Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

III. EPA Proposal for Greenhouse Gas Vehicle Standards 

A. Executive Overview of EPA Proposal 

 1. Introduction

 The Environmental Protection Agency (EPA) is proposing to establish 

greenhouse gas emissions standards for the largest sources of transportation greenhouse 

gases--light-duty vehicles, light-duty trucks, and medium-duty passenger vehicles 

(hereafter light vehicles). These vehicle categories, which include cars, sport utility 

vehicles, minivans, and pickup trucks used for personal transportation, are responsible for 

almost 60% of all U.S. transportation related greenhouse gas emissions. This action 

represents the first-ever proposal by EPA to regulate vehicle greenhouse gas emissions 

under the Clean Air Act (CAA) and would establish standards for model years 2012 and 

later light vehicles sold in the U.S. 

 EPA is proposing three separate standards. The first and most important is a set 

of fleet-wide average carbon dioxide (CO2) emission standards for cars and trucks. These 

standards are based on CO2 emissions-footprint curves, where each vehicle has a 

different CO2 emissions compliance target depending on its footprint value. Vehicle CO2

emissions would be measured over the EPA city and highway tests. The proposed 

standard allows for credits based on demonstrated improvements in vehicle air 

conditioner systems, including both efficiency and refrigerant leakage improvement, 

which are not captured by the EPA tests. The EPA projects that the average light vehicle 

tailpipe CO2 level in model year 2011 will be 326 grams per mile while the average 

vehicle tailpipe CO2 emissions compliance level for the proposed model year 2016 

standard will be 250 grams per mile, an average reduction of 23 percent from today’s 

CO2 levels. 

 EPA is also proposing standards that will cap tailpipe nitrous oxide (N2O) and 

methane (CH4) emissions at 0.010 and 0.030 grams per mile, respectively. Even after 

adjusting for the higher relative global warming potencies of these two compounds, 

nitrous oxide and methane emissions represent less than one percent of overall vehicle 

greenhouse gas emissions from new vehicles. Accordingly, the goal of these two 

proposed standards is to limit any potential increases in the future and not to force 

reductions relative to today’s low levels. 

 

 This proposal represents the second-phase of EPA’s response to the Supreme 

Court’s 2007 decision in Massachusetts v. EPA1 which found that greenhouse gases were 

air pollutants for purposes of the Clean Air Act. The Court held that the Administrator 

 

1

 549 U.S. 497 (2007). For further information on Massachusetts v. EPA see the July 30, 2008 Advance 

Notice of Proposed Rulemaking, “Regulating Greenhouse Gas Emissions under the Clean Air Act”, 73 FR 

44354 at 44397. There is a comprehensive discussion of the litigation’s history, the Supreme Court’s 

findings, and subsequent actions undertaken by the Bush Administration and the EPA from 2007-2008 in 

response to the Supreme Court remand. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

2

must determine whether or not emissions from new motor vehicles cause or contribute to 

air pollution which may reasonably be anticipated to endanger public health or welfare, 

or whether the science is too uncertain to make a reasoned decision. The Court further 

ruled that, in make these decisions, the EPA Administrator is required to follow the 

language of section 202(a) of the CAA. The Court remanded the case back to the 

Agency for reconsideration in light of its finding. 

 The Administrator responded to the Court’s remand by issuing two proposed 

findings under section 202(a) of the Clean Air Act.2

 First, the Administrator proposed to 

find that the science supports a positive endangerment finding that a mix of certain 

greenhouse gases in the atmosphere endangers the public health and welfare of current 

and future generations. This is referred to as the endangerment finding. Second, the 

Administrator proposed to find that the emissions of four of these gases--carbon dioxide, 

methane, nitrous oxide, and hydrofluorocarbons -- from new motor vehicles and new 

motor vehicle engines contribute to the atmospheric concentrations of these key 

greenhouse gases and hence to the threat of climate change. This is referred to as the 

cause and contribute finding. Finalizing this proposed light vehicle regulations is 

contingent upon EPA finalizing both the endangerment finding and cause or contribute 

finding. Sections III.B.1 through III.B.4 below provide more details on the legal and 

scientific bases for this proposal. 

 As discussed in Section I, this GHG proposal is part of a joint National Program 

such that a large majority of the projected benefits are achieved jointly with NHTSA’s 

proposed CAFE rule which is described in detail in Section IV of this preamble. EPA’s 

proposal projects total carbon dioxide emissions savings of nearly 950 million metric 

tons, and oil savings of 1.8 billion barrels over the lifetimes of the vehicles sold in model 

years 2012-2016. EPA projects net societal benefits of $192XX billion at a 3 percent 

discount rate for these same vehicles, or $136 billion at a 7 percent discount rate (both 

values assume a $20/ton SCC value). Accordingly, these proposed light vehicle 

greenhouse gas emissions standards would make an important "first step" contribution as 

part of the National Program toward meeting long-term greenhouse gas emissions and 

import oil reduction goals, while providing important economic benefits as well. 

 2. Why is EPA Proposing this Rule? 

 This proposal addresses only light vehicles. EPA is addressing light vehicles as a 

first step in control of greenhouse gas emissions under the Clean Air Act for four reasons. 

First, light vehicles are responsible for almost 60% of all mobile source greenhouse gas 

emissions, a share three times larger than any other mobile source subsector, and 

represent about one-sixth of all U.S. greenhouse gas emissions. Second, technology 

exists that can be readily and cost-effectively applied to these vehicles to reduce 

greenhouse gas emissions in the near term. Third, EPA already has an existing testing 

and compliance program for these vehicles, refined since the mid-1970s for emissions 

certification and fuel economy compliance, which would require only minor 

modifications to accommodate greenhouse gas emissions regulations. Finally, this 

 

2

 74 FR 18886, April 24, 2009 
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3

proposal is an important first step in responding to the Supreme Court’s ruling in 

Massachusetts vs. EPA. In addition, EPA is currently evaluating controls for motor 

vehicles other than those covered by this proposal, and is reviewing seven petitions 

submitted by various states and organizations requesting that EPA use its Clean Air Act 

authorities to take action to reduce greenhouse gas emissions from aircraft (under § 

231(a)(2)), ocean-going vessels (under § 213(a)(4)), and other nonroad engines and 

vehicle sources (also under § 213(a)(4)). 

a. Light Vehicle Emissions Contribute to Greenhouse Gases and the Threat 

of Climate Change 

 Greenhouse gases are gases in the atmosphere that effectively trap some of the 

Earth’s heat that would otherwise escape to space. Greenhouse gases are both naturally 

occurring and anthropogenic. The primary greenhouse gases of concern are directly 

emitted by human activities and include carbon dioxide, methane, nitrous oxide, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride. 

 These gases, once emitted, remain in the atmosphere for decades to centuries. 

Thus, they become well mixed globally in the atmosphere and their concentrations 

accumulate when emissions exceed the rate at which natural processes remove 

greenhouse gases from the atmosphere. The heating effect caused by the human-induced 

buildup of greenhouse gases in the atmosphere is very likely3

 the cause of most of the 

observed global warming over the last 50 years. The key effects of climate change 

observed to date and projected to occur in the future include, but are not limited to, more 

frequent and intense heat waves, more severe wildfires, degraded air quality, heavier and 

more frequent downpours and flooding, increased drought, greater sea level rise, more 

intense storms, harm to water resources, continued ocean acidification, harm to 

agriculture, and harm to wildlife and ecosystems. A detailed explanation of observed and 

projected changes in greenhouse gases and climate change and its impact on health, 

society, and the environment is included in EPA’s technical support document for the 

recently released Proposed Endangerment and Cause or Contribute Findings for 

Greenhouse Gases Under Section 202(a) of the Clean Air Act.4

 

 Transportation sources represent a large and growing share of United States 

greenhouse gases and include automobiles, highway heavy duty trucks, airplanes, 

railroads, marine vessels and a variety of other sources. In 2006, all transportation 

sources emitted 31.5% of all U.S. greenhouse gases, and were the fastest-growing source 

of greenhouse gases in the U.S., accounting for 47% of the net increase in total U.S. 

greenhouse gas emissions from 1990-2006.

5 The only sector with larger greenhouse gas 

emissions was electricity generation which emitted 33.7% of all U.S. greenhouse gases. 

 

3

 According to Intergovernmental Panel on Climate Change (IPCC) terminology, “very likely” conveys a 

90 to 99 percent probability of occurrence. “Virtually certain” conveys a greater than 99 percent 

probability, “likely” conveys a 66 to 90 percent probability, and “about as likely as not” conveys a 33 to 66 

percent probability.

4

 74 FR18886, April 24, 2009. Both the Federal Register Notice and the Technical Support Document for 

this rulemaking are found in the public docket for this rulemaking. Docket is EPA-OAR-2009-0171.

5

 Inventory of U.S. Greenhouse Gases and Sinks: 1990-2006. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

4

 Light vehicles emit four greenhouse gases: carbon dioxide, methane, nitrous oxide 

and hydrofluorocarbons. Carbon dioxide (CO2) is the end product of fossil fuel 

combustion. During combustion, the carbon stored in the fuels is oxidized and emitted as 

CO2 and smaller amounts of other carbon compounds.6 Methane (CH4) emissions are a 

function of the methane content of the motor fuel, the amount of hydrocarbons passing 

uncombusted through the engine, and any post-combustion control of hydrocarbon 

emissions (such as catalytic converters).7 Nitrous oxide (N2O) (and nitrogen oxide 

(NOX)) emissions from vehicles and their engines are closely related to air-fuel ratios, 

combustion temperatures, and the use of pollution control equipment. For example, some 

types of catalytic converters installed to reduce motor vehicle NOX, carbon monoxide 

(CO) and hydrocarbon emissions can promote the formation of N2O.8 

Hydrofluorocarbons (HFC) emissions are progressively replacing chlorofluorocarbons

(CFC) and hydrochlorofluorocarbons (HCFC) in these vehicles’ cooling and refrigeration 

systems as CFCs and HCFCs are being phased out under the Montreal Protocol and Title 

VI of the CAA. There are multiple emissions pathways for HFCs with emissions 

occurring during charging of cooling and refrigeration systems, during operations, and 

during decommissioning and disposal.9

 

b. Basis for Action under Clean Air Act 

 

Section 202(a)(1) of the Clean Air Act (CAA) states that “the Administrator shall 

by regulation prescribe (and from time to time revise)...standards applicable to the 

emission of any air pollutant from any class or classes of new motor vehicles ..., which 

in his judgment cause, or contribute to, air pollution which may reasonably be anticipated 

to endanger public health or welfare.” As noted above, the Administrator has proposed to 

find that the air pollution of elevated levels of greenhouse gas concentrations may 

reasonably be anticipated to endanger public health and welfare.10 The Administrator 

has proposed to define the air pollution to be the elevated concentrations of the mix of six 

GHGs: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons 

(HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). The Administrator has 

further proposed to find under CAA section 202(a) that CO2, methane, N2O and HFC 

emissions from new motor vehicles and engines contribute to this air pollution. This 

preamble describes proposed standards that would control emissions of CO2, HFCs, 

nitrous oxide, and methane. Standards for these GHGs would only be finalized if EPA 

determines that the criteria have been met for endangerment by the air pollution, and that 

emissions of GHGs from new motor vehicles or engines “cause or contribute” to that air 

pollution. In that case, section 202(a) would authorize EPA to issue standards applicable 

 

6

 Mobile source carbon dioxide emissions in 2006 equaled 26 percent of total U.S. CO2 emissions. 

7

 In 2006, methane emissions equaled 0.32 percent of total U.S. methane emissions Nitrous oxide is a 

produce of the reaction that occurs between nitrogen and oxygen during fuel combustion. 

8

 In 2006, nitrous oxide emissions for these sources accounted for 8 percent of total U.S. nitrous oxide 

emissions. 

9

 In 2006 HFC from these source categories equaled 56 percent of total U.S. HFC emissions, making it the 

single largest source category of U.S. HFC emissions. 

10 74 FR18886, April 24, 2009. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

5

to emissions of those pollutants. For further discussion of EPA’s authority under section 

202(a), see Section I.C.2 of the proposal. 

 There are a variety of other CAA Title II provisions that are relevant to standards 

established under section 202(a). As noted above, the standards are applicable to motor 

vehicles for their useful life. EPA has the discretion in determining what standard applies 

over the useful life. For example, EPA may set a single standard that applies both when 

the vehicles are new and throughout the useful life, or where appropriate may set a 

standard that varies during the term of useful life, such as a standard that is more 

stringent in the early years of the useful life and less stringent in the later years. 

 

The standards established under CAA section 202(a) are implemented and 

enforced through various mechanisms. Manufacturers are required to obtain an EPA 

certificate of conformity with the section 202 regulations before they may sell or 

introduce their new motor vehicle into commerce, according to CAA section 206(a). The 

introduction into commerce of vehicles without a certificate of conformity is a prohibited 

act under CAA section 203 that may subject a manufacturer to civil penalties and 

injunctive actions (see CAA sections 204 and 205). Under CAA section 206(b), EPA 

may conduct testing of new production vehicles to determine compliance with the 

standards. For in-use vehicles, if EPA determines that a substantial number of vehicles 

do not conform to the applicable regulations then the manufacturer must submit and 

implement a remedial plan to address the problem (see CAA section 207(c)). There are 

also emissions-based warranties that the manufacturer must implement under CAA 

section 207(a). 

c. EPA’s Greenhouse Gas Proposal under Section 202(a) Concerning 

Endangerment and Cause or Contribute Findings. 

 EPA’s Administrator recently signed a proposed action with two distinct findings 

regarding greenhouse gases under section 202(a) of the Clean Air Act. This action is 

called the Proposed Endangerment and Cause or Contribute Findings for Greenhouse 

Gases under the Clean Air Act (Endangerment Proposal)11. The Administrator proposed 

an affirmative endangerment finding that the current and projected concentrations of a 

mix of six key greenhouse gases—carbon dioxide (CO2), methane (CH4), nitrous oxide 

(N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur 

hexafluoride(SF6)-- in the atmosphere threaten the public health and welfare of current 

and future generations. She also proposed to find that the combined emissions of four of 

the gases-- carbon dioxide, methane, nitrous oxide and hydrofluorocarbons from new 

motor vehicles and motor vehicle engines -- contribute to the atmospheric concentrations 

of these greenhouse gases and therefore to the climate change problem. 

 

 Specifically, the Administrator proposed, after a thorough examination of the 

scientific evidence on the causes and impact of current and future climate change, to find 

that the science compellingly supports a positive finding that atmospheric concentrations 

of these greenhouse gases result in air pollution which may reasonably be anticipated to 

 

11 74 FR 18886 (April 24,2009) 
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6

endanger both public health and welfare. In her proposed finding, the Administrator 

relied heavily upon the major findings and conclusions from the recent assessments of the 

U.S. Climate Change Science Program and the U.N. Intergovernmental Panel on Climate 

Change.12 The Administrator proposed a positive endangerment finding after considering 

both observed and projected future effects of climate change, key uncertainties, and the 

full range of risks and impacts to public health and welfare occurring within the United 

States. In addition, the proposed finding noted that the evidence concerning risks and 

impacts occurring outside the U.S. provided further support for the proposed finding. 

 The key scientific findings supporting the proposed endangerment finding are 

that: 

– Concentrations of greenhouse gases are at unprecedented levels compared to 

recent and distant past. These high concentrations are the unambiguous result 

of anthropogenic emissions and are very likely the cause of the observed 

increase in average temperatures and other climatic changes. 

– The effects of climate change observed to date and projected to occur in the 

future include more frequent and intense heat waves, more severe wildfires, 

degraded air quality, heavier downpours and flooding, increasing drought, 

greater sea level rise, more intense storms, harm to water resources, harm to 

agriculture, and harm to wildlife and ecosystems. These impacts are effects 

on public health and welfare within the meaning of the Clean Air Act. 

With regard to new motor vehicles and engines, the Administrator also proposed a 

finding that the combined emissions of four greenhouse gases--carbon dioxide, methane, 

nitrous oxide and hydrofluorocarbons-- from new motor vehicles and engines contributes 

to this air pollution, i.e., the atmospheric concentrations of the mix of six greenhouse 

gases which create the threat of climate change and its impacts. Key facts supporting the 

proposed cause and contribute finding for on-highway vehicles regulated under section 

202(a) of the Clean Air Act are that these sources are responsible for 24% of total U.S. 

greenhouse gas emissions, and more than 4% of total global greenhouse gas emissions.13

 

The Administrator also considered whether emissions of each greenhouse gas 

individually, as a separate air pollutant, would contribute to this air pollution. 

If the Administrator makes affirmative findings under section 202(a) on both 

endangerment and cause or contribute, then EPA is to issue standards “applicable to 

emission” of the air pollutant or pollutants that EPA finds causes or contributes to the air 

pollution that endangers public health and welfare. The Endangerment Proposal invited 

public comment on whether the air pollutant should be considered the group of GHGs, or 

whether each GHG should be treated as a separate air pollutant. Either way, the 

emissions standards proposed today would satisfy the requirements of section 202(a) as 

 

12 The U.S. Climate Change Science Program (CCSP) is now called the U.S. Global Change Research 

Program (GCRP). 

13 This figure includes the greenhouse gas contributions of light vehicles, heavy duty vehicles, and 

remaining on-highway mobile sources. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

7

the Administrator has significant discretion in how to structure the standards that apply to 

the emission of the air pollutant or air pollutants at issue. For example, under either 

approach EPA would have the discretion under section 202(a) to adopt separate standards 

for each GHG, a single composite standard covering various gases, or any combination of 

these. In this rulemaking EPA is proposing separate standards for nitrous oxide and 

methane, and a CO2 standard that provides for credits based on reductions of HFCs, as 

the appropriate way to issue standards applicable to emissions of these GHGs. 

 3. What is EPA Proposing? 

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

Passenger Vehicle Greenhouse Gas Emission Standards and Projected 

Compliance Levels 

The CO2 emissions standards are by far the most important of the three standards 

and are the primary focus of this summary. EPA is proposing an attribute-based 

approach for the CO2 fleet-wide standard (one for cars and one for trucks), based on 

vehicle footprint as the attribute. These curves establish different CO2 emissions targets 

for each unique car and truck footprint. Generally, the larger the vehicle footprint, the 

higher the corresponding vehicle CO2 emissions target. Table III.A.3-1 shows the 

greenhouse gas standards for light vehicles that EPA is proposing for model years (MY) 

2012 and later: 

Table III.A.3-1 Proposed Industry-Wide Greenhouse Gas Emissions Standards 

Standard/ 

Covered 

Pollutants 

Form of 

Standard 

Level of 

Standard 

Credits Test Cycles 

CO2 Standard14: 

Tailpipe CO2

Fleetwide 

average footprint 

CO2-curves for 

cars and trucks 

See footprint – 

CO2 curves in 

Figure I.C-1 for 

cars and Figure 

I.C-2 for trucks 

CO2-e credits15 EPA 2-cycle 

(FTP and HFET 

test cycles), with 

separate 

mechanisms for 

A/C credits16

N2O Standard: 

Tailpipe N2O 

Cap per vehicle 0.010 g/mi None EPA FTP test 

CH4 Standard: Cap per vehicle 0.030 g/mi None EPA FTP test 

 

14 While over 99 percent of the carbon in automotive fuels is converted to CO2 in a properly functioning 

engine, compliance with the CO2 standard will also account for the very small levels of carbon associated 

with vehicle tailpipe hydrocarbon (HC) and carbon monoxide (CO) emissions, converted to CO2 on a mass 

basis, as discussed further in section x 

15 CO2-e refers to CO2-equivalent, and is a metric that allows non-CO2 greenhouse gases (such as 

hydrofluorocarbons used as automotive air conditioning refrigerants) to be expressed as an equivalent mass 

(i.e., corrected for relative global warming potency) of CO2 emissions. 

16 FTP is the Federal Test Procedure which uses what is commonly referred to as the “city” driving 

schedule, and HFET is the Highway Fuel Economy Test which uses the “highway” driving schedule. 

Compliance with the CO2 standard will be based on the same 2-cycle values that are currently used for 

CAFE standards compliance; EPA projects that fleet-wide in-use or real world CO2 emissions are 

approximately 25 percent higher, on average, than 2-cycle CO2 values. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

8

Tailpipe CH4

One important flexibility associated with the proposed CO2 standard is the 

proposed option for manufacturers to obtain credits associated with improvements in 

their air conditioning systems. As will be discussed in greater detail in later sections, 

EPA is establishing test procedures and design criteria by which manufacturers can 

demonstrate improvements in both air conditioner efficiency (which reduces vehicle 

tailpipe CO2 by reducing the load on the engine) and air conditioner refrigerants (using 

lower global warming potency refrigerants and/or improving system design to reduce 

GHG emissions associated with leaks). Neither of these strategies to reduce GHG 

emissions from air conditioners would be reflected in the EPA FTP or HFET tests. These 

improvements would be translated to a g/mi CO2-equivalent credit that can be subtracted 

from the manufacturer’s tailpipe CO2 compliance value. EPA expects a high percentage 

of manufacturers to take advantage of this flexibility to earn air conditioning-related 

credits for MY2012-2016 vehicles such that the average credit earned is about 11 grams 

per mile CO2–equivalent in 2016. 

A second flexibility being proposed is CO2 credits for flexible and dual fuel 

vehicles, similar to the CAFE credits for such vehicles which allow manufacturers to gain 

up to 1.2 mpg in their overall CAFE ratings. The Energy Independence and Security Act 

of 2007 (EISA) mandated a phase-out of these flexible fuel vehicle CAFE credits 

beginning in 2015, and ending after 2019. EPA is proposing to allow comparable CO2

credits for flexible fuel vehicles through MY 2015, but for MY 2016 and beyond, EPA is 

proposing to treat flexible and dual fuel vehicles on a CO2-performance basis, calculating 

the overall CO2 emissions for flexible and dual fuel vehicles based on a fuel use-weighted 

average of the CO2 levels on gasoline and on a manufacturer’s demonstrated actual usage 

of the alternative fuel in its vehicle fleet. 

Table III.A.3-2 summarizes EPA projections of industry-wide 2-cycle CO2

emissions and fuel economy levels that would be achieved by manufacturer compliance 

with the proposed GHG standards for MY2012-2016. 

For MY2011, Table III.A.3-2 uses the projected NHTSA compliance values for 

its MY2011 CAFE standards of 30.2 mpg for cars and 24.1 mpg for trucks, converted to 

an equivalent combined car and truck CO2 level of 325 grams per mile.17 EPA believes 

this is a reasonable estimate with which to compare the proposed MY2012-2016 CO2

emission standards. Identifying the proper MY2011 estimate is complicated for many 

reasons, among them being the turmoil in the current automotive market for consumers 

and manufacturers, uncertain and volatile oil and gasoline prices, the ability of 

manufacturers to use flexible fuel vehicle credits to meet MY2011 CAFE standards, and 

the fact that most manufacturers have been surpassing CAFE standards (particularly the 

car standard) in recent years. Taking all of these considerations into account, EPA 

believes that the MY2011 projected CAFE compliance values, converted to CO2

emissions levels, represent a reasonable estimate. 

 

17 74 FR 14196. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

9

Table III.A.3-2 shows projected industry-wide average CO2 emissions values. 

The Projected CO2 Emissions for the Footprint-Based Standard column shows the CO2

g/mi level corresponding with the footprint standard that must be met. It is based on the 

proposed CO2-footprint curves and projected footprint values, and will decrease each 

year to 250 grams per mile (g/mi) in MY2016. For MY2012-2015, the emissions impact 

of the projected utilization of flexible fuel vehicle (FFV) credits and the temporary leadtime allowance alternative standard (TLAAS, discussed below) are shown in the next two 

columns. Neither of these programs is proposed to be available in MY2016. The 

Projected CO2 Emissions column gives the CO2 emissions levels projected to be achieved 

given use of the flexible fuel credits and temporary lead-time allowance program. This 

column shows that, relative to the MY 2011 estimate, EPA projects that MY2016 CO2

emissions will be reduced by 23 percent over five years. The Projected A/C Credit 

column represents the industry wide average air conditioner credit manufacturers are 

expected to earn on an equivalent CO2 gram per mile basis in a given model year. In 

MY2016, the projected A/C credit of 10.6 g/mi represents 14 percent of the 75 g/mi CO2

emissions reductions associated with the proposed standards. The Projected 2-cycle CO2

Emissions column shows the projected CO2 emissions as measured over the EPA 2-cycle 

tests, which would allow compliance with the standard assuming utilization of the 

projected FFV, TLAAS, and A/C credits. 

Table III.A.3-2 Projected Fleetwide CO2 Emissions Values (grams per mile) 

Model 

Year 

Projected 

CO2

Emissions 

for the 

FootprintBased 

Standard 

 

Projected 

FFV 

Credit 

Projected 

TLAAS 

Credit 

Projected 

CO2

Emissions

Projected 

A/C Credit

Projected 

2-cycle 

CO2

Emissions 

2011 - - - (325) - (325) 

2012 295 6 0.3 302 3.1 305 

2013 286 5.7 0.2 291 5.0 296 

2014 276 5.4 0.2 281 7.5 289 

2015 263 4.1 0.1 267 10.0 277 

2016 250 0 0 250 10.6 261 

EPA is also proposing a series of flexibilities for compliance with the CO2

standard which are not expected to significantly affect the projected compliance and 

achieved values shown above, but which should significantly reduce the costs of 

achieving those reductions. These flexibilities include the ability to earn: annual credits 

for a manufacturer’s over-compliance with its unique fleet-wide average standard, early 

credits from MY2009-2011, credits for early introduction of advanced technology 

vehicles, credit for “off-cycle” CO2 reductions not reflected in CO2/fuel economy tests, as 

well as the carry-forward and carry-backward of credits, the ability to transfer credits 

between a manufacturer’s car and truck fleets, and a temporary lead-time allowance 

alternative standard (included in the tables above) that will permit manufacturers with 

Formatted Table
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

10

less than 400,000 vehicles produced in MY 2009 to designate a fraction of their vehicles 

to meet a 25% higher CO2 standard for MY 2012-2015. All of these proposed 

flexibilities are discussed in greater detail in later sections. 

EPA is also proposing caps on the tailpipe emissions of nitrous oxide (N2O) and 

methane (CH4)--0.010 g/mi for N2O and 0.030 g/mi for CH4—over the EPA FTP test. 

While N2O and CH4 can be potent greenhouse gases on a relative mass basis, their 

emission levels from modern vehicle designs are extremely low and represent only about 

1% of total light vehicle GHG emissions. These cap standards are designed to ensure that 

N2O and CH4 emissions levels do not rise in the future, rather than to force reductions in 

the already low emissions levels. Accordingly, these standards are not designed to 

require automakers to make any changes in current vehicle designs, and thus EPA is not 

projecting any environmental or economic impacts associated with these proposed 

standards. 

EPA has attempted to build on existing practice wherever possible in designing a 

compliance program for the proposed GHG standards. In particular, the program 

structure proposed will streamline the compliance process for both manufacturers and 

EPA by enabling manufacturers to use a single data set to satisfy both the new GHG and 

CAFE testing and reporting requirements. Timing of certification, model-level testing, 

and other compliance activities also follow current practices established under the Tier 2 

and CAFE programs. 

b. Environmental and Economic Benefits and Costs of EPA’s Proposed 

 Standards 

In Table III.A.3-3 EPA presents estimated annual net benefits for the indicated 

calendar years. The table also shows the net present values of those benefits for the 

calendar years 2012-2050 using both a 3 percent and a 7 percent discount rate. As 

discussed previously, EPA recognizes that much of these same costs and benefits are also 

attributed to the proposed CAFE standard contained in this joint proposal. 

Table III.A.3-3 Projected Quantifiable Benefits and Costs for Proposed CO2 Standard 

(in million 2007 $s) [note: B = unquantified benefits] 

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

Quantified Annual 

Costsa -$25,100 -$72,500 -$105,700 -$146,100 -$1,287,600 -$529,500 

Benefits from Reduced GHG Emissions at each assumed SCC value 

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

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

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

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

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

Other Quantified Externalities 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

11

PM2.5 Related 

Benefitsb,c,d $1,400 $3,000 $4,600 $6,700 $59,800 $26,300 

Energy Security Impacts 

(price shock) $2,300 $4,800 $6,200 $7,800 $85,800 $38,800 

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

Value of Increased 

Drivinge $4,900 $10,000 $13,600 $18,000 $184,700 $82,700 

Accidents, Noise, 

Congestion -$2,400 -$4,900 -$6,300 -$7,900 -$88,200 -$40,200 

Quantified Net Benefits at each assumed SCC value 

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

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

SCC from 3% and 5% $38,500 $102,300 $152,200 $214,700 $1,882,300 $786,600 

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

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

a

 Quantified annual costs are negative because fuel savings are included as negative costs (i.e., positive 

savings). Since the fuel savings outweigh the vehicle technology costs, the costs of as presented here are 

actually negative (i.e., they represent savings). 

b

 Note that the co-pollutant impacts associated with the standards presented here do not include the full 

complement of endpoints that, if quantified and monetized, would change the total monetized estimate of 

rule-related impacts. Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only 

human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and 

environmental benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale 

air quality modeling. However, EPA was unable to conduct a full-scale air quality modeling analysis in 

time for the proposal. EPA does intend to more fully capture the co-pollutant benefits for the analysis of 

the final standards. 

c

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an 

estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton 

estimates were based on the Six Cities study (Laden et al., 2006), the values would be approximately 145% 

(nearly two-and-a-half times) larger. 

d

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% 

discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. 

If a 7% discount rate had been used, the values would be approximately 9% lower. 

e

Calculated using pre-tax fuel prices. 

4. Basis for the Proposed GHG Standards under Section 202(a)

 EPA statutory authority under section 202(a) (1) of the Clean Air Act (CAA) is 

discussed in more detail in Section I.C.2. The following is a summary of the basis for the 

proposed standards under section 202(a), which is discussed in more detail in the 

following portions of Section III. 

 With respect to CO2 and HFCs, EPA is proposing attribute-based light-duty car 

and truck standards that achieve large and important emissions reductions of GHGs. 

EPA has evaluated the technological feasibility of the proposed standards, and the 

information and analysis performed by EPA indicates that these standards are feasible in 

the lead time provided. EPA and NHTSA have carefully evaluated the effectiveness of 

individual technologies as well as the interactions when technologies are combined. 

EPA’s projection of the technology that would be used to comply with the proposed 

standards indicates that manufacturers will be able to meet the proposed standards by 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

12

employing a wide variety of technology that is already commercially available and can be 

incorporated into their vehicle at the time of redesign. In addition to the use of the 

manufacturers’ redesign cycle, EPA’s analysis also takes into account certain flexibilities 

that will facilitate compliance especially in the early years of the program when potential 

lead time constraints are most challenging. These flexibilities include averaging, 

banking, and trading of various types of credits. For the industry as a whole, EPA’s 

projections indicate that the proposed standards can be met using technology that will be 

available in the lead-time provided. 

To account for additional lead-time concerns for various manufacturers of 

typically higher performance vehicles, EPA is proposing a Temporary Lead-time 

Allowance that will further facilitate compliance for limited volumes of such vehicles in 

the program’s initial years. For a few very small volume manufacturers, EPA projects 

that manufacturers will likely comply using a combination of credits and technology. 

EPA has also carefully considered the cost to manufacturers of meeting the 

standards, estimating piece costs for all candidate technologies, direct manufacturing 

costs, cost markups to account for manufacturers’ indirect costs, and manufacturer cost 

reductions attributable to learning. In estimating manufacturer costs, EPA took into 

account manufacturers’ own standard practices such as making major changes to model 

technology packages during a planned redesign cycle. EPA then projected the average 

cost across the industry to employ this technology, as well as manufacturer –bymanufacturer costs. EPA considers the per vehicle costs estimated from this analysis to 

be well within a reasonable range in light of the emissions reductions and benefits 

received. EPA projects, for example, that the fuel savings over the life of the vehicles 

will more than offset the increase in cost associated with the technology used to meet the 

standards. 

EPA has also evaluated the impacts of these standards with respect to reductions 

in GHGs and reductions in oil usage. For the lifetime of the model year 2012-2016 

vehicles we estimate GHG reductions of approximately 950 million metric tons CO2 eq. 

and fuel reductions of 1.8 billion barrels of oil. These are important and significant 

reductions that would be achieved by the proposed standards. EPA has also analyzed a 

variety of other impacts of the standards, ranging from the standards’ effects on 

emissions of non-GHG pollutants, impacts on noise, energy, safety and congestion. EPA 

has also quantified the cost and benefits of the proposed standards, to the extent 

practicable. Our analysis to date indicates that the overall quantified benefits of the 

proposed standards far outweigh the projected costs. Utilizing a 3% discount rate and a 

$20 per ton social cost of carbon we estimate the total net social benefits over the life of 

the model year 2012-2016 vehicles is $192 $ Z billion, and the net present value of the 

net social benefits of the standards through the year 2050 is $1.9 trillion dollars. These 

values are estimated at $136 billion and $787 billion, respectively, using a 7% discount 

rate and the $20 per ton SCC value.

Under section 202(a) EPA is called upon to set standards that provide adequate 

lead-time for the development and application of technology to meet the standards. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

13

EPA’s proposed standards satisfy this requirement, as discussed above. In setting the 

standards, EPA is called upon to weigh and balance various factors, and to exercise 

judgment in setting standards that are a reasonable balance of the relevant factors. In this 

case, EPA has considered many factors, such as cost, impacts on emissions (both GHG 

and non-GHG), impacts on oil conservation, impacts on noise, energy, safety, and other 

factors, and has where practicable quantified the costs and benefits of the rule. In 

summary, given the technical feasibility of the standard, the moderate cost per vehicle in 

light of the savings in fuel costs over the life time of the vehicle, the very significant 

reductions in emissions and in oil usage, and the significantly greater quantified benefits 

compared to quantified costs, EPA is confident that the proposed standards are an 

appropriate and reasonable balance of the factors to consider under section 202(a). See 

Husqvarna AB v. EPA, 254 F. 3d 195, 200 (D.C. Cir. 2001) (great discretion to balance 

statutory factors in considering level of technology-based standard, and statutory 

requirement “to [give appropriate] consideration to the cost of applying ... technology” 

does not mandate a specific method of cost analysis); see also Hercules Inc. v. EPA, 598 

F. 2d 91, 106 (D.C. Cir. 1978) (“In reviewing a numerical standard we must ask whether 

the agency’s numbers are within a zone of reasonableness, not whether its numbers are 

precisely right”); Permian Basin Area Rate Cases, 390 U.S. 747, 797 (1968) (same); 

Federal Power Commission v. Conway Corp., 426 U.S. 271, 278 (1976) (same); Exxon 

Mobil Gas Marketing Co. v. FERC, 297 F. 3d 1071, 1084 (D.C. Cir. 2002) (same). 

EPA recognizes that the vast majority of technology which we are considering for 

purposes of setting standards under section 202(a) is commercially available and already 

being utilized to a limited extent across the fleet. The vast majority of the emission 

reductions which would result from this proposed rule would result from the increased 

use of these technologies. EPA also recognizes that this proposed rule would enhance the 

development and limited use of more advanced technologies, such as PHEVs and EVs. 

In this technological context, there is no clear cut line that indicates that only one 

projection of technology penetration could potentially be considered feasible for purposes 

of section 202(a), or only one standard that could potentially be considered a reasonable 

balancing of the factors relevant under section 202(a). EPA has therefore evaluated two 

sets of alternative standards, one more stringent than the proposed standards and one less 

stringent. 

The alternatives are 4% per year increase in standards which would be less 

stringent that our proposal and a 6% per year increase in the standards which would be 

more stringent than our proposal. EPA is not proposing either of these. As discussed in 

Section III.D.7, the 4% per year compared to the proposal forgoes CO2 reductions which 

can be achieved at reasonable costs and are achievable by the industry within the rule’s 

timeframe. The 6% per year alternative requires a significant increase in the projected 

required technology which may not be achievable in this timeframe due to the limited 

available lead time and the current difficult financial condition of the automotive 

industry. (See Section III.D.7 for a detailed discussion of why EPA is not proposing 

either of the alternatives.) EPA thus believes that it is appropriate to propose the CO2

standards discussed above. EPA invites comment on all aspects of this judgment, as well 

as comment on the alternative standards. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

14

 

EPA is also proposing standards for N2O and CH4. They are designed to act as 

caps and to avoid increases in emissions. As discussed in Section III.B.6, EPA is also 

proposing standards for N2O and CH4. EPA has designed these standards to act as 

emission rate (i.e., gram per mile) caps and to avoid future increases in light duty vehicle 

emissions. As discussed in Section III.B.6, N2O and CH4 emissions are already generally 

well controlled by current emissions standards relatively low compared to CO2 emissions, 

and EPA has not identified clear technological steps available to manufacturers today that 

would significantly reduce current emission levels for the vast majority of vehicles 

manufactured today (i.e., stoichometric gasoline vehicles). However, for both N2O and 

CH4, some vehicle technologies (and, for CH4, use of natural gas fuel) could potentially 

increase emissions of these GHGs in the future, and EPA believes it is important that this 

be avoided. EPA expects that that, almost universally across current car and truck 

designs, manufacturers will be able to meet the “cap” standards with little if any 

technological improvements or cost. EPA has designed the level of the N2O and CH4

standards with the intent that manufacturers would be able to meet them without the need 

for technological improvement; in other words, these emission standards are designed to 

be "anti-backsliding" standards. there is technology that will be available to meet these 

caps, and there should be little expense to industry to meet these caps. EPA is proposing 

standards that will avoid backsliding in emissions of N2O and CH4. That is appropriate at 

this time, because [insert short summary of why we are not proposing standards to reduce 

as compared to a cap].

B. Proposed GHG Standards for Light-duty Vehicles, Light-duty 

Trucks, and Medium-duty Passenger Vehicles 

 EPA is proposing new emission standards to control greenhouse gases (GHGs) 

from light-duty vehicles. First, EPA is proposing emission standards for carbon dioxide 

(CO2) on a gram per mile (g/mile) basis that would apply to a manufacturer’s fleet of 

cars, and a separate standard that would apply to a manufacturer’s fleet of trucks. CO2 is 

the primary pollutant resulting from the combustion of vehicular fuels, and the amount of 

CO2 emitted is directly correlated to the amount of fuel consumed. Second, EPA is 

providing auto manufacturers with the opportunity to earn credits toward the fleet-wide 

average CO2 standards for improvements to air conditioning systems, including both 

hydrofluorocarbon (HFC) refrigerant losses (i.e., system leakage) and indirect CO2

emissions related to the increased load on the engine. Third, EPA is proposing separate 

emissions standards for two other GHG pollutants: methane (CH4) and nitrous oxide 

(N20). CH4 and N2O emissions relate closely to the design and efficient use of emission 

control hardware (i.e., catalytic converters). The standards for CH4 and N2O would be set 

as a cap that would limit emissions increases and prevent backsliding from current 

emission levels. The proposed standards described below would apply to passenger cars, 

light-duty trucks, and medium-duty passenger vehicles (MDPVs). As an overall group, 

they are referred to in this preamble as light vehicles or simply as vehicles. In this 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

15

preamble section passenger cars may be referred to simply as “cars”, and light-duty 

trucks and MDPVs as “light trucks” or “trucks.”18

EPA is establishing a system of averaging, banking, and trading of credits integral 

to the fleet averaging approach, based on manufacturer fleet average CO2 performance, as 

discussed in Section III.B.4. This approach is similar to averaging, banking, and trading 

(ABT) programs EPA has established in other programs and is also similar to provisions 

in the CAFE program. In addition to traditional ABT credits based on the fleet emissions 

average, EPA is also proposing to include A/C credits as an aspect of the standards, as 

mentioned above. EPA is also proposing several additional credit provisions that apply 

only in the initial model years of the program. These include flex fuel vehicle credits, 

credits based on the use of advanced technologies, and generation of credits prior to 

model year 2012. The proposed A/C credits and additional credit opportunities are 

described in Section III.C. These credit programs would provide flexibility to 

manufacturers, which may be especially important during the early transition years of the 

program. EPA is also proposing to allow a manufacturer to carry a deficit into the future 

for a limited number of model years. A parallel provision, referred to as credit carryback, is proposed as part of the CAFE program. 

 1. What Fleet-wide Emissions Levels Correspond to the CO2 Standards?

The proposed attribute-based CO2 standards, if made final, are projected to 

achieve a national fleet-wide average, covering both light cars and trucks, of 250 

grams/mile of CO2 in model year (MY) 2016. This includes CO2-equivalent emission 

reductions from A/C improvements, reflected as credits in the standard. The standards 

would begin with MY 2012, with a generally linear increase in stringency from MY 2012 

through MY 2016. EPA is proposing separate standards for cars and light trucks. The 

tables in this section below provide overall fleet average levels that are projected for both 

cars and light trucks over the phase-in period which is estimated to correspond with the 

proposed standards. The actual fleet-wide average g/mi level that will be achieved in any 

year for cars and trucks will depend on the actual production for that year, as well as the 

use of the various credit and averaging, banking, and trading provisions. For example, in 

any year, manufacturers may generate credits from cars and use them for compliance 

with the truck standard. Such transfer of credits between cars and trucks is not reflected 

in the table below. In Section III.F, the year-by-year estimate of emissions reductions 

that are projected to be achieved by the proposed standards are discussed. 

In general, the proposed schedule of standards acts as a phase-in to the MY 2016 

standards, and reflects consideration of the appropriate lead-time for each manufacturer 

to implement the requisite emission reductions technology across its product line.19 Note 

that 2016 is the final model year in which standards become more stringent. The 2016 

CO2 standards would remain in place for 2017 and later model years, until revised by 

EPA in a future rulemaking. 

 

18 As described in Section III.B.2., EPA is proposing for purposes of GHG emissions standards to use the

same vehicle category definitions as are used in the CAFE program. 

19 See CAA section 202(a)(2). 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

16

EPA estimates that, on a combined fleet-wide national basis, the proposed 2016 

MY standards would achieve a level of 250 g/mile CO2, including CO2-equivalent credits 

from A/C related reductions. The derivation of the 250 g/mile estimate is described in 

Section III.B.2. 

EPA has estimated the overall fleet-wide CO2-equivalent emission levels that 

correspond with the proposed attribute-based standards, based on the projections of the 

composition of each manufacturer’s fleet in each year of the program. Tables III.B.1-1 

and III.B.1-2 provides these estimates for each manufacturer.20 

Table III.B.1-1 Estimated Fleet CO2-equivalent Levels Corresponding to the Proposed 

Standards for Cars 

Manufacturer Model Year 

 2012 2013 2014 2015 2016

BMW 265 257 249 238 227 

Chrysler 266 259 251 242 231 

Daimler 270 263 257 245 234 

Ford 266 259 251 239 228 

General 

Motors 266 258 250 239 228 

Honda 259 251 244 232 221 

Hyundai 260 252 244 233 221 

Kia 262 253 246 235 223 

Mazda 258 250 243 231 220 

Mitsubishi 255 247 240 228 217 

Nissan 263 255 247 236 225 

Porsche 242 234 227 215 204 

Subaru 252 244 237 225 214 

Suzuki 244 236 229 217 206 

Tata 286 278 271 259 248 

Toyota 257 250 242 231 220 

Volkswagen 254 246 239 228 217 

Table III.B.1-2 Estimated Fleet CO2-equivalent Levels Corresponding to the Proposed 

Standards for Light Trucks 

Manufacturer Model Year 

 2012 2013 2014 2015 2016

BMW 334 324 313 298 283 

Chrysler 349 339 329 315 300 

Daimler 346 334 323 308 293 

Ford 363 352 343 329 314 

 

20 These levels do not include the effect of flexible fuel credits, transfer of credits between cars and trucks, 

temporary lead time allowance, or any other credits. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

17

General 

Motors 372 361 351 337 322 

Honda 333 322 311 295 280 

Hyundai 330 320 308 293 278 

Kia 341 330 319 303 288 

Mazda 321 311 300 286 271 

Mitsubishi 320 310 299 284 269 

Nissan 352 341 332 318 303 

Porsche 338 327 316 301 286 

Subaru 319 308 297 282 267 

Suzuki 324 313 301 286 271 

Tata 326 316 305 289 275 

Toyota 342 332 320 305 291 

Volkswagen 344 333 322 307 292 

 These estimates were aggregated based on projected production volumes into the 

fleet-wide averages for cars and trucks (Table III.B.1-3).21

Table III.B.1-3 Estimated Fleet-wide CO2-equivalent Levels Corresponding to the 

Proposed Standards 

 Cars Trucks 

Model Year CO2 (g/mi) CO2 (g/mi) 

2012 261 352 

2013 254 341 

2014 245 331 

2015 234 317 

2016 and later 224 303 

As shown in Table III.B.1-3, fleet-wide CO2-equivalent emission levels for cars 

under the proposed approach are projected to decrease from 261 to 224 grams per mile 

between MY 2012 and MY 2016. Similarly, fleet-wide CO2-equivalent emission levels 

for trucks are projected to decrease from 352 to 303 grams per mile. These numbers do 

not include the effects of other flexibilities and credits in the program. The estimated 

achieved values can be found in Chapter 5 of the Draft Regulatory Impact Analysis 

(DRIA). 

 EPA has also estimated the average fleet-wide levels for the combined car and 

truck fleets. These levels are provided in Table III.B.1-4. As shown, the overall fleet 

average CO2 level is expected to be 250 g/mile in 2016. 

 

21 Due to rounding during calculations, the estimated fleet-wide CO2-equivalent levels may vary by plus or 

minus 1 gram. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

18

Table III.B.1-4 Estimated Fleet-wide Combined CO2-equivalent Levels Corresponding to 

the Proposed Standards 

 Combined Car and Truck 

Model Year CO2 (g/mi) 

2012 295 

2013 286 

2014 276 

2015 263 

2016 250 

As noted above, EPA is proposing standards that would result in increasingly 

stringent levels of CO2 control from MY 2012 though MY 2016 – applying the CO2

footprint curves applicable in each model year to the vehicles expected to be sold in each 

model year produces fleet-wide annual reductions in CO2 emissions. As explained in 

Section III.D below and the relevant support documents, EPA believes that the proposed 

level of improvement achieves important CO2 emissions reductions through the 

application of feasible control technology at reasonable cost, considering the needed lead 

time for this program. EPA further believes that the proposed averaging, banking and 

trading provisions, as well as other credit-generating mechanisms, allow manufacturers 

further flexibilities which reduce the cost of the proposed CO2 standards and help to 

provide adequate lead time. EPA believes this approach is justified under section 202(a) 

of the Clean Air Act. 

EPA has analyzed the feasibility under the CAA of achieving the proposed CO2

standards, based on projections of what actions manufacturers are expected to take to 

reduce emissions. The results of the analysis are discussed in detail in Section III.D 

below and in the DRIA. EPA also presents the estimated costs and benefits of the 

proposed car and truck CO2 standards in Section III.H. In developing the proposal, EPA 

has evaluated the kinds of technologies that could be utilized by the automobile industry, 

as well as the associated costs for the industry and fuel savings for the consumer, the 

magnitude of the GHG reductions that may be achieved, and other factors relevant under 

the CAA. 

 

With respect to the lead time and cost of incorporating technology improvements 

that reduce GHG emissions, EPA and NHTSA place important weight on the fact that 

during MYs 2012-2016 manufacturers are expected to redesign and upgrade their lightduty vehicle products (and in some cases introduce entirely new vehicles not on the 

market today). Over these five model years there would be an opportunity for 

manufacturers to evaluate almost every one of their vehicle model platforms and add 

technology in a cost-effective way to control GHG emissions and improve fuel economy. 

This includes redesign of the air conditioner systems in ways that will further reduce 

GHG emissions. The time-frame and levels for the proposed standards, as well as the 

ability to average, bank and trade credits and carry a deficit forward for a limited time, 

are expected to provide manufacturers the time needed to incorporate technology that will 

achieve GHG reductions, and to do this as part of the normal vehicle redesign process. 

This is an important aspect of the proposal, as it would avoid the much higher costs that 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

19

would occur if manufacturers needed to add or change technology at times other than 

these scheduled redesigns. This time period would also provide manufacturers the 

opportunity to plan for compliance using a multi-year time frame, again in accord with 

their normal business practice. 

Consistent with the requirement of CAA section 202(a)(1) that standards be 

applicable to vehicles “for their useful life,” EPA is proposing CO2 vehicle standards that 

would apply for the useful life of the vehicle. Under section 202(i) of the Act, which 

authorized the Tier 2 standards, EPA established a useful life period of 10 years or 

120,000 miles, whichever first occurs, for all Tier 2 light-duty vehicles and light-duty 

trucks.22 Tier 2 refers to EPA’s standards for criteria pollutants such as NOX, HC, and 

CO. EPA is proposing new CO2 standards for the same group of vehicles, and therefore 

the Tier 2 useful life would apply for CO2 standards as well. The in-use emission 

standard will be 10% higher than the certification standard, to address issues of 

production variability and test-to-test variability. The in-use standard is discussed in 

Section III.E. 

 EPA is proposing to measure CO2 for certification and compliance purposes using 

the same test procedures currently used by EPA for measuring fuel economy. These 

procedures are the Federal Test Procedure (FTP or ‘‘city’’ test) and the Highway Fuel 

Economy Test (HFET or ‘‘highway’’ test).23 This corresponds with the data used to 

develop the footprint-based CO2 standards, since the data on control technology 

efficiency was also developed in reference to these test procedures. Although EPA 

recently updated the test procedures used for fuel economy labeling, to better reflect the 

actual in-use fuel economy achieved by vehicles, EPA is not proposing to use these test 

procedures for the CO2 standards proposed here, given the lack of data on control 

technology effectiveness under these procedures. 24 As stated in Section I, EPA and 

NHTSA invite comments on potential amendments to the CAFE and GHG test 

procedures, including but not limited to air conditioner-related emissions, that could be 

implemented beginning in MY 2017. 

 EPA proposes to include hydrocarbons (HC) and carbon monoxide (CO) in its 

CO2 emissions calculations on a CO2-equivalent basis. It is well accepted that HC and

CO are typically oxidized to CO2 in the atmosphere in a relatively short period of time 

and so are effectively part of the CO2 emitted by a vehicle. In terms of standard 

stringency, accounting for the carbon content of tailpipe HC and CO emissions and 

expressing it as CO2-equivalent emissions would add less than one percent to the overall 

CO2-equivalent emissions level. This will also ensure consistency with CAFE 

calculations since HC and CO are included in the “carbon balance” methodology that 

EPA uses to determine fuel usage as part of calculating vehicle fuel economy levels. 

 

22 See 65 FR 6698 (February 10, 2000). 

23 EPA established the FTP for emissions measurement in the early 1970s. In 1976, in response to the 

Energy Policy and Conservation Act (EPCA) statute, EPA extended the use of the FTP to fuel economy 

measurement and added the HFET.23 The provisions in the 1976 regulation, effective with the 1977 model 

year, established procedures to calculate fuel economy values both for labeling and for CAFE purposes. 

24 See 71 FR 77872, December 27, 2006. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

20

 2. What Are the CO2 Attribute-based Standards?

 EPA proposes to use the same vehicle category definitions that are used in the 

CAFE program for the 2011 model year standards.25 The CAFE vehicle category 

definitions differ slightly from the EPA definitions for cars and light trucks used for the 

Tier 2 program, as well as other EPA vehicle programs. Specifically, NHTSA's 

reconsideration of the CAFE program statutory language has resulted in many two-wheel 

drive SUVs under 6000 pounds gross vehicle weight being reclassified as cars under the 

CAFE program. The proposed approach of using CAFE definitions allows EPA’s 

proposed CO2 standards and the proposed CAFE standards to be harmonized across all 

vehicles. In other words, vehicles would be subject to either car standards or truck 

standards under both programs, and not car standards under one program and trucks 

standards under the other. 

EPA is proposing separate car and truck standards, that is, vehicles defined as cars 

have one set of footprint-based curves for MY 2012-2016 and vehicles defined as trucks 

have a different set for MY 2012-2016. In general, for a given footprint the CO2 g/mi 

target for trucks is less stringent then for a car with the same footprint. 

EPA is not proposing a single fleet standard where all cars and trucks are 

measured against the same footprint curve for several reasons. First, some vehicles 

classified as trucks (such as pick-up trucks) have certain attributes not common on cars 

which attributes contribute to higher CO2 emissions – notably high load carrying 

capability and/or high towing capability. Due to these differences, it is reasonable to 

separate the light-duty vehicle fleet into two groups. Second, EPA would like to 

harmonize key program design elements of the GHG standards with NHTSA’s CAFE 

program where it is reasonable to do so. NHTSA is required by statute to set separate 

standards for passenger cars and for non-passenger cars. 

Finally, most of the advantages of a single standard for all light duty vehicles are 

also present in the two-fleet standards proposed here. Because EPA is proposing to allow 

unlimited credit transfer between a manufacturer’s car and truck fleets, the two fleets can 

essentially be viewed as a single fleet when manufacturers consider compliance 

strategies. Manufacturers can thus choose on which vehicles within their fleet to focus 

GHG reducing technology and then use credit transfers as needed to demonstrate 

compliance, just as they would if there was a single fleet standard. The one benefit of a 

single light-duty fleet not captured by a two-fleet approach is that a single fleet prevents 

potential “gaming” of the car and truck definitions to try and design vehicles which are 

more similar to passenger cars but which may meet the regulatory definition of trucks. 

Although this is of concern to EPA, we do not believe at this time that concern is 

sufficient to outweigh the other reasons for proposing separate car and truck fleet 

standards. EPA requests comment on this approach. 

 

25 See 49 CFR part 523. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

21

 For model years 2012 and later, EPA is proposing a series of CO2 standards that 

are described mathematically by a family of piecewise linear functions (with respect to 

vehicle footprint). The form of the function is as follows: 

CO2 = a, if x ≤ l 

CO2 = cx + d, if l < x ≤ h 

CO2 = b, if x > h 

 

Where, 

CO2 = the CO2 target value for a given footprint (in g/mi) 

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

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

c = the slope of the linear function (in g/mi per sq ft) 

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

x = footprint of the vehicle model (in square feet, rounded to the nearest tenth) 

l & h are the lower and higher footprint limits, constraints, or the boundary (“kinks”) 

between the flat regions and the intermediate sloped line 

EPA’s proposed parameter values that define the family of functions for the proposed 

CO2 fleetwide average car and truck standards are as follows: 

Table III.B.2-1 Parameter Values for Cars (for CO2 gram per mile targets) 

Model Year a b C D Lower 

constraint

Upper 

constraint

2012 242 313 4.72 48.8 41 56 

2013 234 305 4.72 40.8 41 56 

2014 227 297 4.72 33.2 41 56 

2015 215 286 4.72 22.0 41 56 

2016 and 

later 204 275 4.72 10.9 41 56 

Table III.B.2-2 Parameter Values for Trucks (for CO2 gram per mile targets) 

Model Year a b C D Lower 

constraint

Upper 

constraint

2012 298 399 4.04 132.6 41 66 

2013 287 388 4.04 121.6 41 66 

2014 276 377 4.04 110.3 41 66 

2015 261 362 4.04 95.2 41 66 

2016 and 

later 246 347 4.04 80.4 41 66 

The equations can be shown graphically for each vehicle category, as shown in 

Figures III.B.2-1 and III.B.2-2. These standards (or functions) decrease from 2012-2016 

with a vertical shift. A more detailed description of the development of the attribute 

based standard can be found in Chapter 2 of the Draft Joint TSD. More background 

discussion on other alternative attributes and curves EPA explored can be found in the 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

22

EPA DRIA. EPA recognizes that the CAA does not mandate that EPA use an attribute 

based standard, as compared to NHTSA’s obligations under EPCA. The EPA believes 

that proposing a footprint-based program will harmonize EPA’s proposed program and 

the proposed CAFE program as a single national program, resulting in reduced 

compliance complexity for manufacturers. EPA’s reasons for proposing to use an 

attribute based standard are discussed in more detail in the Joint TSD. Comments are 

requested on this proposal to use the attribute-based approach for regulating tailpipe CO2

emissions. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

23

400350300250200

30 35 40 45 50 55 60 65 70 Footprint (sq feet)

CO2 (grams per mile)

2012

2016

`

Figure III.B.2-1. CO2 (g/mi) Car standard curves. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

24

400350300250200

30 35 40 45 50 55 60 65 70 Footprint (sq feet)

CO2 (grams per mile) 2012

2016

Figure III.B.2-2. CO2 (g/mi) Truck standard curves.
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

25

3. Overview of How EPA’s Proposed CO2 Standards Would Be 

Implemented for Individual Manufacturers 

 

 This section provides a brief overview of how EPA proposes to implement the 

CO2 standards. Section III.E explains EPA’s proposed approach for certification and 

compliance in detail. EPA is proposing two kinds of standards – fleet average standards 

determined by a manufacturer’s fleet profile of various models, and in-use standards that 

would apply to the various models that make up the manufacturer’s fleet. Although this 

is similar in concept to the current light-duty vehicle Tier 2 program, there are important 

differences. In explaining EPA’s proposal for the CO2 standards, it is useful to 

summarize how the Tier 2 program works. 

 Under Tier 2, manufacturers select a test vehicle prior to certification and test the 

vehicle and/or its emissions hardware to determine both its emissions performance when 

new and the emissions performance expected at the end of its useful life. Based on this 

testing, the vehicle is assigned to one of several specified bins of emissions levels, 

identified in the Tier 2 rule, and this bin level becomes the emissions standard for the test 

group the test vehicle represents. All of the vehicles in the group must meet the 

emissions level for that bin throughout their useful life. The emissions level assigned to 

the bin is also used in calculating the manufacturer’s fleet average emissions 

performance. 

 Since compliance with the Tier 2 fleet average depends on actual test group sales 

volumes and bin levels, it is not possible to determine compliance at the time the 

manufacturer applies for and receives a certificate of conformity for a test group. Instead, 

at certification, the manufacturer demonstrates that the vehicles in the test group are 

expected to comply throughout their useful life with the emissions bin assigned to that 

test group, and makes a good faith demonstration that its fleet is expected to comply with 

the Tier 2 average when the model year is over. EPA issues a certificate for the vehicles 

covered by the test group based on this demonstration, and includes a condition in the 

certificate that if the manufacturer does not comply with the fleet average then production 

vehicles from that test group will be treated as not covered by the certificate to the extent 

needed to bring the manufacturer’s fleet average into compliance with Tier 2. 

 EPA proposes to retain the Tier 2 approach of requiring manufacturers to 

demonstrate in good faith at the time of certification that models in a test group will meet 

applicable standards throughout useful life. EPA also proposes to retain the practice of 

conditioning certificates upon attainment of the fleet average standard. However, there 

are several important differences between a Tier 2 type of program and the CO2 standards 

program EPA is proposing. These differences and resulting modifications to certification 

are summarized below and are described in detail in Section III.E. 

 EPA is proposing to certify test groups as it does for Tier 2, with the CO2

emission results for the test vehicle as the initial or default standard for all of the models 

in the test group. However, manufacturers would later substitute test data for individual 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

26

models in that test group, based on the model level fuel economy testing that typically 

occurs through the course of the model year. This model level data would then be used to 

assign a distinct certification level for that model, instead of the initial test group level. 

These model level results would then be used to calculate the fleet average after the end 

of production.26 The option to substitute model level test data for the test group data is at 

the manufacturer's discretion, except they are required as under the CAFE test protocols 

to test, at a minimum, enough models to represent 90 percent of their production. The 

test group level would continue to apply for any model that is not covered by model level 

testing. A related difference is that the fleet average calculation for Tier 2 is based on test 

group bin levels and test group sales whereas under this proposal the CO2 fleet level 

would be based on a combination of test group and model-level emissions and modellevel production. For the new CO2 standards, EPA is proposing to use production rather 

than sales in calculating the fleet average in order to more closely conform with CAFE, 

which is a production-based program. EPA does not expect any significant 

environmental effect because there is little difference between production and sales, and 

this will reduce the complexity of the program for manufacturers. 

 

 4. Averaging, Banking, and Trading Provisions for CO2 Standards

 As explained above, a fleet average CO2 program for passenger cars and light 

trucks is proposed. EPA has implemented similar averaging programs for a range of 

motor vehicle types and pollutants, from the Tier 2 fleet average for NOX to motorcycle 

hydrocarbon (HC) plus oxides of nitrogen (NOX) emissions to NOX and particulate 

matter (PM) emissions from heavy-duty engines.27 The proposed program would operate 

much like EPA’s existing averaging programs in that manufacturers would calculate 

production-weighted fleet average emissions at the end of the model year and compare 

their fleet average with a fleet average standard to determine compliance. As in other 

EPA averaging programs, the Agency is also proposing a comprehensive program for 

averaging, banking, and trading of credits which together will help manufacturers in 

planning and implementing the orderly phase-in of emissions control technology in their 

production, using their typical redesign schedules. 

 Averaging, Banking, and Trading (ABT) of emissions credits has been an 

important part of many mobile source programs under CAA Title II, both for fuels 

programs as well as for engine and vehicle programs. ABT is important because it can 

help to address many issues of technological feasibility and lead-time, as well as 

considerations of cost. ABT is an integral part of the standard setting itself, and is not 

just an add-on to help reduce costs. In many cases, ABT resolves issues of lead-time or 

technical feasibility, allowing EPA to set a standard that is either numerically more 

stringent or goes into effect earlier than could have been justified otherwise. This 

 

26 The final in-use vehicle standards for each model would also be based on the model-level fuel economy

testing. As discussed in Section III.E.4, an in-use adjustment factor would be applied to the model level 

results to determine the in-use standard that would apply during the useful life of the vehicle. 

27 For example, see the Tier 2 light-duty vehicle emission standards program (65 FR 6698, February 10, 

2000), the 2010 and later model year motorcycle emissions program (69 FR 2398, January 15, 2004), and 

the 2007 and later model year heavy-duty engine and vehicle standards program (66 FR 5001, January 18,

2001). 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

27

provides important environmental benefits at the same time it increases flexibility and 

reduces costs for the regulated industry. 

This section discusses generation of credits by achieving a fleet average CO2 level 

that is lower than the manufacturer’s CO2 fleet average standard. EPA is proposing a 

variety of additional ways credits may be generated by manufacturers. Section III.C 

describes these additional opportunities to generate credits in detail. EPA is proposing 

that credits could be earned through A/C system improvements beyond a specified 

baseline. Credits can also be generated by producing alternative fuel vehicles, by 

producing advanced technology vehicles including electric vehicles, plug-in hybrids, and 

fuel cell vehicles, and by using technologies that improve off-cycle emissions. In 

addition, EPA is proposing that early credits could be generated prior to the proposed 

program’s MY 2012 start date. The credits would be used in calculating the fleet 

averages at the end of the model year, with the exception of early credits which would be 

tracked separately. These proposed credit generating opportunities are described below 

in Section III.C. 

 As explained earlier, manufacturers would determine the fleet average standard 

that would apply to their car fleet and the standard for their truck fleet from the applicable 

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

comparing thateir fleet average with the manufacturer’s CO2 standard for that model 

year. The standard would be calculated from footprint values on the attribute curve and 

actual production levels of vehicles at each footprint. A manufacturer would generate 

credits if its car or truck fleet achieves a fleet average CO2 level lower than its standard 

and would generate debits if its fleet average CO2 level is above that standard. ”At the 

end of the model year, each manufacturer would calculate a production-weighted fleet 

average for each averaging set, cars and trucks. A manufacturer’s car or truck fleet that 

achieves a fleet average CO2 level lower than its standard would generate credits, and if 

its fleet average CO2 level is above that standard its fleet would generate debits. 

 EPA is proposing to account for the difference in expected lifetime vehicle miles 

traveled (VMT) between cars and trucks in order to preserve CO2 reductions when credits 

are transferred between cars and trucks. As directed by EISA, NHTSA accomplishes this 

in the CAFE program by using an adjustment factor that is applied to credits when they 

are transferred between car and truck compliance categories. The CAFE adjustment 

factor accounts for two different influences that can cause the transfer of car and truck 

credits (expressed in tenths of a mpg), if left unadjusted, to potentially negate fuel 

reductions. First, mpg is not linear with fuel consumption, i.e., a 1 mpg improvement 

above a standard will imply a different amount of actual fuel consumed depending on the 

level of the standard. Second, NHTSA’s conversion corrects for the fact that the typical 

lifetime miles for cars is less than that for trucks, meaning that credits earned for cars and 

trucks are not necessarily equal. NHTSA’s adjustment factor essentially converts credits 

into vehicle lifetime gallons to ensure preservation of fuel savings and the transfer credits 

on an equal basis, and then converts back to the statutorily-required credit units of tenths 

of a mile per gallon. To convert to gallons NHTSA’s conversion must take into account 

the expected lifetime mileage for cars and trucks. Because EPA is proposing standards 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

28

that are expressed on a CO2 gram per mile basis, which is linear with fuel consumption, 

EPA’s credit calculations do not need to account for the first issue noted above. 

However, EPA is proposing to account for the second issue by expressing credits when 

they are generated in total lifetime megagrams (metric tons), rather than through the use 

of conversion factors that would apply at certain times. In this way credits could be 

freely exchanged between car and truck compliance categories without adjustment. 

Additional detail regarding this approach, including a discussion of the vehicle lifetime 

mileage estimates for cars and trucks can be found in Section III.E.5. A discussion of the 

estimated vehicle lifetime miles traveled can be found in Chapter 4 of the draft Joint 

Technical Support Document. EPA requests comment on the proposed approach. 

