r p o r a t e A v e r a g e F u e l E c o n o m y
( “ C A F E ” ) s t a n d a r d s

.

E ac h o f t h e s c r a pp a g e m

o d e l v a r i a b l e s i s s u mm a r i ze d b e l o w , a l o n g w it h t h e s p e c i f i c r a t i o n a l e f o r

i nc l u d i n g i t a n d a b r i e f d e s c r i p t i o n o f t h e s p ec i f i c d a t a s o u r c e u s e d t o m

ea s u r e i t

.

1. V e h i c l e s p e r D r i v e r (

L ag g e d )

. T h i s v a

r i a b l e r e p r e s e n

t s t h e a v e r a g e n u m b e r o f v e h i c l e s p e r

l i c e n s e d d r i v e r i n t h e p r ev i ous y ea

r

. I t i s i n t e n d e d t o m

ea s u r e t h e e ff ec t o f p r e v i

o u s l y p o s t p o ne d

s c r a pp a g e a n d r e p lac e m

e n t o f o l d e r v e h i c l e s du e t o m

ac r o e c o n o m i c a n d o t h e r c o n d i t i o n s o n

s c r a pp a g e i n s u b s e qu e n

t p e r i o d s ; h i g h e r v a l u e s o f t h i s la gg e d v a

r i a b l e a r e e x p ec t e d t o l ea d t o

i n c r e a s e d s c r a p p a g e i n t h e c u rr e n t y e a r

. T h e m ea s u r e i s c a l c u l a t e d f r o m t h e R

. L

. P o l

k d a t a

o n v e h i c l e s i n e a c h y ea r ( a s d i s c u s s e d a b o v e ) a nd i n f o r m a t i o n o n l i ce n s e d d r i v e r s i n e a c h

y e a r o b t a i n e d f

r o m t h e U

. S

. F

e d e r a l H i g h w a y A d mi n i s t r a

t i o n i n i t s a n n u a l H i g h w a y S t a t i s t i cs

.

2. N e w C a r P r i ce

- A g e I n t e r a c t i ons . T h i s s e t o f v a

r i a b l e s i s m ea s u r e d a s t h

e i n t e r a c t i o n o f t h e a v e r a g e

ne w ca r p r i ce ( i n r e a l t e r m

s ) t i m e s t h e s e t o f d u mm y v a r i a b l e s f o r v e h i c l e a g e

. A v e r a g e n

e w ca r

p r i ce i s m ea s u r e d a s t h

e a v e r a g e r ea l ( 2 0 05 d o l la r) p r i ce , b a s e d u p o n a

v e r a g e n o mi n a l e x

p e n d i t u r e

p e r c a r r e p o r t e d b y t h e B u r ea u o f E c o n o m i c A n a l y s i s a n d c o nv e r s i

o n o f 2005 d

o l la r s u s i n g t h e C P I

25 R

. L

. P o l k r e p o r t s t

h a t p r i o r t o t h e 199 3 r e l e a s e , w h i c h a s n o te d b e l o w i s f o r r e g i s t r a t i o n s a s of J u l y 1

, 199 2

, i t d o u b l e

- c o u n t e d u s e d v e h i c l e s s o l d b y a r e s i d e n t of o n e s tat e t o a r e s i d e

n t of a d i ff

e r e n t s t a t e t h a t w e r e t h e n

s im u l t a n e o u s l y r e g i s t e r e d i n t w o s tat e s

. T h i s d o u b l e

- c o u n t i ng fo r s o m e r e g i s t e r e d v e h i c l e s w a s c o r r ec t e d fo r t h e 1993 r e l e a s e a n d s u b s e qu e n t d a t a r e l e a s e s

. R

. L

. P o l k d i d n o t a d j u s t d a t a f r o m p r i o r y e a r s w h e

n i t ma d e t

h e

c o rr ec ti o n

. T o a vo i d c al c u l a ti n g i n a cc u r a t e s c r a p p a g e r at e s fo r y e a r s a ff e c t e d b y t h i s c h a n g e i n m et h o d o l o g y , w e d r o pp e d ob s e r v ati o n s w h o s e s c r a p p a g e r at e s c o u l d b e c al c u la t e d u s i n g d i f

f e r e n t m et h o d s ( t h r ee y e a r s w o r t

h of

o b s e r v ati o n s )

. We al s o a ll o w e d f o r a s t r u c t u r a l c h a ng e r e l a

t e d t o t h e e f f e c t of t h e l a gg e d v e h i c l e s p e r d r i v e r o n

s c r a p p a g e r at e s b y i n t e

r a c t i ng i t w i t

h a du m m y v a r ia b l e t

h a t t o o k t h e v al u e of o n e fo r ob s e r v ati o n s a f t e r 199 2

.

26 R

. L

. P o l k r e p o r t s r e g i s t r a ti o n s a s of J u l y 1 of e a c h y e a r

. T o c al c u lat e t h e s c r a p p a g e r at e fo r e a c h c al e n d a r y e a r ( i

. e

. , ov e r t

h e p e r i o d f

r o m J a n u a

r y 1 t o D ece m b e r 31 )

, w e c a lc u lat e d t w o s c r a pp a g e r a t e s , o n e b a s e d up o

n t h e

c h a ng e f r o m t h e p r e v i o u s y e a r t o t

h e c u r r e n t y e a r ( e

. g

. , fo r 2 000

, f r o m J u l y 1

, 199 9 t o J u l y 1

, 2000 ) a n d o n e b a s e d

up o n t h e c h a n g e f

r o m t h e c u r r e n t y e a r t o t

h e s u b s e qu e n t y e a r ( e

. g

. , fo r 200 0

, f r o m J u l y 1

, 200 0 t o J u l y 1

, 2001 ) ;
t h e s c r a pp a g e r a

t e w e u s e d f

o r e a c h y e a r w a s t

h e a v e r a g e of t h e s e t w o v al u e s

.A ppen d i x C S c r appage M od e l

51 d e f l a t o r r e p o r t e d b y t h e B u r e a u o f L a b o r S t a t i s t i c s ( a s p r e s e n

t e d i n t h e E c o n o m i c R e p o r t o f t h e

P r e s i d e n t ( 20 0 6 ))

.

3. U n e m p l o y m e n t R a t e

. T h i s v a

r i a b l e m ea s u r e s t h e e f f ec t o f m ac r o ec o n

o mi c c o n d i

t i o n s o n v e h i

c l e

s c r a pp a g e ; h i g h e r u ne m p l o y m e n t du r i n g p e r i o d s o f s l o w e c o n

o m i c g r o w t h o r r ece ss i o n m a y ca u s e

v e h i c l e o w ne r s t o d e la y s c r a pp a g e a n d r e p lac e m

e n t o f o l d e r v e h i c l e s

. I t i s m ea s u r e d b y t h e

a n n u a l u n e m

p l o y m e n t r a t e a m

o n g m a l e s a g e d 1 9

- 65 y ea r s o f a g e , a s r e po r

t e d b y t h e U

. S

.
B u r ea u o f L a b o r S t a t i s t i c s

.

4. F a t a l C r a s h e s p e r V

M T. T h i s v a r i a b l e m e a s u r e s s c r a pp a g e du e t o acc i d e n t s

. T h e v a r i a b l e i s

c a l c u l a t e d a s t h e n u m

b e r o f p a s s e n g e r ca r s i n v o l v e d i n c r a s h e s i n w h i c h a p e r s o n i s k il l e d

, d i v i d e d b y t h e a n n u a l v e h i c l e mi l e s t r a v e l e d

. T h i s v a r i a b l e i s i n t e n d e d t o m e a s u r e v e h i c l e s

l o s t i n m a

j o r ac c i d e n t s

. T h e d a t a w e r e o b t a i n e d fr o m t h e N a t i o n a l H i g h w a y T r a f f i c S a f e t y

A d m i n i s t r a t i o n

.

R ec o gn i z i ng t h e “ p a n e l ” n a t u r e o f t h e d a t a u s e d t o d e v e l o p it

, t h e s c r a pp a g e m o d e l a l s o i n c l ud e s

ca t e g o r i c a l

, a g e s p e c i f

i c v a r i a b l e s ( t e r m

e d “ f i x e d e ff e c t s ” i n s t a t i s t i c a l a n a l y s i s )

.

C

. 2

. 3

. M od e l F o rm a n d E s t i m a t i o n

T h e s p e c i f

i c m a t h e m a t i ca l f

o r m o f t h e s c r a pp a g e m

o d e l e m p l o y s t h e m

e a s u r e

     

− s s
1 ln ( 1 )

a s i t s d e p e n d e n t v a r i a b l e , w h e r e s i s t h e a gg r e g a t e s c r a pp a g e r a t e f o r v e h i c l e s o f a n i n d i v i d u a l

m o d e l y ea r a t a s p e c i f

i c a g e , a n d l n (

. ) d e n o t e s t h e n a t u r a l l o g a r it h m

. T h i s t r a n s f o r m a t i o n o f t h e

s c r a pp a g e r a t e , s o m

e t im e s c a l l e d t h e “ l og it ” o f t h e s c r a pp a g e r a t e , c o nv e r t s a m ea s u r e b o u n d e d

b y t h e v a l u e s ze r o a n d o n e

— a n d i n p r ac t i ce v a r y i ng o v e r a m u c h n a rr o w e r r a n g e

— t o o n e

s p a nn i ng a w i d e r r a n g e o f v a l u e s

. U s i n g t h e t r a n s f o r m e d v a l u e o f t h e s c r a pp a g e r a t e a s t h e

m o d e l ’ s d e p e n d e n t v a r i a b l e a l l o w s t h e e s t im a t e d c o e ff i c i e n t s t o e x h i b it d e s i r a b l e s t a t i s t i c a l

p r o p e r t i e s

. ( N o t e t h a t t h e r e s u l t s o f t h e r e g r e s s i o n m

o d e l u s i ng t h e l og it t r a n s f o r m a t i o n ca n b e

t r a n s f o r m e d b ac k i n t o a n e s t im a t e d r e l a t i o n s h i p b e t w e e n t h e s c r a pp a g e r a t e it s e l f a n d t h e

e x p l a n a t o r y v a r i a b l e s

. )A ppen d i x C S c r appage M od e l

52 

### C.3. Statistical Resul t s

T h e r e s u l t i n g m o d e l p e r f o r m s w e l l i n e x p l a i n i n g v a r i a t i o n a m o n g s c r a pp a g e r a t e s ac r o ss t h e

w i d e r a n g e o f m o d e l y ea r s a n d e x t e n d e d h i s t o r i c a l p e r i o d s p a nn e d b y t h e u n d e r l y i n g d a t a

.
T a b l e C

- 1 p r e s e n t s t h e s t a t i s t i c a l c o e f f i c i e n t e s t i m a t e s a n d o t h e r r e s u l t s o f t h e e s t im a t e d m

o d e l i n

Ta b l e C

- 1

. C o e ff

i c ie n t e s t i m at e s f o r mo d el o f ag e - sp e c i f

i c v e h ic le s c r a pp ag e r a t e s
.

D e p ende n t va r i a b le R

- s qu a r ed 0

. 9 963
S a m p l e pe r i o d F ( 34

, 35 1) 2 9 01 .1

N u m be r o f o b se r va ti ons R o o t M SE 0

. 1 839

C oe f fi c i ent S t d

. E rr or t- S t a ti s tic ( d r op p ed)

1

. 14 43 0

. 4285 2

. 67

1

. 80 92 0

. 431 4 .2

2

. 68 62 0

. 4334 6 .2

3

. 86 74 0

. 4363 8

. 86

4

. 79 86 0

. 4402 10 .9

5

. 47 19 0

. 4452 1 2

. 29

5

. 69 34 0

. 4518 12 .6

5

. 56 89 0

. 4632 1 2

. 02

5

. 05 69 0

. 4747 1 0

. 65

4

. 3 52 0

. 4869 8

. 94

4

. 12 54 0

. 4995 8

. 26

0

. 02 38 0

. 0198 1 .2

- 0

. 02 34 0

. 0198

- 1

. 19

- 0

. 03 63 0

. 0197

- 1

. 84

- 0

. 06 18 0

. 0197

- 3

. 14

- 0

. 10 37 0

. 0197

- 5

. 27

- 0

. 13 26 0

. 0197

- 6

. 74

- 0

. 15 0

. 0197

- 7

. 61

- 0

. 14 74 0

. 0199

- 7

. 42

- 0

. 13 07 0

. 02

- 6

. 54

- 0

. 09 72 0

. 0202

- 4

. 82

- 0

. 05 71 0

. 0205

- 2

. 79

- 0

. 04 34 0

. 0208

- 2

. 09

- 1 0

. 31 83 0

. 8248

- 1 2

. 51

- 1 0

. 41 91 0

. 8136

- 1 2

. 81

- 1 0

. 27 89 0

. 8067

- 1 2

. 74

- 1 0

. 40 61 0

. 8076

- 1 2

. 89

- 1 0

. 57 13 0

. 7902

- 1 3

. 38

- 9

. 99 82 0

. 7874

- 12 .7

- 6

. 79 99 1

. 0061

- 6

. 76

0

. 26 97 0

. 0407 6

. 63

7

. 77 61 1

. 0999 7

. 07

0

. 17 22 0

. 0952 1

. 81 La s t pe r i od veh i c l es p e r d r i ver
La s t pe r i od veh i c l es p e r d r i ve r × P os t 1 992 d u mmy M o d e l y ea r du mm y

- 1 9 90 's

M o d e l y ea r du mm y

- 2 0 00 an d l a t er
U n e m p l o y m e n t r a te

V eh i c l es i n f a t a l c r a she s / V MT M o d e l y ea r du mm y

- 1 9 50 's

M o d e l y ea r du mm y

- 1 9 60 's

M o d e l y ea r du mm y

- 1 9 70 's

M o d e l y ea r du mm y

- 1 9 80 's N e w c a r p r i c e × A ge d u mm y

- 12 y rs
N e w c a r p r i c e × A ge d u mm y

- 13 y rs
N e w c a r p r i c e × A ge d u mm y

- 14 y rs
N e w c a r p r i c e × A ge d u mm y

- 15+ y rs N e w c a r p r i c e × A ge d u mm y

- 8 y rs
N e w c a r p r i c e × A ge d u mm y

- 9 y rs
N e w c a r p r i c e × A ge d u mm y

- 10 y rs
N e w c a r p r i c e × A ge d u mm y

- 11 y rs N e w c a r p r i c e × A ge d u mm y

- 4 y rs
N e w c a r p r i c e × A ge d u mm y

- 5 y rs
N e w c a r p r i c e × A ge d u mm y

- 6 y rs
N e w c a r p r i c e × A ge d u mm y

- 7 y rs A ge du mm y - 12 y rs
A ge du mm y - 13 y rs
A ge du mm y - 14 y rs
A ge du mm y - 15 a nd o l d er A ge du mm y - 8 y rs
A ge du mm y - 9 y rs
A ge du mm y - 10 y rs
A ge du mm y - 11 y rs A ge du mm y - 4 y rs
A ge du mm y - 5 y rs
A ge du mm y - 6 y rs
A ge du mm y - 7 y rs l n [ s / ( 1

- s )]

1970

- 199 0

, 199 4

- 20 05

385

V a r i a b leA ppen d i x C S c r appage M od e l

53 d e t a i l

. T h e s i g n s o f t h e e s t i m a t e d c o e ff i c i e n t s f o r a l l o f t h e m o d e l ’ s v a r i a b l e s r e f l ec t t h e

e ff ec t s o n s c r a pp a g e r a t e s a n t i c i p a t e d i n t h e p r ec e d i ng d i s c u s s i o n

. M o s t o f t h e c o e ff i c i e n t

e s t i m a t e s f

o r v e h i c l e a g e a nd n e w c a r p r i ce

- a g e i n t e r a c t i o n s a r e s t a t i s t i c a ll y s i g n i f i ca n t ; a l l

h a v e t h e e x p e c t e d s i g n e x ce p t f o r t h e c o e f

f i c i e n t o n t h e a g e 4 x n e w v e h i c l e p r i ce i n t e r a c t i o n

v a r i a b l e , w h i c h i s p o s i t i v e b u t n o t s i gn i f i c a n t

.

T h e m o d e l s h o w s t h e s e n s i t i v i t y o f s c r a pp a g e r a t e s t o c h a n g e s i n n e w v e h i c l e p r i ce s

. R i s i ng

p r i ce s f o r n e w m

o d e l s s i g n i f

i c a n t l y r e du ce s c r a p p a g e r a t e s f o r v e h i c l e s f

i v e y ea r s o f a g e a n d

o l d e r

. T h i s m

o d e l a l l o w s n e w v e h i c l e p r i ce s t o h a v e d i ff e r e n t e ff ec t s o n s c r a pp a g e o f u s e d

v e h i c l e s o f d i f

f e r e n t a g e s

. T h e e ff

ec t g r a du a l l y i n c r ea s e s w it h a g e u n t il a g e 10

, a n d t h e n s l i g h t l y

d ec r ea s e s

. T a b l e C

- 2 s h o w s t h e e l a s t i c it y o f s c r a pp a g e f o r 2004 w it h r e s p ec t t o n e w ca r p r i c e

c a l c u l a t e d a t t h e m

ea n s c r a pp a g e r a t e f

o r eac h a g e g r o u p

.



### C.4. Using the Scrapp a ge Model

W e u s e t h e e s t im a t e s o f t h e e f f ec t s o f c h a n g e s i n p r i ce s ( a d j u s t e d f o r u t i l it y a s d e s c r i b e d i n

A pp e n d i x B ) du e t o t h e C a l i f o r n i a P r o g r a m i n c o n

j u n c t i o n w it h t h e a g e

- s p e c i f i c e ff ec t s o f n e w

v e h i c l e p r i ce s o n s c r a pp a g e r a t e s p r o du ce d b y t h i s m o d e l t o s im

u l a t e f u t u r e c h a n g e s i n t h e a g e

d i s t r i b u t i o n o f t h e s e v e h i c l e s i n C a li f o r n i a

. S p e c i f

i c a ll y , w e ca l c u l a t e t h e c h a n g e s i n s c r a pp a g e

r a t e s f o r v e h i c l e s o f e ac h a g e f r o m f o u r t o 15 + p r e d i c t e d b y t h e m o d e l ’ s c o e f

f i c i e n t s t o r e s u l

t Ta b l e C

- 2

. S c r a pp ag e e l a s t i ci t ie s w i t h r e sp ec t t o n e w c a r p ri c e b y c a r a g e
.
A g eS p ec i f i c S c r a p p a g e R a t es E l as t i c i t y o f

S c r a p p a g e w i t h
R es p ec t t o N e w C a r P r i ce
A ge 4 0

. 0136 0

. 5073

A ge 5 0

. 0144

- 0

. 4997

A ge 6 0

. 018

- 0

. 7712

A ge 7 0

. 0213

- 1

. 3093

A ge 8 0

. 0244

- 2

. 1889

A ge 9 0

. 0288

- 2

. 7853

A ge 10 0

. 0352

- 3

. 1296

A ge 11 0

. 0407

- 3

. 0596

A ge 12 0

. 048

- 2

. 6916

A ge 13 0

. 0549

- 1

. 9875

A ge 14 0

. 0672

- 1

. 153

A ge 15 and up 0

. 0787

- 0

. 8648A ppen d i x C S c r appage M od e l

54 f r o m t h e s p e c i f

i e d i n c r ea s e s i n t h e a v e r a g e s a l e s p r i ce o f n e w v e h i c l e s

. We a ss u m e t h a t

s c r a pp a g e r a t e s f

o r v e h i c l e s t h

r ee y e a r s o l d a n d l e ss w o u l d n o t c h a n g e i n r e s p o n s e t o h i g h e r

p r i ce s f o r n e w v e h i c l e s

. S i n ce c h a n g e s i n n e w v e h i c l e p r i c e s a ff e c t t h e n u m

b e r o f v e h i c l e s p e r

d r i v e r , w e a l s o c a l c u l a t e c h a n g e s i n s c r a pp a g e r a t e s f o r v e h i c l e s o f ea c h a g e du e t o l a gg e d

c h a n g e s i n v e h i c l e s p e r d r i v e r

. S p e c i f i ca l l y , w e u s e t h e e s t im a t e d e l a s t i c it i e s , b y a g e , o f

s c r a pp a g e w i t h r e s p ec t t o l a gg e d v e h i c l e s p e r d r i v e r t o ca l c u l a t e c h a n g e s i n s c r a pp a g e r a t e s i n

ea c h c a l e n d a r y ea r du e t o c h a n g e s i n v e h i c l e s p e r d r i v e r i n t h e p r e v i o u s c a l e n d a r y e a r

.

T h e s e o v e r a l l a g e

- s p e c i f i c c h a n g e s i n s c r a pp a g e r a t e s du e t o eac h o f t h e s c e n a r i o s a r e t h e n

a p p li e d t o s c r a pp a g e r a

t e s f o r v e h i c l e s o f ea c h a g e i n t h e b a s e li n e p r o j ec t e d v e h i c l e p o pu l a t i o n s

f o r C a l i f o r n i a t o p r o du ce e s t im a t e s o f t h e c h a n g e s i n v e h i c l e p o p u l a t i o n s du e t o t h e C a l i f o r n i a

P r o g r a m

.



### References

B e r k o v ec , J a m

e s , 1985

. “

N e w C a r S a l e s a n d U s e d C a

r S t o c k s : A M o d e l o f t h

e A u t o m o b i l e M a r k e t

, ”
R and J ou r na l o f E c ono m i c s , V

o l

. 16

, pp

. 195

- 23 6

.

B u r ea u o f E c o n o mi c A n a l y s i s , N a t i o n a l I n c o m e a nd P r o du c t A cc o u n t s, T a b l e 7

. 2

. 5 S

. h tt p : / / www

. b ea

. g o v

/ b ea / d n / n i p a w e b / n i p a

_ u n d e r l y i n g / S e l ec t T a b l e

. a s p ? B e n c h m a r k =P

F e d e r a l H i g h w a y S a f

e t y A d m i n i s t r a t i o n , H i g h w a y S t a ti s ti c s 2004

, S e c t i o n III : D r i v e r L i ce n s i ng

. h tt p : / / www

. f h w a

. d o t

. g o v

/ p o li c y / o h i m / h s 04 / d l

. h tm

.

G r u e n s p e c h t

, H o w a r d

, K

., 1982

. “ D i ff

e r e n t i a t e d R e g u la t i o n : T h e C a s e o f A

u t o m o b i l e E mi ss i o n s S t a n d a r d s , ” A m e r i c an E c ono m i c R ev i e w , V o l

. 72

, N o

. 2

, p p

. 32 8

- 331

.

P a r k s , R

. W

., 1977

. “ D e t e r mi n a n t s o f S c r a pp i n g R a t e f o r P o s t w a r V i n t a g e A u t o m

o b i l e s , ”
E c ono m e t r i c a , V

o l

. 4 5

, N o

. 5

, pp

. 1099

- 111 5

.

R

. L

. P o l k a n d C o m

p a n y

. N a t i o n a l V e h i c l e P o pu l a t i o n P r o f il e , 1969

- 2005

. P u r c h a s e o f

p r o p r i e t a r y d a t a , F e b r u a r y 2006

.

W a l k e r , F

. V

., 196 8

. “ D e t e r mi n a n t s o f A u t o S c r a p p a g e , ” T h e R ev i e w o

f E c ono m i c s and S t a ti s ti cs , V o l

. 5 0

, pp

. 5 0 3

- 5 06

.

U n i t e d S t a t e s G o v e r n m

e n t P r i n t i n g O f

f i ce , “ E c o n o m i c R e p o r t o f t h e P r e s i d e n t 2006

, ”
W a s h i ng t o n , D C

. F e b r u a r y

.

U n i t e d S t a t e s D e p a r t m e n t o f T r a n s p o r t a t i o n , N a t i o n a l H i g h w a y T r a f f i c S a f e t y A d m i n i s t r a t i o n ( NH T S A )

. 200 2

. “ T r a f

f i c S a f e t y F ac t s 2001 : A C o m

p i l a t i o n o f M o t o r V e h i c l e C r a s h D a t a f r o mA ppen d i x C S c r appage M od e l

55 t h e F a t a l i t y A n a l y s i s R e p o r

t i n g S y s t e m a n d t h e G e n e r a l E s t im a t e s S y s t e m

. ” W a s h i n g t o n , D C

. D ec e m b e r

.

U n i t e d S t a t e s D e p a r t m e n t o f T r a n s p o r t a t i o n , N a t i o n a l H i g h w a y T r a f f i c S a f e t y A d m i n i s t r a t i o n ( NH T S A )

. 200 5

. “ T r a f

f i c S a f e t y F ac t s 2004 : A C o m

p i l a t i o n o f M o t o r V e h i c l e C r a s h D a t a f r o m
t h e F a t a l i t y A n a l y s i s R e p o r

t i n g S y s t e m a n d t h e G e n e r a l E s t im a t e s S y s t e m

. ” W a s h i n g t o n , D C

.A ppen d i x D R ebound E ff e c t A n a l y s i s

56 

### A p p e n d i x D

. R e b o un d E f f e ct A n a l y s i s

T h i s a pp e n d i x p r o v i d e s i n f o r m a t i o n o n t h e “ r e b o u n d ” e f f ec t t h a t i s r e l e v a n t f

o r d e t e r mi n i ng t h e

e ff ec t s o f c h a n g e s i n t h e f u e l ec o n o m

y o f t h e v e h i c l e f

l e e t o n v e h i c l e m i l e s t r a v e l e d i n

C a l i f o r n i a

. T h e r e b o u n d e ff

ec t i s m e a s u r e d a s t h e e ff

ec t o f c h a n g e s i n t h e c o s t p e r m i l e o f t r a v e l

( e

. g

. , f u e l c o s t s ) o n v e h i c l e mi l e s t r a v e l e d ; t h e e ff ec t i s t r a d it i o n a l l y m ea s u r e d a s a n e l a s t i c it y—

t h e p e r c e n t a g e i n c r e a s e i n v e h i c l e mi l e s t r a v e l e d t h a t w o u l d r e s u l t s f r o m a o n e p e r c e n t d ec r ea s e

i n t h e c o s t p e r m i l e o f t r a v e l

. T h e m o d e l w e d e v e l o p t o e s t im a t e t h e r e b o u n d e ff ec t i s b a s e d up o n

t h e g e n e r a l m e t h o d o l og y a n d d a t a e m p l o y e d b y r e s ea r c h e r s a t t h e U n i v e r s it y o f C a l i f o r n i a a t

Ir v i n e ( h e r e a f

t e r , “ Ir v i n e s t ud y ” ). 27

T h i s a pp e n d i x c o n s i s t s o f t h e f o l l o w i ng t h

r ee p a r t s :

§ O v e r v i e w o f Ir v i n e s t u d y ;

§ M o d i f i ca t i o n s t o Ir v i n e s t u d y d a t a a n d e s t im a t i o n p r o ce du r e s ; a n d

§ E s t im a t e d R e b o u n d E f f e c t i n C a l i f

o r n i a

.



### D.1. O v e r vie w of Ir v i n e Stu d y

T h e Ir v i n e s t ud y d e v e l o p s a m od e l t h a t p o s it s s i m

u l t a n e o u s d e t e r mi n a t i o n o f t h r ee v a r i a b l e s
( u s i n g t h r ee e qu a t i o n s ) r e l a t e d t o v e h i c l e u s e : f l e e t w i d e v e h i c l e mi l e s t r a v e l e d ( “ V M T ” ) ;

f l ee t w i d e v e h i c l e s t o c k ( n u m b e r o f v e h i c l e s ) ; a n d f

l ee t w i d e v e h i c l e f

u e l i n t e n s it y ( t h e i nv e r s e o f

f u e l ec o n o m

y ). 28 I n t h e m

o d e l

, V M T a n d v e h i c l e s t o c k d e p e n d o n l a gg e d d e p e n d e n t v a r i a b l e s ,

s e v e r a l e x o g e n o u s v a r i a b l e s , a n d c o s t p e r mil e o f t r a v e l

, pm

— d e f i n e d a s t h e p r i ce o f f

u e l ( d o ll a r s

p e r g a l l o n ) d i v i d e d b y f

u e l ec o n o m

y mi l e s p e r g a ll o n ). 29 T h e v a r i a b l e p m i s e n d o g e n o u s b e ca u s e

i t d e p e n d s o n f

u e l ec o n o m

y

. T h e V M T e qu a t i o n a l s o i n c l ud e s t h e e n d o g e n o u s v e h i c l e s t o c k

v a r i a b l e a s w e ll a s i n t e r ac t i o n t e r m s o f pm w it h i n c o m e , pm w it h u r b a n i z a t i o n , a n d pm w it h it s e l f

( i

. e ., pm 2 )

.

27 S ee S ma l l a n d V a n D e

n d e r 20 0 6 a n d 200 6 a a n d S m a l l 2 00 6 a n d 200 6 a

.

28 T h e a u t h o r s u s e t h e n at u r a l l o g a

r i t h m of VM T p e r a du l t a s o n e of t h e t h r ee e n d o g e n o u s l y d e t e r m i n e d v a r ia b l e s

. F o r s i m p l i c it y , w e r e f

e r t o t h i s v a r i a b l e a s V M T

.A ppen d i x D R ebound E ff e c t A n a l y s i s

57 T h e f u e l i n t e n s i t y e qu a t i o n i n c l ud e s a l a gg e d d e p e n d e n t v a r i a b l e , s e v e r a l e x o g e n o u s e x p l a n a t o r y

v a r i a b l e s , a C o r po r a

t e A v e r a g e F u e l E c o n o m y ( “ C A F E ” ) v a r i a b l e , a n d t h e e n d o g e n o u s V M T

v a r i a b l e

. T h e Ir v i n e s t u d y t r ea t s C A F E r e g u l a t i o n a s a f ac t o r t h a t c o n t r i b u t e s t o a c t u a l f u e l

ec o n o m y r a t h e r t h a n a s a m ea s u r e o f o b s e r v e d f u e l ec o n o m

y

. T h u s t h e i n t e n t o f t h e C A F E

v a r i a b l e t o m

e a s u r e t h e r a t i o o f f

u e l ec o n o m

y u nd e r C A F E t o w h a t f u e l ec o n o m

y w ou l d h a v e

b e e n w i t h o u t C A F E. T h e Ir v i n e s t u d y u s e s f u e l ec o n o m

y d a t a f o r y ea r s p r i o r t o C A F E t o p r e d i c t

w h a t f u e l ec o n o m

y w ou l d h a v e b e e n w it h o u t C A F E i n l a t e r y ea r s

.

T h e e s t im a t e d s ho r t

- r un n a t i o n a l r e b o u n d e ff ec t i n t h e Ir v i n e s t u d y d e p e n d s m o s t im p o r t a n t l y o n

t h e e s t im a t e d e l a s t i c i t y o f V M T w i t h r e s p ec t t o t h e c o s t o f t r a v e l

, pm

. T h e e s t im a t e d l ong r un

n a t i o n a l r e b o u n d e f

f ec t i n t h e Ir v i n e s t u d y d e p e n d s m o s t im p o r t a n t l y o n t h e e s t im a t e d s h o r t -r u n

e l a s t i c i t y o f V M T w i t h r e s p ec t t o pm a n d t h e e s t im a t e d c o e ff i c i e n t o f l a gg e d V M T i n t h e V M T

e qu a t i o n

.

D

. 1

. 1

. I r v i n e S t u d y V a r i a b l es a n d D a t a S e t

T h e Ir v i n e s t u d y u s e s a c r o ss

- s ec t i o n a l t im e

- s e r i e s d a t a s e t w it h d a t a o n a ll f i f t y U

. S

. s t a

t e s a n d

t h e D i s t r i c t o f C o l

u m b i a o v e r t h e y ea r s 1966 t h r o ug h 2001

. T a b l e D

- 1 p r o v i d e s a n o v e r v i e w o f

t h e v a r i a b l e s u s e d i n t h e I r v i n e s t u d y

. T h e d e s c r i p t i o n o f ea c h v a r i a b l e e x p l a i n s t h e d a t a u s e d t o

c o n s t r u c t i

t

. T h o ug h t h e s t u d y u s e s a c r o ss

- s ec t i o n a l t im e

- s e r i e s d a t a s e t

, n o t e v e r y v a r i a b l e h a s

s t a t e

- s p e c i f i c v a l u e s ( e

. g ., o n l y n a t i o n a l d a t a w e r e o b t a i n e d o n n e w ca r l o a n i n t e r e s t r a t e s , s o t h e

v a r i a b l e i n t e r e st d i f

f e r s o v e r t im e b u t n o t ac r o ss s t a t e s )

. I n a d d it i o n , s o m e v a r i a b l e s mi x n a t i o n a l

a n d s t a t e

- s p e c i f

i c e l e m e n t s

. F o r e x a m

p l e , i n c o m e ( i nc ) a n d t h e p r i ce o f f u e l ( pf ) c o m e s t a t es p e c i f i c d a t a o n n o mi n a l v a l u e s , b u t a r e t r a n s l a t e d i n t o r ea l t e r m s w it h n a t i o n a l d e f l a t o r s

.

D

. 1

. 2

. I r v i n e S t u d y E s t i m a t i o n P r o ce d u r es

T h e Ir v i n e s t u d y e s t im a t e s t h e t h r ee e qu a t i o n s d e s c r i b e d a b o v e u s i ng s e v e r a l d i f f e r e n t

a pp r o ac h e s : o r d i n a r y l e a s t s qu a r e s ( “ O L S ” ) ; t w o

- s t a g e l e a s t s qu a r e s ( “ 2 S L S ” ) ; t h r ee

- s t a g e l ea s t

s qu a r e s ( “ 3 S L S ” ) ; a n d g e n e r a l i ze d m e t h o d o f m o m e n t s ( “ G M M ” )

. T h e a u t h o r s c o n c l ud e t h a t t h e

m o s t a pp r o p r i a t e e s t im a t o r i s 3 S L S

.

29 M o s t of t h e v a

r i a b l e s i n t

h e I r v i n e s t ud y a r e e x p r e ss e d a s n at

ur a l l o g a r i t h m s fo r t h e e s t i m a ti o n

. F o ll o w i n g t

h e

n o t a ti o n u s e d i n t

h e I r v i n e s t ud y , w e d e n o t e t h e s e v a r ia b l e s i n l o w e r c a s e a n d w e d e n o t e n o n

- l o g a r i t h mi c v a r ia b l e s i n u pp e r c a s e

.A ppen d i x D R ebound E ff e c t A n a l y s i s

58 

### D.2. Modifications to I r vine Stu d y D a ta and Estimation Proce d ure

W e d e v e l o p a n e s t im a t e d r e b o u n d e f f e c t i n C a l i f

o r n i a b a s e d up o n m

od i f i ca t i o n s t o s e v e r a l d a t a

s e r i e s a s w e l l a s t h e p r im a r y e s t im a t i o n p r o ce du r e o f t h e Ir v i n e s t u d y

.

W e h a v e r ec e i v e d a ll o f t h e u n d e r l y i ng d a t a a n d p r o g r a m s ( S m a l l 200 6 a ) u s e d i n m o s t r ece n t

v e r s i o n s o f t h e Ir v i n e s t u d y ( S m a l l a n d V a n D e n d e r 2006 a n d 2006 a )

. T o d e v e l o p m o r e

a pp r o p r i a t e r e s u l

t s f o r t h e r e b o u n d i n e ff

ec t i n C a li f

o r n i a , w e h a v e m a d e s e v e r a l m od i f i c a t i o n s i n

t h e d a t a a n d e s t im a t i o n m e t h o d o l og y d e v e l op e d i n t h e Ir v i n e s t u d y

. Ta b l e D

- 1

. V a ri a b le s U s e d i n t h e I r v i n e S t u d y

V a r i a b l e N a me D es c r i p t i on D e t a il L e vel

E n dog e nous

v ma V M T p e r a d u lt S t a te

v e h s t o ck R eg i s t e r e d v e h i c l e s pe r a du lt S t a te

f i nt F u e l i n t e n s i t y ( f u e l u s e p e r m il e) S t a te

E x og e no us

a drm A d u l t s pe r m i l e o f r o a d w ay S t a te

C a fe T h e r a t i o o f C A F E r e g u l a t e d f u e l e ff i c i en c y t o de s i r e d f u e l e f f i c i e n c y N a t i on al

D 7 4 79 D u m m y v a r i a b l e f o r y e a r s 1 9 7 4 a n d 1 979 N a t i on al

i nc P e r c a p i t a p e r s o n a l i n c o m e ( d e f l a t ed b y n a t i o n a l C P I) S t a t e / N a t i o n al

i n t e r e st N a t i o n a l n e w c a r l o an i n t e r e s t r a te N a t i on al

l i c ad L i c e n s e d d r i v e r s pe r a du lt S t a te pf P r i c e o f g a s o l i n e ( de f l a t e d b y n a t i on a l C P I) S t a t e / N a t i o n al

p m = p f + f i nt C o s t o f t r a v el S t a te

pm 2 C o s t o f t r a v e l s q u a r ed S t a te

p m * ( i n c

- m i n c ): I n t e r a c t i o n o f p m a n d i nc v a r i a b l e
, w h er e m i

nc i s t h e me an of i

nc S t a te

p m * ( U r b a nm U r b an) I n t e r a c t i o n o f p m a n d U r ban

, w he r e m U r

ba n i s t h e me an o f U r

b an S t a te

p o p r a t io P o pu l a t i on p e r a d u lt S t a te

pv I nd e x o f ne w c a r p r i c es N a t i on al

T r e nd

, T r e nd 6 6

- 7 3

, T r e nd 7 4

- 7 9

, T r e nd 8 0+ L i ne a r t i m e t r en ds N a t i on al

R a il p op F r a c t i on o f s t a t e ’ s p o pu l a t i on l i v i n g i n M S A s w i t h h e a v y r a il t r a n s it S t a te

U r ban F r a c t i on o f s t a t e ’ s p o pu l a t i on l i v i n g i n m e t r o p o li t a n a r eas S t a te

Z 1

, . . . , Z

51 D u m m y v a r i a b l e f o r e a c h s t a te S t a te

N o t e s : L o w e r

- c a s e v a r i a b l e s a r e i n n a t u r a l l o g a r i t h m s

. S o u r ce : S m a l l a nd V a n D e n d e r ( 2006 )

.A ppen d i x D R ebound E ff e c t A n a l y s i s

59 § S t a t e du mm

y v a r i ab l e s. T h e c o d e f

o r t h e V M T e qu a t i o n r e s t r i c t e d t h e c o e ff i c i e n t s o f t h e

d u m m y v a r i a b l e s f

o r t h e S t a t e s o f N e v a d a a n d N e b r a s k a t o b e t h e s a m e

. W e e d it e d t h e

e s t im a t i o n c o d e s o t h a t t h e t w o s t a t e s h a d s e p a r a t e c o e f f i c i e n t s

.

§ I n c o m e and ga s o li n e p r i ce s. W e a d j u s t e d t h e i n c o m e a n d g a s o li n e p r i ce d a t a t o r e f l e c t s t a t e

d i ff e r e n c e s i n c o s t o f li v i ng

. W i t h t h e s e d a t a , w e w e r e a b l e t o upd a t e t h e e s t im a t i o n o f t h e

V M T e qu a t i o n a n d o t h e r e qu a t i o n s

§ T r e nd v a r i ab l e. W e m

od i f i e d t h e T r e nd v a r i a b l e t o p r o v i d e a s up e r i o r a n d m o r e c o n s i s t e n t

s p e c i f i c a t i o n

. R a t h e r t h a n u s i ng a s i n g l e T r e nd v a r i a b l e f

o r t h e V M T a n d v e h i c l e s t o c k

e qu a t i o n s , w e u s e d t h

r ee s e p a r a t e T

r e nd v a r i a b l e s , t h e f

i r s t c o v e r i n g t h e y ea r s 1966 t h r o ug h

1973

, t h e s ec o n d c o v e r i n g t h e y ea r s 1974 t h r o ug h 1979

, a n d t h e t h i

r d c o v e r i n g t h e y ea r s

1980 t h r o ug h 2001

.

§ D u mm

y v a r i ab l e s f

o r 1974 an d 1979. W e s p l it t h e j o i n t i n d i ca t o r v a r i a b l e f o r 1974 a n d 1979

i n t o t w o s e p a r a

t e du m m y v a r i a b l e s t o a l l o w t h e e ff ec t s o f t h e s e t w o i n d e p e n d e n t s h o c k s t o

d i ff e r f r o m o n e a n o t h e r

.

§ E s ti m a ti on. W e e s t im a t e d t h e V M T e qu a t i o n u s i n g 2 S L S ( r a t h e r t h a n 3 S L S )

.

D

. 2

. 1

. I n c o m e a n d G as o li n e P r i ces

T h e Ir v i n e s t u d y u s e s n o mi n a l s t a t e

- l e v e l i n c o m e d a t a f r o m t h e U

. S

. B u r ea u o f E c o n o mi c

A n a l y s i s ( “ B E A ” ) a n d s t a t e p o pu l a t i o n d a t a f r o m t h e U

. S

. C e n s u s B u r ea u t o d e r i v e n o mi n a l

i n c o m e p e r ca p i t a e s t im a t e s

. F o r t h e g a s p r i ce d a t a , t h e a u t h o r s u s e s t a t e

- l e v e l n o mi n a l d a t a f

r o m

t h e U

. S

. E n e r g y I n f

o r m a t i o n A d mi n i s t r a t i o n ( “ E I A ” )

. T h e a u t h o r s d e f l a t e d b o t h o f t h e s e d a t a

s e r i e s t o 1987 d o ll a r s u s i ng t h e n a t i o n a l c o n s u m e r p r i ce i nd e x f o r a l l u r b a n c o n s u m e r s ( “ C P I ” )

f r o m t h e U

. S

. B u r ea u o f L a b o r S t a t i s t i c s ( “ B L S ” ) . T h e s e v a l u e s d o n o t acc o u n t f o r d i f f e r e n ce s i n

t h e c o s t o f l i v i ng a c r o ss s t a t e s

. T o acc o u n t f o r t h e s e d i f

f e r e n c e s , w e d e v e l o p e d s t a t e

- s p e c i f i c c o s t

o f li v i ng i n d i ce s b a s e d o n c i t y

- l e v e l d a t a f r o m A C C R A ( f

o r m e r l y “ A m e r i c a n C h a m

b e r o f

C o mm e r ce R e s ea r c h e r s A ss o c i a t i o n ” ) a n d t h e B L S

. T h e s e i n d i c e s a r e u s e d t o ca l c u l a t e r e a l

i n c o m e a n d g a s p r i ce d a t a t h a t r e f l ec t d i ff e r e n c e s i n pu r c h a s i ng p o w e r ac r o ss s t a t e s a n d o v e r

t im e

.A ppen d i x D R ebound E ff e c t A n a l y s i s

60 D

. 2

. 2

. T r e n d V a r i a b l e

T h e Ir v i n e s t ud y i n c o r po r a t e s d i ff e r e n t t r e n d v a r i a b l e s i n d i f f e r e n t e qu a t i o n s

. I n t h e V M T a n d

v e h i c l e s t o c k e qu a

t i o n s , t h e Ir v i n e s t u d y u s e s a l i n ea r t im e t r e n d ( T r e nd )

. I n t h e f

u e l ec o n o m y

e qu a t i o n , t h e I r v i n e s t u d y u s e s t h r e e s e p a r a t e li n ea r t r e n d s

— o n e f o r t h e p e r i o d f

r o m 1966 t o

1973 ( T r e nd66

- 73 ) t o c o v e r t h e y ea r s b e f o r e t h e O P E C e m

b a r g o i n 1974

, o n e f

r o m 1974 t o 1979

( T r e nd74

- 79 ) t o c o v e r t h e y ea r s b e t w ee n t h e O P E C e m b a r g o a n d t h e Ir a n i a n r e v o l u t i o n i n 1979

,

a n d o n e f r o m 1980 t o 2001 ( T

r e nd80+ ) t o c o v e r t h e p e r i o d a f t e r t h e Ir a n i a n r e v o l

u t i o n

. T o t e s t

f o r t h e p o s s i b il i t y t h a t d r i v i ng b e h a v i o r w a s a l s o a ff ec t e d d i ff e r e n t l y i n t h e s e t h

r ee p e r i o d s , w e

p e r f o r m e d a W a l d t e s t f

o r t h e i n c l u s i o n o f T

r e n d66

- 73 a n d T

r e nd74

- 79 i n a d d it i o n t o T r e nd

. ( T h i s s p ec i f

i ca t i o n i s ec o n o m

e t r i c a ll y e q u i v a l e n t t o i n c l u d i ng t h e t h r ee t r e n d s f

r o m t h e f

u e l

ec o n o m y e qu a t i o n s i n c e T

r e nd80+ i s c o n s t r u c t e d a s a li n e a r c o m b i n a t i o n o f t h e o t h e r t r e n d

v a r i a b l e s

. ) T h e W a l d t e s t p r o du ce d e v i d e n c e t h a t a n o n li n e a r t h r ee

- p a r t t r e n d i n t h e V M T

e qu a t i o n i s s up e r i o r t o t h e s i m p l e l i n ea r t r e n d u s e d b y t h e a u t h o r s

. A n o t h e r W a l d t e s t p r o du ce d

s i mi l a r e v i d e n ce f

o r t h e v e h i c l e s t o c k e qu a t i o n

. S o w e m od i f i e d t h e t r e n d v a r i a b l e i n t h e V M T

a n d v e h i c l e s t o c k e qu a

t i o n s t o c o rr e s p o n d t o t h e t h r ee

- p e r i o d t r e n d v a r i a b l e u s e d b y t h e a u t h o r s

i n t h e i r f u e l ec o n o m

y e qu a t i o n

.

D

. 2

. 3

. D u m m y V a r i a b l es f o r 1 9 74 a n d 1 979

T h e Ir v i n e s t u d y p r o v i d e s a s i n g l e d u mm y v a r i a b l e i n t h e V M T a n d f u e l e c o n o m

y e q u a t i o n s f

o r

1974 a n d 1979 ( D 7479 ) t o “ r e p r e s e n t g a s o li n e s u pp l y d i s r up t i o n s i n 1974 a n d 1979

, ” p r e s u m a b l y

r e f e r r i n g t o t h e 1974 o il e m

b a r g o a n d t h e 197 9 Ir a n i a n r e v o l u t i o n

. W e u s e d t w o s e p a r a t e du m m y

v a r i a b l e s t o a l l o w t h e e f

f ec t s o f t h e s e t w o “ s h o c k y ea r s ” t o d i f f e r f r o m o n e a n o t h e r

. T h e r e i s n o a

p r i o ri r ea s o n t o e x p ec t t h a t t h e e f f e c t s o f t h e s e t w o e v e n t s w e r e i d e n t i c a l

. A W a l d t e s t p r o du ce d

e v i d e n c e t h a t s e p a r a

t i n g t h e t w o e f

f ec t s p r o v i d e s a s up e r i o r s p e c i f i ca t i o n

.

D

. 2

. 4

. E s t i m a t i o n

W e u s e d 2 S L S t o e s t im a t e t h e V M T e qu a t i o n b ec a u s e it i s a n o n

- s y s t e m e s t im a t o r t h a t p r e v e n t s

s p e c i f i c a t i o n e rr o r s i n o n e e qu a t i o n f r o m a f f ec t i ng p a r a m

e t e r e s t im a t e s f

o r o t h e r e qu a

t i o n s

. W e

c o n c l ud e d t h a t 3 S L S w a s l e ss a pp r o p r i a t e f o r t h i s m o d e l

, du e t o c o n ce r n s a b o u t t h e d a t a u s e d t o

c o n s t r u c t s o m

e v a r i a b l e s , a n d

, i n p a r t i c u l a r , c o n ce r n s a b o u t t h e c o n s t r u c t i o n o f t h e C A F E

v a r i a b l e

.A ppen d i x D R ebound E ff e c t A n a l y s i s

61 

### D.3. Estimated Rebou n d Effect in C a liforni a

T a b l e D

- 2 s h o w s t h e r e s u l t s o f o u r e s t im a t i o n o f t h e V M T e qu a t i o n

. B eca u s e t h e e s t im a t e d

c o e f f i c i e n t o f t h e i n t e r ac t i o n t e r m o f pm w it h i n c o me ( i

. e ., pm *( i nc

- m i nc ) ) w a s s t a t i s t i c a ll y

i n s i g n i f i c a n t

, w e e x c l ud e d t h a t v a r i a b l e f r o m o u r f

i n a l e s t im a t i o n o f t h e V M T e qu a t i o n

. T h e

e s t im a t e d c o e ff

i c i e n t o n pm i n t h e V M T e qu a t i o n g i v e s t h e s h o r t

- r u n n a t i o n a l r e b o u n d e ff ec t a t

t h e s a m p l e m e a n o f t h e d a t a s e t u s e d i n t h e a n a l y s i s

. T h e l o n g -r u n e ff e c t i s a f u n c t i o n o f t h e

c o e f f i c i e n t o n l a gg e d V M T.

N o t e s : t

- s t a

ti s t i c s i n p a r e n t h e s i s ; r e bo u n d e ff

e c t s c al c u l a

t e d u s i ng o n l y c o e ff

i c i e n t s f r o m t h e VM T e qu a

ti o n

.

B y s u b s t i t u t i n g C a li f

o r n i a

- s p e c i f

i c v a l u e s f

o r Ur b an a n d pm a n d u s i ng t h e e s t im a t e d c o e ff i c i e n t s

o n t h e i n t e r ac t i o n t e r m s , w e d e v e l o p r e b o u n d e ff e c t e s t im a t e s f

o r C a l i f o r n i a a t t h e s a m

p l e m e a n

o f t h e C a l i f

o r n i a d a t a s e t u s e d i n t h e a n a l y s i s . T a b l e D

- 3 s h o w s t h e s e e s t im a t e s

.

W e u s e t h e e s t im a t e d s h o r t

- a n d l o n g

- r u n r e b o u n d e f f e c t s i n C a l i f

o r n i a t o e s t im a t e t h e e ff

ec t s o f

c h a n g e s i n v e h i c l e f

l e e t f u e l ec o n o m

y i n e a c h y e a r u n d e r t h e s c e n a r i o s a n a l y ze d i n t h i s r e p o r t

.
W e e s t im a t e c h a n g e s i n v e h i c l e mi l e s t r a v e l e d b y v e h i c l e c l a s s ( P C

, L D T 1

, a n d L D T 2 + )

. T h e

c h a n g e i n f

l e e t w i d e f u e l ec o n o m

y i n a g i v e n y e a r i s a f

u n c t i o n o f t h e c h a n g e i n n e w v e h i c l e f u e l Ta b l e D

- 2

. E s t

i m at i o n o f t h e V M T E q u at i o n

V ar i a bl es C o e ff i c i e n t s f r o m 2 S L S E s t i ma t ion

p m = p f + f int

- 0

. 0497 (- 8

. 41)

pm 2

- 0

. 0280 (- 3

. 32)

p m * ( in c-m in c):

p m * ( U r ban -m U r ban) 0

. 0523 ( 3

. 95)

vma ( t

- 1) 0

. 7933 ( 53

. 79)

S am pl e A vera g e Re bound Eff ect S ho r t

- Run 4

. 97% Long

- Run 24

. 03%

Ta b l e D

- 3

. C a li f

o r n i a Sh o r t- a nd L o n g- R u n R e b o und Eff ec t s

Re bound Eff ect

S ho r t

- Run 2

. 76% Long

- Run 13

. 36%A ppen d i x D R ebound E ff e c t A n a l y s i s

62 ec o n o m y i n t h a t y ea r a s w e l l a s t h e c h a n g e s i n n e w v e h i c l e f u e l ec o n o m

y i n p r e v i o u s y e a r s

. T h e

c h a n g e i n V M T i n a g i v e n y ea r i s a f u n c t i o n o f t h e c h a n g e i n f l ee t w i d e f u e l ec o n o m

y i n t h a t y ea r

a s w e ll a s t h e c h a n g e i n V M T i n p r e v i o u s y ea r s

.



### References

S m a l l

, K e n n e t h A

. 2006

. E x p e r t R e p o r t o f K e nn e t h A

. S m a l l i n C e n t r a l V a ll ey C h r y s l e r

- Jee p , I n c

. v

. W it h e rs poon ; U

. S

. D

. C

. ( E

. D

. C a l

. ) N o

. C I V

- F

- 04

- 6663 R E C L J O

, A p r i l 19

.

S m a l l

, K e n n e t h A

. 2006 a

. D a t a r ec e i v e d i n c o n

j u n c t i o n w it h

E x p e r t R e p o r

t o f K e n n e t h A

. S m a l l
i n C e n t r a l V a ll ey C h r y s l e r

- Jee p , I n c

. v

. W it h e rs p o on ; U

. S

. D

. C

. ( E. D

. C a l

. ) N o

. C I V

- F

- 04

- 666 3
R E C L J O

, A

p r il 19

.

S m a l l

, K e n n e t h a n d K

u r t V a n D e n d e r

. 2006

. “ F u e l E ff i c i e n c y a n d M o t o r V e h i c l e T r a v e l : T h e D e c li n i ng R e b o u n d E ff

ec t

, ” D e p a r

t m e n t o f E c o n o m i c s , U n i v e r s it y o f C a l i f o r n i a Ir v i n e , M a r c h
21

.

S m a l l

, K e n n e t h a n d K

u r t V a n D e n d e r

. 2006 a

. “ F u e l E ff i c i e n c y a n d M o t o r V e h i c l e T r a v e l : T h e D e c li n i ng R e b o u n d E ff

ec t

, ” D e p a r

t m e n t o f E c o n o m i c s , U n i v e r s it y o f C a l i f o r n i a , Ir v i n e , A

p r i l 10 ( c o rr e c t e d J u l y 17 )

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

63 

### A p p e n d i x E

. E M F A C 2 0 07 P o l l u t a n t E m i s s i o n s M o d e l i n g

T h i s a pp e n d i x d e s c r i b e s t h e d e v e l op m e n t a n d u s e i n t h i s s t u d y o f t h e E M F A C 2007 F l e e t

E mi ss i o n s M o d e l

, a n E x c e l s p r ea d s h ee t m o d e l u s e d b y C A R B i n a n a l y s e s o f e m i ss i o n s e ff e c t s i n

C a l i f o r n i a . T h i s s t u d y u s e s t h e N o v e m b e r 1

, 2006

, v e r s i o n o f

EM F A C 200 7 t o g e n e r a t e e s t im a t e s

o f t h e im

p ac t s o f t h e C a li f

o r n i a P r o g r a m o n c r it e r i a p o l l u t a n t s i n C a li f

o r n i a. 30 T h e m

o d e l

acc o u n t s f

o r t h e im p a c t o f t h e “ f

l ee t

- t u r n o v e r ” e ff

e c t a n d “ r e b o u n d ” e ff

ec t o n e mi ss i o n s o f VO C

, NO x , C O

, S O x , P M 10

, a n d f i v e a i r t o x i c s

. T h e d i s c u s s i o n b e l o w s u mm a r i z e s t h e m e t h o d o l og y

u s e d t o d e v e l o p m

o d e l

- y ea r s p ec i f

i c g r a m s

- p e r

- m il e ( g / mi ) e m i ss i o n f ac t o r s , v e h i c l e p o p u l a t i o n s ,

a n d v e h i c l e mi l e s t r a v e l e d ( “ V M T ” )

, a n d h o w t h o s e p a r a m e t e r s w e r e a d j u s t e d t o acc o u n t f

o r t h e

e mi ss i o n s im

p ac t s o f t h e v a r i o u s s c e n a r i o s i nv e s t i g a t e d i n t h i s s t u d y

.



### E.1. Baseline Model

- Year Specifi c E m issio n s, Population, and V M T

T h e b a s e l i n e m

o d e l

- y ea r- s p e c i f

i c e m i ss i o n r a t e s , v e h i c l e p o p u l a t i o n s , a n d V M T w e r e g e n e r a t e d

b y r u nn i ng E M F A C 2007 f o r e ac h i n d i v i du a l m o d e l y ea r i n c l ud e d i n E M F A C 200 7 f o r t h e

c a l e n d a r y e a r b e i ng e v a l u a t e d

. F o r e x a m p l e , a ca l e n d a r y ea r 2020 E M F A C 2007 r u n i n c l ud e s

v e h i c l e s f r o m t h e 1976 m

o d e l y ea r t h

r o ug h t h e 2020 m

o d e l y ea r ( 45 m

o d e l y ea r s t o t a l )

. T h e

m o d e l o u t p u t c o n s i s t s o f t o n

- p e r- d a y e m i ss i o n s r e s u l t s , w h i c h a r e d i v i d e d b y t h e e s t im a t e d d a i l y

V M T b y v e h i c l e s o f t h a t m o d e l y e a r t o a rr i v e a t g / mi e m i ss i o n r a t e s f o r eac h m

od e l y ea r

. T h e

m o d e l r un s w e r e c o n f

i gu r e d t o o u t p u t s u mm e r- a v e r a g e e mi ss i o n s a n d a l s o e mi ss i o n s , b o t h a t t h e

s t a t e w i d e l e v e l a n d s p e c i f

i ca l l y f o r t h e S o u t h C o a s t A i

r B a s i n ( “ S C A B ” )

, a n d e s t im a t e s w e r e

p r e p a r e d s e p a r a t e l y f

o r t h e p a ss e n g e r ca r ( P C )

, li g h t

- d u t y t r u c k 1 ( L D T 1 )

, li g h t

- d u t y t r u c k 2

( L D T 2 )

, a n d m e d i u m

- du t y v e h i c l e ( M D V ) c l a s s e s ( w h i c h c o v e r a ll li g h t

- du t y v e h i c l e s t h r o ugh

8

, 500 l b s

. g r o ss v e h i c l e w e i g h t r a t i n g )

.

T h e V O C ( e x h a u s t a n d e v a p o r a t i v e e m i ss i o n s c o m b i n e d ) a n d N O x e m i ss i o n r a t e s d e v e l o p e d i n

t h i s m a nn e r a r e i l l u s t r a t e d i n F i gu r e E

- 1 f o r p a ss e ng e r ca r s

. O f p a r t i c u l a r i n t e r e s t i n t h i s f i gu r e i s

t h e r e l a t i v e l y h i g h g / m i e mi ss i o n s f o r t h e o l d e r m

o d e l y ea r v e h i c l e s r e l a t i v e t o t h e n e w e r

v e h i c l e s , w h i c h h o l d s t r u e f o r b o t h p o ll u t a n t s

. F o r t h i s r ea s o n , r e l a t i v e l y s m a l l s h i f t s i n t h e a g e

30 T h e E MFA C20 0 7 m o d e l ca n b e do w n l o a d e d f r o m C A RB ’ s i n t e r n et w e b s it e a t h t t p : // w w w

. a r b

. ca

. g ov

/m s e i/ on

r o a d / l a t e s t

_ v e r s i o n

. h t

m

. N o t e t h a t t h e e x ec u ta b l e v e r s i o n of t h e m o d e l u s e d b y A I R w a s r ec o m p il e d f r o m t h e F o r t r a n c o d e t o all o w r e p o r t i n g of t h e t o n

- p e r

- d a y e mi ss i o n s e s tim a t e s t o fo u r d i g i t s p a s t t

h e d ec i m a l p o i n t r at

h e r
t h a n t w o

. T h i s i s n ece ss a r y w h e n ca l c u l at i ng g r a m -p e r

- m il e e mi ss i o n r a

t e s fo r s o m e v e h i c l e c la ss e s a n d m o d e l

y e a r s t h a t h a v e a r e l a

ti v e l y s mall p o pu la t

i o n

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

64 d i s t r i b u t i o n o f v e h i c l e s i n t h e f l ee t c a n r e s u l

t i n a s i g n i f

i c a n t i n c r e a s e i n t h e f

l e e t a v e r a g e

e mi ss i o n f

ac t o r

. S u c h s h i f

t s i n t h e a g e d i s t r i b u t i o n a r e t h e r e s u l t o f t h e “ F l ee t T u r n o v e r ” e ff ec t

.

T h e m o d e l y e a r s p e c i f

i c g / mi e m i ss i o n r a t e s d e v e l o p e d a s d e s c r i b e d a b o v e w e r e u s e d i n

c o n j u n c t i o n w i t h v e h i c l e p o p u l a t i o n s a n d d a il y V M T b y v e h i c l e a g e t o g e n e r a t e t o n

- p e r- d a y
( t p d ) e mi s s i o n s e s t im a t e s

. E mi ss i o n i nv e n t o r y e s t im a t e s f o r t h e s t a t e w e r e g e n e r a t e d by

m u l t i p l y i ng t h e v e h i c l e p o p u l a t i o n ( b y m o d e l y e a r) b y t h e p e r- v e h i c l e a v e r a g e d a i l y V M T ( b y

m o d e l y e a r) a n d t h e g / m i e m i ss i o n r a t e ( b y m od e l y e a r)

. T h e s e p r o du c t s w e r e t h e n s u m m e d

o v e r a ll m

o d e l y e a r v e h i c l e s i n t h e f l e e t ( e

. g

. , 1976 t h

r o ug h 2020 f

o r a c a l e n d a r y e a r 202 0

a n a l y s i s ) t o o b t a i n t h e i nv e n t o r y f o r t h e s c e n a r i o b e i n g a n a l y z e d

. A s a m p l e o f t h e c a l c u l a t i o n f

o r

b a s e l i n e e x h a u s t VO C e mi ss i o n s f r o m p a s s e n g e r ca r s i s s h o w n i n F i gu r e E

- 1

, a n d a c o m p a r i s o n

o f t h e r e s u l

t s d i r ec t l y f

r o m E M F A C 200 7 v e r s u s t h o s e o b t a i n e d w it h t h e e m i ss i o n s m o d e l

d e v e l o p e d f

o r t h i s e f f o r t i s s h o w n b e l o w

.

P C E xh a u s t VO C D i

r ec t l y f r o m E M F A C 2007 : 31

. 90 t pd

P C E xh a u s t VO C f

r o m F l ee t E mi ss i o n s M o d e l : 31

. 90 t pd E M F A C 2007 P asse n ge r C a r V O C a n d N O x E m i ss i o n R a t es

0 2 4 6 8 10 12 14 16 18

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

M ode l Y ear

V OC NOx

F i g u re E- 1

. E M F AC 2007 P a ss e n g e r C a r V O C a nd N O x E m i ss i o n R at e s ( V O C In cl u d e s E v a p o r at i v e E m i ss i o ns )A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

65 P C NO x D i

r ec t l y f r o m E M F A C 2007 : 63

. 2 8 t pd

P C NO x f r o m F l ee t E mi ss i o n s M o d e l : 63

. 2 8 t pd

A s o b s e r v e d a b o v e , t h e F l ee t E mi ss i o n s M o d e l a g r ee s e x ac t l y w it h t h e E M F A C 2007 e m i ss i o n

m o d e l f o r b o t h VO C a n d N O x

.

Ta b l e E- 1

. S u m m a r y o f 202 0 S ta t e w i d e P a ss e n g e r C a r Ex h a u s t V O C In v e n t o r y C a lc u l at i o n

M od e l Y ear To t a l P asse ng er Cars Da il y

V M T ( m i/d ay ) E x h a u s t V O C ( g / m i ) E x h a u s t V O C (t pd )

2020 996

, 373 55

. 8 0

. 011 0

. 67

2019 984

, 117 48

. 3 0

. 013 0

. 66

2018 942

, 424 43

. 9 0

. 014 0

. 63

2017 911

, 735 40

. 8 0

. 015 0

. 62

2016 882

, 463 38

. 4 0

. 017 0

. 65

2015 886

, 284 36

. 4 0

. 019 0

. 68

2014 852

, 640 34

. 8 0

. 020 0

. 66

2013 827

, 749 33

. 3 0

. 021 0

. 65

2012 785

, 071 32

. 0 0

. 023 0

. 62

2011 740

, 260 30

. 9 0

. 024 0

. 59

2010 700

, 575 29

. 9 0

. 026 0

. 59

2009 655

, 833 28

. 9 0

. 028 0

. 58

2008 613

, 086 28

. 0 0

. 028 0

. 53

2007 569

, 920 27

. 2 0

. 031 0

. 54

2006 530

, 455 26

. 5 0

. 035 0

. 54

2005 502

, 630 25

. 8 0

. 051 0

. 73

2004 416

, 920 25

. 1 0

. 088 1

. 02

2003 390

, 251 24

. 5 0

. 105 1

. 11

2002 333

, 449 24

. 0 0

. 115 1

. 01

2001 305

, 670 23

. 4 0

. 124 0

. 98

2000 280

, 392 22

. 9 0

. 140 0

. 99

1999 204

, 643 22

. 4 0

. 208 1

. 05

1998 172

, 099 21

. 9 0

. 279 1

. 16

1997 147

, 974 21

. 4 0

. 301 1

. 05

1996 115

, 108 21

. 0 0

. 326 0

. 87

1995 122

, 526 20

. 6 0

. 375 1

. 04

1994 100

, 700 20

. 2 0

. 441 0

. 99

1993 90

, 423 19

. 8 0

. 627 1

. 24

1992 80

, 816 19

. 4 0

. 731 1

. 26

1991 89

, 396 19

. 0 0

. 741 1

. 39

1990 84

, 727 18

. 7 0

. 711 1

. 24A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

66 1989 79

, 655 18

. 4 0

. 676 1

. 09

1988 67

, 569 18

. 0 0

. 638 0

. 86

1987 60

, 002 17

. 7 0

. 632 0

. 74

1986 46

, 731 17

. 4 0

. 636 0

. 57

1985 36

, 213 17

. 1 0

. 678 0

. 46

1984 26

, 612 16

. 8 0

. 810 0

. 40

1983 15

, 311 16

. 6 0

. 915 0

. 26

1982 10

, 327 16

. 2 0

. 946 0

. 17

1981 7

, 956 16

. 0 0

. 913 0

. 13

1980 6

, 181 15

. 7 1

. 227 0

. 13

1979 8

, 140 15

. 4 1

. 957 0

. 27

1978 6

, 318 15

. 2 1

. 963 0

. 21

1977 4

, 410 14

. 9 2

. 003 0

. 15

1976 3

, 208 14

. 7 2

. 563 0

. 13

To t a l E x h a u s t V O C : 31

. 90



### E.2. Scenarios

A s d i s c u ss e d e l s e w h e r e i n t h i s r e p o r t

, e mi ss i o n i n v e n t o r i e s f

o r t h e s t a t e o f C a li f

o r n i a a n d f

o r t h e

S C A B a r e e s t im a t e d f

o r t w o s ce n a r i o s :

1. F e d e r a l T i e r 2 P r o g r a m ( b a s e l i n e ) ; a n d

2. C a l i f

o r n i a P r o g r a m ( i n c l u d i ng e x h a u s t a n d e v a p o r a t i v e e m i ss i o n s t a n d a r d s , Z E V

S t a n d a r d s , a n d GHG S t a n d a r d s )

.