 A manufacturer that generates credits in a given year and vehicle category could 

use those credits in essentially four ways, although with some limitations. These 

provisions are very similar to those of other EPA averaging, banking, and trading 

programs. These provisions have the potential to reduce costs and compliance burden, 

and support the feasibility of the standards being proposed in terms of lead time and 

orderly redesign by a manufacturer, thus promoting and not reducing the environmental 

benefits of the program. 

 

 First, the manufacturer would have to offset any deficit that had accrued in that 

averaging set in a prior model year and had been carried over to the current model year. 

In such a case, the manufacturer would be obligated to use any current model year credits 

to offset that deficit. This is referred to in the CAFE program as credit carry-back. 

EPA’s proposed deficit carry-forward, or credit carry-back provisions are described 

further, below. 

 Second, after satisfying any needs to offset pre-existing deficits within a vehicle 

category, remaining credits could be banked, or saved for use in future years. EPA is 

proposing that credits generated in this program be available to the manufacturer for use 

in any of the five years after the year in which they were generated, consistent with the 

CAFE program under EISA. This is also referred to as a credit carry-forward provision. 

For other new emission control programs, EPA has sometimes initially restricted credit 

life to allow time for the Agency to assess whether the credit program is functioning as 

intended. When EPA first offered averaging and banking provisions in its light-duty 

emissions control program (the National Low Emission Vehicle Program), credit life was 

restricted to three years. The same is true of EPA’s early averaging and banking program 

for heavy-duty engines. As these programs matured and were subsequently revised, EPA 

became confident that the programs were functioning as intended and that the standards 

were sufficiently stringent to remove the restrictions on credit life. 

EPA is therefore acting consistently with our past practice in proposing to 

reasonably restrict credit life in this new program. The Agency believes, subject to 

consideration of public comment, that a credit life of five years represents an appropriate 

balance between promoting orderly redesign and upgrade of the emissions control 

technology in the manufacturer’s fleet and the policy goal of preventing large numbers of 

credits accumulated early in the program from interfering with the incentive to develop 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

29

and transition to other more advanced emissions control technologies. As discussed 

below in Section III.C, EPA is proposing that any early credits generated by a 

manufacturer, beginning as soon as MY 2009, would also be subject to the five year 

credit carry-forward restriction based on the year in which they are generated. This 

would limit the effect of the early credits on the long-term emissions reductions 

anticipated to result from the proposed new standards. 

 Third, EPA is proposing to allow manufacturers to transfer credits between the 

two averaging sets, passenger cars and trucks, within a manufacturer. For example, 

credits accrued by over-compliance with a manufacturer’s car fleet average standard 

could be used to offset debits accrued due to that manufacturer’s not meeting the truck 

fleet average standard in a given year. EPA believes that such cross-category use of 

credits by a manufacturer would provide important additional flexibility in the transition 

to emissions control technology without affecting overall emission reductions. 

 Finally, accumulated credits could be traded to another vehicle manufacturer. As 

with intra-company credit use, such inter-company credit trading would provide 

flexibility in the transition to emissions control technology without affecting overall 

emission reductions. Trading credits to another vehicle manufacturer would be a 

straightforward process between the two manufacturers, but could also involve third 

parties that could serve as credit brokers. Brokers would not own the credits at any time. 

These sorts of exchanges are typically allowed under EPA’s current emission credit 

programs, e.g., the Tier 2 light-duty vehicle NOX fleet average standard and the heavyduty engine NOX fleet average standards, although manufacturers have seldom made 

such exchanges. EPA seeks comment on enhanced reporting requirements or other 

methods that could help EPA assess validity of credits, especially those obtained from 

third-party credit brokers 

If a manufacturer had a deficit at the end of a model year – that is, its fleet 

average level failed to meet the required fleet average standard – EPA proposes that the 

manufacturer could carry that deficit forward (also referred to credit carry-back) for a 

total of three model years after the model year in which that deficit was generated. As 

noted above, such a deficit carry-forward could only occur after the manufacturer applied 

any banked credits or credits from another averaging set. If a deficit still remained after 

the manufacturer had applied all available credits, and the manufacturer did not obtain 

credits elsewhere, the deficit could be carried over for up to three model years. No deficit 

could be carried into the fourth model year after the model year in which the deficit 

occurred. Any deficit from the first model year that remained after the third model year 

would thus constitute a violation of the condition on the certificate, which would 

constitute a violation of the Clean Air Act and would be subject to enforcement action. 

In the Tier 2 rulemaking proposal, EPA proposed to allow deficits to be carried 

forward for one year. In their comments on that proposal, manufacturers argued 

persuasively that by the time they can tabulate their average emissions for a particular 

model year, the next model year is likely to be well underway and it is too late to make 

calibration, marketing, or production mix changes to adjust that year’s credit generation. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

30

Based on those comments, in the Tier 2 final rule EPA finalized provisions that allowed 

the deficit to be carried forward for a total of three years. EPA continues to believe that 

three years is an appropriate amount of time that gives the manufacturers adequate time 

to respond to a deficit situation but does not create a lengthy period of prolonged noncompliance with the fleet average standards.28 Subsequent EPA emission control 

programs that incorporate ABT provisions (e.g., the Mobile Source Air Toxics rule) have 

provided this three-year deficit carry-forward provision for this reason.29 

 The proposed averaging, banking, and trading provisions are generally consistent 

with those included in the CAFE program, with a few notable exceptions. As with EPA’s 

proposed approach, CAFE allows five year carry-forward of credits and three year carryback. Transfers of credits across a manufacturer’s car and truck averaging sets are also 

allowed, but with limits established by EISA on the use of transferred credits. The 

amount of transferred credits that can be used in a year is limited, and transferred credits 

may not be used to meet the CAFE minimum domestic passenger car standard. CAFE 

allows credit trading, but again, traded credits cannot be used to meet the minimum 

domestic passenger car standard. EPA is not proposing these constraints on the use of 

transferred credits. 

 

 Additional details regarding the averaging, banking, and trading provisions and 

how EPA proposes to implement these provisions can be found in Section III.E. 

5. CO2 Temporary Lead-time Allowance Alternative Standards

Manufacturers with limited product lines may be especially challenged in 

the early years of the proposed program. Manufacturers with narrow product offerings 

may not be able to take full advantage of averaging or other program flexibilities due to 

the limited scope of the types of vehicles they sell. For example, some manufacturers in 

this situation EPA is proposing a limited and narrowly prescribed provision, called the 

Temporary Lead-time Allowance Alternative Standards (TLAAS), to provide additional 

lead time for a certain subset of manufacturers. This provision is designed to address two 

different situations where we project that more lead time is needed, based on the level of 

emissions control technology and emissions control performance currently exhibited by 

certain vehicles. One situation involves manufacturers who have traditionally paid CAFE 

fines instead of complying with the CAFE fleet average, and as a result at least part of 

their vehicle production currently has significantly higher CO2 and lower fuel economy 

levels than the industry average. More lead time is needed in the program’s initial years 

to upgrade these vehicles to meet the aggressive CO2 emissions performance levels 

required by the proposal. The other situation involves manufacturers who have a limited 

line of vehicles and are unable to take advantage of averaging of emissions performance 

across a full line of production. For example, some smaller volume manufacturers focus 

on high performance vehicles with higher CO2 emissions, above the CO2 emissions target 

for that vehicle footprint, but do not have other types of vehicles in their production mix 

 

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

29 See 71 FR 8427 (February 26, 2007). 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

31

with which to average. Often, these manufacturers also pay fines under the CAFE 

program rather than meeting the applicable CAFE standard, but. Because voluntary noncompliance is impermissible for the GHG standards proposed under the CAA. EPA 

believes that , both of these technological circumstances may call for a gradual phase-in 

by establishing a temporary less stringent standard for MY 2012-2015 for a portion of the 

vehicle sales so that manufacturer resources can be focused on meeting the 2016 levels. 

The program is structured so as to create no incentives for any manufacturer to use it 

except for those with legitimate, criticaltypes of manufacturers need additional lead- time 

constraints in the program's initial model yearsto upgrade vehicles and meet the proposed 

standards. 

Therefore, EPA projects that the environmental impact of the proposed 

TLAAS program will be very small. If all companies eligible to use the TLAAS use it to 

the maximum extent allowed, total GHG emissions from the proposal will increase by 

less than 0.4% over the lifetime of the MY 2012-2016 vehicles. EPA believes the impact 

will be even smaller, as we do not expect all of the eligible companies to use the 

program, and we do not expect all companies who do use the program will use it to the 

maximum extent allowed, as we have included provisions which discourage companies 

from using the TLAAS any longer than it is needed.

EPA has structured the TLAAS program to provide more lead time in these kinds 

of situations, but to limit the program so that it would only be used in situations where 

these kinds of lead time concerns arise. Based on historic data on sales, EPA is using a 

specific historic U.S, sales volume as the best way to identify the subset of production 

that falls into this situation. Under the TLAAS, these manufacturers would be allowed to 

produce up to but no more than 100,000 vehicles that would be subject to a somewhat 

less stringent CO2 standard. This 100,000 volume is not an annual limit, but is an 

absolute limit for the total number of vehicles which can use the TLAAS program over 

the model years 2012-2015. Any additional production would be subject to the same 

standards as any other manufacturer. In addition, EPA is imposing a variety of 

restrictions on the use of the TLAAS program, discussed in more detail below, to ensure 

that only manufacturers who need more lead time for the kinds of reasons noted above 

are likely to use the program. Finally, the program is temporary and expires at the end of 

MY 2015. A more complete discussion of the program is provided below. EPA believes 

the proposed program reasonably addresses a real world lead time constraint, and does it 

in a way that balances the need for more lead time with the need to minimize any 

resulting loss in potential emissions reductions. EPA invites comment as to whether its 

proposal is the best way to balance these concerns.

EPA proposes to establish a Temporary Lead-time Allowance Alternative 

Standards (TLAAS) for a specified subset of manufacturers. There are two types of 

companies who would make use of TLAAS- those manufacturers who have paid CAFE 

fines in recent years, and consequentlywho need additional lead-time to bring 

inincorporate the needed technology since they have not yet made significant fuel 

economy improvement to their vehicles; and those companies who are not full-line 

manufacturers, who have a smaller range of models and vehicle types, who may need 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

32

additional lead-time as well. This alternative standard would apply to manufacturers with 

total U.S. sales of less than 400,000 vehicles per year, using 2009 model year final sales 

numbers to determine eligibility for these alternative standards. EPA reviewed the sales 

volumes of manufacturers over the last few years, and determined that manufacturers 

below this level typically fit the characteristics discussed above, and manufacturers above 

this level did not. Thus, EPA chose this level was chosen because it functionally 

identifies the group of manufacturers described above, recognizing that there is nothing 

intrinsic in the sales volume itself that warrants this allowance. EPA was not able to 

identify any other objective criteria that would more appropriately identify the 

manufacturers and vehicle fleets described above. 

 EPA is proposing that manufacturers qualifying for TLAAS would be allowed to 

meet somewhat less stringent standards for a limited number of vehicles for model years 

2012 – 2015. Specifically, an eligible manufacturer could have a total of up to 100,000 

units of cars and trucks combined over model years 2012 – 2015, and during those model 

years those vehicles would be subject to a standard 1.25 times the standard that would 

otherwise apply to those vehicles under the primary program. In other words, the 

footprint curves upon which the individual manufacturer standards for the TLAAS fleets 

are based would be less stringent by a factor of 1.25 for up to 100,000 of an eligible 

manufacturer’s vehicles for model years 2012-2015. This As noted, this approach seeks 

to balance the need to provide additional lead-time without reducing the environmental 

benefits of the proposed program. EPA believes that 100,000000 units over four model 

years achieves an appropriate balance as the emissions impact is quite small, but does 

provide companies with some flexibility during MY 2012 – 2015. For example, for a 

manufacturer producing 400,000 vehicles per year, this would be a total of up to 100,000 

vehicles out of a total production of up to 1.6 million vehicles over the four year period, 

or about 6 percent of total production. 

Manufacturers with no U.S. sales in model year 2009 would not qualify for the 

TLAAS program. Manufacturers meeting the cut-point of 400,000 for MY 2009 but with 

U.S. directed production above 400,000 in any subsequent model years would remain 

eligible for the TLAAS program. Also, the total sales number applies at the corporate 

level, so if a corporation owns several vehicle brands the aggregate sales for the 

corporation would be used. These provisions would help prevent gaming of the 

provisions through corporate restructuring. Corporate ownership or control relationships 

would be based on determinations made under CAFE for model year 2009. In other 

words, corporations grouped together for purposes of meeting CAFE standards, would be 

grouped together for determining whether or not they are eligible under the 400,000 

vehicle cut point. 

 EPA derived the 100,000 maximum unit set aside number based on a gradual 

phase-out schedule shown in Table III.B.5-1, below. However, individual 

manufacturers’ situations will vary significantly and so EPA believes a flexible approach 

that allows manufacturers to use the allowance as they see fit during these model years 

would be most appropriate. Therefore, EPA is proposing that a total of 100,000 vehicles 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

33

of an eligible manufacturer, with any combination of cars or trucks, could be subject to 

the alternative standard over the four year period without restrictions. 

Table III.B.5-1 TLAAS Default Vehicle Production Volumes 

Model Year 2012 2013 2014 2015 

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

 The TLAAS vehicles would be separate car and truck fleets for that model year 

and would be subject to the less stringent footprint-based standards of 1.25 times the 

primary fleet average that would otherwise apply. The manufacturer would determine 

what vehicles are assigned to these separate averaging sets for each model year. EPA is 

proposing that credits from the primary fleet average program can be transferred and used 

in the TLAAS program. Credits within the TLAAS program may also be transferred 

between the TLAAS car and truck averaging sets for use through 2015 when the TLAAS 

would end. However, credits generated under TLAAS would not be allowed to be 

transferred or traded to the primary program. Therefore, any unused credits under 

TLAAS would expire after model year 2015. EPA believes that this is necessary to limit 

the program to situations where it is needed and to prevent the allowance from being 

inappropriately transferred to the long-term primary program. 

EPA is concerned that some manufacturers would be able to place relatively clean 

vehicles in the TLAAS to maximize TLAAS credits if credit use was unrestricted. 

However, any credits generated from the primary program that are not needed for 

compliance in the primary program, should be used to offset the TLAAS vehicles. EPA 

is thus proposing to restrict the use of banking and trading between companies of credits 

in the primary program in years in which the TLAAS is being used. For example, 

manufacturers using the TLAAS in MY 2012 could not bank credits in the primary 

program during MY 2012 for use in MY 2013 and later. No such restriction would be in 

place for years when the TLAAS is not being used. EPA also believes this provision is 

necessary to prevent credits from being earned simply by removing some high-emitting 

vehicles from the primary fleet. Absent this restriction, manufacturers would be able to 

choose to use the TLAAS for these vehicles and also be able to earn credits under the 

primary program that could be banked or traded under the primary program without 

restriction. EPA is proposing two additional restrictions regarding the use of the TLAAS 

by requiring that for any of the 2012-2015 model years for which an eligible 

manufacturer would like to use the TLAAS, the manufacturer must use two of the 

available flexibilities in the GHG program first in order to try and show compliance with 

the primary standard before accessing the TLAAS. Specifically, before using the 

TLAAS the manufacturer must: (1) use any banked emission credits from a previous 

model year; and, (2) use any available credits from the companies’ car or truck fleet for 

the specific model year (i.e., use credit transfer from cars to trucks or from trucks to cars, 

that is, before using the TLAAS for either the car fleet or the truck fleet, make use of any 

available credit transfers first). EPA is requesting comments on all aspects of the 

proposed TLAAS program including comments on other provisions that might be needed 

to ensure that the TLAAS program is being used as intended and to ensure no gaming 

occurs. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

34

Finally, EPA recognizes that there will be a wide range of companies within the 

eligible companiesmanufacturers with sales less than 400,000 vehicles in model year 

2009, there will be a wide range of companies. Some of these companies, while having 

relatively small U.S. sales volumes, are large global automotive firms, including 

companies such as Mercedes and Volkswagen. Other companies are significantly smaller 

niche firms, with sales volumes closer to 10,000 vehicles per year worldwide; an example 

of this type of firm is Aston Martin. EPA anticipates that there are a small number of 

such smaller volume manufacturers, which have claimed that they may face greater 

challenges in meeting the proposed standards due to their limited product lines across 

which to average. EPA requests comment on whether the proposed TLAAS program, as 

described above, provides sufficient lead-time for these smaller firms to incorporate the 

technology needed to comply with the proposed GHG standards. 

6. Proposed Nitrous Oxide and Methane Standards

In addition to fleet-average CO2 standards, EPA is proposing separate per-vehicle 

standards for nitrous oxide (N2O) and methane (CH4) emissions. Standards are being 

proposed that would cap vehicle N2O and CH4 emissions at current levels. Our intention 

is to set emissions standards that act to cap emissions to ensure that future vehicles do not 

increase their N2O and CH4 emissions above levels that would be allowed under the 

proposal. 

EPA considered an approach of expressing each of these standards in common 

terms of CO2-equivalent emissions and combining them into a single standard along with 

CO2 and HFC emissions. California’s “Pavley” program adopted such a CO2-equivalent 

emissions standards approach to GHG emissions in their program.30 However, these 

pollutants are largely independent of one another in terms of how they are generated by 

the vehicle and how they are tested for during implementation. Potential control 

technologies and strategies for each pollutant also differ. Moreover, an approach that 

provided for averaging of these pollutants could undermine the stringency of the CO2

standards, as at this time we are proposing standards which “cap” N2O and CH4

emissions, rather then proposing a level which is either at the industry fleet-wide average 

or which would result in reductions from these pollutants. It is possible that once EPA 

begins to receive more detailed information on the N2O and CH4 performance of the new 

vehicle fleet as a result of this proposed rule (if it were to be finalized as proposed) that 

for a future action for model years 2017 and later EPA could consider a CO2-equivalent

standard which would not result in any increases in GHG emissions due to the current 

lack of detailed data on N2O and CH4 emissions performance. 

Almost universally across current car and truck designs, both gasoline- and dieselfueled, these emissions are relatively low, and our intent is to not are not proposed to 

require manufacturers to make technological improvements in ordertake steps to reduce 

 

30 California Environmental Protection Agency Air Resources Board, Staff Report: Initial Statement of 

Reasons for Proposed Rulemaking Public Hearing To Consider Adoption Of Regulations To Control 

Greenhouse Gas Emissions From Motor Vehicles, August 6, 2004.
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

35

N2O and CH4 at this time. However, it is important that future vehicle technologies or 

fuels do not result in increases in these emissions, and this is the intent of the proposed 

“cap” standards. 

EPA requests comments on our approach to regulating N2O and CH4 emissions

(including the appropriateness of “cap” standards as opposed to “technology-forcing”

standards, the technical bases for the proposed N2O and CH4 standards, the proposed test 

procedures, and timing. Specifically, EPA seeks comment on the appropriateness of the 

proposed levels of the N2O and CH4 standards to accomplish our stated intent. In 

addition, EPA seeks comment on any additional emissions data on N2O and CH4 from 

current technology vehicles.

a. Nitrous Oxide (N2O) Exhaust Emission Standard 

N2O is a global warming gas with a high global warming potential.31 It accounts 

for about 2.7% of the current greenhouse gas emissions from cars and light trucks. EPA 

is proposing a per-vehicle N2O emission standard of 0.010 g/mi, measured over the 

traditional FTP vehicle laboratory test cycles. The standard would become effective in 

model year 2012 for all light-duty cars and trucks. Averaging between vehicles would 

not be allowed. The standard is designed to prevent increases in N2O emissions from 

current levels, i.e. a no-backsliding standard. 

N2O is emitted from gasoline and diesel vehicles mainly during specific catalyst 

temperature conditions conducive to N2O formation. Specifically, N2O can be generated 

during periods of emission hardware warm-up when rising catalyst temperatures pass 

through the temperature window when N2O formation potential is possible. For current 

Tier 2 compatible gasoline engines with conventional three-way catalyst technology, N2O 

is not generally produced in significant amounts because the time the catalyst spends at 

the critical temperatures during warm-up is short. This is largely due to the need to 

quickly reach the higher temperatures necessary for high catalyst efficiency to achieve 

emission compliance of criteria pollutants. N2O is a more significant concern with diesel 

vehicles, and potentially future gasoline lean-burn engines, equipped with advanced 

catalytic NOX emissions control systems. These systems can but need not be designed in 

a way that emphasizes efficient NOX control while allowing the formation of significant 

quantities of N2O. Excess oxygen present in the exhaust during lean-burn conditions in 

diesel or lean-burn gasoline engines equipped with these advanced systems can favor 

N2O formation if catalyst temperatures are not carefully controlled. Without specific 

attention to controlling N2O emissions in the development of such new NOX control 

systems, vehicles could have N2O emissions many times greater than are emitted by 

current gasoline vehicles. 

EPA is proposing an N2O emission standard that EPA believes would be met by 

current-technology gasoline vehicles at essentially no cost. As noted, N2O formation in 

current catalyst systems occurs, but the emission levels are low, because the time the 

catalyst spends at the critical temperatures during warm-up when N2O can form is short. 

 

31 N2O has a GWP of 310 according to the IPCC Second Assessment Report (SAR). 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

36

At the same time, EPA believes that the proposed standard would ensure that the design 

of advanced NOX control systems, especially for future diesel and lean-burn gasoline 

vehicles, would control N2O emission levels. While current NOX control approaches 

used on current Tier 2 diesel vehicles do not tend to form N2O emissions, EPA believes 

that the proposed standards would discourage any new emission control designs that 

achieve criteria emissions compliance at the cost of increased N2O emissions. Thus, the 

proposed standard would cap N2O emission levels, with the expectation that current 

gasoline and diesel vehicle control approaches that comply with the Tier 2 vehicle 

emission standards for NOX would not increase their emission levels, and that the cap 

would ensure that future vehicle designs would appropriately control their emissions of 

N2O. The proposed N2O level is approximately two times the average N2O level of 

current gasoline passenger cars and light-duty trucks that meet the Tier 2 NOX

standards.32 Manufacturers typically use design targets for NOX emission levels of about 

50% of the standard, to account for in-use emissions deterioration and normal testing and 

production variability, and manufacturers are expected to utilize a similar approach for 

N2O emission compliance. EPA is not proposing a more stringent standard for current 

gasoline and diesel vehicles because the stringent Tier 2 program and the associated NOX

fleet average requirement already result in significant N2O control, and does not expect 

current N2O levels to rise for these vehicles. EPA requests comment on this technical 

assessment of current and potential future N2O formation in cars and trucks. 

 

While EPA believes that manufacturers will likely be able to acquire and install 

N2O analytical equipment, the agency also recognizes that some companies may face 

challenges. Given the short lead-time for this rule, EPA proposes that manufacturers be 

able to apply for a certificate of conformity with the N2O standard for model year 2012 

based on a compliance statement based on good engineering judgment. For 2013 and 

later model years, manufacturers would need to submit measurements of N2O for 

compliance purposes. 

Diesel cars and light trucks with advanced emission control technology are in the 

early stages of development and commercialization. As this segment of the vehicle 

market develops, the proposed N2O standard would require manufacturers to incorporate 

control strategies that minimize N2O formation. Available approaches include using 

electronic controls to limit catalyst conditions that might favor N2O formation and 

consider different catalyst formulations. While some of these approaches may have 

modest associated costs, EPA believes that they will be small compared to the overall 

costs of the advanced NOX control technologies already required to meet Tier 2 

standards. 

Vehicle emissions regulations do not currently require testing for N2O, and most 

test facilities do not have equipment for its measurement. Manufacturers without this 

capability would need to acquire and install appropriate measurement equipment. 

However, EPA is proposing four N2O measurement methods, all of which are 

commercially available today. EPA expects that most manufacturers would use photo-

 

32 Memo to docket “Deriving the standard from EPA’s MOVES model emission factors, ” December 2007.. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

37

acoustic measurement equipment, which the Agency estimates would result in a one-time 

cost of about $50,000-$60,000 for each test cell that would need to be upgraded. 

Overall, EPA believes that manufacturers of cars and light trucks, both gasoline 

and diesel, would meet the proposed standard without implementing any significantly 

new technologies, and there are not expected to be any significant costs associated with 

this proposed standard. 

b. Methane (CH4) Exhaust Emission Standard 

CH4 (or methane) is greenhouse gas with a high global warming potential.33 It 

accounts for about 0.2% of the greenhouse gases from cars and light trucks. 

EPA is proposing a CH4 emission standard of 0.030 g/mi as measured on the FTP, 

to apply beginning with model year 2012 for both cars and trucks. EPA believes that this 

level for the standard would be met by current gasoline and diesel vehicles, and would 

prevent large increases in future CH4 emissions in the event that alternative fueled 

vehicles with high methane emissions, like some past dedicated compressed natural gas 

(CNG) vehicles, become a significant part of the vehicle fleet. Currently EPA does not 

have separate CH4 standards because unlike other hydrocarbons it does not contribute 

significantly to ozone formation,34 However CH4 emissions levels in the gasoline and 

diesel car and light truck fleet have nevertheless generally been controlled by the Tier 2 

non-methane organic gases (NMOG) emission standards. However, without an emission 

standard for CH4, future emission levels of CH4 cannot be guaranteed to remain at current 

levels as vehicle technologies and fuels evolve. 

The proposed standard would cap CH4 emission levels, with the expectation that 

current gasoline vehicles meeting the Tier 2 emission standards would not increase their 

levels, and that it would ensure that emissions would be addressed if in the future there 

are increases in the use of natural gas or any other alternative fuel. The level of the 

standard would generally be achievable through normal emission control methods already 

required to meet Tier 2 program emission standards for NMOG and EPA is therefore not 

attributing any cost to this part of this proposal. Since CH4 is produced in gasoline and 

diesel engines similar to other hydrocarbon components, controls targeted at reducing 

overall NMOG levels generally also work at reducing CH4 emissions. Therefore, for 

gasoline and diesel vehicles, the Tier 2 NMOG standards will generally prevent increases 

in CH4 emissions levels from today. CH4 from Tier 2 light-duty vehicles is relatively low 

compared to other GHGs largely due to the high effectiveness of previous National Low 

Emission Vehicle (NLEV) and current Tier 2 programs in controlling overall HC 

emissions. 

 

33 CH4 has a GWP of 21 according to the IPCC Second Assessment Report (SAR). 

34 But see Ford Motor Co. v. EPA, 604 F. 2d 685 (D.C. Cir. 1979) (permissible for EPA to regulate CH4

under CAA section 202 (b)). 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

38

The level of the proposed standard is approximately two times the average Tier 2 

gasoline passenger cars and light-duty trucks level.

35 As with N2O, this proposed level 

recognizes that manufacturers typically set emission design targets at about 50% of the 

standard. Thus, EPA believes the proposed standard would be met by current gasoline 

vehicles. Similarly, since current diesel vehicles generally have even lower CH4

emissions than gasoline vehicles, EPA believes that diesels would also meet the proposed 

standard. However, EPA also believes that to set a CH4 emission standard more stringent 

than the proposed standard could effectively make the Tier 2 NMOG standard more 

stringent. 

In recent model years, a small number of cars and light trucks were sold that were 

designed for dedicated use of compressed natural gas (CNG) that met Tier 2 emission 

standards. While emission control designs on these recent dedicated CNG-fueled 

vehicles demonstrate CH4 control as effective as gasoline or diesel equivalent vehicles, 

CNG-fueled vehicles have historically produced significantly higher CH4 emissions than 

gasoline or diesel vehicles. This is because their CNG fuel is essentially methane and any 

unburned fuel that escapes combustion and not oxidized by the catalyst is emitted as 

methane. However, even if these vehicles meet the Tier 2 NMOG standard and appear to 

have effective CH4 control by nature of the NMOG controls, Tier 2 standards do not 

require CH4 control. While the proposed CH4 cap standard should not require any 

different emission control designs beyond what is already required to meet Tier 2 NMOG 

standards on a dedicated CNG vehicle, the cap will ensure that systems maintain the 

current level of CH4 control. EPA is not proposing more stringent CH4 standards because 

the same controls that are used to meet Tier 2 NMOG standards should result in effective 

CH4 control. Increased CH4 stringency beyond proposed levels could inadvertently result 

in increased Tier 2 NMOG stringency absent an emission control technology unique to 

CH4 . Since CH4 is already measured under the current Tier 2 regulations (so that it may 

be subtracted to calculate non-methane hydrocarbons), the proposed standard would not 

result in additional testing costs. EPA requests comment on whether the proposed cap 

standard would result in any significant technological challenges for makers of CNG 

vehicles. 

7. Small Entity Deferment 

 EPA is proposing to defer setting GHG emissions standards for small entities 

meeting the Small Business Administration (SBA) criteria of a small business as 

described in 13 CFR 121.201. EPA would instead consider appropriate GHG standards 

for these entities as part of a future regulatory action. This includes small entities in three 

distinct categories of businesses for light-duty vehicles: small volume manufacturers, 

independent commercial importers (ICIs), and alternative fuel vehicle converters. EPA 

has identified about 13 entities that fit the Small Business Administration (SBA) criterion 

of a small business. EPA estimates there are 2 small volume manufacturers, 8 ICIs, and 3 

alternative fuel vehicle converters currently in the light-duty vehicle market. EPA 

estimates that these small entities comprise less than 0.1 percent of the total light-duty 

 

35 Memo to docket “Deriving the standard from EPA’s MOVES model emission factors, ” December 2007. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

39

vehicle sales in the U.S., and therefore the proposed deferment will have a negligible 

impact on the GHG emissions reductions from the proposed standards. Further detail is 

provided in Section III.I.3, below. 

To ensure that EPA is aware of which companies would be deferred, EPA is 

proposing that such entities submit a declaration to EPA containing a detailed written 

description of how that manufacturer qualifies as a small entity under the provisions of 13 

CFR 121.201. Because such entities are not automatically exempted from other EPA 

regulations for light-duty vehicles and light-duty trucks, absent such a declaration, EPA 

would assume that the entity was subject to the greenhouse gas control requirements in 

this GHG proposal. The declaration would need to be submitted at time of vehicle 

emissions certification under the EPA Tier 2 program. Small entities are currently 

covered by a number of EPA motor vehicle emission regulations, and they routinely 

submit information and data on an annual basis as part of their compliance 

responsibilities. EPA expects that the additional paperwork burden associated with 

completing and submitting a small entity declaration to gain deferral from the proposed 

GHG standards would be negligible and easily done in the context of other routine 

submittals to EPA. However, EPA has accounted for this cost with a nominal estimate 

included in the Information Collection Request completed under the Paperwork 

Reduction Act. Additional information can be found in the Paperwork Reduction Act 

discussion in Section III.I.2. 

 

C. Additional Credit Opportunities for CO2 Fleet Average Program 

 The standards being proposed represent a significant multi-year challenge for 

manufacturers, especially in the early years of the program. Section III.B.4 described 

EPA proposals for how manufacturers could generate credits by achieving fleet average 

CO2 emissions below the fleet average standard, and also how manufacturers could use 

credits to comply with standards. As described in Section III.B.4, credits could be carried 

forward five years, carried back three years, transferred between vehicle categories, and 

traded between manufacturers. The credits provisions proposed below would provide 

manufacturers with additional ways to earn credits starting in MY 2012. EPA is also 

proposing early credits provisions for the 2009 – 2011 model years, as described below in 

Section III.C.5. 

The provisions proposed below would provide additional flexibility, especially in 

the early years of the program. This flexibility helps to address issues of lead-time or 

technical feasibility for various manufacturers and in several cases provides an incentive 

for promotion of technology pathways that warrant further development, whether or not 

they are an important or central technology on which critical features of this program are 

premised. EPA is proposing a variety of credit opportunities because manufacturers are 

not likely to be in a position to use every credit provision. EPA expects that 

manufacturers are likely to select the credit opportunities that best fit their future plans. 

EPA believes it is critical that manufacturers have options to ease the transition to the 

final MY 2016 standards. At the same time, EPA believes these credit programs must be 

designed in a way to ensure that they achieve emission reductions that achieve real-world 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

40

reductions over the full useful life of the vehicle (or, in the case of FFV credits and 

Advanced Technology credits, to incentivize the introduction of those vehicle 

technologies) and are verifiable. In addition, EPA wants to ensure these credit programs 

do not provide an opportunity for manufacturers to earn “windfall” credits. EPA seeks 

comments on how to best ensure these objectives are achieved in the design of the credit 

programs. EPA requests comment on all aspects of these proposed credits provisions. 

 1. Air Conditioning Related Credits

EPA proposes that manufacturers be able to generate and use credits for improved 

air conditioner (A/C) systems in complying with the CO2 fleetwide average standards 

described above. EPA expects that most manufacturers will choose to utilize the A/C 

provisions as part of its compliance demonstration (and for this reason cost of compliance 

with A/C related emission reductions are assumed in the cost analysis). The A/C 

provisions are structured as credits, unlike the CO2 standards for which manufacturers 

will demonstrate compliance using 2-cycle tests (see Sections III.B and III.E.). Those 

tests do not measure either A/C leakage or tailpipe CO2 emissions attributable to A/C 

load (see Section III.C.1.b below describing proposed alternative test procedures for 

assessing tailpipe CO2 emission attributable to A/C engine load). Thus, it is a 

manufacturer’s option to include A/C GHG emission reductions as an aspect of its 

compliance demonstration. Since this is an elective alternative, EPA is referring to the 

A/C part of the proposal as a credit. 

EPA estimates that direct A/C GHG emissions – emissions due to the leakage of 

the hydrofluorocarbon refrigerant in common use today -- account for 4.3% of CO2-

equivalent GHGs from light-duty cars and trucks. This includes the direct leakage of 

refrigerant as well as the subsequent leakage associate with maintenance and servicing, 

and with disposal at the end of the vehicle’s life. The emissions that are impacted by 

leakage reductions are the direct leakage and the maintenance and servicing. Together 

these are equivalent to CO2 emissions of approximately 13.6 g/mi per vehicle (this is 14.9 

g/mi if end of life emissions are also included). EPA also estimates that indirect GHG 

emissions (additional CO2 emitted due to the load of the A/C system on the engine) 

account for another 3.9% of light-duty GHGs.36 This is equivalent to CO2 emissions of 

approximately 14.2 g/mi per vehicle. The derivation of these figures can be found in the 

EPA DRIA. . 

 EPA believes that it is important to address A/C direct and indirect emissions 

because the technologies that manufacturers will employ to reduce vehicle exhaust CO2

will have little or no impact on A/C related emissions. Without addressing A/C related 

emissions, as vehicles become more efficient, the A/C related contribution will become a 

much larger portion of the overall vehicle GHG emissions.

 

Over 95% of the new cars and light trucks in the United States are equipped with 

A/C systems and, as noted, there are two mechanisms by which A/C systems contribute 

to the emissions of greenhouse gases: through leakage of refrigerant into the atmosphere 

 

36See Chapter 2, section 2.2.1.2 of the DRIA [Add RIA reference for contribution percentages.]
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

41

and through the consumption of fuel to provide power to the A/C system. With leakage, 

it is the high global warming potential (GWP) of the current automotive refrigerant – 

R134a, with a GWP of 1430 – that results in the CO2-equivalent impact of 13.6 g/mi. 37

 

Due to the high GWP of this HFC, a small leakage of the refrigerant has a much greater 

global warming impact than a similar amount of emissions of CO2 or other mobile source 

GHGs. Manufacturers can choose to reduce A/C leakage emissions by using leak-tight 

components. Also, manufacturers can largely eliminate the global warming impact of 

leakage emissions by adopting systems that use an alternative, low-GWP refrigerant.38

 

The A/C system also contributes to increased CO2 emissions through the additional work 

required to operate the compressor, fans, and blowers. This additional work typically is 

provided through the engine’s crankshaft, and delivered via belt drive to the alternator 

(which provides electric energy for powering the fans and blowers) and A/C compressor 

(which pressurizes the refrigerant during A/C operation). The additional fuel used to 

supply the power through the crankshaft necessary to operate the A/C system is 

converted into CO2 by the engine during combustion. This incremental CO2 produced 

from A/C operation can thus be reduced by increasing the overall efficiency of the 

vehicle’s A/C system, which in turn will reduce the additional load on the engine from 

A/C operation.39

Manufacturers can make very feasible improvements to their A/C systems to 

address A/C system leakage and efficiency. EPA proposes two separate credit 

approaches to address leakage reductions and efficiency improvements independently. A 

proposed leakage reduction credit would take into account the various technologies that 

could be used to reduce the GHG impact of refrigerant leakage, including the use of an 

alternative refrigerant with a lower GWP. A proposed efficiency improvement credit 

would account for the various types of hardware and control of that hardware available to 

increase the A/C system efficiency. Manufacturers would be required to attest the 

durability of the leakage reduction and the efficiency improvement technologies over the 

full useful life of the vehicle.

 

EPA believes that both reducing A/C system leakage and increasing efficiency are 

highly cost-effective and technologically feasible. EPA expects most manufacturers will 

choose to use these A/C credit provisions, although some may not find it necessary to do 

so. 

 

 

37 The global warming potentials (GWP) used in the NPRM analysis are consistent with Intergovernmental 

Panel on Climate Change (IPCC) Fourth Assessment Report (AR4). At this time, the IPCC Second 

Assessment Report (SAR) global warming potential values have been agreed upon as the official U.S. 

framework for addressing climate change. The IPCC SAR GWP values are used in the official U.S. 

greenhouse gas inventory submission to the climate change framework. When inventories are recalculated 

for the final rule, changes in GWP used may lead to adjustments. 

38 Refrigerant emissions during maintenance and at the end of the vehicle’s life (as well as emissions during 

the initial charging of the system with refrigerant) are also addressed by the CAA Title VI stratospheric 

ozone program, as described below. 

39 We will not be addressing changes to the weight of the A/C system, since the issue of CO2 emissions 

from the fuel consumption of normal (non-A/C) operation, including basic vehicle weight, is inherently

addressed with the primary CO2 standards (Sec III.B above). 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

42

a. A/C Leakage Credits 

The refrigerant used in vehicle A/C systems can get into the atmosphere by many 

different means. These refrigerant emissions occur from the slow leakage over time that 

all closed high pressure systems will experience. Refrigerant loss occurs from 

permeation through hoses and leakage at connectors and other parts where the 

containment of the system is compromised. The rate of leakage can increase due to 

deterioration of parts and connections as well. In addition, there are emissions that occur 

during accidents and maintenance and servicing events. Finally, there are end-of-life 

emissions if, at the time of vehicle scrappage, refrigerant is not fully recovered. 

Because the process of refrigerant leakage has similar root causes as those that 

cause fuel evaporative emissions from the fuel system, some of the control technologies 

are similar (including hose materials and connections). There are however, some 

fundamental differences between the systems that require a different approach. The most 

notable difference is that A/C systems are completely closed systems, whereas the fuel 

system is not. Fuel systems are meant to be refilled as liquid fuel is consumed by the 

engine, while the A/C system ideally should never require “recharging” of the contained 

refrigerant. Thus it is critical that the A/C system leakages be kept to an absolute 

minimum. These emissions are typically too low to accurately measure in most current 

SHED chambers designed for fuel evaporative emissions measurement, especially for 

systems that are new or early in life. Therefore, if leakage emissions were to be 

measured directly, new measurement facilities would need to be built by the OEM 

manufacturers and very accurate new test procedures would need to be developed. 

Especially because there are indications that much of the industry is moving toward 

alternative refrigerants (post-2016 for most manufacturers), EPA is not proposing such a 

direct measurement approach to addressing refrigerant leakage. 

Instead, EPA proposes that manufacturers demonstrate improvements in their A/C 

system designs and components through a design-based method. Manufacturers 

implementing systems expected to result in reduced refrigerant leakage would be eligible 

for credits that could then be used to meet their CO2 emission compliance requirements. 

The proposed “A/C Leakage Credit” provisions would generally assign larger credits to 

system designs that are expected to result in greater leakage reduction. In addition, EPA 

proposes that proportionately larger A/C Leakage Credits be available to manufacturers 

that substitute a lower-GWP refrigerant for the current R134a refrigerant. 

Our proposed method for calculating A/C Leakage Credits is based closely on an 

industry-consensus leakage scoring method, described below. This leakage scoring 

method is correlated to experimentally-measured leakage rates from a number of vehicles 

using the different available A/C components. Under the proposed approach, 

manufacturers would choose from a menu of A/C equipment and components used in 

their vehicles in order to establish leakage scores which would characterize their A/C 

system leakage performance. The leakage score can be compared to expected fleetwide 

leakage rates in order to quantify improvements for a given A/C system. Credits would 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

43

be generated from leakage reduction improvements that exceeded average fleetwide 

leakage rates. 

EPA believes that the design-based approach would result in estimates of likely 

leakage emissions reductions that would be comparable to those that would eventually 

result from performance-based testing. At the same time, comments are encouraged on 

all developments that may lead to a robust, practical, performance-based test for 

measuring A/C refrigerant leakage emissions. 

The cooperative industry and government Improved Mobile Air Conditioning 

(IMAC) program40 has demonstrated that new-vehicle leakage emissions can be reduced 

by 50%. This program has shown that this level of improvement can be accomplished by 

reducing the number and improving the quality of the components, fittings, seals, and 

hoses of the A/C system. All of these technologies are already in commercial use and 

exist on some of today’s systems. 

EPA is proposing that a manufacturer wishing to earn A/C Leakage Credits would 

compare the components of its A/C system with a set of leakage-reduction technologies 

and actions that is based closely on that being developed through IMAC and the Society 

of Automotive Engineers (as SAE Surface Vehicle Standard J2727, August 2008 

version). The J2727 approach is developed from laboratory testing of a variety of A/C 

related components, and EPA believes that the J2727 leakage scoring system generally 

represents a reasonable correlation with average real-world leakage in new vehicles. 

Like the IMAC approach, our proposed credit approach would associate each component 

with a specific leakage rate in grams per year identical to the values in J2727. A 

manufacturer choosing to claim Leakage Credits would sum the leakage values for an 

A/C system for a total A/C leakage score. EPA is proposing a formula for converting the 

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

traveled (VMT) and the GWP of the refrigerant into account. This formula is: 

Credit = (MaxCredit) * [ 1 - (LeakScore/AvgImpact) * (GWPRefrigerant/1430)] 

Where: 

MaxCredit is 12.6 and 15.7 g/mi CO2eq for cars and trucks respectively. These become 

13.8 and 17.2 for cars and trucks if alternative refrigerants are used since they get 

additional credits for end-of-life emissions reductions. 

LeakScore is the leakage score of the A/C system as measured according to methods 

similar to the J2727 procedure in units of g/yr. The minimum score which is deemed 

feasible is fixed at 8.3 and 10.4 g/yr for cars and trucks respectively. 

AvgImpact is the average impact of A/C leakage, which is 16.6 and 20.7 g/yr for cars and 

trucks respectively 

 

40 Team 1-Refrigerant Leakage Reduction: Final Report to Sponsors, SAE, 2007. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

44

GWPRefrigerant is the global warming potential for direct radiative forcing of the 

refrigerant as defined by EPA (or IPCC). 

All of the parameters and limits of the equation are derived in the EPA DRIA. 

For systems using the current refrigerant, EPA proposes that these emission rates 

could at most be feasibly reduced by half, based on the conclusions of the IMAC study, 

and consideration of emission over the full life of the vehicle. (This latter point is 

discussed further in the DRIA.) 

As discussed above, EPA recognizes that substituting an alternative refrigerant 

(one with a significantly lower global warming potential, GWP), would potentially be a 

very effective way to reduce the impact of all forms of refrigerant emissions, including 

maintenance, accidents, and vehicle scrappage. To address future GHG regulations in 

Europe and California, systems using alternative refrigerants -- including HFO1234yf, 

with a GWP of 4 -- are under serious development and have been demonstrated in 

prototypes by A/C component suppliers. These alternative refrigerants have remaining 

cost, safety and feasibility hurdles for commercial applications.41 However, the European 

Union has enacted regulations phasing in alternative refrigerants with GWP less than 150 

starting in 2010, and the State of California proposed providing credits for alternative 

refrigerant use in its GHG rule. 

Within the timeframe of 2012 - 2016, EPA is not expecting the use of low-GWP 

refrigerants to be widespread. However, EPA believes that these developments are 

promising, and have included in our proposed A/C Leakage Credit system provisions to 

account for the effective refrigerant reductions that could be expected from refrigerant 

substitution. The quantity of A/C Leakage Credits that would be available would be a 

function of the GWP of the alternative refrigerant, with the largest credits being available 

for refrigerants approaching a GWP of zero.42 For a hypothetical alternative refrigerant 

with a GWP of 1, effectively eliminating leakage as a GHG concern, our proposed credit 

calculation method could result in maximum credits equal total average emissions, or 

credits of 13.4 and 17.8 g/mi CO2eq for cars and trucks, respectively. This option is also 

captured in the equation above. 

It is possible that alternative refrigerants could, without compensating action by 

the manufacturer, reduce the efficiency of the A/C system (see discussion of the A/C 

Efficiency Credit below.) However, EPA believes that manufacturers will have 

substantial incentives to design their systems to maintain the efficiency of the A/C 

system, therefore EPA is not accounting for any potential efficiency degradation. 

 

41 Although see 71 FR 55140 (Sept. 21, 2006) (proposal pursuant to section 612 of the CAA finding CO2

and HFC 152a as acceptable refrigerant substitutes as replacements for CFC-12 in motor vehicle air 

conditioning systems, and stating (at 55142) that “data ... indicate that use of CO2 and HFC 152a with risk 

mitigation technologies does not pose greater risks compared to other substitutes”). 

42 For example, the GWP for R152a is 120, the GWP of HFO-1234yf is 4, and the GWP of CO2 as a 

refrigerant is 1. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

45

EPA requests comment on all aspects of our proposed A/C Leakage Credit 

system. 

b. A/C Efficiency Credits 

EPA is proposing that manufacturers that make improvements in their A/C 

systems to increase efficiency and thus reduce CO2 emissions due to A/C system 

operation be eligible for A/C Efficiency Credits. As with A/C Leakage Credits, 

manufacturers could apply A/C Efficiency Credits toward compliance with their overall 

CO2 standards. 

As mentioned above, EPA estimates that the CO2 emissions due to A/C related 

loads on the engine account for approximately 3.9% of total greenhouse gas emissions 

from passenger vehicles in the United States. Usage of A/C systems is inherently higher 

in hotter and more humid months and climates; however, vehicle owners may use their 

A/C systems all year round in all parts of the nation. For example, people commonly use 

A/C systems to cool and dehumidify the cabin air for passenger comfort on hot humid 

days, but they also use the systems to de-humidify cabin air to assist in defogging/deicing the front windshield and side glass in cooler weather conditions for improved 

visibility. A more detailed discussion of seasonal and geographical A/C usage rates can 

be found in the DRIA. 

Most of the additional load on the engine from A/C system operation comes from 

the compressor, which pumps the refrigerant around the system loop. Significant 

additional load on the engine may also come from electric or hydraulic fans, which are 

used to move air across the condenser, and from the electric blower, which is used to 

move air across the evaporator and into the cabin. Manufacturers have several currentlyexisting technology options for improving efficiency, including more efficient 

compressors, fans, and motors, and systems controls that avoid over-chilling the air (and 

subsequently re-heating it to provide the desired air temperature with an associated loss 

of efficiency). For vehicles equipped with automatic climate-control systems, real-time 

adjustment of several aspects of the overall system (such as engaging the full capacity of 

the cooling system only when it is needed, and maximizing the use of recirculated air) 

can result in improved efficiency. Table III.C.1-1 below lists some of these technologies 

and their respective efficiency improvements. 

As with the A/C Leakage Credit program, EPA is interested in performance-based 

standards (or credits) based on measurement procedures whenever possible. While 

design-based assessments of expected emissions can be a reasonably robust way of 

quantifying emission improvements, these approaches have inherent shortcomings, as 

discussed for the case of A/C leakage above. Design-based approaches depend on the 

quality of the data from which they are calibrated, and it is possible that apparently 

proper equipment may function less effectively than expected. Therefore, while the 

proposal uses a design-based menu approach to quantify improvements in A/C efficiency, 

it is also proposed to begin requiring manufacturers to confirm that technologies applying 

for Efficiency Credits are measurably improving system efficiency. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

46

EPA believes that there is a more critical need for a test procedure to quantify 

A/C Efficiency Credits than for Leakage Credits, for two reasons. First, the efficiency 

gains for various technologies are more difficult to quantify using a design-based 

program (like the SAEJ2727-based procedure used to generate Leakage Credits). 

Second, while leakage may disappear as a significant source of GHG emissions if a shift 

toward alternate refrigerants develops, no parallel factor exists in the case of efficiency 

improvements. EPA is thus proposing to phase-in a performance-based test procedure 

over time beginning in 2014, as discussed below. In the interim, EPA proposes a designbased “menu” approach for estimating efficiency improvements and, thus, quantifying 

A/C Efficiency Credits. 

For model years 2012 and 2013, EPA proposes that a manufacturer wishing to 

generate A/C Efficiency Credits for a group of its vehicles with similar A/C systems 

would compare several of its vehicle A/C-related components and systems with a “menu” 

of efficiency-related technology improvements (see Table III.C.1-1 below). Based on the 

technologies the manufacturer chooses, an A/C Efficiency Credit value would be 

established. This design-based approach would recognize the relationships and synergies 

among efficiency-related technologies. Manufacturers could receive credit based on the 

technologies they chose to incorporate in their A/C systems and the associated credit 

value for each technology. The total A/C Efficiency Credit would be the total of these 

values, up to a maximum feasible credit of 5.7 g/mi CO2eq. This would be the maximum 

improvement from current average efficiencies for A/C systems (see the DRIA for a full 

discussion of our derivation of the proposed reductions and credit values for individual 

technologies and for the maximum total credit available). Although the total of the 

individual technology credit values may exceed 5.7 g/mi CO2eq, synergies among the 

technologies mean that the values are not additive, and thus A/C EfficienclyEfficiency

credit should could not exceed 5.7 g/mi CO2eqthe total maximum feasible credit. 

The EPA requests comment on adjusting the A/C efficiency credit to account for 

potential decreases (or increases) in efficiency when using an alternative refrigerant by 

using the change in the coefficient of performance. The effects may include the impact 

of a secondary loop system (including the incremental effect on tailpipe CO2 emissions 

that the added weight of such a system would incur). Because of synergies among the 

technologies, A/C Efficiency Credits would be organized into a two-tiered system. A 

gram-per-mile CO2-equivalent credit would be available for certain combinations of 

specific technologies that EPA believes will result in significant improvements in A/C 

system efficiency. For a manufacturer using all of these technologies, only a maximum 

credit of 5.7 g/mi CO2eq would be attainable.

Table III.C.1-1 Efficiency-Improving A/C Technologies and Credits 

Technology Description Estimated 

Reduction in 

A/C CO2

Emissions 

A/C 

Efficiency 

Credit (g/mi 

CO2) 

Reduced reheat, with externally-controlled, 30% 1.7
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

47

variable-displacement compressor 

Reduced reheat, with externally-controlled, 

fixed-displacement or pneumatic variabledisplacement compressor 

20% 1.1 

Default to recirculated air whenever 

ambient temperature is greater than 75 °F 

30% 1.7 

Blower motor and cooling fan controls 

which limit waste energy (e.g. pulse width 

modulated power controller) 

15% 0.9 

Electronic expansion valve 20% 1.1 

Improved evaporators and condensers (with 

system analysis on each component 

indicating a COP improvement greater than 

10%, when compared to previous design) 

20% 1.1 

Oil Separator 10% 0.6 

 For model years 2014 and later, EPA proposes that manufacturers seeking to 

generate A/C Efficiency Credits would need to use a specific performance test to confirm 

that the design changes were also improving A/C efficiency. Manufacturers would need 

to perform an A/C CO2 Idle Test for each A/C system (family) for which it desired to 

generate Efficiency Credits. Manufacturers would need to demonstrate at least a 30% 

improvement over current average efficiency levels to qualify for credits. Upon 

qualifying on the Idle Test, the manufacturer would be eligible to use the menu approach 

above to quantify the credits it would earn. 

The proposed A/C CO2 Idle Test procedure, which EPA has designed specifically 

to measure A/C CO2 emissions, would be performed while the vehicle engine is at idle. 

This proposed laboratory idle test would be similar to the idle carbon monoxide (CO) test 

that was once a part of EPA vehicle certification. The test would determine the 

additional CO2 generated at idle when the A/C system is operated. The A/C CO2 Idle 

Test would be run with and without the A/C system cooling the interior cabin while the 

vehicle’s engine is operating at idle and with the system under complete control of the 

engine and climate control system 

The proposed A/C CO2 Idle Test is similar to that proposed in April 2009 for the 

Mandatory GHG Reporting Rule, with several improvements. These improvements 

include tighter restrictions on test cell temperatures and humidity levels in order to more 

closely control the loads from operation of the A/C system. EPA also made additional 

refinements to the required in-vehicle blower fan settings for manually controlled 

systems to more closely represent “real world” usage patterns. These details can be 

found in the DRIA and the regulations. 

The design of the A/C CO2 Idle Test represents a balancing of the need for 

performance tests whenever possible to ensure the most accurate quantification of 

efficiency improvements, with practical concerns for testing burden and facility 

requirements. EPA believes that the proposed Idle Test adds to the robust quantification 
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48

of A/C credits that will result in real-world efficiency improvements and reductions in 

A/C-related CO2 emissions. EPA is proposing that the Idle Test be required in order to 

qualify for A/C Efficiency Credits beginning in 2014 to allow sufficient time for 

manufacturers to make the necessary facilities improvements and to establish a comfort 

level with the test. 

EPA also considered a more comprehensive testing approach to quantifying A/C 

CO2 emissions that could be somewhat more technically robust, but would require more 

test time and test facility improvements for many manufacturers. This approach would 

be to adapt an existing test procedure, the Supplemental Federal Test Procedure (SFTP) 

for A/C operation, called the SC03, in specific ways for it to function as tool to evaluate 

A/C CO2 emissions. The potential test method is described in some detail here, and EPA 

encourages comment on how this type of test might or might not accomplish the goals of 

robust performance-based testing and reasonable test burdens. 

EPA designed the SC03 test to measure criteria pollutants under severe air 

conditioning conditions not represented in the FTP and Highway Fuel Economy Tests. 

EPA did not specifically design the SC03 to measure incremental reductions in CO2

emissions from more efficient A/C technologies. For example, due to the severity of the 

SC03 test environmental conditions and the relatively short duration of the SC03 cycle, it 

is difficult for the A/C system to achieve a stabilized interior cabin condition that reflects 

incremental improvements. Many potential efficiency improvements in the A/C 

components and controls (i.e., automatic recirculation and heat exchanger fan control) are 

specifically measured only during stabilized conditions, and therefore become difficult or 

impossible to measure and quantify during this test. In addition, SC03 testing is also 

somewhat constrained and costly due to limited number of test facilities currently capable 

of performing testing under the required environmental conditions. 

 

One value of using the SC03 as the basis for a new test to quantify A/C-related 

efficiency improvements would be the significant degree of control of test cell ambient 

conditions. The load placed on an A/C system, and thus the incremental CO2 emissions, 

are highly dependent on the ambient conditions in the test cell, especially temperature 

and humidity, as well as simulated solar load. Thus, as with the proposed Idle Test, a 

new SC03-based test would need to accurately and reliably control these conditions. 

(This contrasts with FTP testing for criteria pollutants, which does not require precise 

control of cell conditions because test results are generally much less sensitive to changes 

in cell temperature or humidity). 

However, for the purpose of quantifying A/C system efficiency improvements, 

EPA believes a test cell temperature less severe than the 95°F required by the SC03 

would be appropriate. A cell temperature of 85°F would better align the initial cooling 

phase (“pull-down”) as well as the stabilized phase of A/C operation with real-world 

driving conditions. 

Another value of an SC03-based test would be the opportunity to create operating 

conditions for vehicle A/C systems that in some ways would better simulate “real world” 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

49

operation than either the proposed Idle Test or the current SC03. The SC03 test cycle, 

roughly 10 minutes in length, has a similar average speed, maximum speed, and 

percentage of time at idle as the FTP. However, since the SC03 test cycle was designed 

principally to measure criteria pollutants under maximum A/C load conditions, it is not 

long enough to allow temperatures in the passenger cabin to consistently stabilize. EPA 

believes that once the pull-down phase has occurred and cabin temperatures have 

dropped dramatically to a suitable interior comfort level, additional test cycle time would 

be needed to measure how efficiently the A/C system operates under stabilized 

conditions. 

To capture the A/C operation during stabilized operation, EPA would consider 

adding two phases to the SC03 test of roughly 10 minutes each. Each additional phase 

would simply be repeats of the SC03 drive cycle, with two exceptions. During the 

second phase, the A/C system would now be operating at cabin temperature at or 

approaching a stabilized condition. During the third phase, the A/C system would be 

turned off. The purpose of the third phase would be to establish the base CO2 emissions 

with no A/C loads on the engine, which would provide a baseline for the incremental CO2

due to A/C use. EPA would likely weight the CO2 g/mi results for the first and second 

phases of the test as follows: 50% for phase 1, and 50% for phase 2. From this average 

CO2 the methodology would subtract the CO2 result from phase 3, yielding an 

incremental CO2 (in g/mi) due to A/C use. 

 

EPA expects to continue working with industry, the California Air Resources 

Board, and other stakeholders to move toward increasingly robust performance tests for 

A/C and may include such changes in this final rule. EPA requests comment on all 

aspects of our proposed A/C Efficiency Credits program. 

c. Interaction with Title VI Refrigerant Regulations 

Title VI of the Clean Air Act deals with the protection of stratospheric ozone. 

Section 608 establishes a comprehensive program to limit emissions of certain ozonedepleting substances (ODS). The rules promulgated under section 608 regulate the use 

and disposal of such substances during the service, repair or disposal of appliances and 

industrial process refrigeration. In addition, section 608 and the regulations promulgated 

under it, prohibit knowingly venting or releasing ODS during the course of maintaining, 

servicing, repairing or disposing of an appliance or industrial process refrigeration 

equipment. Section 609 governs the servicing of motor vehicle air conditioners 

(MVACs). The regulations promulgated under section 609 (40 CFR part 82, subpart B) 

establish standards and requirements regarding the servicing of MVACs. These 

regulations include establishing standards for equipment that recovers and recycles or 

only recovers refrigerant (CFC-12, HFC 134a, and for blends only recovers) from 

MVACs; requiring technician training and certification by an EPA-approved 

organization; establishing recordkeeping requirements; imposing sales restrictions; and 

prohibiting the venting of refrigerants. Section 612 requires EPA to review substitutes 

for class I and class II ozone depleting substances and to consider whether such 

substitutes will cause an adverse effect to human health or the environment as compared 
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50

with other substitutes that are currently or potentially available. EPA promulgated 

regulations for this program in 1992 and those regulations are located at 40 CFR part 82, 

subpart G. When reviewing substitutes, in addition to finding them acceptable or 

unacceptable, EPA may also find them acceptable so long as the user meets certain use 

conditions. For example, all motor vehicle air conditioning system must have unique 

fittings and a uniquely colored label for the refrigerant being used in the system. 

EPA views this proposed rule as complementing these Title VI programs, and not 

conflicting with them. To the extent that manufacturers choose to reduce refrigerant 

leakage in order to earn A/C Leakage Credits, this would dovetail with the Title VI 

section 609 standards which apply to maintenance events, and to end-of-vehicle life 

disposal. In fact, as noted, a benefit of the proposed A/C credit provisions is that there 

should be fewer and less impactive maintenance events for MVACs, since there will be 

less leakage. In addition, the credit provisions would not conflict (or overlap) with the 

Title VI section 609 standards. EPA also believes the menu of leak control technologies 

proposed today would complement the section 612 requirements, because these control 

technologies would help ensure that R134a (or other refrigerants) would be used in a 

manner that further minimizes potential adverse effects on human health and the 

environment. 

 2. Flex Fuel and Alternative Fuel Vehicle Credits

As described in this section, EPA is proposing credits for flexible-fuel vehicles 

(FFVs) and alternative fuel vehicles starting in the 2012 model year. FFVs are vehicles 

that can run both on an alternative fuel and conventional fuel. Most FFVs are E-85 

vehicles, which can run on a mixture of up to 85 percent ethanol and gasoline. Dedicated 

alternative fuel vehicles are vehicles that run exclusively on an alternative fuel (e.g., 

compressed natural gas). EPCA includes an incentive under the CAFE program for 

production of dual-fueled vehicles or FFVs, and dedicated alternative fuel vehicles.43

 

EPCA’s provisions were amended by the EISA to extend the period of availability of the 

FFV credits, but to begin phasing them out by annually reducing the amount of FFV 

credits that can be used in demonstrating compliance with the CAFE standards.44 EPCA 

does not premise the availability of the FFV credits on actual use of alternative fuel. 

Under EPCA, after MY 2019 no FFV credits will be available for CAFE compliance.45

 

Under EPCA, for dedicated alternative fuel vehicles, there are no limits or phase-out. 

EPA is proposing that FFV and Alternative Fuel Vehicle Credits be calculated as a part 

of the calculation of a manufacturer’s overall fleet average fuel economy and fleet 

average carbon-related exhaust emissions (§ 600.510-12). 

 

43 49 U.S.C 32905 

44 See 49 U.S.C 32906. The mechanism by which EPCA provides an incentive for production of FFVs is 

by specifying that their fuel economy is determined using a special calculation procedure that results in 

those vehicles being assigned a higher fuel economy level than would otherwise occur. 49 U.S.C section

32905 (b). This is typically referred to as an FFV credit. 

45 49 U.S.C 32906 
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51

 EPA is not proposing to include electric vehicles (EVs) or plug-in hybrid electric 

vehicles (PHEVs) in these flex fuel and alternative fuel provisions. These vehicles would 

be covered by the proposed advanced technology vehicle credits provisions described in 

Section III.C.3, so including them here would lead to a double counting of credits. 

 a. Model Year 2012 – 2015 Credits 

i. FFVs 

For the GHG program, EPA is proposing to allow FFV credits corresponding to 

the amounts allowed by the amended EPCA only during the period from MYs 2012 to 

2015. (As discussed below in Section III.E., EPA is proposing that CAFE-based FFV 

credits would not be permitted as part of the early credits program.) Several 

manufacturers have already taken the availability of FFV credits into account in their 

near-term future planning for CAFE and this reliance indicates that these credits need to 

be considered in considering adequacy of lead time for the CO2 standards. EPA thus 

believes that allowing these credits, in the near term, would help provide adequate lead 

time for manufacturers to implement the new multi-year standards, but that for the longer 

term there is adequate lead time without the use of such credits. This will also tend to 

harmonize the GHG and the CAFE program during these interim years. As discussed 

below, EPA is proposing for MY 2016 and later that manufacturers would not receive 

FFV credits unless they reliably estimate the extent the alternative fuel is actually being 

used by vehicles in order to count the alternative fuel use in the vehicle’s CO2 emissions 

level determination. 

 As with the CAFE program, EPA proposes to base credits on the 

assumption that the vehicles would operate 50% of the time on the alternative fuel and 

50% of the time on conventional fuel, resulting in CO2 emissions that are based on an 

arithmetic average of alternative fuel and conventional fuel CO2 emissions. 46 The 

measured CO2 emissions on the alternative fuel would be multiplied by a 0.15 volumetric 

conversion factor which is included in the CAFE calculation as provided by EPCA. 

Through this mechanism a gallon of alternative fuel is deemed to contain 0.15 gallons of 

fuel. EPA is proposing to take the same approach for 2012-2015 model years. For 

example, for a flexible-fuel vehicle that emitted 330 g/mi CO2 operating on E-85 and 350 

g/mi CO2 operating on gasoline, the resulting CO2 level to be used in the manufacturer’s 

fleet average calculation would be: 

[( ) ]

CO 199 8. g / mi

2

330 15.0 350

2 =

× +

=

 EPA understands that by using the CAFE approach -- including the 0.15 factor -- 

the CO2 emissions value for the vehicle is calculated to be significantly lower than it 

actually would be otherwise, even if the vehicle were assumed to operate on the 

alternative fuel at all times. This represents a “credit” being provided to FFVs. 

 

46 49 U.S.C 32905 (b) 
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52

 EPA notes also that the above equation and example are based on an FFV that is 

an E-85 vehicle. EPCA, as amended by EISA, also establishes the use of this approach, 

including the 0.15 factor, for all alternative fuels, not just E-85.47 The 0.15 factor is used 

for B-20 (20 percent biofuel and 80 percent diesel) FFVs. EPCA also establishes this 

approach, including the 0.15 factor, for gaseous-fueled FFVs such as a vehicle able to 

operate on gasoline and CNG.48 (For natural gas FFVs, EPCA establishes a factor of 

0.823 gallons of fuel for every 100 cubic feet a natural gas used to calculate a gallons 

equivalent.49) The EISA statute’s use of the 0.15 factor in this way provides a similar 

regulatory treatment across the various types of alternative fuel vehicles. EPA also 

proposes to use the 0.15 factor for all FFVs in keeping with the goal of not disrupting 

manufacturers’ near-term compliance planning. EPA, in any case, expects the vast 

majority of FFVs to be E-85 vehicles, as is the case today. 

 The FFV credit limits for CAFE are 1.2 mpg for model years 2012-2014 and 1.0 

mpg for model year 2015.50 In CO2 terms, these CAFE limits translate to declining CO2

credit limits over the four model years, as the CAFE standards increase in stringency (as 

the CAFE standard increases numerically, the limit becomes a smaller fraction of the 

standard). EPA proposes credit limits shown in Table III.C.2-1 based on the proposed 

average CO2 standards for cars and trucks. These have been calculated by comparing the 

average proposed CAFE standards with and without the FFV credits, converted to CO2. 

EPA requests comments on this proposed approach. 