I n v e n t o r i e s f

o r t h e t w o ca s e s a r e e s t im a t e d b y g e n e r a t i n g b y

- m o d e l

- y e a r e m i s s i o n f

a c t o r s u s i n g

E M F A C 2007

, a n d m

u l t i p l y i ng t h e s e b y p o p u l a t i o n s a n d v e h i c l e mi l e s t r a v e l e d p e r d a y

. F o r t h e

F e d e r a l P r o g r a m , t h e r e a r e n o p o pu l a t i o n o r V M T a d j u s t m e n t s , b u t f

o r t h e C a l i f

o r n i a P r o g r a m ,

w h i c h i n c l ud e s b o t h t h e Z E V S t a n d a r d s a n d t h e GHG S t a n d a r d s , t h e r e a r e a d j u s t m e n t s t o

p o pu l a t i o n s a n d v e h i c l e m i l e s t r a v e l e d

, s i n ce bo t h ca s e s w i l l r e s u l t i n i n c r ea s e d c o s t s a n d

r e du ce d n e w v e h i c l e pu r c h a s e s r e l a t i v e t o t h e F e d e r a l P r o g r a m

. A l s o , t h e r e a r e a d d it i o n a l

a d j u s t m e n t s t o v e h i c l e m i l e s t r a v e l e d f o r n e w e r v e h i c l e s du e t o r e b o u n d e ff ec t s

.



### E.3. E m i s sion Rates b y Vehicle C l ass and M odel Y ear

E mi ss i o n f

a c t o r s f o r t h e F e d e r a l P r o g r a m a r e g e n e r a t e d u s i n g E M F A C 200 7 a n d m od i f y i ng t h e

E M F A C T e c h G r o up s i n 2009 a n d l a t e r m o d e l y ea r s t o m a t c h E P A ’ s p r e d i c t e d T i e r 2 B i nA ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

67 p e r ce n t a g e s . T h e T i e r 2 2009 + mi x f o r M O B I L E 6

. 2 i s s h o w n i n T a b l e E

- 3

. A l s o s h o w n i n T a b l e

E

- 3 a r e t h e E M F A C T ec h n o l og y G r o up s t h a t a r e t h e s a m e a s t h e s e b i n s

.

Ta b l e E- 2

. M O B I L E6

. 2 T i e r 2 2 009 M i x
.

B in EM F AC

T e c h G r p L D V

/ T 1 L D T 2 L D T 3 L D T 4 To t a l

8 35 0

. 0% 0

. 0% 26

. 0% 100

. 0% 7

. 5%

7 N / A 0

. 0% 30

. 0% 0

. 0% 0

. 0% 10

. 3%

6 N / A 0

. 0% 30

. 0% 0

. 0% 0

. 0% 10

. 3%

5 28 10

. 0% 20

. 0% 74

. 0% 0

. 0% 19

. 5%

4 33 10

. 0% 20

. 0% 0

. 0% 0

. 0% 11

. 9%

3 32 55

. 0% 0

. 0% 0

. 0% 0

. 0% 27

. 9%

2 30 25

. 0% 0

. 0% 0

. 0% 0

. 0% 12

. 7%

To t al 100% 100% 100% 100% 100%

N O x A vg 0

. 033 0

. 097 0

. 104 0

. 200 0

. 070

N M O G A vg 0

. 049 0

. 086 0

. 099 0

. 125 0

. 070

N / A = n o t a v a i la b l e

A s n o t e d i n

T a b l e E

- 3

, t h e r e a r e T ec h g r o up s f o r B i n s 6 a n d 7

, w h i c h a r e u s e d o n l y f o r L D T 2 s i n

E M F A C

. I n s t ea d o f c r ea t i n g n e w T e c h n o l og y G r oup s i n E M F A C

, t h e a n a l y s i s u s e d p e r c e n t a g e s

o f v e h i c l e s i n B i n s 4

, 5

, a n d 8 t o s im u l a t e t h e T i e r 2 p e r ce n t a g e s

. T h i s r e s u l t s i n t h e s a m e

N M OG

, b u t s l i g h t l y h i g h e r f l e e t

- w e i g h t e d N O x , a s s h o w n i n T a b l e E

- 4

. T h u s , t h e E M F A C

a n a l y s i s f o r T i e r 2 h a s s l i g h t l y l e s s b e n e f it t h a n it s h ou l d

, w h i c h i s a c o n s e r v a t i v e a s s u m p t i o n f o r

t h i s a n l y s i s

.

A l s o , L D T 3 s a n d L D T 4 s m u s t b e c o m

b i n e d i n t o a s i n g l e E M F A C M e d i u m D u t y V e h i c l e
( “ M D V ” ) ca t e go r y

. T h i s a n a l y s i s a s s u m e d 68 % o f M D V s a r e L D T 3 s , a n d 32 % a r e L D T 4 s ,

w h i c h i s c o n s i s t e n t w i t h M O B I L E 6

. 2

. F o r T i e r 2 e v a p o r a t i v e e m i ss i o n s , t h e 2009 + m o d e l y ea r

T ec h n o l og y g r o up a s s i g n m e n t s a r e 100 % T ec h n o l og y G r o up 15 f o r p a ss e n g e r ca r s , a n d 100 %

T ec h n o l og y G r o up 35 f

o r L D T 1 s , L D T 2 s , a n d M DV s

. T h e s e t ec h n o l og y g r o up s c o rr e s p o n d t o

t h e L E V II N ea r Z e r o e v a p o r a t i v e s t a n d a r d s f

o r t h e s e v e h i c l e c l a ss e s

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

68 Ta b l e E- 3

. 2 0 09 + M i x Us e d i n E M F AC 2007 t o M o d el T ie r 2

B in EM F AC

T e c h G r p L D V

/ T 1 L D T 2 L D T 3 L D T 4 To t a l

8 35 0

. 0% 25

. 4% 26

. 0% 100

. 0% 16

. 1%

7 N / A 0

. 0% 0

. 0% 0

. 0% 0

. 0% 0

. 0%

6 N / A 0

. 0% 0

. 0% 0

. 0% 0

. 0% 0

. 0%

5 28 10

. 0% 54

. 6% 74

. 0% 0

. 0% 31

. 3%

4 33 10

. 0% 20

. 0% 0

. 0% 0

. 0% 11

. 9%

3 32 55

. 0% 0

. 0% 0

. 0% 0

. 0% 27

. 9%

2 30 25

. 0% 0

. 0% 0

. 0% 0

. 0% 12

. 7%

To t al 100% 100% 100% 100

. 0% 100%

N O x A vg 0

. 033 0

. 097 0

. 104 0

. 200 0

. 070

N M O G A vg 0

. 049 0

. 095 0

. 099 0

. 125 0

. 073

N / A = n o t a v ai l a b l e

F o r t h e C a li f

o r n i a P r o g r a m , t h e e m i ss i o n s a n a l y s i s r e l i e s o n e s t im a t e s o f t h e p e r c e n t a g e s o f

Z E V s , P Z E V s , a n d A T

- P Z E V s t h a t w o u l d b e s o l d b y m a n u f ac t u r e r s , b a s e d o n t h e r e gu l a t o r y

r e q u i r e m e n t s a n d c o m

p l i a n c e p l a n s d e s c r i b e d e l s e w h e r e i n t h i s r e p o r t

. T h e n , t h e p e r c e n t o f

L E V II s a n d U L E V II s a r e s e l e c t e d i n o r d e r t o m ee t A R B ’ s N M OG r e q u i r e m e n t s

. T h e s e n e w

t ec hn o l og y f

r ac t i o n s a r e i npu t i n t o E M F A C 2007

, a n d t h e m o d e l i s r e -r u n f

o r b o t h t h e s t a t e a n d

f o r t h e S C A B t o p r o du ce e mi ss i o n s b y m o d e l y e a r a n d v e h i c l e c l a ss

. T h e t ec h n o l og y f r ac t i o n s

f o r t h e C a li f

o r n i a p r o g r a m a r e s h o w n i n T a b l e E

- 4

.

Ta b l e E- 4

. T ec hn o l o gy F r a c t i o ns Us e d f

o r M o d eli n g t h e C a li f

o r n i a P r o g r a m
.

T e c h n o l og y

G r o u p s f o r M od e li n g t h e C a li f o r ni a P r o g ram
T e c h G r p 28 29 31 37 25 32 33

N M OG 0

. 075 0

. 04 0

. 0085 0

. 0085 0 0

. 04 0

. 04

M ode l Yr L EV II U L EV II P Z EV A T P Z EV Z EV B in 3 B in 4

P Cs

2009 0

. 091 0

. 050 0

. 365 0

. 103 0

. 001 0

. 290 0

. 100

2010 0

. 000 0

. 135 0

. 408 0

. 112 0

. 001 0

. 244 0

. 100

2011 0

. 081 0

. 050 0

. 449 0

. 121 0

. 001 0

. 198 0

. 100

2012 0

. 171 0

. 000 0

. 487 0

. 138 0

. 004 0

. 100 0

. 100

2013 0

. 161 0

. 000 0

. 494 0

. 140 0

. 005 0

. 100 0

. 100A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

69 2014 0

. 148 0

. 000 0

. 501 0

. 142 0

. 009 0

. 100 0

. 100

2015 0

. 197 0

. 000 0

. 493 0

. 193 0

. 017 0

. 000 0

. 100

2016 0

. 186 0

. 000 0

. 500 0

. 196 0

. 018 0

. 000 0

. 100

2017 0

. 185 0

. 000 0

. 500 0

. 196 0

. 019 0

. 000 0

. 100

2018 0

. 212 0

. 000 0

. 481 0

. 173 0

. 034 0

. 000 0

. 100

2019 0

. 172 0

. 000 0

. 481 0

. 173 0

. 034 0

. 040 0

. 100

2020 0

. 172 0

. 000 0

. 481 0

. 173 0

. 034 0

. 040 0

. 100

2021 0

. 160 0

. 000 0

. 462 0

. 165 0

. 033 0

. 080 0

. 100

2022 0

. 160 0

. 000 0

. 462 0

. 165 0

. 033 0

. 080 0

. 100

2023 0

. 159 0

. 000 0

. 463 0

. 165 0

. 033 0

. 080 0

. 100

L D T 1s

2009 0

. 171 0

. 000 0

. 377 0

. 062 0

. 000 0

. 290 0

. 100

2010 0

. 165 0

. 000 0

. 422 0

. 069 0

. 000 0

. 244 0

. 100

2011 0

. 157 0

. 000 0

. 468 0

. 077 0

. 000 0

. 198 0

. 100

2012 0

. 153 0

. 000 0

. 511 0

. 094 0

. 000 0

. 142 0

. 100

2013 0

. 144 0

. 000 0

. 519 0

. 095 0

. 000 0

. 142 0

. 100

2014 0

. 177 0

. 000 0

. 527 0

. 096 0

. 000 0

. 100 0

. 100

2015 0

. 228 0

. 000 0

. 523 0

. 149 0

. 000 0

. 000 0

. 100

2016 0

. 219 0

. 000 0

. 530 0

. 151 0

. 000 0

. 000 0

. 100

2017 0

. 219 0

. 000 0

. 530 0

. 151 0

. 000 0

. 000 0

. 100

2018 0

. 249 0

. 000 0

. 521 0

. 130 0

. 000 0

. 000 0

. 100

2019 0

. 208 0

. 000 0

. 522 0

. 130 0

. 000 0

. 040 0

. 100

2020 0

. 208 0

. 000 0

. 522 0

. 130 0

. 000 0

. 040 0

. 100

2021 0

. 194 0

. 000 0

. 504 0

. 122 0

. 000 0

. 080 0

. 100

2022 0

. 194 0

. 000 0

. 504 0

. 122 0

. 000 0

. 080 0

. 100

2023 0

. 193 0

. 000 0

. 505 0

. 122 0

. 000 0

. 080 0

. 100

L D T 2s

2009 0

. 7100 0

. 0000 0

. 0710 0

. 0190 0

. 0000 0

. 0000 0

. 2000

2010 0

. 6960 0

. 0000 0

. 0820 0

. 0220 0

. 0000 0

. 0000 0

. 2000

2011 0

. 6840 0

. 0000 0

. 0920 0

. 0240 0

. 0000 0

. 0000 0

. 2000

2012 0

. 6690 0

. 0000 0

. 1020 0

. 0290 0

. 0000 0

. 0000 0

. 2000

2013 0

. 6680 0

. 0000 0

. 1030 0

. 0290 0

. 0000 0

. 0000 0

. 2000

2014 0

. 6650 0

. 0000 0

. 1050 0

. 0300 0

. 0000 0

. 0000 0

. 2000

2015 0

. 6590 0

. 0000 0

. 1010 0

. 0400 0

. 0000 0

. 0000 0

. 2000

2016 0

. 6560 0

. 0000 0

. 1030 0

. 0410 0

. 0000 0

. 0000 0

. 2000A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

70 2017 0

. 6560 0

. 0000 0

. 1030 0

. 0410 0

. 0000 0

. 0000 0

. 2000

2018 0

. 6630 0

. 0000 0

. 1000 0

. 0370 0

. 0000 0

. 0000 0

. 2000

2019 0

. 6630 0

. 0000 0

. 1000 0

. 0370 0

. 0000 0

. 0000 0

. 2000

2020 0

. 6630 0

. 0000 0

. 1000 0

. 0370 0

. 0000 0

. 0000 0

. 2000

2021 0

. 6690 0

. 0000 0

. 0960 0

. 0350 0

. 0000 0

. 0000 0

. 2000

2022 0

. 6690 0

. 0000 0

. 0960 0

. 0350 0

. 0000 0

. 0000 0

. 2000

2023 0

. 6690 0

. 0000 0

. 0960 0

. 0350 0

. 0000 0

. 0000 0

. 2000

M D V s

2009 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2010 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2011 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2012 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2013 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2014 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2015 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2016 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2017 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2018 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2019 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2020 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2021 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2022 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

2023 1

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000 0

. 0000

E

. 3

. 1

. To x i c s E s t i m a t e s

U n l i k e M O B I L E 6

, t h e E M F A C 2007 m o d e l d o e s n o t i n c l ud e e s t im a t e s o f t h e t o x i c s p e c i e s

b e n ze n e , 1

, 3 b u t a d i e n e , ac r o l e i n , f o r m a l d e h y d e , a n d a c e t a l d e h y d e

. T o o b t a i n t o x i c s e mi ss i o n s

f r o m t h e E M F A C 2007

, t h e f o l l o w i ng p r o ce ss w a s u s e d

. F i r s t

, t h e M O B I L E 6

- M S A T m o d e l w a s

m od i f i e d t o o u t p u t t h e a i r t o x i c s f r ac t i o n s ( i

. e ., t h e r a t i o o f t h e p a r t i c u l a r t o x i c e m i ss i o n s t o VO C

e mi ss i o n s ) b y v e h i c l e c l a ss a n d m o d e l y e a r

. T h e m

o d e l w a s r u n f

r o m 2003

- 2023

, u s i ng t h e f l a t

lim i t s f o r C a l i f o r n i a s u mm e r f

u e l p a r a m e t e r s

. W h i l e t h e s e l im it s a r e s o m e w h a t h i g h e r t h a n t h e

ac t u a l v a l u e s f

o r i n

- u s e g a s o li n e , t h e i n

- u s e p r o p e r t i e s v a r y s o m e w h a t f

r o m y ea r- t o

- y ea r , a n d t h e

u s e o f t h e f

l a t li m i t s i n s t ea d o f i n

- u s e p r o p e r t i e s i s n o t e x p ec t e d t o h a v e a s i g n i f i ca n t e ff ec t o n t h eA ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

71 t o x i c r a t i o s f

o r t h i s a n a l y s i s

. N e x t

, t h e f r ac t i o n s w e r e a v e r a g e d b y a g e a n d v e h i c l e c l a s s

. T h e

f i n a l e xh a u s t t o x i c s f

r ac t i o n s , w h i c h a r e m

u l t i p li e d b y t h e e x h a u s t VO C e mi ss i o n s f r o m e ac h

c l a ss , a r e s h o w n i n

T a b l e E

- 5

.

F o r e v a p o r a

t i v e t o x i c s ( b e n z e n e )

, t h e f o l l o w i ng M O B I L E 6 f

r ac t i o n s w e r e u s e d f

o r a l l a g e s a n d

v e h i c l e c l a ss e s :

H o t S o a k E mi s s i o n F

r ac t i o n : 0

. 00675

D i u r n a l E m i s s i o n F

r ac t i o n : 0

. 00610

R unn i ng L o ss E mi ss i o n F r ac t i o n : 0

. 00675 Ta b l e E- 5 E x h a u s t To x ic s F r a c t i o ns Us e d t o E s t i m at e T ox ic s f o r E M F AC 2007 ( O b t a i n e d f r om M O B I LE6-
M SA T)

A ge PC LD T 1 /2 MDV PC LDT 1 /2 MDV PC LDT 1 /2 MDV PC LDT 1 /2 M DV PC LDT 1 /2 M DV
1 0

. 0 64 1 4 0

. 0 6 4 2 4 0

. 0 6 42 4 0

. 0 04 9 4 0

. 0 04 8 6 0

. 0 0 48 6 0

. 0 1 3 9 6 0

. 0 14 1 4 0

. 0 1 4 1 4 0

. 00 8 1 7 0

. 0 0 7 9 3 0

. 0 07 9 3 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
2 0

. 0 64 1 4 0

. 0 6 4 2 4 0

. 0 6 42 4 0

. 0 04 9 4 0

. 0 04 8 6 0

. 0 0 48 6 0

. 0 1 3 9 6 0

. 0 14 1 4 0

. 0 1 4 1 4 0

. 00 8 1 7 0

. 0 0 7 9 3 0

. 0 07 9 3 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
3 0

. 0 64 1 2 0

. 0 6 4 1 9 0

. 0 6 40 0 0

. 0 04 9 5 0

. 0 04 8 8 0

. 0 0 49 2 0

. 0 1 3 9 5 0

. 0 14 1 3 0

. 0 1 4 0 7 0

. 00 8 1 7 0

. 0 0 7 9 3 0

. 0 07 9 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
4 0

. 0 63 9 2 0

. 0 6 3 9 2 0

. 0 6 37 2 0

. 0 04 9 9 0

. 0 04 9 3 0

. 0 0 49 8 0

. 0 1 3 8 9 0

. 0 14 0 4 0

. 0 1 3 9 8 0

. 00 8 1 5 0

. 0 0 7 9 2 0

. 0 07 9 1 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
5 0

. 0 63 7 2 0

. 0 6 3 6 7 0

. 0 6 34 4 0

. 0 05 0 3 0

. 0 04 9 9 0

. 0 0 50 4 0

. 0 1 3 8 3 0

. 0 13 9 7 0

. 0 1 3 8 9 0

. 00 8 1 4 0

. 0 0 7 9 1 0

. 0 07 9 0 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
6 0

. 0 63 5 4 0

. 0 6 3 4 0 0

. 0 6 31 5 0

. 0 05 0 6 0

. 0 05 0 5 0

. 0 0 51 0 0

. 0 1 3 7 8 0

. 0 13 8 8 0

. 0 1 3 8 1 0

. 00 8 1 3 0

. 0 0 7 9 0 0

. 0 07 8 8 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
7 0

. 0 63 3 5 0

. 0 6 3 1 4 0

. 0 6 28 8 0

. 0 05 1 0 0

. 0 05 1 0 0

. 0 0 51 6 0

. 0 1 3 7 2 0

. 0 13 8 0 0

. 0 1 3 7 2 0

. 00 8 1 1 0

. 0 0 7 8 9 0

. 0 07 8 7 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
8 0

. 0 63 1 6 0

. 0 6 2 8 9 0

. 0 6 26 3 0

. 0 05 1 4 0

. 0 05 1 6 0

. 0 0 52 1 0

. 0 1 3 6 6 0

. 0 13 7 3 0

. 0 1 3 6 4 0

. 00 8 1 0 0

. 0 0 7 8 8 0

. 0 07 8 6 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
9 0

. 0 62 9 7 0

. 0 6 2 6 5 0

. 0 6 24 0 0

. 0 05 1 8 0

. 0 05 2 1 0

. 0 0 52 6 0

. 0 1 3 6 0 0

. 0 13 6 5 0

. 0 1 3 5 7 0

. 00 8 0 8 0

. 0 0 7 8 7 0

. 0 07 8 5 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
10 0

. 0 62 7 6 0

. 0 6 2 4 4 0

. 0 6 21 9 0

. 0 05 2 2 0

. 0 05 2 5 0

. 0 0 53 1 0

. 0 1 3 5 5 0

. 0 13 5 9 0

. 0 1 3 5 1 0

. 00 8 0 7 0

. 0 0 7 8 6 0

. 0 07 8 4 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
11 0

. 0 62 5 5 0

. 0 6 2 2 3 0

. 0 6 19 8 0

. 0 05 2 6 0

. 0 05 3 0 0

. 0 0 53 5 0

. 0 1 3 4 9 0

. 0 13 5 3 0

. 0 1 3 4 5 0

. 00 8 0 5 0

. 0 0 7 8 5 0

. 0 07 8 3 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
12 0

. 0 62 3 2 0

. 0 6 2 0 1 0

. 0 6 17 6 0

. 0 05 3 0 0

. 0 05 3 3 0

. 0 0 53 9 0

. 0 1 3 4 3 0

. 0 13 4 8 0

. 0 1 3 4 0 0

. 00 8 0 4 0

. 0 0 7 8 4 0

. 0 07 8 3 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
13 0

. 0 62 1 0 0

. 0 6 1 8 2 0

. 0 6 15 7 0

. 0 05 3 4 0

. 0 05 3 7 0

. 0 0 54 2 0

. 0 1 3 3 7 0

. 0 13 4 3 0

. 0 1 3 3 5 0

. 00 8 0 2 0

. 0 0 7 8 4 0

. 0 07 8 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
14 0

. 0 61 8 7 0

. 0 6 1 6 0 0

. 0 6 13 5 0

. 0 05 3 8 0

. 0 05 4 0 0

. 0 0 54 5 0

. 0 1 3 3 1 0

. 0 13 3 9 0

. 0 1 3 3 1 0

. 00 8 0 1 0

. 0 0 7 8 3 0

. 0 07 8 1 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
15 0

. 0 61 6 9 0

. 0 6 1 4 0 0

. 0 6 11 3 0

. 0 05 4 2 0

. 0 05 4 3 0

. 0 0 54 8 0

. 0 1 3 2 6 0

. 0 13 3 6 0

. 0 1 3 2 8 0

. 00 8 0 0 0

. 0 0 7 8 2 0

. 0 07 8 1 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
16 0

. 0 61 5 1 0

. 0 6 1 2 0 0

. 0 6 09 3 0

. 0 05 4 6 0

. 0 05 4 6 0

. 0 0 55 2 0

. 0 1 3 2 1 0

. 0 13 3 3 0

. 0 1 3 2 4 0

. 00 7 9 8 0

. 0 0 7 8 2 0

. 0 07 8 1 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
17 0

. 0 61 2 2 0

. 0 6 0 8 4 0

. 0 6 05 4 0

. 0 05 5 2 0

. 0 05 5 2 0

. 0 0 55 8 0

. 0 1 3 1 2 0

. 0 13 2 5 0

. 0 1 3 1 5 0

. 00 7 9 6 0

. 0 0 7 8 1 0

. 0 07 7 9 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
18 0

. 0 60 9 3 0

. 0 5 9 9 9 0

. 0 5 96 6 0

. 0 05 5 8 0

. 0 05 5 3 0

. 0 0 56 0 0

. 0 1 3 0 4 0

. 0 13 2 7 0

. 0 1 3 1 6 0

. 00 7 9 4 0

. 0 0 7 8 4 0

. 0 07 8 3 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
19 0

. 0 60 5 9 0

. 0 5 9 0 3 0

. 0 5 86 9 0

. 0 05 6 5 0

. 0 05 5 3 0

. 0 0 56 0 0

. 0 1 2 9 4 0

. 0 13 3 1 0

. 0 1 3 2 0 0

. 00 7 9 2 0

. 0 0 7 8 9 0

. 0 07 8 7 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
20 0

. 0 60 2 2 0

. 0 5 7 9 8 0

. 0 5 76 1 0

. 0 05 7 2 0

. 0 05 5 2 0

. 0 0 56 0 0

. 0 1 2 8 3 0

. 0 13 3 8 0

. 0 1 3 2 6 0

. 00 7 8 9 0

. 0 0 7 9 5 0

. 0 07 9 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
21 0

. 0 59 7 2 0

. 0 5 6 8 4 0

. 0 5 64 5 0

. 0 05 7 9 0

. 0 05 5 0 0

. 0 0 55 8 0

. 0 1 2 7 4 0

. 0 13 4 8 0

. 0 1 3 3 5 0

. 00 7 8 8 0

. 0 0 8 0 1 0

. 0 07 9 9 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
22 0

. 0 59 1 5 0

. 0 5 5 6 0 0

. 0 5 52 0 0

. 0 05 8 6 0

. 0 05 4 7 0

. 0 0 55 5 0

. 0 1 2 6 5 0

. 0 13 6 0 0

. 0 1 3 4 7 0

. 00 7 8 6 0

. 0 0 8 0 9 0

. 0 08 0 6 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
23 0

. 0 58 4 2 0

. 0 5 4 3 1 0

. 0 5 38 9 0

. 0 06 0 1 0

. 0 05 4 3 0

. 0 0 55 2 0

. 0 1 2 6 0 0

. 0 13 7 5 0

. 0 1 3 6 1 0

. 00 7 8 6 0

. 0 0 8 1 7 0

. 0 08 1 5 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
24 0

. 0 57 1 4 0

. 0 5 3 0 0 0

. 0 5 25 7 0

. 0 05 9 7 0

. 0 05 4 2 0

. 0 0 54 6 0

. 0 1 2 7 5 0

. 0 13 9 5 0

. 0 1 3 7 6 0

. 00 7 9 4 0

. 0 0 8 2 6 0

. 0 08 2 3 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
25 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
26 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
27 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
28 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
29 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
30 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
31 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
32 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
33 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
34 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
35 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
36 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
37 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
38 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
39 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
40 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
41 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
42 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
43 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
44 0

. 0 55 8 1 0

. 0 5 1 7 0 0

. 0 5 12 8 0

. 0 05 9 4 0

. 0 05 4 1 0

. 0 0 54 1 0

. 0 1 2 9 3 0

. 0 14 1 5 0

. 0 1 3 9 3 0

. 00 8 0 1 0

. 0 0 8 3 4 0

. 0 08 3 2 0

. 0 0 06 0 0

. 00 0 6 0 0

. 0 00 60
45 0

. 0 55 81 0

. 0 5 1 70 0

. 0 5 128 0

. 0 05 94 0

. 0 05 41 0

. 0 0 541 0

. 0 1 2 93 0

. 0 14 15 0

. 0 1 3 93 0

. 00 8 01 0

. 0 0 8 34 0

. 0 08 32 0

. 0 0 060 0

. 00 0 60 0

. 0 00 60 A c rol e in E x h a u s t A i r T o x i c s F r a ct io ns B e nz e ne 1
, 3 B u t a d i e ne F or m a l d e h y de A c e ta ld e h y deA ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

72 R e s t i n g L o ss E mi s s i o n F

r ac t i o n : 0

. 00610



### E.4. I m p a cts of the Ca l ifornia Prog ra m

T h e r e a r e t w o p r im a r y e ff ec t s f r o m i m p l e m e n t i ng t h e C a li f

o r n i a p r o g r a m t h a t im

p ac t c r it e r i a

p o ll u t a n t e mi ss i o n s : f

l e e t

- t u r n o v e r e ff

ec t s a n d r e b o u n d e ff

ec t s . T h e s e a r e d i s c u ss e d b e l o w

.

E

. 4

. 1

. F l ee t- T u r n o v e r E ff ec t s

A s n o t e d e l s e w h e r e i n t h i s r e p o r t

, t h e n e w v e h i c l e p r i ce i n c r ea s e s a s a r e s u l t o f t h e Z E V a n d

GHG S t a n d a r d s w i l l h a v e a s i g n i f i ca n t im p ac t o n f l e e t t u r n o v e r , ca u s i n g r e du ce d n e w v e h i c l e

s a l e s a n d t h e r e t e n t i o n o f o l d e r , h i g h e r- e m it t i n g v e h i c l e s

. T h i s c a n h a v e a s u b s t a n t i a l i m p ac t o n

t h e c r i t e r i a p o ll u t a n t e mi ss i o n s i nv e n t o r y , a s o l d e r v e h i c l e s i n t h e f l e e t ca n h a v e e m i s s i o n r a t e s

t h a t a r e a h u n d r e d t im e s h i g h e r t h a n t h o s e o f n e w v e h i c l e s ( s e e F i gu r e E

- 1 )

. O bv i o u s l y , a ny

i n c r e a s e i n t r a v e l f

r o m t h e s e v e h i c l e s h a s a n e g a t i v e i m p ac t o n t h e e mi ss i o n s i nv e n t o r y a n d a i r

qu a l i t y

.

A n e x a m p l e o f t h e c h a n g e i n t h e d i s t r i b u t i o n o f v e h i c l e s i n t h e f l e e t a s a r e s u l

t o f t h e C a l i f

o r n i a

P r o g r a m i s s h o w n i n F i gu r e E

- 2

. T h i s f i gu r e il l u s t r a t e s t h e c h a n g e i n t h e s t a t e w i d e v e h i c l e



### - 100 - 80 - 60 - 40 - 20 0 20 40ThousandsofVehicles198019821984198619881990199219941996199820002002200420062008201020122014201620182020



### M o d e l Y e ar

P C / L D T1 L D T 2+

F i g u re E- 2

. E x a m p le o f t h e Ch a n g e i n S ta t e w i d e 2 02 0 V e h ic l e P o p u l at i o n E s t i m at e s a s a R e s u l t o f t h e C o m b i n e d C a li f

o r n i a P r o g r a mA ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

73 p o pu l a t i o n i n 2020

, w h e r e a p o s i t i v e n u m b e r r e f l e c t s m o r e v e h i c l e s t h a n i n t h e b a s e l i n e c a s e a n d

a n e g a t i v e n u m

b e r r e f l e c t s f e w e r v e h i c l e s t h a n i n t h e b a s e l i n e ca s e

. A s o b s e r v e d i n t h e f i gu r e ,

t h e p o pu l a t i o n o f p r e

- 2011 m o d e l y e a r v e h i c l e s i s i n c r e a s e d a n d t h e p o pu l a t i o n o f 2011 a n d

n e w e r m o d e l y e a r v e h i c l e s h a s d ec r ea s e d r e l a t i v e t o t h e b a s e ca s e

. T h i s c h a n g e i n v e h i c l e

p o pu l a t i o n , w h i c h r e s u l

t s i n a n o l d e r v e h i c l e f

l e e t

, a l s o r e s u l

t s i n i n c r e a s e d V O C

, C O

, NO
x ,
PM 2 .5 , a n d t o x i c s e mi ss i o n s c o m p a r e d t o t h e b a s e l i n e f

l e e t

.

E

. 4

. 2

. R e bo un d E ff e c t s

A l s o a s n o t e d e l s e w h e r e i n t h i s r e p o r t

, a s ec o n d a r y o u t c o m

e o f t h e im

p r o v e d f u e l ec o n o m

y

r e q u i r e d b y b o t h t h e Z E V a n d GH G S t a n d a r d s i s a d d it i o n a l V M T b e i ng a c c u m u l a t e d b y t h o s e

v e h i c l e s s u b

j ec t t o t h e r e g u l a t i o n s , du e t o t h e i r i n c r ea s e d f

u e l ec o n o m

y ( i

. e ., t h e “ r e b o u n d

e ff ec t ” )

. I n g e n e r a l

, a s t h e c o s t o f t r a v e l d e c r ea s e s , t o t a l V M T i n c r e a s e s

. A n e x a m p l e o f t h i s

e ff ec t i s il l u s t r a t e d i n F i gu r e E

- 3

, w h i c h s h o w s t h a t V M T acc r u a l i s e s t im a t e d t o i n c r ea s e f r o m

t h e 2009 m

o d e l y ea r ( t h e f

i r s t y ea r o f t h e r e gu l a t i o n ) t o t h e 2016 m o d e l y ea r ( w h e n t h e

r e g u l a t i o n i s f

u l l y p h a s e d i n )

.