Table III.C.2-1 FFV CO2 Standard Credit Limits (g/mile) 

Model Year Cars Trucks 

2012 9.8 17.9 

2013 9.3 17.1 

2014 8.9 16.3 

2015 6.9 12.6 

EPA also requests comments on basing the calculated CO2 credit limit on the 

individual manufacturer standards calculated from the footprint curves. For example, if a 

manufacturer’s 2012 car standard was 260 g/mile, the credit limit in CO2 terms would be 

9.5 g/mile and if it were 270 g/mile the limit would be 10.2 g/mile. This approach would 

be somewhat more complex and would mean that the FFV CO2 credit limits would vary 

by manufacturer as their footprint based standards vary. However, it would more closely 

track CAFE FFV credit limits. 

ii. Dedicated Alternative Fuel Vehicles 

 EPA proposes to calculate CO2 emissions from dedicated alternative fuel vehicles

for MY 2012 – 2015 by measuring the CO2 emissions over the test procedure and 

multiplying the results by the 0.15 conversion factor described above. For example, for a 

 

47 49 U.S.C 32905 (c) 

48 49 U.S.C 32905 (d). 

49 49 U.S.C section 32905 (c). 

50 49 U.S.C section 32906 (a). 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

53

dedicated alternative fuel vehicle that would achieve 330 g/mi CO2 while operating on 

alcohol (ethanol or methanol), the effective CO2 emissions of the vehicle for use in 

determining the vehicle’s CO2 emissions would be calculated as follows: 

CO 330 15.0 49 5. g / mi 2 = × =

b. Model Years 2016 and Later 

i. FFVs 

For 2016 and later model years, EPA proposes to treat FFVs similarly to 

conventional fueled vehicles in that FFV emissions would be based on actual CO2 results 

from emission testing on the alternative fuel. The manufacturer would also be required to 

demonstrate that the alternative fuel is actually being used in the vehicles. The 

manufacturer would need to establish the ratio of operation that is on the alternative fuel 

compared to the conventional fuel. The ratio would be used to weight the CO2 emissions 

performance over the 2-cycle test on the two fuels. The 0.15 conversion factor would no 

longer be included in the CO2 emissions calculation. For example, for a flexible-fuel 

vehicle that emitted 300 g/mi CO2 operating on E-85 ten percent of the time and 350 g/mi 

CO2 operating on gasoline ninety percent of the time, the CO2 emissions for the vehicles 

to be used in the manufacturer’s fleet average would be calculated as follows: 

(300 10.0 ) (350 90.0 ) 345 g/mi CO2 = × + × =

 The most complex part of this approach is to establish what data are needed for a 

manufacturer to accurately demonstrate use of the alternative fuel. One option EPA is 

considering is establishing a rebuttable presumption using a “top-down” approach based 

on national E-85 fuel use to assign credits to FFVs sold by manufacturers under this 

program. For example, national E-85 volumes and national FFV sales could be used to 

prorate E-85 use by manufacturer sales volumes and FFVs already in-use. EPA would 

conduct an analysis of vehicle miles travelled (VMT) by year for all FFVs using its 

emissions inventory MOVES model. Using the VMT ratios and the overall E-85 sales, 

E-85 usage could be assigned to each vehicle. This method would account for the VMT 

of new FFVs and FFVs already in the existing fleet using VMT data in the model. The 

model could then be used to determine the ratio of E-85 and gasoline for new vehicles 

being sold. Fluctuations in E-85 sales and FFV sales would be taken into account to 

adjust the credits annually. EPA believes this is a reasonable way to apportion E-85 use 

across the fleet. 

If manufacturers decided not to use EPA’s assigned credits based on the top-down 

analysis, they would have a second option of presenting their own data for consideration 

as the basis for credits. Manufacturers have suggested demonstrations using vehicle onboard data gathering through the use of on-board sensors and computers. California’s 

program allows FFV credits based on FFV use and envisioned manufacturers collecting 

fuel use data from vehicles in fleets with on-site refueling. Any approach must 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

54

reasonably ensure that no CO2 emissions reductions anticipated under the program are 

lost. 

EPA proposes that manufacturers would need to present a statistical analysis of 

alternative fuel usage data collected on actual vehicle operation. EPA is not attempting 

to specify how the data is collected or the amount of data needed. However, the analysis 

must be based on sound statistical methodology. Uncertainty in the analysis must be 

accounted for in a way that provides reasonable certainty that the program does not result 

in loss of emissions reductions. EPA requests comment on how this demonstration could 

reasonably be made. 

 EPA recognizes that under EPCA FFV credits are entirely phased-out of the 

CAFE program by MY 2020, and apply in the prior years with certain limitations, but 

without a requirement that the manufacturers demonstrate actual use of the alternative 

fuel. Under this proposal EPA would treat FFV credits the same as under EPCA for 

model years 2012-2015, but would apply a different approach starting with model year 

2016. Unlike EPCA, CAA section 202(a) does not mandate that EPA treat FFVs in a 

specific way. Instead EPA is required to exercise its own judgment and determine an 

appropriate approach that best promotes the goals of this CAA section. Under these 

circumstances, EPA proposes to treat FFVs for model years 2012-2015 the same as 

under EPCA, for the lead time reasons described above. Starting with model year 2016, 

EPA believes the appropriate approach is to ensure that emissions reduction credits are 

based upon a demonstration that emissions reductions have been achieved, to ensure the 

credits are for real reductions instead of reductions that have not likely occurred. This 

will promote the environmental goals of this proposal. At the same time, the ability to 

generate credits upon a demonstration of usage of the alternative fuel will provide an 

actual incentive to see that such fuels are used. Under the EPCA credit provision, there is 

an incentive to produce FFVs but no actual incentive to ensure that the alternative fuels 

are used. GHG and energy security benefits are only achieved if the alternative fuel is 

actually used, and EPA’s approach will now provide such an incentive. This approach 

will promote greater use of renewable fuels, as compared to a situation where there is a 

credit but no usage requirement. This is also consistent with the agency’s overall 

commitment to the expanded use of renewable fuels. Therefore EPA is not proposing to 

phase-out the FFV program for MYs 2016 and later but instead to base the program on 

real-world reductions (i.e., actual vehicle CO2 emissions levels based on actual use of the 

two fuels, without the 0.15 conversion factor specified under EISA). Based on existing 

certification data, E-85 FFV CO2 emissions are typically about 5 percent lower on E-85 

than CO2 emissions on 100 percent gasoline. However, currently there is little incentive 

to optimize CO2 performance for vehicles when running on E-85. EPA believes the 

above approach would provide such an incentive to manufacturers and that E-85 vehicles 

could be optimized through engine redesign and calibration to provide additional CO2

reductions. EPA requests comments on the above. 

ii. Dedicated Alternative Fuel Vehicles 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

55

 EPA proposes that for model years 2016 and later dedicated alternative fuel 

vehicles, CO2 would be measured over the 2-cycle test in order to be included in a 

manufacturer’s fleet average CO2 calculations. As noted above, this is different than 

CAFE methodology which provides a methodology for calculating a petroleum-based 

mpg equivalent for alternative fuel vehicles so they can be included in CAFE. However, 

because CO2 can be measured directly from alternative fuel vehicles over the test 

procedure, EPA believes this is the simplest and best approach since it is consistent with 

all other vehicle testing under the proposed CO2 program. 

3. Advanced Technology Vehicle Credits for Electric Vehicles, Plug-in 

Hybrids, and Fuel Cells

EPA is proposing additional credit opportunities to encourage the early 

commercialization of advanced vehicle powertrains, including electric vehicles (EVs), 

plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles. These technologies have 

the potential for more significant reductions of GHG emissions than any technology 

currently in commercial use, and EPA believes that encouraging early introduction of 

such technologies will help to enable their wider use in the future, promoting the 

technology-based emission reduction goals of section 202 (a)(1) of the Clean Air Act. 

EPA proposes that these advanced technology credits would take the form of a 

multiplier that would be applied to the number of vehicles sold such that they would 

count as more than one vehicle in the manufacturer’s fleet average. These advanced 

technology vehicles would then count more heavily when calculating fleet average CO2

levels. The multiplier would not be applied when calculating the manufacturer’s footprint-based standard is calculated, only when calculating the manufacturer’s fleet average 

levels. EPA proposes to use a multiplier in the range of 1.2 to of 2.0 for all EVs, PHEVs, 

and fuel cell vehicles produced from MY2012 through MY2016. EPA proposes that 

starting in MY 2017, the multiplier would no longer be used. As described in Section 

III.C.5, EPA is also proposing to allow early advanced technology vehicle credits to be 

generated for model years 2009-2011. EPA requests comment on the level of the 

multiplier and , whether it should be the same value for each of these three technologies.,

Further, and whether it should be phased-down over time.if EPA determines that a 

multiplier of 2.0, or another level near the higher end of this range, is appropriate for the 

final rule, EPA requests comment on whether the multiplier should be phased down over 

time, such as: 2.0 for MY 2009 through MY 2012, 1.8 in MY 2013, 1.6 in MY 2014, 1.4 

in MY 2015, and 1.2 in MY 2016 (i.e., the multiplier could phase-down by 0.2 per year). 

As described in Section III.C.5, EPA is also proposing to allow early advanced 

technology vehicle credits to be generated for model years 2009-2011. In addition, EPA 

requests comment on whether or not it would be appropriate to differentiate between EVs 

and PHEVs for advanced technology credits. Under such an approach, PHEVs could be 

provided a lesser multiplier compare to EVs. Also, the PHEV multiplier could be 

prorated based on the equivalent electric range (i.e., the extent to which the PHEV 

operates on average as an EV) of the vehicle in order to incentivize battery technology 

development. This approach would give more credits to “stronger” PHEV technology.
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

56

EPA has provided this type of credit previously, in the Tier 2 program. This 

approach provides an incentive for manufacturers to prove out ultra-clean technology 

during the early years of the program. In Tier 2, early credits for Tier 2 vehicles certified 

to the very cleanest bins (equivalent to California’s standards for super ultra low 

emissions vehicles (SULEVs) and zero emissions vehicles (ZEVs)) had a multiplier of 

1.5 or 2.0.51 The multiplier range of 1.2 to of 2.0 being proposed for GHGs is consistent 

with the Tier 2 approach. EPA believes it is appropriate to provide incentives to 

manufacturers to produce vehicles with very low emissions levels and that these 

incentives may help pave the way for greater and/or more cost effective emission 

reductions from future vehicles. EPA also requests comment on alternative multiplier

approaches, such as a phase-down of the multiplier which would be set at 2.0 for 

MY2012, and then step-down by 0.2 per year, that is, 2 in 2012, 1.8 in 2013, 1.6 in 2014, 

1.4 in 2015, and 1.2 in 2016. EPA would like to finalize an approach which 

appropriately balances the benefits of encouraging advanced technologies with the 

overall environmental reductions of the proposed standards as a whole. 

EPA requests comment on whether or not it would be appropriate to differentiate 

between EVs and PHEVs for advanced technology credits. Under such an approach 

PHEVs could be provided a lesser multiplier compare to EVs. Also, the PHEV multiplier 

could be prorated based on the equivalent electric range (i.e., the extent to which the 

PHEV operates on average as an EV) of the vehicle in order to incentivize battery 

technology development. This approach would give more credits to “stronger” PHEV 

technology.

 As with other vehicles, CO2 for these vehicles would be determined as part of 

vehicle certification, based on emissions over the 2-cycle test procedures, to be included 

in the fleet average CO2 levels. 

 For electric vehicles, EPA proposes that manufacturers would include them in the 

average with CO2 emissions of zero grams/mile both for early credits, and for the 

MY2012-2016 time frame. Similarly, EPA proposes to include as zero grams/mile of 

CO2 the electric portion of PHEVs (i.e., when PHEVs are operating as electric vehicles) 

and fuel cell vehicles. EPA recognizes that for each EV which that is sold, in reality the 

total emissions off-set relative to the typical gasoline or diesel powered vehicle is not 

zero, as there is a corresponding increase in upstream CO2 emissions due to an increase in 

the requirements for electric utility generation. However, for the time frame of this 

proposed rule, EPA is also interested in promoting very advanced technologies such as 

EVs which offer the future promise of significant reductions in GHG emissions, in 

particular when coupled with a broader context which would include reductions from the 

electricity generation. For the California Paley 1 program, California assigned EVs a 

CO2 performance value of 130 g/mile, which was intended to represent the average CO2

emissions required to charge an EV using representative CO2 values for the California 

electric utility grid. For this proposal, EPA is assigning an EV a value of zero g/mile, 

which should be viewed as an interim solution for how to account for the emission 

 

51 See 65 FR 6746, February 10, 2000. 

Formatted: Subscript
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

57

reduction potential of this type of vehicle, and may not be the appropriate long-term 

approach. EPA requests comment on this proposal and whether alternative approaches to 

address EV emissions should be considered, including approaches for considering the 

lifecycle emissions from such advanced vehicle technologies. 

 The criteria and definitions for what vehicles qualify for the multiplier are 

provided in Section III.E. As described in Section III.E, EPA is proposing definitions for 

EVs, PHEVs, and fuel cell vehicles to ensure that only credible advanced technology 

vehicles are provided credits. 

 EPA requests comments on the proposed approach for advanced technology 

vehicle credits. 

 4. Off-cycle Technology Credits

 EPA is proposing an optional credit opportunity intended to apply to new and 

innovative technologies that reduce vehicle CO2 emissions, but for which the CO2

reduction benefits are not captured over the 2-cycle test procedure used to determine 

compliance with the fleet average standards (i.e., “off-cycle”). Eligible innovative 

technologies would be those that are relatively newly introduced in one or more vehicle 

models, but that are not yet implemented in widespread use in the light-duty fleet. EPA 

will not approve credits for technologies that are not innovative or novel approaches to 

reducing greenhouse gas emissions. Further, any credits for these off-cycle technologies 

must be based on real-world GHG reductions not captured on the current 2-cycle tests 

and verifiable test methods, and represent average U.S. driving conditions. 

Similar to the technologies used to reduce A/C system indirect CO2 emissions 

such as compressor efficiency improvements, eligible technologies would not be active 

during the 2-cycle test and therefore the associated improvements in CO2 emissions 

would not be captured. EPA will not consider technologies to be eligible for these credits 

if the technology has a significant impact on CO2 emissions over the FTP and HFET 

tests. Because these technologies are not nearly so well developed and understood, EPA 

is not prepared to require their utilization to meet the CO2 standards. However, EPA is 

aware of some emerging and innovative technologies and concepts in various stages of 

development with CO2 reduction potential that might not be adequately captured on the 

FTP or HFET, and that some of these technologies might merit some additional CO2

credit for the manufacturer. Examples include solar panels on hybrids or electric 

vehicles, adaptive cruise control, and active aerodynamics. EPA believes it would be 

appropriate to provide an incentive to encourage the introduction of these types of 

technologies and that a credit mechanism is an effective way to do this. This optional 

credit opportunity would be available through the 2016 model year. 

 EPA is proposing that manufacturers quantify CO2 reductions associated with the 

use of the off-cycle technologies such that the credits could be applied on a g/mile 

equivalent basis, as is proposed for A/C system improvements. Credits would have to be 

based on real additional reductions of CO2 emissions and would need to be quantifiable 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

58

and verifiable with a repeatable methodology. Such submissions of data should be 

submitted to EPA subject to public scrutiny. EPA proposes that the technologies upon 

which the credits are based would be subject to full useful life compliance provisions, as 

with other emissions controls. Unless the manufacturer can demonstrate that the 

technology would not be subject to in-use deterioration over the useful life of the vehicle, 

the manufacturer would have to account for deterioration in the estimation of the credits 

in order to ensure that the credits are based on real in-use emissions reductions over the 

life of the vehicle. 

 As discussed below, EPA is proposing a two-tiered process for demonstrating the 

CO2 reductions of an innovative and novel technology with benefits not captured by the 

FTP and HFET test procedures. First, a manufacturer would determine whether the 

benefit of the technology could be captured using the 5-cycle methodology currently used 

to determine fuel economy label values. EPA established the 5-cycle test methods to 

better represent real-world factors impacting fuel economy, including higher speeds and 

more aggressive driving, colder temperature operation, and the use of air conditioning. 

If this determination is affirmative, the manufacture would follow the protocol laid out 

below and in the proposed regulations. If the manufacturer finds that the technology is 

such that the benefit is not adequately captured using the 5-cycle approach, then the 

manufacturer would have to develop a robust methodology, subject to EPA approval, to 

demonstrate the benefit and determine the appropriate CO2 gram per mile credit. 

 

a. Technology Demonstration Using EPA 5-Cycle Methodology 

As noted above, the CO2 reduction benefit of some innovative technologies could 

be demonstrated using the 5-cycle approach currently used for EPA’s fuel economy 

labeling program. The 5-cycle methodology was finalized in EPA’s 2006 fuel economy 

labeling rule,52 which provides a more accurate fuel economy label estimate to consumers 

starting with 2008 model year vehicles. In addition to the FTP and HFET test procedures, 

the 5-cycle approach folds in the test results from three additional test procedures to 

determine fuel economy. The additional test cycles include cold temperature operation, 

high temperature, high humidity and solar loading, and aggressive and high-speed 

driving; thus these tests could be used to demonstrate the benefit of a technology that 

reduces CO2 over these types of driving and environmental conditions. Using the test 

results from these additional test cycles collectively with the 2-cycle data provides a more 

precise estimate of the average fuel economy and CO2 emissions of a vehicle for both the 

city and highway independently. A significant benefit of using the 5-cycle methodology 

to measure and quantify the CO2 reductions is that the test cycles are properly weighted 

for the expected average U.S. operation, meaning that the test results could be used 

without further adjustments. 

The use of these supplemental cycles may provide a method by which 

technologies not demonstrated on the baseline 2-cycles can be quantified. The cold 

temperature FTP can capture new technologies that improve the CO2 performance of 

 

52 Fuel Economy Labeling of Motor Vehicles: Revisions to Improve Calculation of Fuel Economy 

Estimates; Final Rule (71 FR 77872, December 27, 2006). 
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59

vehicles during colder weather operation. These improvements may be related to warmup of the engine or other operation during the colder temperature. An example of such a 

new, innovative technology is a waste heat capture device that provides heat to the cabin 

interior, enabling additional engine-off operation during colder weather not previously 

enabled due to heating and defrosting requirements. The additional engine-off time 

would result in additional CO2 reductions that otherwise would not have been realized 

without the heat capture technology. 

While A/C credits for efficiency improvements will largely be captured in the 

A/C credits proposal through the credit menu of known efficiency improving components 

and controls, certain new technologies may be able to use the high temperatures, 

humidity, and solar load of the SC03 test cycle to accurately measure their impact. An 

example of a new technology may be a refrigerant storage device that accumulates 

pressurized refrigerant during driving operation or uses recovered vehicle kinetic energy 

during deceleration to pressurize the refrigerant. Much like the waste heat capture device 

used in cold weather, this device would also allow additional engine-off operation while 

maintaining appropriate vehicle interior occupant comfort levels. SC03 test data 

measuring the relative impact of innovative A/C-related technologies could be applied to 

the 5-cycle equation to quantify the CO2 reductions of the technology. Another example 

is glazed windows. This reflects sunlight away from the cabin so that the energy required 

to stabilize the cabin air to a comfortable level is decreased. The impact of these 

windows may be measureable on an SC03 test (with and without the window option). 

The US06 cycle may be used to capture innovative technologies designed to 

reduce CO2 emissions during higher speed and more aggressive acceleration conditions, 

but not reflected on the 2-cycle tests. An example of this is an active aerodynamic 

technology. This technology recognizes the benefits of reduced aerodynamic drag at 

higher speeds and makes changes to the vehicle at those speeds. The changes may 

include active front or grill air deflection devices designed to redirect frontal airflow. 

Certain active suspension devices designed primarily to reduce aerodynamic drag by 

lowering the vehicle at higher speeds may also be measured on the US06 cycle. To 

properly measure these technologies on the US06, the vehicle would require unique load 

coefficients with and without the technologies. The different load coefficient (properly 

weighted for the US06 cycle) could effectively result in reduced vehicle loads at the 

higher speeds when the technologies are active. Similar to the previously discussed 

cycles, the results from the US06 test with and without the technology could then use the 

5-cycle methodology to quantify CO2 reductions. 

If the 5-cycle procedures can be used to demonstrate the innovative technology, 

then the process would be relatively simple. The manufacturer would simply test 

vehicles with and without the technology installed or operating and compare results. All 

5-cycles would be tested with the technology enabled and disabled, and the test results 

would be used to calculate a combined city/highway CO2 value with the technology and 

without the technology. These values would be compared to determine the amount of the 

credit; the combined city/highway CO2 value with the technology operating would be 

subtracted from the combined city/highway CO2 value without the technology operating 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

60

to determine the gram per mile CO2 credit. It is likely that multiple tests of each of the 

five test procedures would need to be performed in order to achieve the necessary strong 

degree of statistical significance of the credit determination results. This would have to 

be done for each model type for which a credit was being sought, unless the manufacturer 

could demonstrate that the impact of the technology was independent of the vehicle 

configuration on which it was installed. In this case, EPA may consider allowing the test 

to be performed on an engine family basis or other grouping. At the end of the model 

year, the manufacturer would determine the number of vehicles produced subject to each 

credit amount and report that to EPA in the final model year report. The gram per mile 

credit value determined with the 5-cycle comparison testing would be multiplied by the 

total production of vehicles subject to that value to determine the total number of credits. 

b. Alternative Off-Cycle Credit Methodologies 

In cases where the benefit of a technological approach to reducing CO2 emissions 

can not be adequately represented using existing test cycles, EPA will work with and 

advise manufacturers in developing test procedures and analytical approaches to estimate 

the effectiveness of the technology for the purpose of generating credits. Clearly the first 

step should be a thorough assessment of whether the 5-cycle approach can be used, but if 

the manufacturer finds that the 5-cycle process is fundamentally inadequate for the 

specific technology being considered by the manufacturer, then an alternative approach 

may be developed and submitted to EPA for approval. The demonstration program 

should be robust, verifiable, and capable of demonstrating the real-world emissions 

benefit of the technology with strong statistical significance. 

The CO2 benefit of some technologies may be able to be demonstrated with a 

modeling approach, using engineering principles. An example would be where a roof 

solar panel is used to charge the on-board vehicle battery. The amount of potential 

electrical power that the panel could supply could be modeled for average U.S. 

conditions and the units of electrical power translated to equivalent fuel energy or 

annualized CO2 emission rate reduction from the captured solar energy. The CO2

reductions from other technologies may be more challenging to quantify, especially if 

they are interactive with the driver, geographic location, environmental condition, or 

other aspect related to operation on actual roads. In these cases, manufacturers might 

have to design extensive on-road test programs. Any such on-road testing programs 

would need to be statistically robust and based on average U.S. driving conditions, 

factoring in differences in geography, climate, and driving behavior across the U.S. 

Whether the approach involves on-road testing, modeling, or some other 

analytical approach, the manufacturer would be required to present a proposed 

methodology to EPA. EPA would approve the methodology and credits only if certain 

criteria were met. Baseline emissions and control emissions would need to be clearly 

demonstrated over a wide range of real world driving conditions and over a sufficient 

number of vehicles to address issues of uncertainty with the data. Data would need to be 

on a vehicle model-specific basis unless a manufacturer demonstrated model specific data 

was not necessary. Approval of the approach to determining a CO2 benefit would not 
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61

imply approval of the results of the program or methodology; when the testing, modeling, 

or analyses are complete the results would likewise be subject to EPA review and 

approval. EPA believes that manufacturers could work together to develop testing, 

modeling, or analytical methods for certain technologies, similar to the SAE approach 

used for A/C refrigerant leakage credits. 

 

EPA requests comments on the proposed approach for off-cycle emissions credits, 

including comments on how best to structure the program. EPA particularly requests 

comments on how the case-by-case approach to assessing off-cycle innovative 

technology credits could best be designed, including ways to ensure the verification of 

real-world emissions benefits and to ensure transparency in the process of reviewing 

manufacturer’s proposed test methods. 

 5. Early Credit Options

 EPA is proposing to allow manufacturers to generate early credits in model years 

2009-2011. As described below, credits could be generated through early additional fleet 

average CO2 reductions, early A/C system improvements, early advanced technology 

vehicle credits, and early off-cycle credits. As with other credits, early credits would be 

subject to a five year carry-forward limit based on the model year in which they are 

generated. Early credits could also be transferred between vehicle categories (e.g., 

between the car and truck fleet) or traded among manufacturers without limits. The 

agencies note that CAFE credits earned in MYs prior to MY 2011 will still be available 

to manufacturers for use in the CAFE program in accordance with applicable regulations. 

 EPA is not proposing certification, compliance, or in-use requirements for 

vehicles generating early credits. MY 2009 would be complete and MY 2010 would be 

well underway by the time the rule is promulgated. This would make certification, 

compliance, and in-use requirements unworkable. As discussed below, manufacturers 

would be required to submit an early credits report to EPA for approval no later than the 

time they submit their final CAFE report for MY 2011. This report would need to 

include details on all early credits the manufacturer generates, why the credits are bona 

fide, how they are quantified, and how they can be verified. 

As a general principle, EPA believes these early credit programs must be 

designed in a way to ensure that they are capturing real-world reductions. In addition, 

EPA wants to ensure these credit programs do not provide an opportunity for 

manufacturers to earn “windfall” credits that do not result in actual, surplus CO2 

emission reductions. EPA seeks comments on how to best ensure these objectives are 

achieved in the design of the early credit program options. 

 a. Credits based on Early Fleet Average CO2 Reductions 

 EPA is proposing opportunities for early credit generation in MYs 2009-2011 

through over-compliance with a fleet average CO2 baseline established by EPA. EPA is 

proposing four pathways for doing so. Manufacturers would select one of the four paths 
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62

for credit generation for the entire three year period and could not switch between 

pathways for different model years. For two pathways, the baseline would be set by EPA 

to be equivalent to the California standards for the relevant model year. Generally, 

manufacturers that over-comply with those CARB standards would earn credits. Two 

additional pathways, described below, would include credits based on over-compliance 

with CAFE standards in states that have not adopted the California standards. 

Pathway 1 would be to earn credits by over- complying with the California 

equivalent baseline over the manufacturer’s fleet of vehicles sold nationwide. Pathway 2 

would be for manufacturers to generate credits against the baseline only for the fleet of 

vehicles sold in California and the CAA section 177 states.53 This approach would 

include any CAA 177 states as of the date of promulgation of the Final Rule in this 

proceeding. Manufacturers would be required to include both cars and trucks in the 

program. Under Pathways 1 and 2, EPA proposes that manufacturers would be required 

to cover any deficits incurred against the baseline levels established by EPA during the 

three year period 2009-2011 before credits could be carried forward into the 2012 model 

year. For example, a deficit in 2011 would have to be subtracted from the sum of credits 

earned in 2009 and 2010 before any credits could be applied to 2012 (or later) model year 

fleets. EPA is proposing this provision to help ensure the early credits generated under 

this program are consistent with the credits available under the California program during 

these model years. 

 Table III.C.5-1 provides the California equivalent baselines EPA proposes to use 

as the basis for CO2 credit generation under the California-based pathways. These are the 

California GHG standards for the model years shown, with a 2.0 g/mile adjustment to 

account for the exclusion of N2O and CH4, which are included in the California GHG 

standards, but not included in the credits program. Manufacturers would generate CO2

credits by achieving fleet average CO2 levels below these baselines. As shown in the 

table, the California-based early credit pathways are based on the California vehicle 

categories. Also, the California-based baseline levels are not footprint-based, but 

universal levels that all manufacturers would use. Manufacturers would need to achieve 

fleet levels below those shown in the table in order to earn credits. 

Table III.C.5-1 California Equivalent Baselines CO2 Emissions Levels for Early Credit 

Generation 

Model Year 

Passenger Cars and Light 

Trucks with an LVW of 0-

3,750 lbs 

Light Trucks with a LVW of 3,751 or 

more and a GVWR of up to 8,500 lbs 

plus Medium-duty Passenger Vehicles 

2009 321 437 

2010 299 418 

2011 265 388 

 

53 CAA 177 states refers to states that have adopted the California GHG standards. At present, there are 

thirteen CAA 177 states including New York, Massachusetts, Maryland, Vermont, Maine, Connecticut, 

Arizona, New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Washington, and Washington, 

DC. 
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63

 EPA proposes that manufacturers using Pathways 1 or 2 above would use year 

end car and truck sales in each category. Although production data is used for the 

program starting in 2012, EPA is proposing to use sales data for the early credits program 

in order to apportion vehicles by state. This is described further below. Manufacturers 

would calculate actual fleet average emissions over the appropriate vehicle fleet, either 

for vehicles sold nationwide for Pathway 1, or California plus 177 states sales for 

Pathway 2. Early CO2 credits would be based on the difference between the baseline 

shown in the table above and the actual fleet average emissions level achieved. Any 

early A/C credits generated by the manufacturer, described below in Section III.C.5.b, 

would be included in the fleet average level determination. In model year 2009, the 

California CO2 standards for cars (321 g/mi CO2) are only slightly more stringent than 

the 2009 CAFE car standard of 27.5 mpg, which is approximately equivalent to 323 g/mi 

CO2, and the California light-truck standard (437 g/mi CO2) is less stringent than the 

equivalent CAFE standard, recognizing that there are some differences between the way 

the California program and the CAFE program categorize vehicles. Under the proposed 

option, manufacturers would have to show that they over comply over the entire three 

model year time period, not just the 2009 model year, to generate early credits under 

either Pathways 1, 2 or 3. A manufacturer cannot use credits generated in model year 

2009 unless they offset any debits from model years 2010 and 2011. EPA expects that 

the requirement to over comply over the entire time period covering these three model 

years should mean that the credits that are generated are real and are in excess of what 

would have otherwise occurred. However, because of the circumstances involving the 

2009 model year, in particular for companies with significant truck sales, there is some 

concern that under Pathways 1, 2, and 3, there is a potential for a large number of credits 

generated in 2009 against the California standard, in particular for a number of 

companies who have significantly over-achieved on CAFE in recent model years. EPA 

wants to avoid a situation where, contrary to expectation, some part of the early credits 

generated by a manufacturer are in fact not excess, where companies could trade such 

credits to other manufacturers, risking a delay in the addition of new technology across 

the industry from the 2012 and later EPA CO2 standards. For this reason, EPA requests 

comment on the merits of prohibiting the trading of model year 2009 generated early 

credits between firms.

In addition, for Pathways 1 and 2, EPA proposes that manufacturers may also 

include alternative compliance credits earned per the California alternative compliance 

program.

54 These alternative compliance credits are based on the demonstrated use of 

alternative fuels in flex fuel vehicles. As with the California program, the credits would 

be available beginning in MY 2010. Therefore, these early alternative compliance credits 

would be available under EPA’s program for the 2010 and 2011 model years. FFVs 

would otherwise be included in the early credit fleet average based on their emissions on 

the conventional fuel. This would not apply to EVs and PHEVs. The emissions of EVs 

and PHEVs would be determined as described in Section III.E. Manufacturers could 

 

54 See Section 6.6.E, California Environmental Protection Agency Air Resources Board, Staff Report: 

Initial Statement of Reasons For Proposed Rulemaking, Public Hearing to Consider Adoption of 

Regulations to Control Greenhouse Gas Emissions From Motor Vehicles, August 6, 2004. 
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64

choose to either include their EVs and PHEVs in one of the four pathways described in 

this section or under the early advanced technology emissions credits described below, 

but not both due to issues of credit double counting. 

 EPA is also proposing two additional early credit pathways manufacturers could 

select. Pathways 3 and 4 incorporate credits based on over-compliance with CAFE 

standards for vehicles sold outside of California and CAA 177 states in MY 2009-2011. 

Pathway 3 would allow manufacturers to earn credits as under Pathway 2, plus earn 

CAFE-based credits in other states. Credits would not be generated for cars sold in 

California and CAA 177 states unless vehicle fleets in those states are performing better 

than the standards which otherwise would apply in those states, i.e. the baselines shown 

in Table III.C.5-1 above. 

Pathway 4 would be for manufacturers choosing to forego California-based early 

credits entirely and earn only CAFE-based credits outside of California and CAA 177 

states. EPA proposes that manufacturers would not be able to include FFV credits under 

the CAFE-based early credit pathways since those credits do not automatically reflect 

actual reductions in CO2 emissions. 

The proposed baselines for CAFE-based early pathways are provided in Table 

III.C.5-2 below. They are based on the CAFE standards for the 2009-2011 model years. 

For CAFE standards in 2009-2011 model years that are footprint-based, the baseline 

would vary by manufacturer. Footprint-based standards are in effect for the 2011 model 

year CAFE standards.55 Additionally, for Reform CAFE truck standards, footprint 

standards are optional for the 2009-2010 model years. Where CAFE footprint-based 

standards are in effect, manufacturers would calculate a baseline using the footprints and 

sales of vehicles outside of California and CAA 177 states. The actual fleet CO2

performance calculation would also only include the vehicles sold outside of California 

and CAA 177 states, and as mentioned above, may not include FFV credits. 

Table III.C.5-2 CAFE Equivalent Baselines CO2 Emissions Levels for Early Credit 

Generation 

Model Year Cars Trucks 

2009 323 381* 

2010 323 376* 

2011 Footprint-based standard Footprint-based standard 

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

CAFE 

 For the CAFE-based pathways, EPA proposes to use the NHTSA car and truck 

definitions that are in place for the model year in which credits are being generated. EPA 

understands that the NHTSA definitions change starting in the 2011 model year, and 

would therefore change part way through the early credits program. EPA further 

recognizes that MDPVs are not part of the CAFE program until the 2011 model year, and 

 

55 74 FR 14196, March 30, 2009. 
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65

therefore would not be part of the early credits calculations for 2009 – 2010 under the 

CAFE-based pathways. 

 Pathways 2 through 4 involve splitting the vehicle fleet into two groups, vehicles 

sold in California and CAA 177 states and vehicles sold outside of these states. This 

approach would require a clear accounting of location of vehicle sales by the 

manufacturer. EPA believes it will be reasonable for manufacturers to accurately track 

sales by state, based on its experience with the National Low Emissions Vehicle (NLEV) 

Program. NLEV required manufacturers to meet separate fleet average standards for 

vehicles sold in two different regions of the country.

56 As with NLEV, the determination 

would be based on where the completed vehicles are delivered as a point of first sale, 

which in most cases would be the dealer.57

 As noted above, EPA proposes that manufacturers choosing to generate early 

credits would select one of the four pathways for the entire early credits program and 

would not be able to switch among them. EPA proposes that manufacturers would 

submit their early credits report when they submit their final CAFE report for MY 2011 

(which is required to be submitted no later than 90 days after the end of the model year). 

Manufacturers would have until then to decide which pathway to select. This would give 

manufacturers enough time to determine which pathway works best for them. This timing 

may be necessary in cases where manufacturers earn credits in MY 2011 and need time 

to assess data and prepare an early credits submittal for final EPA approval. 

 The table below provides a summary of the four fleet average-based CO2 early 

credit pathways EPA is proposing. As noted above, EPA is concerned with potential 

“windfall” credits and is seeking comments on how to best ensure the objective of 

achieving surplus, real-world reductions is achieved in the design of the credit programs. 

In addition, EPA requests comments on the merits of each of these pathways. 

Specifically, EPA requests comment on whether or not any of the pathways could be 

eliminated to simplify the program without diminishing its overall flexibility. For 

example, Pathway 2 may not be particularly useful to manufacturers if the California/177 

state and overall national fleets are projected to be similar during these model years. 

EPA also requests comment on proposed program implementation structure and 

provisions. 

Table III.C.5-3: Summary of Proposed Early Fleet Average CO2 Credit Pathways 

Common Elements - Manufacturers would select a pathway. Once 

selected, may not switch among pathways 

- All credits subject to 5 year carry-forward 

restrictions 

- For Pathways 2-4, vehicles apportioned by state 

based on point of first sale 

Pathway 1: California-based - Manufacturers earn credits based on fleet average 

 

56 62 FR 31211, June 6, 1997. 

57 62 FR 31212, June 6, 1997 
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66

Credits for National Fleet emissions compared with California equivalent 

baseline set by EPA 

- Based on nationwide CO2 sales-weighted fleet 

average 

- Based on use of California vehicle categories 

- FFV alternative compliance credits per California

program may be included 

- Once in the program, manufacturers must make up 

any deficits that are incurred prior to 2012 in order 

to carry credits forward to 2012 and later 

Pathway 2: California-based 

Credits for vehicles sold in 

California plus CAA 177 States 

- Same as Pathway 1, but manufacturers only 

includes vehicles sold in California and CAA 177 

states in the fleet average calculation 

Pathway 3: Pathway 2 plus 

CAFE-based Credits outside of 

California plus CAA 177 States 

- Manufacturer earns credits as provided by Pathway

2: California-based credits for vehicles sold in 

California plus CAA 177 States, plus: 

- CAFE-based credits allowed for vehicles sold 

outside of California and CAA 177 states 

- For CAFE-based credits, manufacturers earn 

credits based on fleet average emissions compared 

with baseline set by EPA 

- CAFE-based credits based on NHTSA car and 

truck definitions 

- FFV credits not allowed to be included for CAFEbased credits 

Pathway 4: Only CAFE-based 

Credits outside of California plus 

CAA 177 States 

- Manufacturer elects to only earn CAFE-based 

credits for vehicles sold outside of California and

CAA 177 states. Earns no California and 177 state 

credits. 

- For CAFE-based credits, manufacturers earn 

credits based on fleet average emissions compared 

with baseline set by EPA 

- CAFE-based credits based on NHTSA car and 

truck definitions 

- FFV credits not allowed to be included for CAFEbased credits 

 b. Early A/C Credits 

 EPA proposes that manufacturers could earn early A/C credits in MYs 2009-2011 

using the same A/C system design-based EPA provisions being proposed for MYs 

commencing in 2012, as described in Section III.C.1, above. Manufacturers would be 

able to earn early A/C CO2-equivalent credits by demonstrating improved A/C system 

performance, for both direct and indirect emissions. To earn credits for vehicles sold in 

California and CAA 177 states, the vehicles would need to be included in one of the 
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67

California-based early credit pathways described above in III.C.5.a. EPA is proposing 

this constraint in order to avoid credit double counting with the California program in 

place in those states, which also allows A/C system credits in this time frame. 

Manufacturers would fold the A/C credits into the fleet average CO2 calculations under 

the California-based pathway. For example, the MY 2009 California-based program car 

baseline would be 321 g/mile (see Table III.C.5-1). If a manufacturer under Pathway 1 

had a MY 2009 car fleet average CO2 level of 320 g/mile and then earned an additional 9 

g/mile CO2-equivalent A/C credit, the manufacturers would earn a total of 10 g/mile of 

credit. Vehicles sold outside of California and 177 states would be eligible for the early 

A/C credits whether or not the manufacturers participate in other aspects of the early 

credits program. 

 c. Early Advanced Technology Vehicle Credits 

 EPA is proposing to allow early advanced technology vehicle credits for sales of 

EVs, PHEVs, and fuel cell vehicles. To avoid double-counting, manufacturers would not 

be allowed to generate advanced technology credits for vehicles they choose to include in 

Pathways 1 through 4 described in III.C.5.a, above. EPA proposes to use a similar 

methodology to that proposed for MYs 2012 and later, as described in Section III.C.3, 

above. EPA proposes to would use a multiplier in the range of 1.2 to of 2.0 for all 

eligible vehicles (i.e., EVs, PHEVs, and fuel cells). Manufacturers, however, would track 

the number of these vehicles sold in the model years 2009 - 2011, and the emissions level 

of the vehicles, rather than a CO2 credit. When a manufacturer chooses to use the vehicle 

credits to comply with 2012 or later standards, the vehicle counts including the multiplier 

would be folded into the CO2 fleet average. For example, if a manufacturer sells 1,000 

EVs in MY 2011, and if the final multiplier level were 2.0, the manufacturer would apply 

the multiplier of 2.0 and then be able to include 2,000 vehicles at 0 g/mile in their MY 

2012 fleet to decrease the fleet average for that model year. As with other early credits, 

these early advanced technology vehicle credits would be tracked by model year (2009, 

2010, or 2011) and would be subject to 5 year carry-forward restrictions. Again, 

manufacturers would not be allowed to include the EVs, PHEVs, or fuel cell vehicles in 

the early credit pathways discussed above in Section III.C.5.a, otherwise the vehicles 

would be double counted. As discussed in Section III.C.3, EPA is requesting comment 

on a multiplier in the range of 1.2 to 2.0 multiplier, including values less than 2.0 as well 

as a potential phase-down in the multiplier by model year 2016, if a multiplier near the 

higher end of this range is determined for the final rule. This request for comment also 

extends to the potential for early advance technology vehicle credits. EPA is also 

requesting comment on the appropriate gram/mile metric for EVs and fuel celled 

vehicles, as well as for the EV-only contribution for a PHEV. 

 d. Early Off-Cycle Credits 

 EPA’s proposed off-cycle innovative technology credit provisions are provided in 

Section III.C.4. EPA requests comment on beginning these credits in the 2009-2011 time 

frame, provided manufacturers are able to make the necessary demonstrations outlined in 

Section III.C.4, above. 
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68

D. Feasibility of the Proposed CO2 Standards 

This proposal is based on the need to obtain significant GHG emissions 

reductions from the transportation sector, and the recognition that there are cost-effective 

technologies to achieve such reductions in the 2012-2016 time frame. As in many prior 

mobile source rulemakings, the decision on what standard to set is largely based on the 

effectiveness of the emissions control technology, the cost and other impacts of 

implementing the technology, and the lead time needed for manufacturers to employ the 

control technology. The standards derived from assessing these issues are also evaluated 

in terms of the need for reductions of greenhouse gases, the degree of reductions 

achieved by the standards, and the impacts of the standards in terms of costs, quantified 

benefits, and other impacts of the standards. The availability of technology to achieve 

reductions and the cost and other aspects of this technology are therefore a central focus 

of this rulemaking. 

EPA is taking the same basic approach in this rulemaking, although the 

technological problems and solutions involved in this rulemaking differ in some ways 

from prior mobile source rulemakings. Here, the focus of the emissions control 

technology is on reducing CO2 and other greenhouse gases. Vehicles combust fuel to 

perform two basic functions: 1) transport the vehicle, its passengers and its contents, and 

2) operate various accessories during the operation of the vehicle such as the air 

conditioner. Technology can reduce CO2 emissions by either making more efficient use 

of the energy that is produced through combustion of the fuel or reducing the energy 

needed to perform either of these functions. 

This focus on efficiency calls for looking at the vehicle as an entire system. In 

addition to fuel delivery, combustion, and aftertreatment technology, any aspect of the 

vehicle that affects the need to produce energy must also be considered. For example, the 

efficiency of the transmission system, which takes the energy produced by the engine and 

transmits it to the wheels, and the resistance of the tires to rolling both have major 

impacts on the amount of fuel that is combusted while operating the vehicle. The braking 

system, the aerodynamics of the vehicle, and the efficiency of accessories, such as the air 

conditioner, all affect how much fuel is combusted. 

 In evaluating vehicle efficiency, we have excluded fundamental changes in 

vehicles’ size and utility. For example, we did not evaluate converting minivans and 

SUVs to station wagons, converting vehicles with four wheel drive to two wheel drive, or 

reducing headroom in order to lower the roofline and reduce aerodynamic drag. We have 

limited our assessment of technical feasibility and resultant vehicle cost to technologies 

which maintain vehicle utility as much as possible. Manufacturers may decide to alter 

the utility of the vehicles which they sell in response to this rule. Assessing the societal 

cost of such changes is very difficult as it involves assessing consumer preference for a 

wide range of vehicle features. 
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69

This need to focus on the efficient use of energy by the vehicle as a system leads 

to a broad focus on a wide variety of technologies that affect almost all the systems in the 

design of a vehicle. As discussed below, there are many technologies that are currently 

available which can reduce vehicle energy consumption. These technologies are already 

being commercially utilized to a limited degree in the current light-duty fleet. These 

technologies include hybrid technologies that use higher efficiency electric motors as the 

power source in combination with or instead of internal combustion engines. While 

already commercialized, hybrid technology continues to be developed and offers the 

potential for even greater efficiency improvements. Finally, there are other advanced 

technologies under development, such as lean burn gasoline engines, which offer the 

potential of improved energy generation through improvements in the basic combustion 

process. In addition, the available technologies are not limited to powertrain 

improvements but also include mass reduction, electrical system efficiencies, and 

aerodynamic improvements. 

 The large number of possible technologies to consider and the breadth of vehicle 

systems that are affected mean that consideration of the manufacturer’s design and 

production process plays a major role in developing the proposed standards. Vehicle 

manufacturers typically develop many different models by basing them on a limited 

number of vehicle platforms. The platform typically consists of a common vehicle 

architecture and structural components. This allows for efficient use of design and 

manufacturing resources. Given the very large investment put into designing and 

producing each vehicle model, manufacturers typically plan on a major redesign for the 

models approximately every 5 years. At the redesign stage, the manufacturer will 

upgrade or add all of the technology and make most other changes supporting the 

manufacturer’s plans for the next several years, including plans related to emissions, fuel 

economy, and safety regulations. 

This redesign often involves a package of changes designed to work together to 

meet the various requirements and plans for the model for several model years after the 

redesign. This often involves significant engineering, development, manufacturing, and 

marketing resources to create a new product with multiple new features. In order to 

leverage this significant upfront investment, manufacturers plan vehicle redesigns with 

several model years’ of production in mind. Vehicle models are not completely static 

between redesigns as limited changes are often incorporated for each model year. This 

interim process is called a refresh of the vehicle and generally does not allow for major 

technology changes although more minor ones can be done (e.g., small aerodynamic 

improvements, valve timing improvements, etc). More major technology upgrades that 

affect multiple systems of the vehicle thus occur at the vehicle redesign stage and not in 

the time period between redesigns. 

 As discussed below, there are a wide variety of CO2 reducing technologies 

involving several different systems in the vehicle that are available for consideration. 

Many can involve major changes to the vehicle, such as changes to the engine block and 

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

vehicle shape to improve aerodynamic efficiency and the application of aluminum in 
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70

body panels to reduce mass. Logically, the incorporation of emissions control 

technologies would be during the periodic redesign process. This approach would allow 

manufacturers to develop appropriate packages of technology upgrades that combine 

technologies in ways that work together and fit with the overall goals of the redesign. It 

also allows the manufacturer to fit the process of upgrading emissions control technology 

into its multi-year planning process, and it avoids the large increase in resources and 

costs that would occur if technology had to be added outside of the redesign process. 

 This proposed rule affects five years of vehicle production, model years 2012-

2016. Given the now-typical five year redesign cycle, nearly all of a manufacturer’s 

vehicles will be redesigned over this period. However, this assumes that a manufacturer 

has sufficient lead time to redesign the first model year affected by this proposed rule 

with the requirements of this proposed rule in mind. In fact, the lead time available for 

model year 2012 is relatively short. The time between a likely final rule and the start of 

2013 model year production is likely to be just over two years. At the same time, 

manufacturer product plans indicate that they are planning on introducing many of the 

technologies EPA projects could be used to show compliance with the proposed CO2

standards in both 2012 and 2013. In order to account for the relatively short lead time 

available prior to the 2012 and 2013 model years, albeit mitigated by their existing plans, 

EPA has factored this reality into how the availability is modeled for much of the 

technology being considered for model years 2012-2016 as a whole. If the technology to 

control greenhouse gas emissions is efficiently folded into this redesign process, then 

EPA projects that 85 percent of each manufacturer’s sales will be able to be redesigned 

with many of the CO2 emission reducing technologies by the 2016 model year, and as 

discussed below, to reduce emissions of HFCs from the air conditioner. 

 In determining the level of this first ever GHG emissions standard under the CAA 

for light-duty vehicles, EPA proposes to use an approach that accounts for and builds on 

this redesign process. This provides the opportunity for several control technologies to 

be incorporated into the vehicle during redesign, achieving significant emissions 

reductions from the model at one time. This is in contrast to what would be a much more 

costly approach of trying to achieve small increments of reductions over multiple years 

by adding technology to the vehicle piece by piece outside of the redesign process. 

As described below, the vast majority of technology required by this proposal is 

commercially available and already being employed to a limited extent across the fleet. 

The vast majority of the emission reductions which would result from this proposed rule 

would result from the increased use of these technologies. EPA also believes that this 

proposed rule would encourage the development and limited use of more advanced 

technologies, such as PHEVs and EVs. 

In developing the proposed standard, EPA built on the technical work performed 

by the State of California during its development of its statewide GHG program. EPA 

began by evaluating a nationwide CAA standard for MY 2016 that would require the 

levels of technology upgrade, across the country, which California standards would 

require for the subset of vehicles sold in California under Pavley 1. In essence, EPA 
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71

evaluated the stringency of the California Pavley 1 program but for a national standard. 

As mentioned above, and as described in detail in Section II.C of this preamble and 

Chapter 3 of the Joint TSD, one of the important technical documents included in EPA 

and NHTSA’s assessment of vehicle technology effectiveness and costs was the 2004 

NESCCAF report which was the technical foundation for California’s Pavley 1 standard. 

However, in order to evaluate the impact of standards with similar stringency on a 

national basis to the California program EPA chose not to evaluate the specific California 

standards for several reasons. First, California’s standards are universal standards (one 

for cars and one for trucks), while EPA is proposing attribute-based standards using 

vehicle footprint. Second, California’s definitions of what vehicles are classified as cars 

and which are classified as trucks are different from those used by NHTSA for CAFE 

purposes and different from EPA’s proposed classifications in this notice (which 

harmonizes with the CAFE definitions). In addition, there has been progress in the 

refinement of the estimation of the effectiveness and cost estimation for technologies 

which can be applied to cars and trucks since the California analysis in 2004 which could 

lead to different relative stringencies between cars and trucks than what California 

determined for its Pavley 1 program. There have also been improvements in the fuel 

economy and CO2 performance of the actual new vehicle fleet since California’s 2004 

analysis which EPA wanted to reflect in our current assessment. For these reasons, EPA 

developed an assessment of an equivalent national new vehicle fleet-wide CO2

performance standards for model year 2016 which would result in the new vehicle fleet in 

the State of California having CO2 performance equal to the performance from the 

California Pavley 1 standards. This assessment is documented in Chapter 3.1 of the 

DRIA. The results of this assessment predicts that a national light-duty vehicle fleet 

which adopts technology that achieves performance of 250 g/mile CO2 for model year 

2016 would result in vehicles sold in California that would achieve the CO2 performance 

equivalent to the Pavley 1 standards. 

 EPA then analyzed a level of 250 g/mi CO2 in 2016 using the OMEGA model, 

and the car and truck footprint curves relative stringency discussed in Section II to 

determine what technology would be needed to achieve a fleet wide average of 250 g/mi 

CO2. As discussed later in this section we believe this level of technology application to 

the light-duty vehicle fleet can be achieved in this time frame, that such standards will 

produce significant reductions in GHG emissions, and that the costs for both the industry 

and the costs to the consumer are reasonable. EPA also developed standards for the 

model years 2012 through 2015 that lead up to the 2016 level. 

 

 EPA’s independent technical assessment of the technical feasibility of the 

proposed MY2012-2016 standards is described below. EPA has also evaluated a set of 

alternative standards for these model years, one that is more stringent than the proposed 

standards and one that is less stringent. The technical feasibility of these alternative 

standards is discussed at the end of this section. 

Evaluating the feasibility of these standards primarily includes identifying 

available technologies and assessing their effectiveness, cost, and impact on relevant 

aspects of vehicle performance and utility. The wide number of technologies which are 
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72

available and likely to be used in combination requires a more sophisticated assessment 

of their combined cost and effectiveness. An important factor is also the degree that 

these technologies are already being used in the current vehicle fleet and thus, 

unavailable for use to improve energy efficiency beyond current levels. Finally, the 

challenge for manufacturers to design the technology into their products, and the 

appropriate lead time needed to employ the technology over the product line of the 

industry must be considered. 

Applying these technologies efficiently to the wide range of vehicles produced by 

various manufacturers is a challenging task. In order to assist in this task, EPA has 

developed a computerized model called the Optimization Model for reducing Emissions 

of Greenhouse gases from Automobiles (OMEGA) model. Broadly, the model starts 

with a description of the future vehicle fleet, including manufacturer, sales, base CO2

emissions, footprint and the extent to which emission control technologies are already 

employed. For the purpose of this analysis, over 200 vehicle platforms were used to 

capture the important differences in vehicle and engine design and utility of future 

vehicle sales of roughly 16 million units in the 2016 timeframe. The model is then 

provided with a list of technologies which are applicable to various types of vehicles, 

along with their cost and effectiveness and the percentage of vehicle sales which can 

receive each technology during the redesign cycle of interest. The model combines this 

information with economic parameters, such as fuel prices and a discount rate, to project 

how various manufacturers would apply the available technology in order to meet various 

levels of emission control. The result is a description of which technologies are added to 

each vehicle platform, along with the resulting cost. While OMEGA can apply 

technologies which reduce CO2 emissions and HFC refrigerant emissions associated with 

air conditioner use, this task is currently handled outside of the OMEGA model. The 

model can be set to account for various types of compliance flexibilities, such as FFV 

credits. 

EPA invites comment on all aspects of this feasibility assessment. Both the 

OMEGA model and its inputs have been placed in the docket to this proposed rule and 

available for review. 

The remainder of this section describes the technical feasibility analysis in greater 

detail. Section III.D.1 describes the development of our projection of the MY 2012-

2016 fleet in the absence of this proposed rule. Section III.D.2 describes our estimates of 

the effectiveness and cost of the control technologies available for application in the 

2012-2016 timeframe. Section III.D.3 combines these technologies into packages likely 

to be applied at the same time by a manufacturer. In this section, the overall 

effectiveness of the technology packages vis-à-vis their effectiveness when combined 

individually is described. Section III.D.4 describes the process which manufacturers 

typically use to apply new technology to their vehicles. Section III.D.5 describes EPA’s 

OMEGA model and its approach to estimating how manufacturers would add technology 

to their vehicles in order to comply with CO2 emission standards. Section III.D.6 

presents the results of the OMEGA modeling, namely the level of technology added to 

manufacturers’ vehicles and its cost. Section III.D.7 discusses the feasibility of the 
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73

alternative 4-percent-per-year and 6-percent-per-year standards. Further detail on all of 

these issues can be found in EPA and NHTSA’s draft Joint Technical Support Document 

as well as EPA’s draft Regulatory Impact Analysis. 

 

1. How Did EPA Develop a Reference Vehicle Fleet for Evaluating Further 

CO2 Reductions?

In order to calculate the impacts of this proposed regulation, it is necessary to 

project the GHG emissions characteristics of the future vehicle fleet absent this proposed 

regulation. This is called the “reference” fleet. EPA developed this reference fleet by 

determining the characteristics of a specific model year (in this case, 2008) of vehicles

for the creation of the reference fleet, called the baseline fleet, and then projecting what 

changes if any would be made to these vehicles to comply with the MY2011 CAFE 

standards. Thus, the MY 2008 fleet is our “baseline fleet,” and the projection of the 

baseline to MY 2011-2016 is called the “reference fleet.” 

EPA used 2008 model year vehicles as the basis for its baseline fleet. 2008 model 

year is the most recent model year for which data is publicly available. Sources of data 

for the baseline include the EPA vehicle certification data, Ward’s Automotive Group 

data, Motortrend.com, Edmunds.com, manufacturer product plans, and other sources to a 

lesser extent (such as articles about specific vehicles) revealed from internet search 

engine research. EPA then projects this fleet out to the 2016 MY, taking into account 

factors such as changes in overall sales volume. Section II.B describes the development 

of the EPA reference fleet, and further details can be found in Section II.B of this 

preamble and Chapter 1 of the Draft Joint TSD. 

The light-duty vehicle market is currently in a state of flux due to the volatility in 

fuel prices over the past several years and the current economic downturn. These factors 

have changed the relative sales of the various types of light-duty vehicles marketed, as 

well as total sales volumes. EPA and NHTSA desire to account for these changes to the 

degree possible in our forecast of the make-up of the future vehicle fleet. EPA wants to 

include improvements in fuel economy associated with the existing CAFE program. It is 

possible that manufacturers could increase fuel economy beyond the level of the 2011 

MY CAFE standards for marketing purposes. However, it is difficult to separate fuel 

economy improvements in those years for marketing purposes from those designed to 

facilitate compliance with anticipated CAFE or CO2 emission standards. Thus, EPA 

limits fuel economy improvements in the reference fleet to those projected to result from 

the existing CAFE standards. The addition of technology to The process used to develop 

the characteristics of this reference fleet is described in Section III.A.1. Incorporating 

any fuel economy improvements into the reference the baseline fleet so that itare needed 

to compliesy with the MY 2011 CAFE standards is described later in Section III.D.4, as 

this involves the addition of technology to vehicles usesing the same methodology as 

used to project compliance with the proposed CO2 emission standards. In summary, the 

reference fleet represents vehicle characteristics and sales in the 2012 and later model 

years absent this proposed rule. Technology is then added to these vehicles in order to 

reduce CO2 emissions to achieve compliance with the proposed CO2 standards. EPA 
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74

diddoes not factor in project any changes to vehicle characteristics or sales in projecting 

manufacturers’ compliance withdue to this proposal except for the addition of CO2

reducing technology. 

After the reference fleet is created, the next step aggregates vehicle sales by a 

combination of manufacturer, vehicle platform, market segment and engine design. As 

discussed in Section III.D.4 below1, manufacturers implement major design changes at 

vehicle redesign and tend to implement these changes across a vehicle platform. Because 

the cost of modifying the engine depends on the valve train design (such as SOHC, 

DOHC, etc.), the number of cylinders and in some cases head design, the vehicle sales 

are broken down beyond the platform level to reflect relevant engine differences. The 

vehicle groupings are shown in Table III.D.1-1. 

Table III.D.1-1 Vehicle Groupingsa

Vehicle Description Vehicle 

Type Vehicle Description Vehicle Type 

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

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

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

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

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

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

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

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

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

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

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

Large Auto V8+ OHV 13 Small Pickup I4 7 

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

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

Large Auto V6 OHV 12 Large SUV V8+ OHV 13 

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

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

Midsize Auto V8+ SOHC 10 Large SUV V6 OHV 12 

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

Midsize Auto V6 OHV 12 Large SUV I4/ 7 

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

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

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

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

Compact Auto V6 OHV 12 Small SUV V6 OHV 12 

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

Compact Auto I5 7 Minivan V6 OHV 12 

Compact Auto I4 2 Minivan I4 7 

Subcompact Auto V8+ OHV 13 Cargo Van V8+ OHV 13 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

75

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

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

Subcompact Auto I5/V6 S/DOHC 4v 4 

a

I4 = 4 cylinder engine, I5 = 5 cylinder engine, V6, V7, and V8 = 6, 7, and 8 cylinder engines, respectively, 

DOHC = Double overhead cam, SOHC = Single overhead cam, OHV = Overhead valve, v = number of 

valves per cylinder, “/” = and, “+” = or larger.

As mentioned above, the second factor which needs to be considered in 

developing a reference fleet against which to evaluate the impacts of this proposed rule is 

the impact of the 2011 MY CAFE standards, which were published earlier this year. 

Since the vehicles which comprise the above reference fleet are those sold in the 2008 

MY, when coupled with our sales projections, they do not necessarily meet the 2011 MY 

CAFE standards. 

The levels of the 2011 MY CAFE standards are straightforward to apply to future 

sales fleets, as is the potential fine-paying flexibility afforded by the CAFE program (i.e., 

$55 per mpg of shortfall). However, projecting some of the compliance flexibilities 

afforded by EISA and the CAFE program are less clear. Two of these compliance 

flexibilities are relevant to EPA’s analysis: 1) the credit for FFVs, and 2) the limit on the 

transferring of credits between car and truck fleets. The FFV credit is limited to 1.2 mpg 

in 2011 and EISA gradually reduces this credit, to 1.0 mpg in 2015 and eventually to zero 

in 2020. In contrast, the limit on car truck transfer is limited to 1.0 mpg in 2011, and 

EISA increases this to 1.5 mpg beginning in 2015 and then to 2.0 mpg beginning in 2020. 

The question here is whether to hold the 2011 MY CAFE provisions constant in the 

future or incorporate the changes in the FFV credit and car-truck credit trading limits 

contained in EISA. 

EPA decided to hold the 2011 MY limits on FFV credit and car-truck credit 

trading constant in projecting the fuel economy and CO2 emission levels of vehicles in 

our reference case. This approach treats the changes in the FFV credit and car-truck 

credit trading provisions consistently with the other EISA-mandated changes in the 

CAFE standards themselves. All EISA provisions relevant to 2011 MY vehicles are 

reflected in our reference case fleet, while all post-2011 MY provisions are not. 

Practically, relative to the alternative, this increases both the cost and benefit of the 

proposed standards. In our analysis of this proposed rule, any quantified benefits from 

the presence of FFVs in the fleet are not considered. Thus, the only impact of the FFV 

credit is to reduce onroad fuel economy. By assuming that the FFV credit stays at 1.2 

mpg in the future absent this rule, the assumed level of onroad fuel economy that would 

occur absent this proposal is reduced. As this proposal eliminates the FFV credit starting 

in 2016, the net result is to increase the projected level of fuel savings from our proposed 

standards. Similarly, the higher level of FFV credit reduces projected compliance cost 

for manufacturers to meet the 2011 MY standards in our reference case. This increases 

the projected cost of meeting the proposed 2012 and later standards. 

As just implied, EPA needs to project the technology (and resultant costs) 

required for the 2008 MY vehicles to comply with the 2011 MY CAFE standards in those 
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76

cases where they do not automatically do so. The technology and costs are projected 

using the same methodology that projects compliance with the proposed 2012 and later 

CO2 standards. The description of this process is described in the following four 

sections. 

A more detailed description of the methodology used to develop these sales 

projections can be found in the Draft Joint TSD. Detailed sales projections by model 

year and manufacturer can also be found in the TSD. EPA requests comments on both 

the methodology used to develop the reference fleet, as well as the characteristics of the 

reference fleet. 

2. What are the Effectiveness and Costs of CO2-reducing Technologies?

 

EPA and NHTSA worked together to jointly develop information on the 

effectiveness and cost of the CO2-reducing technologies, and fuel economy-improving 

technologies, other than A/C related control technologies. This joint work is reflected in 

Chapter 3 of the Draft Joint TSD and in Section II of this preamble. A summary of the 

effectiveness and cost of A/C related technology is contained here. For more detailed 

information on the effectiveness and cost of A/C related technology, please refer to 

Section III.C of this preamble and Chapter 2 of EPA’s DRIA. 

A/C improvements are an integral part of EPA’s technology analysis and have 

been included in this section along with the other technology options. While discussed in 

Section III.C as a credit opportunity, air conditioning-related improvements are included 

in Table III.D.2-1.because A/C improvements are a very cost-effective technology at 

reducing CO2 (or CO2-equivalent) emissions. EPA expects most manufacturers will 

choose to use AC improvement credit opportunities as a strategy for meeting compliance 

with the CO2 standards. Note that the costs shown in Table III.D.2-1 do not include 

maintenance savings that would be expected from the new AC systems. Further, EPA 

does not include AC-related maintenance savings in our cost and benefit analysis 

presented in Section III.H. EPA discusses the likely maintenance savings in Chapter 2 of 

the DRIA and requests comment on that discussion because we may include maintenance 

savings in the final rule and would like to have the best information available in order to 

do so. The EPA approximates that the level of the credits earned will increase from 2012 

to 2016 as more vehicles in the fleet are redesigned. The penetrations and average levels 

of credit are summarized in Table III.D.2-2, though the derivation of these numbers (and 

the breakdown of car vs. truck credits) is described in the DRIA. As demonstrated in the 

IMAC study (and described in Section III.C as well as the DRIA), these levels are 

feasible and achievable with technologies that are available and cost-effective today. 

These improvements are categorized as either leakage reduction, including use of 

alternative refrigerants, or system efficiency improvements. Unlike the majority of the 

technologies described in this section, A/C improvements will not be demonstrated in the 

test cycles used to quantify CO2 reductions in this proposal. As described earlier, for this 

analysis A/C-related CO2 reductions are handled outside of OMEGA model and therefore 

their CO2 reduction potential is expressed in grams per mile rather than a percentage used 
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77

by the OMEGA model. See Section III.C for the method by which potential reductions 

are calculated or measured. Further discussion of the technological basis for these 

improvements is included in Chapter 2 of the DRIA. 

Table III.D.2-1 Total CO2 Reduction Potential and 2016 Cost for A/C Related 

Technologies for all Vehicle Classes (Costs in 2007 dollars) 

CO2 Reduction 

Potential 

Incremental Compliance 

Costs 

A/C refrigerant leakage 

reduction 

7.5 g/mi58 $17 

A/C efficiency improvements 5.7 g/mi $53 

Table III.D.2-2 A/C Related Technology Penetration and Credit Levels Expected 

to be Earned 

 Technology Penetration

Average 

credit 

over 

entire 

fleet 

2012 25% 3.1 

2013 40% 5.0 

2014 60% 7.5 

2015 80% 10.0 

2016 85% 10.6 

3. How can Technologies be Combined into “Packages” and What is the 

Cost and Effectiveness of Packages?

Individual technologies can be used by manufacturers to achieve incremental CO2

reductions. However, as mentioned in Section III.D.1, EPA believes that manufacturers 

are more likely to bundle technologies into “packages” to capture synergistic aspects and 

reflect progressively larger CO2 reductions with additions or changes to any given 

package. In addition, manufacturers would typically apply new technologies in packages 

during model redesigns—which occur once roughly every five years—rather than adding 

new technologies one at a time on an annual or biennial basis. This way, manufacturers 

can more efficiently make use of their redesign resources and more effectively plan for 

changes necessary to meet future standards. 