E s ti m a t es o f t he 2020 P e r- V eh i c l e I nc r ease i n V M T f r o m t he R ebound E ff ect

0

. 0% 0

. 5% 1

. 0% 1

. 5% 2

. 0% 2

. 5% 3

. 0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

M ode l Y ear

PC L D T1 L D T2 M DV

F i g u re E- 3

. E s t i m a t e s o f t h e P e r - V e h i c l e In c r e a s e i n V M T f r om t h e R e b o u n d Eff

e c t

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

74 E

. 4

. 3

. E m i ss i o n s I m p ac t s o f F l ee t- T u r n o v e r a n d R e bo un d E ff e c t s

T h e e m i s s i o n s im

p ac t s o f t h e f

l ee t

- t u r n o v e r a n d r e b o u n d e f f ec t s w e r e c a l c u l a t e d b y m od i f y i n g

t h e b a s e li n e v e h i c l e p o pu l a t i o n e s t im a t e s a n d t h e b a s e l i n e p e r- v e h i c l e V M T e s t im a t e s i n t h e

s p r ea d s h ee t m

o d e l d e v e l o p e d f

o r t h i s e f f o r t

. F l ee t t u r n o v e r im

p ac t s a ll m

o d e l y ea r v e h i c l e s ,

w h i l e t h e r e b o u n d e f

f ec t i s o n l y a p p li e d t o v e h i c l e s s u b j ec t t o t h e r e g u l a t i o n ( i

. e ., 2009 a n d

n e w e r m o d e l y ea r s )

.

T h e r e v i s e d p o pu l a t i o n f i l e s f o r ea c h o f t h e s ce n a r i o s o u t li n e d a b o v e w e r e i npu t i n t o t h e

E M F A C 2007 F l ee t E mi ss i o n s M o d e l d e v e l o p e d f o r t h i s s t ud y

. F o r eac h s c e n a r i o , t h e t o t a l V M T

( a b s e n t r e b o u n d e f

f ec t s ) w a s h e l d c o n s t a n t

. T h i s w a s acc o m p l i s h e d b y m a k i ng s l i g h t

m od i f i c a t i o n s t o t h e b a s e l i n e d a i l y V M T p e r v e h i c l e f o r a ll v e h i c l e s

. T h i s w a s n ec e s s a r y b eca u s e

t h e t o t a l v e h i c l e p o p u l a t i o n ( a n d t h e a g e d i s t r i b u t i o n ) c h a n g e d u n d e r ea c h s ce n a r i o ; t h u s , i f t h e

b a s e l i n e V M T p e r v e h i c l e w a s a p p l i e d t o eac h m o d e l y ea r , t h e t o t a l V M T u n d e r t h e c o n t r o l ca s e s

w o u l d n o t b e e qu a l t o t h e t o t a l V M T u n d e r t h e b a s e li n e c a s e

. O n c e t h i s i n it i a l V M T a d j u s t m e n t

w a s m a d e , t h e V M T f

r o m 2009 a n d n e w e r v e h i c l e s w a s i n c r ea s e d t o ac c o u n t f o r t h e r e b o u n d

e ff ec t

. T h i s s ec o n d a d

j u s t m e n t r e s u l t s i n h i g h e r t o t a l V M T f

o r eac h v e h i c l e c l a ss

.



### E.5. Results

H e r e w e p r e s e n t r e s u l

t s o f t h e E M F A C 2007 e m i ss i o n s m o d e li ng , b o t h f

o r t h e e n t i

r e s t a t e o f

C a l i f o r n i a a n d s p ec i f

i c a ll y f o r t h e S o u t h C o a s t A i

r B a s i n. 31

E

. 5

. 1

. S t a t e wi d e R es u l t s

T h e f o l l o w i ng a r e s t a

t e w i d e p l o t s o f t h e d if

f e r e n ce i n e mi ss i o n s u n d e r t h e C a li f o r n i a P r o g r a m

r e l a t i v e t o e mi ss i o n s u n d e r t h e F e d e r a l P r o g r a m , f o r t h e s u mm e r s e a s o n , i n t o n s p e r d a y , f o r a l l

v e h i c l e s u n d e r 8500 l b s G V W

. T h u s , po s iti ve v a l u e s i n d i ca t e t h a t t h e i n v e n t o r i e s u n d e r t h e

C a l i f o r n i a P r o g r a m a r e h i gh er t h a n u n d e r t h e F e d e r a l P r o g r a m , w h il e n e ga ti ve v a l u e s i n d i ca t e

t h a t t h e i n v e n t o r i e s u n d e r t h e C a l i f o r n i a P r o g r a m a r e l o w er t h a n u n d e r t h e F e d e r a l P r o g r a m

. P u t

a n o t h e r w a y , a v a l u e o f ze r o i n a n y o f t h e f o l l o w i n g c h a r t s i n d i ca t e s t h a t e mi ss i o n s a r e i d e n t i c a l

u n d e r t h e t w o p r og r a m s , a p o s i t i v e v a l u e i n d i c a t e s e mi ss i o n s a r e h i g h e r u n d e r t h e C a l i f o r n i a

P r o g r a m t h a n u n d e r t h e F e d e r a l P r o g r a m , a n d a n e g a t i v e v a l u e i n d i ca t e s t h a t e mi ss i o n s a r e l o w e r

u n d e r t h e C a l i f

o r n i a P r o g r a m t h a n u n d e r t h e F e d e r a l P r o g r a m . T h e f o l l o w i ng c h a r t s a r e s h o w n :A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

75 § VO C + N O x ( F i gu r e E

- 4 ) ;

§ NO
x ( F i gu r e E

- 5 ) ;

§ VO C ( F i gu r e E

- 6 ) ;

§ C O ( F i gu r e E

- 7 ) ;

§ E x h a u s t PM 2 .5 ( F i gu r e F

- 8 ) ;

§ 5 T o x i c s S u mm e d ( F i gu r e E

- 9 ) ; a n d

,

§ SO
x ( F i gu r e E

- 10 )

.

T h e VO C + N O x , VO C

, NO x , C O

, a n d P M 2

. 5 c h a r t s h a v e b e e n a d j u s t e d f o r f u e l c y c l e e ff

ec t s

c o n s i s t e n t w i t h t h e d i s c u ss i o n i n A pp e n d i x G . T h e t o x i c s a n d S O x c h a r t s h a v e n o t b ee n a d j u s t e d

f o r f u e l c y c l e e ff

e c t s

.

31 A l l r e s u lt s s h o w n i n t

h i s s ec ti o n , e x ce p t r e s u l t s fo r SO
x a nd 5 T o x i c s S u mm e d

, i n c l ud e f u e l c y c l e e f

f e c t s

. S t a t e w i d e V O C + NO x ( E M F A C)

0 2 4 6 8 10 12 14 16200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U nd e r C a li f o r n i a P r og r am

F i g u re E- 4

. D i f

f e r e n c e i n S ta t e w i d e e m i ss i o ns o f V O C + NO
x u nd er c om b i n e d C a l i f o r n i a P r o g r a m ( r e l a t

i v e t o e m i ss i o ns u nd er F e d e r a l P r o g r a m )

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

76 S t a t e wi d e NO x ( E M F A C)

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5200620072008200920102011201220132014201520162017201820192020202120222023

Calendar Ye arStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U nd e r C a li f o r n i a P r og r am

F i g u re E- 5

. D i f

f e r e n c e i n s ta t e w i d e e m i ss i o ns o f NO
x u n d e r c om b i n e d C a l i f o r n i a P r o g r a m ( r e l a t

i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m )

.

S t a t e w i d e V O C ( E M F A C)

0 1 2 3 4 5 6 7 8 9 10200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference(tpd)

D i f f e r e n c e i n E m i s s i o n s U nd e r C a l i f o r n i a P r og r am

F i g u re E- 6

. D i ff

e re n c e i n s tat e w

i d e e m i ss i o ns o f V O C u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m )

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

77 S t a t e w i d e C O ( E M F A C)

0 5 10 15 20 25 30 35 40 45 50200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U n d e r C a li f o r n i a P r o g r am

F i g u re E- 7

. D i f

f e r e n c e i n S ta t e w i d e e m i ss i o ns o f C O u n d e r c om b i n e d C a l i f o r n i a P r o g r a m ( r e l a t

i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m )

.

E x h a u s t PM 2

. 5 ( E M F A C)

-0.2 0 0.2 0.4 0.6 0.8 1 1.2200620072008200920102011201220132014201520162017201820192020202120222023

C alendar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U nd e r C a li f o r n i a P r og r am

F i g u re E- 8

. D i f

f e r e n c e i n S ta t e w i d e e m i ss i o ns o f e x h a u s t PM 2 .5 u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u nd er F e d er a l P r o g r a m )

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

78 S t a t e wi d e S u m o f F i ve To x i c E m i s s i o n s ( E M F A C)

0 0

. 05 0.1 0

. 15 0.2 0

. 25200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference(tpd)

D i f f e r e n c e i n E m i s s i o n s U nd e r C a li f o r n i a P r og r am

F i g u re E- 9

. D i f

f e r e n c e i n S ta t e w i d e s u m o f e m i ss i o ns o f f i v e t ox ic sp e c ie s u nd er c om b i n e d C a l i f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u n d er F e d er a l P r o g r a m )

.

S t a t e w i d e SO x ( E M F A C)

-0.8 -0.7 -0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0200620072008200920102011201220132014201520162017201820192020202120222023

Calenda r YearStatewide Inventory Difference (tpd)

D i f f e r e n ce i n E m i s s i o n s U n d e r C a li f o r n i a P r og r am

F i g u re E-1 0

. D i f

f e re n ce i n S t at e w

i d e e m i ss i o ns o f SO
x und er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m )

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

79 E

. 5

. 2

. S o u t h C o as t A i r B as i n R es u l t s

T h e f o l l o w i ng p a g e s s h o w p l o t s o f t h e d i ff e r e n c e i n e m i ss i o n s o f t h e C a l i f o r n i a P r o g r a m o v e r t h e

F e d e r a l P r o g r a m , f

o r t h e s u mm e r s e a s o n , i n t o n s p e r d a y , f o r a ll v e h i c l e s u n d e r 8500 l b s G r o s s

V e h i c l e W e i g h t R a t i n g , i n t h e S o u t h C o a s t A i r B a s i n

. P o s it i v e v a l u e s i n d i ca t e t h a t t h e

i nv e n t o r i e s u n d e r t h e C a l i f o r n i a P r o g r a m a r e h i g h e r t h a n u n d e r t h e F e d e r a l P r o g r a m

. N e g a t i v e

v a l u e s i n d i c a t e t h a t t h e i n v e n t o r i e s u n d e r t h e C a l i f o r n i a P r o g r a m a r e l e ss t h a n t h e F e d e r a l

P r o g r a m . T h e f

o l l o w i ng c h a r t s a r e s h o w n :

§ VO C + N O x ( F i gu r e E

- 11 ) ;

§ VO C ( F i gu r e E

- 12 ) ;

§ NO x ( F i gu r e E

- 13 ) ;

§ C O ( F i gu r e E

- 14 ) ;

§ E x h a u s t PM 2 .5 ( F i gu r e E

- 15 ) ;

§ SO
x ( F i gu r e E

- 16 ) ; a n d

,

§ 5 T o x i c s S u mm e d ( F i gu r e E

- 17 )

.

T h e VO C + N O x , VO C

, NO x , C O

, a n d P M 2

. 5 c h a r t s h a v e b e e n a d j u s t e d f o r f u e l c y c l e e ff

ec t s

c o n s i s t e n t w i t h t h e d i s c u ss i o n i n A pp e n d i x G . T h e t o x i c s a n d S O x c h a r t s h a v e n o t b ee n a d j u s t e d

f o r f u e l c y c l e e ff

e c t s

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

80 S ou t h C o a s t V O C + NO x ( E M F AC)

0 0.5 1 1.5 2 2.5 3 3.5 4200620072008200920102011201220132014201520162017201820192020202120222023

Calenda r YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i ss i o n s U n d e r C a li f o r n i a P r og r am

F i g u re E-1 1

. D i f

f e re n ce i n S o u t h C o a s t e m i ss i o ns o f V O C + NO
x u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u nd er F e d er a l P r o g r a m )

.

S o u t h C o a st NO x ( E M F A C)

0 0.2 0.4 0.6 0.8 1 1.2200620072008200920102011201220132014201520162017201820192020202120222023

Cal e ndar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U n d e r C a li f o r n i a P r og r am

F i g u re E-1 2

. D i f

f e re n ce i n S o u t h C o a s t e m i ss i o ns o f NO
x u nd er c om b i n e d C a l i f o r n i a P r o g r a m ( r el a t

i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m )

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

81 S ou t h C o a s t V O C ( E M F A C)

0 0.5 1 1.5 2 2.5 3200620072008200920102011201220132014201520162017201820192020202120222023

Calenda r YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i ss i on s U n d e r C a li f o r n i a P r og r am

F i g u re E-1 3

. D i f

f e r e n c e i n S o u t h C o a s t e m i ss i o ns o f V OC u nd er c om b i n e d C a l i f o r n i a P r o g r a m ( r el a t

i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m )

.

S ou t h C o a s t C O ( E M F A C)

0 2 4 6 8 10 12 14 16200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i ss i on s U n d e r C a li f o r n i a P r o g r am

F i g u re E-1 4

. D i f

f e re n ce i n S o u t h C o a s t e m i ss i o ns o f CO u n d er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m )

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

82 S ou t h C o a s t E x h a u s t PM 2

. 5 ( E M F A C)

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5200620072008200920102011201220132014201520162017201820192020202120222023

Calenda r YearStatewide Inventory Difference (tpd)

D i f f e r e n ce i n E m i s s i o n s U n d e r C a li f o r n i a P r og r am

F i g u re E-1 5

. D i f

f e r e n c e i n S o u t h C o a s t e x h a u s t e m i ss i o n s o f PM 2 .5 u nd e r c om b i n e d C a l i f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u nd er F e d er a l P r o g r a m )

.

S ou t h C o a s t S u m o f F i v e To x i c S p e c i e s ( E M F A C)

-0.04 -0.03 -0.02 -0.01 0 0.01 0.02 0.03 0.04 0.05 0.06200620072008200920102011201220132014201520162017201820192020202120222023

C alendar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U nd e r C a li f o r n i a P r og r am

F i g u re E-1 6

. D i f

f e re n ce i n S o u t h C o a s t s u m o f e m i ss i o ns o f f i v e t ox ic sp e c i e s u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u n d er F e d er a l P r o g r a m )

.A ppen d i x E E M F A C 2007 P o l l u t a n t E m i ss i on s M ode l i ng

83 S ou t h C o a st SO x ( E M F A C)

-0.3 -0.25 -0.2 -0.15 -0.1 -0.05 0200620072008200920102011201220132014201520162017201820192020202120222023

C alendar YearStatewide Inventory Difference (tpd)

D i f f e r e n ce i n E m i s s i o n s U nd e r C a li f o r n i a P r og r am

F i g u re E-1 7

. D i f

f e re n ce i n S o u t h C o a s t e m i ss i o ns o f SO
x u n d er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m
.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

84 

### A p p e n d i x F

. M O B I L E 6

. 2 P o l l u t a n t E m i s s i o n s M od e li n g

T h e i m p ac t s o f t h e C a li f

o r n i a P r o g r a m o n C a li f

o r n i a s t a t e w i d e a n d S o u t h C o a s t A i r B a s i n
( “ S C A B ” ) li g h t

- du t y v e h i c l e e m i ss i o n s w e r e e v a l u a t e d u s i n g U

. S

. E P A ’ s M O B I L E 6

. 2 m o d e l. 32

S u mm e r s ea s o n i nv e n t o r y i m p ac t s w e r e e v a l u a t e d f

o r c a l e n d a r y ea r s 2006 t o 2023 a s , b y t h a t

t im e , b o t h t h e Z E V S t a n d a r d s a n d t h e GHG S t a n d a r d s p r o g r a m s w i l l b e f u l l y p h a s e d

- i n a n d 202 3

i s t h e a tt a i n m e n t d ea d li n e f o r t h e S o u t h C o a s t A i r B a s i n w it h t h e o z o n e NAAQ S

. E mi ss i o n

i nv e n t o r i e s o f o z o n e p r ec u r s o r s ( VO C a n d N O x ) w e r e p r e p a r e d a s w e l l a s t h o s e o f o t h e r c r it e r i a

p o ll u t a n t s ( C O

, S O x a n d PM 2 .5 ) a n d f i v e k e y a i r t o x i c s ( b e n z e n e , 1

, 3

- b u t a d i e n e , f o r m a l d e h y d e ,

ace t a l d e h y d e , a n d ac r o l e i n )

.

E mi ss i o n s im

p ac t s w e r e e s t im a t e d b y e v a l u a t i n g a n d c o m

p a r i n g t h e f

o l l o w i ng t w o r e gu l a t o r y

s c e n a r i o s :

1. F e d e r a l T i e r 2 P r o g r a m ( b a s e l i n e ) ; a n d

2. C a l i f o r n i a P r o g r a m ( i n c l u d i ng e xh a u s t a n d e v a p o r a t i v e e m i s s i o n s t a n d a r d s , Z E V

S t a n d a r d s , a n d GHG S t a n d a r d s )

.

T h e a n a l y s i s a n d r e p o r

t e d r e s u l t s o f t h i s d o c u m

e n t o n l y i n c l ud e l i g h t

- d u t y v e h i c l e s a t o r b e l o w

8

, 500 l b s

. GV R W

. T h e s e i n c l u d e t h e f e d e r a l v e h i c l e c l a ss e s o f p a s s e n g e r ca r ( P C )

, li g h t

- d u t y

t r u c k 1 ( L D T 1 )

, li g h t

- du t y t r u c k 2 ( L D T 2 )

, li g h t

- du t y t r u c k 3 ( L D T 3 ) a n d l i g h t

- d u t y t r u c k 4

( L D T 4 )

. I n t h i s d o c u m

e n t w e a l s o d e f

i n e t h e t e r m “ m e d i u m du t y v e h i c l e” ( M DV ) a s t h e s u m o f

L D T 3 a n d L D T 4. 33

T h e m e t h o d a n d r e s u l

t s o f t h e M O B I L E 6

. 2 a n a l y s i s a r e d e s c r i b e d i n t h e f o l l o w i ng s ec t i o n s

.



### F.1. Method

T h e M O B I L E 6

. 2 m

o d e li ng a pp r o ac h f

o r t h e t w o r e g u l a t o r y s c e n a r i o s w a s i n t e n d e d t o e m u l a t e

t h e p a r a ll e l a n a l y s i s c o m p l e t e d w i t h t h e E M F A C 200 7 m o d e l

– d e s c r i b e d i n A

pp e n d i x E

.
H o w e v e r , un li k e E M F A C 2007

, M O B I L E 6

. 2 i s no t a “ s e l f

- c o n t a i n e d ” m

o d e l

, i

. e ., it d o e s n o t

c o n t a i n v e h i c l e p o p u l a t i o n a n d V M T e s t im a t e s t h a t a r e n ee d e d t o g e n e r a t e a n e mi ss i o n s

i nv e n t o r y i n t h e u n i t s o f t o n s p e r d a y

. I n s t ea d

, M O B I L E 6

. 2 p r o v i d e s g r a m

- p e r

- m i l e ( g / m i )

32 V e r s i o n MO B I L E 6

. 2

. 0 3 d a

t e d 2 4 S e p t e m b e r 200 3

.

33 T h i s MDV d e f

i n i ti o n i s c o n s i s t e

n t w i t h v e h i c l e c at e g o r i z ati o

n of t h e E MFA C200 7 m o d e l

.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

85 e mi ss i o n s e s t im a t e s t h a t a r e t h e n c o m b i n e d w it h V M T e s t im a t e s o u t s i d e o f t h e m o d e l

. T h e r e b y ,

t h e c o m b i n a t i o n o f M O B I L E 6

. 2 e m i s s i o n r a t e s w i t h V M T d a t a ( i

. e ., t h e c a l c u l a t i o n o f e m i ss i o n

i nv e n t o r i e s ) w a s h a n d l e d w i t h i n a s p r ea d s h e e t p o s t

- p r o ce ss o r f o r t h i s a n a l y s i s

.

O v e r a l l

, t h e a p p l i ca t i o n o f t w o m o d e l s ( E M F A C 2007 a n d M O B I L E 6

. 2 ) w a s im p l e m e n t e d t o

d e t e r mi n e i f b o t h m

o d e l s p r e d i c t c o n s i s t e n t r e s u l t s i n qu a n t i f

y i ng t h e r e l a t i v e e mi ss i o n s im p ac t

o f t h e C a l i f

o r n i a P r o g r a m r e l a t i v e t o t h e F e d e r a l P r o g r a m. 34 I n b o t h m o d e l s ’ a n a l y s e s , t h e

v e h i c l e p o p u l a t i o n a n d V M T a ss u m p t i o n s w e r e k e p t un i f

o r m , a n d t h e r e f

o r e a n y r e s u l

t i n g

i nv e n t o r y d i f

f e r e n c e s w ou l d b e du e t o d i ff e r e n c e s i n p r e d i c t e d e mi ss i o n r a t e s f r o m e ac h m

o d e l

.
T h e b a s e l i n e V M T a n d v e h i c l e p o p u l a t i o n s u s e d i n t h e M O B I L E 6

. 2 a n a l y s i s w e r e t h o s e o f t h e

E M F A C 2007 m

o d e l

, w h e r e “ b a s e l i n e” s i g n i f i e s t h e c o n d it i o n s i n t h e a b s e n ce o f t h e f l ee t

t u r n o v e r a n d r e b o u n d e ff e c t s r e s u l t i n g f r o m t h e C a l i f

o r n i a P r o g r a m

— t h a t i s , c o n d it i o n s u n d e r

t h e F e d e r a l P r o g r a m

. T h e e x t r ac t i o n o f t h e s e b a s e li n e d a t a f r o m E M F A C 200 7 a r e d o c u m e n t e d

i n A p p e n d i x E.

N o t a b l y , M O B I L E 6

. 2 i s n o t s t r u c t u r e d t o m o d e l a n y o n e s p e c i f

i c g e o g r a ph i c a r ea , b u t r a t h e r h a s

b e e n s t r u c t u r e d t o a l l o w u s e r s t o i npu t n u m e r o u s p a r a m

e t e r s t o t a i l o r t h e m

o d e l t o a n y

g e o g r a ph i c a r ea o f i n t e r e s t

. T h u s , i n a p p l y i ng t h e M O B I L E 6

. 2 m o d e l f o r t h i s a n a l y s i s , it w a s

n e c e s s a r y t o d e v e l o p t h e d e t a il e d m o d e l i ng i npu t s s p e c i f

i c t o t h e S o u t h C o a s t A i r B a s i n
( “ S C A B ” ) a n d t o C a l i f

o r n i a a s a w h o l e

. T h e d e v e l op m e n t o f t h e s e M O B I L E 6

. 2 i npu t s i s

d e s c r i b e d n e x t a n d i s f

o l l o w e d b y t h e d e s c r i p t i o n o f t h e a pp r o ac h e s f o r m o d e li ng t h e f

l ee t

t u r n o v e r a n d r e b o u n d e ff

ec t s w i t h M O B I L E 6

. 2

. 

### F.2. MOBILE6.2 Inputs

F o r c o n s i s t e n c y , t h e M O B I L E 6

. 2 i n pu t d a t a w e r e g e n e r a ll y d e v e l op e d f r o m t h e i npu t d a t a u s e d

i n t h e E M F A C 2007 m

o d e l

. T h e d e t a il s o f t h e M O B I L E 6

. 2 m o d e li ng i npu t d e v e l op m e n t a r e a s

d e s c r i b e d i n t h e f

o l l o w i n g s u b

- s e c t i o n s ( i d e n t i c a l v a l u e s f o r ea c h i npu t p a r a m

e t e r w e r e u s e d f

o r

b o t h t h e C a l i f

o r n i a P r o g r a m a n d t h e F e d e r a l P r o g r a m e x ce p t w h e r e s p e c i f i ca ll y n o t e d )

.

34 T h e MO B I L E a n d E MFA C m o d e l s h a v e d e v e l o p e d a n d e v o l v e d s e p a r a t e l y ov e r s e v e r a l y e a r s , a n d t h e c u r r e n t

v e r s i o n s of t h e s e m o d e l s c o n t a i n n u m e r o u s s t ru c t u r a l

, m et

h o d o l o g i c al a n d d a t a d i ff

e r e n ce s

. T h e

r e fo r e , t h e t w o

m o d e l s c a n p r o du ce d i s ti n c t em i ss i o n r a t e p r e d i ct i o n s u n d e r t h e s am e s et of m o d e li n g c o n d i ti o n s

.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

86 F

. 2

. 1

. V e h i c l e R e g u l a t o r y S t a n d a r d s

A ss u m e d v e h i c l e r e g u l a t o r y s t a n d a r d s w e r e m od i f i e d acc o r d i n g l y t o m a t c h t h e r e q u i r e m e n t s o f

t h e C a l i f o r n i a a n d F e d e r a l P r o g r a m s

. A s n o t e d ea r l i e r , t h e s t a r t i n g p o i n t f

o r t h i s a n a l y s i s w a s t h e

2009 m o d e l y e a r , a n d t h e r e f

o r e f o r 2008

- a n d

- ea r l i e r m

o d e l y ea r v e h i c l e s , b o t h s c e n a r i o s r e l i e d

o n i d e n t i ca l r e g u l a t o r y a s s u m p t i o n s

. T h e f

o ll o w i n g d e s c r i b e s t h e M O B I L E 6

. 2 r e g u l a t o r y

a ss u m p t i o n s u s e d

.

1. 2009

- and

- l a t e r m od e l ye a r v e h i c l e s ( C a li f o r n i a p r og r a m)

– T h e p r o p o r

t i o n o f Z E V M a n d a t e

v e h i c l e s ( i

. e ., P Z E V

, A T

- P Z E V a n d Z E V ) b y m o d e l y ea r w a s b a s e d o n t h e r e s u l t s o f t h e

N e w V e h i c l e M a r k e t M o d e l

. T h e r e m a i n i ng n o n

- Z E V v e h i c l e s w e r e a ss u m e d t o f o l l o w t h e

r e g u l a t o r y a ss u m

p t i o n s o f t h e E M F A C 2007 m o d e l

. A d

j u s t m e n t s w e r e m a d e t o t h e

p r o p o r t i o n s o f t h e r e m a i n i ng v e h i c l e s t o e n s u r e c o m p li a n ce w it h f

l ee t a v e r a g e N M O G

s t a n d a r d s i n C a li f

o r n i a

. T h e r e s u l

t i n g e xh a u s t a n d e v a p o r a t i v e c o m p l i a n ce s c h e d u l e s b y

m o d e l y ea r w e r e i n c o r po r a t e d i n t o t h e M O B I L E 6

. 2 i npu t s f i l e s

. T h e s e s c h e d u l e s a r e t h o s e

a l s o u s e d i n t h e E M F A C 2007 a n a l y s i s a n d a r e s h o w n i n A pp e n d i x E.

2. 2009

- and

- l a t e r m od e l ye a r ve h i c l e s ( f e d e r a l p r og r a m)

– T h e M O B I L E 6

. 2 d e f a u l t s f o r t h e

f e d e r a l T i e r II p r o g r a m w e r e u s e d

.

3. 2003 t h r

ough 2008 m od e l ye a r ve h i c l es

– T h e m o d e li ng o f C a l i f

o r n i a s t a n d a r d s w it h

M O B I L E 6

. 2 w a s c o m

p l e t e d f o l l o w i ng E P A g u i d e l i n e s f o r t h o s e s t a

t e s o p t i n g i n t o t h e

C a l i f o r n i a L E V II p r o g r a m ( E P A 2002 )

. C a li f o r n i a e x h a u s t a n d e v a p o r a t i v e s t a n d a r d s w e r e

b a s e d o n t h e M O B I L E 6

. 2 m o d e li ng i npu t s t h a t acc o m p a n y t h e s e g u i d e l i n e s

. T h e s e

r e g u l a t o r y a ss u m

p t i o n s a n d g u i d a n ce a r e c o n s i s t e n t w it h t h e r e g u l a t o r y a s s u m p t i o n s i n

E M F A C 2007

.

4. 1994 t h r

ough 200 2 m od e l ye a r ve h i c l es

– T h e m o d e l i ng o f C a l i f

o r n i a s t a n d a r d s w a s

c o m p l e t e d b y e x t r ac t i n g o u t t h e a ss u m e d m o d e l y ea r e x h a u s t s t a n d a r d s a n d t ec h n o l og y

g r o up s f r o m E M F A C 2007 a n d p l a c i ng t h e s e i n t o t h e c o rr e s p o n d i n g M O B I L E 6

. 2 i npu t f i l e

f o r a d j u s t i n g 1994

- a n d

- l a t e r m o d e l y ea r v e h i c l e e x h a u s t s t a n d a r d s

. T h i s i npu t f i l e a l l o w s f

o r

a d j u s t i n g m o d e l y ea r p o p u l a t i o n s t o a ss u m e d p r o p o r

t i o n s m ee t i n g T i e r 0

, T i e r 1

, T L E V

,
L E V

, U L E V a n d Z E V s t a n d a r d s

.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

87 P r i o r t o t h e 1994 m

o d e l y e a r , M O B I L E 6

. 2 d o e s n o t a l l o w f o r m od i f y i ng v e h i c l e r e g u l a t o r y

s t a n d a r d s t h

r o ug h t h e m

o d e l ’ s i npu t f

i l e s , a n d n o a d

j u s t m e n t s w e r e m a d e f

o r t h e s e m

o d e l y e a r s

t o acc o u n t f

o r d i ff e r e n ce s b e t w ee n t h e C a li f o r n i a s t a n d a r d s a n d t h e c o rr e s p o n d i n g a ss u m p t i o n s

o f t h e M O B I L E 6

. 2 m

o d e l

.

F

. 2

. 2

. A m b i e n t C o n d i t i o n s

A m b i e n t c o n d i t i o n s , c o n s i s t i n g o f h o u r l y t e m p e r a t u r e a n d h u m i d it y v a l u e s a s s u m e d b y t h e m o d e l

f o r s u mm e r s e a s o n m

o d e l i ng , w e r e e x t r ac t e d f r o m E M F A C 2007

. T h e h o u r l y d a t a w e r e

i n c o r po r a t e d i n t o t h e M O B I L E 6

. 2 i n pu t f i l e s

. S e p a r a t e v a l

u e s w e r e o b t a i n e d f

o r S o u t h C o a s t

a n d s t a t e w i d e m

o d e l i ng

. F o r t h e s t a t e w i d e v a l u e s, E M F A C 2007 u s e s a V M T

- w e i g h t e d a v e r a g e

t o g e n e r a t e t h e C a l i f

o r n i a

- w i d e a s s u m

p t i o n s

.

F

. 2

. 3

. F u e l P a r a m e t e r s

C a l i f o r n i a g a s o li n e p a r a m e t e r s w e r e t a k e n f r o m t h e s u mm e r 2005 g a s o li n e s u r v e y p u b l i s h e d b y

t h e A l l i a n ce o f A u t o m

o b i l e M a n u f

ac t u r e r s

. S u r v e y r e s u l

t s b y g r a d e w e r e w e i g h t e d i n t o a s i n g l e

c o m p o s i t e b a s e d o n C a li f

o r n i a g a s o li n e s a l e s by g r a d e pub l i s h e d i n t h e P e t r o l e u m M a r ke ti n g

A nnua l 2005 ( E I A 2006 )

. M O B I L E 6

. 2 i npu t s f o r s u l f u r c o n t e n t

, R V P

, a r o m a t i c c o n t e n t

, b e n ze n e c o n t e n t

, o l e f

i n c o n t e n t

, o x y g e n a t e c o n t e n t

, E 200 a n d E 300 w e r e o b t a i n e d i n t h i s

m a n n e r

.

T h e L o s A n g e l e s s u r v e y d a t a w a s u s e d t o d e f i n e M O B I L E 6

. 2 f

u e l p r o p e r

t i e s f o r t h e S o u t h C o a s t

A i r B a s i n

. T h e C a li f

o r n i a s t a t e w i d e p r o p e r

t i e s w e r e e s t im a t e d b y c o m b i n i ng t h e L o s A n g l e s a n d

S a n F r a n c i s c o s u r v e y d a t a i n p r o p o r t i o n t o V M T. 35 T h e r e s u l t i n g M O B I L E 6

. 2 g a s o li n e

p r o p e r t i e s f o r t h e t w o m

o d e li n g a r ea s w e r e n ea r l y i d e n t i c a l ( e

. g ., R V P o f 7

. 0 p s i

, s u l f u r c o n t e n t

l e ss t h a n 9 pp m , b e n z e n e c o n t e n t o f a b o u t 0

. 5 %

, a n d 100 p e r ce n t e t h a n o l

- b l e n d m a r k e t s h a r e a t

5

. 7 v o l u m e p e r c e n t e t h a n o l )

.