Therefore, the approach taken here is to group technologies into packages of 

increasing cost and effectiveness. EPA determined that 19 different vehicle types 

provided adequate representation to accurately model the entire fleet. This was the result 

of analyzing the existing light duty fleet with respect to vehicle size and powertrain 

 

58 This represents 50% improvement in leakage and thus 50% of the A/C leakage impact potential 

compared to a maximum of 15 g/mi credit that can be achieved through the incorporation of a low very 

GWP refrigerant. 

Formatted Table
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78

configurations. All vehicles, including cars and trucks, were first distributed based on 

their relative size, starting from compact cars and working upward to large trucks. Next, 

each vehicle was evaluated for powertrain, specifically the engine size, I4, V6, and V8, 

and finally by the number of valves per cylinder. Note that each of these 19 vehicle types 

was mapped into one of the five classes of vehicles mentioned in Section III.D.2. While 

the five classes provide adequate representation for the cost basis associated with most 

technology application, they do not adequately account for all existing vehicle attributes 

such as base vehicle powertrain configuration and mass reduction. As an example, costs 

and effectiveness estimates for engine friction reduction for the small car class were used 

to represent cost and effectiveness for three vehicle types: subcompact cars, compact 

cars, and small multi-purpose vehicles (MPV) equipped with a 4-cylinder engine, 

however the mass reduction associated for each of these vehicle types was based on the 

vehicle type sales-weighted average. In another example, a vehicle type for V8 single 

overhead cam 3-valve engines was created to properly account for the incremental cost in 

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

types span the range of vehicle footprints—smaller footprints for smaller vehicles and 

larger footprints for larger vehicles—which serve as the basis for the standards proposed 

in this rule. A complete list of vehicles and their associated vehicle types is shown above 

in Table III.D.1-1.

Within each of the 19 vehicle types multiple technology packages were created in 

increasing technology content and, hence, increasing effectiveness. Important to note is 

that the effort in creating the packages attempted to maintain a constant utility for each 

package as compared to the baseline package. As such, each package is meant to provide 

equivalent driver-perceived performance to the baseline package. The initial packages 

represent what a manufacturer will most likely implement on all vehicles, including low 

rolling resistance tires, low friction lubricants, engine friction reduction, aggressive shift 

logic, early torque converter lock-up, improved electrical accessories, and low drag 

brakes.59 Subsequent packages include advanced gasoline engine and transmission 

technologies such as turbo/downsizing, GDI, and dual-clutch transmission. The most 

technologically advanced packages within a segment included HEV, PHEV and EV 

designs. The end result being a list of several packages for each of 19 different vehicle 

types from which a manufacturer could choose in order to modify its fleet such that 

compliance could be achieved. 

Before using these technology packages as inputs to the OMEGA model, the cost 

and effectiveness for the package was calculated. The first step—mentioned briefly 

above—was to apply the scaling class for each technology package and vehicle type 

combination. The scaling class establishes the cost and effectiveness for each technology 

with respect to the vehicle size or type. The Large Car class was provided as an example 

in Section III.D.2. Additional classes include Small Car, Minivan, Small Truck, and 

Large Truck and each of the 19 vehicle types was mapped into one of those five classes. 

In the next step, the cost for a particular technology package, was determined as the sum 

 

59 When making reference to low friction lubricants, the technology being referred to is the engine changes 

and possible durability testing that would be done to accommodate the low friction lubricants, not the

lubricants themselves.
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

79

of the costs of the applied technologies. The final step, determination of effectiveness, 

requires greater care due to the synergistic effects mentioned in Section III.D.2. This step 

is described immediately below. 

Usually, the benefits of the engine and transmission technologies can be 

combined multiplicatively. For example, if an engine technology reduces CO2 emissions 

by five percent and a transmission technology reduces CO2 emissions by four percent, the 

benefit of applying both technologies is 8.8 percent (100% - (100% – 4%) * (100% - 

5%)). In some cases, however, the benefit of the transmission-related technologies 

overlaps with many of the engine technologies. This occurs because the primary goal of 

most of the transmission technologies is to shift operation of the engine to more efficient 

locations on the engine map. Some of the engine technologies have the same goal, such 

as cylinder deactivation. In order to account for this overlap and avoid over-estimating 

emissions reduction effectiveness, EPA has developed a set of adjustment factors 

associated with specific pairs of engine and transmission technologies. 

The various transmission technologies are generally mutually exclusive. As such, 

the effectiveness of each transmission technology generally supersedes each other. For 

example, the 9.5-14.5 percent reduction in CO2 emissions associated with the automated 

manual transmission includes the 4.5-6.5 percent benefit of a 6-speed automatic 

transmission. Exceptions are aggressive shift logic and early torque converter lock-up. 

The former can be applied to any vehicle and the latter can be applied to any vehicle with 

an automatic transmission. 

EPA has chosen to use an engineering approach known as the lumped-parameter 

technique to determine these adjustment factors. The results from this approach were 

then applied directly to the vehicle packages. The lumped-parameter technique is well 

documented in the literature, and the specific approach developed by EPA is detailed in 

Chapter 3 of the Draft Joint TSD. 

Table III.D.3-1 presents several examples of the reduction in the effectiveness of 

technology pairs. A complete list and detailed discussion of these synergies is presented 

in Chapter 3 of the Draft Joint TSD. 

Table III.D.3-1 Reduction in Effectiveness for Selected Technology Pairs 

Engine Technology Transmission Technology Reduction in Combined 

Effectiveness 

Intake cam phasing 5 speed automatic 0.5% 

Coupled cam phasing 5 speed automatic 0.5% 

Coupled cam phasing Aggressive shift logic 0.5% 

Cylinder deactivation 5 speed automatic 1.0% 

Cylinder deactivation Aggressive shift logic 0.5% 

 Table III.D.3-2 presents several examples of the CO2-reducing technology 

vehicle packages used in the OMEGA model for the large car class. Similar packages 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

80

were generated for each of the 19 vehicle types and the costs and effectiveness estimates 

for each of those packages are discussed in detail in Chapter 3 of the Draft Joint TSD. 

Table III.D.3-2 CO2 Reducing Technology Vehicle Packages for a Large Car 

Effectiveness and Costs in 2016 (Costs in 2007 dollars) 

Engine 

Technology 

Transmission 

Technology 

Additional 

Technology 

CO2

Reduction 

Package 

Cost 

3.3L V6 4 speed automatic None Baseline 

3.0L V6 + GDI 

+ CCP 6 speed automatic 3% Mass Reduction 17.9% $1,022 

3.0L V6 + GDI 

+ CCP + Deac 6 speed automatic 5% Mass Reduction 20.6% $1,280 

3.0L V6 + GDI 

+ CCP + Deac 6 Speed DCT 10% Mass Reduction Start-Stop 34.2% $2,108 

2.2L I4 + GDI + 

Turbo + DCP 6 speed DCT 10% Mass Reduction Start-Stop 34.3% $2,245 

 

4. Manufacturer’s Application of Technology

Vehicle manufacturers often introduce major product changes together, as a 

package. In this manner the manufacturers can optimize their available resources, 

including engineering, development, manufacturing and marketing activities to create a 

product with multiple new features. In addition, manufacturers recognize that a vehicle 

will need to remain competitive over its intended life, meet future regulatory 

requirements, and contribute to a manufacturer’s CAFE requirements. Furthermore, 

automotive manufacturers are largely focused on creating vehicle platforms to limit the 

development of entirely new vehicles and to realize economies of scale with regard to 

variable cost. In very limited cases, manufacturers may implement an individual 

technology outside of a vehicle’s redesign cycle. In following with these industry 

practices, EPA has created set of vehicle technology packages that represent the entire 

light duty fleet. 

EPA has historically allowed manufacturers of new vehicles or nonroad 

equipment to phase in available emission control technology over a number of years. 

Examples of this are EPA’s Tier 2 program for cars and light trucks and its 2007 and later 

PM and NOX emission standards for heavy-duty vehicles. In both of these rules, the 

major modifications expected from the rules were the addition of exhaust aftertreatment 

control technologies. Some changes to the engine were expected as well, but these were 

not expected to affect engine size, packaging or performance. The CO2 reduction 

technologies described above potentially involve much more significant changes to car 

and light truck designs. Many of the engine technologies involve changes to the engine 

block and heads. The transmission technologies could change the size and shape of the 

transmission and thus, packaging. Improvements to aerodynamic drag could involve 

body design and therefore, the dies used to produce body panels. Changes of this sort 

potentially involve new capital investment and the obsolescence of existing investment. 
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81

At the same time, vehicle designs are not static, but change in major ways 

periodically. The manufacturers’ product plans indicate that vehicles are usually 

redesigned every 5 years on average. Vehicles also tend to receive a more modest 

“refresh” between major redesigns, as discussed above. Because manufacturers are 

already changing their tooling, equipment and designs at these times, further changes to 

vehicle design at these times involve a minimum of stranded capital equipment. Thus, 

the timing of any major technological changes is projected to coincide with changes that 

manufacturers would already tend to be making to their vehicles. This approach 

effectively avoids the need to quantify any costs associated with discarding equipment, 

tooling, emission and safety certification, etc. when CO2-reducing equipment is 

incorporated into a vehicle. 

This proposed rule affects five years of vehicle production, model years 2012-

2016. Given the now-typical five year redesign cycle, nearly all of a manufacturer’s 

vehicles will be redesigned over this period. However, this assumes that a manufacturer 

has sufficient lead time to redesign the first model year affected by this proposed rule 

with the requirements of this proposed rule in mind. In fact, the lead time available for 

model year 2012 is relatively short. The time between a likely final rule and the start of 

2013 model year production is likely to be just over two years. At the same time, the 

manufacturer product plans indicate that they are planning on introducing many of the 

technologies projected to be required by this proposed rule in both 2012 and 2013. In 

order to account for the relatively short lead time available prior to the 2012 and 2013 

model years, albeit mitigated by their existing plans, EPA projects that only 85 percent of 

each manufacturer’s sales will be able to be redesigned with major CO2 emissionreducing technologies by the 2016 model year. Less intrusive technologies can be 

introduced into essentially all a manufacturer’s sales. This resulted in three levels of 

technology penetration caps, by manufacturer. Common technologies (e.g., low friction 

lubes, aerodynamic improvements) had a penetration cap of 100%. More advanced 

powertrain technologies (e.g., stoichiometric GDI, turbocharging) had a penetration cap 

of 85%. The most advanced technologies considered in this analysis (e.g., diesel 

engines, as well as IMA, powersplit and 2-mode hybrids) had a 15% penetration cap. 

5. How is EPA Projecting that a Manufacturer Would Decide Between 

Options to Improve CO2 Performance to Meet a Fleet Average Standard?

 There are many ways for a manufacturer to reduce CO2-emissions from its 

vehicles. A manufacturer can choose from a myriad of CO2 reducing technologies and 

can apply one or more of these technologies to some or all of its vehicles. Thus, for a 

variety of levels of CO2 emission control, there are an almost infinite number of 

technology combinations which produce the desired CO2 reduction. EPA has created a 

new vehicle model, the Optimization Model for Emissions of Greenhouse gases from 

Automobiles (OMEGA) in order to make a reasonable estimate of how manufacturers 

will add technologies to vehicles in order to meet a fleet-wide CO2 emissions level. EPA 

has described OMEGA’s specific methodologies and algorithms in a memo to the docket 

for this rulemaking (Docket EPA-HQ-OAR-2009-0472). 
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82

The OMEGA model utilizes four basic sets of input data. The first is a 

description of the vehicle fleet. The key pieces of data required for each vehicle are its 

manufacturer, CO2 emission level, fuel type, projected sales and footprint. The model 

also requires that each vehicle be assigned to one of the 19 vehicle types, which tells the 

model which set of technologies can be applied to that vehicle. (For a description of how 

the 19 vehicle types were created, reference Section III.D.3.) In addition, the degree to 

which each vehicle already reflects the effectiveness and cost of each available 

technology must also be input. This avoids the situation, for example, where the model 

might try to add a basic engine improvement to a current hybrid vehicle. Except for this 

type of information, the development of the required data regarding the reference fleet 

was described in Section III.D.1 above and in Chapter 1 of the Draft Joint TSD. 

The second type of input data used by the model is a description of the 

technologies available to manufacturers, primarily their cost and effectiveness. Note that 

the five vehicle classes are not explicitly used by the model, rather the costs and 

effectiveness associated with each vehicle package is based on the associated class. This 

information was described in Sections III.D.2 and III.D.3 above as well as Chapter 3 of 

the Draft Joint TSD. In all cases, the order of the technologies or technology packages 

for a particular vehicle type is determined by the model user prior to running the model. 

Several criteria can be used to develop a reasonable ordering of technologies or packages. 

These are described in the Draft Joint TSD. 

The third type of input data describes vehicle operational data, such as annual 

scrap rates and mileage accumulation rates, and economic data, such as fuel prices and 

discount rates. These estimates are described in Section II.F above, Section III.H below 

and Chapter 4 of the Draft Joint TSD. 

The fourth type of data describes the CO2 emission standards being modeled. 

These include the CO2 emission equivalents of the 2011 MY CAFE standards and the 

proposed CO2 standards for 2016. As described in more detail below, the application of 

A/C technology is evaluated in a separate analysis from those technologies which impact 

CO2 emissions over the 2-cycle test procedure. Thus, for the percent of vehicles that are 

projected to achieve A/C related reductions, the CO2 credit associated with the projected 

use of improved A/C systems is used to adjust the proposed CO2 standard which would 

be applicable to each manufacturer to develop a target for CO2 emissions over the 2-cycle 

test which is assessed in our OMEGA modeling. 

As mentioned above for the market data input file utilized by OMEGA, which 

characterizes the vehicle fleet, our modeling must and does account for the fact that many 

2008 MY vehicles are already equipped with one or more of the technologies discussed 

in Section III.D.2 above. Because of the choice to apply technologies in packages, and 

2008 vehicles are equipped with individual technologies in a wide variety of 

combinations, accounting for the presence of specific technologies in terms of their 

proportion of package cost and CO2 effectiveness requires careful, detailed analysis. The 

first step in this analysis is to develop a list of individual technologies which are either 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

83

contained in each technology package, or would supplant the addition of the relevant 

portion of each technology package. An example would be a 2008 MY vehicle equipped 

with variable valve timing and a 6-speed automatic transmission. The cost and 

effectiveness of variable valve timing would be considered to be already present for any 

technology packages which included the addition of variable valve timing or technologies 

which went beyond this technology in terms of engine related CO2 control efficiency. An 

example of a technology which supplants several technologies would be a 2008 MY 

vehicle which was equipped with a diesel engine. The effectiveness of this technology 

would be considered to be present for technology packages which included 

improvements to a gasoline engine, since the resultant gasoline engines have a lower CO2

control efficiency than the diesel engine. However, if these packages which included 

improvements also included improvements unrelated to the engine, like transmission 

improvements, only the engine related portion of the package already present on the 

vehicle would be considered. The transmission related portion of the package’s cost and 

effectiveness would be allowed to be applied in order to comply with future CO2

emission standards. 

The second step in this process is to determine the total cost and CO2

effectiveness of the technologies already present and relevant to each available package. 

Determining the total cost usually simply involves adding up the costs of the individual 

technologies present. In order to determine the total effectiveness of the technologies 

already present on each vehicle, the lumped parameter model described above is used. 

Because the specific technologies present on each 2008 vehicle are known, the applicable 

synergies and dis-synergies can be fully accounted for. 

The third step in this process is to divide the total cost and CO2 effectiveness 

values determined in step 2 by the total cost and CO2 effectiveness of the relevant 

technology packages. These fractions are capped at a value of 1.0 or less, since a value 

of 1.0 causes the OMEGA model to not change either the cost or CO2 emissions of a 

vehicle when that technology package is added. 

As described in Section III.D.31 above, technology packages are applied to 

groups of vehicles which generally represent a single vehicle platform and which are 

equipped with a single engine size (e.g., compact cars with four cylinder engine produced 

by Ford). These grouping are described in Table III.D.1-1. Thus, the fourth step is to 

combine the fractions of the cost and effectiveness of each technology package already 

present on the individual 2008 vehicles models for each vehicle grouping. For cost, 

percentages of each package already present are combined using a simple sales-weighting 

procedure, since the cost of each package is the same for each vehicle in a grouping. For 

effectiveness, the individual percentages are combined by weighting them by both sales 

and base CO2 emission level. This appropriately weights vehicle models with either 

higher sales or CO2 emissions within a grouping. Once again, this process prevents the 

model from adding technology which is already present on vehicles, and thus ensures that 

the model does not double count technology effectiveness and cost associated with 

complying with the 2011 MY CAFE standards and the proposed CO2 standards. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

84

Conceptually, the OMEGA model begins by determining the specific CO2

emission standard applicable for each manufacturer and its vehicle class (i.e., car or 

truck). Since the proposed rule allows for averaging across a manufacturer’s cars and 

trucks, the model determines the CO2 emission standard applicable to each 

manufacturer’s car and truck sales from the two sets of coefficients describing the 

piecewise linear standard functions for cars and trucks in the inputs, and creates a 

combined car-truck standard. This combined standard considers the difference in lifetime 

VMT of cars and trucks, as indicated in the proposed regulations which would govern 

credit trading between these two vehicle classes. For both the 2011 CAFE and 2016 CO2

standards, these standards are a function of each manufacturer’s sales of cars and trucks 

and their footprint values. When evaluating the 2011 MY CAFE standards, the car-truck 

trading was limited to 1.2 mpg. When evaluating the proposed CO2 standards, the 

OMEGA model was run only for MY 2016. OMEGA is designed to evaluate technology 

addition over a complete redesign cycle and 2016 represents the final year of a redesign 

cycle starting with the first year of the proposed CO2 standards, 2012. Estimates of the 

technology and cost for the interim model years are developed from the model 

projections made for 2016. This process is discussed in Chapter 6 of EPA’s DRIA to this 

proposed rule. When evaluating the 2016 standards using the OMEGA model, the, the

proposed CO2 standard which manufacturers would otherwise have to meet to account for 

the anticipated level of A/C credits generated was adjusted. On an industry wide basis, 

the projection shows that manufacturers would generate 11 g/mi of A/C credit in 2016. 

Thus, the 2016 CO2 target for the fleet evaluated using OMEGA was 261 g/mi instead of 

250 g/mi. 

The cost of the improved A/C systems required to generate the 11 g/mi credit was 

estimated separately. This is consistent with our proposed A/C credit procedures, which 

would grant manufacturers A/C credits based on their total use of improved A/C systems, 

and not on the increased use of such systems relative to some base model year fleet. 

Some manufacturers may already be using improved A/C technology. However, this 

represents a small fraction of current vehicle sales. To the degree that such systems are 

already being used, EPA is over-estimating both the cost and benefit of the addition of 

improved A/C technology relative to the true reference fleet to a small degree. 

The model then works with one manufacturer at a time to add technologies until 

that manufacturer meets its applicable standard. The OMEGA model can utilize several 

approaches to determining the order in which vehicles receive technologies. For this 

analysis, EPA used a “manufacturer-based net cost-effectiveness factor” to rank the 

technology packages in the order in which a manufacturer would likely apply them. 

Conceptually, this approach estimates the cost of adding the technology from the 

manufacturer’s perspective and divides it by the mass of CO2 the technology will reduce. 

One component of the cost of adding a technology is its production cost, as discussed 

above. However, it is expected that new vehicle purchasers value improved fuel 

economy since it reduces the cost of operating the vehicle. Typical vehicle purchasers 

are assumed to value the fuel savings accrued over the period of time which they will 

own the vehicle, which is estimated to be roughly five years. It is also assumed that 

consumers discount these savings at the same rate as that used in the rest of the analysis 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

85

(3 or 7 percent). Any residual value of the additional technology which might remain 

when the vehicle is sold is not considered. The CO2 emission reduction is the change in 

CO2 emissions multiplied by the percentage of vehicles surviving after each year of use 

multiplied by the annual miles travelled by age, again discounted to the year of vehicle 

purchase. 

Given this definition, the higher priority technologies are those with the lowest 

manufacturer-based net cost-effectiveness value (relatively low technology cost or high 

fuel savings leads to lower values). Because the order of technology application is set for 

each vehicle, the model uses the manufacturer-based net cost-effectiveness primarily to 

decide which vehicle receives the next technology addition. Initially, technology 

package #1 is the only one available to any particular vehicle. However, as soon as a 

vehicle receives technology package #1, the model considers the manufacturer-based net 

cost-effectiveness of technology package #2 for that vehicle and so on. In general terms, 

the equation describing the calculation of manufacturer-based cost effectiveness is as 

follows: 

[ ]

[ ] ( ) ∑

∑

+

=

−

× ×

−

− × ×

= 35

1

1

1

2

1( )

1

i

i

i

PP

i

i i

Gap

dCO VMT

Gap

TechCost dFS VMT

ManufCostEff

Where 

ManufCostEff = Manufacturer-Based Cost Effectiveness (in dollars per kilogram 

CO2), 

TechCost = Marked up cost of the technology (dollars), 

PP = Payback period, or the number of years of vehicle use over which consumers 

value fuel savings when evaluating the value of a new vehicle at time of purchase, 

dFSi = Difference in fuel consumption due to the addition of technology times 

fuel price in year i, 

dCO2 = Difference in CO2 emissions due to the addition of technology 

VMTi = product of annual VMT for a vehicle of age i and the percentage of 

vehicles of age i still on the road, 

1- Gap = Ratio of onroad fuel economy to two-cycle (FTP/HFET) fuel economy 

EPA describes the technology ranking methodology and manufacturer-based cost 

effectiveness metric in greater detail in a technical memo to the Docket for this proposed 

rule (Docket EPA-HQ-OAR-2009-0472). 

When calculating the fuel savings, the full retail price of fuel, including taxes is 

used. While taxes are not generally included when calculating the cost or benefits of a 

regulation, the net cost component of the manufacturer-based net cost-effectiveness 

equation is not a measure of the social cost of this proposal, but a measure of the private 

cost, (i.e., a measure of the vehicle purchaser’s willingness to pay more for a vehicle with 

higher fuel efficiency). Since vehicle operators pay the full price of fuel, including 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

86

taxes, they value fuel costs or savings at this level, and the manufacturers will consider 

this when choosing among the technology options. 

This definition of manufacturer-based net cost-effectiveness ignores any change 

in the residual value of the vehicle due to the additional technology when the vehicle is 

five years old. As discussed in Chapter 1of the DRIA, based on historic used car pricing, 

applicable sales taxes, and insurance, vehicles are worth roughly 1223% of their original 

cost after five years, discounted to year of vehicle purchase at 7% per annum. It is 

reasonable to estimate that the added technology to improve CO2 level and fuel economy 

would retain this same percentage of value when the vehicle is five years old. However, 

it is less clear whether first purchasers, and thus, manufacturers would consider this 

residual value when ranking technologies and making vehicle purchases, respectively. 

For this proposal, this factor was not included in our determination of manufacturerbased net cost-effectiveness in the analyses performed in support of this proposed rule. 

Comments are requested on the benefit of including an increase in the vehicle’s residual 

value after five years in the calculation of effective cost. 

The values of manufacturer-based net cost-effectiveness for specific technologies 

will vary from vehicle to vehicle, often substantially. This occurs for three reasons. 

First, both the cost and fuel-saving component cost, ownership fuel-savings, and lifetime 

CO2 effectiveness of a specific technology all vary by the type of vehicle or engine to 

which it is being applied (e.g., small car versus large truck, or 4-cylinder versus 8-

cylinder engine). Second, the effectiveness of a specific technology often depends on the 

presence of other technologies already being used on the vehicle (i.e., the dis-synergies. 

Third, the absolute fuel savings and CO2 reduction of a percentage an incremental 

reduction in fuel consumption depends on the CO2 level of the vehicle prior to adding the 

technology. Chapter 1 of the DRIA of this proposed rule contains further detail on the 

values of manufacturer-based net cost-effectiveness for the various technology packages. 

EPA requests comment on the use of manufacturer-based net cost-effectiveness to 

rank CO2 emission reduction technologies in the context of evaluating alternative fleet 

average standards for this rule. EPA believes this manufacturer-based net costeffectiveness metric is appropriate for ranking technology in this proposed program 

because it considers effectiveness values that may vary widely among technology 

packages when determining the order of technology addition. Comments are requested 

on this option and on any others thought to be appropriate. 

6. Why are the Proposed CO2 Standards Feasible?

 The finding that the proposed standards would be technically feasible is based 

primarily on two factors. One is the level of technology needed to meet the proposed 

standards. The other is the cost of this technology. The focus is on the proposed 

standards for 2016, as this is the most stringent standard and requires the most extensive 

use of technology. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

87

 With respect to the level of technology required to meet the standards, EPA 

established technology penetration caps. As described in Section III.D.4, EPA used two 

constraints to limit the model’s application of technology by manufacturer. The first was 

the application of common fuel economy enablers such as low rolling resistance tires and 

transmission logic changes. These were allowed to be used on all vehicles and hence had 

no penetration cap. The second constraint was applied to most other technologies and 

limited their application to 85% with the exception of the most advanced technologies 

(e.g., powersplit and 2-mode hybrids) whose application was limited to 15% 

 EPA used the OMEGA model to project the technology (and resultant cost) 

required for manufacturers to meet the current 2011 MY CAFE standards and the 

proposed 2016 MY CO2 emission standards. Both sets of standards were evaluated using 

the OMEGA model. The 2011 MY CAFE standards were applied to cars and trucks 

separately with the transfer of credits from one category to the other allowed up to an 

increase in fuel economy of 1.0 mpg. Chrysler, Ford and General Motors are assumed to 

utilize FFV credits up to the maximum of 1.2 mpg for both their car and truck sales. 

Nissan is assumed to utilize FFV credits up to the maximum of 1.2 mpg for only their 

truck sales. The use of any banked credits from previous model years was not 

considered. The modification of the reference fleet to comply with the 2011 CAFE 

standards through the application of technology by the OMEGA model is the final step in 

creating the final reference fleet. This final reference fleet forms the basis for 

comparison for the model year 2016 standards. 

 Table III.D.6-1 shows the usage level of selected technologies in the 2008 

vehicles coupled with 2016 sales prior to projecting their compliance with the 2011 MY 

CAFE standards. These technologies include converting port fuel-injected gasoline 

engines to direct injection (GDI), adding the ability to deactivate certain engine cylinders 

during low load operation (Deac), adding a turbocharger and downsizing the engine 

(Turbo), increasing the number of transmission speeds to 6 or, converting automatic 

transmissions to dual-clutch automated manual transmissions (Dual-Clutch Trans), 

adding 42 volt start-stop capability (Start-Stop), and converting a vehicle to a 

intermediate or strong hybrid design. This last category includes three current hybrid 

designs: integrated motor assist (IMA), power-split (PS) and 2-mode hybrids. 

Table III.D.6-1 Penetration of Technology in 2008 Vehicles with 2016 Sales: Cars and 

Trucks 

GDI 

GDI+ 

Deac 

GDI+ 

Turbo Diesel 

6 Speed 

or CV 

Trans 

Dual 

Clutch 

Trans 

StartStop Hybrid 

BMW 6.7% 0.0% 0.0% 0.0% 98.8% 0.8% 0.0% 0.1%

Chrysler 0.0% 0.0% 0.0% 0.0% 27.9% 0.0% 0.0% 0.0%

Daimler 6.2% 0.0% 0.0% 6.2% 74.7% 11.4% 0.0% 0.0%

Ford 0.6% 0.0% 0.0% 0.0% 28.1% 0.0% 0.0% 0.0%

General Motors 3.3% 0.0% 0.0% 0.0% 13.7% 0.0% 0.1% 0.1%

Honda 1.2% 0.0% 0.0% 0.0% 4.2% 0.0% 0.0% 2.1%
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

88

Hyundai 0.0% 0.0% 0.0% 0.0% 4.9% 0.0% 0.0% 0.0%

Kia 0.0% 0.0% 0.0% 0.0% 0.9% 0.0% 0.0% 0.0%

Mazda 11.8% 0.0% 0.0% 0.0% 37.1% 0.0% 0.0% 0.0%

Mitsubishi 0.0% 0.0% 0.0% 0.0% 76.1% 0.0% 0.0% 0.1%

Nissan 17.7% 0.0% 0.0% 0.0% 33.3% 0.0% 0.0% 0.0%

Porsche 0.0% 0.0% 0.0% 0.0% 3.9% 0.0% 0.0% 0.0%

Subaru 0.0% 0.0% 0.0% 0.0% 29.0% 0.0% 0.0% 0.0%

Suzuki 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0%

Tata 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Toyota 7.5% 0.0% 0.0% 0.0% 30.6% 0.0% 0.0% 12.8%

Volkswagen 52.2% 0.0% 0.0% 0.1% 82.8% 10.9% 0.0% 0.0%

Overall 6.4% 0.0% 0.0% 0.1% 27.1% 0.6% 0.0% 2.8%

As can be seen, all of these technologies except for the direct injection gasoline 

engines with either cylinder deactivation or turbocharging and downsizing, were already 

being used on some 2008 MY vehicles. High speed transmissions were the most 

prevalent, with some manufacturers (e.g., BMW, Suzuki) using them on essentially all of 

their vehicles. Both Daimler and VW equip many of their vehicles with automated 

manual transmissions, while VW makes extensive use of direct injection gasoline engine 

technology. Toyota has converted a significant percentage of its 2008 vehicles to strong 

hybrid design. 

 Table III.D.6-2 shows the usage level of the same technologies in the reference 

case fleet after projecting their compliance with the 2011 MY CAFE standards. Except 

for mass reduction, the figures shown represent the percentages of each manufacturer’s 

sales which are projected to be equipped with the indicated technology. For mass 

reduction, the overall mass reduction projected for that manufacturer’s sales is shown. 

The last row in Table III.D.6-2 shows the increase in projected technology penetration 

due to compliance with the 2011 MY CAFE standards. The results of DOT’s Volpe 

Modeling were used to project that all manufacturers would comply with the 2011 MY 

standards in 2016 without the need to pay fines, with one exception. This exception was 

Porsche in the case of their car fleet. When projecting Porsche’s compliance with the 

2011 MY CAFE standard for cars, the car fleet was assumed to achieve a CO2 emission 

level of 293.2 g/mi instead of the required 285.2 g/mi level (30.3 mpg instead of 31.2 

mpg). 

Table III.D.6-2 Penetration of Technology Under 2011 MY CAFE Standards in 2016 

Sales: Cars and Trucks (Percent of Sales) 

 GDI 

GDI+ 

Deac 

GDI+ 

Turbo 

6 

Speed 

or CV 

Trans 

Dual 

Clutch 

Trans 

StartStop Hybrid 

Mass 

Reduction 

(%) 

BMW 7.3% 11.1% 0.0% 86.3% 11.1% 11.1% 0.1% 0.5%

Chrysler 0.0% 0.0% 0.0% 27.9% 0.0% 0.0% 0.0% 0.0%
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

89

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

Ford 0.6% 0.0% 0.0% 28.1% 0.0% 0.0% 0.0% 0.0%

General Motors 3.3% 0.0% 0.0% 13.7% 0.0% 0.1% 0.1% 0.0%

Honda 1.2% 0.0% 0.0% 4.2% 0.0% 0.0% 2.1% 0.0%

Hyundai 0.0% 0.0% 0.0% 4.9% 0.0% 0.0% 0.0% 0.0%

Kia 0.0% 0.0% 0.0% 0.9% 0.0% 0.0% 0.0% 0.0%

Mazda 11.8% 0.0% 0.0% 37.1% 0.0% 0.0% 0.0% 0.0%

Mitsubishi 0.0% 2.2% 0.0% 76.0% 2.2% 2.2% 0.1% 0.0%

Nissan 17.7% 0.0% 0.0% 33.3% 0.0% 0.0% 0.0% 0.0%

Porsche 0.0% 25.0% 23.2% 0.0% 48.2% 37.1% 0.0% 1.2%

Subaru 0.0% 0.0% 0.0% 29.0% 0.0% 0.0% 0.0% 0.0%

Suzuki 4.5% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0%

Tata 14.5% 60.9% 0.0% 14.5% 60.9% 60.9% 0.0% 2.6%

Toyota 7.5% 0.0% 0.0% 30.6% 0.0% 0.0% 12.8% 0.0%

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

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

Increase over 2008 

MY 0.3% 1.2% 0.8% -1.7% 2.0% 2.0% 0.0% 0.0%

As can be seen, the 2011 MY CAFE standards, when evaluated on an industry 

wide basis, require only a modest increase in the use of these technologies. Higher speed 

automatic transmission use actually decreases due to conversion of these units to more 

efficient designs such as automated manual transmissions and hybrids. However, the 

impact of the 2011 MY CAFE standards is much greater on selected manufacturers, 

particularly BMW, Daimler, Porsche, Tata (Jaguar/Land Rover) and VW. All of these 

manufacturers are projected to increase their use of advanced direct injection gasoline 

engine technology, advanced transmission technology, and start-stop technology. It 

should be noted that these manufacturers have traditionally paid fines under the CAFE 

program. However, with higher fuel prices and the lead-time available by 2016, these 

manufacturers would likely find it in their best interest to improve their fuel economy 

levels instead of continuing to pay fines (again with the exception of Porsche cars). 

While not shown, no gasoline engines were projected to be converted to diesel 

technology. 

 This 2008 baseline fleet, modified to meet 2011 standards, becomes our 

“reference” case. This is the fleet by which the control program (or 2016 rule) will be 

compared. Thus, it is also the fleet that would be assumed to exist in the absence of this 

rule. No air conditioning improvements are assumed for model year 2011 vehicles. The 

average CO2 emission levels of this reference fleet vary slightly from 2012-2016 due to 

small changes in the vehicle sales by market segments and manufacturer. CO2 emissions 

from cars range from 282-284 g/mi, while those from trucks range from 382-384 g/mi. 

CO2 emissions from the combined fleet range from 316-320. These estimates are 

described in greater detail in Section 5.3.2.2 of the DRIA. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

90

Conceptually, both EPA and NHTSA perform the same projection in order to 

develop their respective reference fleets. However, because the two agencies use two 

different models to modify the baseline fleet to meet the 2011 CAFE standards, the 

technology added will be slightly different. The differences, however, are small since 

most manufacturers do not require a lot of additional technology to meet the 2011 

standards. 

 EPA then used the OMEGA model once again to project the level of technology 

needed to meet the proposed 2016 CO2 emission standards. Using the results of the 

OMEGA model, every manufacturer was projected to be able to meet the proposed 2016 

standards with the technology described above except for four: BMW, VW, Porsche and 

Tata due to the OMEGA cap on technology penetration by manufacturer. For these 

manufacturers, the results presented below are those with the fully allowable application 

of technology and not for the technology projected to enable compliance with the 

proposed standards. Described below are a number of potential feasible solutions for 

how these companies can achieve compliance. The overall level of technology needed to 

meet the proposed 2016 standards is shown in Table III.D.6-3. As discussed above, all 

manufacturers are projected to improve the air conditioning systems on 85% of their 

2016 sales. 

Table III.D.6-3 Penetration of Technology for Proposed 2016 CO2 Standards: Cars and 

Trucks 

 GDI 

GDI+ 

Deac 

GDI+ 

Turbo 

6 

Speed 

Auto 

Trans 

Dual 

Clutch 

Trans 

StartStop Hybrid 

Mass 

Reduction 

(%) 

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

Chrysler 51% 28% 3% 37% 51% 51% 0% 6%

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

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

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

Honda 24% 1% 2% 10% 22% 22% 2% 2%

Hyundai 28% 3% 14% 3% 43% 43% 0% 3%

Kia 37% 0% 5% 7% 35% 35% 0% 3%

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

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

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

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

Subaru 46% 4% 14% 0% 64% 51% 0% 4%

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

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

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

Volkswagen 9% 26% 58% 12% 72% 70% 15% 4%
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

91

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

Increase over 

2011 CAFE 24% 17% 9% -7% 46% 43% 1% 4%

As can be seen, the overall average reduction in vehicle weight is projected to be 

4%. This reduction varies across the two vehicle classes and vehicle base weight. For 

cars below 2,950 pounds curb weight, the average reduction is 2.3% (62 pounds), while 

the average was 4.4% (154 pounds) for cars above 2,950 curb weight. For trucks below 

3,850 pounds curb weight, the average reduction is 3.5% (119 pounds), while it was 4.5% 

(215 pounds) for trucks above 3,850 curb weight. Splitting trucks at a higher weight, for 

trucks below 5,000 pounds curb weight, the average reduction is 3.3% (140 pounds), 

while it was 6.7% (352 pounds) for trucks above 5,000 curb weight. 

 The levels of requisite technologies differ significantly across the various 

manufacturers. Therefore, several analyses were performed to ascertain the cause. 

Because the baseline case fleet consists of 2008 MY vehicle designs, these analyses were 

focused on these vehicles, their technology and their CO2 emission levels. 

 Comparing CO2 emissions across manufacturers is not a simple task. In addition 

to widely varying vehicle styles, designs, and sizes, manufacturers have implemented fuel 

efficient technologies to varying degrees, as indicated in Table III.D.6-1. The projected 

levels of requisite technology to enable compliance with the proposed 2016 standards 

shown in Table III.D.6-3 account for two of the major factors which can affect CO2

emissions:1) level of technology already being utilized and 2) vehicle size, as represented 

by footprint. 

 For example, the fuel economy of a manufacturer’s 2008 vehicles may be 

relatively high because of the use of advanced technology. This is the case with Toyota’s 

high sales of their Prius hybrid. However, the presence of this technology in a 2008 

vehicle eliminates the ability to significantly reduce CO2 further through the use of this 

technology. In the extreme, if a manufacturer were to hybridize a high level of its sales 

in 2016, it doesn’t matter whether this technology was present in 2008 or whether it 

would be added in order to comply with the standards. The final level of hybrid 

technology would be the same. Thus, the level at which technology is present in 2008 

vehicles does not explain the difference in requisite technology levels shown in Table 

III.D.6-3. 

 Similarly, the proposed CO2 emission standards adjust the required CO2 level 

according to a vehicle’s footprint, requiring lower absolute emission levels from smaller 

vehicles. Thus, just because a manufacturer produces larger vehicles than another 

manufacturer does not explain the differences seen in Table III.D.6-3. 

 In order to remove these two factors from our comparison, the EPA lumped 

parameter model described above was used to estimate the degree to which technology 

present on each 2008 MY vehicle in our reference fleet was improving fuel efficiency. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

92

The effect of this technology was removed and each vehicle’s CO2 emissions were 

estimated as if it utilized no additional fuel efficiency technology beyond the baseline. 

The differences in vehicle size were accounted for by determining the difference between 

the sales-weighted average of each manufacturer’s “no technology” CO2 levels to their 

required CO2 emission level under the proposed 2016 standards. The industry-wide 

difference was subtracted from each manufacturer’s value to highlight which 

manufacturers had lower and higher than average “no technology” emissions. The results 

are shown in Figure III.D.6-1. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

93

-20-40-60

0

80604020

120100

BMW

Chrysler

Da ml i

er

Fo dr

GeneralMotors

Honda

Hyundai

K ai

Mazda

Mitsubishi

N si san

Porsche

Subaru

Suzuki

Tata

Toyota

Vo ks l

wagen

CO2 Emissions (g/mi) Car Truck

Figure III.D.6-1 CO2 Emissions Relative to Fleet Adjusted for Technology and Footprint 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

94

As can be seen in Table III.D.6-3 the manufacutrersmanufacturers projected to 

require the greatest levels of technology also show the highest offsets relative to the 

industry. The greatest offset shown in Figure III.D.6-1 is for Tata’s trucks (Land Rover). 

These vehicles are estimated to have 100 g/mi greater CO2 emissions than the average 

2008 MY truck after accounting for differences in the use of fuel saving technology and 

footprint. The lowest adjustment is for Subaru’s trucks, which have 50 g/mi CO2 lower 

emissions than the average truck. 

 While this comparison confirms the differences in the technology penetrations 

shown in Table III.D.6-3, it does not yet explain why these differences exist. Two well 

known factors affecting vehicle fuel efficiency are vehicle weight and performance. The 

footprint-based form of the proposed CO2 standard accounts for most of the difference in 

vehicle weight seen in the 2008 MY fleet. However, even at the same footprint, vehicles 

can have varying weights. Higher performing vehicles also tend to have higher CO2

emissions over the two-cycle test procedure. So manufacturers with higher average 

performance levels will tend to have higher average CO2 emissions for any given 

footprint. 

 The impact of these two factors on each manufacturer’s “no technology” CO2

emissions was estimated. First, the “no technology” CO2 emissions levels were 

statistically analyzed to determine the average impact of weight and the ratio of 

horsepower to weight on CO2 emissions. Both factors were found to be statistically 

significant at the 95 percent confidence level. Together, they explained over 80 percent 

of the variability in vehicles’ CO2 emissions for cars and over 70 percent for trucks. 

These relationships were then used to adjust each vehicle’s “no technology” CO2

emissions to the average weight for its footprint value and to the average horsepower to 

weight ratio of either the car or truck fleet. The comparison was repeated as shown in 

Figure III.D.6-1. The results are shown in Figure III.D.6-2. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

95

-10-20-30-40

0

40302010

BMW

Chrysler

Daimler

Ford

GeneralMotors

Honda

Hyundai

Kia

Mazda

Mitsubishi

Nissan

Porsche

Suba ur

Suzuki

Tata

Toyo at

Vo kl

swagen

CO2 Emissions (g/mi) Car Truck

Figure III.D.6-2 CO2 Emissions Relative to Fleet Adjusted for Technology, Footprint, Weight at 

Footprint, and Performance 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

96

First, note that the scale in Figure III.D.6-2 is much smaller by a factor of 3 than 

that in Figure III.D.6-1. In other words, accounting for differences in vehicle weight (at 

constant footprint) and performance dramatically reduces the differences in various 

manufacturers’ CO2 emissions. Most of the manufacturers with high offsets in Figure 

III.D.6-1 now show low or negative offsets. For example, BMW’s and VW’s trucks 

show very low CO2 emissions. Tata’s emissions are very close to the industry average. 

Daimler’s vehicles are no more than 10 g/mi above the average for the industry. This 

analysis indicates that the primary reasons for the differences in technology penetrations 

shown for the various manufacturers in Table III.D.6-3 are weight and performance. 

EPA has not determined why some manufacturers’ vehicle weight is relatively high for 

its footprint value, or whether this weight provides additional utility for the consumer. 

Performance is more straightforward. Some consumers desire high performance and 

some manufacturers orient their sales towards these consumers. However, the cost in 

terms of CO2 emissions is clear. Producing relatively heavy or high performance 

vehicles increases CO2 emissions and will require greater levels of technology in order to 

meet the proposed CO2 standards. 

 As can be seen from Table III.D.6-3 above, widespread use of several 

technologies is projected due to the proposed standards. The vast majority of engines are 

projected to be converted to direct injection, with some of these engines including 

cylinder deactivation or turbocharging and downsizing. More than 60 percent of all 

transmissions are projected to be either high speed automatic transmissions or dual-clutch 

automated manual transmissions. More than one third of the fleet is projected to be 

equipped with 42 volt start-stop capability. This technology was not utilized in 2008 

vehicles, but as discussed above, promises significant fuel efficiency improvement at a 

moderate cost. 

 EPA foresees no significant technical or engineering issues with the projected 

deployment of these technologies across the fleet, with their incorporation being folded 

into the vehicle redesign process. All of these technologies are commercially available 

now. The automotive industry has already begun to convert its port fuel-injected gasoline 

engines to direct injection. Cylinder deactivation and turbocharging technologies are 

already commercially available. As indicated in Table III.D.6-1, high speed 

transmissions are already widely used. However, while more common in Europe, 

automated manual transmissions are not currently used extensively in the U.S. 

Widespread use of this technology would require significant capital investment but does 

not present any significant technical or engineering issues. Start-stop systems also 

represent a significant challenge because of the complications involved in a changeover 

to a higher voltage electrical architecture. However, with appropriate capital investments 

(which are captured in the costs), these technology penetration rates are achievable within 

the timeframe of this rule. While most manufacturers have some plans for these systems, 

our projections indicate that their use may exceed 35% of sales, with some manufacturers 

requiring higher levels. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

97

 Most manufacturers would not have to hybridize any vehicles due to the proposed 

standards. The hybrids shown for Toyota are projected to be sold even in the absence of 

the proposed standards. However the relatively high hybrid penetrations (15%) projected 

for BMW, Daimler, Porsche, Tata and Volkswagen deserve further discussion. These 

manufacturers are all projected by the OMEGA model to utilize the maximum 

application of full hybrids allowed by our model in this time frame, which is 15 percent. 

 As discussed in the EPA DRIA, a 2016 technology penetration rate of 85% is 

projected for the vast majority of available technologies, however, for full hybrid systems 

the projection shows that given the available lead-time full hybrids can only be applied to 

approximately 15% of a manufacturer’s fleet. This number of course can vary by 

manufacturer. 

While the hybridization levels of BMW, Daimler, Porsche, Tata and Volkswagen 

are relatively high, the sales levels of these five manufacturers are relatively low. Thus, 

industry-wide, hybridization reaches only 8 percent, compared with 3 percent in the 

reference case. This 8 percent level is believed to be well within the capability of the 

hybrid component industry by 2016. Thus, the primary challenge for these five 

companies would be at the manufacturer level, redesigning a relatively large percentage 

of sales to include hybrid technology. The proposed TLAAS provisions will provide 

significant aid to these manufacturers in pre-2016 compliance, since all qualified 

companies are expected to be able to take advantage of these provisions. By 2016, it is 

likely that these manufacturers would also be able to change vehicle characteristics which 

currently cause their vehicles to emit much more CO2 than similar sized vehicles 

produced by other manufacturers. These factors may include changes in model mix, 

further lightweighting, downpowering, electric and/or plug-in hybrid vehicles, or 

downsizing (our current baseline fleet assumes very little change in footprint from 2012-

2016), as well as technologies that may not be included in our packages. Also, 

companies may have technology penetration rates of less costly technologies (listed in the 

above tables) greater than 85%, and they may also be able to apply hybrid technology to 

more than 15 percent of their fleet (as the 15% for hybrid technology is an industry 

average). For example, a switch to a low GWP alternative refrigerant in a large fraction 

of a fleet can replace many other much more costly technologies, but this option is not 

captured in the modeling. In addition, these manufacturers can also take advantage of 

flexibilities, such as early credits for air conditioning and trading with other 

manufacturers. The EPA expects that there will be certain high volume manufacturers 

that will earn a significant amount of early GHG credits starting in 2009 and 2010 that 

will expire 5 years later, by 2014 and 2015, unused. The EPA believes that these 

manufacturers will be willing to sell these expiring credits to manufacturers with whom 

there is no direct competition. Furthermore, some of these manufacturers have also 

stated either publicly or in confidential discussions with EPA that they will be able to 

comply with 2016 standards. Because of the confidential nature of this information 

sharing, EPA is unable to capture these packages specifically in our modeling. The 

following companies have all submitted letters in support of the national program, 

including the 2016 MY levels discussed above: BMW, Chrysler, Daimler, Ford, GM, 

Honda, Mazda, Toyota, and Volkswagen. This supports the view that the emissions 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

98

reductions needed to achieve the standards are technically and economically feasible for 

all these companies, and that EPA’s projection of non-compliance for four of the 

companies is based on an inability of our model to fully account for the full flexibilities 

of the EPA program as well as the potentially unique technology approaches or new 

product offerings which these manufactures are likely to employ. 

 In addition, manufacturers do not need to apply technology exactly according to 

our projections. Our projections simply indicate one path which would achieve 

compliance. Those manufacturers whose vehicles are heavier and higher performing than 

average in particular have additional options to facilitate compliance and reduce their 

technological burden closer to the industry average. These options include decreasing the 

mass of the vehicles and/or decreasing the power output of the engines. Finally, EPA 

allows compliance to be shown through the use of emission credits obtained from other 

manufacturers. Especially for the lower volume sales of some manufacturers that could 

be one component of an effective compliance strategy, reducing the technology that 

needs to be employed on their vehicles. 

 For the vast majority of light-duty cars and trucks, manufacturers have available 

to them a range of technologies that are currently commercially available and can 

feasibly be employed in their vehicles by MY 2016. Our modeling projects widespread 

use of these technologies as a technologically feasible approach to complying with the 

proposed standards. 

 In sum, EPA believes that the emissions reductions called for by the proposed 

standards are technologically feasible, based on projections of widespread use of 

commercially available technology, as well as use by some manufacturers of other 

technology approaches and compliance flexibilities not fully reflected in our modeling. 

 EPA also projected the cost associated with these projections of technology 

penetration. Table III.D.6-4 shows the cost of technology in order for manufacturers to 

comply with the 2011 MY CAFE standards, as well as those associated with the proposed 

2016 CO2 emission standards. The latter costs are incremental to those associated with 

the 2011 MY standards and also include $60 per vehicle, on average, for the cost of 

projected use of improved air-conditioning systems.60

 

Table III.D.6-4 Cost of Technology per Vehicle in 2016 ($2007) 

 2011 MY CAFE Standards Proposed 2016 CO2 Standards 

 Cars Trucks All Cars Trucks All 

BMW $319 $479 $361 $1,701 $1,665 $1,691

Chrysler $7 $125 $59 $1,331 $1,505 $1,408

Daimler $431 $632 $495 $1,631 $1,357 $1,543

Ford $28 $211 $109 $1,435 $1,485 $1,457

 

60 Note that the actual cost of the A/C technology is estimated at $78 per vehicle as shown in Table III.D.2-

3. However, we expect only 85 percent of the fleet to add that technology. Therefore, the cost of the 

technology when spread across the entire fleet is $66 per vehicle ($78 x 85% = $66). 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

99

General Motors $28 $136 $73 $969 $1,782 $1,311

Honda $0 $0 $0 $606 $695 $633

Hyundai $0 $76 $14 $739 $1,680 $907

Kia $0 $48 $8 $741 $1,177 $812

Mazda $0 $0 $0 $946 $1,030 $958

Mitsubishi $96 $322 $123 $1,067 $1,263 $1,090

Nissan $0 $19 $6 $1,013 $1,194 $1,064

Porsche $535 $1,074 $706 $1,549 $666 $1,268

Subaru $64 $100 $77 $903 $1,329 $1,057

Suzuki $99 $231 $133 $1,093 $1,263 $1,137

Tata $691 $1,574 $1,161 $1,270 $674 $952

Toyota $0 $0 $0 $600 $436 $546

Volkswagen $269 $758 $354 $1,626 $949 $1,509

Overall $47 $141 $78 $968 $1,214 $1,051

As can be seen, the industry average cost of complying with the 2011 MY CAFE 

standards is quite low, $78 per vehicle. The range of costs across manufacturers is quite 

large, however. Honda, Mazda and Toyota are projected to face no cost, while Daimler, 

Porsche and Tata face costs of at least $495 per vehicle. As described above, these last 

three manufacturers face such high costs to meet even the 2011 MY CAFE standards due 

to both their vehicles’ weight per unit footprint and performance. Also, these cost 

estimates apply to sales in the 2016 MY. These three manufacturers, as well as others 

like Volkswagen, may choose to pay CAFE fines prior to this or even in 2016. 

 As shown in the last row of Table III.D.6-4, the average cost of technology to 

meet the proposed 2016 standards for cars and trucks combined relative to the 2011 MY 

CAFE standards is $1051 per vehicle. The projection shows that the average cost for cars 

would be slightly lower than that for trucks. Toyota and Honda show projected costs 

significantly below the average, while BMW, Porsche, Tata and Volkswagen show 

significantly higher costs. On average, the $1051 per vehicle cost is significant, 

representing roughly 5% of the total cost of a new vehicle. However, as discussed below, 

the fuel savings associated with the proposed standards exceeds this cost significantly. 

Thus, the total cost of vehicle ownership would actually decline due to this proposed rule. 

 

 While the CO2 emission compliance modeling using the OMEGA model focused 

on the proposed 2016 MY standards, EPA believes that the proposed standards for 2012-

2015 would also be feasible. As discussed above, EPA believes that manufacturers 

develop their vehicle designs with several model years in view. Generally, the 

technology estimated above for 2016 MY vehicles represents the technology which 

would be added to those vehicles which are being redesigned in 2012-2015. The 

proposed CO2 standards for 2012-2016 reduce CO2 emissions at a fairly steady rate. 

Thus, manufacturers which redesign their vehicles at a fairly steady rate will 

automatically comply with the interim standard as they plan for compliance in 2016. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

100

 Manufacturers which redesign much fewer than 20% of their sales in the early 

years of the proposed program would face a more difficult challenge, as simply 

implementing the “2016 MY” technology as vehicles are redesigned may not enable 

compliance in the early years. However, even in this case, manufacturers would have 

several options to enable compliance. One, they could utilize the proposed debit carryforward provisions described above. This may be sufficient alone to enable compliance 

through the 2012-2016 MY time period, if their redesign schedule exceeds 20% per year 

prior to 2016. If not, at some point, the manufacturer might need to increase their use of 

technology beyond that projected above in order to generate the credits necessary to 

balance the accrued debits. For most manufacturers representing the vast majority of 

U.S. sales, this would simply mean extending the same technology to a greater 

percentage of sales. The added cost of this in the later years of the program would be 

balanced by lower costs in the earlier years. Two, the manufacturer could buy credits 

from another manufacturer. As indicated above, several manufacturers are projected to 

require less stringent technology than the average. These manufacturers would be in a 

position to provide credits at a reasonable technology cost. Thus, EPA believes the 

proposed standards for 2012-2016 would be feasible. 

7. What Other Fleet-Wide CO2 Levels Were Considered?

Two alternative sets of CO2 standards were considered. One set would reduce 

CO2 emissions at a rate of 4 percent per year. The second set would reduce CO2

emissions at a rate of 6 percent per year. The analysis of these standards followed the 

exact same process as described above for the proposed standards. The only difference 

was the level of CO2 emission standards. The footprint-based standard coefficients of the 

car and truck curves for these two alternative control scenarios were discussed above. 

The resultant CO2 standards in 2016 for each manufacturer under these two alternative 

scenarios and under the proposal are shown in Table III.D.7-1. 

Table III.D.7-1 Overall Average CO2 Emission Standards by Manufacturer in 

2016 

4% per Year Proposed 6% per Year 

BMW 245 241 222 

Chrysler 266 262 241 

Daimler 257 253 233 

Ford 270 266 245 

General Motors 272 268 247 

Honda 243 239 219 

Hyundai 235 231 212 

Kia 237 234 215 

Mazda 231 227 208 

Mitsubishi 226 223 204 

Nissan 251 247 227 

Porsche 234 230 210 

Subaru 237 233 213 

Suzuki 227 223 203 

Formatted Table
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

101

Tata 267 263 241 

Toyota 247 243 223 

Volkswagen 233 230 211 

Overall 254 250 230 

Tables III.D.7-2 and III.D.7-3 show the technology penetration levels for the 4 

percent per year and 6 percent per year standards in 2016. 

Table III.D.7-2 Technology Penetration - 4% per Year CO2 Standards in 2016: Cars and 

Trucks Combined 

 GDI 

GDI+ 

Deac 

GDI+ 

Turbo 

6 

Speed 

Auto 

Trans 

Dual 

Clutch 

Trans 

StartStop Hybrid 

Mass 

Reduction 

(%) 

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

Chrysler 47% 25% 3% 33% 48% 48% 0% 5%

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

Ford 33% 32% 13% 23% 61% 61% 0% 5%

General Motors 33% 25% 7% 19% 48% 48% 0% 5%

Honda 20% 1% 0% 6% 19% 19% 2% 2%

Hyundai 27% 2% 12% 2% 39% 39% 0% 3%

Kia 31% 0% 4% 1% 34% 34% 0% 2%

Mazda 34% 2% 16% 10% 43% 43% 0% 3%

Mitsubishi 65% 2% 7% 28% 60% 60% 0% 6%

Nissan 34% 22% 2% 40% 51% 51% 1% 5%

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

Subaru 46% 4% 14% 10% 54% 46% 0% 3%

Suzuki 72% 5% 2% 15% 63% 63% 0% 4%

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

Toyota 25% 2% 0% 30% 33% 5% 13% 1%

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

Overall 28% 17% 9% 20% 45% 40% 4% 4%

Increase over 

2011 CAFE 21% 15% 9% -5% 42% 38% 1% 4%

Table III.D.7-3 Technology Penetration - 6% per Year Alternative Standards in 2016: 

Cars and Trucks Combined 

 GDI 

GDI+ 

Deac 

GDI+ 

Turbo 

6 

Speed 

Auto 

Trans 

Dual 

Clutch 

Trans 

StartStop Hybrid 

Weight 

Reduction 

(%) 

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

Chrysler 29% 50% 6% 4% 85% 85% 0% 8%
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Daimler 3% 44% 39% 11% 73% 72% 13% 5%

Ford 8% 37% 40% 4% 74% 74% 11% 7%

General Motors 24% 54% 8% 6% 81% 81% 0% 8%

Honda 38% 1% 15% 8% 50% 50% 2% 4%

Hyundai 36% 9% 28% 7% 66% 66% 0% 5%

Kia 48% 0% 25% 18% 55% 55% 0% 4%

Mazda 65% 2% 16% 4% 81% 76% 0% 6%

Mitsubishi 59% 7% 19% 7% 80% 80% 5% 8%

Nissan 34% 17% 35% 9% 76% 76% 10% 7%

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

Subaru 66% 4% 14% 0% 85% 80% 0% 6%

Suzuki 2% 12% 71% 0% 80% 80% 5% 7%

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

Toyota 40% 7% 11% 25% 50% 50% 13% 3%

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

Overall 28% 24% 23% 11% 67% 67% 7% 6%

Increase over 

2011 CAFE 22% 23% 22% -15% 65% 65% 4% 6%

With respect to the 4 percent per year standards, the levels of requisite control 

technology decreased relative to those under the proposed standards, as would be 

expected. Industry-wide, the largest decrease was a 2 percent decrease in the application 

of start-stop technology. On a manufacturer specific basis, the most significant decreases 

were a 6 percent decrease in hybrid penetration for BMW and a 2 percent drop for 

Daimler. These are relatively small changes and are due to the fact that the 4 percent per 

year standards only require 4 g/mi CO2 less control than the proposed standards in 2016. 

Porsche, Tata and Volkswagen continue to be unable to comply with the CO2 standards 

in 2016. 

With respect to the 6 percent per year standards, the levels of requisite control 

technology increased relative to those under the proposed standards, as again would be 

expected. Industry-wide, the largest increase was an 8 percent increase in the application 

of start-stop technology. On a manufacturer specific basis, the most significant increases 

were a 42 percent increase in hybrid penetration for BMW and a 38 percent increase for 

Daimler. These are more significant changes and are due to the fact that the 6 percent per 

year standards require 20 g/mi CO2 more control than the proposed standards in 2016. 

Porsche, Tata and Volkswagen continue to be unable to comply with the CO2 standards 

in 2016. However, BMW joins this list, as well, though just by 1 g/mi. Most 

manufacturers experience the increase in start-stop technology application, with the 

increase ranging from 5 to 17 percent. 

Table III.D.7-4 shows the projected cost of the two alternative sets of standards. 
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Table III.D.7-4 Technology Cost per Vehicle in 2016 – Alternative Standards ($2007) 

 4 Percent per Year Standards 6 Percent per Year Standards 

 Cars Trucks All Cars Trucks All 

BMW $1,701 $1,665 $1,691 $1,701 $1,665 $1,691

Chrysler $1,340 $1,211 $1,283 $1,642 $2,211 $1,893

Daimler $1,631 $1,357 $1,543 $1,631 $1,357 $1,543

Ford $1,429 $1,305 $1,374 $2,175 $2,396 $2,273

General Motors $969 $1,567 $1,221 $1,722 $2,154 $1,904

Honda $633 $402 $564 $777 $1,580 $1,016

Hyundai $685 $1,505 $832 $1,275 $1,680 $1,347

Kia $741 $738 $741 $1,104 $1,772 $1,213

Mazda $851 $914 $860 $1,369 $1,030 $1,320

Mitsubishi $1,132 $247 $1,028 $1,495 $2,065 $1,563

Nissan $910 $1,194 $991 $1,654 $2,274 $1,830

Porsche $1,549 $666 $1,268 $1,549 $666 $1,268

Subaru $903 $1,131 $985 $1,440 $1,615 $1,503

Suzuki $1,093 $1,026 $1,076 $1,718 $2,219 $1,846

Tata $1,270 $674 $952 $1,270 $674 $952

Toyota $518 $366 $468 $762 $1,165 $895

Volkswagen $1,626 $949 $1,509 $1,626 $949 $1,509

Overall $940 $1,054 $978 $1,385 $1,859 $1,544

As can be seen, the average cost of the 4 percent per year standards is only $73 

per vehicle less than that for the proposed standards. In contrast, the average cost of the 6 

percent per year standards is nearly $500 per vehicle more than that for the proposed 

standards. Compliance costs are entering the region of non-linearity. The $73 cost 

savings of the 4 percent per year standards relative to the proposal represents $18 per 

g/mi CO2 increase. The $493 cost increase of the 6 percent per year standards relative to 

the proposal represents $25 per g/mi CO2 increase. 

 

 EPA does not believe the 4% per year alternative is an appropriate standard for 

the MY2012-2016 time frame. As discussed above, the 250 g/mi proposal is 

technologically feasible in this time frame at reasonable costs, and provides higher GHG 

emission reductions at a modest cost increase over the 4% per year alternative (less than 

$100 per vehicle). In addition, the 4% per year alternative does not result in a 

harmonized National Program for the country. Based on California’s letter of May 18, 

2009, the emission standards under this alternative would not result in the State of 

California revising its regulations such that compliance with EPA’s GHG standards 

would be deemed to be in compliance with California’s GHG standards for these model 

years. Thus, the consequence of promulgating a 4% per year standard would be to 

require manufacturers to produce two vehicle fleets: a fleet meeting the 4% per year 

federal standard, and a separate fleet meeting the more stringent California standard for 

sale in California and the section 177 states. This further increases the costs of the 4% 
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per year standard and could lead to additional difficulties for the already stressed 

automotive industry. 

EPA also does not believe the 6% per year alternative is an appropriate standard 

for the MY 2012-2016 time frame. As shown in Tables III.D.7-3 and III.D.7-4, the 6% 

per year alternative represents a significant increase in both the technology required and 

the overall costs compared to the proposed standards. In absolute percent increases in the 

technology penetration, compared to the proposed standards the 6% per year alternative 

requires for the industry as a whole: an 18% increase in GDI fuel systems, an 11% 

increase in turbo-downsize systems, a 6% increase in dual-clutch automated manual 

transmissions (DCT), and a 9% increase in start-stop systems. For a number of 

manufacturers the expected increase in technology is greater: for GM, a 15% increase in 

both DCTs and start-stop systems, for Nissan a 9% increase in full hybrid systems, for 

Ford an 11% increase in full hybrid systems, for Chrysler a 34% increase in both DCT 

and start-stop systems and for Hyundai a 23% increase in the overall penetration of DCT 

and start-stop systems. For the industry as a whole, the per-vehicle cost increase for the 

6% per year alternative is nearly $500. On average this is a 50% increase in costs 

compared to the proposed standards. At the same time, CO2 emissions would be reduced 

by about 8%, compared to the 250 g/mi target level. 

These technology and cost increases are significant, given the amount of leadtime between now and model years 2012-2016. In order to achieve the levels of 

technology penetration for the proposed standards, the industry needs to invest significant 

capital and product development resources right away, in particular for the 2012 and 

2013 model year, which is only 2-3 years from now. For the 2014-2016 time frame, 

significant product development and capital investments will need to occur over the next 

2-3 year in order to be ready for launching these new products for those model years. 

Thus a major part of the required capital and resource investment will need to occur in 

the next few years, under the proposed standards. EPA believes that the proposal (a 

target of 250 gram/mile in 2016) already requires significant investment and product 

development costs for the industry, focused on the next few years. 

It is important to note, and as discussed later in this preamble, as well as in the 

draft Joint Technical Support Document and the draft EPA Regulatory Impact Analysis 

document, the average model year 2016 per-vehicle cost increase of nearly $500 includes 

an estimate of both the increase in capital investments by the auto companies and the 

suppliers as well as the increase in product development costs. These costs can be 

significant, especially as they must occur over the next 2-3 years. Both the domestic and 

transplant auto firms, as well as the domestic and world-wide automotive supplier base, is 

experiencing one of the most difficult markets in the U.S. and internationally that has 

been seen in the past 30 years. One major impact of the global downturn in the 

automotive industry and certainly in the U.S. is the significant reductions in product 

development engineers and staffs, as well as a tightening of the credit markets which 

allow auto firms and suppliers to make the near-term capital investments necessary to 

bring new technology into production. EPA is concerned that the significantly increased 

pressure on capital and other resources from the 6% per year alternative may be too 
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stringent for this time frame, given both the relatively limited amount of lead-time 

between now and model years 2012-2016, the need for much of these resources over the 

next few years, as well the current financial and related circumstances of the automotive 

industry. EPA is not concluding that the 6% per year alternative standards are 

technologically infeasible, but EPA believes such standards for this time frame would be 

overly stringent given the significant strain it would place on the resources of the industry 

under current conditions. EPA believes this degree of stringency is not warranted at this 

time. Therefore EPA does not believe the 6% per year alternative would be an 

appropriate balance of various relevant factors for model years 2012-1016. 

These alternative standards represent two possibilities out of many. The EPA 

believes that the current proposed standards represent an appropriate balance of the 

factors relevant under section 202(a). For further discussion of this issue, see Chapter 4 

of the DRIASection II.B. 

E. Certification, Compliance, and Enforcement 

 1. Compliance Program Overview

This section of the preamble describes EPA's proposal for a comprehensive 

program to ensure compliance with EPA’s proposed emission standards for carbon 

dioxide (CO2), nitrous oxide (N2O), and methane (CH4), as described in Section III.B. 

An effective compliance program is essential to achieving the environmental and public 

health benefits promised by these mobile source GHG standards. EPA's proposal for a 

GHG compliance program is designed around two overarching priorities: 1) to address 

Clean Air Act (CAA) requirements and policy objectives; and 2) to streamline the 

compliance process for both manufacturers and EPA by building on existing practice 

wherever possible, and by structuring the program such that manufacturers can use a 

single data set to satisfy both the new GHG and Corporate Average Fuel Economy 

(CAFE) testing and reporting requirements. The program proposed by EPA and NHTSA 

recognizes, and replicates as closely as possible, the compliance protocols associated 

with the existing CAA Tier 2 vehicle emission standards, and with CAFE standards. The 

certification, testing, reporting, and associated compliance activities closely track current 

practices and are thus familiar to manufacturers. EPA already oversees testing, collects 

and processes test data, and performs calculations to determine compliance with both 

CAFE and CAA standards. Under this proposed coordinated approach, the compliance 

mechanisms for both programs are consistent and non-duplicative. 

 Vehicle emission standards established under the CAA apply throughout a 

vehicle's full useful life. In this case EPA is proposing fleet average standards where 

compliance with the fleet average is determined based on the testing performed at time of 

production, as with the current CAFE fleet average. EPA is also proposing in-use 

standards that apply throughout a vehicle’s useful life, with the standard determined by 

adding a 10% adjustment factor to the model-level emission results used to calculate the 

fleet average. Therefore, EPA’s proposed program must not only assess compliance with 

the fleet average standards described in Section III.B, but must also assess compliance 

with the in-use standards. As it does now, EPA would use a variety of compliance 
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mechanisms to conduct these assessments, including pre-production certification and 

post-production, in-use monitoring once vehicles enter customer service. Specifically, 

EPA is proposing a compliance program for the fleet average that utilizes CAFE 

program protocols with respect to testing, a certification procedure that operates in 

conjunction with the existing CAA Tier 2 certification procedures, and assessment of 

compliance with the in-use standards concurrent with existing EPA and manufacturer 

Tier 2 emission compliance testing programs. Under the proposed compliance program 

manufacturers would also be afforded numerous flexibilities to help achieve compliance, 

both stemming from the program design itself in the form of a manufacturer-specific CO2

fleet average standard, as well as in various credit banking and trading opportunities, as 

described in Section III.C. EPA's proposed compliance program is outlined in further 

detail below. EPA requests comment on all aspects of the compliance program design 

including comments about whether differences between the proposed compliance scheme 

for GHG and the existing compliance scheme for other regulated pollutants are 

appropriate. 

2. Compliance With Fleet-Average CO2 Standards 

 Fleet average emission levels can only be determined when a complete fleet 

profile becomes available at the close of the model year. Therefore, EPA is proposing to 

determine compliance with the fleet average CO2 standards when the model year closes 

out, as is currently the protocol under EPA’s Tier 2 program as well as under the current 

CAFE program. The compliance determination would be based on actual production 

figures for each model and on model-level emissions data collected through testing over 

the course of the model year. Manufacturers would submit this information to EPA in an 

end-of-year report which is discussed in detail in Section III.E.5.h below. 

 Manufacturers currently conduct their CAFE testing over an entire model year to 

maximize efficient use of testing and engineering resources. Manufacturers submit their 

CAFE test results to EPA and EPA conducts confirmatory fuel economy testing at its 

laboratory on a subset of these vehicles under EPA's Part 600 regulations. EPA is 

proposing that manufacturers continue to perform the model level testing currently 

required for CAFE fuel economy performance and measure and report the CO2 values for 

all tests conducted. Thus, manufacturers will submit one data set in satisfaction of both 

CAFE and GHG requirements such that EPA’s proposed program would not impose 

additional timing or testing requirements on manufacturers beyond that required by the 

CAFE program. For example, manufacturers currently submit fuel economy test results at 

the subconfiguration and configuration levels to satisfy CAFE requirements. Under this 

proposal manufacturers would also submit CO2 values for the same vehicles. Section 

III.E.3 discusses how this will be implemented in the certification process. 

 a. Compliance Determinations 

 As described in Section III.B above, the fleet average standards would be 

determined on a manufacturer by manufacturer basis, separately for cars and trucks, using 

the proposed footprint attribute curves. Under this proposal, EPA would calculate the 
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fleet average emission level using actual production figures and, for each model type, 

CO2 emission test values generated at the time of a manufacturer's CAFE testing. EPA 

would then compare the actual fleet average to the manufacturer's footprint standard to 

determine compliance, taking into consideration use of averaging and/or other types of 

credits. 

 Final determination of compliance with fleet average CO2 standards may not 

occur until several years after the close of the model year due to the flexibilities of carryforward and carry-back credits and the remediation of deficits (see Section III.C). A 

failure to meet the fleet average standard after credit opportunities have been exhausted 

could ultimately result in penalties and injunctive orders under the CAA as described in 

Section III.E.6 below. 

 EPA periodically provides mobile source emissions and fuel economy 

information to the public, for example through the annual Compliance Report61 and Fuel 

Economy Trends Report.62 EPA plans to expand these reports to include GHG 

performance and compliance trends information, such as annual status of credit balances 

or debits, use of various credit programs, attained versus projected fleet average emission 

levels, and final compliance status for a model year after credit reconciliation occurs. We 

seek comment on all aspects of public dissemination of GHG compliance information 

b. Required Minimum Testing For Fleet Average CO2

 As noted, EPA is proposing that the same test data required for determining a 

manufacturer’s compliance with the CAFE standard also be used to determine the 

manufacturer’s compliance with the fleet average CO2 emissions standard. CAFE 

requires manufacturers to submit test data representing at least 90% of the manufacturer's 

model year production, by configuration.63 The CAFE testing covers the vast majority of 

models in a manufacturer’s fleet. Manufacturers industry-wide currently test more than 

1,000 vehicles each year to meet this requirement. EPA believes this minimum testing 

requirement is necessary and applicable for calculating accurate CO2 fleet average 

emissions. Manufacturers may test additional vehicles, at their option. As described 

above, EPA would use the emissions results from the model-level testing to calculate a 

manufacturer's fleet average CO2 emissions and to determine compliance with the CO2

standard. 

 EPA is proposing to continue to allow certain testing flexibilities that exist under 

the CAFE program. EPA has always permitted manufacturers some ability to reduce 

their test burden in tradeoff for lower fuel economy numbers. Specifically the practice of 

“data substitution” enables manufacturers to apply fuel economy test values from a 

“worst case” configuration to other configurations in lieu of testing them. The substituted 

 

61 2007 Progress Report Vehicle and Engine Compliance Activities; EPA-420-R-08-011; October 2008. 

This document is available electronically at http://www.epa.gov/otaq/about/420r08011.pdf

62 Light-Duty Automotive Technology and Fuel-Economy Trends: 1975 Through 2008; EPA-420-S-08-

003; September 2008. This document is available electronically at http://www.epa.gov/otaq/fetrends.htm

63 See 40 CFR 600.010-08(d). 
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values may only be applied to configurations that would be expected to have better fuel 

economy and for which no actual test data exist. Substituted data would only be accepted 

for the GHG program if it is also used for CAFE purposes. 

 EPA's regulations for CAFE fuel economy testing permit the use of analytically 

derived fuel economy data in lieu of an actual fuel economy test in certain situations.64

 

Analytically derived data is generated mathematically using expressions determined by 

EPA and is allowed on a limited basis when a manufacturer has not tested a specific 

vehicle configuration. This has been done as a means to reduce some of the testing 

burden on manufacturers without sacrificing accuracy in fuel economy measurement. 

EPA has issued guidance that provides details on analytically derived data and that 

specifies the conditions when analytically derived fuel economy may be used. EPA 

would also apply the same guidance to the GHG program and would allow any 

analytically derived data used for CAFE to also satisfy the GHG data reporting 

requirements. EPA would, however, need to revise the terms in the current equations for 

analytically derived fuel economy to specify them in terms of CO2. Analytically derived 

CO2 data would not be permitted for the Emission Data Vehicle representing a test group 

for pre-production certification, only for the determination of the model level test results 

used to determine actual fleet-average CO2 levels. 

 EPA is retaining the definitions needed to determine CO2 levels of each model 

type (such as "subconfiguration," "configuration," "base level," etc.) as they are currently 

defined in EPA's fuel economy regulations. 

 3. Vehicle Certification

CAA section 203(a)(1) prohibits manufacturers from introducing a new motor 

vehicle into commerce unless the vehicle is covered by an EPA-issued certificate of 

conformity. Section 206(a)(1) of the CAA describes the requirements for EPA issuance 

of a certificate of conformity, based on a demonstration of compliance with the emission 

standards established by EPA under section 202 of the Act. The certification 

demonstration requires emission testing, and must be done for each model year.65

 

Under Tier 2 and other EPA emission standard programs, vehicle manufacturers 

certify a group of vehicles called a test group. A test group typically includes multiple 

vehicle car lines and model types that share critical emissions-related features.66 The 

manufacturer generally selects and tests one vehicle to represent the entire test group for 

certification purposes. The test vehicle is the one expected to be the worst case for the 

emission standard at issue. Emission results from the test vehicle are used to assign the 

 

64 40 CFR 86.600.106600.006-08(e) 

65 CAA section 206(a)(1). 

66 The specific test group criteria are described in 40 CFR 86.1827-01, car lines and model types have the 

meaning given in 40 CFR 86.1803-01. 
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test group to one of several specified bins of emissions levels, identified in the Tier 2 

rule, and this bin level becomes the in-use emissions standard for that test group.67

 

Since compliance with the Tier 2 fleet average depends on actual test group sales 

volumes and bin levels, it is not possible to determine compliance at the time the 

manufacturer applies for and receives a certificate of conformity for a test group. Instead, 

EPA requires the manufacturer to make a good faith demonstration in the certification 

application that vehicles in the test group will both 1) comply throughout their useful life 

with the emissions bin assigned, and 2) contribute to fleetwide compliance with the Tier 

2 average when the year is over. EPA issues a certificate for the vehicles included in the 

test group based on this demonstration, and includes a condition in the certificate that if 

the manufacturer does not comply with the fleet average, then production vehicles from 

that test group will be treated as not covered by the certificate to the extent needed to 

bring the manufacturer’s fleet average into compliance with Tier 2. 

The certification process often occurs several months prior to production and 

manufacturer testing may occur months before the certificate is issued. The certification 

process for the Tier 2 program is an efficient way for manufacturers to conduct the 

needed testing well in advance of certification, and to receive the needed certificates in a 

time frame which allows for the orderly production of vehicles. The use of a condition 

on the certificate has been an effective way to ensure compliance with the Tier 2 fleet 

average. 

 EPA is proposing to similarly condition each certificate of conformity for the 

GHG program upon a manufacturer's good faith demonstration of compliance with the 

manufacturer’s fleetwide average CO2 standard. The following discussion explains how 

EPA proposes to integrate the proposed vehicle certification program into the existing 

certification program. 

a. Compliance Plans 

EPA is proposing that manufacturers submit a compliance plan to EPA prior to 

the beginning of the model year and prior to the certification of any test group. This plan 

would include the manufacturer's estimate of its footprint-based standard (Section III.B), 

along with a demonstration of compliance with the standard based on projected modellevel CO2 emissions, and production estimates. Manufacturers would submit the same 

information to NHTSA in the pre-model year report required for CAFE compliance. 

However, the GHG compliance plan could also include additional information relevant 

only to the EPA program. For example, manufacturers seeking to take advantage of air 

conditioning or other credit flexibilities (Section III.C) would include these in their 

compliance demonstration. Similarly, the compliance demonstration would need to 

include a credible plan for addressing deficits accrued in prior model years. EPA would 

review the compliance plan for technical viability and conduct a certification preview 

 

67 Initially in-use standards were different from the bin level determined at certification as the useful life 

level. The current in-use standards, however, are the same as the bin levels. In all cases, the bin level, 

reflecting useful life levels, has been used for determining compliance with the fleet average. 
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discussion with the manufacturer. EPA would view the compliance plan as part of the 

manufacturer's good faith demonstration, but understands that initial projections can vary 

considerably from the reality of final production and emission results. EPA requests 

comment on the proposal to evaluate manufacturer compliance plans prior to the 

beginning of model year certification. EPA also requests comment on what criteria the 

agency should use to evaluate the sufficiency of the plan and on what steps EPA should 

take if it determines that a plan is unlikely to offset a deficit. 

b. Certification Test Groups and Test Vehicle Selection 

Manufacturers currently divide their fleet into "test groups" for certification 

purposes. The test group is EPA's unit of certification; one certificate is issued per test 

group. These groupings cover vehicles with similar emission control system designs 

expected to have similar emissions performance.68 The factors considered for 

determining test groups include combustion cycle, engine type, engine displacement, 

number of cylinders and cylinder arrangement, fuel type, fuel metering system, catalyst 

construction and precious metal composition, among others. Vehicles having these 

features in common are generally placed in the same test group.69 Cars and trucks may be 

included in the same test group as long as they have similar emissions performance 

(manufacturers frequently produce cars and trucks that have identical engine designs and 

emission controls). 

EPA is proposing to retain the current Tier 2 test group structure for cars and light 

trucks in the certification requirements for CO2. At the time of certification, 

manufacturers would use the CO2 emission level from the Tier 2 Emission Data Vehicle 

as a surrogate to represent all of the models in the test group. However, following 

certification further testing would generally be required for compliance with the fleet 

average CO2 standard as described below. EPA's issuance of a certificate would be 

conditioned upon the manufacturer's subsequent model level testing and attainment of the 

actual fleet average. Further discussion of these requirements is presented in Section 

III.E.6. 

 

 EPA recognizes that the Tier 2 test group criteria do not necessarily relate to CO2

emission levels. For instance, while some of the criteria, such as combustion cycle, 

engine type and displacement, and fuel metering, may have a relationship to CO2

emissions, others, such as those pertaining to the catalyst, may not. In fact, there are 

many vehicle design factors that impact CO2 generation and emission but are not 

included in EPA's test group criteria.70 Most important among these may be vehicle 

weight, horsepower, aerodynamics, vehicle size, and performance features. 

 

68 40 CFR 86.1827-01. 

69 EPA provides for other groupings in certain circumstances, and can establish its own test groups in cases 

where the criteria do not apply. 40 CFR 86.1827-01(b), (c) and (d). 

70 EPA noted this potential lack of connection between fuel economy testing and testing for emissions 

standard purposes when it first adopted fuel economy test procedures. See 41 FR at 38677 (Sept. 10, 

1976). 
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 EPA considered, but is not proposing, a requirement for separate CO2 test groups 

established around criteria more directly related to CO2 emissions. Although CO2- 

specific test groups might more consistently predict CO2 emissions of all vehicles in the 

test group, the addition of a CO2 test group requirement would greatly increase the preproduction certification burden for both manufacturers and EPA. For example, a current 

Tier 2 test group would need to be split into two groups if automatic and manual 

transmissions models had been included in the same group. Two- and four-wheel drive 

vehicles in a current test group would similarly require separation, as would weight 

differences among vehicles. This would at least triple the number of test groups. EPA 

believes that the added burden of creating separate CO2 test groups is not warranted or 

necessary to maintain an appropriately rigorous certification program because the test 

group data are later replaced by model specific data which are used as the basis for 

determining compliance with a manufacturer’s fleet average standard. 

EPA believes that the current test group concept is appropriate for N20 and CH4

because the technologies that would be employed to control N2O and CH4 emissions 

would generally be the same as those used to control the criteria pollutants. 

As just discussed, the “worst case” vehicle a manufacturer selects as the 

Emissions Data Vehicle to represent a test group under Tier 2 (40 CFR 86.1828-01) may 

not have the highest levels of CO2 in that group. For instance, there may be a heavier, 

more powerful configuration that would have higher CO2, but may, due to the way the 

catalytic converter has been matched to the engine, actually have lower NOX, CO, PM or 

HC. 

 Therefore, in lieu of a separate CO2-specific test group, EPA considered requiring 

manufacturers to select a CO2 test vehicle from within the Tier 2 test group that would be 

expected, based on good engineering judgment, to have the highest CO2 emissions within 

that test group. The CO2 emissions results from this vehicle would be used to establish 

an in-use CO2 emission standard for the test group. The requirement for a separate, worst 

case CO2 vehicle would provide EPA with some assurance that all vehicles within the test 

group would have CO2 emission levels at or below those of the selected vehicle, even if 

there is some variation in the CO2 control strategies within the test group (such as 

different transmission types). Under this approach, the test vehicle might or might not be 

the same one that would be selected as worst case for criteria pollutants. Thus, 

manufacturers might be required to test two vehicles in each test group, rather than a 

single vehicle. This would represent an added timing burden to manufacturers because 

they might need to build additional test vehicles at the time of certification that 

previously weren't required to be tested. 

 Instead, EPA is proposing to require a single Emission Data Vehicle that would 

represent the test group for both Tier 2 and CO2 certification. The manufacturer would be 

allowed to initially apply the Emission Data Vehicle’s CO2 emissions value to all models 

in the test group, even if other models in the test group are expected to have higher CO2

emissions. However, as a condition of the certificate, this surrogate CO2 emissions value 

would generally be replaced with actual, model-level CO2 values based on results from 
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CAFE testing that occurs later in the model year. This model level data would become 

the official certification test results (as per the conditioned certificate) and would be used 

to determine compliance with the fleet average. Only if the test vehicle is in fact the 

worst case CO2 vehicle for the test group could the manufacturer elect to apply the 

Emission Data Vehicle emission levels to all models in the test group for purposes of 

calculating fleet average emissions. Manufacturers would be unlikely to make this 

choice, because doing so would ignore the emissions performance of vehicle models in 

their fleet with lower CO2 emissions and would unnecessarily inflate their CO2 fleet 

average. Testing at the model level already occurs and data is already being submitted to 

EPA for CAFE and labeling purposes, so it would be an unusual situation that would 

cause a manufacturer to ignore these data and choose to accept a higher CO2 fleet 

average. 

 EPA requests comment regarding whether the Tier 2 test group can adequately 

represent CO2 emissions for certification purposes, and whether the Emission Data 

Vehicle's CO2 emission level is an appropriate surrogate for all vehicles in a test group at 

the time of certification, given that the certificate would be conditioned upon additional 

model level testing occurring during the year (see Section III.E.6) and that the surrogate 

CO2 emission values would be replaced with model-level emissions data from those tests. 

Comments should also address EPA's desire to minimize the up-front pre-production 

testing burden and whether the proposed efficiencies would be balanced by the 

requirement to test all model types in the fleet by the conclusion of the model year in 

order to establish the fleet average CO2 levels. 

 There are two standards that the manufacturer would be subject to, the fleet 

average standard and the in-use standard for the useful life of the vehicle. Compliance 

with the fleet average standard is based on production-weighted averaging of the test data 

that applies for each model. For each model, the in-use standard is set at 10% higher than 

the level used for that model in calculating the fleet average. The certificate would cover 

both of these standards, and the manufacturer would have to demonstrate compliance 

with both of these standards for purposes of receiving a certificate of conformity. The 

certification process for the in-use standard is discussed below in Section III.E.4. 

 

 c. Certification Testing Protocols and Procedures

To be consistent with CAFE, EPA proposes to combine the CO2 emissions results 

from the FTP and HFET tests using the same calculation method used to determine fuel 

economy for CAFE purposes. This approach is appropriate for CO2 because CO2 and 

fuel economy are so closely related. Other than the fact that fuel economy is calculated 

using a harmonic average and CO2 emissions can be calculated using a conventional 

average, the calculation methods are very similar. The FTP CO2 data will be weighted at 

55%, and the highway CO2 data at 45%, and then averaged to determine the combined 

number. See Section III.B.1 for more detailed information on CO2 test procedures, 

Section III.C.1on Air Conditioning Emissions, and Section III.B.6 for N2O and CH4 test 

procedures. 
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For the purposes of compliance with the fleet average and in-use standards, the 

emissions measured from each test vehicle will include hydrocarbons (HC) and carbon 

monoxide (CO), in addition to CO2. All three of these exhaust constituents are currently 

measured and used to determine the amount of fuel burned over a given test cycle using a 

“carbon balance equation” defined in the regulations, and thus measurement of these is an 

integral part of current fuel economy testing. As explained in Section III.C, it is 

important to account for the total carbon content of the fuel. Therefore the carbon-related 

combustion products HC and CO must be included in the calculations along with CO2. 

CO emissions are adjusted by a coefficient that reflects the carbon weight fraction (CWF) 

of the CO molecule, and HC emissions are adjusted by a coefficient that reflects the CWF 

of the fuel being burned (the molecular weight approach doesn’t work since there are 

many different hydrocarbons being accounted for). Thus, EPA is proposing that the 

carbon-related exhaust emissions of each test vehicle be calculated according to the 

following formula, where HC, CO, and CO2 are in units of grams per mile: 

carbon-related exhaust emissions (grams/mile) = CWF*HC + 1.571*CO + CO2

 

As part of the current CAFE and Tier 2 compliance programs, EPA selects a 

subset of vehicles for confirmatory testing at its National Vehicle and Fuel Emissions 

Laboratory. The purpose of confirmatory testing is to validate the manufacturer’s 

emissions and/or fuel economy data. Under this proposal, EPA would add CO2, N2O, 

and CH4 to the emissions measured in the course of Tier 2 and CAFE confirmatory 

testing. The emission values measured at the EPA laboratory would continue to stand as 

official, as under existing regulatory programs. 

As is the current practice with fuel economy testing, if during EPA’s confirmatory 

testing the EPA CO2 value differs from the manufacturer's value by more than 3%, 

manufacturers could request a re-test. Also as with current practice, the results of the retest would stand as official, even if they differ from the manufacturer value by more than 

3%. EPA is proposing to allow a re-test request based on a 3% or greater disparity since a 

manufacturer's fleet average emissions level would be established on the basis of model 

level testing only (unlike Tier 2 for which a fixed bin standard structure provides the 

opportunity for a compliance buffer). EPA requests comment on whether the 3% value 

currently used during CAFE confirmatory testing is appropriate and should be retained 

under the proposed GHG program. 

 4. Useful Life Compliance

Section 202(a)(1) of the CAA requires emission standards to apply to vehicles 

throughout their statutory useful life, as further described in Section III.A. For emission 

programs that have fleet average standards, such as Tier 2 and the proposed CO2

standards, the useful life requirement applies to individual vehicles rather than to the fleet 

average standard. For example, in Tier 2 the useful life requirements apply to the 

individual emission standard levels or “bins” that the vehicles are certified to, not the 

fleet average standard. For Tier 2, the useful life requirement is 10 years or 120,000 

miles with an optional 15 year or 150,000 mile provision. For each model, the proposed 
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CO2 standards in-use are the model specific levels used in calculating the fleet average, 

adjusted to be 10% higher. EPA is proposing the 10% adjustment factor to provide some 

margin for production and test-to-test variability that could result in differences between 

initial model-level emission results used in calculating the fleet average and any 

subsequent in-use testing. EPA requests comment on whether a separate in-use standard 

is an appropriate means of addressing issues of variability and whether 10% is an 

appropriate adjustment. 

This in-use standard would apply for the same useful life period as in Tier 2. 

Section 202 (i) (3) (D) of the CAA allows EPA to adopt useful life periods for light duty 

vehicles and light-duty trucks which differ from those in section 202(d). Similar to Tier 2, 

the useful life requirements would be applicable to the model-level CO2 certification 

values (similar to the Tier 2 bins), not to the fleet average standard. 

 

 EPA believes that the useful life period established for criteria pollutants under 

Tier 2 is also appropriate for CO2. Data from EPA’s current in-use compliance test 

program indicate that CO2 emissions from current technology vehicles increase very little 

with age and in some cases may actually improve slightly. The stable CO2 levels are 

expected because unlike criteria pollutants, CO2 emissions in current technology vehicles 

are not controlled by after treatment systems that may fail with age. Rather, vehicle CO2

emission levels depend primarily on fundamental vehicle design characteristics that do 

not change over time. Therefore, vehicles designed for a given CO2 emissions level 

would be expected to sustain the same emissions profile over their full useful life. 

The CAA requires emission standards to be applicable for the vehicle’s full useful 

life. Under Tier 2 and other vehicle emission standard programs, EPA requires 

manufacturers to demonstrate at the time of certification that the new vehicles being 

certified will continue to meet emission standards throughout their useful life. EPA 

allows manufacturers several options for predicting in-use deterioration, including full 

vehicle testing, bench-aging specific components, and application of a deterioration 

factor based on data and/or engineering judgment. 

In the specific case of CO2, EPA does not currently anticipate notable 

deterioration and is therefore proposing that an assigned deterioration factor be applied at 

the time of certification. EPA is further proposing an additive assigned deterioration 

factor of zero, or a multiplicative factor of one. EPA anticipates that the deterioration 

factor would be updated from time to time, as new data regarding emissions deterioration 

for CO2 are obtained and analyzed. Additionally, EPA may consider technology-specific 

deterioration factors, should data indicate that certain CO2 control technologies 

deteriorate differently than others. 

During compliance plan discussions prior to the beginning of the certification 

process, EPA would explore with each manufacturer any new technologies that could 

warrant use of a different deterioration factor. Manufacturers would not be allowed to 

use the assigned deterioration factor but rather would be required to establish an 

appropriate factor for any vehicle model determined likely to experience increases in CO2
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emissions over the vehicle’s useful life. If such an instance were to occur, EPA is also 

proposing to allow manufacturers to use the whole-vehicle mileage accumulation method 

currently offered in EPA's regulations. 

 EPA requests comments on the proposal to allow manufacturers to use an EPAassigned deterioration factor for CO2 useful life compliance, and to set that factor at zero 

(additive) or one (multiplicative). Particularly helpful would be data from in-use vehicles 

that demonstrate the rate of change in CO2 emissions over a vehicle's useful life, 

separated according to vehicle technology. 

 

 N2O and CH4 emissions are directly affected by vehicle emission control systems. 

Any of the durability options offered under EPA's current compliance program can be 

used to determine how emissions of N2O and CH4 change over time. 

 

 a. Ensuring Useful Life Compliance 

 The CAA requires a vehicle to comply with emission standards over its regulatory 

useful life and affords EPA broad authority for the implementation of this requirement. 

As such, EPA has authority to require a manufacturer to remedy any noncompliance 

issues. The remedy can range from the voluntary or mandatory recall of any 

noncompliant vehicles to the recalculation of a manufacturers fleet average emissions 

level. . This provides manufacturers with a strong incentive to design and build 

complying vehicles. 

 

Currently, EPA regulations require manufacturers to conduct in-use testing as a 

condition of certification. Specifically, manufacturers must commit to later procure and 

test privately-owned vehicles that have been normally used and maintained. The vehicles 

are tested to determine the in-use levels of criteria pollutants when they are in their first 

and third years of service. This testing is referred to as the In-Use Verification Program 

(IUVP) testing, which was first implemented as part of EPA’s CAP 2000 certification 

program.

71 The emissions data collected from IUVP serves several purposes. It 

provides EPA with annual real-world in-use data representing the majority of certified 

vehicles. EPA uses IUVP data to identify in-use problems, validate the accuracy of the 

certification program, verify the manufacturer’s durability processes, and support 

emission modeling efforts. Manufacturers are required to test low mileage and high 

mileage vehicles over the FTP and US06 test cycles. They are also required to provide 

evaporative emissions and on-board diagnostics (OBD) data. 

Manufacturers are required to provide data for all regulated criteria pollutants. 

Some manufacturers voluntarily submit CO2 data as part of IUVP. EPA is proposing that 

for IUVP testing, all manufacturers will provide emission data for CO2 and also for N2O 

and CH4. EPA is also proposing that manufacturers perform the highway test cycle as 

part of IUVP. Since the proposed CO2 standard reflects a combined value of FTP and 

highway results, it is necessary to include the highway emission test in IUVP to enable 

 

71 64 FR 23906, May 4, 1999. 
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EPA to compare an in-use CO2 level with a vehicle’s in-use standard. EPA requests 

comments on adding the highway test cycle as part of the IUVP requirements. 

Another component of the CAP 2000 certification program is the In-Use 

Confirmatory Program (IUCP). This is a manufacturer-conducted recall quality in-use 

test program that can be used as the basis for EPA to order an emission recall. In order to 

qualify for IUCP, there is a threshold of 1.30 times the certification emission standard 

and an additional requirement that at least 50% of the test vehicles for the test group fail 

for the same pollutant. EPA is proposing to exclude IUVP data for CO2, N20, and CH4

emissions from the IUCP thresholds. At this time, EPA does not have sufficient data to 

determine if the existing thresholds are appropriate or even applicable to those emissions. 

Once EPA can gather more data from the IUVP program and from EPA’s internal 

surveillance program described below, EPA will reassess the need to exclude IUCP 

thresholds, and if warranted, propose a separate rulemaking establishing IUCP threshold 

criteria which may include CO2, N2O, and CH4 emissions. EPA requests comment on the 

proposal to exclude CO2, N2O, and CH4 from the IUCP threshold. 

 EPA has also administered its own in-use testing program for light-duty vehicles 

under authority of section 207(c) of the CAA for more than 30 years. In this program, 

EPA procures and tests representative privately owned vehicles to determine whether 

they are complying with emission standards. When testing indicates noncompliance, 

EPA works with the manufacturer to determine the cause of the problem and to conduct 

appropriate additional testing to determine its extent or the effectiveness of identified 

remedies. This program operates in conjunction with the IUVP program and other 

sources of information to provide a comprehensive picture of the compliance profile for 

the entire fleet and address compliance problems that are identified. EPA proposes to 

add CO2, N2O, and CH4 to the emissions measurements it collects during surveillance 

testing. 

b. In-Use Compliance Standard 

For Tier 2, the in-use standard and the certification standard are the same. In-use 

compliance for an individual vehicle is determined by comparing the vehicle’s in-use 

emission results with the emission standard levels or “bin” to which the vehicle is 

certified rather than to the Tier 2 fleet average standard for the manufacturer. This is 

because as part of a fleet average standard, individual vehicles can be certified to various 

emission standard levels, which could be higher or lower than the fleet average standard. 

Thus, comparing an individual vehicle to the fleet average, where that vehicle was 

certified to an emission level that could be different than the fleet average level, would be 

inappropriate. 

This would also be true for the proposed CO2 fleet average standard. Therefore, 

to ensure that an individual vehicle complies with the proposed CO2 standards in-use, it is 

necessary to compare the vehicle’s in-use CO2 emission result with the appropriate 

model-level certification CO2 level used in determining the manufacturer’s fleet average 

result. 
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There is a fundamental difference between the proposed CO2 standards and Tier 2 

standards. For Tier 2, the certification standard is one of eight different emission levels, 

or “bins,” whereas for the proposed CO2 fleet average standard, the certification standard

is the model-level certification CO2 result. The Tier 2 fleet average standard is calculated 

using the “bin” emission level or standard, not the actual certification emission level of 

the certification test vehicle. So no matter how low a manufacturer’s actual certification 

emission results are, the fleet average is still calculated based on the “bin” level rather 

than the lower certification result. In contrast, EPA is proposing that the CO2 fleet 

average standard would be calculated using the actual vehicle model-level CO2 values 

from the certification test vehicles. With a known certification emission standard, such 

as the Tier 2 “bins,” manufacturers typically attempt to over-comply with the standard to 

give themselves some cushion for potentially higher in-use testing results due to 

emissions performance deterioration and/or variability that could result in higher 

emission levels during subsequent in-use testing. For our proposed CO2 standards, the 

certification standard is the actual certification vehicle test result, thus manufacturers 

cannot over comply since the certification test vehicle result will always be the value 

used in determining the CO2 fleet average. If the manufacturer attempted to design the 

vehicle to achieve a lower CO2 value, similar to Tier 2 for in-use purposes, the new lower 

CO2 value would simply become the new certification standard. 

The CO2 fleet average standard is based on the performance of pre-production 

technology that is representative of the point of production, and while there is expected to 

be limited if any deterioration in effectiveness for any vehicle during the useful life, the 

fleet average standard does not take into account the test to test variability or production 

variability that can affect in-use levels. Therefore, EPA believes that unlike Tier 2, it is 

necessary to have a different in-use standard for CO2 to account for these variabilities. 

EPA is proposing to set the in-use standard at 10% higher than the appropriate modellevel certification CO2 level used in determining the manufacturer’s fleet average result. 

As described above, manufacturers typically design their vehicles to emit at 

emission levels considerably below the standards. This intentional difference between 

the actual emission level and the emission standard is referred to as “certification 

margin,” since it is typically the difference between the certification emission level and 

the emission standard. The certification margin can provide manufacturers with some 

protection from exceeding emission standards in-use, since the in-use standards are 

typically the same as the certification standards. For Tier 2, the certification margin is 

the delta between the specific emission standard level, or “bin,” to which the vehicle is 

certified, and the vehicle’s certification emission level. 

 Since the level of the fleet average standard does not reflect this kind of 

variability, EPA believes it is appropriate to set an in-use standard that provides 

manufacturers with an in-use compliance factor of 10% that will act as a surrogate for a 

certification margin. The factor would only be applicable to CO2 emissions, and would 

be applied to the model-level test results that are used to establish the model-level in-use 

standard. 
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118

 

If the in-use emission result for the vehicle exceeds the model-level CO2

certification result multiplied by the in-use compliance factor of 10%, then the vehicle 

would have exceeded the in-use emission standard. The in-use compliance factor would 

apply to all in-use compliance testing including IUVP, selective enforcement audits, and 

EPA’s internal test program. 

The intent of the separate in-use standard, based on a 10% compliance factor 

adjustment, is to provide a reasonable margin such that vehicles are not automatically 

deemed as exceeding standards simply because of normal variability in test results. EPA 

has some concerns however that this in-use compliance factor could be perceived as 

providing manufacturers with the ability to design their fleets to generate CO2 emissions 

up to 10% higher than the actual values they use to certify and to calculate the year end 

fleet average value that determines compliance with the fleet average standard. This 

concern provides additional rationale for requiring FTP and HFET IUVP data for CO2

emissions to ensure that in-use values are not regularly 10% higher than the values used 

in the fleet average calculation. If in the course of reviewing a manufacturer’s IUVP data 

it becomes apparent that a manufacturer’s CO2 results are consistently higher than the 

values used for certification, EPA would discuss the matter with the manufacturer and 

consider possible resolutions such as changes to ensure that the emissions test data more 

accurately reflects the emissions level of vehicles at the time of production, increased 

EPA confirmatory testing, and other similar measures. 

 EPA selected a value of 10% for the in-use standard based on a review of EPA’s 

fuel economy labeling and CAFE confirmatory test results for the past several vehicle 

model years. The EPA data indicate that it is common for test variability to range 

between three to six percent and only on rare occasions to exceed 10%. EPA believes 

that a value of 10% should be sufficient to account for testing variability and any 

production variability that a manufacturer may encounter. EPA considered both higher 

and lower values. The Tier 2 fleet as a whole, for example, has a certification margin 

approaching 50%.72 However, there are some fundamental differences between CO2

emissions and other criteria pollutants in the magnitude of the pollutants. Tier 2 NMOG 

and NOX emission standards are hundredths of a gram per mile (e.g., 0.07 g/mi NOX & 

0.09 g/mi NMOG), whereas the CO2 standards are four orders of magnitude greater (e.g., 

250 g/mi). Thus EPA does not believe it is appropriate to consider a value on the order 

of 50 percent. In addition, little deterioration in emissions control is expected in-use. 

The adjustment factor addresses only one element of what is usually built into a 

compliance margin. 

EPA requests comments regarding a proposed in-use standard that uses an in-use 

compliance factor. Specifically, is a factor the best way to address the technical and 

other feasibility of the in-use standard ; is 10% the appropriate factor; can EPA expect 

variability to decrease as manufacturing experience increases, in which case would it be 

 

72 See pages 39-41 of EPA’s Vehicle and Engine Compliance Activities 2007 Progress Report (EPA-420-

R-08-011) published in October, 2008. This document is available electronically at 

http://epa.gov/otaq/about/420r08011.pdf
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appropriate for the in-use compliance factor of 10% to decrease over time? EPA 

especially requests any data to support such comments. 

5. Credit Program Implementation

As described in Section III.E.2 above, for each manufacturer’s model year 

production, EPA is proposing that the manufacturer would average the CO2 emissions 

within each of the two averaging sets (passenger cars and trucks) and compare that with 

its respective fleet average CO2 standards (which in turn would have been determined 

from the appropriate footprint curve applicable to that model year). In addition to this 

within-company averaging, EPA is proposing that when a manufacturer’s fleet average 

CO2 emissions of vehicles produced in an averaging set over-complies compared to the 

applicable fleet average standard, the manufacturer could generate credits that it could 

save for later use (banking) or could transfer to another manufacturer (trading). Section 

III.C discusses opportunities that EPA is proposing for manufacturers to earn additional 

credits, beyond those simply calculated by “over-achieving” their applicable standard. 

Implementation of the credit program generally involves two steps: calculation of the 

credit amount and reporting the amount and the associated data and calculations to EPA. 

Of the various credit programs being proposed by EPA, there are two broad types. 

One type of credit directly lowers a manufacturer’s actual fleet average by virtue of being 

applied to the methodology for calculating the fleet average emissions. Examples of this 

type of credit include the credits available for alternative fuel vehicles and for advanced 

technology vehicles. The second type of credit is independent of the calculation of a 

manufacturer’s fleet average. Rather than giving credit by lowering a manufacturer’s 

fleet average via a credit mechanism, these credits (in megagrams) are calculated 

separately and are simply added to the manufacturer’s overall “bank” of credits (or 

debits). Using a fictional example, the remainder of this section will step through the 

different types of credits and show where and how they are calculated and how they 

impact a manufacturer’s available credits. 

a. Basic Credits for a Fleet with Average CO2 Emissions Below the Standard 

Basic credits are earned by doing better than the applicable standard. 

Manufacturers calculate their standards (separate standards are calculated for cars and 

trucks) using the footprint-based equations described in Section III.B. A manufacturer’s 

actual end-of-year fleet average CO2 is calculated similarly to the way in which CAFE 

values are currently calculated; in fact, the regulations are essentially identical. The 

current CAFE calculation methods are in 40 CFR Part 600. EPA is proposing to amend 

key subparts and sections of Part 600 to require that fleet average CO2 be calculated in a 

manner parallel to the way CAFE values are calculated. First manufacturers would 

determine a CO2-equivalent value for each model type. The CO2-equivalent value is a 

summation of the carbon-containing constituents of the exhaust emissions, with each 

weighted by a coefficient that reflects the carbon weight fraction of that constituent. For 

gasoline and diesel vehicles this simply involves measurement of total hydrocarbons and 

carbon monoxide in addition to CO2, but becomes somewhat more complex for 
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alternative fuel vehicles due to the different nature of their exhaust emissions. For 

example, for ethanol-fueled vehicles, the emission tests must measure ethanol, methanol, 

formaldehyde, and acetaldehyde in addition to CO2. However, all these measurements 

are necessary to determine fuel economy and thus no new testing or data collection would 

be required. Second, manufacturers would calculate a fleet average by weighting the 

CO2-equivalent value for each model type by the production of that model type, as they 

currently do for the CAFE program. Again, this would be done separately for cars and 

trucks. Finally, the manufacturer would compare the calculated standard with the 

average that is actually achieved to determine the credits (or debits). Both the 

determination of the applicable standard and the actual fleet average would be done after 

the model year is complete and using final model year production data. 

Consider a basic example where Manufacturer “A” has calculated a car standard 

of 300 grams/mile and a fleet average of 290 grams/mile (Figure III.E.5-1). Further 

assume that the manufacturer produced 500,000 cars. The credit is calculated by taking 

the difference between the standard and the fleet average (300-290=10) and multiplying it 

by the production of 500,000. This result is then multiplied by the lifetime vehicle miles 

travelled (for cars this is 190,971 miles), then finally divided by 1,000,000 to convert 

from grams to total megagrams. The result is the number of CO2 megagrams of credit (or 

deficit, if the manufacturer was not able to comply with the fleet average standard) 

generated by the manufacturer’s car fleet. In this example, the result is 954,855 

megagrams. 
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121

Summary for Manufacturer A: Earning Basic Credits 

 CO2 Totals 

Total production Conventional: 500,000 290 g/mi 500,000 

Fleet average 

standard 

 300 g/mi 

Fleet average 290 g/mi 

Credits [(300-290) × 500,000 × 190,971] ÷ 

1,000,000 

 = 954,855 Mg 

Figure III.E.5-1 Summary for Manufacturer A: Earning Basic Credits 
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122

b. Advanced Technology Credits 

 Advanced technology credits directly impact a manufacturer’s fleet average, thus 

increasing the amount of credits they earn (or reducing the amount of debits that would 

otherwise accrue). To earn these credits, manufacturers that produce electric vehicles, 

plug-in hybrid electric vehicles, or fuel cell electric vehicles would include these vehicles 

in the fleet average calculation with their model type emission values (0 g/m for electric 

vehicles and fuel cell electric vehicles, and a measured CO2 value for plug-in hybrid 

electric vehicles), but would apply the proposed multiplier of 2.0 to the production 

volume of each of these vehicles. This approach would thus enhance the impact that each 

of these low-CO2 advanced technology vehicles has on the manufacturer’s fleet average. 

 EPA is proposing to limit availability of advanced technology credits to the 

technologies noted above, with the additional limitation that the vehicles must be 

certified to Tier 2 Bin 5 emission standards or cleaner (this obviously applies primarily to 

plug-in hybrid electric vehicles). EPA is proposing to use the following definitions to 

determine which vehicles are eligible for the advanced technology credits: 

• Electric vehicle means a motor vehicle that is powered solely by an electric motor 

drawing current from a rechargeable energy storage system, such as from storage 

batteries or other portable electrical energy storage devices, including hydrogen 

fuel cells, provided that: 

o (1) Recharge energy must be drawn from a source off the vehicle, such as 

residential electric service; and 

o (2) The vehicle must be certified to the emission standards of Bin #1 of 

Table S04-1 in paragraph (c)(6) of §86.1811. 

• Fuel cell electric vehicle means a motor vehicle propelled solely by an electric 

motor where energy for the motor is supplied by a fuel cell. 

• Fuel cell means an electrochemical cell that produced electricity via the reaction 

of a consumable fuel on the anode with an oxidant on the cathode in the presence 

of an electrolyte. 

• Plug-in hybrid electric vehicle (PHEV) means a hybrid electric vehicle that: (1) 

has the capability to charge the battery from an off-vehicle electric source, such 

that the off-vehicle source cannot be connected to the vehicle while the vehicle is 

in motion, and (2) has an equivalent all-electric range of no less than 10 miles. 

With some simplifying assumptions, assume that 25,000 of Manufacturer A’s 

fleet are now plug-in hybrid electric vehicles with CO2 emissions of 100 g/mi, and the 

remaining 475,000 are conventional technology vehicles with average CO2 emissions of 

290 grams/mile. By applying the factor of 2.0 to the electric vehicle production numbers 

in the appropriate places in the fleet average calculation formula Manufacturer A now has 

more than 2.6 million credits (Figure III.E.5-2). Without the use of the multiplier 

Manufacturer A’s fleet average would be 281 instead of 272, which would generate about 

1.8 million credits. 
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Summary for Manufacturer A: 

Earning Basic and Advanced Technology Credits 

 CO2 Totals 

Total production Conventional: 475,000 290 g/mi 500,000 

 PHEV: 25,000 100 g/mi 

Fleet average 

standard 

 300 g/mi 

Fleet average [(475,000 × 290) + ((2x25,000) × 100)] 

÷ [475,000+(2×25,000)] 

272 g/mi 

Credits [(300-272) × 500,000 × 190,971] 

÷ 1,000,000 

 = 2,673,594 

Mg 

Figure III.E.5-2 Summary for Manufacturer A: Earning Basic and Advanced Technology 

Credits 
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124

c. Flexible-Fuel Vehicle Credits 

As noted in Section III.C, treatment of flexible-fuel vehicle (FFV) credits differs 

between 2012 to 2015 and 2016 and later. For the 2012 through 2015 model years the 

FFV credits will be calculated as they are in the CAFE program for the same model 

years, except that formulae in the regulations would be modified as needed to do the 

calculations in terms of grams per mile of CO2 rather than miles per gallon. Like the 

advanced technology vehicle credits, these credits are integral to the fleet average 

calculation, but rather than crediting the vehicles with an artificially inflated quantity as 

in the advanced technology credit program described above, the FFV credit program 

allows the vehicles to be represented by artificially reduced emissions. To use this credit 

program, the CO2 emissions of FFVs will be represented by the average of two things: 

the CO2 emissions while operating on gasoline, and the CO2 emissions operating on the 

alternative fuel multiplied by 0.15. 

For example, Manufacturer A now makes 30,000 FFVs with CO2 emissions of 

280 g/mi using gasoline and 260 g/mi using ethanol. The CO2 emissions that would 

represent the FFVs in the fleet average calculation would be calculated as follows: 

FFV emissions = (280 + 260×0.15) ÷ 2 = 160 g/mi 

Including these FFVs with the applicable credit in Manufacturer A’s fleet average, as 

shown below in Figure III.E.5-3, further reduces the fleet average to 256 grams/mile and 

increases the manufacturer’s credits to about 4.2 million megagrams. 
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125

Summary for Manufacturer A: 

Earning Basic, Advanced Technology, and Flexible Fuel Vehicle Credits 

 CO2 Totals 

Total production Conventional: 445,000 290 g/mi 500,000 

 PHEV: 25,000 100 g/mi 

 FFV: 30,000 160 g/mi 

Fleet average 

standard 

 300 g/mi 

Fleet average [(445,000 × 290) + ((2x25,000) × 100) + 

30,000 x 160] 

÷ [475,000+(2×25,000)] 

256 g/mi 

Credits [(300-256) × 500,000 × 190,971] 

÷ 1,000,000 

 = 4,201,362 

Mg 

Figure III.E.5-3 Summary for Manufacturer A: Earning Basic and Advanced Technology, 

and Flexible Fuel Vehicle Credits 
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126

 In the 2016 and later model years the calculation of FFV emissions would be 

much the same except that the determination of the CO2 value to represent an FFV model 

type would be based upon the actual use of the alternative fuel and on actual CO2

emissions while operating on that fuel. EPA’s default assumption in the regulations is 

that the alternative fuel is used negligibly, and the CO2 value that would apply to an FFV 

by default would be the value determined for operation on conventional fuel. However, 

if the manufacturer believes that the alternative fuel is used in real-world driving and that 

accounting for this use could improve the fleet average, the manufacturer would have two 

options. First, the regulations would allow a manufacturer to request that EPA determine 

an appropriate weighting value for an alternative fuel to reflect the degree of use of that 

fuel in FFVs relative to real-world use of the conventional fuel. Section III.C describes 

how EPA might make this determination. Any value determined by EPA would be 

published via guidance letter to manufacturers, and that weighting value would be 

available for all manufacturers to use for that fuel. A second option proposed in the 

regulations would allow a manufacturer to determine the degree of alternative fuel use for 

their own vehicle(s), using a variety of potential methods. Both the method and the use 

of the final results would have to be approved by EPA before their use would be allowed. 

In either case, whether EPA supplies the weighting factors or the manufacturer 

determines them, the CO2 emissions of an FFV in 2016 and later would be as follows 

(assuming non-zero use of the alternative fuel): 

(W1×CO2conv)+(W2×CO2alt), 

where W1 and W2 are the proportion of miles driven using conventional fuel and 

alternative fuel, respectively, CO2conv is the CO2 value while using conventional fuel, 

and CO2alt is the CO2 value while using the alternative fuel. 

d. Dedicated Alternative Fuel Vehicle Credits 

Like the FFV credit program described above, these credits would be treated 

differently in the first years of the program than in the 2016 and later model years. In 

fact, these credits are essentially identical to the FFV credits except for two things: (1) 

there is no need to average CO2 values for gasoline and alternative fuel, and (2) in 2016 

and later there is no demonstration needed to get a benefit from the alternative fuel. The 

CO2 values are essentially determined the same way they are for FFVs operating on the 

alternative fuel. For the 2012 through 2015 model years the CO2 test results are 

multiplied by the credit adjustment factor of 0.15, and the result is production-weighted 

in the fleet average calculation. For example, assume that Manufacturer A now produces 

20,000 dedicated CNG vehicles with CO2 emissions of 220 grams/mile, in addition to the 

FFVs and PHEVs already included in their fleet (Figure III.E.5-4). Prior to the 2016 

model year the CO2 emissions representing these CNG vehicles would be 33 grams/mile 

(220 × 0.15). 
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Summary for Manufacturer A: 

Earning Basic, Advanced Technology, and Flexible Fuel Vehicle Credits 

 CO2 Totals 

Total production Conventional: 425,000 290 g/mi 500,000 

 PHEV: 25,000 100 g/mi 

 FFV: 30,000 160 g/mi 

 CNG: 20,000 33 g/mi 

Fleet average 

standard 

 300 g/mi 

Fleet average [(425,000 × 290) + ((2x25,000) × 100) + 

(30,000 × 160) + (20,000 × 33)] 

÷ [475,000+(2×25,000)] 

247 g/mi 

Credits [(300-247) × 500,000 × 190,971] 

÷ 1,000,000 

 = 5,060,732 

Mg 

Figure III.E.5-4 Summary for Manufacturer A: 

Earning Basic, Advanced Technology, and Flexible Fuel Vehicle Credits 
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The calculation for 2016 and later would be exactly the same except the 0.15 

credit adjustment factor would be removed from the equation, and the CNG vehicles 

would simply be production-weighted in the equation using their actual emissions value 

of 220 grams/mile instead of the “credited” value of 33 grams/mile. 

e. Air Conditioning Leakage Credits 

Unlike the credit programs described above, air conditioning-related credits do 

not affect the overall calculation of the fleet average. Whether a manufacturer generates 

zero air conditioning credits or many, the calculated fleet average remains the same. Air 

conditioning credits are calculated and added to any credits (or deficit) that results from 

the fleet average calculation. Thus, these credits can increase a manufacturer’s credit 

balance or offset a deficit, but their calculation is external to the fleet average calculation. 

As noted in Section III.C, manufacturers could generate credits for reducing the leakage 

of refrigerant from their air conditioning systems. To do this the manufacturer would 

identify an air conditioning system improvement, indicate that they intend to use the 

improvement to generate credits, and then calculate an annual leakage rate (grams/year) 

for that system based on the method defined by the proposed regulations. Air 

conditioning credits would be determined separately for cars and trucks using the car and 

truck-specific equations described in Section III.C. 

In order to put these credits on the same basis as the basic and other credits 

describe above, the air conditioning leakage credits would need to be calculated 

separately for cars and trucks. Thus, the resulting grams per mile credit determined from 

the appropriate car or truck equation would be multiplied by the lifetime VMT (190,971 

for cars; 221,199 for trucks), and then divided by 1,000,000 to get the total megagrams of 

CO2 credits generated by the improved air conditioning system. Although the 

calculations are done separately for cars and trucks, the total megagrams would be 

summed and then added to the overall credit balance maintained by the manufacturer. 

For example, assume that Manufacturer A has improved an air conditioning 

system that is installed in 250,000 cars and that the calculated leakage rate is 12 

grams/year. Assume that the manufacturer has also implemented a new refrigerant with a 

Global Warming Potential of 850. In this case the credit per air conditioning unit, 

rounded to the nearest gram per mile would be: 

[13.8 × [1 – (12/16.6 × 850/1430)] = 7.9 g/mi. 

Total megagrams of credits would then be: 

[ 7.9 × 250,000 × 190971 ] ÷ 1,000,000 = 377,168 Mg. 

These credits would be added directly to a manufacturer’s total balance; thus in 

this example Manufacturer A would now have, after consideration of all the above 

credits, a total of 5,437,900 Megagrams of credits. 
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f. Air Conditioning Efficiency Credits 

As noted in Section III.C.1.b, manufacturers could earn credits for improvements 

in air conditioning efficiency that reduce the impact of the air conditioning system on fuel 

consumption. These credits are similar to the air conditioning leakage credits described 

above, in that these credits are determined independently from the manufacturer’s fleet 

average calculation, and the resulting credits are added to the manufacturer’s overall 

balance for the respective model year. Like the air conditioning leakage credits, these 

credits can increase a manufacturer’s credit balance or offset a deficit, but their 

calculation is external to the fleet average calculation. 

In order to put these credits on the same basis as the basic and other credits 

describe above, the air conditioning leakage credits would need to be calculated 

separately for cars and trucks. Thus, the resulting grams per mile credit determined in the 

above equation would be multiplied by the lifetime VMT (190,971 for cars; 221,199 for 

trucks), and then divided by 1,000,000 to get the total megagrams of CO2 credits 

generated by the improved air conditioning system. Although the calculations are done 

separately for cars and trucks, the total megagrams can be summed and then added to the 

overall credit balance maintained by the manufacturer. 

As described in Section III.C, manufacturers would determine their credit based 

on selections from a menu of technologies, each of which provides a gram per mile credit 

amount. The credits would be summed for all the technologies implemented by the 

manufacturer, but could not exceed 5.7 grams per mile. Once this is done, the calculation 

is a straightforward translation of a gram per mile credit to total car or truck megagrams, 

using the same methodology described above. For example, if Manufacturer A 

implements enough technologies to get the maximum 5.7 grams per mile for an air 

conditioning system that sells 250,000 units in cars, the calculation of total credits would 

be as follows: 

[ 5.7 × 250,000 × 190971 ] ÷ 1,000,000 = 272,134 Mg. 

These credits would be added directly to a manufacturer’s total balance; thus in 

this example Manufacturer A would now have, after consideration of all the above 

credits, a total of 5,710,034 Megagrams of credits. 

g. Off-Cycle Technology Credits 

As described in Section III.C, these credits would be available for certain 

technologies that achieve real-world CO2 reductions that aren’t adequately captured on 

the city or highway test cycles used to determine compliance with the fleet average 

standards. Like the air conditioning credits, these credits are independent of the fleet 

average calculation. Section III.C.4 describes two options for generating these credits: 

either using EPA’s 5-cycle fuel economy labeling methodology, or if that method fails to 

capture the CO2-reducing impact of the technology, the manufacturer could propose and 
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130

use, with EPA approval, a different analytical approach to determining the credit amount. 

Like the air conditioning credits above, these credits would have to be determined 

separately for cars and trucks because of the differing lifetime mileage assumptions 

between cars and trucks. 

Using the 5-cycle approach would be relatively straightforward, and because the 

5-cycle formulae account for nationwide variations in driving conditions, no additional 

adjustments to the test results would be necessary. The manufacturer would simply 

calculate a 5-cycle CO2 value with the technology installed and operating and compare it 

with a 5-cycle CO2 value determined without the technology installed and/or operating. 

Existing regulations describe how to calculate 5-cycle fuel economy values, and the 

proposed regulations contain provisions that describe how to calculate 5-cycle CO2

values. The manufacturer would have to design a test program that accounts for vehicle 

differences if the technology is installed in different vehicle types, and enough data 

would have to be collected to address data uncertainty issues. A description of such a test 

program and the results would be submitted to EPA for approval. 

As noted in Section III.C.4, a manufacturer-developed testing, data collection and 

analysis program would require some additional EPA approval and oversight. Once the 

demonstration of the CO2 reduction of an off-cycle technology is complete, however, and 

the resulting value accounts for variations in driving, climate and other conditions across 

the country, the two approaches are treated fundamentally the same way and in a way that 

parallels the approach for determining the air conditioning credits described above. Once 

a gram per mile value is approved by the EPA, the manufacturer would determine the 

total credit value by multiplying the gram per mile per vehicle credit by the volume of 

vehicles with that technology and approved for use of the credit. This would then be 

multiplied by the lifetime vehicle miles for cars or trucks, whichever applies, and divided 

by 1,000,000 to obtain total Megagrams of CO2 credits. These credits would then be 

added to the manufacturer’s total balance for the given model year. Just like the above 

air conditioning case, an off-cycle technology that is demonstrated to achieve an average 

CO2 reduction of 4 grams/mile and that is installed in 175,000 cars would generate 

credits as follows: 

[ 4 × 175,000 × 190971 ] ÷ 1,000,000 = 133,680 Mg. 

h. End-of-Year Reporting 

In general, implementation of the averaging, banking, and trading (ABT) 

program, including the calculation of credits and deficits, would be accomplished via 

existing reporting mechanisms. EPA’s existing regulations define define how 

manufacturers calculate fleet average miles per gallon for CAFE compliance purposes, 

and EPA is proposing to modify these regulations to also require the parallel calculation 

of fleet average CO2 levels for car and light truck compliance categories. These 

regulations already require an end-of-year report for each model year, submitted to EPA, 

which details the test results and calculations that determine each manufacturer’s CAFE 

levels. EPA is proposing to require that this report also include fleet average CO2 levels. 
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In addition to requiring reporting of the actual fleet average achieved, this end-of-year 

report would also contain the calculations and data determining the manufacturer’s 

applicable fleet average standard for that model year. As under the existing Tier 2 

program, the report would be required to contain the fleet average standard, all values 

required to calculate the fleet average standard, the actual fleet average CO2 that was 

achieved, all values required to calculate the actual fleet average, the number of credits 

generated or debits incurred, all the values required to calculate the credits or debits, and 

the resulting balance of credits or debits. 

Because of the multitude of credit programs that are available, the end-of-year 

report will be required to have more data and a more defined and specific structure than 

the CAFE end–of-year report does today. Although requiring “all the data required” to 

calculate a given value should be inclusive, the proposed report would contain some 

requirements specific to certain types of credits. 

For advanced technology credits that apply to vehicles like electric vehicles and 

plug-in hybrid electric vehicles, manufacturers would be required to identify the number 

and type of these vehicles and the effect of these credits on their fleet average. The same 

would be true for credits due to flexible-fuel and alternative-fuel vehicles, although for 

2016 and later flexible-fuel credits manufacturers would also have to provide a 

demonstration of the actual use of the alternative fuel in-use and the resulting calculations 

of CO2 values for such vehicles. For air conditioning leakage credits manufacturers 

would have to include a summary of their use of such credits that would include which 

air conditioning systems were subject to such credits, information regarding the vehicle 

models which were equipped with credit-earning air conditioning systems, the production 

volume of these air conditioning systems, the leakage score of each air conditioning 

system generating credits, and the resulting calculation of leakage credits. Air 

conditioning efficiency reporting will be somewhat more complicated given the phase-in 

of the efficiency test, and reporting would have to detail compliance with the phase-in as 

well as the test results and the resulting efficiency credits generated. Similar reporting 

requirements would also apply to the variety of possible off-cycle credit options, where 

manufacturers would have to report the applicable technology, the amount of credit per 

unit, the production volume of the technology, and the total credits from that technology. 

Although it is the final end-of-year report, when final production numbers are 

known, that will determine the degree of compliance and the actual values of any credits 

being generated by manufacturers, EPA is also proposing that manufacturers be prepared 

to discuss their compliance approach and their potential use of the variety of credit 

options in pre-certification meetings that EPA routinely has with manufacturers. In 

addition, and in conjunction with a pre-model year report required under the CAFE 

program, the manufacturer would be required to submit projections of all of the elements 

described above. 

Finally, to the extent that there are any credit transactions, the manufacturer 

would have to detail in the end-of-year report documentation on all credit transactions 

that the manufacturer has engaged in. Information for each transaction would include: 
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the name of the credit provider, the name of the credit recipient, the date the transfer 

occurred, the quantity of credits transferred, and the model year in which the credits were 

earned. Failure by the manufacturer to submit the annual report in the specified time 

period would be considered to be a violation of section 203(a)(1) of the Clean Air Act. 

6. Enforcement

As discussed above in Section III.E.5 under the proposed program, manufacturers 

would report to EPA their fleet average standard for a given model year (reporting 

separately for each of the car and truck averaging sets), the credits or deficits generated 

in the current year, the balance of credit balances or deficits (taking into account banked 

credits, deficit carry-forward, etc. see Section III.E.5), and whether they were in 

compliance with the fleet average standard under the terms of the regulations. EPA 

would review the annual reports, figures, and calculations submitted by the manufacturer 

to determine any nonconformance. EPA requests comments on the above approach for 

monitoring and enforcement of the fleet average standard. 

Each certificate, required prior to introduction into commerce, would be 

conditioned upon the manufacturer attaining the CO2 fleet average standard. If a 

manufacturer failed to meet this condition and had not generated or purchased enough 

credits to cover the fleet average exceedance following the three year deficit carryforward (Section III.B.4, then EPA would review the manufacturer's sales for the most 

recent model year and designate which vehicles caused the fleet average standard to be 

exceeded. EPA would designate as nonconforming those vehicles with the highest 

emission values first, continuing until a number of vehicles equal to the calculated 

number of non-complying vehicles as determined above is reached and those vehicles 

would be considered to be not covered by the certificates of conformity covering those 

model types. In a test group where only a portion of vehicles would be deemed 

nonconforming, EPA would determine the actual nonconforming vehicles by counting 

backwards from the last vehicle sold in that model type. A manufacturer would be 

subject to penalties and injunctive orders on an individual vehicle basis for sale of 

vehicles not covered by a certificate. This is the same general mechanism used for the 

National LEV and Tier 2 corporate average standards, except that these programs operate 

slightly differently in that the non-compliant vehicles would be designated not in the 

most recent model year, but in the model year in which the deficit originated. EPA 

requests comment on which approach is most appropriate; the Tier 2 approach of 

penalizing vehicles from the year in which the deficit was generated, or the proposed 

approach that would penalize vehicles from the year in which the manufacturer failed to 

make up the deficit as required. 

 Section 205 of the CAA authorizes EPA to assess penalties of up to $37,500 per 

vehicle for violations of the requirements or prohibitions of this proposed rule.73 This 

section of the CAA provides that the agency shall take the following penalty factors into 

consideration in determining the appropriate penalty for any specific case: 

 

73 42 U.S.C. 7524(a), Civil Monetary Penalty Inflation Adjustment, 69 Fed. Reg. 7121 (Feb. 13, 2004) and

Civil Monetary Penalty Inflation Adjustment Rule, 73 Fed. Reg. 75340 (Dec. 11,2008). 
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the gravity of the violation, the economic benefit or savings (if any) resulting from the 

violation, the size of the violator's business, the violator's history of compliance with this 

title, action taken to remedy the violation, the effect of the penalty on the violator's ability 

to continue in business, and such other matters as justice may require. 

EPA recognizes that it may be appropriate, should a manufacturer fail to comply 

with the NHTSA fuel economy standards as well as the CO2 standard proposed today in a 

case arising out of the same facts and circumstances, to take into account the civil 

penalties that NHTSA has assessed for violations of the CAFE standards when 

determining the appropriate penalty amount for violations of the CO2 emissions 

standards. This approach is consistent with EPA’s broad discretion to consider “such 

other matters as justice may require,” and will allow EPA to exercise its discretion to 

prevent injustice and ensure that penalties for violations of the CO2 rule are assessed in a 

fair and reasonable manner.

The statutory penalty factor that allows EPA to consider “such other matters as 

justice may require” vests EPA with broad discretion to reduce the penalty when other 

adjustment factors prove insufficient or inappropriate to achieve justice.74. The 

underlying principle of this penalty factor is to operate as a safety mechanism when 

necessary to prevent injustice.75 

 In other environmental statutes, Congress has specifically required EPA to 

consider penalties assessed by other government agencies where violations arise from the 

same set of facts. For instance, section 311(b)(8) of the Clean Water Act, 33 U.S.C. 

1321(b)(8) authorizes EPA to consider any other penalty for the same incident when 

determining the appropriate Clean Water Act penalty. Likewise, section 113(e) of the 

CAA authorizes EPA to consider "payment by the violator of penalties previously 

assessed for the same violation" when assessing penalties for certain violations of Title I 

of the Act. 

 7. Prohibited Acts In The CAA

 

Section 203 of the Clean Air Act describes acts that are prohibited by law. This 

section and associated regulations apply equally to the greenhouse standards proposed 

today as to any other regulated pollutant. 

 8. Other Certification Issues

 a. Carryover/Carry Across Certification Test Data 

EPA's certification program for vehicles allows manufacturers to carry 

certification test data over and across certification testing from one model year to the 

next, when no significant changes to models are made. EPA expects that this policy 

 

74 In re Spang & Co., 6 E.A.D. 226, 249 (EAB 1995) 

75 B.J. Carney Industries, 7 E.A.D. 171, 232, n. 82 (EAB 1997).
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could also apply to CO2, N20 and CH4 certification test data. A manufacturer may also 

be eligible to use carryover and carry across data to demonstrate CO2 fleet average 

compliance if they had done so for CAFE purposes. 

 

b. Compliance Fees 

 The CAA allows EPA to collect fees to cover the costs of issuing certificates of 

conformity for the classes of vehicles and engines covered by this proposal. On May 11, 

2004, EPA updated its fees regulation based on a study of the costs associated with its 

motor vehicle and engine compliance program (69 FR 51402). At the time that cost 

study was conducted the current rulemaking was not considered. 

At this time the extent of any added costs to EPA as a result of this proposal is not 

known. EPA will assess its compliance testing and other activities associated with the 

proposed rule and may amend its fees regulations in the future to include any warranted 

new costs. 

c. Small Entity Deferment 

 EPA is proposing to defer CO2 standards for certain small entities, and these 

entities (necessarily) would not be subject to the certification requirements of this 

proposal. 