F

. 2

. 4

. V e h i c l e O p e r a t i o n C h a r ac t e r i s t i cs

S e v e r a l v e h i c l e o p e r a t i n g c h a r ac t e r i s t i c s w e r e e x t r a c t e d f r o m E M F A C 2007 o u t p u t f i l e s f r o m

s p e c i f i ca l l y d e s i g n e d m

o d e l r u n s t o d e f

i n e c o r r e s p o n d i n g M O B I L E 6

. 2 i npu t p a r a m e t e r s

.

35 T h e L o s A n g e l e s s u r v e y w a s u s e d t o r e p r e s e n t t h o s e C ali fo rn i a a

r e a s c o v e r e d b y f

e d e r al r e fo r m u l a

t e d g a s o l i n e

r e gu l a t i o n s ( r e p r e s e n t i ng 8 9 p e

r ce n t of t h e s t at e VM T ) a n d S a n F r a n c i s c o w a s u s e d t o r e p r e s e n t t h e a r e a s n o t

c ov e r e d b y t h i s f

e d e r a l r e qu i r e

m e n t ( 11 p e r ce n t of s tat e VM T )

.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

88 E M F A C 200 7 r e s u l

t s w e r e c o m

p i l e d f o r b o t h s t a t e w i d e a n d S o u t h C o a s t o p e r a t i o n f o r c a l e n d a r

y ea r 2006

– i n c l u d i n g r e s u l t s d e t a il e d b y s p e e d

, h o u r

- o f

- d a y a n d v e h i c l e a g e

– a s n ee d e d t o

p r o ce ss i n t o s p e c i f

i c M O B I L E 6

. 2 p a r a m

e t e r s u n d e r s u mm e r w ee kd a y c o n d it i o n s

. T h e f o l l o w i n g

M O B I L E 6

. 2 i n

pu t p a r a m

e t e r s w e r e d e f

i n e d i n t h i s m a n n e r: 36

1. Sp ee d D i s t r i bu ti ons

– t h e n o r m a l i ze d p r o p o r t i o n o f V M T b y 5

- m

p h s p ee d b i n f

o r eac h h o u r

o f d a y ,

2. S t a r ts p e r D ay

- t h e a v e r a g e n u m b e r o f e n g i n e s t a r

t s p e r v e h i c l e p e r d a y a s a f u n c t i o n o f

v e h i c l e c l a ss a n d v e h i c l e a g e ,

3. H ou r l y V M T D i s t r i bu ti ons

– t h e n o r m a l i ze d p r o p o r t i o n o f V M T b y h o u r o f d a y , a n d

4. H ou r l y T r i p D i s t r i bu ti on s

– t h e n o r m a l i ze d p r o p o r t i o n o f t r i p s b y h o u r o f d a y

.

F

. 2

. 5

. M il ea g e A cc u m u l a t i o n R a t es a n d R e g i s t r a t i o n D i s t r i b u t i o n s

M O B I L E 6

. 2 m i l ea g e acc u m u l a t i o n r a t e s a n d r e g i s t r a t i o n d i s t r i b u t i o n s w e r e a l s o b a s e d o n d a t a

e x t r ac t e d f

r o m E M F A C 2007

. M i l e a g e a cc u m u l a t i o n r a t e s a r e a v e r a g e a n n u a l mi l e s d r i v e n by

v e h i c l e c l a s s b y v e h i c l e a g e ; r e g i s t r a t i o n d i s t r i b u t i o n s a r e t h e n o r m a l i ze d a g e d i s t r i b u t i o n s o f

v e h i c l e p o p u l a t i o n s b y v e h i c l e c l a s s

. F o r t h e s e t w o p a r a m e t e r s , t h e v a l u e s m

o d e l e d v a r i e d b y

r e g u l a t o r y

s c e n a r i o s

.

F o r t h e F e d e r a l P r o g r a m t h e b a s e l i n e E M F A C 20 0 7 d a t a w e r e u s e d

. F o r t h e C a l i f o r n i a P r o g r a m ,

t h e r e b o u n d a n d f

l ee t t u r n o v e r e f

f e c t s w e r e f

ac t o r e d i n t o t h e r e g i s t r a t i o n d i s t r i b u t i o n a n d mi l ea g e

acc u m u l a t i o n r a t e s o f t h e s c e n a r i o

. T h e m e t h o d f o r m a k i ng t h e s e a d

j u s t m e n t s i s d e s c r i b e d

b e l o w

. N o t a b l y , f

o r t h e s e t w o p a r a m

e t e r s , t h e v a l u e s i n c o r p o r a t e d i n t o M O B I L E 6

. 2 w e r e

s p e c i f i c t o eac h c a l e n d a r y e a r ( 2006 t h r o ug h 2023 )

.

F

. 2

. 6

. I / M P r og r a m P a r a m e t e r s

T h e M O B I L E 6

. 2 I / M p r o g r a m m o d e l i ng p a r a m e t e r s w e r e t a k e n f r o m t h o s e u s e d b y t h e U

. S

.
E P A f o r t h e 2002 N a t i o n a l E mi ss i o n I n v e n t o r y ( N E I) e f f o r t ( E P A 2005 )

. T h e 2002 N E I b a s e d

36 E MFA C2 0 07 d a ta fo r c al e n d a r y e a r 20 0 6 w e r e u s e d t o d e f i n e t h e p a r a m e t e r s li s t e d

. T h e s e w e r e t h e n u s e d fo r

m o d e li ng a l l ca l e n d a

r y e a r s i n t

h e MO B I L E 6

. 2 a n a l y s i s (2006 t h r o u g h 202 3 ) ; of t h e s e p a r am e t e r s o n l y t h e s p ee d d i s t r i b u t i o n of E MFA C20 0 7 ca n v a r y b y c al e n d a

r y e a r fo r s o m e a

r e a s of C ali fo r n i a

.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

89 i npu t s w e r e r e v i e w e d f o r c o n s i s t e n c y w it h t h e E M F A C 2007 m o d e l i ng a s s u m

p t i o n s

. T h e

p r o g r a m i n c l

u d e s a n a n t i

- t a m

p e r i ng i n s p ec t i o n , A S M t a il p i p e t e s t i n g a n d O B D t e s t i n g

r e q u i r e m e n t s

.

F

. 2

. 7

. P a r t i c u l a t e M a tt e r E m i ss i o n R a t es

M O B I L E 6

. 2 d e f

a u l t P M e m i ss i o n r a t e s h a v e b ee n ca r r i e d o v e r f r o m s u c ce ss i v e v e r s i o n s o f E P A

m o d e l s f o r s o m e t im e a n d h a v e n o t b ee n upd a t e d s i g n i f i ca n t l y i n 20 y ea r s ( m i d

- 1980 ’ s t e s t d a t a )

.
E P A r ec o gn i z e d t h e n ee d t o p o t e n t i a ll y upd a t e t h e P M e mi ss i o n r a t e a ss u m p t i o n s i n M O B I L E 6

. 2

a n d m a d e P M t h e o n l y c r i t e r i a p o ll u t a n t f o r w h i c h a l

t e r n a t e e mi ss i o n r a t e a ss u m p t i o n s c a n b e

h a n d l e d t h

r o ug h t h e m

o d e l i npu t

. H o w e v e r , E P A h a s n o t p r o v i d e d t o d a t e a n y upd a t e s t o t h e

P M e mi ss i o n r a t e s o f M O B I L E 6

. 2

.

S i e rr a R e s ea r c h d e v e l o p e d upd a t e d li g h t

- du t y v e h i c l e P M e m i ss i o n r a t e s f o r t h e W e s t e r n

R e g i o n a l A i r P a r t n e r s h i p

. T h e s e w e r e b a s e d o n m o r e r ece n t l y c o ll e c t e d t e s t d a t a

– m u c h o f

w h i c h w a s C a l i f

o r n i a

- b a s e d ( S i e rr a 2001 )

. T h e s e P M e m i ss i o n r a t e upd a t e s w e r e u s e d i n t h i s

a n a l y s i s a s w e l l a n d w e r e i n c o r p o r a t e d i n t o t h e M O B I L E 6

. 2 P M e m i ss i o n r a t e i npu t s f i l e s

.
N o t a b l y , t h e P M e m i ss i o n r a t e s i n c l ud e d a d e t e r i o r a t i o n r a t e b a s e d o n t h e a ss u m p t i o n t h a t 9

p e r ce n t o f t h e f

l e e t w o u l d b e h i g h e m itt e r s a t t h e 10 y ea r- o l d m a r k ( e qu a l t o a b o u t 15 0

, 000

acc u m u l a t e d m i l e s b a s e d o n t h e m i l ea g e acc u m u l a t i o n r a t e s o f

E M F A C 2007 )

.



### F.3. Fleet T urn o v er Ef f ects

T h e f l e e t t u r n o v e r e f

f e c t im p a c t s o n l y t h e C a li f

o r n i a p r o g r a m s c e n a r i o r e s u l t i ng i n c h a n g e s t o t h e

f l ee t c o m p o s i t i o n a s d e t e r mi n e d b y t h e N e w V e h i c l e M a r k e t M o d e l a n d t h e S c r a pp a g e M o d e l

.
T h e v e h i c l e p o p u l a t i o n c h a n g e s du e t o t h e f e w e r n e w s a l e s a n d a g r ea t e r r e t e n t i o n o f o l d e r

v e h i c l e s (r e l a t i v e t o t h e F e d e r a l P r o g r a m )

. O v e r a l l

, t h e r e i s t y

p i c a ll y a n e t l o ss i n t h e t o t a l

n u m b e r o f v e h i c l e s o f o n e t o t w o p e r ce n t o r l e s s

. T h e s e i m p ac t s w e r e i n c o r p o r a

t e d i n t o t h e

M O B I L E 6

. 2 a n a l y s i s a s f o l l o w s

.

1. R e g i s t r

a ti on D i s t r i bu ti ons

– T h e r e g i s t r a t i o n d i s t r i b u t i o n s o f t h e C a l i f o r n i a p r o g r a m s c e n a r i o

w e r e r ec a l c u l a t e d b a s e d o n t h e s c e n a r i o f l ee t c o m p o s it i o n d a t a f

ac t o r i n g i n t h e f

l e e t t u r n o v e r

e ff ec t

.

2. V M T

– O v e r a ll

, t h e f

l ee t t u r n o v e r e ff

ec t r e s u l t s i n t h e c o n s e r v a t i o n o f V M T i n t h a t t o t a l V M T

d e m a n d w o u l d b e u n a ff e c t e d r e m a i n s u n c h a ng e d f r o m t h e b a s e l i n e ( f

e d e r a l p r o g r a mA ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

90 s c e n a r i o )

. H o w e v e r , t h e p r o p o r t i o n s o f V M T b y v e h i c l e c l a s s a n d v e h i c l e a g e a r e a d j u s t e d t o

acc o u n t f o r t h e c h a n g e s i n f

l ee t c o m p o s it i o n

. T h e s e c h a n g e s w e r e i n c o r p o r a t e d i n t o t h e

s p r ea d s h ee t p o s t

- p r o ce ss o r u s e d t o ca l c u l a t e e m i ss i o n i nv e n t o r i e s i n t h e M O B I L E 6

. 2

a n a l y s i s

. A l l v e h i c l e s w e r e a ss u m e d t o m a k e up a n y V M T s h o r t f a l l ( du e t o a n e t r e du c t i o n i n

o v e r a ll f l e e t p o pu l a t i o n ) b y d r i v i ng a b it m o r e p e r v e h i c l e

– b u t t h e r e l a t i v e p r o po r t i o n s

b e t w e e n m il e a g e acc u m

u l a t i o n r a t e s w e r e r e t a i n e d s o t h a t n e w e r v e h i c l e s a r e d r i v e n m o r e

t h a n o l d e r v e h i c l e s i n m a k i n g up a n y a d d it i o n a l V M T p e r v e h i c l e

.



### F.4. Rebound Effects

T h e r e b o u n d e ff

ec t i s r e l e v a n t o n l y f

o r t h e C a l i f

o r n i a P r o g r a m

— r e s u l t i n g i n i n c r e a s e d V M T f

o r

t h o s e v e h i c l e s w i t h i n c r e a s e d f u e l ec o n o m

y o v e r t h e b a s e l i n e ( b eca u s e t h e s e v e h i c l e s a r e l e ss

e x p e n s i v e t o o p e r a

t e )

. T h e r e b o u n d e f

f ec t w a s i n c o r po r a

t e d i n t o t h e M O B I L E 6

. 2 a n a l y s i s a s

f o l l o w s

.

1. V MT

–T h e V M T d r i v e n b y 2009

- a n d

- l a t e r m o d e l y ea r v e h i c l e s u n d e r t h e C a l i f o r n i a P r o g r a m

w e r e m od i f i e d t o i n c l

u d e t h e e s t im a t e d r e b o und V M T. T h i s c h a n g e w a s m a d e t o t h e

s p r ea d s h ee t p o s t

- p r o ce ss o r m o d e l

.

2. M il e ag e A cc u m u l a ti on R a t es

– F o r 200 9

- a n d

- l a t e r m o d e l y ea r v e h i c l e s o n l y , t h e M O B I L E 6

. 2

mi l ea g e acc u m

u l a t i o n r a t e s w e r e m

od i f i e d f o r c o n s i s t e n c y o f t h e r e b o u n d V M T r e s u l t i n g i s

s li g h t l y g r ea t e r m i l ea g e acc u m u l a t i o n r a t e s f

o r t h i s m

o d e l y ea r g r o up i n t h e C a l i f o r n i a

p r o g r a m s c e n a r i o

.



### F.5. Results

T h e M O B I L E 6

. 2 a n a l y s i s i nv e n t o r y r e s u l t s a r e d i s c u s s e d i n t h e f

o l l o w i ng s u b

- s ec t i o n s

. S o u t h

C o a s t A i r B a s i n r e s u l

t s a r e p r e s e n t e d f

i r s t

, f o l l o w e d b y t h e C a l i f

o r n i a s t a t e w i d e r e s u l

t s

. T h e

i nv e n t o r y r e s u l

t s a r e p r e s e n t e d a s t h e d i f f e r e n ce b e t w ee n t h e C a li f

o r n i a P r o g r a m a n d t h e F e d e r a l

P r o g r a m , w h e r e a p o s iti ve d i ff e r e n c e s i g n i f

i e s a n i n c r

e a s e i n e m i s s i ons u n d e r t h e C a l i f o r n i a

p r o g r a m

. R e s u l

t s s h o w n a r e s u mm e r s e a s o n t o n s p e r d a y f o r li g h t

- d u t y v e h i c l e s ( < 8500 l b s

GV W R )

.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

91 F

. 5

. 1

. S o u t h C o as t A i r B as i n

T h e f o l l o w i ng i nv e n t o r y d i ff

e r e n ce p l o t s a r e p r e s e n t e d f o r t h e S o u t h C o a s t A i

r B a s i n i n c l u d i n g

t h e r e b o u n d a n d f

l ee t t u r n o v e r e f

f e c t s :

F i gu r e F

- 1 : o z o n e p r ec u r s o r e mi s s i o n s ( VO C & NO x )

, F i gu r e F

- 2 : C O e mi ss i o n s , F i gu r e F

- 3 : PM 2

. 5 e mi s s i o n s , F i gu r e F

- 4 : S O x e mi ss i o n s , a n d
F i gu r e F

- 5 : t o x i c s e mi ss i o n s ( s u m o f 5 s p e c i e s )

.

T h e s e r e s u l

t s s h o w t h a t t h e C a li f

o r n i a p r o g r a m r e s u l

t s i n h i g h e r e mi ss i o n s f o r a l l p o ll u t a n t s

e x c e p t S O x

. S O x e mi ss i o n s a r e l o w e r du e t o r e du ce d f u e l c o n s u m

p t i o n u n d e r t h e C a l i f

o r n i a

P r o g r a m

.

T h e r e s u l t s s h o w n i n F i gu r e s F

- 1 t h r o ug h F

- 5 d o n o t f

ac t o r i n t h e f

u e l c y c l e e m i ss i o n s , w h i c h a r e

g e n e r a ll y l o w e r u n d e r t h e C a l i f o r n i a P r o g r a m

. T h e f

o l l o w i ng f

i gu r e s i n c l ud e t h e f

u e l c y c l e

e ff ec t s ( a s e s t im a t e d i n A

pp e n d i x G f

o r o z o n e p r ec u r s o r s, C O a n d P M )

.

F i gu r e F

- 6 : o z o n e p r ec u r s o r e mi s s i o n s ( VO C & NO x )

, F i gu r e F

- 7 : C O e mi ss i o n s , a n d
F i gu r e F

- 8 : PM 2

. 5 e mi s s i o n s

.

W h e n t h e f

u e l c y c l e e ff

e c t s a r e i n c l u d e d

, t h e i n v e n t o r y r e s u l t s f o r t h e C a l i f

o r n i a p r o g r a m

s c e n a r i o a r e s t i l l g r ea t e r t h a n t h o s e o f t h e f e d e r a l p r o g r a m

.

F

. 5

. 2

. C a li f o r n i a

A c o rr e s p o n d i n g s e t o f i n v e n t o r y d i f f e r e n ce p l o t s a r e a l s o p r e s e n t e d f o r t h e C a l i f

o r n i a s t a t e w i d e

r e s u l t s i n c l u d i ng t h e r e b o u n d a n d f l e e t t u r n o v e r e f

f ec t s :

F i gu r e F

- 9 : o z o n e p r ec u r s o r e mi s s i o n s ( VO C & NO x )

, F i gu r e F

- 10 : C O e mi ss i o n s , F i gu r e F

- 11 : PM 2

. 5 e mi s s i o n s , F i gu r e F

- 12 : S O x e mi ss i o n s , a n d
F i gu r e F

- 13 : t o x i c s e mi ss i o n s ( s u m o f 5 s p e c i e s )

.

T h e s e r e s u l

t s s h o w s i mi l a r r e s u l

t s t o t h o s e o f t h e S o u t h C o a s t A i r B a s i n . T h e C a l i f

o r n i a p r o g r a m

s c e n a r i o e m i ss i o n s a r e g e n e r a ll y g r ea t e r t h a n t h o s e o f t h e f e d e r a l s ce n a r i o

. T h e e x ce p t i o n s t o

t h i s a r e S O x e m i ss i o n s a n d t o x i c s ( c a l e n d a r y ea r 2023 o n l y )

.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

92 T h e f o l l o w i ng f

i gu r e s i n c o r po r a t e t h e f

u e l c y c l e e ff

e c t s ( a s e s t im a t e d i n A

pp e n d i x G f

o r o z o n e

p r ec u r s o r s, C O a n d P M ) i n t o t h e C a li f o r n i a s t a t e w i d e r e s u l

t s

.

F i gu r e F

- 14 : o z o n e p r ec u r s o r e mi s s i o n s ( VO C & NO x )

, F i gu r e F

- 15 : C O e mi ss i o n s , a n d
F i gu r e F

- 16 : PM 2

. 5 e mi s s i o n s

.

W h e n t h e f

u e l c y c l e e ff

e c t s a r e i n c l u d e d

, t h e i n v e n t o r y r e s u l t s f o r t h e C a l i f

o r n i a p r o g r a m

s c e n a r i o a r e s t i l l g r ea t e r t h a n t h o s e o f t h e f e d e r a l p r o g r a m

.

S o u t h C o a s t V O C + NO x ( M O B I L E
, E x c l u d e s Fu e l C y c l e
E f f e c t s)

0 2 4 6 8 10 12 14 16200620072008200920102011201220132014201520162017201820192020202120222023

Cale n dar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i o n s U nd e r C a li f o r n i a P r og r am

F i g u re F -1

. D i ff

e re n c e i n S o u t h C o a s t e m i ss i o ns o f V O C + N O x u nd er c om b i n e d C a l i f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u nd er F e d er a l P r o g r a m ) , n o t a c c o un t i n g f o r f u e l c y c le e f

f ec t sA ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

93 S o u t h C o a s t C O ( M O B I L E
, E x c l ud e s F u e l C y c l e E f f e c t s)

0 20 40 60 80 100 120200620072008200920102011201220132014201520162017201820192020202120222023

Calen d a r YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i o n s U n d e r C a li f o r n i a P r o g r am

F i g u re F -2

. D i ff

e re n c e i n S o u t h C o a s t e m i ss i o ns o f C O u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , n o t a cc o u n t i n g f o r f u e l c y c l e e ff

e c t s
.

S ou t h C o a s t PM 2

. 5 ( M O B I L E
, E x c l ud e s Fu e l C yc l e E f f e c t s)

0 0.02 0.04 0.06 0.08 0.1 0.12 0.14200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i ss i on s U n d e r C a li f o r n i a P r og r am

F i g u re F -3

. D i ff

e re n c e i n S o u t h C o a s t e m i ss i o ns o f P M 2

. 5 u nd er c om b i n e d C a l i f o r n i a P r o g r a m ( r el a t

i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , n o t a cc o u n t i n g f o r f u e l c y c l e e ff

e c t s
.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

94 S o u t h C o a s t SO x ( M O B I L E
, E x c l ud e s Fu e l C y c l e E f f e ct s)

-0.5 -0.45 -0.4 -0.35 -0.3 -0.25 -0.2 -0.15 -0.1 -0.05 0 0.05200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide InventoryDifference (tpd)

D i f f e r e n c e i n E m i s s i on s U nd e r C a li f o r n i a P r o g r am

F i g u re F -4

. D i ff

e re n c e i n S o u t h C o a s t e m i ss i o ns o f SO
x und er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , n o t a cc o u n t i n g f o r f u e l c y c l e e ff

e c t s
.

S o u t h C o a s t S u m o f F i ve T o x i c S p e c i e s ( M O B I L E
, E x c l ud e s

Fu e l C yc l e E f f ec t s)

0 0

. 01 0

. 02 0

. 03 0

. 04 0

. 05 0

. 06 0

. 07 0

. 08 0

. 09 0 .1200620072008200920102011201220132014201520162017201820192020202120222023

C a l e n d a r Y earStatewideInventoryDifference(tpd)

D i f f e r e n ce i n E m i s s i on s U n d e r C a li f o r n i a P r og r am

F i g u re F -5

. D i ff

e re n c e i n S o u t h C o a s t e m i ss i o ns o f 5 a i r t o x ic s u nd er c om b i n e d C a l i f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u nd er F e d er a l P r o g r a m ) , n o t a c c o un t i n g f o r f u e l c y c le e f

f ec t s
.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

95 S ou t h C o a s t V O C + NO x ( M O B I L E
, I n c l u d e s Fu e l C yc l e E f f e c ts)

0 2 4 6 8 10 12 14200620072008200920102011201220132014201520162017201820192020202120222023

Calendar Y e arStatewide InventoryDifference (tpd)

C h a ng e i n E m i s s i on s U nd e r C a li f o r n i a P r o g r am

F i g u re F -6

. D i ff

e re n c e i n S o u t h C o a s t e m i ss i o ns o f V O C + N O x u nd er c om b i n e d C a l i f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u nd er F e d er a l P r o g r a m ) , a cc o u n t i n g f o r f u e l c y c l e e f

f ec t s
.

S ou t h C o a s t C O ( M O B I L E
, I n c l ud es Fu e l C y c l e E f f e c t s)

0 20 40 60 80 100 120200620072008200920102011201220132014201520162017201820192020202120222023

Calen d a r YearStatewide Inventory Difference (tpd)

C h a n g e i n E m i s s i on s U n d e r C a li f o r n i a P r og r am

F i g u re F -7

. D i ff

e re n c e i n S o u t h C o a s t e m i ss i o ns o f C O u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , a c c o un t i n g f o r f u el c y cl e e ff

e c t s
.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

96 S ou t h C o a s t E x h a u st PM 2 .5 ( M O B I L E
, I n c l ud e s F u e l C y c l e
E f f e c ts)

0 0.02 0.04 0.06 0.08 0.1 0.12200620072008200920102011201220132014201520162017201820192020202120222023

Calend a r YearStatewide InventoryDifference (tpd)

C h a ng e i n E m i s s i on s U n d e r C a l i f o r n i a P r og r am

F i g u re F -8

. D i ff

e re n c e i n S o u t h C o a s t e m i ss i o ns o f PM 2 .5 u n d er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , a c c o un t i n g f o r f u el c y cl e e ff

e c t s
.

S t a t e w i d e V O C + N O x ( M O B IL E
, E x c l ud e s Fu e l C y c l e Eff e c t s)

0 5 10 15 20 25 30 35 40 45200620072008200920102011201220132014201520162017201820192020202120222023

Calendar Ye arStatewide Inventory Difference (tpd)

D i ff e r e n c e i n E m i ss i o n s U n d e r C a li f o r n i a P r o g r am

F i g u re F -9

. D i ff

e re n c e i n C a l i f

o r n i a e m i ss i o ns o f V O C + N O x u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , n o t a cc o u n t i n g f o r f u el c y c l e e ff

e c t s
.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

97 S t a t e w i d e C O ( M O B I L E
, E x c l ud e s F u e l C y c l e E f f ec t s)

0 50 100 150 200 250 300200620072008200920102011201220132014201520162017201820192020202120222023

Calendar Y e arStatewide Inventory Difference(tpd)

D i f f e r e n c e i n E m i s s i on s U n d e r C a l i f o r n i a P r og r am

F i g u re F -10

. D i ff

e re n c e i n C a l i f

o r n i a e m i ss i o ns o f C O u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , n o t a cc o u n t i n g f o r f u e l c y c l e e ff

e c t s
.

St a t e w id e PM 2

. 5 ( M O B I L E
, E x c lud e s Fu e l C yc l e E f f e c t s )

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35200620072008200920102011201220132014201520162017201820192020202120222023

Calendar Ye arStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U nd e r C a li f o r n i a P r o g r am

F i g u re F -11

. D i ff

e re n c e i n C a l i f

o r n i a e m i ss i o ns o f PM 2 .5 u n d er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , n o t a cc o u n t i n g f o r f u e l c y c l e e ff

e c t s
.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

98 S t a t e wi d e SO x ( M O B I L E
, E x c l ud e s Fu e l C y c l e E f f e c t s)

-1.4 -1.2 -1 -0.8 -0.6 -0.4 -0.2 0200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i ss i o n s U nd e r C a l i f o r n i a P r og r am

F i g u re F -12

. D i ff

e re n c e i n C a l i f

o r n i a e m i ss i o ns o f SO
x und er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , n o t a cc o u n t i n g f o r f u e l c y c l e e ff

e c t s
.

S t a t e wi d e S u m o f F i v e To x i c S p e c i e s ( M O B I L E
, E xc l ud es F u e l C yc l e E f f e c t s)

-0.1 -0.05 0 0.05 0.1 0.15 0.2 0.25 0.3200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference (tpd)

D i f f e r e n ce i n E m i s s i on s U n d e r C a li f o r n i a P r og r am

F i g u re F -13

. D i ff

e re n c e i n C a l i f

o r n i a e m i ss i o ns o f 5 a i r t o x ic s u nd er c om b i n e d C a l i f o r n i a P r o g r a m ( r el a t

i v e t o e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , n o t a cc o u n t i n g f o r f u el c y c l e e ff

e c t s
.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

99 S t a t e w i d e V O C + NO x ( M O B I L E
, I n c l u d e s F u e l C yc l e E ff ec t s)

0 5 10 15 20 25 30 35 40200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U n d e r C a li f o r n i a P r og r am

F i g u re F -14

. D i ff

e re n c e i n C a l i f

o r n i a e m i ss i o ns o f V O C + N O x u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u nd er F e d er a l P r o g r a m ) , a cc o u n t i n g f o r f u e l c y c l e e f

f ec t s
.

S ta t e wi d e C O ( M O B I L E
, I n c l ud e s Fu e l C yc l e E f f e c t s)

0 50 100 150 200 250 300200620072008200920102011201220132014201520162017201820192020202120222023

Calen d a r YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U nd e r C a li f o r n i a P r og r am

F i g u re F -15

. D i f

f e r e n c e i n C a li f

o r n i a e m i ss i o ns o f C O u n d er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o

e m i ss i o ns u nd er F e d e r a l P r o g r a m ) , a c c o un t i n g f o r f u el c y cl e e ff

e c t s
.A ppen d i x F M O B I L E 6

. 2 P o l l u t an t E m i ss i o n s M ode l i ng

100 

### References

U

. S

. E P A

, M o d e li ng A l

t e r n a t i v e N L E V I m

p l e m e n t a t i o n a n d A d o p t i o n o f C a l i f o r n i a S t a n d a r d s i n M O B I L E, gu i d a n ce m e m o r a n d u m f

r o m A s s e ss m e n t a n d M o d e li n g D i v i s i o n , O ff i c e o f
T r a n s p o r t a t i o n a n d A i

r Q u a l i t y , U

. S . E n v i

r o n m e n t a l P r o t e c t i o n A g e n c y , J un e 2002

.

U

. S

. E n e r g y I n f

o r m a t i o n A d mi n i s t r a t i o n , P e t r o l e u m M a r k e t i n g A n n u a l 2005

, DO E / E I A0487 ( 2005 )

, A ugu s t 2006

.

U

. S

. E P A

, D o c u m

e n t a t i o n f o r t h e F i n a l 2002 M o b i l e N a t i o n a l E m i s s i o n s I n v e n t o r y , A s s e ss m e n t

a n d S t a n d a r d s D i v i s i o n , O f f i ce o f T r a n s p o r t a t i o n a n d A i

r Q u a l it y , U

. S . E n v i

r o n m e n t a l P r o t e c t i o n A g e n c y , S e p t e m

b e r 2005

.

S i e rr a R e s ea r c h

, M e t h o d o l o g i e s U s e d t o D e v e l o p t h e O n

- R o a d M o b il e S o u r ce E mi ss i o n s I n v e n t o r i e s , m

e m o r a n d u m p r e p a r e d f

o r t h e W e s t e r n R e g i o n a l A i r P a r t n e r s h i p , O c t o b e r 2001

. S t a t e w i d e E x h a u st PM 2

. 5 ( M O B I L E
, I n c l ud e s Fu e l C y c l e
E f f e c t s)

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35200620072008200920102011201220132014201520162017201820192020202120222023

Calendar YearStatewide Inventory Difference (tpd)

D i f f e r e n c e i n E m i s s i on s U n d e r C a li f o r n i a P r og r am

F i g u re F -16

. D i ff

e re n c e i n C a l i f

o r n i a e m i ss i o ns o f V O C + N O x u nd er c om b i n e d C a li f o r n i a P r o g r a m ( r e l at i v e t o e m i ss i o ns u nd er F e d er a l P r o g r a m ) , a cc o u n t i n g f o r f u e l c y c l e e f

f ec t s
.A ppen d i x G E m i ss i on s I m pa c t s A ss o c i a t ed w i t h R edu c ed G a s o l i ne C o n s u m p t i on

101 

### A p p e n d i x G

. E m i ss i o n s I m p a ct s A s s o c i a t e d w i t h R e d u c e d G a s o li n e C o n s u m p t i o n

T h e t e r m “ f

u e l c y c l e e m i s s i o n s ” ( s o m e t im e s c a l l e d “ up s t r e a m e m i ss i o n s ” ) i s r e l a t e d t o a c o n ce p t

w h e r e b y t h e c r i t e r i a e m i ss i o n s a ss o c i a t e d w it h t h e u s e o f d i f f e r e n t t y p e s o f v e h i c u l a r f

u e l s ( e

. g .,

g a s o li n e ) a r e a s s e s s e d s t a r t i n g a t t h e p o i n t t h a t p r o du c t i o n o f t h e f u e l b e g i n s

- - i n t h i s ca s e , a

p e t r o l e u m w e l l

-- a n d c o n t i n u i ng t h r o ug h t h e d e l i v e r y o f t h e f u e l t o a v e h i c l e

. T h e f

o l l o w i ng a r e

po t e n t i a l s o u r ce s o f f

u e l c y c l e e m i ss i o n s a ss o c i a t e d w it h t h e u s e o f g a s o li n e :

1. E x t r a c t i o n o f p e t r o l e u m;

2. T r a n s p o r

t o f p e t r o l e u m t o a r e f

i n e r y ;

3. P r o du c t i o n o f g a s o li n e a t a r e f i n e r y ;

4. T r a n s p o r

t a n d s t o r a g e o f g a s o li n e ; a n d

5. G a s o li n e m a r k e t i n g

.

I n a n a l y z i ng f

u e l c y c l e e m i ss i o n s d i f

f e r e n ce s b e t w ee n t h e t w o r e gu l a t o r y s c e n a r i o s o f i n t e r e s t

,

t h e k e y f ac t o r i s t h e e f

f ec t o f t h e C a li f

o r n i a r e gu l a t i o n o n t h e f u e l e c o n o m

y o f n e w v e h i c l e s

.
R e du ce d f

u e l c o n s u m

p t i o n t r a n s l a t e s i n t o r e du ce d f u e l c y c l e e m i ss i o n s

. T h e f o l l o w i ng s ec t i o n s

e x a m i n e t h e up s t r e a m c r i t e r i a e m i ss i o n s a ss o c i a t e d w it h g a s o li n e c o n s u m p t i o n o f t h e f

e d e r a l a n d

C a l i f o r n i a r e g u l a t o r y s c e n a r i o s. 37



### G.1. Method

T h e p r im a r y r e g u l a t o r y d r i v e r a ff e c t i n g g a s o li n e c o n s u m

p t i o n i s t h e GHG S t a n d a r d . T h e m e t h o d

u s e d i n t h i s s t u d y g e n e r a l l y f o l l o w s t h a t o f C A R B i n it s I n it i a l S t a t e m e n t o f R ea s o n s (I S O R )

( C A R B 2004 ) w i t h s i g n i f i c a n t c h a n g e s t o t h e f

u e l c y c l e e m i ss i o n f

ac t o r s t o c o rr e c t f

o r e rr o r s

m a d e b y C A RB

.

W e h a v e a l r ea d y c o m

p l e t e d a n e x t e n s i v e r e v i e w o f t h e f u e l c y c l e m e t h o d s e m

p l o y e d b y C A RB

i n t h e r e g u l a t o r y p r o ce ss f o r t h e GH G S t a n d a r d s , w h i c h i s n o t r e p e a t e d h e r e ( S i e rr a 2005 )

. I n

b r i e f

, C A R B s t a ff e s t im a t e s o f f u e l c y c l e e m i ss i o n s c h a n g e d m u l t i p l e t im e s a s upd a t e s w e r e pub l i s h e d t o c o r

r ec t f o r s t a f f e rr o r s ( C A RB 200 4 a )

, w it h t h e s t a ff ’ s f i n a l a s s e s s m e n t b e i ng t h a t

37 N o t e t h a t w e d o n o t a cc o u n t fo r f

u e l c y c l e e mi ss i o n s a ss o c iat e d w i t h t h e p r o du c ti o n a n d d e li v e r y o f h y d r o g e n

. T h u s , o ur e s t i m a

t e s o v e r s t a

t e t h e em i ss i o n s r e du c ti o n s of t h e C a l i fo r n i a p r o gr a m du e t o f u e l c y c l e e f

f e c t s

.A ppen d i x G E m i ss i on s I m pa c t s A ss o c i a t ed w i t h R edu c ed G a s o l i ne C o n s u m p t i on

102 pub l i s h e d o n O c t o b e r 19

, 2004 i n C A R B ’ s f i r s t 15

- D a y N o t i ce f

o r t h e C a l i f

o r n i a G HG

r e g u l a t i o n s ( C A RB 200 4 b )

. S p e c i f i c a ll y , f i n a l e s ti m a t e s w e r e c o n t a i n e d i n A tt ac h m e n t II t o t h e

15

- D a y N o t i c e e n t i t l e d “ A d d i t i o n a l S upp o r t i n g D o c u m e n t s a n d I n f

o r m a t i o n

. ” W e f

o u n d t h a t

s i g n i f i c a n t f l a w s c o n t i n u e d t o e x i s t i n t h e 15

- D a y N o t i ce v e r s i o n o f t h e s t a ff ’ s e mi ss i o n f a c t o r

e s t im a t e s

– m

o s t s i g n i f i ca n t w e r e t h e a ss u m e d f l ee t c h a r ac t e r i s t i c s o f f

u e l d e l i v e r y t r u c k s a n d

a ss u m e d t r a n s i t d i s t a n ce s t r a v e l e d

. T h e s e a ss u m p t i o n s c o n f

l i c t e d w it h b o t h o t h e r C A RB

r e g u l a t o r y e s t im a t e s a s w e l l a s t h o s e u s e d b y t h e S o u t h C o a s t A i r Q u a l it y M a n a g e m e n t D i s t r i c t

( “ S C A Q M D ” ) a n d r e s u l

t e d i n a s i g n i f

i c a n t o v e r e s ti m a t e o f f

u e l c y c l e e m i ss i o n s ( up t o a f ac t o r o f

4 )

.

W e h a v e e s t im a t e d r e v i s e d g a s o li n e f u e l c y c l e e m i ss i o n f

ac t o r s c o rr e c t i n g f

o r t h e e rr o r s m a d e i n

C A R B ’ s a ss e s s m e n t s o f t h e GHG S t a n d a r d s

. T h e s e f ac t o r s, s p e c i f

i c t o C a l i f

o r n i a g a s o li n e

p r o du c t i o n a n d d e l i v e r y , a r e p r e s e n t e d i n T a b l e G

- 1 a n d r e p r e s e n t t h e c r it e r i a e m i ss i o n s i n g r a m s

o f p o ll u t a n t p e r g a l l o n o f f u e l d e l i v e r e d

. E m i ss i o n f ac t o r s a r e r e p o r

t e d a s a r a n g e r e f

l ec t i n g t h e

v a l i d r a n g e o f u n d e r l y i ng a ss u m p t i o n s

.

Ta b l e G

- 1

. C a li f

o r n i a F u el C y c l e E m i ss i o n F a c t o r s ( g r am s / ga ll o n )

P o l lu t a n t L ow - E n d

E s t i ma t e H igh

- E n d

E s t i ma t e

NO X 0

. 010 0

. 035

C O 0

. 006 0

. 009

N M OG 0

. 190 0

. 213

PM 0

. 0003 0

. 0008

F u e l c y c l e e m i ss i o n s w e r e e s t im a t e d f r o m t h e c o m

b i n a t i o n o f e m i ss i o n f

a c t o r s a n d e s t im a t e d

g a s o li n e c o n s u m

p t i o n u n d e r t w o s ce n a r i o s ( t h e F e d e r a l P r o g r a m a n d t h e C a li f o r n i a P r o g r a m

)

.
F u e l c o n s u m

p t i o n w a s e s t im a t e d i n t w o w a y s : f i r s t

, f o l l o w i n g t h e m e t h o d s o f t h e E M F A C 200 7

m o d e l

, a n d s ec o n d

, f

o l l o w i n g t h e m e t h o d s o f M O B I L E 6

. 2

. F u e l c o n s u m p t i o n w a s c a l c u l a t e d a s

p a r t o f ea c h m

o d e l ’ s e mi ss i o n i nv e n t o r y a s s e ss m e n t o f t h e t w o r e gu l a t o r y s c e n a r i o s ( a s d e s c r i b e d

i n A pp e n d i x E a n d A

pp e n d i x F

, r e s p ec t i v e l y )

. F o r t h e C a l i f o r n i a P r o g r a m , t h e f

u e l ec o n o m

y o f

2009

- a n d

- l a t e r m

o d e l y ea r v e h i c l e s i n c r e a s e s o v e r t h a t u n d e r t h e F e d e r a l P r o g r a m

. T h e p e r c e n t

c h a n g e i n m

o d e l y ea r f

u e l ec o n o m

y i s s h o w n i n T a b l e G

- 2 a n d i n c l u d e s t h e i m p ac t s o f b o t h t h e

Z E V S t a n d a r d s a n d t h e GHG S t a n d a r d s

. T h e s e f u e l ec o n o m

y c h a n g e s w e r e i n c o r p o r a t e d i n t oA ppen d i x G E m i ss i on s I m pa c t s A ss o c i a t ed w i t h R edu c ed G a s o l i ne C o n s u m p t i on

103 t h e e mi ss i o n i nv e n t o r y a n a l y s i s o f ea c h m o d e l

, f u e l ec o n o m

y w a s c o n v e r t e d t o f

u e l c o n s u m

p t i o n

u s i n g V M T d a t a , a n d t h e r e s u l t i n g f u e l c o n s u m

p t i o n e s t im a t e s i n c l ud e d b o t h t h e r e b o u n d a n d

f l ee t t u r n o v e r e ff

ec t s o f t h e C a l i f

o r n i a p r o g r a m

.

Ta b l e G

- 2

. Pe r c e n t In c r e a s e i n M o d e l Y e a r F u el E c o n o my C a l i f o r n i a P r o g r a m O v e r t h e F e d e r a l P r o g r a m

M od e l Y ear P C L D T 1 L D T 2 M D V

2009 4

. 21% 0

. 88% 0

. 45% 0

. 42%

2010 7

. 25% 2

. 53% 2

. 32% 2

. 30%

2011 8

. 83% 3

. 44% 2

. 99% 2

. 96%

2012 10

. 43% 4

. 36% 3

. 66% 3

. 63%

2013 17

. 40% 7

. 54% 7

. 56% 7

. 53%

2014 24

. 70% 10

. 77% 11

. 56% 11

. 54%

2015 32

. 62% 14

. 29% 15

. 70% 15

. 65%

2016 40

. 61% 17

. 62% 19

. 90% 19

. 86%

2017 40

. 59% 17

. 61% 19

. 90% 19

. 86%

2018 40

. 54% 17

. 63% 19

. 90% 19

. 86%

2019 40

. 53% 17

. 62% 19

. 90% 19

. 86%

2020 40

. 51% 17

. 60% 19

. 90% 19

. 86%

2021 40

. 52% 17

. 64% 19

. 90% 19

. 86%

2022 40

. 50% 17

. 63% 19

. 90% 19

. 86%

2023 40

. 49% 17

. 61% 19

. 90% 19

. 86%



### G.2. Results

T h e e s t im a t e d s u mm e r s ea s o n d a il y f u e l c o n s u m

p t i o n i s p r e s e n t e d i n T a b l e G

- 3 a n d T a b l e G

- 4

f o r C a l i f o r n i a s t a t e w i d e a n d t h e S o u t h C o a s t A i r B a s i n , r e s p ec t i v e l y

. F o r t h e s t a t e w i d e t o t a l

, t h e

C a l i f o r n i a p r o g r a m i s e s t im a t e d t o r e s u l t i n a r e d u c t i o n o f a b o u t 6 t o 7 m ill i o n g a l l o n s b y 2023

.
I n g e n e r a l

, t h e f

u e l c o n s u m

p t i o n e s t im a t e s f

o r E M F A C 200 7 a r e g r ea t e r t h a n t h o s e o f

M O B I L E 6

. 2 a s t h e u n d e r l y i ng f u e l ec o n o m

y o f a g i v e n m

o d e l y ea r v e h i c l e i s l e s s i n t h e EM F A C

m o d e l

. F o r t h e S o u t h C o a s t

, t h e r e s u l t s a r e s imi l a r t o t h o s e r e p o r t e d f o r t h e s t a t e w h e r e t h e

d i s t r i c t m a k e s up b e t w ee n 38 a n d 42 p e r c e n t o f t h e s t a t e w i d e f u e l c o n s u m

p t i o n

– d e p e n d i ng o n

c a l e n d a r y ea r

.A ppen d i x G E m i ss i on s I m pa c t s A ss o c i a t ed w i t h R edu c ed G a s o l i ne C o n s u m p t i on

104 Ta b l e G

- 3

. C a li f

o r n i a S ta t e w i d e F u el C o nsu m p t i o n ( G a ll o ns / D ay) V e h i c le s a t o r b e l o w 8 , 5 0 0 L b s G VR W , Su m m er S e a s o n

M O B I L E 6

. 2 M o d e l Res ul t s EM F A C2007 M od e l Res ul t s

Ca l e nd ar Y ear F e d era l

P r og ram Ca li f o r ni a

P r og ram D i ff ere n ce

( Ca li f o r ni a P r og ram Re du c t i on ) F e d era l

P r og ram Ca li f o r ni a

P r og ram D i ff ere n ce

( Ca li f o r ni a P r og ram Re du c t i on )

2006 41

, 345

, 835 41

, 345

, 835 0 48

, 362

, 184 48

, 362

, 184 0

2007 40

, 892

, 899 40

, 892

, 899 0 47

, 712

, 624 47

, 712

, 624 0

2008 41

, 234

, 450 41

, 234

, 450 0 47

, 926

, 581 47

, 926

, 581 0

2009 41

, 734

, 053 41

, 652

, 604 81

, 449 48

, 357

, 727 48

, 263

, 761 93

, 966

2010 42

, 275

, 427 42

, 040

, 716 234

, 712 48

, 932

, 238 48

, 661

, 616 270

, 622

2011 42

, 817

, 673 42

, 412

, 982 404

, 691 49

, 681

, 856 49

, 213

, 577 468

, 279

2012 43

, 430

, 712 42

, 834

, 934 595

, 778 50

, 306

, 258 49

, 617

, 299 688

, 960

2013 44

, 121

, 678 43

, 182

, 355 939

, 323 51

, 015

, 386 49

, 928

, 172 1

, 087

, 213

2014 44

, 769

, 097 43

, 368

, 974 1

, 400

, 123 51

, 736

, 997 50

, 111

, 993 1

, 625

, 004

2015 45

, 425

, 477 43

, 449

, 581 1

, 975

, 897 52

, 473

, 466 50

, 178

, 603 2

, 294

, 863

2016 45

, 974

, 687 43

, 370

, 552 2

, 604

, 135 53

, 278

, 925 50

, 234

, 473 3

, 044

, 453

2017 46

, 536

, 490 43

, 339

, 924 3

, 196

, 566 53

, 906

, 595 50

, 168

, 629 3

, 737

, 966

2018 47

, 172

, 230 43

, 406

, 066 3

, 766

, 164 54

, 582

, 716 50

, 175

, 377 4

, 407

, 339

2019 47

, 822

, 658 43

, 514

, 333 4

, 308

, 325 55

, 290

, 638 50

, 246

, 275 5

, 044

, 363

2020 48

, 465

, 572 43

, 637

, 284 4

, 828

, 288 56

, 025

, 925 50

, 373

, 053 5

, 652

, 872

2021 49

, 049

, 620 43

, 745

, 545 5

, 304

, 075 57

, 023

, 110 50

, 772

, 275 6

, 250

, 835

2022 49

, 635

, 646 43

, 869

, 393 5

, 766

, 253 57

, 698

, 418 50

, 905

, 087 6

, 793

, 332

2023 50

, 301

, 298 44

, 096

, 362 6

, 204

, 936 58

, 402

, 067 51

, 087

, 087 7

, 314

, 980

Ta b l e G

- 4

. S o u t h C o a s t A ir B a s i n F u el C o n s u m p t i o n ( G a ll o ns / D ay) V e h i c le s a t o r b e l o w 8 , 5 0 0 L b s G VR W , Su m m er S e a s o n

M O B I L E 6

. 2 M o d e l Res ul t s EM F A C2007 M od e l Res ul t s

Ca l e nd ar Y ear F e d era l

P r og ram Ca li f o r ni a

P r og ram D i ff ere n ce

( Ca li f o r ni a P r og ram Re du c t i on ) F e d era l

P r og ram Ca li f o r ni a

P r og ram D i ff ere n ce

( Ca li f o r ni a P r og ram Re du c t i on )

2006 17

, 225

, 854 17

, 225

, 854 0 20

, 433

, 167 20

, 433

, 167 0

2007 16

, 696

, 744 16

, 696

, 744 0 19

, 745

, 178 19

, 745

, 178 0

2008 16

, 824

, 126 16

, 824

, 126 0 19

, 748

, 543 19

, 748

, 543 0

2009 16

, 938

, 564 16

, 903

, 372 35

, 192 19

, 849

, 687 19

, 808

, 576 41

, 110A ppen d i x G E m i ss i on s I m pa c t s A ss o c i a t ed w i t h R edu c ed G a s o l i ne C o n s u m p t i on

105 2010 17

, 051

, 054 16

, 953

, 648 97

, 406 19

, 957

, 842 19

, 844

, 056 113

, 786

2011 17

, 196

, 138 17

, 032

, 733 163

, 405 20

, 235

, 288 20

, 043

, 377 191

, 912

2012 17

, 367

, 352 17

, 131

, 287 236

, 065 20

, 405

, 868 20

, 128

, 931 276

, 937

2013 17

, 576

, 114 17

, 208

, 789 367

, 325 20

, 617

, 685 20

, 186

, 643 431

, 042

2014 17

, 720

, 304 17

, 184

, 076 536

, 228 20

, 800

, 821 20

, 169

, 214 631

, 606

2015 17

, 881

, 368 17

, 133

, 238 748

, 130 20

, 979

, 770 20

, 097

, 840 881

, 929

2016 17

, 984

, 445 17

, 008

, 457 975

, 988 21

, 176

, 940 20

, 018

, 920 1

, 158

, 020

2017 18

, 104

, 588 16

, 912

, 277 1

, 192

, 311 21

, 311

, 890 19

, 896

, 455 1

, 415

, 435

2018 18

, 259

, 336 16

, 857

, 394 1

, 401

, 942 21

, 474

, 472 19

, 808

, 673 1

, 665

, 799

2019 18

, 426

, 840 16

, 823

, 765 1

, 603

, 076 21

, 657

, 424 19

, 751

, 473 1

, 905

, 951

2020 18

, 598

, 760 16

, 801

, 682 1

, 797

, 078 21

, 856

, 886 19

, 719

, 989 2

, 136

, 897

2021 18

, 706

, 077 16

, 740

, 797 1

, 965

, 280 22

, 078

, 440 19

, 729

, 218 2

, 349

, 222

2022 18

, 824

, 076 16

, 693

, 977 2

, 130

, 100 22

, 215

, 541 19

, 669

, 682 2

, 545

, 859

2023 18

, 972

, 281 16

, 685

, 619 2

, 286

, 663 22

, 366

, 452 19

, 631

, 570 2

, 734

, 882

T h e r e du c t i o n i n f

u e l c o n s u m

p t i o n u n d e r t h e C a li f

o r n i a p r o g r a m w a s c o n v e r t e d i n t o a r e du c t i o n

i n f u e l c y c l e e m i s s i o n s

. T h e r e s u l t s a r e p r e s e n t e d i n T a b l e G

- 5 a n d T a b l e G

- 6 f o r C a l i f o r n i a a n d

t h e S o u t h C o a s t A i

r B a s i n , r e s p ec t i v e l y

. R e s u l t s a r e r e p o r

t e d a s a r a n g e w h e r e t h e l o w

- e n d

e s t im a t e i s b a s e d o n t h e l o w

- e n d e m i ss i o n f a c t o r ( s ee T a b l e G

- 2 ) a n d t h e M O B I L E 6

. 2

- b a s e d f u e l

c o n s u m p t i o n d i f f e r e n c e s

. A cc o r d i n g l y , t h e h i g h

- e n d e s t im a t e i s b a s e d o n t h e h i g h

- e n d e m i ss i o n

f ac t o r a n d E M F A C 2007

- b a s e d f u e l c o n s u m

p t i o n d i ff e r e n c e s

. B y 2023

, t h e s t a t e w i d e r e du c t i o n

i s e s t im a t e d b e t w ee n 1

. 3 a n d 1

. 6 t pd f o r N M OG

, b e t w e e n 0

. 07 a n d 0

. 28 t pd f o r NO x , b e t w e e n

0

. 04 a n d 0

. 07 t pd f

o r C O

, a n d b e t w ee n 0

. 002 a n d 0

. 006 t pd f o r P M

. F o r t h e S o u t h C o a s t

, t h e

r e s u l t s a r e s i mi l a r t o t h o s e r e p o r t e d f o r t h e s t a t e w it h r e p o r

t e d r e du c t i o n s i n a pp r o x im a t e

p r o p o r t i o n t o t h e d i s t r i c t ’ s s h a r e o f t h e s t a t e f u e l c o n s u m

p t i o n ( b e t w ee n 38 a n d 42 p e r c e n t o f t h e

s t a t e t o t a l )

.

F i n a ll y , t h e r e du c t i o n i n f u e l c y c l e e m i ss i o n s f

o r t h e s u m o f o z o n e p r ec u r s o r s ( N M OG a n d N O x )

i s p r e s e n t e d g r a ph i c a ll y i n F i gu r e G

- 1 a n d F i gu r e G

- 2 f o r C a li f o r n i a a n d t h e S o u t h C o a s t A i r

B a s i n , r e s p ec t i v e l y

. F o r C a l i f o r n i a , t h e o z o n e p r ec u r s o r r e du c t i o n du e t o t h e C a l i f o r n i a p r o g r a m

r eac h e s a m a x im

u m o f 1

. 4 t o 2

. 0 t pd i n 2023

. C o m p a r a t i v e l y , t h e S o u t h C o a s t r e du c t i o n i n f u e l

c y c l e e m i ss i o n s i s e s t im a t e d t o r a n g e f r o m 0

. 5 t o 0

. 7 t p d b y 2023

.A ppen d i x G E m i ss i on s I m pa c t s A ss o c i a t ed w i t h R edu c ed G a s o l i ne C o n s u m p t i on

106 Ta b l e G

- 5

. C a li f

o r n i a S ta t e w i d e F u el C y c l e E m i ss i o ns R e d u c t i o n (T o ns / D ay) D u e t o t h e C a li f o r n i a P r o g r a m , L o w -E nd a nd Hi g h

- E nd V a l u e s

N M OG N O X C O PM Ca l e nd ar Y ear L o w H igh L o w H igh L o w H igh L o w H igh

2009 0

. 017 0

. 022 0

. 001 0

. 004 0

. 001 0

. 001 0

. 0000 0

. 0001

2010 0

. 049 0

. 064 0

. 003 0

. 010 0

. 002 0

. 003 0

. 0001 0

. 0002

2011 0

. 085 0

. 110 0

. 004 0

. 018 0

. 003 0

. 005 0

. 0001 0

. 0004

2012 0

. 125 0

. 162 0

. 007 0

. 027 0

. 004 0

. 007 0

. 0002 0

. 0006

2013 0

. 197 0

. 255 0

. 010 0

. 042 0

. 006 0

. 011 0

. 0003 0

. 0010

2014 0

. 293 0

. 382 0

. 015 0

. 063 0

. 009 0

. 016 0

. 0005 0

. 0014

2015 0

. 414 0

. 539 0

. 022 0

. 089 0

. 013 0

. 023 0

. 0007 0

. 0020

2016 0

. 545 0

. 715 0

. 029 0

. 117 0

. 017 0

. 030 0

. 0009 0

. 0027

2017 0

. 669 0

. 878 0

. 035 0

. 144 0

. 021 0

. 037 0

. 0011 0

. 0033

2018 0

. 789 1

. 035 0

. 042 0

. 170 0

. 025 0

. 044 0

. 0012 0

. 0039

2019 0

. 902 1

. 184 0

. 047 0

. 195 0

. 028 0

. 050 0

. 0014 0

. 0044

2020 1

. 011 1

. 327 0

. 053 0

. 218 0

. 032 0

. 056 0

. 0016 0

. 0050

2021 1

. 111 1

. 468 0

. 058 0

. 241 0

. 035 0

. 062 0

. 0018 0

. 0055

2022 1

. 208 1

. 595 0

. 064 0

. 262 0

. 038 0

. 067 0

. 0019 0

. 0060

2023 1

. 300 1

. 718 0

. 068 0

. 282 0

. 041 0

. 073 0

. 0021 0

. 0065

Ta b l e G

- 6

. S o u t h C o a s t A ir Ba s i n F u el C y c l e E m i ss i o ns R e d u c t i o n (T o ns / D ay) D u e t o t h e C a li f o r n i a P r o g r a m , L o w -E nd a nd H i g h -E nd V a l u e s

N M OG N O X C O PM Ca l e nd ar Y ear L o w H igh L o w H igh L o w H igh L o w H igh

2009 0

. 007 0

. 010 0

. 000 0

. 002 0

. 000 0

. 000 0

. 0000 0

. 0000

2010 0

. 020 0

. 027 0

. 001 0

. 004 0

. 001 0

. 001 0

. 0000 0

. 0001

2011 0

. 034 0

. 045 0

. 002 0

. 007 0

. 001 0

. 002 0

. 0001 0

. 0002

2012 0

. 049 0

. 065 0

. 003 0

. 011 0

. 002 0

. 003 0

. 0001 0

. 0002

2013 0

. 077 0

. 101 0

. 004 0

. 017 0

. 002 0

. 004 0

. 0001 0

. 0004

2014 0

. 112 0

. 148 0

. 006 0

. 024 0

. 004 0

. 006 0

. 0002 0

. 0006

2015 0

. 157 0

. 207 0

. 008 0

. 034 0

. 005 0

. 009 0

. 0002 0

. 0008

2016 0

. 204 0

. 272 0

. 011 0

. 045 0

. 006 0

. 011 0

. 0003 0

. 0010

2017 0

. 250 0

. 332 0

. 013 0

. 055 0

. 008 0

. 014 0

. 0004 0

. 0012A ppen d i x G E m i ss i on s I m pa c t s A ss o c i a t ed w i t h R edu c ed G a s o l i ne C o n s u m p t i on

107 2018 0

. 294 0

. 391 0

. 015 0

. 064 0

. 009 0

. 017 0

. 0005 0

. 0015

2019 0

. 336 0

. 448 0

. 018 0

. 074 0

. 011 0

. 019 0

. 0005 0

. 0017

2020 0

. 376 0

. 502 0

. 020 0

. 082 0

. 012 0

. 021 0

. 0006 0

. 0019

2021 0

. 412 0

. 552 0

. 022 0

. 091 0

. 013 0

. 023 0

. 0006 0

. 0021

2022 0

. 446 0

. 598 0

. 023 0

. 098 0

. 014 0

. 025 0

. 0007 0

. 0022

2023 0

. 479 0

. 642 0

. 025 0

. 106 0

. 015 0

. 027 0

. 0008 0

. 0024

O z o n e P r ec u r s o r E m i s s i o n s ( N M OG + N O x)

0 0 .5 1 1 .5 2 2 .5

2 0 06 2 008 20 10 2 0 12 2014 20 16 2 0 18 2020 20 22

C a l e n d a r YearFuelCycleEmissionsReduction(tons/day)

H i g h -End E s t i m a te

Lo w -End E s t i m a te

F i g u re G -1

. R e d u c t i o n i n Su mm er S e a s o n C a li f o r n i a F u el C y c l e E m i ss i o ns D u e t o t h e C a li f o r n i a P r o g r a m ( C a li f o r n i a S ta t e w i d e )A ppen d i x G E m i ss i on s I m pa c t s A ss o c i a t ed w i t h R edu c ed G a s o l i ne C o n s u m p t i on

108 

### References

C a l i f o r n i a A i r R e s o u r ce s B o a r d

, I n i t i a l S t a t e m e n t o f R ea s o n s f

o r P r o p o s e d R u l e m a k i ng , P ub l i c H ea r i n g t o C o n s i d e r A d o p t i o n o f R e g u l a t i o n s t o C o n t r o l G r ee n h o u s e G a s E mi ss i o n s f r o m M o t o r V e h i c l e s , A ugu s t 6

, 200 4

.

S i e rr a R e s ea r c h , E v a l u a t i o n o f V e r m o n t ’ s A d o p t i o n o f C a li f

o r n i a ’ s G r e e n h o u s e G a s R e g u l a t i o n s

o n C r i t e r i a P o ll u t a n t s a n d P r ec u r s o r E mi ss i o n s , S e p t e m b e r 19

, 2005

.

C a l i f o r n i a A i r R e s o u r ce s B o a r d

, A dd e n d u m t o I n it i a l S t a t e m e n t o f R ea s o n s , P ub li c H ea r i ng t o C o n s i d e r A d o p t i o n o f R e g u l a t i o n s t o C o n t r o l G r e e n h o u s e G a s E mi ss i o n s f r o m M o t o r V e h i c l e s , S e p t e m b e r 10

, 2004 a

.

C a l i f o r n i a A i r R e s o u r ce s B o a r d

, P ub li c H ea r i ng t o C o n s i d e r A d o p t i o n o f R e g u l a t i o n s t o C o n t r o l
G r ee n h o u s e G a s E mi ss i o n s f r o m M o t o r V e h i c l e s , O c t o b e r 19

, 2004 b

, h tt p : / / www

. a r b

. ca

. g o v

/ r e g ac t / g r nh s g a s / 15d a y

. p df

. O z on e P r ec u r s o r Em i ss i o n s ( NM OG + N Ox)

0 0 .1 0 .2 0 .3 0 .4 0 .5 0 .6 0 .7 0 .8

2006 2008 2010 2012 2014 2016 2018 20 20 2 022

C a l e n d a r YearFuelCycleEmissionsBenefit(tons/day)

H igh-End E s t i m a te
Lo w -End E s t i m a te

F i g u re G -2

. R e d uc t i o n i n S u mm er S e a s o n C a li f o r n i a F u el C y c l e E m i ss i o ns D u e to t h e C a li f o r n i a P r o g r am ( S o u t h C o a s t A ir B a s i n )STATE OF CALIFORNIA AIR RESOURCES BOARD

Comments of the Alliance of Automobile Manufacturers

On the Proposed Rulemaking to Adopt Regulations to

Control Greenhouse Gas Emissions from Motor Vehicles

September 23, 2004i Executive Summary

This is a rulemaking required by Assemb ly Bill 1493, enacted in 2002 in order to address
concerns about the global climate. A.B. 1493 di rected the Air Resources Board to consider

adoption of regulations that would control gree nhouse gases from motor vehicles, on the premise
that such rules might help reduce global warming.

The regulations proposed by the Executive Officer on August 6, 2004, and now before

the Board for review would not serve the ultima te purpose of the legi slation, or any other

environmental goal. Instead, as explained in these comments, the proposed rules would increase

pollution levels in California’s c ities and create safety risks for the motoring public. Increases in

smog-forming emissions from the California motor ve hicle fleet could surpa ss 30 tons per day in
2020. Depending on assumptions about how the propos ed rule might affect the weight of the

California fleet and the total number of vehicle miles traveled in the state, the regulation could

result in hundreds of additional d eaths on California’s roads.

The proposed rules would also add substantia lly to the costs of purchasing a new vehicle
and would reduce the variety of different vehi cle models that are currently available in

California. The costs of the technologies id entified by the Executive Officer for use in
complying with the proposed rules would be mo re than double the possible savings in reduced

operating costs. The proposed rules would cost California motor vehicle purchasers roughly $14

billion by 2016 and substantially reduce employment in the automobile industry in California.

California would become the only State in the country attempting to regulate motor vehicle fuel
economy, which is the responsibility of the nati onal government under federal law. For those

reasons, the Alliance of Automobile Manufactu rers does not support adoption of the proposed

rules.

Few of the adverse effects of the proposed rule have been considered, and none have
been fully addressed, in the documents published by the Executive Officer to support the

proposal. The Board needs to hear from the Execu tive Officer on each of those adverse effects

and permit adequate time for the public to respo nd. We hope that the Board will decline the

Executive Officer’s proposal, and will request that the staff (1) analyze the serious issues raised

in these comments, and (2) develop one or more alternatives that w ould address the problems

with the current proposal.ii Table of Contents

Page

I. The Analytical Framework for the Current Rulemaking..............................................2

A. The General Role of “Cost Effectiv eness” Analysis in the Greenhouse Gas Rulemaking..............................................................................................................4

B. Total Costs of the Proposed Regulation for the Consumer......................................8

C. Valuation of Future Cost Savings from Reduced Gasoline Consumption ............13

II. Technical and Economic Analysis of the Proposed Regulations .................................17

A. Engineering Cost and Benefit Assessment ............................................................18

B. Likely Industry Response to the Proposed Regulation..........................................22

III. Environmental and Other Health-Related Impacts of the Proposed Regulation..................................................................................................................... ....25

IV. The Board’s Options on the Curren t Record................................................................31

V. Conclusion ..................................................................................................................... ...391 Comments of the Alliance of Automobile Manufacturers On the Proposed Rulemaking to Adopt Regulations to Control Greenhouse Gas Emissions from Motor Vehicles

The Alliance of Automobile Manufacturers respectfully submits these comments on the

proposal to adopt State regulations for the c ontrol of greenhouse gas emissions from new motor

vehicles, starting in model year 2009. 1 Our comments begin with an analysis of the framework

established by the Legislature for this rulemakin g. This includes a review of the unique criteria

that the statute requires ARB to use in deciding whether and, if so, how to establish specific

control limits for greenhouse gases. ( See pp. 2-17 below.)

Our comments next examine the technology analysis and compliance strategies

presented in the August 2004 staff report and later documents released by the Executive Officer,

and summarize several i ndependent studies prepared since August to analyze the technical and

economic aspects of the staff report. ( See pp. 17-25 below.) The comments then briefly

addresses the impact of the proposed rules on th e environment and on vehicle safety, which are

examined in detail in other parts of the Alliance’s comments. ( See pp. 25-31 below.) We next

outline the options presented by the current rulemaking record for the Board, and outline

alternatives to the action proposed by the Ex ecutive Officer that warrant consideration. ( See pp.

31-39 below.) In addition, we comment to the extent possible on the document placed on the

1 The members of the Alliance of Automobile Manufacturers (“the Alliance”) are BMW Group of North America, Inc., DaimlerChrysler Corpor ation, Ford Motor Company, General Motors Corporation, Mazda North American Operations , Mitsubishi Motor Sales of America, Inc., Porsche Cars North America, Inc., Toyota Motor North America, Inc., and Volkswagen of America, Inc.2 ARB web-site yesterday, reporting on various extr amural reviews of the ARB staff’s analysis.

( See pp. 13-17, 20, 25-29, 31, 37-38 below.)

Separate documents included with these comments evaluate many of the specific

economic, environmental, safety and legal issues raised by the current rulemaking. The Alliance

requests a detailed response by the Executive Officer to each of the issues and all the evidence

and analysis contained in the attached comments, as well as comments being filed by our

members and other participants in this rulemaking.