As discussed in Section III.B.7, businesses meeting the Small Business 

Administration (SBA) criterion of a small business as described in 13 CFR 121.201 

would not be subject to the proposed GHG requirements, pending future regulatory 

action. EPA is proposing that such entities submit a declaration to EPA containing a 

detailed written description of how that manufacturer qualifies as a small entity under the 

provisions of 13 CFR 121.201 in order to ensure EPA is aware of the deferred 

companies. This declaration would have to be signed by a chief officer of the company, 

and would have to be made at least 30 days prior to the introduction into commerce of 

any vehicles for each model year for which the small entity status is requested, but not 

later than December of the calendar year prior to the model year for which deferral is 

requested. For example, if a manufacturer will be introducing model year 2012 vehicles 

in October of 2011, then the small entity declaration would be due in September of 2011. 

If 2012 model year vehicles are not planned for introduction until March of 2012, then 

the declaration would have to be submitted in December of 2011. Such entities are not 

automatically exempted from other EPA regulations for light-duty vehicles and light-duty 

trucks; therefore, absent this annual declaration EPA would assume that each entity was 

not deferred from compliance with the proposed greenhouse gas standards. 

d. Onboard Diagnostics (OBD) And CO2 Regulations 

 The light-duty on-board diagnostics (OBD) regulations require manufacturers to 

detect and identify malfunctions in all monitored emission-related powertrain systems or 
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components.76 Specifically, the OBD system is required to monitor catalysts, oxygen 

sensors, engine misfire, evaporative system leaks, and any other emission control systems 

directly intended to control emissions, such as exhaust gas recirculation (EGR), 

secondary air, and fuel control systems. The monitoring threshold for all of these 

systems or components is 1.5 times the applicable standards, which typically include 

NMHC, CO, NOX, and PM. EPA is confident that many of the emission-related systems 

and components currently monitored would effectively catch any malfunctions related to 

CO2 emissions. For example, malfunctions resulting from engine misfire, oxygen 

sensors, the EGR system, the secondary air system, and the fuel control system would all 

have an impact on CO2 emissions. Thus, repairs made to any of these systems or 

components should also result in an improvement in CO2 emissions. In addition, EPA 

does not have data on the feasibility or effectiveness of monitoring various emission 

systems and components for CO2 emissions and does not believe it would be prudent to 

include CO2 emissions without such information. Therefore, at this time, EPA does not 

plan to require CO2 emissions as one of the applicable standards required for the OBD 

monitoring threshold. EPA plans to evaluate OBD monitoring technology, with regard to 

monitoring CO2 emissions-related systems and components, and may choose to propose 

to include CO2 emissions as part of the OBD requirements in a future regulatory action. 

EPA requests comment as to whether this is appropriate at this time, and specifically 

requests any data that would support the need for CO2-related components that could or 

should be monitored via an OBD system. 

e. Applicability of Current High Altitude Provisions to Greenhouse Gases 

EPA is proposing that vehicles covered by this proposal meet the CO2, N2O and 

CH4 standard at altitude. The CAA requires emission standards under section 202 to 

apply at all altitudes.77 EPA does not expect vehicle CO2, CH4, or N2O emissions to be 

significantly different at high altitudes based on vehicle calibrations commonly used at all 

altitudes. Therefore, EPA is proposing to retain its current high altitude regulations so 

manufacturers would not normally be required to submit vehicle CO2 test data for high 

altitude. Instead, they would submit an engineering evaluation indicating that common 

calibration approaches will be utilized at high altitude. Any deviation in emission control 

practices employed only at altitude would need to be included in the auxiliary emission 

control device (AECD) descriptions submitted by manufacturers at certification. In 

addition, any AECD specific to high altitude would be required to include emissions data 

to allow EPA evaluate and quantify any emission impact and validity of the AECD. EPA 

requests comment on this approach, and specifically requests data on impact of altitude 

on FTP and HFET CO2 emissions. 

 f. Applicability of Standards to Aftermarket Conversions 

 With the exception of the small entity deferment option EPA is proposing, EPA’s 

emission standards, including the proposed greenhouse gas standards, would continue to 

apply as stated in the applicability sections of the relevant regulations. The proposed 

 

76 40 CFR 86.1806-04 

77 See CAA 206(f). 
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greenhouse gas standards are being incorporated into 40 CFR part 86, subpart S, the 

provisions of which include exhaust and evaporative emission standards for criteria 

pollutants. Subpart S includes requirements for new light-duty vehicles, light-duty 

trucks, medium-duty passenger vehicles, Otto-cycle complete heavy-duty vehicles, and 

some incomplete light-duty trucks. Subpart S is currently specifically applicable to 

aftermarket conversion systems, aftermarket conversion installers, and aftermarket 

conversion certifiers, as those terms are defined in 40 CFR 85.502. EPA expects that 

some aftermarket conversion companies would qualify for and seek the small entity 

deferment, but those that do not qualify would be required to meet the applicable 

emission standards, including the proposed greenhouse gas standards. 

9. Miscellaneous Revisions to Existing Regulations 

a. Revisions and Additions to Definitions 

EPA is proposing to amend its definitions of "engine code," "transmission class," 

and "transmission configuration" in its vehicle certification regulations (Part 86) to 

conform with the definitions for those terms in its fuel economy regulations (Part 600). 

The exact terms in Part 86 are used for reporting purposes and are not used for any 

compliance purpose (e.g., an engine code would not determine which vehicle was 

selected for emission testing). However, the terms are used for this purpose in Part 600 

(e.g., engine codes, transmission class, and transmission configurations are all criteria 

used to determine which vehicles are to be tested for the purposes of establishing 

corporate average fuel economy). Here, EPA is proposing that the same vehicles tested 

to determine corporate average fuel economy also be tested to determine fleet average 

CO2, so the same definitions should apply. Thus EPA is proposing to amend its Part 86 

definitions of the above terms to conform to the definitions in Part 600. 

 

 To bring EPA's fuel economy regulations in Part 600 into conformity with this 

proposal for fleet average CO2 and NHTSA's reform truck regulations two amendments 

are proposed. First, the definition of "footprint" that is proposed in this rule is also being 

proposed for addition to EPA's Part 86 and 600 regulations. This definition is based on 

the definition promulgated by NHTSA at 49 CFR 523.2. Second, EPA is proposing to 

amend its model year CAFE reporting regulations to include the footprint information 

necessary for EPA to determine the reformed truck standards and the corporate average 

fuel economy. This same information is proposed to be included in this proposal for fleet 

average CO2 and fuel economy compliance. 

 b. Addition of Ethanol Fuel Economy Calculation Procedures 

 EPA is proposing to add calculation procedures to part 600 for determining the 

carbon-related exhaust emissions and calculating the fuel economy of vehicles operating 

on ethanol fuel. Manufacturers have been using these procedures as needed, but the 

regulatory language – which specifies how to determine the fuel economy of gasoline, 

diesel, compressed natural gas, and methanol fueled vehicles – has not previously been 

brought up-to-date to provide procedures for vehicles operating on ethanol. Thus EPA is 
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proposing a carbon balance approach similar to other fuels for the determination of 

carbon-related exhaust emissions for the purpose of determining fuel economy and for 

compliance with the proposed fleet average CO2 standards. The carbon balance formula 

is similar to that for methanol, except that ethanol-fueled vehicles must also measure the 

emissions of ethanol and acetaldehyde. The proposed carbon balance equation for 

determining fuel economy is as follows, where CWF is the carbon weight fraction of the 

fuel and CWFexHC is the carbon weight fraction of the exhaust hydrocarbons: 

mpg = (CWF × SG × 3781.8)/((CWFexHC× HC) + (0.429 × CO) + (0.273 × CO2) + (0.375 

× CH3OH) + (0.400 × HCHO) + (0.521 × C2H5OH) + (0.545 × C2H4O)) 

The proposed equation for determining the total carbon-related exhaust emissions for 

compliance with the CO2 fleet average standards is the following, where CWFexHC is the 

carbon weight fraction of the exhaust hydrocarbons:

CO2-eq = (CWFexHC× HC) + (0.429 × CO) + (0.375 × CH3OH) + (0.400 × HCHO) + 

(0.521 × C2H5OH) + (0.545 × C2H4O) + CO2. 

EPA requests comment on the use of these formulae to determine fuel economy and 

carbon emissions. 

c. Revision of Electric Vehicle Applicability Provisions 

In 1980 EPA issued a rule that provided for the inclusion of electric vehicles in 

the CAFE program.78 EPA now believes that certain provisions of the regulations should 

be updated to reflect the current state of motor vehicle emission and fuel economy 

regulations. In particular, EPA believes that the exemption of electric vehicles in certain 

cases from fuel economy labeling and CAFE requirements should be reevaluated and 

revised. 

The rule created an exemption for electric vehicles from fuel economy labeling in 

the following cases: (1) if the electric vehicles are produced by a company that produces 

only electric vehicles; and (2) if the electric vehicles are produced by a company that 

produces fewer than 10,000 vehicles of all kinds worldwide. EPA believes that this 

exemption language is no longer appropriate and proposes to delete it from the affected 

regulations. First, since 1980 many regulatory provisions have been put in place to 

address the concerns of small manufacturers and enable them to comply with fuel 

economy and emission programs with reduced burden. EPA believes that all small 

volume manufacturers should compete on a fair and level regulatory playing field and 

that there is no longer a need to treat small volume electric vehicles any differently than 

small volume manufacturers of other types of vehicles. Current regulations contain 

streamlined certification procedures for small companies, and because electric vehicles 

emit no direct pollution there is effectively no certification emission testing burden. For 

example, the proposed greenhouse gas regulations contain a provision allowing the 

exemption of certain small entities. Meeting the requirements for fuel economy labeling 

 

78 45 FR 49256, July 24, 1980. 
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and CAFE will entail a testing, reporting, and labeling burden, but these burdens are not 

extraordinary and should be applied equally to all small volume manufacturers, 

regardless of the fuel that moves their vehicles. EPA has been working with existing 

electric vehicle manufacturers on fuel economy labeling, and EPA believes it is important 

for the consumer to have impartial, accurate, and useful label information regarding the 

energy consumption of these vehicles. Second, EPCA does not provide for an 

exemption of electric vehicles from NHTSA’s CAFE program, and NHTSA regulations 

regarding the applicability of the CAFE program do not provide an exemption for electric 

vehicles. Third, the blanket exemption for any manufacturer of only electric vehicles 

assumed at the time that these companies would all be small, but the exemption language 

inappropriately did not account for size and would allow large manufacturers to be 

exempt as well. Finally, because of growth expected in the electric vehicle market in the 

future, EPA believes that the labeling and CAFE regulations need to be designed to more 

specifically accommodate electric vehicles and to require that consumers be provided 

with appropriate information regarding these vehicles. For these reasons EPA is 

proposing revisions to 40 CFR Part 600 applicability regulations such that these electric 

vehicle exemptions are deleted starting with the 2012 model year. 

d. Miscellaneous Conforming Regulatory Amendments

Throughout the regulations EPA has made a number of minor amendments to 

update the regulations as needed or to conform with amendments discussed in this 

preamble. For example, for consistency with the ethanol fuel economy calculation 

procedures discussed above, EPA has amended regulations where necessary to require 

the collection of emissions of ethanol and acetaldehyde. Other changes are made to 

applicability sections to remove obsolete regulatory requirements such as phase-ins 

related to EPA’s Tier 2 emission standards program, and still other changes are made to 

better accommodate electric vehicles in EPA emission control regulations. Not all of 

these minor amendments are noted in this preamble, thus the reader should carefully 

evaluate the proposed regulatory text to ensure a complete understanding of the 

regulatory changes being proposed by EPA. 

10. Warranty, Defect Reporting, and Other Emission-related Components 

Provisions

 Under section 207(a) of the CAA, manufacturers must warrant that a vehicle is 

designed to comply with the standards and will be free from defects that may cause it to 

not comply over the specified period which is 2 years/24,000 miles (whichever is first) 

or, for major emission control components, 8 years/80,000 miles. Under certain 

conditions, manufacturers may be liable to replace failed emission components at no 

expense to the owner. EPA regulations define "emission related parts" for the purpose of 

warranty. This definition includes parts which must function properly to assure 

continued compliance with the emission standards.79 

 

79 40 CFR 85.2102(14). 
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139

 The air conditioning system and its components have not previously been 

covered under the CAA warranty provisions. However, the proposed A/C leakage and 

A/C-related CO2 emission standards are dependent upon the proper functioning of a 

number of components on the A/C system, such as rings, fittings, compressors, and 

hoses. Therefore, EPA is proposing that these components be included under the CAA 

section 207(a) emission warranty provisions, with a warranty of 2 years/24,000 miles. 

 EPA requests comment as to whether any other parts or components should be 

designated as “emission related parts” subject to warranty and defect reporting provisions 

under this proposal. 

 11. Light Duty Vehicles and Fuel Economy Labeling 

 American consumers need accurate and meaningful information about regarding

the environmental and fuel economy performance of new light vehicles. EPA believes it 

is important to insurethat the fuel-economy label affixed to the new vehicles provide 

consumers with the critical information they need to make smart purchase decisions. 

This is a special challenge in , particularly in light of the expected increase in market 

share of electric and other advanced technology vehicles. CAmerican consumer’s may 

need new and different information than today’s vehicle labels provide in order to help 

them information that helps them understand the energy use and associated cost of 

owning these electric and advanced technology vehicles. As discussed below, these two 

issues are key to determining whether the current MPG-based fuel-economy label is 

adequate. 

Therefore, as part of this action, EPA seeks comments on issues surrounding 

consumer vehicle labeling in general, and labeling of advanced technology vehicles in 

particular. EPA also plans to initiate a separate rulemaking to explore in detail the 

information displayed on the fuel economy label and the methodology for deriving that 

information. The purposes of this new rulemaking would be to ensure that American 

consumers continue to have the most accurate, meaningful, and useful information 

available to them when purchasing new vehicles, and that the information is presented to 

them in clear and understandable terms. 

a. Background 

 EPA has considerable experience in providing consumer vehicle information to 

consumers through its related fuel-economy labeling activities and related and web-based 

programs. Under 49 U.S.C. 32908(b) EPA is responsible for developing the fuel 

economy labels that are posted on window stickers of all new light duty cars and trucks 

sold in the U.S. and, beginning with the 2011 model year, on all new medium-duty 

passenger vehicles (a category that includes large sport-utility vehicles and passenger 

vans). The statutory requirements established by EPCA require that the label contain the 

following:
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

140

• The fuel economy of the vehicle;80

• The estimated annual fuel cost of operating the vehicle; 

• The range of fuel economy of comparable vehicles among all manufacturers; 

• A statement that a fuel economy booklet is available from the dealer;81 and 

• The amount of the “gas guzzler” tax imposed on the vehicle by the Internal 

Revenue Service. 

• Other information required or authorized by EPA that is related to the information 

required above. 

Fuel economy is defined as the number of miles traveled by an automobile for each 

gallon of gasoline (or equivalent amount of other fuel). It is relatively easy to determine 

the miles per gallon (MPG) for vehicles that use liquid fuels (e.g., gasoline or diesel), but 

an expression that uses gallons – whether miles per gallon or gallons per mile – may not 

be a useful metric for vehicles that have limited to no operation on liquid fuel such as 

electric or compressed natural gas vehicles. The mpg metric is the one generally used 

today to provide comparative fuel economy information to consumers. 

As part of its vehiclegeneral certification, CAFE, and fuel economy labeling 

authorities efforts, EPA works with stakeholders on the testing and other regulatory 

requirements necessary to bring advanced technology vehicles to market. WithAs an

increasing numbers of advanced technology vehicles beginning to be sold, EPA believes 

it is now appropriate to address potential regulatory or and certification issues associated 

with these technologies including, especially how best to provide relevant consumer 

information about their environmental impact, energy consumption, and cost. 

b. Test Procedures 

 As discussed in this notice, there are explicit and very long-standing test 

procedures and calculation methodologies associated with CAFEÉ that EPA uses to test 

conventionally-fueled vehicles and to calculate their fuel economy. These test 

procedures and calculations also generally apply for to advanced technology vehicles

(e.g., an electric (EV) or plug-in hybrid vehicle (PHEV), which could be considered a 

dual-fueled vehicle under CAFE). 

The basic test procedure for an electric vehicle follows a standardized practice -- 

an EV is fully charged and then driven over the city cycle (Urban Dynamometer Drive 

Schedule) until the vehicle can no longer maintain the required drive cycle vehicle speed. 

For some vehicles, this could require operation over multiple drive cycles. The EV is then 

fully recharged and the AC energy to the charger is recorded. .

To derive the CAFE value for electric vehicles, the amount of This AC energy

needed to recharge the battery is then divided by the range the vehicle reached in the 

repeated city drive cycle. This calculation provides a raw CAFE energy s to obtain a 

 

80 “Fuel economy” per the statute is miles per gallon of gasoline (or equivalent amount of other fuel). 

81 EPA and DOE jointly publish the annual Fuel Economy Guide and distribute it to dealers. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

141

consumption value expressed in kilowatt hours per 100 miles. The raw CAFE number

and is the raw CAFÉ value. This consumption value is then converted to miles per gallon 

of equivalent gasoline using a Department of Energy (DOE) conversion factor of 82,700 

Kwhr/gallon of gasoline.82 The DOE conversion factor combines several adjustments 

including: an adjustment similar to the statutory 6.67 multiplier credit83 used in deriving 

the final CAFE value for all alternative fueled vehicles; a factor representing the 

gasoline-equivalent energy content of electricity; and various adjustments discounts to 

account for the relative efficiency of petroleum used in producing and transporting the 

electricity. The resulting value after the DOE conversion factor is applied becomes 

includes various adjustment factors, including an EV statutory credit of a 6.67 multiplier, 

to come up with the final CAFEÉ city value. 

The label value calculation for an EV uses a different conversion factor than the 

CAFE value calculation. To come up with the final city fuel economy label value for an 

EV, a conversion factor of 33,705 Kwhr/100 miles per gallon of gasoline equivalent is 

applied to the raw consumption number instead of the 82,700 Kwhr/gallon used for 

CAFE. The conversion factor used for labeling purposes represents only the gasolineequivalent energy content of electricity, without the multiplier credit and other 

adjustments used in the CAFE calculation. The consumption, now expressed as a fuel 

economy in miles per gallon equivalent, is then applied to the derived 5-cycle equation 

required under EPA’s fuel economy labeling regulations. The above process is then 

repeated for the EV highway fuel economy label number. Finally, the combined city/ 

highway numbers for the EV use the same 55/45 weighting as conventional vehicles to 

determine the final fuel economy label values. CAFEÉ numbers end up being 

significantly higher for EVs than the associated fuel economy label values, both because 

both a higher adjustment factors applies under CAFEÉ regulations and also because other 

real-world adjustments such as the 5-cycle test are not applied to the CAFÉE values. 

For PHEVs, a similar process would be followed, except that PHEVs require 

testing in both charge sustain (CS) and charge depleting (CD) modes to capture how 

these vehicles operate. For charge sustain modes, PHEVs essentially operate as 

conventional Hybrid Electric Vehicles (HEVs). PHEVs therefore test in all 5-cycles (for 

further information on these test cycles, see Section III.C.4) just as HEVs do for CS fuel 

economy. For CD fuel economy, PHEVs are only required to test on the Urban 

Dynamometer Drive Schedule and Highway Fuel Economy cycles just like other 

alternative fueled vehicles-- the 5-cycle fuel economy testing is optional in the CD 

mode. There are additional processes that address different PHEV modes, such as for 

PHEVs that operate solely on electricity throughout the CD mode. 

As this discussion showsshown, the CAFEÉ and fuel economy labeling test 

procedures and calculations for advanced technology vehicles such as EVs and PHEVs 

can be very complicated. EPA is interested in comments on these processes, including 

views on the appropriate use of adjustment factors. Currently in guidance, EPA 

references SAE J1634 for EV range and consumption test procedures. EPA currently 

 

82 49 USC 32904 and 10 CFR 474.3

83 49 USC 32905
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142

includes the “California Exhaust Emission Standards and Test Procedures for 2003 and 

Subsequent Model Zero-Emission Vehicles, in the Passenger Car, Light Truck, and 

Medium-duty Vehicle Classes” by reference in 40 CFR 86.1. As California requirements 

and SAE test procedures are updated these may be included by reference in the future.

c. Current Fuel Economy Label 

In 2006 EPA redesigned the window stickers to make them more informative for 

consumers. More particular, the redesigned stickers to more prominently feature annual 

fuel cost information, to provide contemporary and easy-to-use graphics for comparing 

the fuel economy of different vehicles, to use clearer text, and to include a web site 

reference to www.fueleconomy.gov which provides additional information. In addition, 

EPA updated how the city and highway fuel economy values were calculated, to better 

reflect typical real-world driving patterns. 84 This rulemaking involved significant 

stakeholder outreach in determining how best to calculate and display this new 

information. EPA’s The feedback EPA has received to date on the new label design and 

values has been generally very positive 

 During the 2006 label rulemaking process EPA requested comments on how a 

fuel consumption metric (such as gallons per 100 miles) could be used and represented to 

the public, including presentation in the annual Fuel Economy Guide. EPA received a 

number of comments from both vehicle manufacturers and consumer organizations,

suggesting that the MPG measures can be misleading and that a fuel consumption metric 

might be more meaningful to consumers than the established MPG metric found on fuel 

economy labels., The reason is that fuel consumption metric, since it directly measures 

the amount of fuel used and is thus directly related to cost that consumers incur when 

filling up. 

Unlike a fuel consumption metric, The problem with the an MPG metric is that it 

is inversely related to fuel consumption and cost. – meaning that a As higher MPG values 

are reached, the relative impact of these higher values on fuel consumption and fuel costs 

decreases. For example, a 25 percent increase in gallons per 100 miles will always lead to 

a 25 percent increase in the fuel cost, but a similar 25 percent increase in MPG will have 

varying impacts on actual fuel cost depending on whether the percent increase occurs to a 

low or high MPG value. It is unclear whether Many consumers do not understand this 

nonlinear relationship between MPG and fuel costs. Many consumers may tend to treat 

Evidence suggest that people tend to see the MPG as being linear with fuel cost, which 

could potentially will lead to erroneous decisions regarding vehicle purchases. Figure 

III.E.11-1 below illustrates the issue; one can see that changes in MPG at low MPG 

levels can result in large changes in the fuel cost, while changes in MPG values at high 

MPG levels result in small changes in the fuel cost. For example, a change from 10 to 15 

MPG will reduce the 10-mile fuel cost from $2.50 to $1.60, but a similar increase in 

MPG from 20 to 25 MPG will only reduce the 10-mile fuel cost by less than $0.30. 

 

84 71 FR 77872 (December 27, 2006). Fuel Economy Labeling of Motor Vehicles: Revisions to Improve 

Calculations of Fuel Economy Estimates. U.S. EPA. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

143

 Fuel Economy vs. Fuel Cost of Driving

(at fuel price of $2.50/gallon)

$3.00$2.50$2.00$1.50$1.00$0.50$0.00

10 15 20 25 30 35 40

Miles per Gallon

Cost of Driving 10 Miles

Figure III.E.11-1 Fuel Economy vs. Fuel Cost of Driving 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

144

Because of the potential for consumers to misunderstand this MPG/cost relationship, 

commenters on the 2006 labeling rule universally agreed that any change to the label 

metric should involve a significant public education campaign directed toward both 

dealers and consumers. 

In 2006, EPA did not include a consumption-based metric on the redesigned fuel 

economy label in 2006, due to It was concerneds about potential confusion associated 

with introducing a second metric on the label (MPG is a required element, as noted 

above). EPA has developed an interactive feature on www.fueleconomy.gov which 

allows consumers, while viewing data on a specific vehicle, to switch units between the 

MPG and gallons per 100 miles metrics. The tool also displays the cost and the amount 

of fuel needed to drive 25 miles. As indicated above, however, EPA is alert to the 

problems with the MPG measure and the importance of providing consumers with a clear 

sense of the consequences of their purchasing decisions; a gallon-per mile measure would 

have significant advantages. EPA plans to seek comment and engage in extensive public 

debate about fuel consumption and other appropriate consumer information metrics as 

part of a new labeling rule initiative. EPA also welcomes comments on this topic in 

response to this GHG proposal. 

 d. Labeling for Advanced Technology Vehicles 

 Even though a fuel consumption metric may more directly represent likely fuel 

costs than a fuel economy metric, any expression that uses gallons – whether miles per 

gallon or gallons per mile – is not a useful metric for vehicles that have limited to no 

operation on liquid fuel (e.g., electricity or compressed natural gas). For example, 

PHEVs and extended range electric vehicles (EREVs) can use two types of energy 

sources: (1) an onboard battery, charged by plugging the vehicle into the electrical grid 

via a conventional wall outlet, to power an electric motor, as well as (2) a gas or dieselpowered engine to propel the vehicle or power a generator used to provide electricity to 

the electric motor. Depending on how these vehicles are operated, they can use 

electricity exclusively, never use electricity and operate like a conventional hybrid, or 

operate in some combination of these two modes. The use of a MPG figure alone would 

not account for the electricity used to propel the vehicle. 

EPA has worked closely with numerous stakeholders including vehicle 

manufacturers, the Society of Automotive Engineers (SAE), the State of California, the 

Department of Energy (DOE) and others to develop possible approaches for both 

estimating fuel economy and labeling vehicles that can operate using more than one 

energy source. At the present time, EPA believes the appropriate method for estimating 

fuel economy of PHEVs and EREVs would be a weighted average of fuel economy for 

the two modes of operation. A methodology developed by SAE and DOE to predict the 

fractions of total distance driven in each mode of operation (electricity and gas) uses a 

term known as a utility factor (UF). By using a utility factor, it is possible to determine a 

weighted average for fuel economy of the electric and gasoline modes. For example, a 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

145

UF of 0.8 would indicate that a PHEV or EREV operates in an all electric mode 80% of 

the time and uses the gasoline engine the other 20% of the time. In this example, the 

weighted average fuel economy value would be influenced more by the electrical 

operation than the gasoline operation. 

Under this approach, a UF could be assigned to each successive fuel economy test 

until the battery charge was depleted and the PHEV or EREV needed power from the 

gasoline engine to propel the vehicle or to recharge the battery. One minus the sum of all 

the utility factors would then represent the fraction of driving performed in this “gasoline 

mode.” Fuel economy could then be expressed as: 

Likewise, the electrical consumption would be expressed by adding the fuel 

consumption from each mode. Since there is no electrical consumption in hybrid mode, 

the equation for electricity consumption would be as follows: 

Utility factors could be cycle specific not only due to different battery ranges on different 

test cycles but also due to the fact that “highway” type driving may imply longer trips 

than urban driving. That is to say that the average city trip could be shorter than the 

average highway trip. 

e. Request for Comments 

EPA is interested in comments on both topics raised in this section. For the 

methodology, we are interested in comments addressing how the utility factor is 

calculated and which data should be used in establishing the UF. Additionally, 

commenters should address: the appropriateness of this approach for estimating fuel 

economy for PHEVs and EREVs, including the concept of using a UF to determine the 

fuel economy for vehicles operated in multiple modes; the appropriate form and value of 

the factor, including the type of data that would be necessary to confidently develop it 

accurately; and availability of other potential methodologies for determining fuel 

economy for vehicles that can operate in multiple modes, such as “all electric” and 

“hybrid,” including the use of fuel consumption, cost, or other metrics in addition to 

miles per gallons. 

EPA is also requesting comment on how the agency can satisfy statutory labeling 

requirements while providing relevant information to consumers. For example, the 

statute indicates that EPA may provide other related items on the label beyond those that 

are required.85 EPA is interested in receiving comments on the potential approaches and 

 

85 49 USC3290(b) (F) 

gasoline

i

i

i

MPG

FE

UF

FE

UF

FE ∑ ∑

−

+

=

1

1

FCKwhr/100miles =∑UFi ×FCi
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

146

supporting data we might consider for adding additional information regarding fuel 

economics while maintaining our statutory obligation to report MPG on the label. 

There are a number oftwo different metrics that are available that could be useful 

in this regard. Two possible options would be to show, namely showing consumption in 

fuel use per distance (e.g., gallons/100 miles) or or in cost per /distance (e.g., $/100 

miles). As discussed above, these two metrics have benefits over a straight mpg value in 

showing a more direct relationship between fuel consumption and cost. The cost/distance 

metric has an added potential benefit of providing a common basis for comparing son 

between differently-fueled or powered vehicles, for example being able to show the cost 

of gasoline used over a specified distance or time for a conventional gasoline-powered 

vehicle in comparison to the gasoline and electricity used over the same period for a 

plug-in hybrid vehicle. A total annual energy cost would be another way to look at this 

datainformation, and is currently used on the fuel economy label.. As is currently done, 

EPA would need to determine and show a common set of fuel costs used to calculate 

such values, recognizing that energy costs vary across the country. 

The Agency is also interested in comments on the usefulness of adding other 

types of information, such as an estimated driving range for electric vehicles. The label 

design is also an important issue to consider and any changes to the existing label would 

need to show information in a technologically accurate, meaningful and understandable 

manner, while ensuring that the label does not become overcrowded and difficult for 

consumers to comprehend. EPA is also interested in what and how other information 

paths, such as web-based programs, could be used to enhance the consumer education 

process. 

12. Fuel Economy Labeling for Advanced Technologies

In February, 2009, EPA developed and disseminated an issue paper addressing a 

potential approach to the labeling methodology for advanced technology vehicles. The 

paper, titled “Fuel Economy Labeling for Advanced Technologies,” 86 included 

significant input from various stakeholders and highlighted some of the challenges of 

applying the statutory and regulatory requirements of fuel economy labeling to advanced 

technology vehicles that no longer rely exclusively on internal combustion engines for 

the purposes of propulsion.. Since sharing this paper, EPA has continued to develop 

methodologies discussed in the paper through close collaboration with numerous 

stakeholders including vehicle manufacturers, the Society of Automotive Engineers 

(SAE), the State of California, the Department of Energy (DOE) and others. 

The issue paper discusses methods for expressing fuel economy for various 

modes of operation, such as “all electric,” “hybrid,” and a combination of these modes. A 

detailed presentation of the issue paper methodology discussion can be found in the 

Technical Support Document Section XXXX. As mentioned above, EPA has worked 

closely with numerous stakeholders in developing the methods discussed in the paper. 

 

86 See Docket number EPA-HQ-OAR-2009-0472. 
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147

For the case of a combination of modes of operation, the method discussed in the paper is 

very similar to the methodology developed by SAE as part of the SAE J1711 protocol. 

The J1711 methodology averages the fuel economy from the “all electric” and “hybrid” 

modes using a utility factor as a means for weighting the percentage of operation in the 

two modes for the typical driver.

EPA requests comments on the “Fuel Economy Labeling for Advanced 

Technologies” issue paper. EPA would like comments on the methodologies discussed 

for the various modes of operation, including the use of the SAE J1711 methodology that 

incorporates a utility factor to determine the fuel economy for vehicles operated in 

multiple modes. EPA also seeks comments on the concept of using a utility factor, 

including what the appropriate form and value of the factor should be. Finally, EPA 

requests comments on other potential methodologies for determining fuel economy for 

vehicles that can operate in multiple modes, such as “all electric” and “hybrid,” including 

the use of fuel consumption, cost, or other metrics in addition to miles per gallons.

 

F. How Would This Proposal Reduce GHG Emissions and Their 

Associated Effects? 

This action is an important step towards curbing steady growth of GHG emissions 

from cars and light trucks. In the absence of control, GHG emissions worldwide and in 

the U.S. are projected to continue steady growth; Table III.F-1 shows emissions of CO2, 

methane, nitrous oxide and air conditioning refrigerants on a CO2-equivalent basis for 

calendar years 2010, 2020, 2030, 2040 and 2050. U.S. GHGs are estimated to make up 

roughly 15 percent of total worldwide emissions, and the contribution of direct emissions 

from cars and light-trucks to this U.S. share is growing over time, reaching an estimated 

20 percent of U.S. emissions by 2030 in the absence of control. As discussed later in this 

section, this steady rise in GHG emissions is associated with numerous adverse impacts 

on human health, food and agriculture, air quality, and water and forestry resources. 

Table III.F-1 Reference Case GHG Emissions by Calendar Year (MMTCO2 Eq)

 2010 2020 2030 2040 2050 

All Sectors (Worldwide)a41,016 48,059 52,870 56,940 60,209 

All Sectors (U.S. Only)a7,118 7,390 7,765 8,101 8,379 

U.S. Cars/Light Truck 

Onlyb 1,359 1,332 1,516 1,828 2,261 

aADAGE model projections, U.S. EPA87 

b MOVES(2010), OMEGA Model (2020-50) U.S. EPA. See DRIA Chapter 5.3 for modeling details. 

EPA’s proposed GHG rule, if finalized, will result in significant reductions as 

newer, cleaner vehicles come into the fleet, and the rule is estimated to have a measurable 

 

87 U.S. EPA (2009). “EPA Analysis of the American Clean Energy and Security Act of 2009: H.R. 2454 in 

the 111th Congress.” U.S. Environmental Protection Agency, Washington, DC, USA. 

(www.epa.gov/climatechange/economics/economicanalyses.html) 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

148

impact on world global temperatures. As discussed in Section I, this GHG proposal is 

part of a joint National Program such that a large majority of the projected benefits would 

be achieved jointly with NHTSA’s proposed CAFE standards which are described in 

detail in Section IV of this preamble. EPA estimates the reductions attributable to the 

GHG program over time assuming the proposed 2016 standards continue indefinitely 

post-2016,88 compared to a baseline scenario in which the 2011 model year fuel economy 

standards continue beyond 2011. 

Using this approach EPA estimates these standards would cut annual fleetwide 

car and light truck tailpipe CO2 emissions 21 percent by 2030, when 90 percent of car 

and light truck miles will be travelled by vehicles meeting the new standards. Roughly 

20 percent of these reductions are due to emission reductions from gasoline extraction, 

production and distribution processes as a result of reduced gasoline demand associated 

with this proposal. Some of the overall emission reductions also come from projected 

improvements in the efficiency of vehicle air conditioning systems, which will 

substantially reduce direct emissions of HFCs, one of the most potent greenhouse gases, 

as well as indirect emissions of tailpipe CO2 emissions attributable to reduced engine 

load from air conditioning. In total, EPA estimates that compared to a baseline of 

indefinite 2011 model year standards, net GHG emission reductions from the proposed 

program would be 325 million metric tons CO2-equivalent (MMTCO2eq) annually by 

2030, which represents a reduction of 4 percent of total U.S. GHG emissions and 0.6 

percent of total worldwide GHG emissions projected in that year. This estimate accounts 

for all upstream fuel production and distribution emission reductions, vehicle tailpipe 

emission reductions including air conditioning benefits, as well as increased vehicle miles 

travelled (VMT) due to the "rebound" effect discussed in Section III.H. EPA estimates 

this would be the equivalent of removing nearly 60 million cars and light trucks from the 

road in this timeframe. 

EPA projects the total reduction of the program over the full life of model year 

2012-2016 vehicles is about 950 MMTCO2eq, with fuel savings of 76 billion gallons (1.8 

billion barrels) of gasoline over the life of these vehicles, assuming that some 

manufacturers take advantage of low-cost HFC reduction strategies to help meet these 

proposed standards. 

These reductions are projected to reduce global mean temperature by 

approximately 0.007-0.016°C by 2100 and global mean sea-levelsea level rise is 

projected to be reduced by approximately 0.06-0.15 cm by 2100. 

 

 1. Impact on GHG Emissions

a. Calendar Year Reductions Due to GHG Standards 

 

88 This analysis does not include the EISA requirement for 35 MPG through 2020 or California’s Pavley 1 

GHG standards. The proposed standards are intended to supersede these requirements, and the baseline 

case for comparison are the emissions that would result without further action above the currently 

promulgated fuel economy standards. 
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149

 This action, if finalized, will reduce GHG emissions emitted directly from 

vehicles due to reduced fuel use and more efficient air conditioning systems. In addition 

to these “downstream” emissions, reducing CO2 emissions translates directly to 

reductions in the emissions associated with the processes involved in getting petroleum to 

the pump, including the extraction and transportation of crude oil, and the production and 

distribution of finished gasoline (termed “upstream” emissions). Reductions from 

tailpipe GHG standards grow over time as the fleet turns over to vehicles affected by the 

standards, meaning the benefit of the program will continue as long as the oldest vehicles 

in the fleet are replaced by newer, lower CO2 emitting vehicles. 

EPA is not projecting any reductions in tailpipe CH4 or N2O emissions as a result 

of these proposed emission caps, which are meant to prevent emission backsliding and to 

bring diesel vehicles equipped with advanced technology aftertreatment into alignment 

with current gasoline vehicle emissions. 

 As detailed in the DRIA, EPA estimated calendar year tailpipe CO2 reductions 

based on pre- and post-control CO2 gram per mile levels from EPA’s OMEGA model and 

assumed to continue indefinitely into the future, coupled with VMT projections from 

AEO2009. These estimates reflect the real-world CO2 emissions reductions projected 

for the entire U.S. vehicle fleet in a specified calendar year, including the projected effect 

of air conditioning credits, TLAASP credits and FFV credits. EPA also estimated full 

lifetime reductions for model years 2012-2016 using pre- and post-control CO2 levels 

projected by the OMEGA model, coupled with projected vehicle sales and lifetime 

mileage estimates. These estimates reflect the real-world CO2 emissions reductions 

projected for model years 2012 through 2016 vehicles over their entire life. 

This proposal would allow manufacturers to earn credits for improved vehicle air 

conditioning efficiency. Since these improvements are relatively low cost, EPA projects 

that manufacturers will take advantage of this flexibility, leading to reductions from 

emissions associated with vehicle air conditioning systems. As explained above, these 

reductions will come from both direct emissions of air conditioning refrigerant over the 

life of the vehicle and tailpipe CO2 emissions produced by the increased load of the A/C 

system on the engine. In particular, EPA estimates that direct emissions of HFCs, one of 

the most potent greenhouse gases, would be reduced 40 percent from light-duty vehicles 

when the fleet has turned over to more efficient vehicles. The fuel savings derived from 

lower tailpipe CO2 would also lead to reductions in upstream emissions. Our estimated 

reductions from the A/C credits program are based on our analysis of how manufacturers 

are expected to take advantage of this credit opportunity in complying with the CO2

fleetwide average tailpipe standards. 

Upstream emission reductions associated with the production and distribution of 

fuel were estimated using emission factors from DOE’s GREET1.8 model, with some 

modifications as detailed in the DRIA. These estimates include both international and 

domestic emission reductions, since reductions in foreign exports of finished gasoline 

and/or crude would make up a significant share of the fuel savings resulting from the 

proposed GHG standards. Thus, significant portions of the upstream GHG emission 
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150

reductions will occur outside of the U.S.; a breakdown of projected international versus 

domestic reductions is included in the DRIA. 

 Table III.F.1-1 shows reductions estimated from these proposed GHG standards 

assuming a pre-control case of 2011 MY standards continuing indefinitely beyond 2011, 

and a post-control case in which 2016 MY standards continue indefinitely beyond 2016. 

These reductions are broken down by upstream and downstream components, including 

air conditioning improvements, and also account for the offset from a 10 percent VMT 

“rebound” effect as discussed in Section III.H. Including the reductions from upstream 

emissions, total reductions are estimated to reach 325 MMTCO2eq annually by 2030 (a 

21 percent reduction in U.S. car and light truck emissions), and grow to over 500 

MMTCO2eq in 2050 as cleaner vehicles continue to come into the fleet (a 23 percent 

reduction in U.S. car and light truck emissions). 

Table III.F.1-1 Projected Net GHG Reductions (MMTCO2 Eq per year)

Calendar Year: 2020 2030 2040 2050 

Net Reduction Due to 

Tailpipe Standards* 165.2 324.6 417.5 518.5 

Tailpipe Standards 107.7 211.4 274.1 344.0 

A/C – indirect CO2 11.0 21.1 27.3 34.2 

A/C – direct HFCs 13.5 27.2 32.1 34.9 

Upstream 33.1 64.9 84.1 105.5 

 

Percent reduction relative to 

U.S. reference (cars + light 

trucks)

12.4% 21.4% 22.8% 22.9% 

Percent reduction relative to 

U.S. reference (all sectors) 2.2% 4.2% 5.2% 6.2% 

Percent reduction relative to 

worldwide reference 0.3% 0.6% 0.7% 0.9% 

* includes impacts of 10% VMT rebound rate presented in Table III.F.1-3 

 

b. Lifetime Reductions for 2012-2016 Model Years 

EPA also analyzed the emission reductions over the full life of the 2012-2016 model 

year cars and trucks affected by this proposal.89 These results, including both upstream 

and downstream GHG contributions, are presented in Table III.F.1-2, showing lifetime 

reductions of nearly 950 MMTCO2eq, with fuel savings of 76 billion gallons (1.8 billion 

barrels) of gasoline. 

Table III.F.1-2 Projected Net GHG Reductions (MMTCO2 Eq per year)

Model Year Lifetime GHG Lifetime Fuel 

 

89 As detailed in the DRIA, for this analysis the full life of the vehicle is represented by average lifetime 

mileages for cars (190,000 miles) and trucks (221,000 miles) averaged over calendar years 2012 through

2030, a function of how far vehicles drive per year and scrappage rates. 

Formatted Table
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Reduction 

(MMT CO2 EQ) 

Savings 

(Billion Gallons) 

2012 81.4 6.6 

2013 125.0 10.0 

2014 174.1 13.9 

2015 243.2 19.5 

2016 323.6 26.3 

Total Program Benefit 947.4 76.2 

c. Impacts of VMT Rebound Effect 

As noted above and discussed more fully in Section III.H., the effect of fuel cost 

on VMT (“rebound”) was accounted for in our assessment of economic and 

environmental impacts of this proposed rule. A 10 percent rebound case was used for 

this analysis, meaning that VMT for affected model years is modeled as increasing by 10 

percent as much as the increase in fuel economy; i.e., a 10 percent increase in fuel 

economy would yield a 1.0 percent increase in VMT. Results are shown in Table III.F.1-

3; using the 10 percent rebound rate results in an overall emission increase of 26.4 

MMTCO2eq annually in 2030 (this increase is accounted for in the reductions presented 

in Tables III.F.1-1 and III.F.1-2). Our estimated changes in CH4 or N2O emissions as a 

result of these proposed vehicle GHG standards are attributed solely to this rebound 

effect. 

As discussed in Section III.H, EPA will be reassessing the appropriate rate of 

VMT rebound for the final rule. Although EPA has not directly quantified the GHG 

emissions effect of using a lower rebound rate for this analysis, lowering the rebound rate 

would reduce the emission increases in Tables III.F.1-1 and III.F.1-2 in proportion (i.e., 

zero rebound equals zero emissions effect), and, thus, would increase our estimates of 

emission reductions due to these proposed standards. 

Table III.F.1-3 GHG Impact Of 10% VMT Rebounda

(MMTCO2 Eq per year)

2020 2030 2040 2050 

Total GHG Increase 13.6 26.4 34.2 42.9 

Tailpipe & Indirect A/C CO2 10.6 20.6 26.6 33.4 

Upstream GHGs b 2.95 5.74 7.43 9.32 

Tailpipe N2O 0.040 0.085 0.113 0.142 

Tailpipe CH4 0.008 0.016 0.021 0.027 

a

 These impacts are included in the reductions shown in Table III.F.1-1 and III.F.1-2. 

b

 Upstream rebound impact calculated as upstream total CO2 effect times ratio of downstream tailpipe 

rebound CO2 effect to downstream tailpipe total CO2 effect. 

d. Analysis of Alternatives 
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EPA analyzed two alternative scenarios, including 4% and 6% annual increases in 

2 cycle (CAFE) fuel economy. In addition to this annual increase, EPA assumed that 

manufacturers would use air conditioning improvements in identical penetrations as in 

the primary scenario. Under these assumptions, EPA expects achieved fleetwide average 

emission levels of 254 g/mile CO2 EQ (4%), and 230 g/mile CO2 EQ (6%) in 2016. 

As in the primary scenario, EPA assumed that the fleet complied with the 

standards. For full details on modeling assumptions, please refer to DRIA Chapter 5. 

Table III.F.1-4 Calendar Year Impacts Of Alternative Scenarios

Calendar Year 

 Scenario CY 2020 CY2030 CY 2040 CY 2050 

Total GHG 

Reductions (MMT 

CO2EQ) 

Primary 165.2 324.6 417.5 518.5 

4% 152.8 305.9 394.1 489.3 

6% 213.8 423.3 545.6 679.3 

Fuel Savings 

(Billion Gallons 

Gasoline 

Equivalent) 

Primary 13.4 26.2 33.9 42.6 

4% 12.2 24.5 31.8 39.9 

6% 17.8 35.1 45.5 57.1 

Table III.F.1-5 Model Year Impacts Of Alternative Scenarios

Model Year Lifetime 

 Scenario MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total 

Total GHG 

Reductions (MMT 

CO2EQ) 

Primary 81.4 125.0 174.1 243.2 323.6 947.4 

4% 41.8 93.5 160.8 231.0 305.2 832.3 

6% 60.2 146.4 239.9 333.3 424.9 1,204.7 

Fuel Savings 

(Billion Gallons 

Gasoline 

Equivalent) 

Primary 6.6 10.0 13.9 19.5 26.3 76.2 

4% 3.1 7.2 12.7 18.4 24.7 66.1 

6% 4.7 11.9 19.7 27.4 35.2 99.0 

2. Overview of Climate Change Impacts from GHG Emissions

Once emitted, greenhouse gases (GHG) can remain in the atmosphere for decades 

to centuries, meaning that 1) their concentrations become well-mixed throughout the 

global atmosphere regardless of emission origin, and 2) their effects on climate are long 

lasting. Greenhouse gas emissions come mainly from the combustion of fossil fuels 

(coal, oil, and gas), with additional contributions from the clearing of forests and 

agricultural activities. 

This section, a summary of key findings from the Technical Support Document 

(TSD) for EPA’s Proposed Endangerment and Cause or Contribute Findings Under the 

Clean Air Act90, reviews observed and projected changes in climate based on current and 

projected atmospheric GHG concentrations and emissions, as well as the related impacts 

and risks from climate change that are projected in the absence of GHG mitigation 

 

90 See Federal Register /Vol.74, No.78/Friday, April 24, 2009/Proposed Rules; also Docket Number EPAHQ-OAR-2009-0171; FRL-8895-5 
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actions, including this proposal and other U.S. and global actions. As this section only 

presents summary information, please refer to the TSD itself for a fuller discussion. 

The proposed Endangerment TSD – the source document for this section – synthesizes 

major findings from the best available scientific assessments that have gone through 

rigorous and transparent peer review. The proposed Endangerment TSD therefore relies 

most heavily on the major assessment reports of both the Intergovernmental Panel on 

Climate Change (IPCC) and the U.S. Global Change Research Program (USGCRP, 

formerly referred to as the U.S. Climate Change Science Program). The IPCC and 

USGCRP assessments base their findings on the large body of many individual, peer 

reviewed studies in the literature, and then the IPCC and USGCRP assessments 

themselves go through a transparent peer-reviewed process. The proposed Endangerment

TSD was in turn reviewed by a dozen federal government scientists who have contributed 

significantly to the body of climate change literature. The information in the proposed 

Endangerment TSD has therefore been developed and prepared in a manner that is 

consistent with EPA’s Guidelines for Ensuring and Maximizing the Quality, Objectivity, 

Utility and Integrity of Information Disseminated by the Environmental Protection 

This section is a summary of observed and projected changes in climate based on 

current and projected atmospheric GHG concentrations and emissions as well as the 

related impacts and risks from climate change that are projected in the absence of GHG 

mitigation actions, including this proposal and other U.S. and global actions. These 

highlights are condensed from a longer and broader discussion in EPA’s proposed 

Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 

202(a) of the Clean Air Act and the accompanying Technical Support Document 

(TSD).91 The TSD synthesizes major findings from the best available scientific 

assessments of the scientific literature that have gone through rigorous and transparent 

peer review, including the major assessment reports of both the Intergovernmental Panel 

on Climate Change (IPCC) and the U.S. Climate Change Science Program (CCSP). In 

addition, this section includes information from the recent report by the Global Change 

Research Program (formerly CCSP), Global Climate Change Impacts in the United States

(2009). 

a. Changes in Atmospheric Concentrations of GHGs from Global and U.S. 

Emissions 

Concentrations of six key GHGs (carbon dioxide, methane, nitrous oxide, 

hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride) are at unprecedented 

levels compared to the recent and distant past. The global atmospheric CO2

concentration has increased about 38% from pre-industrial levels to 2009, and almost all 

of the increase is due to anthropogenic emissions. 

 

91 See Federal Register /Vol.74, No.78/Friday, April 24, 2009/Proposed Rules; also Docket Number EPAHQ-OAR-2009-0171; FRL-8895-5 
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Based on data from the most recent Inventory of U.S. Greenhouse Gas Emissions 

and Sinks (2008)92, total U.S. GHG emissions increased by 905.9 teragrams of CO2-

equivalent (Tg CO2 Eq), or 14.7%, between 1990 and 2006. U.S. transportation sources 

subject to control under section 202(a) of the Clean Air Act (passenger cars, light duty 

trucks, other trucks and buses, motorcycles, and cooling93) emitted 1665 Tg CO2 Eq in 

2006, representing almost 24% of the total U.S. GHG emissions. Total global emissions, 

calculated by summing emissions of the six greenhouse gases by country, for 2005 was 

38,725.9 Tg CO2 Eq. This represents an increase of 26% from the 1990 level. See 

Section 2 of the proposed Endangerment TSD for a more complete discussion of GHG 

emissions and concentrations. 

b. Observed Changes in Climate 

i. Temperature 

The warming of the climate system is unequivocal, as is now evident from 

observations of increases in global air and ocean temperatures, widespread melting of 

snow and ice, and rising global average sea level. The global average net effect of the 

increase in atmospheric GHG concentrations, plus other human activities (e.g., land use 

change and aerosol emissions), on the global energy balance since 1750 has been one of 

warming. The global mean surface temperature94 over the last 100 years (1906-2005) 

has risen by about 0.74oC (1.5oF) +/- 0.18oC, and climate model simulations suggest that 

natural variation alone (e.g., changes in solar irradiance) cannot explain the observed 

warming. The rate of warming over the last 50 years is almost double that over the last 

100 years. Most of the observed increase in global mean surface temperature since the 

mid-20th century is very likely due to the observed increase in anthropogenic GHG 

concentrations. 

It can be stated with confidence that global mean surface temperature was higher 

during the last few decades of the 20th century than during any comparable period during 

the preceding four centuries. Like global mean surface temperatures, U.S. surface 

temperatures also warmed during the 20th and into the 21st century. U.S. average annual 

temperatures are now approximately 0.69oC (1.25oF) warmer than at the start of the 20th

century, with an increased rate of warming over the past 30 years. Temperatures in 

winter have risen more than any other season, with winters in the Midwest and northern 

Great Plains increasing more than 7oF95. Some of these changes have been faster than 

previous assessments had suggested. 

ii. Precipitation 

 

92 U.S. EPA (2008) Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2006. EPA-430-R-08-

005, Washington, DC. 

93 Cooling refers to refrigerants/air conditioning from all transportation sources and is related to HFCs. 

94 Surface temperature is calculated by processing data from thousands of world-wide observation sites on 

land and sea. 

95 Global Climate Change Impacts in the United States, Thomas R. Karl, Jerry M. Melillo, and Thomas C. 

Peterson, (eds.) Cambridge University Press, 2009 
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Observations show that changes are occurring in the amount, intensity, frequency 

and type of precipitation. Global, long-term trends from 1900 to 2005 have been 

observed in the amount of precipitation over many large regions. Patterns in precipitation 

change are more spatially and seasonally variable than temperature change, but where 

significant precipitation changes do occur they are consistent with measured changes in 

stream flow. Significantly increased precipitation has been observed in eastern parts of 

North and South America, northern Europe and northern and central Asia959493. More 

intense and longer droughts have been observed over wider areas since the 1970s, 

particularly in the tropics and subtropics. It is likely there has been an increase in heavy 

precipitation events (e.g., 95th percentile) within many land regions, even in those where 

there has been a reduction in total precipitation amount, consistent with a warming 

climate and observed significant increasing amounts of water vapor in the atmosphere. 

Rising temperatures have generally resulted in rain rather than snow in locations and 

seasons such as in northern and mountainous regions where the average (1961-1990) 

temperatures were close to 0oC. Over the contiguous U.S., total annual precipitation 

increased at an average rate of 6.5% from 1901-2006, with the greatest increases in 

precipitation in the East and Northcentral climate regions (11.2% per century). 

iii. Extreme Events 

Changes in climate extremes have been observed related to temperature, 

precipitation, tropical cyclones, and sea level. In the last 50 years, there have been 

widespread changes in extreme temperatures observed across the globe. For example, 

cold days, cold nights, and frost have become less frequent, while hot days, hot nights, 

and heat waves have become more frequent. Globally, a reduction in the number of daily 

cold extremes has been observed in 70 to 75% of the land regions where data is available. 

Cold nights (lowest or coldest 10% of nights, based on the period 1961-1990) have 

become rarer over the last 50 years. 

Observational evidence indicates an increase in intense tropical cyclone (i.e., 

tropical storms and/or hurricanes) activity in the North Atlantic. Since about 1970, 

increases in cyclone developments that affect the U.S. East and Gulf Coasts have been 

correlated with increases of tropical sea surface temperatures In the contiguous U.S., 

studies find statistically significant increases in heavy precipitation (the heaviest 5%) and 

very heavy precipitation (the heaviest 1%) of 14 and 20%, respectively. Much of this 

increase occurred during the last three decades of the 20th century and is most apparent 

over the eastern parts of the country. Trends in drought also have strong regional 

variations. In much of the Southeast and large parts of the western U.S., the frequency of 

drought has increased coincident with rising temperatures over the past 50 years. 

Although there has been an overall increase in precipitation and no clear trend in drought 

for the nation as a whole, increasing temperatures have made droughts more severe and 

widespread than they would have otherwise been. 

iv. Physical and Biological Changes

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Observations show that climate change is currently affecting U.S. physical and 

biological systems in significant ways. Observations of the cryosphere (the “frozen” 

component of the climate system) have revealed changes in sea ice, glaciers and snow 

cover, freezing and thawing, and permafrost. Satellite data since 1978 show that annual 

average Arctic sea ice extent has shrunk by 2.7% (+/- 0.6%) per decade, with larger 

decreases in summer. Subtropical and tropical corals in shallow waters have already 

suffered major bleaching events that are primarily driven by increases in sea surface 

temperatures. Heat stress from warmer ocean water can cause corals to expel the 

microscopic algae that live inside them which are essential to their survival. Another 

stressor on coral populations is ocean acidification which occurs as CO2 is absorbed from 

the atmosphere by the oceans. About one-third of the carbon dioxide emitted by human 

activities has been absorbed by the ocean, resulting in a decrease in the ocean’s pH. A 

lower pH affects the ability of living things to create and maintain shells or skeletons of 

calcium carbonate. Other documented bio-physical impacts include a significant 

lengthening of the growing season and increase in net primary productivity96 in higher 

latitudes of North America. Over the last 19 years, global satellite data indicate an earlier 

onset of spring across the temperate latitudes by 10 to 14 days. See Section 4 of the 

proposed Endangerment TSD for a more complete discussion and list of citations on 

observed changes in climate. 

c. Projected Changes in Climate 

Most future scenarios that assume no explicit GHG mitigation actions (beyond 

those already enacted) project increasing global GHG emissions over the century, with 

corresponding climbing GHG concentrations. Carbon dioxide is expected to remain the 

dominant anthropogenic GHG over the course of the 21

st century. The radiative forcing97

associated with the non-CO2 GHGs is still significant and increasing over time. As a 

result, warming over this century is projected to be considerably greater than over the last 

century and climate related changes are expected to continue while new ones develop. 

Described below are projected changes in climate for the U.S. 

i. Temperature

Future warming over the course of the 21st century, even under scenarios of low 

emissions growth, is very likely to be greater than observed warming over the past 

century. The range of IPCC SRES scenarios provides a global warming range of 1.8oC to 

4.0oC (3.2oF to 7.2oF) with an uncertainty range of 1.1oC to 6.4oC (2.0oF to 11.5oF). All of 

the U.S. is very likely to warm during this century, and most areas of the U.S. are 

expected to warm by more than the global average. The average warming in the U.S. 

through 2100 is projected by nearly all the models used in the IPCC assessment to exceed 

2oC (3.6oF) for all scenarios, with 5 out of 21 models projecting average warming in 

 

96 Net primary productivity is the rate at which an ecosystem accumulates energy or biomass, excluding the 

energy it uses for the process of respiration 

97 Radiative forcing is a measure of the change that a factor causes in altering the balance of incoming

(solar) and outgoing (infrared and reflected shortwave) energy in the Earth-atmosphere system and thus

shows the relative importance of different factors in terms of their contribution to climate change. 
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excess of 4oC (7.2oF) for the mid-range emissions scenario. The number of days with 

high temperatures above 90oF is projected to increase throughout the U.S. Temperature 

increases in the next couple of decades will be primarily determined by past emissions of 

heat-trapping gases. As a result, there is less difference in projected temperature 

scenarios in the near-term (around 2020) than in the middle (2050) and end of the 

century, which will be determined more by future emissions. 

ii. Precipitation

Increases in the amount of precipitation are very likely in higher latitudes, while 

decreases are likely in most subtropical latitudes and the southwestern U.S., continuing 

observed patterns. The mid-continental area is expected to experience drying during the 

summer, indicating a greater risk of drought. Climate models project continued increases 

in the heaviest downpours during this century, while the lightest precipitation is projected 

to decrease. With more intense precipitation expected to increase, the risk of flooding 

and greater runoff and erosion will also increase. In contrast, droughts are likely to 

become more frequent and severe in some regions. The Southwest, in particular, is 

expected to experience increasing drought as changes in atmospheric circulation patterns 

cause the dry zone just outside the tropics to expand farther northward into the United 

States. 

iii. Extreme Events 

It is likely that hurricanes will become more intense, especially along the Gulf and 

Atlantic coasts, with stronger peak winds and more heavy precipitation associated with 

ongoing increases of tropical sea surface temperatures. Heavy rainfall events are 

expected to increase, increasing the risk of flooding, greater runoff and erosion, and thus 

the potential for adverse water quality effects. These projected trends can increase the 

number of people at risk from suffering disease and injury due to floods, storms, 

droughts, and fires. Severe heat waves are projected to intensify, which can increase 

heat-related mortality and sickness. 

iv. Physical and Biological Changes 

IPCC projects a six-inch to two-foot rise in sea level during the 21st century from 

processes such as thermal expansion of sea water and the melting of land-based polar ice 

sheets. Ocean acidification is projected to continue, resulting in the reduced biological 

production of marine calcifiers, including corals. In addition to ocean acidification, 

coastal waters are very likely to continue to warm by as much as 4 to 8oF in this century, 

both in summer and winter. This will result in a northward shift in the geographic 

distribution of marine life along the coasts. Warmer ocean temperatures will also 

contribute to increased coral bleaching. See Section 6 of the proposed Endangerment

TSD for a more complete discussion and list of citations on observed changes in climate.

d. Key Climate Change Impacts and Risks 
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The effects of climate changes observed to date and/or projected to occur in the 

future include: more frequent and intense heat waves, more wildfires, degraded air 

quality, more heavy downpours and flooding, increased drought, greater sea level rise, 

more intense storms, water quantity and quality problems, and negative impacts to human 

health, water supply, agriculture, forestry, coastal areas, wildlife and ecosystems, and 

many other aspects of society and the natural environment. 

i. Human Health 

Warm temperatures and extreme weather already cause and contribute to adverse 

human health outcomes through heat-related mortality and morbidity, storm-related 

fatalities and injuries, and disease. In the absence of effective adaptation, these effects 

are likely to increase with climate change. Health effects related to climate change 

include increased deaths, injuries, infectious diseases, and stress-related disorders and 

other adverse effects associated with social disruption and migration from more frequent 

extreme weather. Severe heat waves are projected to intensify in magnitude and duration 

over the portions of the U.S. where these events already occur, with potential increases in 

mortality and morbidity, especially among the elderly, young and other sensitive 

populations. However, reduced human mortality from cold exposure is projected through 

2100. It is not clear whether reduced mortality from cold will be greater or less than 

increased heat-related mortality, especially among the elderly, young and frail. Public 

health effects from climate change will likely disproportionately impact the health of 

certain segments of the population, such as the poor, the very young, the elderly, those 

already in poor health, the disabled, those living alone and/or indigenous populations 

dependent on one or a few resources. Increases are expected in potential ranges and 

exposure of certain diseases affected by temperature and precipitation changes, including 

vector and waterborne diseases (i.e., malaria, dengue fever, West Nile virus). See 

Section 7 of the proposed Endangerment TSD for a more complete discussion and list of 

citations regarding climate science and impacts to human health. 

ii. Air Quality 

Climate change can be expected to influence the concentration and distribution of 

air pollutants through a variety of direct and indirect processes, including the 

modification of biogenic emissions, the change of chemical reaction rates, wash-out of 

pollutants by precipitation, and modification of weather patterns that influence pollutant 

build-up. Higher temperatures and weaker circulation patterns associated with climate 

change are expected to worsen regional ozone pollution in the U.S., with associated risks 

in respiratory infection, aggravation of asthma, and premature death. In addition to 

human health effects, elevated levels of tropospheric ozone have significant adverse 

effects on crop yields, pasture and forest growth, and species composition. See Section 8 

of the proposed Endangerment TSD for a more complete discussion and list of citations 

regarding human health impacts resulting from climate change effects on air quality.
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159

iii. Food and Agriculture 

The Climate Change Science Program (CCSP) concluded that, with increased 

CO2 and temperature, the life cycle of grain and oilseed crops will likely progress more 

rapidly. But, as temperature rises, these crops will increasingly begin to experience 

failure, especially if climate variability increases and precipitation lessens or becomes 

more variable. Furthermore, the marketable yield of many horticultural crops (e.g., 

tomatoes, onions, fruits) is very likely to be more sensitive to climate change than grain 

and oilseed crops. Higher temperatures will very likely reduce livestock production 

during the summer season, but these losses will very likely be partially offset by warmer 

temperatures during the winter season. Cold water fisheries will likely be negatively 

affected; warm-water fisheries will generally benefit; and the results for cool-water 

fisheries will be mixed, with gains in the northern and losses in the southern portions of 

ranges. See Section 9 of the proposed Endangerment TSD for a more complete discussion 

and list of citations regarding climate science and impacts to food production and 

agriculture.

iv. Forestry 

Climate change has very likely increased the size and number of forest fires, 

insect outbreaks, and tree mortality in the interior west, the Southwest, and Alaska, and 

will continue to do so. Disturbances like wildfire and insect outbreaks are increasing and 

are likely to intensify in a warmer future with drier soils and longer growing seasons. 

Although recent climate trends have increased vegetation growth, continuing increases in 

disturbances are likely to limit carbon storage, facilitate invasive species, and disrupt 

ecosystem services Overall forest growth for North America as a whole will likely 

increase modestly (10-20%) as a result of extended growing seasons and elevated CO2

over the next century, but with important spatial and temporal variation. Forest Ggrowth 

is slowing in areas subject to drought and has been subject to significant loss due insect 

infestations such as the spruce bark beetle in Alaska. See Section 10 of the proposed 

Endangerment TSD for a more complete discussion and list of citations regarding climate 

science and impacts to forestry.

v. Water Resources 

The vulnerability of freshwater resources in the United States to climate change 

varies from region to region. Climate change will likely further constrain already overallocated water resources in some sections of the U.S., increasing competition among 

agricultural, municipal, industrial, and ecological uses. Although water management 

practices in the U.S. are generally advanced, particularly in the western U.S climate 

change may increasingly create conditions well outside of historic observations impacting 

managed water systems. Rising temperatures will diminish snowpack and increase 

evaporation, affecting seasonal availability of water. Groundwater systems generally 

respond more slowly to climate change than surface water systems. In semi-arid and arid 
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areas, groundwater resources are particularly vulnerable because of precipitation and 

stream flow are concentrated over a few months, year-to-year variability is high, and 

deep groundwater wells or reservoirs generally do not exist. Availability of groundwater 

is likely to be influenced by changes in withdrawals (reflecting development, demand, 

and availability of other sources). 

In the Great Lakes and major river systems, lower levels are likely to exacerbate 

challenges relating to water quality, navigation, recreation, hydropower generation, water 

transfers, and bi-national relationships. Decreased water supply and lower water levels 

are likely to exacerbate challenges relating to aquatic navigation. Higher water 

temperatures, increased precipitation intensity, and longer periods of low flows will 

exacerbate many forms of water pollution, potentially making attainment of water quality 

goals more difficult. As waters become warmer, the aquatic life they now support will be 

replaced by other species better adapted to warmer water. In the long-term, warmer 

water and changing flow may result in deterioration of aquatic ecosystems. See Section 

11 of the proposed Endangerment TSD for a more complete discussion and list of 

citations regarding climate science and impacts to water resources.

vi. Sea Level Rise and Coastal Areas 

Warmer temperatures raise sea level by expanding ocean water, melting glaciers, 

and possibly increasing the rate at which ice sheets discharge ice and water into the 

oceans. Rising sea level and the potential for stronger storms pose an increasing threat to 

coastal cities, residential communities, infrastructure, beaches, wetlands, and ecosystems. 