I. The Analytical Framework for the Current Rulemaking

This rulemaking results from passage of Assembly Bill 1493 (“A.B. 1493”) by the

California Legislature in the summer of 2002. Th e purpose of A.B. 1493 was to require ARB to

consider adoption of rules th at would provide the “maximum feasible and cost effective

reduction of greenhouse gas emissions from motor vehicles,” c onsistent with federal law and

subject to specified other limitations. 2

It is important at the outset to establish th e analytical process that A.B. 1493 establishes

for this rulemaking. Among other steps, the st atute appears to require the Board to consider

whether any vehicular greenhouse gas regulation woul d be “cost-effective” for vehicle owners or

operators. Assuming that the Board determines that such a cost-effective regulation exists, and

can be implemented given the test for “feasibilit y” in A.B. 1493, ARB then needs to compare the

“maximum feasible and cost effective” requirement for California with federal regulations.

2 Health & Safety Code § 43018.5(a). See id . § 43013(a) (authorizing vehicle emissions rules “unless preempted by federal law”) and Cal. Stats. 2002, c.200 (A.B. 1493 -- Pavley) § 1(h) (requiring that ARB’s greenhouse gas rulemaking authority conform to “any limitations that may be imposed pursuant to the federal Clean Air Act ... and the waiver provisions of the federal act”)3 Specifically, the statute di rects the Board to consider whethe r for any particular greenhouse gas,

“the federal government [has] adopt[ed] a standa rd ... in substantially th e same timeframe, and of

equivalent or greater effectiveness as the regu lations that would be adopted” under A.B. 1493. If

such a federal standard exists, A.B. 1493 requires no separate California regulation. 3

The rulemaking process envisioned by A.B. 149 3 is thus a two-step process: it begins

with a determination of the “maximum feasible a nd cost effective” regulation within California,

but then also requires an evalua tion of the effectiveness of separate California rules within a

national context. Consideration of related fe deral programs is critical, both because the

Legislature required it and because proposals to control greenhouse gases from motor vehicles

generally focus on the control of carbon dioxid e (“CO2”). Controls on CO2 emissions from

motor vehicles when measured on a per-mile basi s are functionally the same as motor vehicle

fuel economy standards. Moto r vehicle fuel economy is currently regulated in California and

nationwide by the National Highway Traffic Safe ty Administration (“NHTSA”), under a federal

statute that also establishes controls at the “maximum feasible” levels. 4

The August 2004 staff report reflects great effo rt to analyze the technologies that could

be used to control greenhouse gas emissions. But the staff report fails to consider how the rules

it proposes would fit into the federal regulatory program. Indeed, the Executive Officer’s

rulemaking notice does not acknowledge the existe nce of any related federal regulations. The

legal significance of that omission is considered in Appendix H to these comments. Below in this

3 Health & Safety Code § 43018.5(h).

4 See Appendix H to these comments and the accompanying Declaration of S. Kingsley Macomber.4 section of these comments, we examine how the staff report approached the first step in the

rulemaking process, which is the determinati on of what rules would be “cost-effective” and

therefore worthy of further consideration.

A. The General Role of “Cost Effectiveness” Analysis in the Greenhouse Gas Rulemaking

As noted above, A.B. 1493 requires ARB to consider establishing a regulation that it

would find to be “cost effective.” Normally, the Board attempts to determine the costeffectiveness of a regulation by estimating the costs of the rule and then quantifying the level of

environmental protection that the rule will achieve, along with the rule’s other positive and

negative effects. 5 That approach is intended to establis h a rule having an appropriate level of

stringency.

The typical approach to standard-setting for mobile-source regulations cannot be applied

in the current rulemaking. The greenhouse gase s identified for possible control in A.B. 1493

have not been identified by California or the federal government as criteria pollutants or

precursor emissions. While climate change is a matter of local, national and international

interest, there are no health-based criteria for gr eenhouse gases that can be used to determine an

appropriate level of stringency in controls on various sources in California, such as automobiles

and trucks.

5 The conventional method of cost -effectiveness analysis is de scribed in Cal-EPA’s December 1996 memorandum entitled, “Economic Analysis Requirements for the Adoption of Administrative Regulations.” The Cal-EPA memorandum is ava ilable on the ARB web-site at www.arb.ca.gov/research/econprog/econmemo.txt.5 There is another salient difference between this rulemaking and other ARB rulemakings

involving mobile sources. In contrast to measures that apply to criteria or precursor pollutants,

it is unlikely that California could impose a co ntrol measure for greenhouse gases that would

actually achieve significant reductions of the emissions of concern (in this case, greenhouse

gases) in the California biosphere. 6 Two factors account for this. First, the growth in

greenhouse gas emissions in other parts of the worl d would more than offset any reductions from

CO2 from vehicles in California that has been estimated by the ARB staff. That is a reality that

the August 6 staff report for this rulemaking appears to recognize.

Second, the national program for fuel econom y regulation, combined with the economics

of the automobile industry, make it very unlik ely that a greenhouse gas rule like that proposed

here would reduce greenhouse gases from the ove rall United States transportation sector.

Compliance with the federal average fuel economy standards is based on na tional sales-weighted

averages of a manufacturer’s production of passenge r cars and trucks up to a specified weight.

Even if California coul d mandate specific reductions in CO2 emissions and fuel consumption by

California vehicles, the State could not directly constrain manufacturers from selling greater

numbers of vehicles with higher levels of CO2 emissions outside California. Absent a

regulation, no prudent manufacturer will attempt to force customers to buy hardware of any

type, including hardware needed to control greenh ouse gases, if the costs of the hardware are not

fully valued in the market. If the costs of the California regulation are high compared to the

estimated customer benefits, and if manufacturers follow a strategy that minimizes the impact on

6 See Appendix B, Attachment B-5.6 the market, the amount of gasoline consumed nationwide -- and the level of CO2 in the

atmosphere over California -- will not significantly change. 7

As explained below and in separate materials being filed with these comments, it is clear

that in order to remain competitive, the industr y would use the fuel economy gains required by

the proposed rules to permit the sale of more fu el-intensive vehicles elsewhere in the United

States. 8 The practical result will be no significant impact on the atmospheric concentrations of

carbon dioxide believed to contribute to global c limate change. The Board’s review of the

evidence should confirm this point, and it should be expressed in ARB’s report to the Legislature

on this rulemaking. 9 It is difficult to see how a rule can be “cost effective” if it will have no

effectiveness in the real world.

7 California-specific fuel econom y or CO2 regulations will lead to national reductions in CO2 only if the California standards are so stringent that they generate more credit than manufacturers can use to satisfy demand for fuel-intensive vehicl es in the market outside of California. ARB staff’s analysis raises a different possibility, which is that the vehicle technologies discussed in the staff report may be deployed nationwide. That scenario rests on an analysis of the costs and fuel savings from specific technologies that ar e examined in Appendix C to these comments, which is summarized below at pp. 17-23.

8 Certainly, there is no general demand in th e market for the types of greenhouse gas controls envisioned by the proposed rules, nor is such a demand likely under any plausible estimate of future gasoline prices. Even at gasoline pr ices in the $4.00 to $5.00 per gallon range, fuel economy levels in Europe fall short of the ARB staff’s proposed mid-term requirements for

passenger cars.

9 Based on their comments in the document released to the public on the ARB web-site yesterday, the lack of any connection betw een the proposed rules and the global-climate conditions of concern to the Legislature in A.B.1493 appears to be understood by ARB’s extramural reviewers, a position shared by the Allia nce. If the Board finds that adoption of the proposed rules would have more than symbolic impact in mitigating globa l climate change, it presumably could and should make specific finding s that demonstrate and quantify the effects of the rules using some appropriate metric, such as concentrations of greenhouse gases in the California biosphere or globally, net changes in energy flux, reduced pollution levels, or (Continued...)7 Perhaps because they recognized that no st andards that California could establish would

meet any conventional test of co st-effectiveness, the framers of A.B. 1493 established a special

test for cost-effectiveness to be used in deter mining what standards to consider under A.B. 1493.

Under that special test, a rule can be considered “c ost effective” if it is found to be “[e]conomical

to an owner or operator of a vehicle, taking in to account the full life-cycle costs of a vehicle.” 10

As one participant at the July 7, 2004 public mee ting to discuss the proposed rules indicated, the

statutory criterion to be used in setting CO2 standards is thus more an economic test than an

environmental test. 11

Much of the staff report is devoted to an analysis of various combinations of control

systems in order to determine which combinations would pay for themselves over the life of the

vehicle. As explained in th e next sections of these comme nts, however, the staff report’s

approach has two major shortcomings, when considered within the statutory framework. First,

the staff report’s cost analysis fails to consider all the relevant costs of the proposed regulations

from the perspective of the vehicle purchaser. Second, the staff report makes unrealistic

assumptions about the value that a typical ve hicle purchaser would place on future gasoline

savings.

economic benefits from reducing the need for adaptation to possible global warming. The August 2004 staff report contains no such demonstr ation or quantification; if any is developed, the Board should permit adequate time for public review and comment before it decides to act on the currently proposed rules.

10 Health & Safety Code § 43018.5(i)(2)(B).

11 The Alliance has included a copy of an electr onic audio recording of the July 7 public meeting that it obtained from ARB in Appendix I of thes e comments, which also contain a number of electronic files related to other Appendices.8 B. Total Costs of the Proposed Regulation for the Consumer

The economic analysis in the August 2004 staff report and its supporting materials

assume that the major cost that would be incurred by a consumer who purchases a vehicle

certified to the proposed CO2 requirements would be the cost of the hardware needed to meet

those requirements. The staff ignores opportunity costs, which are important in mainstream

economic analysis of measures like that proposed in this rulemaking. The total costs of a rule

like that proposed in the staff report include, fo r example, the value of the foregone opportunity

to purchase a vehicle which may be less fuel-effic ient but has other featur es that a consumer

desires more than enhanced fuel efficiency. Such feat ures obviously include vehicle

performance, safety, capacity, comfort and aesthetics.

The leading studies all consider these costs, unlike the staff report. The relevant studies

come from many quarters, including work funded by ARB but not considered in the August 2004

staff report. 12 Several recent studies in this area not already in the rulemaking file are

summarized below.

Congressional Budget Office

. A recent study of the federal fuel economy standards by

the nonpartisan Congressional Budget Office (“the CB O”) identifies two types of costs that must

be compared with fuel economy savings flow ing from a mandated increase in fuel economy

levels. These are (1) the “higher prices paid by purchasers of new vehicles and [(2)] a loss in the

well-being of consumers who would be discouraged from buying a new vehicle because of the

higher prices.” Applying estimates of the engineering or hardware costs and fuel savings that

12 See note 17 below (studies funded by ARB).9 were assumed in the National Research Council’s study of fuel economy standards, the CBO

found that a proposal to increase the nation’s fu el economy standards by 3.8 miles per gallon for

both cars and light trucks over the next 14 years (far short of the proposal before the Board)

would cost the nation’s consumers some $2.4 b illion per year, or $153 per vehicle and 33 cents

per gallon of fuel conserved. 13

Portney, Parry, Gruenspecht and Harrington

. In a recent survey article, the former Chair

of the National Research Council (NRC) and several co-authors ex amine the issue of consumer

costs as it should be examined, by including th e opportunity costs of not using fuel saving

technologies for other vehicle en hancements that consumers would prefer over increased fuel

economy. Those opportunity costs include the value of the improved performance, increased

weight and carrying capacity and other vehicle attributes that a consumer must forego when she

purchases or operates a vehicle designed to meet a regulatory fuel economy target that is higher

than what she would choose for herself. The authors of the survey article conclude that those

opportunity costs must be compared with the fuel economy savings achieved by fuel economy

13 Congressional Budget Office, “The Economic Costs of Fuel Economy Standards Versus a Gasoline Tax,” (December 2003), Chapter 2, pages 1 to 5. These cost estimates are net of CBO’s estimates of the value of reduced fuel consumption associated with such a mandate. The 3.8 mpg increase that CBO models is off a base of 27.5 mpg for cars and 21.7 mpg for light trucks. CBO notes that the costs would be some what lower if a program of CAFE credit trading is adopted. However, CBO also notes that the costs could be substantially higher if it had estimated the adverse impacts of CAFE regulations on labor and capital markets. Id. , Chapter 3, pages 3 to 5. The 33 cents per gallon is “the marg inal cost of reaching the benchmark target (that is, the cost of saving the ‘final’ gallon of ga soline” and it ignores “the external costs resulting from the increase in driving.” (Note 8, page 11) See also National Research Council, “Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards,” Washington D.C. National Academy Press (2002).10 standards. 14 The survey concludes that the costs of any further regulation of fuel economy, when

fully considered to comprehend consumers’ oppor tunity costs, are likely to “significantly”

exceed any benefits associated with reduced fu el consumption. Addres sing the specific issue

presented by the approach taken by the ARB staff in this rulemaking, the authors of the survey

article state:

“Engineering studies alone may give a very unreliable guide to the actual costs of mandated increases in fuel economy. They may not capture many important costs of actually implementing a new technolog y . . . Moreover, auto manufacturers have for the past several decades devoted their technological skills principally to the introduction of technologies that improve vehicle performance (like acceleration and towing capacity) rather th an fuel economy; therefore, the real cost of devoting technology to improving fuel economy is the foregone performance enhancements that might have resulted. . . . When we account for the existing taxes on gasoline and the likelihood of a rebound effect, it appears that tightening CAFE could significantly reduce social welfare overall. ”

14 Portney and his colleagues write:

“[E]ngineering studies [may] underestimate the true economic costs of actually adopting fuel-saving technologies. The true economic cost is probably larger than ... engineering cost estimates ... for two reasons. First, it ignores the possible opportunity cost of not using fuel sa ving technologies for other vehicle enhancements. That is, by forcing automake rs to apply their technical expertise to more fuel-efficient engines, tighter [fue l economy] standards could mean fewer of the improvements to which consumers ha ve responded enthusiastically in the past—including such things as enhanced acceleration, towing capacity and so on. It is the implicit values of these foregone improvements that ought to be compared with the fuel economy savings that tighter [fuel economy] standards would bring. A second point is that engineering studies may exclude various costs of actually implementing a new tec hnology that are difficult to observe—for example, marketing, consumer unfamiliarity and retraining of mechanics.”

Portney et al ., Comment, in Journal of Economic Perspectives

, vol. 18 at 273, 274 (Spring 2004).11 Paul Portney, Ian W. H. Parry, Howard K. Gruenspecht and Winston Harrington, “The

Economics of Fuel Economy Standards,” Journal of Economic Perspectives (Fall 2003), pages

209, 212 (emphasis added).

Kleit, Lutter, and Kravitz

. The same basic points about the economics of vehicle

regulation involving fuel consumption and fu el economy are mirrored by two other recent

studies. Andrew Kleit, at the time a member of the faculty of The Pennsylvania State University,

found that a “long-range” CAFE increase of 3 miles per gallon for both cars and light trucks

would impose consumer and producer welfare losse s summing to about $4 billion per year, for a

“hidden tax” of $0.78 per gallon of fuel conserved. 15 Randall Lutter of the American Enterprise

Institute and Troy Kravitz of the Brookings In stitution found that “mandatory fuel economy

standards cannot benefit informed consumers” and “that there is little reason to believe that

consumers systematically underestima te the price of gasoline.” Lutter and Kravitz also note that

engineering-based estimates overstate the net bene fits of fuel economy standards because they

“exclude the foregone value to the consumer of the declines in performance associated with

better fuel economy.” 16

The studies summarized above are the work of leading analysts in the field of

environmental regulation. They establish the importance of estimating co nsumer welfare losses

15 Andrew N. Kleit, “Impacts of Long-Range In creases in the Fuel Economy (CAFE) Standard,” Economic Inquiry(April 2004), pages 279-294.

16 Randall Lutter and Troy Kravitz, “Do Regulations Requiring Light Trucks To Be more Fuel Efficient Make Sense? An Evaluation of NH TSA’s Proposed Standards,” AEI-Brookings Joint Center for Regulatory Studies, Regulatory Anal ysis 03-2, (February 2003), pages 6, 7, and 10.12 when assessing the costs of regula tions related to fuel consumption. 17 Nothing in the text of

A.B. 1493 permits the Board to ignore any categor y of costs. The statute’s requirement to

consider what is “economical” to the consumer must be unders tood as a mandate to consider all

relevant costs to the consumer, not ju st the costs of additional hardware. 18 Consumers who buy

17 There can be no serious question that welfar e losses can be quantified. A draft paper by Kenneth Small and Kurt Van Dender of the Univer sity of California (Irv ine) dated March 11, 2004, develops estimates of the “tig htness of CAFE regulation starting in 1978,” which indicates that the national standards “have been binding since their introduction,” and calculates a gap between “[d]esired and mandated fuel efficiency for new passenger vehicles.” See Small et al., “The Effect of Improved Fuel Efficiency on Vehicle Miles Traveled and on Carbon dioxide Emissions” Estimating the Rebound Effect usin g U.S. State Date, 1966-2001 -- Second Interim Report to the California Air Resources Board an d the California Energy Commission” at 12, 20 - 21. Presumably such a gap can be used to he lp measure the welfare loss when consumers are forced to buy fuel economy attributes they woul d not otherwise purchase. In addition, a draft paper prepared for by researchers at the Institute for Transportation Studies, reviewed in Appendix G of these comments, notes that hist orically, there was “market resistance to downsizing” by purchasers of cars produced by U. S.-based manufacturers. Burke et al. “The Response of the Auto Industry and Consumers to Changes in the Exhaust Emission and Fuel Economy Standards (1975-2003): A Historical Re view of Changes in Technology, Prices, and Sales of Various Classes of Ve hicles (March 2004). The ITS paper sponsored by ARB thus recognizes consumer welfare losses from fu el economy standards. (Although it recently commissioned both these studies, ARB decided not to place them in the rulemaking file.) See also Kleit, “Impacts of Long-Range Increases in the Corporate Average Fuel Economy Standards,” AEI-Brookings Joint Center for Re gulatory Studies Working Paper 02-10 (2002) (current federal CAFE standard s set targets above consumer de mand for fuel economy by about 1.5 miles per gallon) and Appendix G to these comments.

18 For example, the statute doe s not say that the Board is supposed merely to sum up the estimated fuel consumption savings that a propos ed standard will achieve, and then compare them with the costs of the technologies and other st eps needed to obtain those savings. If that is how the Board intends to construe the statute, it should explain why it is making that choice, and why it is not giving consideration to mainstream economic analysis of what is “economical” for participants in the new-vehicle market. It is also important to note that the statute requires that the Board’s report to the Legislature consider economic impacts. See Health & Safety Code § 43018.5(g)(2). The opportunity costs and welf are losses imposed by the regulation would certainly be part of the “economic ... impact[] ... on the state.” It would be implausible for A.B. 1493 to require a report on economic impact, but permit ARB to ignore that impact in determining what standa rds to consider.13 a vehicle, but who are forced to purchase technol ogy or other features added or subtracted from

the vehicle to meet standards that they would not otherwise prefer, incur costs that are real and

quantifiable, as demonstrated by the literature reviewed above. 19 In view of the staff report’s

failure to consider all th e relevant types of costs of the propos ed regulation to vehicle purchasers,

the Board lacks sufficient analysis, and the public has not been properly advised of the total

estimated costs of the proposed rule. On such a record ARB cannot adopt the proposed rule.

C. Valuation of Future Cost Savings from Reduced Gasoline Consumption

One premise of the staff report is that future savings from reduced gasoline consumption

will exceed up-front costs to the purchaser of a ne w vehicle. Of course, a dollar today is worth

more than a dollar three, five or ten years hen ce. Within the limited economic analysis contained

in the staff report, it is critical to apply a rea listic estimate of the value of future fuel economy

savings for today’s vehicle purchaser. While the us e of such a realistic va luation would not save

the overall analysis from the problems of omitting total costs noted above, the failure to use

realistic estimates for the value of future savings would, standi ng alone, make the economic

analysis unreliable. Here as well, the approa ch taken in the August 2004 staff report does not

reflect mainstream economic analysis. This is underscored in the extramural review document

added to the ARB web-site yesterday. 20

19 For example, vehicles that are down-weighted or that have less capacity or comfort, or that have lower towing capacity or performance, wo uld have less value for many consumers than vehicles that do not have those reduced features or lower weight. That diminished value is not captured in the type of cost assessment containe d in the staff report, but it is a real cost nonetheless.

20 See “Peer Review Comments and Responses” (Sept. 2004) (hereafter “Sept. 22 Document”) at
71-75.14 The staff report attempts to address the i ssue of consumers’ valuation of future fuel

economy savings by assigning a type of private discount rate to the re duced operating costs it

attributes to the technologies it id entifies. The discount rate assu med in the staff report, which is

five percent, has no support in any independent empirical analysis. ARB’s designated external

reviewer considers this issue to be “key” to the economic analysis in the staff report and

recommends that it be re-examined. 21 The peer-reviewed literature -- some of which the Board’s

external reviewer considered, but all of which the staff documents ignore -- indicates that the

private discount rate applied in the market for pe rsonal-use vehicles is far above five percent.

One of the most detailed empirical studies indicates that “only 35 percent of the present-value

cost savings provided by improved energy efficiency is capitalized in the purchase price of

vehicles.” 22 The rate used in some of the fu el economy benefit calculations in the National

Research Council study published in 2002, which wa s 12%, is more than twice that used in

August 6 staff report. 23 Those key studies are ignored in the staff report, which refers only to

21 See Sept. 22 Document at 71. In addition, the external reviewer concurs with the Alliance declarant on the importance of differences in loan rates for new and used vehicles, which is completely ignored in the staff’s analysis. See Declaration of Steven P. Douglas ¶¶ 14-17.

22 Howarth, “Fuel Economy Standards,” in Journal of Economic Perspectives, vol. 18 at 272 (2004), describing Dreyfus et al. , “Rates of Time Preference and Consumer Valuations of Automobile Safety and Fuel Efficiency,” Journal of Law & Economics , vol. 38, at 79-105 (1995). According to Prof. Howarth, Dreyfus and Viscusi calculate imp licit discount rates for safety and fuel economy attributes that range from 11 to 17 percent.

23 National Research Council, “Effectiveness a nd Impact of Corporate Average Fuel Economy (CAFE) Standards,” Washington D.C.” National Academy Press (2002) at 66. The NRC notes that its calculations and their results “are not recommended fuel economy goals.” Id. (emphasis in original).15 undocumented “trends” concerning automobile intere st loan rates that c onflict with the real

evidence in the marketplace. 24

In addition, the staff report does not take pr oper account of the fact that very few

individuals who purchase a new vehi cle plan to retain it for the vehicle’s full service life. For

example, the staff report sugge sts that a new-vehicle owner wh o obtained financing would find

the cost of interest and principal for the a dditional technology required by the proposed rule

would be far less than her monthl y “decreases in operating costs.” 25 But that is not how a

rational consumer would value futu re fuel savings. Particularly in the used-vehicle market,

“many automobile purchasers are liquidity constr ained, and therefore face implicit discount rates

higher than the market level.” 26 This has consequences not just for someone buying a used

vehicle, but for the purchaser of a new vehicle who does not plan to keep the vehicle for its full

service life. Assuming she considers loan rates in valuing future fuel savings, the new-vehicle

purchaser will not apply the relatively low loan rate that she can command for the new vehicle

when valuing the entire future stream of fuel economy savings that a vehicle will provide. In the

used vehicle market, the value of future fuel economy savings w ill be discounted at higher rates

24 The staff report’s reference to “historical tr ends” and a “ten-year averages of automobile interest rate and the general inflation rate” (Staff Report at 100) cites no sources, and is contradicted by the facts. Yet, as one of ARB’s external reviewers’ has noted, “real interest rates over the past few years have been at historic lows.” See Sept. 22 Document at 72. An Alliance member with a large vehicle finance business reports an average difference of more than one full percentage point between new- and used-vehicle loan rates for non-commercial customers; the new-vehicle rate has averaged about eight percen t and the used vehicle rate has averaged above 9.5 percent. See Douglas Declaration ¶ 17.

25 See Staff Report at v.

26 Kleit et al. , “Increasing CAFE Standards; Still a Ve ry Bad Idea” at 4 (Brookings, June 2004).16 than in the new-vehicle market, due to the liquidity constraints recognized in the literature and

greater uncertainty about the value of the collateral.

There is an even more basi c empirical problem with the di scount rate applied by the ARB

staff’s analysis in what appears to be that analysis’ version of the new-vehicle ( i.e. , first retail

sale) market. Suppose, for exampl e, that a new vehicle purchaser does plan to keep her vehicle

for its full service life (which very few new vehicle purchasers do). As the ARB staff’s analysis

apparently recognizes, a discount rate is essentially the opportuni ty cost of capital. A five

percent discount rate implies that the average ne w car buyer is willing to spend or borrow money

in order to obtain a five percent return over time. Current unsubsidized new car loan real interest

rates in the non-commercial market are in the range of eight percent. Even if consumers valued

fuel economy savings over the full service life as sumed by the ARB staff’s analysis, no rational

consumer would borrow money at eight percent in order to obtain a return on investment of five

percent. 27 Indeed, the five percent rate is not cons istent with other discount rates used by ARB

staff in other recent rulemaking in which it wa s necessary to select a discount rate, and its

realism has been questioned in ARB’s ex tramural review of the staff report. 28 In the extramural

review document, one reviewer properly recogniz es this as a “crucial consideration,” and the

ARB staff agrees with him that “real interest rates will be higher over the next 5-10 years than

27 If the ARB analysis is based on a study of the loan or discount rates that actually obtain in the retail new-vehicle market in Califor nia, and that are anticipated in the future, it should have been included in the staff publications. Absent such a study, the only evidence available to ARB on this point is the evidence that is supported by the accompanying Declaration of Steven P. Douglas.

28 See Sept. 22 Document at 72.17 they were over the past 5-10 years.” 29 A discount rate that is too low will, in an analysis like

that performed in the staff report, overstate the benefits of future fuel savings; that is why

selection of discount rates is “crucial.” The Board cannot adopt a rule based on a costeffectiveness assessment when a “crucial” input like th e discount rate has been conceded by the

ARB staff to be incorrect.

If it considers the use of loan discount ra tes to be an appropria te method for estimating

cost-effectiveness, the Board should direct the staff to identify a ra nge of realistic discount rates,

based on the published literature or some other sources that can be fully examined by the public,

and then should invite public comment on the new sta ff analysis. Only at that point would it be

appropriate for ARB to attempt to determine what levels of control might be appropriate, based

on the value of future cost savings to the consumer.

II. Technical and Economic Analysis of the Proposed Regulations

In addition to seeking a more systematic analysis of the cost-effectiveness of the

proposed rules consistent with Part I of these comments, the Alliance also recommends that ARB

examine carefully the estimates for the costs of producing and selling vehicles that meet the

proposed standards contained in th e staff report, along with the specific fuel economy benefits

estimated in the staff report. A realistic assessment of those engineering issues is also critical in

determining whether the proposed st andards will be cost-effective for the consumer, as well as in

assessing the broader economic imp acts of the proposed rules.

29 See Sept. 22 Document at 71, 75.18 A detailed examination of the engineering co st and benefit analysis contained in the

August 6 staff report appears in Appendix C of these comments. In this section of our

comments, we briefly review the main conclu sions in Appendix C, and then provide an

assessment of how the industry might attempt to comply with the proposed rules.

A. Engineering Cost and Benefit Assessment

As explained in detail in Appendix C to these comments, the staff report has substantially

underestimated the costs of the technologies it examines, and has substantially overestimated the

theoretical operating cost savings associated with the proposed regulation. When the

shortcomings in the staff analysis are corrected , the costs of the regulations for the average

consumer, and indeed for nearly any Californian, will be more than double the potential fuel

economy savings that the requisite technologies could provide. In the report contained in

Appendix C, Sierra Research, Inc. (“Sierra Research”) draws these conclusions, after stating a

number of important assumpti ons detailed in the report:

“[T]he cost of the technology [to comply with the proposed rules] is more than double the net present value (“NPV”) of the gasoline savings. ... [O]ur analysis indicates that the proposed regulation will not come close to providing fuel savings that are sufficient to offset the increase in vehicle prices required to achieve compliance under any plausible a ssumptions about the typical vehicle ownership period in California and the valu e normally placed on future operating cost savings. The proposed rules will therefore not be cost-effective for the average California driver, and there is no evidence ... to indicate whether the proposed rules will be cost-effective for any California drivers.

See Appendix C at 2. Some of the problems in th e staff report’s analysis reviewed in Appendix

C include the following:

• The price of passenger cars in the 2009 baseline case was inflated by the use of

unrealistic assumptions about t echnology changes that will be made in the absence of a

regulation.19 • The staff report’s analysis assumes the use of regular unleaded gasoline for

technologies that require more expensive, high er-octane gasoline; once this inconsistency is

corrected, those technologies do not pr ovide the assumed economic benefit. 30

• The staff report’s vehicle cost estima tes were based on an unrealistic 40% markup

factor to vendor-supplied parts pri ces, which is less than half of the markup required to account

for manufacturer costs for research, developmen t, engineering, warranty, overhead, sales and

marketing, profit, and dealer margin.

• The staff report failed to account for the integration costs of certain vendor-supplied

components that cannot merely be ad ded without other design changes.

• Cost estimates for technology changes provided by a third party, Martec, were

arbitrarily discounted by 30% to account for “unforeseen innovations in design and

manufacturing.”

• Credit was claimed for significant reductions in aerodynamic drag and rolling

resistance despite evidence that customers will not accept such changes and despite the fact that

customers do not routinely use orig inal equipment replacement tires.

• The fuel economy benefits of automatic transmission improvement s were inadvertently

assigned to manual transmissions as well.

30 This error is notable in part because the advi sors for the underlying project used in the staff report’s analysis, affiliated with Martec Inc., cautioned against it in communications with the ARB engineering staff. See Douglas Decl. Exhi bit D. At the July 2004 public consultation meeting to review the draft staff report, the ARB staff noted the high level of trust they placed on guidance from Martec, and so the failure to take Martec’s advice on this point is surprising.20 • Fuel cost savings were estimated as if the federal test procedures for fuel economy

reflect real-world consumption of fuel under actu al driving conditions. That assumption is not

supported in the record and is inconsistent with assumptions applied by ARB in other regulatory

analyses and in emissions compliance testing. 31

• Fuel cost savings were apparently based on inflated estimates of vehicle service life,

which may have resulted from a significant mathema tical error in the analysis of odometer data

from the State’s vehicle inspection and maintenance program.

Some of those same problems were identified in the extramural review document that the

Executive Officer made available yesterday. 32 The Board and the public need a specific, and

properly documented, response to each element in the analysis of the staff report contained in

Appendix C, with references to the data sources that support the response. If it intends to rely

on extramural reviews, it is obviously also im portant that the reviewers be given current

information.

As also indicated in Appendi x C, there are additional and pe rhaps even more fundamental

problems with the analysis of costs and benefits in the staff report. One of the most significant

of those problems is the assumption that the technologies described in the report will be

31 The federal government recognizes the differe nce between fuel economy as measured in the federal test procedures and the fuel economy actu ally exhibited by vehicles in normal operation, and applies an adjustment to the test measurem ents in the fuel economy estimates placed on new vehicle mileage labels. See Appendix C, Attachment C-2 at C2-2.

32 See Sept. 22 Document at 6 (questioning use of driving cycles used in ARB staff’s analysis), 20 (same). Remarkably, the ARB staff responses in the September 22 Document agree on this, but the staff presentation posted on ARB’s web-s ite yesterday does not make the necesary change in the staff’s benefit assessment.21 implemented nationwide, in the absence of any rule that requires such a result. If the market

actually demanded the relevant t echnologies, they would be in general use today, or the industry

as a whole would be planning to introduce them now on a full-product-line basis. There are no

plausible future estimates for gasoline prices in th is country that suggest that such a demand will

exist, within the time horizon of this proposed regulation. 33 If the technologies envisioned in

the staff report were to be deployed mainly in the markets covered by the regulation, the

engineering costs discussed in Appendix C would grow many-fold.

In addition, the ARB staff report assumes that the automotive industry has the economic

and human resources necessary to develop and produce the technology changes outlined in the

staff report in the time envisioned by the staff’s pr oposal. That assumption is not consistent with

any evidence in the record before ARB or the independent analysis performed by Sierra

Research, Inc., which is contained in Appendix C. As stated in Sierra Research’s analysis:

“[The ARB staff report] assumes that the automotive industry has the economic and human resources necessary to deve lop and produce the required technology changes by 2016. [The staff report ] pr ovides no support for this assumption and [Sierra’s] analysis indicates that vehicle design changes would need to occur at a rate that substantially exceeds historical practice, unless compliance is achieved by shifting motorists into smaller, lower performance vehicles. Information we received from some manufacturers indicates that compliance with the proposed regulations is not feasible in the absence of an increase in consumer preferences for such vehicles. ... Prudent engineerin g practice dictates th at new technologies be phased into production in a manner that provides some manufacturing and customer service experience with a single car line. This allows unforeseeable problems to be resolved without th e economic and produc t reputation risk associated with simultaneous deployment of a new technology across multiple car lines. However, this practice could not be followed if manufacturers are to

33 Even markets overseas that face much higher gasoline prices and different consumer preferences have not seen 100 percent deployme nt of the technologies that the staff report envisions to be found nationwide within a relatively short period of time. See note 8 above.22 comply with the proposed regula tions on a normal product development schedule.”