Coastal communities and habitats will be increasingly stressed by climate change effects 

interacting with development and pollution. Sea level is rising along much of the U.S. 

coast, and the rate of change will increase in the future, exacerbating the impacts of 

progressive inundation, storm-surge flooding, and shoreline erosion. Studies find 75% of 

the shoreline removed from the influence of spits, tidal inlets and engineering structures 

is eroding along the U.S. East Coast probably due to sea level rise. Storm impacts are 

likely to be more severe, especially along the Gulf and Atlantic coasts. Salt marshes, 

estuaries, other coastal habitats, and dependent species will be further threatened by sealevelsea level rise. The interaction with coastal zone development and climate change 

effects such as sea-levelsea level rise will further stress coastal communities and habitats. 

Population growth and rising value of infrastructure in coastal areas increases 

vulnerability and risk of climate variability and future climate change. Sea level rise and 

high rates of water withdrawal promote the intrusion of saline water in to groundwater 

supplies, which adversely affects water quality. See Section 12 of the proposed 

Endangerment TSD for a more complete discussion and list of citations regarding climate 

science and impacts to sea level rise and coastal areas. 

vii. Energy, Infrastructure and Settlements 
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Most of the effects of climate change on the U.S. energy sector will be related to 

energy use and production. The research evidence is relatively clear that climate warming 

will mean reductions in total U.S. heating requirements and increases in total cooling 

requirements for building. These changes will vary by region and by season and will 

affect household and business energy costs. Studies project that temperature increases 

due to global warming are very likely to increase peak demand for electricity in most 

regions of the country as rising temperatures are expected to increase energy 

requirements for cooling residential and commercial buildings. An increase in peak 

demand for electricity can lead to a disproportionate increase in energy infrastructure 

investment. Extreme weather events can threaten coastal energy infrastructures and 

electricity transmission and distribution in the U.S. Increases in hurricane intensity are 

likely to cause further disruptions to oil and gas operations in the Gulf, like those 

experienced in 2005 with Hurricane Katrina. Climate change is likely to affect some 

renewable energy sources across the nation, such as hydropower production in regions 

subject to changing patterns of precipitation or snowmelt. The U.S. energy sector, which 

relies heavily on water for both hydropower and cooling capacity, may be adversely 

impacted by changes to water supply and quality in reservoirs and other water bodies. 

Water infrastructure, including drinking water and wastewater treatment plants, 

and sewer and storm water management systems, will be at greater risk of flooding, sealevelsea level rise and storm surge, low flows, and other factors that could impair 

performance. In addition, as water supply is constrained and demand increases it will 

become more likely that water will have to be transported and moved which will require 

additional energy capacity. See Section 13 of the proposed Endangerment TSD for a 

more complete discussion and list of citations regarding climate science and impacts to 

energy, infrastructure and settlements.

viii. Ecosystems and Wildlife 

Disturbances such as wildfires and insect outbreaks are increasing in the U.S. and 

are likely to intensify in a warmer future with drier soils and longer growing seasons. 

Although recent climate trends have increased vegetation growth, continuing increases in 

disturbances are likely to limit carbon storage, facilitate invasive species, and disrupt 

ecosystem services. Over the 21st century, changes in climate will cause species to shift 

north and to higher elevations and fundamentally rearrange U.S. ecosystems. Differential 

capacities for range shifts are constrained by development, habitat fragmentation, 

invasive species, and broken ecological connections. IPCC consequently predicts 

significant disruption of ecosystem structure, function, and services. See Section 14 of

the proposed Endangerment TSD for a more complete discussion and list of citations 

regarding climate science and impacts to ecosystems and wildlife.

3. Changes in Global Mean Temperature and Sea Level Rise Associated with 

the Proposal’s GHG Emissions Reductions 
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EPA examined the reductions in CO2 and other GHGs associated with the 

proposal and analyzed the projected effects on global mean surface temperature and sea 

level, two common indicators of climate change. The analysis projects that the proposal 

will reduce climate warming and sea level rise. Although the projected reductions are 

small in overall magnitude by themselves, they are quantifiable and would contribute to 

reducing climate change risks. 

a. Estimated Projected Reductions in Global Mean Surface Temperatures 

and Sea Level Rise 

EPA estimated changes in the atmospheric CO2 concentration, projected global 

mean surface temperature and sea-levelsea level rise to 2100 resulting from the emissions 

reductions in this proposal using the Model for the Assessment of Greenhouse Gas 

Induced Climate Change (MAGICC, version 5.3). This widely-used, peer reviewed 

modeling tool was also used to project temperature and sea-levelsea level rise under 

different emissions scenarios in the Third and Fourth Assessments of the 

Intergovernmental Panel on Climate Change (IPCC). 

GHG emissions reductions from Section III.F.1a were applied as net reductions to 

a peer reviewed global reference case (or baseline) emissions scenario to generate an 

emissions scenario specific to this proposal. For the proposal scenario, all emissions 

reductions were assumed to begin in 2012, with zero emissions change in 2011 (from the 

reference case) followed by emissions linearly increasing to equal the value supplied in 

Section III.F.1.a for 2020 and then continuing to 2100. Details about the reference case 

scenario and how the emissions reductions were applied to generate the proposal scenario 

can be found in the DRIA Chapter 7. 

The atmospheric CO2 concentration, temperature, increase and sea -level rise 

increases for both the reference case and the proposal emissions scenarios were computed 

using MAGICC. To compute the reductions in the atmospheric CO2 concentrations as 

well as in temperature and sea-levelsea level rise resulting from the proposal, the output 

from the proposal scenario was subtracted from an existing MiniCAM emission scenario. 

To capture some key uncertainties in the climate system with the MAGICC model, 

changes in temperature and sea- level rise were projected across the most current IPCC 

range for climate sensitivities which ranges from 1.5°C to 6.0°C (representing the 90% 

confidence interval)98. This wide range reflects the uncertainty in this measure of how 

much the global mean temperature would rise if the concentration of carbon dioxide in 

the atmosphere were to double. Details about this modeling analysis can be found in the 

DRIA Chapter 7.4. 

 

98 In IPCC reports, equilibrium climate sensitivity refers to the equilibrium change in the annual mean 

global surface temperature following a doubling of the atmospheric equivalent carbon dioxide 

concentration. The IPCC states that climate sensitivity is “likely” to be in the range of 2°C to 4.5°C, “very 

unlikely” to be less than 1.5°C, and “values substantially higher than 4.5°C cannot be excluded.” IPCC

WGI, 2007, Climate Change 2007 - The Physical Science Basis, Contribution of Working Group I to the 

Fourth Assessment Report of the IPCC, http://www.ipcc.ch/ 
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The results of this modeling show a small, but quantifiable, reductions in the 

atmospheric CO2 concentration, the projected global mean surface temperature and sea 

level respectively as a result of resulting from this proposal (assuming it is finalized), 

across all climate sensitivities. The atmospheric CO2 concentration is projected to be 

reduced by approximately 2.9-3.2 parts per million (ppm), global mean temperature is 

projected to be reduced by approximately 0.007-0.016°C by 2100, and global mean sealevelsea level rise is projected to be reduced by approximately 0.06-0.15cm by 2100. 

The reductions are small relative to the IPCC’s 2100 “best estimates” for global mean 

temperature increases (1.8 – 4.0oC) and sea-levelsea level rise (0.20-0.59m) for all global 

GHG emissions sources for a range of emissions scenarios. 

As a substantial portion of CO2 emitted into the atmosphere is not removed by 

natural processes for millennia, each unit of CO2 not emitted into the atmosphere avoids 

essentially permanent climate change on centennial time scales. Though the magnitude 

of the avoided climate change projected here is small, these reductions would represent a 

reduction in the adverse risks associated with climate change (though these risks were not 

formally estimated for this proposal) across all climate sensitivities. 

4. Weight Reduction and Potential Safety Impacts

[NOTE – THIS SECTION DOES NOT YET REFLECT EDITS EPA WILL MAKE IN 

RESPONSE TO OMB COMMENT #1 FROM THE SEPTEMBER 4, 2009 

INTERAGENCY COMMENTS FROM OMB]

In this section, EPA will discuss the potential safety impacts of the proposed CO2 

standard. In the joint technology analysis, EPA and NHTSA agree that automakers will 

reduce weight as one part of the industries’ strategy for meeting the proposed standards. 

As shown in table III.D.6-3, of this Preamble, EPA is expecting that vehicle 

manufacturers will reduce the weight of their vehicles by 4% on average between 2011 

and 2016 (NHTSA’s results are similar using the Volpe model). The penetration and 

magnitude of these changes are consistent with the public announcements made by many 

manufacturers since early 2008 and are consistent with meetings that EPA has had with 

senior engineers and technical leadership at many of the automotive companies during 

2008 and 2009. This could be an underestimation of what will actually occur in the 

industry as a number of automotive companies have announced product plans for vehicle 

weight reduction exceeding this 4%. 

 EPA and NHTSA also project that automakers will not reduce footprint in order 

to meet the proposed CO2 and CAFE standards. NHTSA and EPA have taken two 

measures to help ensure that the proposed rules provide no incentive for mass reduction 

to be accompanied by a corresponding decrease in the size of the vehicle (with its 

concomitant decrease in crush and crumple zones). The first design feature of the 

proposed rule is that the CO2 or fuel economy targets are based on the attribute of 

footprint (which is a surrogate for vehicle size). The second design feature is that the 

shape of the attribute footprint standard curve (or function) has been carefully chosen 

such that it neither encourages manufacturers to increase, nor decrease the footprint of 
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164

their fleet. Thus the standard curves are designed to be approximately “size neutral” 

within the sloped portion of the function. For further discussion on this, refer to Section 

II.C of the preamble, or Chapter 2 of the joint TSD. Thus the agencies are assuming that 

the manufacturers are projected to decrease the average mass of the vehicle fleet with no 

change in the average footprint in response to the proposed rule.99

 

 In Section IV of this preamble NHTSA presents a safety analysis of the proposed 

CAFE standards based on a 2003 NHTSA Study. As discussed in Section IV, the 

underlying data used for that analysis does not allow NHTSA to analyze the specific 

impact of weight reduction at constant footprint, but rather that data set also includes 

weight reduction accomplished through vehicle downsizing. Therefore, the agencies are 

not able to definitively estimate the impact of the projected type of weight reduction we 

anticipate will occur do to the proposed standards. Thus, EPA will not attempt to 

quantify this relationship but rather will provide a qualitative discussion of the possible 

safety impacts that could be associated with the proposed standards. 

 In Section IV of this Preamble, NHTSA has quantified the “worst case” scenario 

that would occur if all of the weight reduction is due to vehicle downsizing (where 

downsizing includes the effects of size reduction, mass reduction and changes in 

structural integrity). The numbers in the NHTSA analyses predict the safety 

consequences that would occur in the unlikely event that weight reduction for MYs 2012-

2016 is accomplished entirely by making the vehicles smaller—that is, by reducing mass 

and reducing footprint. EPA concurs with NHTSA that the safety analysis conducted by 

NHTSA and presented in Section IV is a worst case analysis and we both agencies expect 

the actual impacts on vehicle safety will be much less. EPA and NHTSA are not able to 

quantify the lower-bound of the potential impacts at this time.

 

Reducing vehicle mass without reducing the size of the vehicle or the structural integrity 

is technically feasible. Many of the technical options for doing so are outlined in Chapter 

3 of the joint TSD and in EPA’s DRIA. Weight reduction can be accomplished by the 

proven methods described below. Every manufacturer will employ all of these 

methodologies to some degree, the magnitude to which each will be used is dependent on 

opportunities within individual vehicle design such as:.

• Material Substitution: Substitution of lower density and/or higher strength 

materials in a manner that preserves or improves the function of the component. 

This includes substitution of high-strength steels, aluminum, magnesium or 

composite materials for components currently fabricated from mild steel (e.g., the 

magnesium-alloy front structure used on the 2009 Ford F150 pickups). Lightweight materials with acceptable energy absorption properties can maintain 

structural integrity and absorption of crash energy relative to previous designs 

while providing a net decrease in component weight. 

• Smart Design: Computer aided engineering (CAE) tools can be used to better 

optimize load paths within structures by reducing stresses and bending moments 

without adversely affecting structural integrity. This allows better optimization of 

 

99 See Chapter 1 of the joint TSD for a description of potential footprint changes in the 2016 reference fleet 
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the sectional thicknesses of structural components to reduce mass while 

maintaining or improving the function of the component. Smart designs also 

integrate separate parts in a manner that reduces mass by combining functions or 

the reduced use of separate fasteners. In addition, some “body on frame” vehicles 

are redesigned with a lighter “unibody” construction with no compromise in 

vehicle functionality. 

• Reduced Powertrain Requirements: Reducing vehicle weight sufficiently allows 

for the use of a smaller, lighter and more efficient engine while maintaining or 

increasing performance. Approximately half of the reduction is due to these 

reduced powertrain output requirements from reduced engine power output and/or 

displacement, lighter weight transmission and final drive gear ratios. The 

subsequent reduced rotating mass (e.g. transmission, driveshafts/halfshafts, 

wheels and tires) via weight and/or size reduction of components are made 

possible by reduced torque output requirements. 

• Mass Compounding: The compounded weight reductions of the body, engine and 

drivetrain reduce stresses on the suspension components, steering components, 

brakes, allows further reductions in the weight of these subsystems. The 

reductions in weight for unsprung masses such as brakes, control arms, wheels 

and tires further reduce stresses in the suspension mounting points allowing still 

further reductions in weight. For example lightweighting allows for the reduction 

in the size of the vehicle brake system, while maintaining the same stopping 

distance. 

Therefore, EPA believes iIt is both technically feasible to reduce weight without 

reducing vehicle size, and we the EPA projects that manufacturers will use these 

approaches to do just that. We request comment on this assessment. 

 For this proposed rule, EPA’s modeling analysis projects that weight reduction by 

model year 2016 on the order of 4% will occur, and that this weight reduction will be 

accomplished through efficient design and the use of high-strength, light-weight 

materials. EPA believes that these changes in the fleet may have minimal to no adverse 

safety effects, but as discussed by NHTSA in Section IV the agencies are not able to 

quantify a “best estimate” of the potential impacts. In addition, EPA is conducting a full 

scale air quality modeling and health impacts analysis for the final rule. It is expected 

that the health benefits due to improved air quality will offset the “worst case” scenario 

analyzed by NHTSA in Section IV of this Preamble. EPA The agencies commits to 

continue to analyze vehicle safety issues so a more informed evaluation can be made. 

We request comment on this issue, including data and analysis which can allow EPA the 

agencies to more accurately quantify any potential safety concerns with the proposed 

standards. In summary, EPA believes that it is much more likely that the net safety 

impacts of the proposal will be much smaller than the worse case scenario presented in 

Section IV by NHTSA, though we are not able to quantify how low at this time. 

G. How Would the Proposal Impact Non-GHG Emissions and Their 

Associated Effects? 
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In addition to reducing the emissions of greenhouse gases, this proposal would 

influence the emissions of “criteria” air pollutants and air toxics (i.e., hazardous air 

pollutants). The criteria air pollutants include carbon monoxide (CO), fine particulate 

matter (PM2.5), sulfur dioxide (SOX) and the ozone precursors hydrocarbons (VOC) and 

oxides of nitrogen (NOX); the air toxics include benzene, 1,3-butadiene, formaldehyde, 

acetaldehyde, and acrolein. Our estimates of these non-GHG emission impacts from the 

proposed program are shown by pollutant in Table III.G-1 and Table III.G-2 in total, and 

broken down by the two drivers of these changes: a) “upstream” emission reductions due 

to decreased extraction, production and distribution of motor gasoline; and b) 

“downstream” emission increases, reflecting the effects of VMT rebound (discussed in 

Sections III.F and III.H). Total program impacts on criteria and toxics emissions are 

discussed below, followed by individual discussions of the upstream and downstream 

impacts. Those are followed by discussions of the effects on air quality, health, and other 

environmental concerns. 

As discussed in Chapter 5 of the DRIA, the impacts presented here are only from 

petroleum (i.e., EPA assumes that total volumes of ethanol and other renewable fuels will 

remain unchanged due to this program). Ethanol use was modeled at the volumes 

projected in AEO2007 for the reference and control case; thus no changes are projected 

in upstream emissions related to ethanol production and distribution. However, due to 

the decreased gasoline volume associated with this proposal, a greater market share of 

E10 is expected relative to E0, which would be expected to have some effect on fleetwide 

average non-GHG emission rates. This effect, which is likely small relative to the other 

effects considered here, has not been accounted for in the downstream emission modeling 

conducted for this proposal, but EPA does plan to address it in the final rule air quality 

analysis, for which localized impacts could be more significant. A more comprehensive 

analysis of the impacts of different ethanol and gasoline volume scenarios is being 

prepared as part of EPA's RFS2 rulemaking package.100

 

As shown in Table III.G-1, EPA estimates that this program would result in 

reductions of NOX, VOC, PM and SOX, but would increase CO emissions. For NOx,

VOC, PM and SOx, we estimate net reductions in criteria pollutant emissions because the 

emissions reductions from upstream sources are larger than the emission increases due to 

additional driving (i.e., the "rebound effect). In the case of CO, we estimate slight 

emission increases, because there are relatively small reductions in upstream emissions, 

and thus the projected emission increases due to additional driving are greater than the 

projected emission decreases due to reduced fuel production. EPA estimates that the 

proposed program would result in small changes for toxic emissions compared to total 

U.S. inventories across all sectors. The CO increase is because gasoline fueled passenger 

cars and light trucks contribute over 50 percent of the total CO emissions in the U.S., 

whereas for other pollutants the contribution is less than 40 percent. Thus, for CO the 

increase from VMT rebound outweighs the upstream CO reductions. For all pollutants 

the overall impact of the program would be relatively small compared to total U.S. 

inventories across all sectors. In 2030 EPA estimates the proposed program would 

reduce these total NOX, PM and SOX inventories by 0.2 to 0.3 percent and reduce the 

 

100 74 FR 24904. See also Docket EPA-HQ-OAR-2005-0161. 
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VOC inventory by 1.2 percent, while increasing the total national CO inventory by 0.4 

percent. 

As shown in Table III.G-2, EPA estimates that the proposed program would result 

in small changes for toxic emissions compared to total U.S. inventories across all sectors. 

In 2030 EPA estimates the program would reduce total benzene and formaldehyde by 

0.04 percent. Total acrolein, acetaldehyde, and 1,3-butadiene would increase by 0.03 to 

0.2 percent. 

 Other factors which may impact non-GHG emissions, but are not estimated in this 

analysis, include: 

• Vehicle technologies used to reduce tailpipe CO2 emissions; because the 

regulatory standards for non-GHG emissions are the primary driver for these 

emissions, EPA expects the impact of this program to be negligible on non-GHG 

emission rates per mile. 

• The potential for increased market penetration of diesel vehicles; because these 

vehicles would be held to the same certification and in-use standards for criteria 

pollutants as their gasoline counterparts, EPA expects their impact to be 

negligible on criteria pollutants and other non-GHG emissions. 

• Early introduction of electric vehicles and plug-in hybrid electric vehicles, which 

would reduce criteria emissions in cases where they are able to certify to lower 

certification standards. It would also likely reduce gaseous air toxics. 

• Reduced refueling emissions due to less frequent refueling events and reduced 

annual refueling volumes resulting from the GHG standards. 

• Increased hot soak evaporative emissions due to the likely increase in number of 

trips associated with VMT rebound modeled in this proposal. 

• Increased market share of E10 relative to E0 due to the decreased overall gasoline 

consumption of this proposal combined with an unchanged fuel ethanol volume. 

EPA invites comments on the possible contribution of these factors to non-GHG 

emissions. 
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Table III.G-1 Annual Criteria Emission Impacts of Program (short tons) 

Total Impacts Upstream Impacts Downstream Impacts

2020 2030 2020 2030 2020 2030 

VOC -73,739 -142,347 -75,437 -147,841 1,698 5,494 

 % of total 

inventory -0.60% -1.2% -0.61% -1.2% 0.01% 0.05% 

CO 70,614 227,832 -7,209 -14,107 77,823 241,939 

 % of total 

inventory 0.13% 0.38% -0.01% -0.02% 0.14% 0.40% 

NOX -17,206 -27,726 -22,560 -43,286 5,354 15,560 

 % of total 

inventory -0.14% -0.2% -0.18% -0.36% 0.04% 0.13% 

PM2.5 -2,856 -5,431 -3,075 -6,003 218 572 

 % of total 

inventory -0.08% -0.16% -0.09% -0.18% 0.01% 0.02% 

SOX -16,307 -31,965 -13,804 -27,060 -2,503 -4,906 

 % of total 

inventory -0.18% -0.34% -0.16% -0.29% -0.03% -0.05% 

Table III.G-2 Annual Air Toxic Emission Impacts of Program (short tons) 

Total Impacts Upstream Impacts Downstream Impacts 

2020 2030 2020 2030 2020 2030 

1,3-Butadiene 11 37 -1.8 -3.4 13.2 40.2 

 % of total 

inventory 0.07% 0.22% -0.01% -0.02% 0.08% 0.24% 

Acetaldehyde 17 61 -8 -15 24.8 75.5 

 % of total 

inventory 0.04% 0.13% -0.02% -0.03% 0.05% 0.17% 

Acrolein 0 2 -1.1 -2.0 1.3 3.9 

 % of total 

inventory 0.00% 0.03% 0.0% 0.0% 0.02% 0.06% 

Benzene -84 -77 -163 -320 79.6 242.2 

 % of total 

inventory -0.04% -0.04% -0.08% -0.15% 0.04% 0.11% 

Formaldehyde -28 -16 -60 -112 31.8 96.3 

 % of total 

inventory -0.03% -0.02% -0.07% -0.1% 0.04% 0.11% 

1. Upstream Impacts of Program

Reducing tailpipe CO2 emissions from light-duty cars and trucks through tailpipe 

standards and improved A/C efficiency will result in reduced fuel demand and reductions 

in the emissions associated with all of the processes involved in getting petroleum to the 

pump. These upstream emission impacts on criteria pollutants are summarized in Table 

III.G-1. The upstream reductions grow over time as the fleet turns over to cleaner CO2

vehicles, so that by 2030 VOC would decrease by 148,000 tons, NOX by 43,000 tons, and 

PM2.5 by 6,000 tons. Table III.G-2 shows the corresponding impacts on upstream air 

toxic emissions in 2030. Formaldehyde decreases by 112 tons, benzene by 320 tons, 

acetaldehyde by 15 tons, acrolein by 2 tons, and 1,3-butadiene by 3 tons. 
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To determine these impacts, EPA estimated the impact of reduced petroleum 

volumes on the extraction and transportation of crude oil as well as the production and 

distribution of finished gasoline. For the purpose of assessing domestic-only emission 

reductions it was necessary to estimate the fraction of fuel savings attributable to 

domestic finished gasoline, and of this gasoline what fraction is produced from domestic 

crude. For this analysis EPA estimated that 50 percent of fuel savings is attributable to 

domestic finished gasoline and that 90 percent of this gasoline originated from imported 

crude. Emission factors for most upstream emission sources are based on the GREET1.8 

model, developed by DOE’s Argonne National Laboratory,101 but in some cases the 

GREET values were modified or updated by EPA to be consistent with the National 

Emission Inventory (NEI).102 The primary updates for this analysis were to incorporate 

newer information on gasoline distribution emissions for VOC from the NEI, which were 

significantly higher than GREET estimates; and the incorporation of upstream emission 

factors for the air toxics estimated in this analysis: benzene, 1,3-butadiene, acetaldehyde, 

acrolein, and formaldehyde. The development of these emission factors is detailed in 

DRIA Chapter 5. 

2. Downstream Impacts of Program

As discussed in more detail in Section III.H, the effect of fuel cost on VMT 

(“rebound”) was accounted for in our assessment of economic and environmental impacts 

of this proposed rule. A 10 percent rebound case was used for this analysis, meaning 

that VMT for affected model years is modeled as increasing by 10 percent as much as the 

increase in fuel economy; i.e., a 10 percent increase in fuel economy would yield a 1.0 

percent increase in VMT. 

Downstream emission impacts of the rebound effect are summarized in Table 

III.G-1 for criteria pollutants and precursors and Table III.G-2 for air toxics. The 

emission increases from the rebound effect grow over time as the fleet turns over to 

cleaner CO2 vehicles, so that by 2030 VOC would increase by 5,500 tons, NOX by 

16,000 tons, and PM2.5 by 570 tons. Table III.G-2 shows the corresponding impacts on 

air toxic emissions. The most noteworthy of these impacts in 2030 are 40 additional tons 

of 1,3-butadiene, 75 tons of acetaldehyde, 240 tons of benzene, 96 tons of formaldehyde, 

and 4 tons of acrolein. 

For this analysis the reference case non-GHG emissions for light duty vehicles 

and trucks were derived using EPA’s MOtor Vehicle Emission Simulator (MOVES) 

model for VOC, CO, NOX, PM and air toxics. PM2.5 emission estimates include 

additional adjustments for low temperatures, discussed in detail in the DRIA. Because 

this modeling was based on calendar year estimates, estimating the rebound effect 

 

101 Greenhouse Gas, Regulated Emissions, and Energy Use in Transportation model (GREET), U.S. 

Department of Energy, Argonne National Laboratory, 

http://www.transportation.anl.gov/modeling_simulation/GREET/ . 

102 EPA. 2002 National Emissions Inventory (NEI) Data and Documentation, 

http://www.epa.gov/ttn/chief/net/2002inventory.html . 
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required a fleet-weighted rebound factor to be calculated for calendar years 2020 and 

2030; these factors are presented in DRIA Chapter 5. 

As discussed in Section III.H, EPA will be taking comment on the appropriate 

level of rebound rate for this analysis. The sensitivity of the downstream emission 

increases shown in Tables III.G-1 and III.G-2 to the level of rebound would be in direct 

proportion to the rebound rate itself; since zero rebound would result in zero emission 

increase, the downstream results presented in Table III.G-1 and Table III.G-2 can be 

directly scaled to estimate the effect of lower rebound rates. 

 3. Health Effects of Non-GHG Pollutants 

 

a. Particulate Matter 

i. Background

Particulate matter is a generic term for a broad class of chemically and physically 

diverse substances. It can be principally characterized as discrete particles that exist in the 

condensed (liquid or solid) phase spanning several orders of magnitude in size. Since 

1987, EPA has delineated that subset of inhalable particles small enough to penetrate to 

the thoracic region (including the tracheobronchial and alveolar regions) of the 

respiratory tract (referred to as thoracic particles). Current NAAQS use PM2.5 as the 

indicator for fine particles (with PM2.5 referring to particles with a nominal mean 

aerodynamic diameter less than or equal to 2.5 μm), and use PM10 as the indicator for 

purposes of regulating the coarse fraction of PM10 (referred to as thoracic coarse particles 

or coarse-fraction particles; generally including particles with a nominal mean 

aerodynamic diameter greater than 2.5 μm and less than or equal to 10 μm, or PM10-2.5). 

Ultrafine particles are a subset of fine particles, generally less than 100 nanometers (0.1 

μm) in aerodynamic diameter. 

Fine particles are produced primarily by combustion processes and by 

transformations of gaseous emissions (e.g., SOX, NOX and VOC) in the atmosphere. The 

chemical and physical properties of PM2.5 may vary greatly with time, region, 

meteorology, and source category. Thus, PM2.5 may include a complex mixture of 

different pollutants including sulfates, nitrates, organic compounds, elemental carbon and 

metal compounds. These particles can remain in the atmosphere for days to weeks and 

travel hundreds to thousands of kilometers. 

ii. Health Effects of PM

Scientific studies show ambient PM is associated with a series of adverse health 

effects. These health effects are discussed in detail in EPA’s 2004 Particulate Matter Air 

Quality Criteria Document (PM AQCD) and the 2005 PM Staff Paper.103,104,105 Further 

 

103 U.S. EPA (2004). Air Quality Criteria for Particulate Matter. Volume I EPA600/P-99/002aF and 

Volume II EPA600/P-99/002bF. Retrieved on March 19, 2009 from Docket EPA-HQ-OAR-2003-0190 at 

http://www.regulations.gov/. 
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discussion of health effects associated with PM can also be found in the DRIA for this 

rule. 

Health effects associated with short-term exposures (hours to days) to ambient 

PM include premature mortality, aggravation of cardiovascular and lung disease (as 

indicated by increased hospital admissions and emergency department visits), increased 

respiratory symptoms including cough and difficulty breathing, decrements in lung 

function, altered heart rate rhythm, and other more subtle changes in blood markers 

related to cardiovascular health.106 Long-term exposure to PM2.5 and sulfates has also 

been associated with mortality from cardiopulmonary disease and lung cancer, and 

effects on the respiratory system such as reduced lung function growth or development of 

respiratory disease. A new analysis shows an association between long-term PM2.5

exposure and a measure of atherosclerosis development.107,108

Studies examining populations exposed over the long term (one or more years) to 

different levels of air pollution, including the Harvard Six Cities Study and the American 

Cancer Society Study, show associations between long-term exposure to ambient PM2.5

and both total and cardiopulmonary premature mortality.109,110,111 In addition, an 

 

104 U.S. EPA. (2005). Review of the National Ambient Air Quality Standard for Particulate Matter: Policy 

Assessment of Scientific and Technical Information, OAQPS Staff Paper. EPA-452/R-05-005a. Retrieved 

March 19, 2009 from http://www.epa.gov/ttn/naaqs/standards/pm/data/pmstaffpaper_20051221.pdf. 

105 The PM NAAQS is currently under review and the EPA is considering all available science on PM 

health effects, including information which has been published since 2004, in the development of the 

upcoming PM Integrated Science Assessment Document (ISA). A second draft of the PM ISA was 

completed in July 2009 and was submitted for review by the Clean Air Scientific Advisory Committee 

(CASAC) of EPA’s Science Advisory Board. Comments from the general public have also been requested. 

For more information, see http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=210586. 

106 U.S. EPA. (2006). National Ambient Air Quality Standards for Particulate Matter; Proposed Rule. 71 

FR 2620, January 17, 2006. 

107 Künzli, N., Jerrett, M., Mack, W.J., et al. (2004). Ambient air pollution and atherosclerosis in Los 

Angeles. Environ Health Perspect.,113, 201-206 

108 This study is included in the 2006 Provisional Assessment of Recent Studies on Health Effects of 

Particulate Matter Exposure. The provisional assessment did not and could not (given a very short 

timeframe) undergo the extensive critical review by CASAC and the public, as did the PM AQCD. The 

provisional assessment found that the “new” studies expand the scientific information and provide 

important insights on the relationship between PM exposure and health effects of PM. The provisional 

assessment also found that “new” studies generally strengthen the evidence that acute and chronic exposure 

to fine particles and acute exposure to thoracic coarse particles are associated with health effects. Further, 

the provisional science assessment found that the results reported in the studies did not dramatically diverge 

from previous findings, and taken in context with the findings of the AQCD, the new information and 

findings did not materially change any of the broad scientific conclusions regarding the health effects of 

PM exposure made in the AQCD. However, it is important to note that this assessment was limited to 

screening, surveying, and preparing a provisional assessment of these studies. For reasons outlined in 

Section I.C of the preamble for the final PM NAAQS rulemaking in 2006 (see 71 FR 61148-49, October 

17, 2006), EPA based its NAAQS decision on the science presented in the 2004 AQCD. 

109 Dockery, D.W., Pope, C.A. III, Xu, X, et al. (1993). An association between air pollution and mortality 

in six U.S. cities. N Engl J Med, 329, 1753-1759. Retrieved on March 19, 2009 from 

http://content.nejm.org/cgi/content/full/329/24/1753. 

110 Pope, C.A., III, Thun, M.J., Namboodiri, M.M., Dockery, D.W., Evans, J.S., Speizer, F.E., and Heath, 

C.W., Jr. (1995). Particulate air pollution as a predictor of mortality in a prospective study of U.S. adults. 

Am. J. Respir. Crit. Care Med, 151, 669-674. 
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extension of the American Cancer Society Study shows an association between PM2.5 and 

sulfate concentrations and lung cancer mortality.112

 

b. Ozone 

i. Background 

Ground-level ozone pollution is typically formed by the reaction of VOC and 

NOX in the lower atmosphere in the presence of heat and sunlight. These pollutants, 

often referred to as ozone precursors, are emitted by many types of pollution sources, 

such as highway and nonroad motor vehicles and engines, power plants, chemical plants, 

refineries, makers of consumer and commercial products, industrial facilities, and smaller 

area sources. 

The science of ozone formation, transport, and accumulation is complex.113

 

Ground-level ozone is produced and destroyed in a cyclical set of chemical reactions, 

many of which are sensitive to temperature and sunlight. When ambient temperatures 

and sunlight levels remain high for several days and the air is relatively stagnant, ozone 

and its precursors can build up and result in more ozone than typically occurs on a single 

high-temperature day. Ozone can be transported hundreds of miles downwind of 

precursor emissions, resulting in elevated ozone levels even in areas with low local VOC 

or NOX emissions. 

ii. Health Effects of Ozone 

The health and welfare effects of ozone are well documented and are assessed in 

EPA’s 2006 Air Quality Criteria Document (ozone AQCD) and 2007 Staff Paper.114, 115

 

Ozone can irritate the respiratory system, causing coughing, throat irritation, and/or 

uncomfortable sensation in the chest. Ozone can reduce lung function and make it more 

difficult to breathe deeply; breathing may also become more rapid and shallow than 

normal, thereby limiting a person’s activity. Ozone can also aggravate asthma, leading to 

 

111 Krewski, D., Burnett, R.T., Goldberg, M.S., et al. (2000). Reanalysis of the Harvard Six Cities study and 

the American Cancer Society study of particulate air pollution and mortality. A special report of the 

Institute's Particle Epidemiology Reanalysis Project. Cambridge, MA: Health Effects Institute. Retrieved 

on March 19, 2009 from http://es.epa.gov/ncer/science/pm/hei/Rean-ExecSumm.pdf.

112 Pope, C. A., III, Burnett, R.T., Thun, M. J., Calle, E.E., Krewski, D., Ito, K., Thurston, G.D., (2002). 

Lung cancer, cardiopulmonary mortality, and long-term exposure to fine particulate air pollution. J. Am. 

Med. Assoc., 287, 1132-1141. 

113 U.S. EPA. (2006). Air Quality Criteria for Ozone and Related Photochemical Oxidants (Final). 

EPA/600/R-05/004aF-cF. Washington, DC: U.S. EPA. Retrieved on March 19, 2009 from Docket EPAHQ-OAR-2003-0190 at http://www.regulations.gov/. 

114 U.S. EPA. (2006). Air Quality Criteria for Ozone and Related Photochemical Oxidants (Final). 

EPA/600/R-05/004aF-cF. Washington, DC: U.S. EPA. Retrieved on March 19, 2009 from Docket EPAHQ-OAR-2003-0190 at http://www.regulations.gov/. 

115 U.S. EPA. (2007). Review of the National Ambient Air Quality Standards for Ozone: Policy 

Assessment of Scientific and Technical Information, OAQPS Staff Paper. EPA-452/R-07-003. 

Washington, DC, U.S. EPA. Retrieved on March 19, 2009 from Docket EPA-HQ-OAR-2003-0190 at 

http://www.regulations.gov/. 
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more asthma attacks that require medical attention and/or the use of additional 

medication. In addition, there is suggestive evidence of a contribution of ozone to 

cardiovascular-related morbidity and highly suggestive evidence that short-term ozone 

exposure directly or indirectly contributes to non-accidental and cardiopulmonary-related 

mortality, but additional research is needed to clarify the underlying mechanisms causing 

these effects. In a recent report on the estimation of ozone-related premature mortality 

published by the National Research Council (NRC), a panel of experts and reviewers 

concluded that short-term exposure to ambient ozone is likely to contribute to premature 

deaths and that ozone-related mortality should be included in estimates of the health 

benefits of reducing ozone exposure.116 Animal toxicological evidence indicates that 

with repeated exposure, ozone can inflame and damage the lining of the lungs, which 

may lead to permanent changes in lung tissue and irreversible reductions in lung function. 

People who are more susceptible to effects associated with exposure to ozone can include 

children, the elderly, and individuals with respiratory disease such as asthma. Those with 

greater exposures to ozone, for instance due to time spent outdoors (e.g., children and 

outdoor workers), are of particular concern. 

The 2006 ozone AQCD also examined relevant new scientific information that 

has emerged in the past decade, including the impact of ozone exposure on such health 

effects as changes in lung structure and biochemistry, inflammation of the lungs, 

exacerbation and causation of asthma, respiratory illness-related school absence, hospital 

admissions and premature mortality. Animal toxicological studies have suggested 

potential interactions between ozone and PM with increased responses observed to 

mixtures of the two pollutants compared to either ozone or PM alone. The respiratory 

morbidity observed in animal studies along with the evidence from epidemiologic studies 

supports a causal relationship between acute ambient ozone exposures and increased 

respiratory-related emergency room visits and hospitalizations in the warm season. In 

addition, there is suggestive evidence of a contribution of ozone to cardiovascular-related 

morbidity and non-accidental and cardiopulmonary mortality. 

c. NOX and SOX 

i. Background

Nitrogen dioxide (NO2) is a member of the NOX family of gases. Most NO2 is 

formed in the air through the oxidation of nitric oxide (NO) emitted when fuel is burned 

at a high temperature. SO2, a member of the sulfur oxide (SOX) family of gases, is 

formed from burning fuels containing sulfur (e.g., coal or oil derived), extracting gasoline 

from oil, or extracting metals from ore. 

SO2 andNO2 can dissolve in water vapor and further oxidize to form sulfuric and 

nitric acid which react with ammonia to form sulfates and nitrates, both of which are 

important components of ambient PM. The health effects of ambient PM are discussed in 

Section III.G.3.a of this preamble. NOX along with non-methane hydrocarbon (NMHC) 

 

116 National Research Council (NRC), 2008. Estimating Mortality Risk Reduction and Economic Benefits 

from Controlling Ozone Air Pollution. The National Academies Press: Washington, D.C. 
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are the two major precursors of ozone. The health effects of ozone are covered in Section 

III.G.3.b. 

ii. Health Effects of NO2

Information on the health effects of NO2 can be found in the U.S. Environmental 

Protection Agency Integrated Science Assessment (ISA) for Nitrogen Oxides.117 The 

U.S. EPA has concluded that the findings of epidemiologic, controlled human exposure, 

and animal toxicological studies provide evidence that is sufficient to infer a likely causal 

relationship between respiratory effects and short-term NO2 exposure. The ISA 

concludes that the strongest evidence for such a relationship comes from epidemiologic 

studies of respiratory effects including symptoms, emergency department visits, and 

hospital admissions. The ISA also draws two broad conclusions regarding airway 

responsiveness following NO2 exposure. First, the ISA concludes that NO2 exposure 

may enhance the sensitivity to allergen-induced decrements in lung function and increase 

the allergen-induced airway inflammatory response at exposures as low as 0.26 ppm NO2

for 30 minutes. Second, exposure to NO2 has been found to enhance the inherent 

responsiveness of the airway to subsequent nonspecific challenges in controlled human 

exposure studies of asthmatic subjects. Enhanced airway responsiveness could have 

important clinical implications for asthmatics since transient increases in airway 

responsiveness following NO2 exposure have the potential to increase symptoms and 

worsen asthma control. Together, the epidemiologic and experimental data sets form a 

plausible, consistent, and coherent description of a relationship between NO2 exposures 

and an array of adverse health effects that range from the onset of respiratory symptoms 

to hospital admission. 

Although the weight of evidence supporting a causal relationship is somewhat 

less certain than that associated with respiratory morbidity, NO2 has also been linked to 

other health endpoints. These include all-cause (nonaccidental) mortality, hospital 

admissions or emergency department visits for cardiovascular disease, and decrements in 

lung function growth associated with chronic exposure. 

iii. Health Effects of SO2

Information on the health effects of SO2 can be found in the U.S. Environmental 

Protection Agency Integrated Science Assessment for Sulfur Oxides.118 SO2 has long 

been known to cause adverse respiratory health effects, particularly among individuals 

with asthma. Other potentially sensitive groups include children and the elderly. During 

periods of elevated ventilation, asthmatics may experience symptomatic 

bronchoconstriction within minutes of exposure. Following an extensive evaluation of 

 

117 U.S. EPA (2008). Integrated Science Assessment for Oxides of Nitrogen – Health Criteria (Final 

Report). EPA/600/R-08/071. Washington, DC,: U.S.EPA. Retrieved on March 19, 2009 from 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=194645. 

118 U.S. EPA. (2008). Integrated Science Assessment (ISA) for Sulfur Oxides – Health Criteria (Final 

Report). EPA/600/R-08/047F. Washington, DC: U.S. Environmental Protection Agency. Retrieved on 

March 18, 2009 from http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=198843 
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health evidence from epidemiologic and laboratory studies, the EPA has concluded that 

there is a causal relationship between respiratory health effects and short-term exposure 

to SO2. Separately, based on an evaluation of the epidemiologic evidence of associations 

between short-term exposure to SO2 and mortality, the EPA has concluded that the 

overall evidence is suggestive of a causal relationship between short-term exposure to 

SO2 and mortality. 

 d. Carbon Monoxide 

Carbon monoxide (CO) forms as a result of incomplete fuel combustion. CO 

enters the bloodstream through the lungs, forming carboxyhemoglobin and reducing the 

delivery of oxygen to the body’s organs and tissues. The health threat from CO is most 

serious for those who suffer from cardiovascular disease, particularly those with angina 

or peripheral vascular disease. Healthy individuals also are affected, but only at higher 

CO levels. Exposure to elevated CO levels is associated with impairment of visual 

perception, work capacity, manual dexterity, learning ability and performance of complex 

tasks. Carbon monoxide also contributes to ozone nonattainment since carbon monoxide 

reacts photochemically in the atmosphere to form ozone.

119 Additional information on 

CO related health effects can be found in the Carbon Monoxide Air Quality Criteria 

Document (CO AQCD).120,121 

e. Air Toxics 

Motor vehicle emissions contribute to ambient levels of air toxics known or 

suspected as human or animal carcinogens, or that have noncancer health effects. The 

population experiences an elevated risk of cancer and other noncancer health effects from 

exposure to air toxics. 122 These compounds include, but are not limited to, benzene, 1,3-

butadiene, formaldehyde, acetaldehyde, acrolein, polycyclic organic matter (POM), and 

naphthalene. These compounds, except acetaldehyde, were identified as national or 

regional risk drivers in the 2002 National-scale Air Toxics Assessment (NATA) and have 

significant inventory contributions from mobile sources.

123 Emissions and ambient 

concentrations of compounds are discussed in the DRIA chapter on emission inventories 

and air quality (Chapters 5 and 7, respectively). 

i. Benzene

 

119 U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide, EPA/600/P-99/001F. This document is 

available in Docket EPA-HQ-OAR-2004-0008. 

120 U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide, EPA/600/P-99/001F. This document is 

available in Docket EPA-HQ-OAR-2004-0008. 

121 The CO NAAQS is currently under review and the EPA is considering all available science on CO 

health effects, including information which has been published since 2000, in the development of the 

upcoming CO Integrated Science Assessment Document (ISA). A first draft of the CO ISA was completed 

in March 2009 and was submitted for review by the Clean Air Scientific Advisory Committee (CASAC) of 

EPA’s Science Advisory Board. For more information, see 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=203935. 

122 U. S. EPA. 2002 National-Scale Air Toxics Assessment. 

http://www.epa.gov/ttn/atw/nata12002/risksum.html 

123 U.S. EPA .2009. National-Scale Air Toxics Assessment for 2002. http://www.epa.gov/ttn/atw/nata2002/
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The EPA’s IRIS database lists benzene as a known human carcinogen (causing 

leukemia) by all routes of exposure, and concludes that exposure is associated with 

additional health effects, including genetic changes in both humans and animals and 

increased proliferation of bone marrow cells in mice.

124,125,126 EPA states in its IRIS 

database that data indicate a causal relationship between benzene exposure and acute 

lymphocytic leukemia and suggest a relationship between benzene exposure and chronic 

non-lymphocytic leukemia and chronic lymphocytic leukemia. The International Agency 

for Research on Carcinogens (IARC) has determined that benzene is a human carcinogen 

and the U.S. Department of Health and Human Services (DHHS) has characterized 

benzene as a known human carcinogen.127,128 

A number of adverse noncancer health effects including blood disorders, such as 

preleukemia and aplastic anemia, have also been associated with long-term exposure to 

benzene.129,130 The most sensitive noncancer effect observed in humans, based on current 

data, is the depression of the absolute lymphocyte count in blood.131, 132 In addition, 

recent work, including studies sponsored by the Health Effects Institute (HEI), provides 

evidence that biochemical responses are occurring at lower levels of benzene exposure 

than previously known.133,134,135,136 EPA’s IRIS program has not yet evaluated these new 

data.

 

124 U.S. EPA. 2000. Integrated Risk Information System File for Benzene. This material is available 

electronically at http://www.epa.gov/iris/subst/0276.htm.

125 International Agency for Research on Cancer (IARC). 1982. Monographs on the evaluation of 

carcinogenic risk of chemicals to humans, Volume 29, Some industrial chemicals and dyestuffs, World 

Health Organization, Lyon, France, p. 345-389.

126 Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry, V.A. 1992. Synergistic action of the benzene 

metabolite hydroquinone on myelopoietic stimulating activity of granulocyte/macrophage colonystimulating factor in vitro, Proc. Natl. Acad. Sci. 89:3691-3695.

127 International Agency for Research on Cancer (IARC). 1987. Monographs on the evaluation of 

carcinogenic risk of chemicals to humans, Volume 29, Supplement 7, Some industrial chemicals and 

dyestuffs, World Health Organization, Lyon, France.

128 U.S. Department of Health and Human Services National Toxicology Program 11th Report on 

Carcinogens available at: http://ntp.niehs.nih.gov/go/16183.

129 Aksoy, M. (1989). Hematotoxicity and carcinogenicity of benzene. Environ. Health Perspect. 82: 193-

197.

130 Goldstein, B.D. (1988). Benzene toxicity. Occupational medicine. State of the Art Reviews. 3: 541-554. 

131 Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E. Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, 

M.T. Smith, N. Titenko-Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes (1996) Hematotoxicity 

among Chinese workers heavily exposed to benzene. Am. J. Ind. Med. 29: 236-246.

132 U.S. EPA (2002) Toxicological Review of Benzene (Noncancer Effects). Environmental Protection 

Agency, Integrated Risk Information System (IRIS), Research and Development, National Center for 

Environmental Assessment, Washington DC. This material is available electronically at 

http://www.epa.gov/iris/subst/0276.htm.

133 Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport, S.; Li, 

H.; Rupa, D.; Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok, E.; Li, Y.; Mu, 

R.; Xu, B.; Zhang, X.; Li, K. (2003) HEI Report 115, Validation & Evaluation of Biomarkers in Workers 

Exposed to Benzene in China. 

134 Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et al. (2002) Hematological changes among 

Chinese workers with a broad range of benzene exposures. Am. J. Industr. Med. 42: 275-285.

135 Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004) Hematotoxically in Workers Exposed to Low 

Levels of Benzene. Science 306: 1774-1776.
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ii. 1,3-Butadiene

EPA has characterized 1,3-butadiene as carcinogenic to humans by 

inhalation.137,138 The IARC has determined that 1,3-butadiene is a human carcinogen and 

the U.S. DHHS has characterized 1,3-butadiene as a known human carcinogen.139,140

 

There are numerous studies consistently demonstrating that 1,3-butadiene is metabolized 

into genotoxic metabolites by experimental animals and humans. The specific 

mechanisms of 1,3-butadiene-induced carcinogenesis are unknown; however, the 

scientific evidence strongly suggests that the carcinogenic effects are mediated by 

genotoxic metabolites. Animal data suggest that females may be more sensitive than 

males for cancer effects associated with 1,3-butadiene exposure; there are insufficient 

data in humans from which to draw conclusions about sensitive subpopulations. 1,3-

butadiene also causes a variety of reproductive and developmental effects in mice; no 

human data on these effects are available. The most sensitive effect was ovarian atrophy 

observed in a lifetime bioassay of female mice.141

 

iii. Formaldehyde 

Since 1987, EPA has classified formaldehyde as a probable human carcinogen 

based on evidence in humans and in rats, mice, hamsters, and monkeys.142 EPA is 

currently reviewing recently published epidemiological data. For instance, research 

conducted by the National Cancer Institute (NCI) found an increased risk of 

nasopharyngeal cancer and lymphohematopoietic malignancies such as leukemia among 

workers exposed to formaldehyde.143, 144 In an analysis of the lymphohematopoietic 

cancer mortality from an extended follow-up of these workers, NCI confirmed an 

 

136 Turtletaub, K.W. and Mani, C. (2003) Benzene metabolism in rodents at doses relevant to human 

exposure from Urban Air. Research Reports Health Effect Inst. Report No.113.

137 U.S. EPA (2002) Health Assessment of 1,3-Butadiene. Office of Research and Development, National 

Center for Environmental Assessment, Washington Office, Washington, DC. Report No. EPA600-P-98-

001F. This document is available electronically at http://www.epa.gov/iris/supdocs/buta-sup.pdf.

138 U.S. EPA (2002) Full IRIS Summary for 1,3-butadiene (CASRN 106-99-0). Environmental Protection 

Agency, Integrated Risk Information System (IRIS), Research and Development, National Center for 

Environmental Assessment, Washington, DC http://www.epa.gov/iris/subst/0139.htm.

139 International Agency for Research on Cancer (IARC) (1999) Monographs on the evaluation of 

carcinogenic risk of chemicals to humans, Volume 71, Re-evaluation of some organic chemicals, hydrazine 

and hydrogen peroxide and Volume 97 (in preparation), World Health Organization, Lyon, France.

140 U.S. Department of Health and Human Services (2005) National Toxicology Program 11th Report on 

Carcinogens available at: ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E7FCE50709CB4C932.

141 Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996) Subchronic toxicity of 4-vinylcyclohexene in rats and 

mice by inhalation. Fundam. Appl. Toxicol. 32:1-10.

142 U.S. EPA (1987) Assessment of Health Risks to Garment Workers and Certain Home Residents from 

Exposure to Formaldehyde, Office of Pesticides and Toxic Substances, April 1987.

143 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2003. Mortality from 

lymphohematopoetic malignancies among workers in formaldehyde industries. Journal of the National 

Cancer Institute 95: 1615-1623.

144 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2004. Mortality from solid 

cancers among workers in formaldehyde industries. American Journal of Epidemiology 159: 1117-1130.
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association between lymphohematopoietic cancer risk and peak exposures.145 A recent 

National Institute of Occupational Safety and Health (NIOSH) study of garment workers 

also found increased risk of death due to leukemia among workers exposed to 

formaldehyde.146 Extended follow-up of a cohort of British chemical workers did not 

find evidence of an increase in nasopharyngeal or lymphohematopoietic cancers, but a 

continuing statistically significant excess in lung cancers was reported.147 Recently, the 

IARC re-classified formaldehyde as a human carcinogen (Group 1).148 

Formaldehyde exposure also causes a range of noncancer health effects, including 

irritation of the eyes (burning and watering of the eyes), nose and throat. Effects from 

repeated exposure in humans include respiratory tract irritation, chronic bronchitis and 

nasal epithelial lesions such as metaplasia and loss of cilia. Animal studies suggest that 

formaldehyde may also cause airway inflammation – including eosinophil infiltration into 

the airways. There are several studies that suggest that formaldehyde may increase the 

risk of asthma – particularly in the young.149,150

iv. Acetaldehyde 

Acetaldehyde is classified in EPA’s IRIS database as a probable human 

carcinogen, based on nasal tumors in rats, and is considered toxic by the inhalation, oral, 

and intravenous routes.151 Acetaldehyde is reasonably anticipated to be a human 

carcinogen by the U.S. DHHS in the 11th Report on Carcinogens and is classified as 

possibly carcinogenic to humans (Group 2B) by the IARC.152,153 EPA is currently 

conducting a reassessment of cancer risk from inhalation exposure to acetaldehyde. 

 

145 Beane Freeman, L. E.; Blair, A.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Hoover, R. N.; Hauptmann, 

M. 2009. Mortality from lymphohematopoietic malignancies among workers in formaldehyde industries: 

The National Cancer Institute cohort. J. National Cancer Inst. 101: 751-761. 

146 Pinkerton, L. E. 2004. Mortality among a cohort of garment workers exposed to formaldehyde: an 

update. Occup. Environ. Med. 61: 193-200.

147 Coggon, D, EC Harris, J Poole, KT Palmer. 2003. Extended follow-up of a cohort of British chemical 

workers exposed to formaldehyde. J National Cancer Inst. 95:1608-1615.

148 International Agency for Research on Cancer (IARC). 2006. Formaldehyde, 2-Butoxyethanol and 1-tertButoxypropan-2-ol. Volume 88. (in preparation), World Health Organization, Lyon, France.

149 Agency for Toxic Substances and Disease Registry (ATSDR). 1999. Toxicological profile for 

Formaldehyde. Atlanta, GA: U.S. Department of Health and Human Services, Public Health Service. 

http://www.atsdr.cdc.gov/toxprofiles/tp111.html

150 WHO (2002) Concise International Chemical Assessment Document 40: Formaldehyde. Published 

under the joint sponsorship of the United Nations Environment Programme, the International Labour 

Organization, and the World Health Organization, and produced within the framework of the InterOrganization Programme for the Sound Management of Chemicals. Geneva.

151 U.S. EPA. 1991. Integrated Risk Information System File of Acetaldehyde. Research and Development, 

National Center for Environmental Assessment, Washington, DC. This material is available electronically 

at http://www.epa.gov/iris/subst/0290.htm.

152 U.S. Department of Health and Human Services National Toxicology Program 11th Report on 

Carcinogens available at: ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E7FCE50709CB4C932.

153 International Agency for Research on Cancer (IARC). 1999. Re-evaluation of some organic chemicals, 

hydrazine, and hydrogen peroxide. IARC Monographs on the Evaluation of Carcinogenic Risk of 

Chemical to Humans, Vol 71. Lyon, France.
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The primary noncancer effects of exposure to acetaldehyde vapors include irritation of 

the eyes, skin, and respiratory tract.154 In short-term (4 week) rat studies, degeneration of 

olfactory epithelium was observed at various concentration levels of acetaldehyde 

exposure.155, 156 Data from these studies were used by EPA to develop an inhalation 

reference concentration. Some asthmatics have been shown to be a sensitive 

subpopulation to decrements in functional expiratory volume (FEV1 test) and 

bronchoconstriction upon acetaldehyde inhalation.157 The agency is currently conducting 

a reassessment of the health hazards from inhalation exposure to acetaldehyde. 

 v. Acrolein

Acrolein is extremely acrid and irritating to humans when inhaled, with acute 

exposure resulting in upper respiratory tract irritation, mucus hypersecretion and 

congestion. Levels considerably lower than 1 ppm (2.3 mg/m3

) elicit subjective 

complaints of eye and nasal irritation and a decrease in the respiratory rate.158,159 Lesions 

to the lungs and upper respiratory tract of rats, rabbits, and hamsters have been observed 

after subchronic exposure to acrolein. Based on animal data, individuals with 

compromised respiratory function (e.g., emphysema, asthma) are expected to be at 

increased risk of developing adverse responses to strong respiratory irritants such as 

acrolein. This was demonstrated in mice with allergic airway-disease by comparison to 

non-diseased mice in a study of the acute respiratory irritant effects of acrolein.160 

The intense irritancy of this carbonyl has been demonstrated during controlled tests in 

human subjects, who suffer intolerable eye and nasal mucosal sensory reactions within 

minutes of exposure.161

EPA determined in 2003 that the human carcinogenic potential of acrolein could 

not be determined because the available data were inadequate. No information was 

available on the carcinogenic effects of acrolein in humans and the animal data provided 

 

154 U.S. EPA. 1991. Integrated Risk Information System File of Acetaldehyde. This material is available

electronically at http://www.epa.gov/iris/subst/0290.htm.

155 Appleman, L. M., R. A. Woutersen, V. J. Feron, R. N. Hooftman, and W. R. F. Notten. 1986. Effects 

of the variable versus fixed exposure levels on the toxicity of acetaldehyde in rats. J. Appl. Toxicol. 6: 331-

336.

156 Appleman, L.M., R.A. Woutersen, and V.J. Feron. 1982. Inhalation toxicity of acetaldehyde in rats. I.

Acute and subacute studies. Toxicology. 23: 293-297.

157 Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda, T. 1993. Aerosolized acetaldehyde induces 

histamine-mediated bronchoconstriction in asthmatics. Am. Rev. Respir.Dis.148(4 Pt 1): 940-3.

158 Weber-Tschopp, A; Fischer, T; Gierer, R; et al. (1977) Experimentelle reizwirkungen von Acrolein auf 

den Menschen. Int Arch Occup Environ Hlth 40(2):117-130. In German

159 Sim, VM; Pattle, RE. (1957) Effect of possible smog irritants on human subjects. J Am Med Assoc 

165(15):1908-1913.

160 Morris JB, Symanowicz PT, Olsen JE, et al. 2003. Immediate sensory nerve-mediated respiratory 

responses to irritants in healthy and allergic airway-diseased mice. J Appl Physiol 94(4):1563-1571.

161 Sim VM, Pattle RE. Effect of possible smog irritants on human subjects JAMA165: 1980-2010, 1957.
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inadequate evidence of carcinogenicity.162 The IARC determined in 1995 that acrolein 

was not classifiable as to its carcinogenicity in humans

.163 

vi. Polycyclic Organic Matter (POM) 

POM is generally defined as a large class of organic compounds which have 

multiple benzene rings and a boiling point greater than 100 degrees Celsius. Many of the 

compounds included in the class of compounds known as POM are classified by EPA as 

probable human carcinogens based on animal data. One of these compounds, 

naphthalene, is discussed separately below. Polycyclic aromatic hydrocarbons (PAHs) 

are a subset of POM that contain only hydrogen and carbon atoms. A number of PAHs 

are known or suspected carcinogens. Recent studies have found that maternal exposures 

to PAHs (a subclass of POM) in a population of pregnant women were associated with 

several adverse birth outcomes, including low birth weight and reduced length at birth, as 

well as impaired cognitive development at age three.

164,165 EPA has not yet evaluated 

these recent studies. 

vii. Naphthalene 

Naphthalene is found in small quantities in gasoline and diesel fuels. 

Naphthalene emissions have been measured in larger quantities in both gasoline and 

diesel exhaust compared with evaporative emissions from mobile sources, indicating it is 

primarily a product of combustion. EPA released an external review draft of a 

reassessment of the inhalation carcinogenicity of naphthalene based on a number of 

recent animal carcinogenicity studies.166 The draft reassessment completed external peer 

review.167 Based on external peer review comments received, additional analyses are 

being undertaken. This external review draft does not represent official agency opinion 

and was released solely for the purposes of external peer review and public comment. 

Once EPA evaluates public and peer reviewer comments, the document will be revised. 

The National Toxicology Program listed naphthalene as "reasonably anticipated to be a 

 

162 U.S. EPA. 2003. Integrated Risk Information System File of Acrolein. Research and Development, 

National Center for Environmental Assessment, Washington, DC. This material is available at 

http://www.epa.gov/iris/subst/0364.htm

163 International Agency for Research on Cancer (IARC). 1995. Monographs on the evaluation of 

carcinogenic risk of chemicals to humans, Volume 63, Dry cleaning, some chlorinated solvents and other 

industrial chemicals , World Health Organization, Lyon, France.

164 Perera, F.P.; Rauh, V.; Tsai, W-Y.; et al. (2002) Effect of transplacental exposure to environmental 

pollutants on birth outcomes in a multiethnic population. Environ Health Perspect. 111: 201-205. 

165 Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang, D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; 

Camann, D.; Kinney, P. (2006) Effect of prenatal exposure to airborne polycyclic aromatic hydrocarbons

on neurodevelopment in the first 3 years of life among inner-city children. Environ Health Perspect 114: 

1287-1292. 

166 U. S. EPA. 2004. Toxicological Review of Naphthalene (Reassessment of the Inhalation Cancer Risk), 

Environmental Protection Agency, Integrated Risk Information System, Research and Development, 

National Center for Environmental Assessment, Washington, DC. This material is available electronically 

at http://www.epa.gov/iris/subst/0436.htm.

167 Oak Ridge Institute for Science and Education. (2004). External Peer Review for the IRIS 

Reassessment of the Inhalation Carcinogenicity of Naphthalene. August 2004. 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=84403
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human carcinogen" in 2004 on the basis of bioassays reporting clear evidence of 

carcinogenicity in rats and some evidence of carcinogenicity in mice.168 California EPA 

has released a new risk assessment for naphthalene, and the IARC has reevaluated 

naphthalene and re-classified it as Group 2B: possibly carcinogenic to humans.169

 

Naphthalene also causes a number of chronic non-cancer effects in animals, including 

abnormal cell changes and growth in respiratory and nasal tissues.170

 viii. Other Air Toxics

In addition to the compounds described above, other compounds in gaseous 

hydrocarbon and PM emissions from vehicles will be affected by this proposed action. 

Mobile source air toxic compounds that would potentially be impacted include 

ethylbenzene, polycyclic organic matter, propionaldehyde, toluene, and xylene. 

Information regarding the health effects of these compounds can be found in EPA’s IRIS 

database.171

4. Environmental Effects of Non-GHG Pollutants 

 

a. Visibility 

Visibility can be defined as the degree to which the atmosphere is transparent to 

visible light. Airborne particles degrade visibility by scattering and absorbing light. 

Visibility is important because it has direct significance to people’s enjoyment of daily 

activities in all parts of the country. Individuals value good visibility for the well-being it 

provides them directly, where they live and work and in places where they enjoy 

recreational opportunities. Visibility is also highly valued in significant natural areas 

such as national parks and wilderness areas and special emphasis is given to protecting 

visibility in these areas. For more information on visibility, see the final 2004 PM 

AQCD as well as the 2005 PM Staff Paper.172,173 

EPA is pursuing a two-part strategy to address visibility. First, to address the 

welfare effects of PM on visibility, EPA has set secondary PM2.5 standards which act in 

 

168 National Toxicology Program (NTP). (2004). 11th Report on Carcinogens. Public Health Service, U.S. 

Department of Health and Human Services, Research Triangle Park, NC. Available from: http://ntpserver.niehs.nih.gov.

169 International Agency for Research on Cancer (IARC). (2002). Monographs on the Evaluation of the 

Carcinogenic Risk of Chemicals for Humans. Vol. 82. Lyon, France.

170 U. S. EPA. 1998. Toxicological Review of Naphthalene, Environmental Protection Agency, Integrated 

Risk Information System, Research and Development, National Center for Environmental Assessment, 

Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm

171 U.S. EPA Integrated Risk Information System (IRIS) database is available at: www.epa.gov/iris

172 U.S. EPA. (2004). Air Quality Criteria for Particulate Matter (AQCD). Volume I Document No. 

EPA600/P-99/002aF and Volume II Document No. EPA600/P-99/002bF. Washington, DC: U.S. 

Environmental Protection Agency. Retrieved on March 18, 2009 from 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=87903

173 U.S. EPA. (2005). Review of the National Ambient Air Quality Standard for Particulate Matter: Policy 

Assessment of Scientific and Technical Information, OAQPS Staff Paper. EPA-452/R-05-005. Washington, 

DC: U.S. Environmental Protection Agency. 
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conjunction with the establishment of a regional haze program. In setting this secondary 

standard, EPA has concluded that PM2.5 causes adverse effects on visibility in various 

locations, depending on PM concentrations and factors such as chemical composition and 

average relative humidity. Second, section 169 of the Clean Air Act provides additional 

authority to address existing visibility impairment and prevent future visibility 

impairment in the 156 national parks, forests and wilderness areas categorized as 

mandatory class I federal areas (62 FR 38680-81, July 18, 1997).174 In July 1999, the 

regional haze rule (64 FR 35714) was put in place to protect the visibility in mandatory 

class I federal areas. Visibility can be said to be impaired in both PM2.5 nonattainment 

areas and mandatory class I federal areas. 

b. Plant and Ecosystem Effects of Ozone 

Elevated ozone levels contribute to environmental effects, with impacts to plants 

and ecosystems being of most concern. Ozone can produce both acute and chronic injury 

in sensitive species depending on the concentration level and the duration of the 

exposure. Ozone effects also tend to accumulate over the growing season of the plant, so 

that even low concentrations experienced for a longer duration have the potential to 

create chronic stress on vegetation. Ozone damage to plants includes visible injury to 

leaves and impaired photosynthesis, both of which can lead to reduced plant growth and 

reproduction, resulting in reduced crop yields, forestry production, and use of sensitive 

ornamentals in landscaping. In addition, the impairment of photosynthesis, the process 

by which the plant makes carbohydrates (its source of energy and food), can lead to a 

subsequent reduction in root growth and carbohydrate storage below ground, resulting in 

other, more subtle plant and ecosystems impacts. 