See Appendix C at 1. Sierra Research’s observa tions are borne out by the experience of the

manufacturers who have begun to deploy some of th e technologies discussed in the staff report.

For example, the automated manual transmissions and advanced valve-train systems that have

been a particular focus of the AR B staff’s analysis have generally been first introduced in limited

volumes on premium products after ma ny years of development.

In sum, the assessment of engineering costs and fuel economy savings contained in the

staff report presents an incorrect picture of the impact the proposed rules would have on the

average new-vehicle purchaser in California. Only the segment of the population that applies a

very high personal value to operating cost savings -- higher than most consumers -- or that has a

stronger than typical preference for particular vehicle designs or new technology will find the

technology packages that the staff report presents as cost-effective to be truly “economical” for

that consumer over the life of the vehicle. This indicates that there is a basic need for

reconsideration of the analysis taken in the staff report to the basic issue of cost-effectiveness, as

that term was defined by the Legislatur e for purposes of greenhouse gas regulation.

B. Likely Industry Response to the Proposed Regulation

Because it does not have and cannot obtain access to the specific business plans of its

members, the Alliance requested an independent “best case” analysis of how the industry as a

whole might attempt to comply with the propos ed regulation. The preliminary results of the

analysis are presented in appendices to these comments. The basic approach taken in that

analysis was to assume, as did the ARB staff, th at various bundles of technologies, when applied

to a hypothetical or “average” vehicle, would result in changes in both fuel consumption and

retail prices.23 The preliminary analysis in Appendix B had to be completed in the very short period of

time permitted by the current hearing date. For that reason, the only corrective adjustments to

some of the most obvious shortcomings in the sta ff report’s engineering cost and benefit analysis

are those described in Appendices B and C. It b ears emphasizing that neither the authors of the

study in Appendix B nor the Alliance can represen t that the response to the proposed regulation

in Appendix B is a “compliance strategy” for the proposed rule. 34 To the contrary, confidential

submissions to Sierra Research from some members of the Alliance indicate the following:

• Some manufacturers deem the risk of customer resistance to some of the key

technologies identified in the staff report to be too large to permit deployment of those

technologies at the level assume d in the ARB staff’s analysis.

34 Owing to the limited time available to prepare the analysis, Appendix B does not contain an assessment of how the proposed standards would a ffect employment or fi nancial conditions in the automobile industry outside California. Th e impact of the proposed rules outside the State are likely to be severe for the companies subject to those rules and their employees. Also omitted from Appendix B are sensitivity analyses th at would demonstrate how events beyond the control of California would ensure the failure of even an aggressive technology strategy in meeting the proposed rules. Those scenarios incl ude significant reductions in gasoline prices, and customer resistance to some of the releva nt technologies that the ARB staff forecasts as needed to meet the proposed standards, but whic h would degrade performance or other attributes to an extent not tolerated by Ca lifornia or other U.S. customers. The result would be an increase in used-vehicle sales and increased market share for companies that are not subject to the same requirements as those who must comply prior to model year 2016. The history of federal fuel economy regulation demonstrates that full-line ve hicle manufacturers who have been constrained by the CAFE standards cannot force the market to accept the higher fuel economy vehicles that federal regulations have required, and as a result, the CAFE sta ndards for some vehicles have required relaxation in ligh t of market conditions. See Declaration of S. Kingsley Macomber (adjustment of CAFE standards when requ ired by conditions beyond the control of manufacturers). The historical record does not document the adverse impact of the CAFE standards on consumers and on some manufacturers that could not be prevented by a timely adjustment of the standards.24 • In addition, some vehicle manufacturers face capital constraints that will limit their

ability to invest in new technology and have in sufficient engineering resources to implement

changes at the pace required by the proposed regulation.

• As a result, the likely response by so me of the manufacturers who would be regulated

by the proposed rules would involve the disc ontinuation of many products from the fleet

regulated by the California rule -- even though th at strategy (so-called “mix shifting”) is very

costly from a business perspective. This appr oach will be needed because no combination of

technologies and other vehicle changes will be suffi cient to bring the relevant manufacturers into

compliance with the regulation when fully impleme nted, and because sufficient credits will not

be available to permit manufacturers in a deficit position to avoid mix-shifting.

• Equally important, once the proposed st andards would be fully implemented, vehicle

manufacturers will generally not attempt to sell “California” vehicles in jurisdictions where the

proposed rules would not apply. This means that the cost analysis contained in the Sierra

Research study understates the likely costs of vehi cles meeting the new standards, because there

will be no nationwide producti on economies of scale once the rules took full effect. 35

Significantly, each of the Board’s external reviewers whose views were made available

just prior to today’s hearing, and who comme nted on the compliance issues, concurs that

strategies like mix-shifting and other approaches different from the use of new technologies must

be considered in a complete analysis of the impacts of the proposed rules. 36 Like the Alliance,

35 See Declaration of Thomas C. Austin, include d in Appendix C. The Alliance has received no confidential information from any source, including any member of the Alliance.

36 See, e.g., Sept. 22 Document at 13, 79-8025 those reviewers were not given enough time fully to evaluate compliance strategies in a fully

systematic way. Even given its necessary simplifications, however, the study submitted in

Appendix B demonstrates severe adverse eff ects on the California economy, which warrant

careful consideration by the Board. The main findings in the study regarding the California

economy can be summarized as follows:

1. By raising vehicle ownership costs above the value of any fuel savings, the proposed

regulations would lead to almost 100,000 fewer jo bs in 2016. The cumulative effect would mean

that by 2016, more than 300,000 person-years of em ployment would have been sacrificed over

an 8-year period. (See Appendix B at 33-35.)

2. The California Gross Re gional Product would be reduced by more than $11.6 billion

in 2016, with a cumulative loss from 2009 to 2016 of more than $36 billion (in 2003 dollars).

Disposable personal income lo sses would be similar, peaking at $7.9 billion in 2016 with a

cumulative total of more than $25 billi on by 2016. (See Appendix B at 31-32.)

3. Tax revenues in 2016 would be almost $1 billion le ss in California, with a

cumulative loss of more than $3.2 billion fro m 2009 to 2016. (See Appendix B at 36.)

Against those negative effects of the pr oposed regulation should be weighed their

environmental benefits, if any. The environmental effects of the proposed rule are outlined in

the next section of these comments.

III. Environmental and Other Health-Related Impacts of the Proposed Regulation

The August 6 staff report also includes a disc ussion of the environmental effects that the

staff and its consultant s attribute to the proposed regulati on. As the staff report appears to

recognize, it would be incorrect to attribute any significant reduction in global warming, or any

other discrete impact on c limate, to the implementati on of the proposed rules. The best available26 evidence demonstrates that even under very optimistic assumptions about the impact of the

proposed greenhouse gas rules in California, ther e would be no significant impact on the global

or California climate. Any theoretical change in temperatures that a rule of this nature could

produce would, in turn, have no measurable effect on ozone levels in California -- even if the

proposed greenhouse gas rule were implemented nationwide. 37 There is, in sum, no reliable

evidence that implementation of the proposed re gulation will reduce global warming or have any

impact on ozone levels, or any other air pollution levels. If the staff believes that there is any

such evidence, it needs to identify it and then permit public comment on the evidence before

submitting it to the Board for consideration. As the record now stands, there is no quantification

of any particular environmental benefit from the proposed rules, or any reasoned explanation of

how such a benefit could be estimated.

This crucial point -- which is that there is no real connection between the proposed rule

and the global climate conditions of concern to the framers of A.B. 1493 -- was apparently

recognized by one of the ARB’s external reviewers, whose assessment was finally released

yesterday: in the September 22 review document , he states that any impact of the proposed

37 See Appendix B, Attachment B-5 . Any claim that the proposed rule would reduce ozone levels in California to a measurable extent is therefore “baseless.” Id. at B5-4. In a separate submission to the record, the Principal Scientist of Air Improvement Resource, Inc. (“AIR”), an air quality research firm, also addresses claims concerning climate scientific issues in the August 2004 staff report. AIR’s review of the evidence should be fully addressed by the Executive Officer, insofar as she relies to any extent on the claims concerning climate science in Chapter 2 of the staff report and its related do cuments to support the proposed regulatory action. One key point is that the staff report makes no credible connection, even at a qualitative level, between the greenhouse gas reductions attributed to this proposed rule and the environmental evidence reviewed in staff report. For exam ple, there is no connection between the greenhouse gas reductions that are being sought in this rule making and daily peak temperatures, which are of primary importance in smog formation. See Declaration of Jon M. Heuss (AIR).27 regulation on ozone “is not quantified to any real extent” in the staff’s document. (Sept. 22

Document at 22.) The ARB staff’s response on that point is to agree, but then to try to dismiss

its relevance by claiming that their focus is on “the proposed regulation and the supporting

technologies.” ( Id .) That response appears to treat the issue of global climate as having no role

in the writing of a rule intended to force technology for its own sake.

The Board itself should not give such little attention to the overa ll environmental and

public-health risks and benefits i nvolved in this rulemaking. Although the proposed rule by the

staff’s own admission will have no quantified benefits in reducing global warming or smog,

there are clear adverse environmental effects that would result from implementation of the

proposed rule

. This is largely conceded in the “Adde ndum” to the August 6 staff report, which

was published on September 10, 2004 (and which apparently was not provided to ARB’s

external reviewers). Once the staff’s estimate d rebound and fleet turnover effects are included,

the proposed rule will under the staff’s own estima tes result in increases in overall smog-forming

pollutants from the regulated vehicle fleet, as vehicles are driven more and the age of the fleet

increases. The staff’s estimates appear in Ta ble 12.4-1 of the September 10 Addendum, and are

discussed in detail in Appendix B of these comments. Th e staff’s estimates were based on

unrealistic estimates of the engineering costs and fu el savings benefits of the proposed rule, as

noted above and explained in de tail in Appendix C, but even those estimates show pollution

increases. When more realistic estimates are used (estimates which still understate the total costs

of the proposed rules), the excess smog-forming emissions in 2020 could surpass 30 tons per day

in California, depending on the pr edictive models used in the analysis, as demonstrated in

Appendix B.28 The 2002 legislation directing ARB to consider greenhouse gas regulations did not give

the Board any authority to adopt measures that might increase emissions of precursor or criteria

pollutants -- a key point explained in Appendix H. Before this rulemaking can proceed further,

it is critical for the staff to review and respond to the analytical problems in their estimates, as

well as to address the estimates of adverse effect s in the independent studi es that are being filed

in the record. The staff reviews would then require public comment, be fore the Board could

consider taking any action.

The only method by which the proposed rule can be suggested not to have those adverse

effects on smog-forming pollution levels is by accepting at face value the September 10

Addendum’s claims that the proposed rules mig ht indirectly reduce “upstream” emissions.

Because the staff did not present those claims and their basis in its August 6 publications, it

would be improper for the Board to accept thos e claims without allowi ng proper public review,

in the manner outlined elsewhere in these comments. 38 To the extent that those claimed indirect

upstream emissions estimates can be understood, however, they appe ar to be inconsistent with

the studies on which they are supposedly based. When partially corrected to conform with the

prior studies, the upstream emissions benefits are minor, compared to the excess emissions from

the vehicle fleet itself. In fact, even if the Addendum’s estimated upstr eam emissions benefits

38 The extramural review document released yesterday indicates that one of the relevant documents is “now ... available for public review,” but the Alliance is not aware of when or how it was made available, desp ite diligent efforts to try to obtain it. (Sept. 22 Document at 14.)29 are taken at face value, the net effect of the proposed regulation will still be an increasein smogforming emissions. 39

Perhaps even more importantly, the proposed rules will compromise traffic safety. This

increased risk will result from two separate eff ects from the proposed rule, neither of which is

considered in the staff’s publications. First, th e rebound effect will result in increased driving, as

explained in Appendix B of these comments. 40 This will increased exposure to the risk of

39 See Appendix B Attachment B-6. The Addend um projects a small net reduction in emissions when fleet emissions increases are combined with upstream emissions decreases. But that result is fragile: it depends on (1) the use of a comput er model whose details ha ve been withheld from public scrutiny, and (2) the use of the unrealistic cost and price estimates discussed above and in Appendix C of these comments. (By the ARB st aff’s own admission, in the extramural review document finally released yesterday, the relevant computer model is in an “early stage of development.” See Sept. 22 Document at 77.) When one uses either a realistic set of cost assumptions, or the only predictive model whose full details are being put in the public record (i.e., the model described in Appendix B of th ese comments and detailed in Appendix I) the result is a net emissions increase. As a legal matter, when there is so much evidence of possible emissions increases, it is critical for the Board to conduct a much more detailed environmental review than the current rulemaki ng process and schedule allows. See also Sept. 22 Document at 85 (external reviewer calling ARB’s consumer choice model whose details have not been released to the public “important” to the overall analysis).

40 Analyses of the rebound effect in California that are contained in the staff report are thoroughly critiqued and corrected in several different filings in the record. Those include an independent analysis by NERA, a separate inde pendent analysis by Sierra Research, and two additional reviews of Robert Crawford and Laurentius Marais. As the NERA reviewers indicate, the “ad hoc approach” taken in the rebound study for ARB on some key analytical issues “is not defensible.” See Appendix D at 43. The ARB external review of the staff’s rebound analysis was apparently not completed. Under the California Environmental Quality Act and the Board’s implementing regulations, the work by NERA, Crawford and Marais must be fully considered by the ARB staff, addre ssed in a written document for public review, and then considered by the Board, if the intent is to continue the rulemaking process. See Appendix
H at 19-32.30 accidents, including fatal accident s and accidents involving serious injuries, which is quantified

in a preliminary manner in Appendix F of these comments. 41

Second, the proposed rule will result in th e overall down-weightin g of the California

motor vehicle fleet in order to comply with the proposed standards, as well as weight reductions

in some vehicles in order to reduce fuel consum ption. This issue is completely ignored by the

staff report, which simply assumes for purposes of its analysis that the fleet will not lose weight

(while conceding that it may). If the proposed rules do not result in reduced weight and an

increase in safety risk, they would be the first fuel-economy-related rules in history not to have

such an effect, and the study contained in Appendix C explains why weight reductions are

inevitable. The effects of weight reduction are “clear,” according to a report by the National

Research Council:

“[P]ast downweighting and downsizing of the light-duty fleet, while resulting in significant fuel savings, has also resulte d in a safety penalty. In 1993, it would appear that the safety penalty in cluded between 1,300 and 2,600 motor vehicle crash deaths that would not have occurred had vehicles been as large and heavy as in 1976.”

National Research Council, Effe ctiveness and Impact of Corporate Average Fuel Economy

(CAFE) Standards (2002) at 28. To evaluate the related possible effect of the proposed CO2

rules on California traffic safety, a researcher with expertise in the use of current National

Highway Traffic Safety Administration and other predictive models performed a preliminary

41 Only preliminary quantifications of the safety risks are possible at this point, given the limited time allowed to review the propos ed rule and to prepare comments. But even that preliminary analysis is more than sufficient to require additional review of the issue in the manner required by the California Environmental Quality Act, which requires the evaluation of safety risks just as it does other threats to public health. See Appendix H at 24-25, 30.31 analysis that assumed some down-weighting of th e California fleet to meet the proposed rules.

The results, reported in Appendix F, suggest that the proposed rules may cause hundreds of

additional deaths once the Califor nia fleet is fully populated by vehicles meeting the proposed

CO2 requirements. 42 Tellingly, when one of ARB’s external reviewers raised the issue of

weight reduction with the ARB staff as one of se veral important issues the ARB staff needed to

consider, the staff chose not to focu s on the weight issue in its response. 43

ARB must consider all the evidence bearing on the environmental and safety risks of the

proposed regulations before it decides what acti on to take. The Alliance urges the Board to

instruct the staff to respond specifically to all the issues of environmental and safety risk raised

in the attached reports, and to permit public review of those respons es, before ARB decides

whether to approve the Executiv e Officer’s recommendation.

IV. The Board’s Options on the Current Record

The Alliance recognizes the tremendous level of effort that the ARB staff has expended

to date in preparing a recommendation for the Board’s review. As our review of the record

above indicates, however, the Alliance cannot su pport the proposed regulations. We urge ARB

to consider carefully its options before committin g the State to the proposed regulation. Several

key points stand out in the record.

42 See Appendix F.

43 See Sept. 22 Document at 79-81 (reviewer notes that “manufacturers might respond” to the rule by “lowering motor vehicle weight;” sta ff responds that the “industry’s response to the regulations may be very different from those [sic ] identified by the staff” but does not respond to the specific comment from the revi ewer on weight reductions).32 First, the record indicates that some supporters of the A.B. 1493 legislation may have

developed unrealistic assumptions about the efficacy of any rule that ARB could adopt, insofar

as the goal is actually to reduce greenhouse gase s to any significant degree. The staff report

largely agrees that action by ARB will have little or no effect on greenhouse gas levels, and it

does not attempt to connect those minor estimated reduction to any impact on the California

climate. Instead, the staff report attempts to develop f our different reasons to proceed with the

regulation. It states as follows:

“Greenhouse gas emissions from Californi a light duty vehicles are a small fraction of the global total.... It does not necessarily follow, however, that California should do nothing. Rather, th ere are several compelling reasons to move forward with the proposed regulation, even while recognizing that by itself it will not solve the climate change problem . First of all, the proposed regulation is a “no regrets” policy that addresses climate change emissions but at the same time provides economic benef it to the state. Second, California would not be acting in isolation. Other states in the United States, and other countries internationally, have already taken or are contemplating steps to reduce GHG emissions from a variety of sectors a nd sources. Moreover, California action specifically to control GHGs is strongly supported by the public.... Finally, the longstanding technology-forcing role of California regulation should not be understated. There have been many inst ances where other jurisdictions have adopted motor vehicle controls that were pioneered in California. Thus there is potential for the proposed regulation to spre ad to other jurisdictions and thereby add momentum to the already existing se t of measures that are underway around the globe.”

Staff Report at vii-viii. In light of that rati onale for implementing a greenhouse gas regulation, it

is fair to ask what evidence actually suppo rts each justification for the rulemaking.

Economic benefit to the State. There is no legitimate basis for the suggestion that

additional regulation will provide economic benefit to the state. The economic impact analysis

in the staff report ultimately rests on conjecture that any reduction in the number of vehicles sold

by California dealers will be offset by an increase in net revenue (or profit) that will result from

the higher prices for the technology-enhanced vehicl es that the staff report predicts will enter the33 market. California new-vehicle dealers already operate in a highly competitive market, in which

they can respond quickly to changes in consumer demand and advances in technology that will

increase demand and revenue. The record contains no evidence to support the premise that the

proposed regulation will somehow move in a perm anent manner the market into vehicle classes

that will produce higher dealer profits. 44 On the contrary, the available evidence indicates that

the proposed rules would create new hardships fo r the state’s auto dealers and other automotiverelated businesses, with no offsetting environmental benefit.

California would not be acting alone. The staff report predicts that if ARB takes

regulatory action, other States will follow. This is a speculative claim that suggested that the

wisdom of adopting the proposed rules depe nds on the unknown future actions of other

44 ARB commissioned a number of studies on the pr icing issues, which are mentioned in the staff report and related document s, but since the publication of the 45-day notice the ARB staff has indicated that it is not relying on those studi es to support its proposal. The studies have not been properly identified and placed in the record, in any event, and so it would not be proper for ARB to rely on them to support regulation. Some drafts of apparently similar reports provided informally to the Alliance are discussed in Appendix G.

The only sector-specific economic analysis in the August 6 staff report on which the proposal is apparently based is a brief review of the possible effects of the regulation in a single portion of the State (the San Diego area) using unsupported assumptions rather than a validated economic model. That review shows injury to th e automotive sector. For that reason if no other, the Board should not approve the staff proposal b ecause the staff report and related documents did not present a complete analysis of the pot ential impact of the proposed regulation on the affected business sectors in all areas of the Stat e. This is important both as a matter of sound public policy and because such a statewide anal ysis is required both by A.B. 1493 and other directions from the Legislature.

Some of the ARB staff’s estimates rely on the CARBITS consumer choice model. CARBITS is, according to the ARB staff, not in the possession or subject to the control of ARB. For that reason its source code and its specifica tions have not and cannot be properly scrutinized by ARB or the public. The only fully documented consumer choice model in the record is the model prepared by Sierra Research and NERA.34 independent states. Even if othe r States follow California’s lead, the staff report does not claim,

nor could it, that there would be any effect on th e California biosphere. In any case, if the

reaction of other states is to become the basis for regulatory action, the Board needs a full report

indicating how and why action in other States w ould benefit the Californi a environment or serve

the purposes of the statute.

Public support. The claim that the public supports the regulation of greenhouse gas

emissions from motor vehicles appears to rest pr imarily on a recent public poll. The Board is

supposed to exercise its own expertise based on a fu ll record of all the relevant issues. Such a

poll is not entitled to any weight in the Board’s analysis, because among other reasons the

participants in the survey did not have full info rmation about the specific costs and benefits of

the proposed regulation, and also lacked an awar eness of all the legal and policy constraints on

the Board’s decision-making. It should also be not ed that the survey participants presumably

were polled before the discovery of the error in the staff report that necessitated a nearly 70

percent increase in the estimated engineering costs of full-size trucks. Of course, the most

significant shortcoming in the staff’s reliance upon a public poll is that the actual purchasing

decisions by Californian’s is a far more reliable m easure of the vehicles Californians desire.

Regulatory momentum. The claim that regulation s hould be pursued in California

because it might also be pursued elsewhere appears either to be circular and ultimately irrelevant

to the Board’s evaluation of the specific proposal from the staff, or is just a restatement of the

claim that California would not be ac ting alone, which is discussed above.

In addition, it should be clear from the record that the proposed rule will impose

additional costs on consumers when they purchase automobiles. While the staff report greatly

understates those costs, the fact that the re gulation will impose costs is undeniable. Unlike35 regulatory costs that are imposed to improve air quality, enhance vehicle safety or promote

recycling, however, the costs of this regulation ca nnot be justified by reference to any specific

public goal, other than those listed in the preceding excerpt from the staff report and discussed

above. As noted in other parts of the Alliance’ s comments, the staff repor t’s examination of how

those costs will affect the California automobile industry is limited to a study of industry impacts

in a single portion of the state -- which hardly complies with the Legislature’s expectation that

the Board would consider statewide economic impacts.

There are also significant potential advers e effects of the proposed regulation on the

environment and public safety. In the most recen t staff analysis of the impacts of the proposed

rule on criteria and precursor pollutants, released only on September 10, the staff concedes that

smog-forming emissions from the ve hicle fleet itself will increase as a result of the proposed

rule. The revised estimate project s a net decrease in the emissions of conern only by introducing

a completely new, undocumented and highly qu estionable set of assumptions about how the

proposed rule might affect upstream emissions, mainly related to emissions from tanker ships

that will supposedly be reduced indirectly by the regulation. As recently as last week, the ARB

staff had still not documented its analysis of those upstream emissions, and in particular the

shipping-related emissions. Th e critical question of whether a proposed rule will increase

regulated emissions should not be decided on an undocumented basis that has not allowed any

member of the public an adequate opportunity for review and comment.

Likewise, the staff report’s conclusion th at the proposed regulation will not cause a

“rebound” effect that will increase vehicle miles tr aveled, local emissions from automobiles, and36 accidents and injuries rests mainly on a model prepared by researchers who madefundamental

errors in their analysis. 45 An analysis of the data that the ARB’s consultant essentially said was

too resource-intensive -- the Calif ornia Smog-Check data -- de monstrates a significant rebound

effect, consistent with the published literature. 46 In addition, once the errors in the ARB

consultant’s model are corrected, that model itself confirms the existence of a significant

rebound effect.

Perhaps most importantly of all, the staff report simply ignores, without any explanation,

the likely effect of the proposed rule on the wei ght and crashworthiness of the California motor

vehicle fleet. 47 There is no evidence of any serious attempt to consult the federal, State and local

agencies with expertise on such safety issues. Th e issues raised by likely vehicle weight changes

induced by the proposed rule need to be care fully evaluated in a public process, and then

presented to the Board, before ARB is asked to take regulatory action.

All the relevant issues need more study. This is underscored by the document that the

Executive Officer apparently posted on the ARB web-site yesterday, called “Peer Review

Comments and Responses.” 48 Several features of that document, in addition to the specific

45 See Appendix B, Attachment B-3.

46 See Appendices C and D.

47 See Appendix F.

48 Presumably the intent, and certainly the result, of the Executive Officer’s action has been to provide additional information or analysis that she considers to be relevant to the merits of the staff’s proposal. Her action was substantially no ncompliant with the Ca lifornia Administrative Procedure Act. See Gov’t Code §§ 11347.1 (requiring at least 15 days for public comment on

“ any ... study, report or other documen t” added to the rulemaking file) and 11347.3 (contents of rulemaking file must include “ all ” materials submitted to the agency or relied upon by the (Continued...)37 points it makes that are noted above , are important to note. The September 22 document states at

the beginning that “[n]o reviewer found that ARB failed to demonstrate that a scientific portion

of the proposed rule was based upon sound scientific knowledge, met hods and practices.” (Sept.

22 Document at ii.) The “Major Conclusions” se ction of the document (whose authorship is not

disclosed) is crafted to be gene rally supportive of some parts of the staff analysis. But as noted

above, in key areas, the extramural revi ewers find fault with that analysis.

Second, the September 22 document is the wo rk of several reviewers. The only common

version of the staff analysis given to all of th em appears to have been the June 14 draft staff

analysis, not the “final’ version of the staff report released in August 2004. Some reviewers

were provided with the August 2004 staff report, but all were not. None of the reviewers were

apparently asked to comment for present purposes on the September 10 “Addendum,” which

contained the modified engineering cost estimates. That omission is fatal to any reliance on

significant portions of the September 22 documen t, if not the entire document, because ARB’s

reviewers frequently relied on the cost estimates in the earlier documents. 49

Third, the September 22 document is by it own admission incomplete. There is, for

example, no treatment of the critical “rebound” issu e: the relevant section of the document ends

agency in a rulemaking) (emphasis added). The Alliance believes that observance of those provisions of the APA are particul arly important here because the contents of the September 22 document support its assessment of the staff anal ysis in important respects, and therefore adequate time should be allowed to examine the implications of the review documents. This cannot be done literally overnight, which is all that the current schedule appears to allow.

49 See, e.g., Sept. 22 Document at 71-79. Th e reviewer does not i ndicate what his position would be if he was advised that the staff had dramatically increased the incremental cost estimates for vehicles subject to the new rules. The effects he surmises to be “minor” or “small” became much larger after the ARB st aff revised their cost estimates.38 with a sentence fragment, and the note “TO BE COMPLETED.” (Sept. 22 Document at 78.) It

would be inappropriate to place reliance on any ge neral conclusions from the review based on an

analysis that was incomplete overall.

The incompleteness and inconsistencies in the September 22 document, and our overall

review of the record presented here and in th e appendices to these comments, underscore this

basic point: the current record does not suppor t the action proposed by the staff report, and

instead warrants rejection of the proposal. Approval of that proposal under the current

circumstances would certainly deprive the public of the full and fair hearing that the public needs

in a rulemaking of this importance.

Nevertheless, there are a number of other ac tions that ARB can properly consider, other

than approval of the staff’s proposal. One su ch action, recommended by the Association of

International Automobile Manufacturers at the July 7, 2004, public consultation meeting, was

the use of incentive programs to encourage wide use of fuel-efficient technologies. The Alliance

supports consideration of that a lternative, provided that any regulatory program adopted by ARB

of this nature is confined to public fleets that are directly owned by the State and operated by

executive-department agencies. The other options that are worthy of consideration by the Board

following a staff evaluation and prope r public notice include the following:

• Recommendations to encourage the use of fu el efficient GF-3 or GF-4 engine oil.

• Sponsorship of driver education programs to promote efficient driving as outlined by

the U.S. Environmental Protection Agency, and public education programs on the importance of

proper vehicle maintenance to enhance fuel econo my. If the public has a better understanding of

how its driving and maintenance practices can a ffect operating costs, households will be able

better to manage their vehicle operating costs.39 • Development of a volunt ary vehicle repair, retrofit and retirement program. The

legislature specifically authorized this program as part of Carl Moyer (A.B. 923 (Firebaugh)). A

well-designed gross-polluter repair, retrofit, a nd retirement program could not only improve fuel

efficiency but also dramatically re duce gross polluting vehicle emissions.

Such alternatives to the proposed regulati on could serve the long-run purposes of A.B.

1493 as effectively as the proposed regulation, wit hout the significant adverse environmental and

economic consequences of the current proposal.

V. Conclusion

The Alliance supports Califor nia’s efforts to improve air quality and to enhance

consumer value. The rule proposed by the ARB staff would not serve those objectives, and

would require consumers to pay more than the re sidents of other States, with no environmental

gain for the State or the nation. The Alliance ur ges the Board to disapprove the proposed rule

and to direct the staff to undert ake further analysis, with the goal of developing one or more

alternative proposals that avoid the problems discussed above and in other comments being

submitted to ARB.

Respectfully submitted,s

ALLIANCE OF AUTOMOBILE MANUFACTURERSDebbie Rabin - Clean Cars Regulations Page 1

From: "Betsy Johnson" <bet sy_johnson@comcast.net> To: <drabin@mde.state.md.us> Date: 9/30/07 4:03PM Subject: Clean Cars Regulations

I'm writing to urge MDE not to make any changes to the Clean Cars regulations as currently proposed.

With transportation causing 30% or more of global warming emissions it's imperative that we take strong action now. We're relying on this administration to do the right thing on this issue..

Thanks.

Betsy Johnson

MD Sierra ClubDebbie Rabin - Cleans Cars regulations Page 1

From: dave o'leary <daveol@earthlink.net> To: <drabin@mde.state.md.us> Date: 10/2/07 5:23PM Subject: Cleans Cars regulations

Hello, I am writing to encourage that the proposed Clean Cars regulations be implemented as proposed. Thank you.

David O'Leary Maryland Chapter, Sierra Club

CC: <dave.oleary@mdsierra.org>Debbie Rabin - Clean Cars Act Regulations Page 1

From: David/Cindy Hackett <hackett_hale@yahoo.com> To: <drabin@mde.state.md.us> Date: 9/29/07 6:11PM Subject: Clean Cars Act Regulations

Dear Mr. Secretary It is vital to m, my family and to MD that the Clean Cars Act regulations published in draft for puoblic comment be implemented as published; without changes. My family needs clenaer air and more fuel efficient vehicles. Hold the line against the endless industry foot dragging resisting pollution control, carbon emissions reduction and better fuel efficiency. Thanks for all you do to make our energy sector cleaner and more efficient. I look foward to actions requiring and providing financial incentives for very rapid development of renewable energy sources for Maryland.

David Hackett 1303 Redwood Ave Annapolis, MD 21403

___________________________________________________________________________________

_ Boardwalk for $500? In 2007? Ha! Play Monopoly Here and Now (it's updated for today's economy) at Yahoo! Games. http://get.games.yahoo.com/pr oddesc?gamekey=monopolyherenowDebbie Rabin - Page 1

From: <joeadams@comcast.net> To: <drabin@mde.state.md.us> Date: 9/30/07 9:51PM

re: Clean Cars Act regulations

To Whom it may concern,

This is a note from a concerned citizen asking t he MDE not to change anything of substance in the proposed regulations of the clean cars act. That is , nothing should be done that would have the effect of weakening the law.

I wish the Act could have gone farther than it did. The need to limit emissions and especially to improve fuel efficiency is urgent.

Please keep these crucial protections st rong as the regulations are drafted.

Sincerely,

Joseph A. Adams, M.D., F.A.C.P. 1405 Berwick Rd. Towson, MD 21204 home phone: 410-296-6338 cell: 410-812-1447Debbie Rabin - Clean Cars Act supporter Page 1

From: "MaryEllen Kustin" <maryellenkustin@gmail.com> To: <drabin@mde.state.md.us> Date: 10/2/07 4:01PM Subject: Clean Cars Act supporter

Hello, I am a resident of Riverdale Park, MD but will not be able to make it to the public hearing on the regulations to implement the Clean Cars Act this Wednesday, Oct 3, at 10:00 at MDE. But I would like to urge MDE not to make any changes to the regulations as proposed.

Thank you!

-Mary Ellen M. Kustin (301) 448.2056 maryellenkustin@gmail.comDebbie Rabin - Clean cars Page 1

From: Sue Chapelle <suechapelle@yahoo.com> To: <drabin@mde.state.md.us> Date: 9/29/07 3:17PM Subject: Clean cars

Hello, I understand that you all will be holding hearings next week about implementing the new clean car regulations passed by the General Assembly. I strongly support these measures to make our air cleaner and healthier and to lessen our causing global warming. Please make sure that the regualtions don't weaken the law or allow people to get out of following the intent of the law. Sincerely, Sue Chapelle Baltimore County

___________________________________________________________________________________

_ Moody friends. Drama queens. Your life? Nope! - their lif e, your story. Play Sims Stories at Yahoo! Games. http://sims.yahoo.com/