These latter impacts include increased susceptibility of plants to insect attack, 

disease, harsh weather, interspecies competition and overall decreased plant vigor. The 

adverse effects of ozone on forest and other natural vegetation can potentially lead to 

species shifts and loss from the affected ecosystems, resulting in a loss or reduction in 

associated ecosystem goods and services. Lastly, visible ozone injury to leaves can result 

in a loss of aesthetic value in areas of special scenic significance like national parks and 

wilderness areas. The final 2006 ozone AQCD presents more detailed information on 

ozone effects on vegetation and ecosystems. 

c. Atmospheric Deposition 

Wet and dry deposition of ambient particulate matter delivers a complex mixture 

of metals (e.g., mercury, zinc, lead, nickel, aluminum, cadmium), organic compounds 

(e.g., POM, dioxins, furans) and inorganic compounds (e.g., nitrate, sulfate) to terrestrial 

and aquatic ecosystems. The chemical form of the compounds deposited depends on a 

variety of factors including ambient conditions (e.g., temperature, humidity, oxidant 

levels) and the sources of the material. Chemical and physical transformations of the 

 

174 These areas are defined in section 162 of the Act as those national parks exceeding 6,000 acres, 

wilderness areas and memorial parks exceeding 5,000 acres, and all international parks which were in 

existence on August 7, 1977.
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compounds occur in the atmosphere as well as the media onto which they deposit. These 

transformations in turn influence the fate, bioavailability and potential toxicity of these 

compounds. Atmospheric deposition has been identified as a key component of the 

environmental and human health hazard posed by several pollutants including mercury, 

dioxin and PCBs.175

Adverse impacts on water quality can occur when atmospheric contaminants 

deposit to the water surface or when material deposited on the land enters a water body 

through runoff. Potential impacts of atmospheric deposition to water bodies include 

those related to both nutrient and toxic inputs. Adverse effects to human health and 

welfare can occur from the addition of excess nitrogen via atmospheric deposition. The 

nitrogen-nutrient enrichment contributes to toxic algae blooms and zones of depleted 

oxygen, which can lead to fish kills, frequently in coastal waters. Deposition of heavy 

metals or other toxins may lead to the human ingestion of contaminated fish, human 

ingestion of contaminated water, damage to the marine ecology, and limits to recreational 

uses. Several studies have been conducted in U.S. coastal waters and in the Great Lakes 

Region in which the role of ambient PM deposition and runoff is 

investigated.176,177,178,179,180

Atmospheric deposition of nitrogen and sulfur contributes to acidification, 

altering biogeochemistry and affecting animal and plant life in terrestrial and aquatic 

ecosystems across the U.S. The sensitivity of terrestrial and aquatic ecosystems to 

acidification from nitrogen and sulfur deposition is predominantly governed by geology. 

Prolonged exposure to excess nitrogen and sulfur deposition in sensitive areas acidifies 

lakes, rivers and soils. Increased acidity in surface waters creates inhospitable conditions 

for biota and affects the abundance and nutritional value of preferred prey species, 

threatening biodiversity and ecosystem function. Over time, acidifying deposition also 

removes essential nutrients from forest soils, depleting the capacity of soils to neutralize 

future acid loadings and negatively affecting forest sustainability. Major effects include a 

decline in sensitive forest tree species, such as red spruce (Picea rubens) and sugar maple 

(Acer saccharum), and a loss of biodiversity of fishes, zooplankton, and macro 

invertebrates. 

In addition to the role nitrogen deposition plays in acidification, nitrogen 

deposition also causes ecosystem nutrient enrichment leading to eutrophication that alters 

 

175 U.S. EPA (2000) Deposition of Air Pollutants to the Great Waters: Third Report to Congress. Office of 

Air Quality Planning and Standards. EPA-453/R-00-0005. This document is available in Docket EPA-HQOAR-2003-0190.

176 U.S. EPA (2004) National Coastal Condition Report II. Office of Research and Development/ Office of 

Water. EPA-620/R-03/002. This document is available in Docket EPA-HQ-OAR-2003-0190.

177 Gao, Y., E.D. Nelson, M.P. Field, et al. 2002. Characterization of atmospheric trace elements on PM2.5 

particulate matter over the New York-New Jersey harbor estuary. Atmos. Environ. 36: 1077-1086.

178 Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 2000. Factors influencing the atmospheric 

depositional fluxes of stable Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65-79.

179 Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003. Dry deposition of airborne trace metals on the Los 

Angeles Basin and adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11-1 to 11-24.

180 Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. 2002. Surficial sediment contamination in Lakes Erie 

and Ontario: A comparative analysis. J. Great Lakes Res. 28(3): 437-450.
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biogeochemical cycles. Excess nitrogen also leads to the loss of nitrogen sensitive lichen 

species as they are outcompeted by invasive grasses as well as altering the biodiversity of 

terrestrial ecosystems, such as grasslands and meadows. For a broader explanation of the 

topics treated here, refer to the description in Chapter 7 of the DRIA. 

Adverse impacts on soil chemistry and plant life have been observed for areas 

heavily influenced by atmospheric deposition of nutrients, metals and acid species, 

resulting in species shifts, loss of biodiversity, forest decline and damage to forest 

productivity. Potential impacts also include adverse effects to human health through 

ingestion of contaminated vegetation or livestock (as in the case for dioxin deposition), 

reduction in crop yield, and limited use of land due to contamination. 

Atmospheric deposition of pollutants can reduce the aesthetic appeal of buildings 

and culturally important articles through soiling, and can contribute directly (or in 

conjunction with other pollutants) to structural damage by means of corrosion or erosion. 

Atmospheric deposition may affect materials principally by promoting and accelerating 

the corrosion of metals, by degrading paints, and by deteriorating building materials such 

as concrete and limestone. Particles contribute to these effects because of their 

electrolytic, hygroscopic, and acidic properties, and their ability to adsorb corrosive gases 

(principally sulfur dioxide). The rate of metal corrosion depends on a number of factors, 

including the deposition rate and nature of the pollutant; the influence of the metal 

protective corrosion film; the amount of moisture present; variability in the 

electrochemical reactions; the presence and concentration of other surface electrolytes; 

and the orientation of the metal surface. 

d. Environmental Effects of Air Toxics 

Fuel combustion emissions contribute to ambient levels of pollutants that 

contribute to adverse effects on vegetation. Volatile organic compounds (VOCs), some 

of which are considered air toxics, have long been suspected to play a role in vegetation 

damage.181 In laboratory experiments, a wide range of tolerance to VOCs has been 

observed.182 Decreases in harvested seed pod weight have been reported for the more 

sensitive plants, and some studies have reported effects on seed germination, flowering 

and fruit ripening. Effects of individual VOCs or their role in conjunction with other 

stressors (e.g., acidification, drought, temperature extremes) have not been well studied. 

In a recent study of a mixture of VOCs including ethanol and toluene on herbaceous 

plants, significant effects on seed production, leaf water content and photosynthetic 

efficiency were reported for some plant species.183

 

Research suggests an adverse impact of vehicle exhaust on plants, which has in 

some cases been attributed to aromatic compounds and in other cases to nitrogen 

 

181 U.S. EPA. 1991. Effects of organic chemicals in the atmosphere on terrestrial plants. EPA/600/3-91/001.

182 Cape JN, ID Leith, J Binnie, J Content, M Donkin, M Skewes, DN Price AR Brown, AD Sharpe. 2003. 

Effects of VOCs on herbaceous plants in an open-top chamber experiment. Environ. Pollut. 124:341-343.

183 Cape JN, ID Leith, J Binnie, J Content, M Donkin, M Skewes, DN Price AR Brown, AD Sharpe. 2003. 

Effects of VOCs on herbaceous plants in an open-top chamber experiment. Environ. Pollut. 124:341-343.
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oxides.184, 185, 186 The impacts of VOCs on plant reproduction may have long-term 

implications for biodiversity and survival of native species near major roadways. Most of 

the studies of the impacts of VOCs on vegetation have focused on short-term exposure 

and few studies have focused on long-term effects of VOCs on vegetation and the 

potential for metabolites of these compounds to affect herbivores or insects. 

5. Air Quality Impacts of Non-GHG Pollutants 

a. Current Levels of PM2.5, Ozone, CO and Air Toxics 

This proposal may have impacts on levels of PM2.5, ozone, CO and air toxics. 

Nationally, levels of PM2.5, ozone, CO and air toxics are declining.187,188 However, in 

2005 EPA designated 39 nonattainment areas for the 1997 PM2.5 National Ambient Air 

Quality Standard (NAAQS) (70 FR 943, January 5, 2005). These areas are composed of 

208 full or partial counties with a total population exceeding 88 million. The 1997 PM2.5

NAAQS was recently revised and the 2006 24-hour PM2.5 NAAQS became effective on 

December 18, 2006. The numbers above likely underestimate the number of counties 

that are not meeting the PM2.5 NAAQS because the nonattainment areas associated with 

the more stringent 2006 24-hour PM2.5 NAAQS have not yet been designated. Area 

designations for the 2006 24-hour PM2.5 NAAQS are expected to be promulgated in 2009 

and become effective 90 days after publication in the Federal Register. 

In addition, the U.S. EPA has recently amended the ozone NAAQS (73 FR 

16436, March 27, 2008). That final 2008 ozone NAAQS rule set forth revisions to the 

previous 1997 NAAQS for ozone to provide increased protection of public health and 

welfare. As of June 5, 2009, there are 55 areas designated as nonattainment for the 1997 

8-hour ozone NAAQS, comprising 290 full or partial counties with a total population of 

approximately 132 million people. These numbers do not include the people living in 

areas where there is a future risk of failing to maintain or attain the 1997 8-hour ozone 

NAAQS. The numbers above likely underestimate the number of counties that are not 

meeting the ozone NAAQS because the nonattainment areas associated with the more 

stringent 2008 8-hour ozone NAAQS have not yet been designated. 

The proposed vehicle standards may also impact levels of ambient CO, a criteria 

pollutant (see Table III.G-1 above for co-pollutant emission impacts). As of June 5, 2009 

 

184 Viskari E-L. 2000. Epicuticular wax of Norway spruce needles as indicator of traffic pollutant 

deposition. Water, Air, and Soil Pollut. 121:327-337.

185 Ugrekhelidze D, F Korte, G Kvesitadze. 1997. Uptake and transformation of benzene and toluene by 

plant leaves. Ecotox. Environ. Safety 37:24-29.

186 Kammerbauer H, H Selinger, R Rommelt, A Ziegler-Jons, D Knoppik, B Hock. 1987. Toxic 

components of motor vehicle emissions for the spruce Pciea abies. Environ. Pollut. 48:235-243.

187 U. S. EPA (2008) National Air Quality Status and Trends through 2007. Office of Air Quality Planning 

and Standards, Research Triangle Park, NC. Publication No. EPA 454/R-08-006. 

http://epa.gov/airtrends/2008/index.html. 

188 U. S. EPA (2007) Final Regulatory Impact Analysis: Control of Hazardous Air Pollutants from Mobile 

Sources, Office of Transportation and Air Quality, Ann Arbor, MI, Publication No. EPA420-R-07-002. 

http://www.epa.gov/otaq/toxics.htm
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there are approximately 479,000 people living in a portion of Clark Co., NV which is 

currently the only area in the country that is designated as nonattainment for CO.189

 

Further, the majority of Americans continue to be exposed to ambient 

concentrations of air toxics at levels which have the potential to cause adverse health 

effects.190 The levels of air toxics to which people are exposed vary depending on where 

people live and work and the kinds of activities in which they engage, as discussed in 

detail in U. S EPA’s recent mobile source air toxics rule.191

 

 

b. Impacts of Proposed Standards on Future Ambient PM2.5, Ozone, CO and 

 Air Toxics 

Full-scale photochemical air quality modeling is necessary to accurately project 

levels of PM2.5, ozone, CO and air toxics. For the final rule, a national-scale air quality 

modeling analysis will be performed to analyze the impacts of the vehicle standards on 

PM2.5, ozone, and selected air toxics (i.e., benzene, formaldehyde, acetaldehyde, acrolein 

and 1,3-butadiene). The length of time needed to prepare the necessary emissions 

inventories, in addition to the processing time associated with the modeling itself, has 

precluded us from performing air quality modeling for this proposal. 

Section III.G.1 of the preamble presents projections of the changes in criteria 

pollutant and air toxics emissions due to the proposed vehicle standards; the basis for 

those estimates is set out in Chapter 5 of the DRIA. The atmospheric chemistry related to 

ambient concentrations of PM2.5, ozone and air toxics is very complex, and making 

predictions based solely on emissions changes is extremely difficult. However, based on 

the magnitude of the emissions changes predicted to result from the proposed vehicle 

standards, EPA expects that there will be an improvement in ambient air quality, pending 

a more comprehensive analysis for the final rule. 

For the final rule, EPA intends to use a 2005-based Community Multi-scale Air 

Quality (CMAQ) modeling platform as the tool for the air quality modeling. The CMAQ 

modeling system is a comprehensive three-dimensional grid-based Eulerian air quality 

model designed to estimate the formation and fate of oxidant precursors, primary and 

secondary PM concentrations and deposition, and air toxics, over regional and urban 

spatial scales (e.g., over the contiguous U.S.).192,193,194 The CMAQ model is a well-

 

189 Carbon Monox

ide Nonattainment Area Summary: http://www.epa.gov/air/oaqps/greenbk/cnsum.html 

190 U. S. Environmental Protection Agency (2007). Control of Hazardous Air Pollutants from Mobile 

Sources; Final Rule. 72 FR 8434, February 26, 2007.

191 U. S. Environmental Protection Agency (2007). Control of Hazardous Air Pollutants from Mobile 

Sources; Final Rule. 72 FR 8434, February 26, 2007.

192 U.S. Environmental Protection Agency, Byun, D.W., and Ching, J.K.S., Eds, 1999. Science algorithms 

of EPA Models-3 Community Multiscale Air Quality (CMAQ modeling system, EPA/600/R-99/030, 

Office of Research and Development). 

193 Byun, D.W., and Schere, K.L., 2006. Review of the Governing Equations, Computational Algorithms, 

and Other Components of the Models-3 Community Multiscale Air Quality (CMAQ) Modeling System, J. 

Applied Mechanics Reviews, 59 (2), 51-77.

194 Dennis, R.L., Byun, D.W., Novak, J.H., Galluppi, K.J., Coats, C.J., and Vouk, M.A., 1996. The next 

generation of integrated air quality modeling: EPA’s Models-3, Atmospheric Environment, 30, 1925-1938.
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known and well-established tool and is commonly used by EPA for regulatory analyses, 

for instance the recent ozone NAAQS proposal, and by States in developing attainment 

demonstrations for their State Implementation Plans.

195 The CMAQ model (version 4.6) 

was peer-reviewed in February of 2007 for EPA as reported in “Third Peer Review of 

CMAQ Model,” and the EPA Office of Research and Development (ORD) peer review 

report which includes version 4.7 is currently being finalized.196

 CMAQ includes many science modules that simulate the emission, production, 

decay, deposition and transport of organic and inorganic gas-phase and particle-phase 

pollutants in the atmosphere. EPA intends to use the most recent CMAQ version (version 

4.7), which was officially released by EPA’s Office of Research and Development 

(ORD) in December 2008 and reflects updates to earlier versions in a number of areas to 

improve the underlying science. These include (1) enhanced secondary organic aerosol 

(SOA) mechanism to include chemistry of isoprene, sesquiterpene, and aged in-cloud 

biogenic SOA in addition to terpene; (2) improved vertical convective mixing; (3) 

improved heterogeneous reaction involving nitrate formation; and (4) an updated gasphase chemistry mechanism, Carbon Bond 05 (CB05), with extensions to model explicit 

concentrations of air toxic species as well as chlorine and mercury. This mechanism, 

CB05-toxics, also computes concentrations of species that are involved in aqueous 

chemistry and that are precursors to aerosols. 

H. What are the Estimated Cost, Economic, and Other Impacts of the 

Proposal? 

In this section, EPA presents the costs and impacts of EPA’s proposed GHG 

program. It is important to note that NHTSA’s CAFE standards and EPA’s GHG 

standards will both be in effect, and each will lead to increases in average fuel economy 

and CO2 emissions reductions. The two agencies’ standards comprise the National 

Program, and this discussion of costs and benefits of EPA’s GHG standard does not 

change the fact that both the CAFE and GHG standards, jointly, are the source of the 

benefits and costs of the National Program. 

EPA’s proposed program costs consist of the vehicle program costs (costs of 

complying with the vehicle CO2 standards, taking into account FFV credits through 2015, 

the temporary lead-time alternative allowance standard program (TLAASP), full 

car/truck trading, and the A/C credit program), along with the fuel savings associated 

with reduced fuel usage resulting from the proposed program. These proposed program 

costs also include external costs associated with noise, congestion, accidents, time spent 

refueling vehicles, and energy security impacts. EPA also presents the cost-effectiveness 

of the proposed standards and our analysis of the expected economy-wide impacts. The 

projected monetized benefits of reducing GHG emissions and co-pollutant health and 

environmental impacts are also presented. EPA also presents our estimates of the impact 

 

195 U.S. EPA (2007). Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Air 

Quality Standards for Ground-Level Ozone. EPA document number 442/R-07-008, July 2007.

196 Aiyyer, A, Cohan, D., Russell, A., Stockwell, W., Tanrikulu, S., Vizuete, W., Wilczak, J., 2007. Final 

Report: Third Peer Review of the CMAQ Model. p. 23.
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on vehicle miles traveled and the impacts associated with those miles as well as other 

societal impacts of the proposed program, including energy security impacts. 

The total monetized benefits (excluding fuel savings) under the proposed program 

are projected to be $21 to $54 billion in 2030, assuming a 3 percent discount rate and 

depending on the value used for the social cost of carbon. The costs of the proposed 

program in 2030 are estimated to be approximately $18 billion for new vehicle 

technology less $90 billion in savings realized by consumers through fewer fuel 

expenditures (calculated using pre-tax fuel prices). 

Further information on these and other aspects of the economic impacts of our 

proposed rule are summarized in the following sections and are presented in more detail 

in the DRIA for this rulemaking. EPA requests comment on all aspects of the cost, 

savings, and benefits analysis presented here and in the DRIA. EPA also requests 

comment on the inputs used in these analyses as described in the Draft Joint TSD. 

1. Costs Associated with the Vehicle Program 

 In this section EPA presents our estimate of the costs associated with the 

proposed vehicle program. The presentation here summarizes the costs associated with 

the new vehicle technology expected to be added to meet the proposed GHG standards, 

including hardware costs to comply with the proposed A/C credit program. The analysis 

summarized here provides our estimate of incremental costs on a per vehicle basis and on 

an annual total basis. 

 The presentation here summarizes the outputs of the OMEGA model that was 

discussed in some detail in Section III.D of this preamble. For details behind the analysis 

such as the OMEGA model inputs and the estimates of costs associated with individual 

technologies, the reader is directed to Chapters 1 and 2 of the DRIA, and Chapter 3 of the 

Draft Joint TSD. For more detail on the outputs of the OMEGA model and the overall 

vehicle program costs summarized here, the reader is directed to Chapters 4 and 7 of the 

DRIA. 

With respect to the cost estimates for vehicle technologies, EPA notes that, 

because these estimates relate to technologies which are in most cases already available, 

these cost estimates are technically robust. EPA notes further that, in all instances, its 

estimates are within the range of estimates in the most widely-utilized sources and 

studies. In that way, EPA believes that we have been conservative in estimating the 

vehicle hardware costs associated with this proposal. 

With respect to the aggregate cost estimations presented in Section III.H.1.b, EPA 

notes that there are a number of areas where the results of our analysis may be 

conservative and, in general, EPA believes we have directionally overestimated the costs 

of compliance with these proposed standards, especially in not accounting for the full 

range of credit opportunities available to manufacturers. For example, some cost saving 
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programs are considered in our analysis, such as full car/truck trading, while others are 

not, such as cross-manufacturer trading and advanced technology credits. 

a. Vehicle Compliance Costs Associated with CO2 Efficiency 

 For the technology and vehicle package costs associated with adding new CO2-

reducing technology to vehicles, EPA began with EPA’s 2008 Staff Report and 

NHTSA’s 2011 CAFE FRM both of which presented costs generated using existing 

literature, meetings with manufacturers and parts suppliers, and meetings with other 

experts in the field of automotive cost estimation.197 EPA has updated some of those 

technology costs with new information from our contract with FEV, through further 

discussion with NHTSA, and by converting from 2006 dollars to 2007 dollars using the 

GDP price deflator. The estimated costs presented here represent the incremental costs 

associated with this proposal relative to what the future vehicle fleet would be expected 

to look like absent this proposed rule. A more detailed description of the factors 

considered in our reference case is presented in Section III.D. 

The estimates of vehicle compliance costs cover the years of implementation of 

the program – 2012 through 2016. EPA has also estimated compliance costs for the years 

following implementation so that we can shed light on the long term – 2022 and later – 

cost impacts of the proposal.198 EPA used the year 2022 here because our short-term and 

long-term markup factors described shortly below are applied in five year increments 

with the 2012 through 2016 implementation span and the 2017 through 2021 span both 

representing the short-term. Some of the individual technology cost estimates are 

presented in brief in Section III.D, and account for both the direct and indirect costs 

incurred in the automobile manufacturing and dealer industries (for a complete 

presentation of technology costs, please refer to Chapter 3 of the Draft Joint TSD). To 

account for the indirect costs, EPA has applied an indirect cost markup (ICM) factor to 

all of our direct costs to arrive at the estimated technology cost.199 The ICM factors used 

range from 1.11 to 1.64 in the short-term (2012 through 2021), depending on the 

complexity of the given technology, to account for differences in the levels of R&D, 

tooling, and other indirect costs that would be incurred. Once the program has been fully 

implemented, some of the indirect costs would no longer be attributable to these proposed 

standards and, as such, a lower ICM factor is applied to direct costs in years following 

full implementation. The ICM factors used range from 1.07 to 1.39 in the long-term 

 

197 “EPA Staff Technical Report: Cost and Effectiveness Estimates of Technologies Used to Reduce 

Light-duty Vehicle Carbon Dioxide Emissions,” EPA 420-R-08-008; NHTSA 2011 CAFE FRM is at 74 

FR 14196; both documents are contained in Docket EPA-HQ-OAR-2009-0472. 

198 Note that the assumption made here is that the standards proposed would continue to apply for years 

beyond 2016 so that new vehicles sold in model years 2017 and later would continue to incur costs as a

result of this rule. Those costs are estimated to get lower in 2022 because some of the indirect costs 

attributable to this proposal in the years prior to 2022 would be eliminated in 2022 and later. 

199 Alex Rogozhin et al., Automobile Industry Regail Price Equivalent and Indirect Cost Multipliers. 

Prepared for EPA by RTI International and Transportation Research Institute, University of Michigan. 

EPA-420-R-09-003, February 2009 (Docket EPA-HQ-OAR-2009-0472). 
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(2022 and later) depending on the complexity of the given technology.200 Note that the 

short-term ICMs are used in the 2012 through 2016 years of implementation and continue 

through 2021. EPA does this since the proposed standards are still being implemented 

during the 2012 through 2016 model years. Therefore, EPA considers the five year 

period following full implementation also to be short-term. 

The argument has been made that the ICM approach may be more appropriate for 

regulatory cost estimation than the more traditional retail price equivalent, or RPE, 

markup. The RPE is based on the historical relationship between direct costs and 

consumer prices; it is intended to reflect the average markup over time required to sustain 

the industry as a viable operation. Unlike the RPE approach, the ICM focuses more 

narrowly on the changes that are required in direct response to regulation-induced vehicle 

design changes which may not directly influence all of the indirect costs that are incurred 

in the normal course of business. For example, an RPE markup captures all indirect costs 

including costs such as the retirement benefits of retired employees. However, the 

retirement benefits for retired employees are not expected to change as a result of a new 

GHG regulation and, therefore, those indirect costs should not increase in relation to 

newly added hardware in response to a regulation. So, under the ICM approach, if a 

newly added piece of technology has an incremental direct cost of $1, its direct plus 

indirect costs should not be $1 multiplied by an RPE markup of say 1.5, or $1.50, but 

rather something less since the manufacturer is not paying more for retired-employee 

retirement benefits as a direct result of adding the new piece of technology. Further, as 

noted above, the indirect cost multiplier can be adjusted for different levels of 

technological complexity. For example, a move to low rolling resistance tires is less 

complex than converting a gasoline vehicle to a plug-in hybrid. Therefore, the 

incremental indirect costs for the tires should be lower in magnitude than those for the 

plug-in hybrid. For the analysis underlying these proposed standards, the agencies have 

based our estimates on the ICM approach, but EPA notes that discussion continues about 

the use of the RPE approach and the ICM approach for safety and environmental 

regulations. We discuss our ICM factors and the complexity levels used in our analysis 

in more detail in Chapter 3 of the Draft Joint TSD and EPA requests comment on the 

approach described there as well as the general concepts of both the ICM and RPE 

approaches. 

EPA has also considered the impacts of manufacturer learning on the technology 

cost estimates. Consistent with past EPA rulemakings, EPA has estimated that some 

costs would decline by 20 percent with each of the first two doublings of production 

beginning with the first year of implementation. These volume-based cost declines—

which EPA calls “volume” based learning—take place after manufacturers have had the 

opportunity to find ways to improve upon their manufacturing processes or otherwise 

manufacture these technologies in a more efficient way. After two 20 percent cost 

reduction steps, the cost reduction learning curve flattens out considerably as only minor 

improvements in manufacturing techniques and efficiencies remain to be had. By then, 

 

200 Gloria Helfand and Todd Sherwood, “Documentation of the Development of Indirect Cost Multipliers 

for Three Automotive Technologies,” Office of Transportation and Air Quality, USEPA, August 2009

(Docket EPA-HQ-OAR-2009-0472). 
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costs decline roughly three percent per year as manufacturers and suppliers continually 

strive to reduce costs. These time-based cost declines—which EPA calls “time” based 

learning—take place at a rate of three percent per year. EPA has considered learning 

impacts on most but not all of the technologies expected to be used because some of the 

expected technologies are already used rather widely in the industry and, presumably, 

learning impacts have already occurred. EPA has considered volume-based learning for 

only a handful of technologies that EPA considers to be new or emerging technologies 

such as the hybrids and electric vehicles. For most technologies, EPA has considered 

them to be more established given their current use in the fleet and, hence, we have 

applied the lower time based learning. We have more discussion of our learning 

approach and the technologies to which we have applied which type of learning in the 

Draft Joint TSD. 

The technology cost estimates discussed in Section III.D and detailed in Chapter 3 

of the Draft Joint TSD are used to build up package cost estimates which are then used as 

inputs to the OMEGA model. EPA discusses our packages and package costs in Chapter 

1 of the DRIA. The model determines what level of CO2 improvement is required 

considering the reference case for each manufacturer’s fleet. The vehicle compliance 

costs are the outputs of the model and take into account FFV credits through 2015, 

TLAASP, full car/truck trading, and the A/C credit program. Table III.H.1-1 presents the 

fleet average incremental vehicle compliance costs for this proposal. As the table 

indicates, 2012-2016 costs increase every year as the standards become more stringent. 

Costs per car and per truck then remain stable through 2021 while cost per vehicle 

(car/truck combined) decline slightly as the fleet mix trends slowly to increasing car 

sales. In 2022, costs per car and per truck decline as the long-term ICM kicks in because 

some indirect costs are no longer considered attributable to the proposed program. Costs 

per car and per truck remain constant thereafter while the cost per vehicle declines 

slightly as the fleet continues to trend toward cars. By 2030, projections of fleet mix 

changes become static and the cost per vehicle remains constant. EPA has a more 

detailed presentation of vehicle compliance costs on a manufacturer by manufacturer 

basis in the DRIA. 

Table III.H.1-1 Industry Average Vehicle Compliance Costs Associated with the 

Proposed Tailpipe CO2 Standards 

($/vehicle in 2007 dollars) 

Calendar Year $/car $/truck $/vehicle 

(car & truck 

combined) 

2012 $374 $358 $368 

2013 $531 $539 $534 

2014 $663 $682 $670 

2015 $813 $886 $838 

2016 $968 $1,213 $1,050 

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2017 $968 $1,213 $1,047 

2018 $968 $1,213 $1,044 

2019 $968 $1,213 $1,042 

2020 $968 $1,213 $1,040 

2021 $968 $1,213 $1,039 

2022 $890 $1,116 $955 

2030 $890 $1,116 $953 

2040 $890 $1,116 $953 

2050 $890 $1,116 $953 

b. Annual Costs of the Proposed Vehicle Program 

 The costs presented here represent the incremental costs for newly added 

technology to comply with the proposed program. Together with the projected increases 

in car and light-truck sales, the increases in per-vehicle average costs shown in Table 

III.H.1-1 above result in the total annual costs reported in Table III.H.1-2 below. Note 

that the costs presented in Table III.H.1-2 do not include the savings that would occur as 

a result of the improvements to fuel consumption. Those impacts are presented in 

Section III.H.3. 

 

Table III.H.1-2 Quantified Annual Costs Associated with the Proposed Vehicle Program 

($Millions of 2007 dollars)

Year Quantified 

Annual Costs

2012 $5,400

2013 $8,400

2014 $10,900

2015 $13,900

2016 $17,500

2020 $18,000

2030 $17,900

2040 $19,300

2050 $20,900

NPV, 3% $390,000

NPV, 7% $216,600

2. Cost per Ton of Emissions Reduced

EPA has calculated the cost per ton of GHG (CO2-equivalent, or CO2e) reductions 

associated with this proposal using the above costs and the emissions reductions 

described in Section III.F. More detail on the costs, emission reductions, and the cost per 

ton can be found in the DRIA and Draft Joint TSD. EPA has calculated the cost per 

metric ton of GHG emissions reductions in the years 2020, 2030, 2040, and 2050 using 

the annual vehicle compliance costs and emission reductions for each of those years. The 

value in 2050 represents the long-term cost per ton of the emissions reduced. Note that 

EPA has not included the savings associated with reduced fuel consumption, nor any of 

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the other benefits of this proposal in the cost per ton calculations. If EPA were to include 

fuel savings in the cost estimates, the cost per ton would be less than $0, since the 

estimated value of fuel savings outweighs these costs. With regard to the proposed CH4

and N2O standards, since these standards would be emissions caps designed to ensure 

manufacturers do not backslide from current levels, EPA has not estimated costs 

associated with the standards (since the standards would not require any change from 

current practices nor does EPA estimate they would result in emissions reductions. 

The results for CO2e costs per ton under the proposed vehicle program are shown 

in Table III.H.2-1. 

Table III.H.2-1 Annual Cost Per Metric Ton of CO2e Reduced, in $2007 dollars 

Year Costa

($Millions)

CO2e Reduced 

(Million Metric Tons)

Cost per Ton

2020 $18,000 170 $110 

2030 $17,900 320 $60 

2040 $19,300 420 $50 

2050 $20,900 520 $40 

a

 Costs here include vehicle compliance costs and do not include 

any fuel savings (discussed in Section III.H.3) or other benefits of 

this proposal (discussed in Sections III.H.5 through III.H 10). 

3. Reduction in Fuel Consumption and its Impacts

a. What Are the Projected Changes in Fuel Consumption? 

The proposed CO2 standards would result in significant improvements in the fuel 

efficiency of affected vehicles. Drivers of those vehicles would see corresponding 

savings associated with reduced fuel expenditures. EPA has estimated the impacts on 

fuel consumption for both the proposed tailpipe CO2 standards and the proposed A/C 

credit program. To do this, fuel consumption is calculated using both current CO2

emission levels and the proposed CO2 standards. The difference between these estimates 

represents the net savings from the proposed CO2 standards. Note that the total number 

of miles that vehicles are driven each year is different under each of the control case 

scenarios than in the reference case due to the “rebound effect,” which is discussed in 

Section III.H.3.c. 

The expected impacts on fuel consumption are shown in Table III.H.3-1. The 

gallons shown in the tables reflect impacts from the proposed CO2 standards, including 

the proposed A/C credit program, and include increased consumption resulting from the 

rebound effect. 

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Table III.H.3-1 Fuel Consumption Impacts of the Proposed Vehicle Standards and A/C 

Credit Programs 

 (Million gallons) 

Year Total 

2012 530

2013 1,320

2014 2,410

2015 3,910

2016 5,930

2020 13,350

2030 26,180

2040 33,930

2050 42,570

 

 

b. What are the Fuel Savings to the Consumer? 

 Using the fuel consumption estimates presented in Section III.H.3.a, EPA can 

calculate the monetized fuel savings associated with the proposed CO2 standards. To do 

this, we multiply reduced fuel consumption in each year by the corresponding estimated 

average fuel price in that year, using the reference case taken from the AEO 2009.201 

AEO is the government consensus estimate used by NHTSA and many other government 

agencies to estimate the projected price of fuel. EPA has included all fuel taxes in these 

estimates since these are the prices paid by consumers. As such, the savings shown 

reflect savings to the consumer. These results are shown in Table III.H.3-2. Note that 

EPA presents the monetized fuel savings using pre-tax fuel prices in Section III.H.10. 

The fuel savings based on pre-tax fuel prices reflect the societal savings in contrast to the 

consumer savings presented in Table III.H.3-2. Also in Section III.H.10, EPA presents 

the benefit-cost of the proposal and, for that reason, present the fuel impacts as negative 

costs of the program while here EPA presents them as positive savings. 

Table III.H.3-2 Estimated Fuel Consumption Savings to the Consumera

(Millions of 2007 dollars) 

 

201 Energy Information Administration, Supplemental tables to the Annual Energy Outlook 2009, Updated 

Reference Case with American Recovery and Reinvestment Act. Available 

http://www.eia.doe.gov/oiaf/aeo/supplement/stimulus/regionalarra.html. April 2009. 

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Calendar Year Total 

2012 $1,400

2013 $3,800

2014 $7,200

2015 $12,400

2016 $19,400

2020 $48,400

2030 $100,000

2040 $136,800

2050 $181,000

NPV, 3% $1,850,200

NPV, 7% $826,900

a

Fuel consumption savings calculated 

using taxed fuel prices. Fuel 

consumption impacts using pre-tax fuel 

prices are presented in Section III.H.10 

as negative costs of the vehicle program

As shown in Table III.H.3-2, EPA is projecting that consumers would realize very 

large fuel savings as a result of the standards contained in this proposal. There are 

several ways to view this value. Some, as demonstrated below in Section III.H.4, view 

these fuel savings as a reduction in the cost of owning a vehicle, whose full benefits 

consumers realize. This approach assumes that, regardless how consumers in fact make 

their decisions on how much fuel economy to purchase, they will gain these fuel savings. 

Another view says that consumers do not necessarily value fuel savings as equal to the 

results of this calculation. Instead, consumers may either undervalue or overvalue fuel 

economy relative to these savings, based on their personal preferences. This issue is 

discussed further in Section III.H.4 and in Chapter 8 of the DRIA. 

c. VMT Rebound Effect 

The fuel economy rebound effect refers to the fraction of fuel savings expected to 

result from an increase in vehicle fuel economy – particularly one required by higher fuel 

efficiency standards – that is offset by additional vehicle use. The increase in vehicle use 

occurs because higher fuel economy reduces the fuel cost of driving, which is typically 

the largest single component of the monetary cost of operating a vehicle, and vehicle 

owners respond to this reduction in operating costs by driving slightly more. 

For this proposal, EPA is using an estimate of 10% for the rebound effect. This 

value is based on the most recent time period analyzed in the Small and Van Dender 2007 

paper,

202 and which is further supported by the new research conducted by David 

Greene.

203

 It also falls within the range of the larger body of historical work on the 

 

202 Small, K. and K. Van Dender, 2007a. “Fuel Efficiency and Motor Vehicle Travel: The Declining 

Rebound Effect”, The Energy Journal, vol. 28, no. 1, pp. 25-51 (Docket EPA-HQ-OAR-2009-0472). 

203 Report by Kenneth A. Small of University of California at Irvine, “The Rebound Effect from Fuel 

Efficiency Standards: Measurement and Projection to 2030”, June 12, 2009 (Docket EPA-HQ-OAR-2009-

0472). 

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rebound effect.204 Recent work by David Greene on the rebound effect for light-duty 

vehicles in the U.S. further supports the hypothesis suggests that the rebound effect is 

decreasing over time. 205 If we were to use a dynamic estimate of the future rebound 

effect, our analysis shows that the rebound effect could be in the range of 5% or lower.206 

The rebound effect is also discussed in Section II.F of the preamble; the TSD, Section 

4.2.5, reviews the relevant literature and discusses in more depth the reasoning for the 

rebound values used here. EPA invites comment on the most appropriate methodology 

for estimating the rebound effect for this rulemaking. 

EPA also invites comments on other alternatives for estimating the rebound 

effect. As one illustration, variation in the price per gallon of gasoline directly affects the 

per-mile cost of driving, and drivers may respond just as they would to a change in the 

cost of driving resulting from a change in fuel economy, by varying the number of miles 

they drive. Because vehicles’ fuel economy is fixed in the short run, variation in the 

number of miles driven in response to changes in fuel prices will be reflected in changes 

in gasoline consumption. Under the assumption that drivers respond similarly to changes 

in the cost of driving whether they are caused by variation in fuel prices or fuel economy, 

the short-run price elasticity of demand for gasoline – which measures the sensitivity of 

gasoline consumption to changes in its price per gallon – may provide some indication 

about the magnitude of the rebound effect itself. EPA invites comment on the extent to 

which the short run elasticity of demand for gasoline with respect to its price can provide 

useful information about the size of the rebound effect. Specifically, we seek comment 

on whether it would be appropriate to use the price elasticity of demand for gasoline, or 

other alternative approaches, to guide the choice of a value for the rebound effect.

4. Impacts on U.S. Vehicle Sales and Consumer Vehicle Choice Modeling

a. Vehicle Sales Impacts 

 

 The methodology EPA used for estimating the impact on vehicle sales is 

relatively straightforward, but makes a number of simplifying assumptions. According to 

the literature, the price elasticity of demand for vehicles is commonly estimated to be -

1.0.207 In other words, a one percent increase in the price of a vehicle would be expected 

 

204 Sorrell, S. and J. Dimitropoulos, 2007. “UKERC Review of Evidence for the Rebound Effect, Technical 

Report 2: Econometric Studies”, UKERC/WP/TPA/2007/010, UK Energy Research Centre, London, 

October (Docket EPA-HQ-OAR-2009-0472). 

205 Report by Kenneth A. Small of University of California at Irvine to EPA, “The Rebound Effect from 

Fuel Efficiency Standards: Measurement and Projection to 2030”, June 12, 2009 (Docket EPA-HQ-OAR2009-0472). 

206 Report by David Greene of Oak Ridge National Laboratory to EPA, “Rebound 2007: Analysis of 

National Light-Duty Vehicle Travel Statistics,” March 24, 2009 (Docket EPA-HQ-OAR-2009-0472). 

Note, this report has been submitted for peer review. Completion of the peer review process is expected 

prior to the final rule.

207 Kleit A.N., 1990. “The Effect of Annual Changes in Automobile Fuel Economy Standards.” 

Journal of Regulatory Economics 2: 151-172 (Docket EPA-HQ-OAR-2009-0472); McCarthy, Patrick S., 

1996. “Market Price and Income Elasticities of New Vehicle Demands.” Review of Economics and 

Statistics 78: 543-547 (Docket EPA-HQ-OAR-2009-0472); Goldberg, Pinelopi K., 1998. “The Effects of 
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to decrease sales by one percent, holding all other factors constant. For our estimates, 

EPA calculated the effect of an increase in vehicle costs due to the proposed standards 

and assume that consumers will face the full increase in costs, not an actual (estimated) 

change in vehicle price. (The estimated increases in vehicle cost due to the rule are 

discussed in Section III.H.1) This is a conservative methodology, since an increase in 

cost may not pass fully into an increase in market price in an oligopolistic industry such 

as the automotive sector.208 EPA also notes that we have not used these estimated sales 

impacts in the OMEGA Model. 

Although EPA uses the one percent price elasticity of demand for vehicles as the 

basis for our vehicle sales impact estimates, we assumed that the consumer would take 

into account both the higher vehicle purchasing costs as well as the fuel savings benefits 

when deciding whether to purchase a new vehicle. Therefore, the incremental cost 

increase of a new vehicle would be offset by reduced fuel expenditures over a certain 

period of time (i.e., the “payback period”). For the purposes of this rulemaking, EPA 

used a five-year payback period, which is consistent with the length of a typical new 

light-duty vehicle loan.209

 

This increase in costs has other effects on consumers as well: if vehicle prices 

increase, consumers will face higher insurance costs and sales tax, and additional finance 

costs if the vehicle is bought on credit. In addition, the resale value of the vehicles will 

increase. EPA estimates that, with corrections for these factors, the effect on consumer 

expenditures of the cost of the new technology should be 0.841932 times the cost of the 

technology at a 3% discount rate, and 0.88492 times the cost of the technology at a 7% 

discount rate. The details of this calculation are in the DRIA, Chapter 8.l. 

Once the cost estimates are adjusted for these additional factors, the fuel cost 

savings associated with the rule, discussed in Section III.H.3, are subtracted to get the net 

effect on consumer expenditures for a new vehicle. With the assumed elasticity of 

demand of -1, the percent change in this “effective price,” estimated as the adjusted 

increase in cost, is equal to the negative of the percent change in vehicle purchases. The 

net effect of this calculation is in Table III.H.4-1 and Table III.H.4-2. 

The estimates provided in Table III.H.4-1 and Table III.H.4-2 are meant to be 

illustrative rather than a definitive prediction. When viewed at the industry-wide level, 

they give a general indication of the potential impact on vehicle sales. As shown below, 

 

the Corporate Average Fuel Efficiency Standards in the U.S.,” Journal of Industrial Economics 46(1): 1-33

(Docket EPA-HQ-OAR-2009-0472). 

208 See, for instance, Gron, Ann, and Deborah Swenson, 2000. “Cost Pass-Through in the U.S. Automobile 

Market,” Review of Economics and Statistics 82: 316-324 (Docket EPA-HQ-OAR-2009-0472). 

209 There is not a consensus in the literature on how consumers consider fuel economy in their vehicle 

purchases. Results are inconsistent, possibly due to fuel economy not being a major focus of many of the 

studies. Espey, Molly, and Santosh Nair (1995, “Automobile Fuel Economy: What Is It Worth?” 

Contemporary Economic Policy 23: 317-323, (Docket EPA-HQ-OAR-2009-0472) find that their results 

are consistent with consumers using the lifetime of the vehicle, not just the first five years, in their fuel 

economy purchase decisions. This result suggests that the five-year time horizon used here may be an 

underestimate. 
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198

the overall impact is positive and growing over time for both cars and trucks, because the 

estimated value of fuel savings exceeds the costs of meeting the higher standards. 

Table III.H.4-1 Vehicle Sales Impacts Using a 3% Discount Rate 

 Change in Car 

Sales 

% Change Change in 

Truck Sales 

% Change 

2012 66,60075,700 0.70.8 27,30035,000 0.50.6

2013 93,300109,900 0.91.1 161,30076,800 2.81.3

2014 134,400161,700 1.31.5 254,400149,700 4.42.6

2015 236,300272,900 2.22.5 368,400233,200 6.54.1

2016 375,400410,200 3.43.7 519,000328,200 9.45.9

Table III.H.4-1 shows the impacts on new vehicle sales using a 3% discount rate. 

The fuel savings are always higher than the technology costs. Although both cars and 

trucks show very small effects initially, over time vehicle sales become increasingly 

positive, as increased fuel prices make improved fuel economy more desirable. The 

increases in sales for cars are always larger than the increases for trucks, though trucks 

show a greater percentage increase. 

Table III.H.4-2 New Vehicle Sales Impacts Using a 7% Discount Rate 

 Change in Car 

Sales 

% Change Change in 

Truck Sales 

% Change 

2012 61,90059,700 0.70.6 25,30027,600 0.50.5

2013 86,60086,400 0.90.9 60,00064,100 11.1

2014 125,200130,800 1.21.3 122,900131,300 2.12.3

2015 221,400230,400 22.1 198,100207,600 3.53.6

2016 353,100353,900 3.23.2 291,500292,300 5.35.3

Table III.H.4-2 shows the impacts on new vehicle sales using a 7% interest rate. 

While a 7% interest rate shows slightly lower impacts than using a 3% discount rate, the 

results are qualitatively similar to those using a 3% discount rate. Sales increase for 

every year. For both cars and trucks, sales become increasingly positive over time, as 

higher fuel prices make improved fuel economy more valuable. The car market grows 

more than the truck market in absolute numbers, but less on a percentage basis. 

In general, changes in prices or other characteristics of the new vehicles market 

will also have consequences for the used vehicle market. Specifically, any action that 

raises prices for new vehicles will also tend to increase prices of used vehicles, and in 

turn cause owners of existing vehicles to keep them in service for slightly longer. In the 

case of the proposed rule, however, the agency estimates that the value of fuel savings 

over the lifetimes of the new vehicles will exceed the increase in their prices, prompting 

an increase in sales of new vehicles during most model years that the rule affects. As a 

consequence, prices for used vehicles are also likely to decline, leading to slight increases 

in the rate at which used vehicles are retired from service (“scrapped”) and replaced with 
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new models. In turn, this will accentuate the effects of the proposed standards on fuel 

consumption and GHG emissions; at the same time, total criteria pollutant emissions 

from the entire vehicle fleet may also decrease, as newer, lower-polluting vehicles 

replace used vehicles.

EPA believes these secondary effects of the proposed standards are de minimus, 

because the primary effect on new vehicle prices is likely to be small, and consequently 

the impact on used vehicle markets would be similarly modest.

A detailed discussion of the vehicle sales impacts methodology is provided in the 

DRIA. EPA invites comments on this approach to estimating the vehicle sales impacts of 

this proposal. 

b. Consumer Vehicle Choice Modeling 

In this section EPA describes some of the consumer vehicle choice models EPA 

has reviewed in the literature, and we describe the models’ results and limitations that we 

have identified. The evidence from consumer vehicle choice models indicates a huge 

range of estimates for consumers’ willingness to pay for additional fuel economy. 

Because consumer surplus estimates from consumer vehicle choice models depend 

critically on this value, EPA would consider any consumer surplus estimates of the effect 

of our rule from such models to be unreliable. In addition, the predictive ability of 

consumer vehicle choice models may be limited. While vehicle choice models are based 

on sales of existing vehicles, vehicle models are likely to change, both independently and 

in response to this proposed rule; the models may not predict well in response to these 

changes. Instead, EPA compares the value of the fuel savings associated with this rule 

with the increase in technology costs. EPA will continue its efforts to review the 

literature, but, given the known difficulties, EPA has not conducted an analysis using 

these models for this proposal. 

Consumer vehicle choice models (referred to as “market shift” models by 

NHTSA in Section IV.C.4.c) are a tool that attempts to estimate how consumers decide 

what vehicles they buy. The models typically take into consideration both household 

characteristics (such as income, family size, and age) and vehicle characteristics 

(including a vehicle’s power, price, and fuel economy). These models are often used to 

examine how a consumer’s vehicle purchase decision is affected by a change in vehicle 

or personal characteristics. Although these models focus on the consumer, some have 

also linked consumer choice models with information on vehicle technologies and costs, 

to estimate an integrated system of consumer and auto maker response. 

The outputs from consumer vehicle choice models typically include the market 

shares of each category of vehicle in the model. In addition, consumer vehicle choice 

models are often used to estimate the effect of market or regulatory changes on consumer 

surplus. Consumer surplus is the benefit that a consumer gets over and above the market 

price paid for the good. For instance, if a consumer is willing to pay up to $30,000 for a 

car but is able to negotiate a price of $25,000, the $5000 difference is consumer surplus. 
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200

Information on consumer surplus can be used in benefit-cost analysis to measure whether 

consumers are likely to consider themselves better or worse off due to the changes. 

Consumer vehicle choice modeling has not previously been applied in federal 

regulatory analysis of fuel economy, and EPA has not used a consumer vehicle choice 

model in its analysis of the effects of this proposed rule. EPA has not done so, to this 

point, due to concern over the wide variation in the methods and results of existing 

models, as well as some of the limitations of existing applications of consumer choice 

modeling. Our preliminary review of the literature indicates that these models vary in a 

number of dimensions, including data sources used, modeling methods, vehicle 

characteristics included in the analysis, and the research questions for which they were 

designed. These dimensions are likely to affect the models’ results and their 

interpretation. In addition, their ability to incorporate major changes in the vehicle fleet 

appears unproven. 

One problem for this rule is the variation in the value that consumers place on fuel 

economy in their vehicle purchase decisions. A number of consumer vehicle choice 

models make the assumption that auto producers provide as much fuel economy in their 

vehicles as consumers are willing to purchase, and consumers are satisfied with the 

current combinations of vehicle fuel economy and price in the marketplace.210 If this 

assumption is true, then consumers will not benefit from required improvements in fuel 

economy, even if the fuel savings that they receive exceed the additional costs from the 

fuel-saving technology. Other vehicle choice models, in contrast, find that consumers are 

willing to pay more for additional fuel economy than the costs to auto producers of 

installing that technology.211 If this result is true, then both consumers and producers 

would benefit from increased fuel economy. This result leaves open the question why 

auto producers do not follow the market incentive to provide more fuel economy, and 

why consumers do not seek out more fuel-efficient vehicles. 

Whether consumers and producers will benefit from improved fuel economy 

depends on the value of improved fuel economy to consumers. There may be a 

 

210 E.g., Kleit, Andrew N. (2004). “Impacts of Long-Range Increases in the Fuel Economy (CAFE) 

Standard.” Economic Inquiry 42(2): 279-294 (Docket EPA-HQ-OAR-2009-0472); Austin, David, and 

Terry Dinan (2005). “Clearing the Air: The Costs and Consequences of Higher CAFE Standards and 

Increased Gasoline Taxes.” Journal of Environmental Economics and Management 50: 562-582 (Docket 

EPA-HQ-OAR-2009-0472); Klier, Thomas, and Joshua Linn (2008). “New Vehicle Characteristics and the 

Cost of the Corporate Average Fuel Economy Standard,” working paper. 

http://www.chicagofed.org/publications/workingpapers/wp2008_13.pdf (Docket EPA-HQ-OAR-2009-

0472); Jacobsen, Mark. “Evaluating U.S. Fuel Economy Standards In a Model with Producer and 

Household Heterogeneity,” http://www.econ.ucsd.edu/~m3jacobs/Jacobsen_CAFE.pdf, accessed 5/11/09

(Docket EPA-HQ-OAR-2009-0472).

211 E.g., Gramlich, Jacob (2008). “Gas Prices and Endogenous Product Selection in the U.S. Automobile 

Industry,” http://www.econ.yale.edu/seminars/apmicro/am08/gramlich-081216.pdf , accessed 5/11/09

(Docket EPA-HQ-OAR-2009-0472); McManus, Walter M. (2007). “The Impact of Attribute-Based 

Corporate Average Fuel Economy (CAFE) Standards: Preliminary Findings.” University of Michigan 

Transportation Research Institute paper UMTRI-2007-31 (Docket EPA-HQ-OAR-2009-0472); McManus, 

W. and R. Kleinbaum (2009). “Fixing Detroit: How Far, How Fast, How Fuel Efficient.“ Working Paper, 

Transportation Research Institute, University of Michigan (Docket EPA-HQ-OAR-2009-0472). 
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201

difference between the fuel savings that consumers would receive from improved fuel 

economy, and the amount that consumers would be willing to spend on a vehicle to get 

improved fuel economy. A 1988 review of consumers’ willingness to pay for improved 

fuel economy found estimates that varied by more than an order of magnitude: for a $1 

per year reduction in vehicle operating costs, consumers would be willing to spend 

between $0.74 and $25.97 in increased vehicle price.

212 For comparison, the present 

value of saving $1 per year on fuel for 15 years at a 3% discount rate is $11.94, while a 

7% discount rate produces a present value of $8.78. Thus, this study finds that 

consumers may be willing to pay either far too much or far too little for the fuel savings 

they will receive. 

Although EPA has not found an updated survey of these values, a few examples 

suggest that the existing consumer vehicle choice models still demonstrate wide variation 

in estimates of how much people are willing to pay for fuel savings. For instance, Espey 

and Nair (2005) and McManus (2006) find that consumers are willing to pay around $600 

for one additional mile per gallon.213 In contrast, Gramlich (2008) finds that consumers’ 

willingness to pay for an increase from 25 mpg to 30 mpg varies between $4100 (for 

luxury cars when gasoline costs $2/gallon) to $20,560 (for SUVs when gasoline costs 

$3.50/gallon).214 

Lack of information is one possible reason for the variation. Consumers face 

difficulty in predicting the fuel savings that they are likely to get from a vehicle, for a 

number of reasons. For instance, the calculation of fuel savings is complex, and 

consumers may not make it correctly.215 In addition, future fuel price (a major 

component of fuel savings) is highly uncertain. Consumer fuel savings also vary across 

individuals, who travel different amounts and have different driving styles. Studies 

regularly show that fuel economy plays a role in consumers’ vehicle purchases, but 

modeling that role may still be in development.216

 

212 Greene, David L., and Jin-Tan Liu (1988). “Automotive Fuel Economy Improvements and Consumers’ 

Surplus.” Transportation Research Part A 22A(3): 203-218 (Docket EPA-HQ-OAR-2009-0472). The 

study actually calculated the willingness to pay for reduced vehicle operating costs, of which vehicle fuel 

economy is a major component.

213 Espey, Molly, and Santosh Nair (2005). “Automobile Fuel Economy: What is it Worth?” 

Contemporary Economic Policy 23(3): 317-323 (Docket EPA-HQ-OAR-2009-0472); McManus, Walter 

M. (2006). “Can Proactive Fuel Economy Strategies Help Automakers Mitigate Fuel-Price Risks?” 

University of Michigan Transportation Research Institute (Docket EPA-HQ-OAR-2009-0472). 

214Gramlich, Jacob (2008). “Gas Prices and Endogenous Product Selection in the U.S. Automobile 

Industry,” http://www.econ.yale.edu/seminars/apmicro/am08/gramlich-081216.pdf , accessed 5/11/09

(Docket EPA-HQ-OAR-2009-0472). 

215 Turrentine, T. and K. Kurani (2007). “Car Buyers and Fuel Economy?” Energy Policy 35: 1213-1223

(Docket EPA-HQ-OAR-2009-0472); Larrick, R. P., and J.B. Soll (2008). “The MPG illusion.” Science

320: 1593-1594 (Docket EPA-HQ-OAR-2009-0472). 

216 Busse, Meghan R., Christopher R. Knittel, and Florian Zettelmeyer (2009). “Pain at the Pump: How 

Gasoline Prices Affect Automobile Purchasing in New and Used Markets,” Working paper (accessed 

6/30/09), available at 

 http://www.econ.ucdavis.edu/faculty/knittel/papers/gaspaper_latest.pdf (Docket EPA-HQ-OAR-2009-

0472). 
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202

If there is a difference between fuel savings and consumers’ willingness to pay for 

fuel savings, the next question is, which is the appropriate measure of consumer benefit? 

Fuel savings measure the actual monetary value that consumers will receive after 

purchasing a vehicle; the willingness to pay for fuel economy measures the value that, 

before a purchase, consumers place on additional fuel economy. There are a number of 

reasons that consumers may incorrectly estimate the benefits that they get from improved 

fuel economy, including risk or loss aversion, poor ability to estimate savings, and 

personal variation in benefits. 

A second problem with use of consumer vehicle choice models, as they now 

stand, is that they are even less reliable in the face of significant changes otherwise 

occurring in fleet composition. One attempt to analyze the effect of the oil shock of 1973 

on consumer vehicle choice found that, after two years, the particular model did not 

predict well due to changes in the vehicle fleet.217 It is likely that, in the next few years, 

many of the vehicles that will be offered for sale will change. In coming years, new 

vehicles will be developed, and existing vehicles will be redesigned. For instance, over 

the next few years, new vehicles that have both high fuel economy and high safety 

factors, in combinations that consumers have not previously been offered, are likely to 

appear in the market. Models based on the existing vehicle fleet may not do well in 

predicting consumers’ choices among the new vehicles offered. Given that consumer 

vehicle choice models appear to be less effective in predicting vehicle choices when the 

vehicles are likely to change, EPA is reluctant to use the models for this proposed 

rulemaking. 

In sum, the estimates of consumer surplus from consumer vehicle choice models 

depend heavily on the value to consumers of improved fuel economy, a value for which 

estimates are highly varied. In addition, the predictive ability of consumer vehicle choice 

models may be limited as consumers face new vehicle choices that they previously did 

not have. 

Nonetheless, because there are potential advantages to using consumer vehicle 

choice models if these difficulties can be addressed, EPA plans to continue our 

investigation and evaluation of consumer vehicle choice models. This effort includes 

further review of existing consumer vehicle choice models and the estimates of 

consumers’ willingness to pay for increased fuel economy. In addition, EPA is 

developing capacity to examine the factors that may affect the results of consumer 

vehicle choice models, and to explore their impact on analysis of regulatory scenarios. 

A detailed discussion of the state of the art of consumer choice modeling is 

provided in the DRIA. EPA invites comments on this review and on the state of the art 

of consumer vehicle choice modeling.

c. Consumer Payback Period and Lifetime Savings on New Vehicle 

Purchases 

 

217 Berry, Steven, James Levinsohn, and Ariel Pakes (July 1995). “Automobile Prices in Market 

Equilibrium,” Econometrica 63(4): 841-940 (Docket EPA-HQ-OAR-2009-0472). 
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203

Another factor of interest is the payback period on the purchase of a new vehicle 

that complies with the proposed standards. In other words, how long would it take for the 

expected fuel savings to outweigh the increased cost of a new vehicle? For example, a 

new 2016 MY vehicle is estimated to cost $1,050 more (on average, and relative to the 

reference case vehicle) due to the addition of new GHG reducing technology (see Section

III.D.6 for details on this cost estimate). This new technology will result in lower fuel 

consumption and, therefore, savings in fuel expenditures (see Section III.F.1 for details 

on fuel savings). But how many months or years would pass before the fuel savings 

exceed the upfront cost of $1,050? 

Table III.H.4-3 provides the answer to this question for a vehicle purchaser who 

pays for the new vehicle upfront in cash (we discuss later in this section the payback 

period for consumers who finance the new vehicle purchase with a loan). The table uses 

annual miles driven (vehicle miles traveled, or VMT) and survival rates consistent with 

the emission and benefits analyses presented in Chapter 4 of the draft joint TSD. The 

control case includes rebound VMT but the reference case does not, consistent with other 

parts of the analysis. Also included are fuel savings associated with A/C controls (in the 

control case only), but the expected A/C-related maintenance savings are not included. 

The likely A/C-related maintenance savings are discussed in Chapter 2 of EPA’s draft 

RIA. Further, this analysis does not include other societal impacts such as the value of 

increased driving, or noise, congestion and accidents since the focus is meant to be on 

those factors consumers consider most while in the showroom considering a new car 

purchase. Car/truck fleet weighting is handled as described in Chapter 1 of the draft joint 

TSD. As can be seen in the table, it will take under 3 years (2 years and 8 months at a 3% 

discount rate, 2 years and 10 months at a 7% discount rate) for the cumulative discounted 

fuel savings to exceed the upfront increase in vehicle cost. More detail on this analysis 

can be found in Chapter 8 of EPA’s draft RIA.

Table III.H.4-3 Payback Period on a 2016 MY New Vehicle Purchase via Cash (2007 

dollars)

YEAR OF 

OWNERSHIP

INCREASED 

VEHICLE COST A

ANNUAL FUEL 

SAVINGS B

CUMULATIVE 

DISCOUNTED 

FUEL SAVINGS

AT 3%

CUMULATIVE 

DISCOUNTED 

FUEL SAVINGS 

AT 7%

1 $1,128 $443 $436 $428

2 $444 $860 $829

3 $443 $1,272 $1,203

4 $434 $1,663 $1,546

a

 Increased cost of the proposed rule is $1,050; the value here includes nationwide average sales tax of 

5.3% and increased insurance premiums of 1.98%; both of these percentages are discussed in Section 8.1.1 

of EPA’s draft RIA. 

b Calculated using AEO 2009 reference case fuel price including taxes.

 However, most people purchase a new vehicle using credit rather than paying 

cash up front. The typical car loan today is a five year, 60 month loan. As of August 24, 

2009, the national average interest rate for a 5 year new car loan was 7.41 percent. If the 

increased vehicle cost is spread out over 5 years at 7.41 percent, the analysis would look 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

204

like that shown in Table III.H.4-4. As can be seen in this table, the fuel savings 

immediately outweigh the increased payments on the car loan, amounting to $162165 in 

discounted net savings (3% discount rate) saved in the first year and similar savings for 

the next two years before reduced VMT starts to cause the fuel savings to fall. Results 

are similar using a 7% discount rate. This means that for every month that the average 

owner is making a payment for the financing of the average new vehicle their monthly 

fuel savings would be greater than the increase in the loan payments. This amounts to a 

savings on the order of $912 to $14 per month throughout the duration of the 5 year loan. 

Note that in year six when the car loan is paid off, the net savings equal the fuel savings 

(as would be the case for the remaining years of ownership).

Table III.H.4-4 Payback Period on a 2016 MY New Vehicle Purchase via Credit (2007 

dollars)

YEAR OF 

OWNERSHIP

INCREASED 

VEHICLE COST A

ANNUAL FUEL 

SAVINGS B

ANNUAL 

DISCOUNTED 

NET SAVINGS AT 

3%

ANNUAL 

DISCOUNTED 

NET SAVINGS AT 

7%

1 $278 $443 $162 $159

2 $278 $444 $158 $150

3 $278 $443 $153 $139

4 $278 $434 $141 $123

5 $278 $423 $127 $107

6 $0 $403 $343 $278

a

This uses the same increased cost as Table III.H.4-3 but spreads it out over 5 years assuming a 5 year car 

loan at 7.41 percent. 

b

 Calculated using AEO 2009 reference case fuel price including taxes.

 The lifetime fuel savings and net savings can also be calculated for those who 

purchase the vehicle using cash and for those who purchase the vehicle with credit. This 

calculation applies to the vehicle owner who retains the vehicle for its entire life and 

drives the vehicle each year at the rate equal to the national projected average. The 

results are shown in Table III.H.4-5. In either case, the present value of the lifetime net 

savings is greater than $3,3003,200 at a 3% discount rate, or $2,400 at a 7% discount 

rate.

Table III.H.4-5 Lifetime Discounted Net Savings on a 2016 MY New Vehicle Purchase, 

Net Present Values at a 3% Discount Rate (2007 dollars)

PURCHASE 

OPTION

INCREASED 

DISCOUNTED 

VEHICLE COST

LIFETIME 

DISCOUNTED 

FUEL SAVINGS B

LIFETIME 

DISCOUNTED 

NET SAVINGS

3% discount rate

Cash $1,128 $4,558 $3,446

Credit a$1,293 $4,558 $3,265

7% discount rate

Cash $1,128 $3,586 $2,495

Credit a$1,180 $3,586 $2,406

a

 Assumes a 5 year loan at 7.41 percent.

b Fuel savings here were calculated using AEO 2009 reference case fuel price 

including taxes.
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

205

 Note that throughout this consumer payback discussion, the average number of 

vehicle miles traveled per year has been used. Drivers who drive more miles than the 

average would incur fuel related savings more quickly and, therefore, the payback would 

come sooner. Drivers who drive fewer miles than the average would incur fuel related 

savings more slowly and, therefore, the payback would come later.

5. Economy-Wide Impacts of the Rule

It is anticipated that this proposal would have impacts on the U.S. economy that 

extend beyond the transportation sector. The price of light-duty vehicles would increase 

with the proposed GHG vehicle emissions standards. This proposal would also lower the 

demand for transportation fuels, resulting in fuel savings to vehicle users and a lower 

overall price for transportation fuels. This combination of effects—price increases for 

vehicles and lower demand and prices for transportation fuels—would impact all sectors 

of the economy that use light-duty vehicles and fuels as intermediate inputs (e.g., delivery 

vehicles) to produce final goods. Households would also be impacted indirectly as 

consumers of final goods, and directly as consumers of fuels and light-duty vehicles. 

It is important to note, however, that these potential impacts do not represent 

additional benefits or costs from the proposed regulation. Instead, they represent the 

effects on the U.S. economy as its direct benefits and costs are transmitted through 

changes in prices in the affected markets, including those for vehicles and their 

components, fuel, and the various resources used to supply them. To estimate the impacts 

of this proposal on U.S. Gross Domestic Product (GDP) and personal consumption, EPA 

has used an economy-wide, computable general equilibrium (CGE) model. This model 

uses outputs of the vehicle sector model (e.g., incremental costs of vehicle technologies, 

reduction in fuel consumption, impacts on transportation fuel prices) as inputs to 

determine the economy-wide impacts of the proposal. The economy-wide model used in 

this analysis is the Intertemporal General Equilibrium Model (IGEM).218 IGEM is a 

model of the U.S. economy with an emphasis on the economy’s energy and 

environmental aspects. IGEM is a dynamic model which depicts growth of the economy 

due to capital accumulation, technical change and population change. It is a detailed 

multi-sector model covering thirty-five industries. It also depicts changes in consumption 

patterns due to demographic changes, price, and income effects. The substitution 

possibilities for both producers and consumers in IGEM are driven by model parameters 

that are based on observed market behavior revealed over the past forty to fifty years. 

See the Chapter 8.2 in the DRIA for more information on the approach taken to analyze 

the economy-wide impacts of the proposed rule. 

a. Impacts on U.S. GDP 

 

218 The model is developed and run by Dale W. Jorgenson Associates for EPA. Model Homepage: 

http://www.dja.insightworks.com/ 
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206

 In order to use IGEM to estimate the real U.S. GDP impacts of the vehicles 

proposal, EPA analyzed the impact of changes in the costs of light-duty vehicles, changes 

in fuel consumption from the shift to a lower GHG-emitting vehicle stock, and the 

impacts of changes in the demand for motor fuels on fuel prices (see Section III.H.1 for 

details on changes in vehicle technology costs, Section III.H.3 for details on the changes 

in transportation fuel demand, and Section III.H.8 for details on changes in the world oil 

pricethe monopsony effect) as a result of this proposal. It is important to note that the 

economy-wide analysis does not include a representation of the benefits associated with 

reducing greenhouse gas emissions, and thus the GDP impacts presented here do not 

incorporate the results of a complete cost benefit analysis. Table III.H.5-1 shows the 

Reference Case GDP, GDP with this proposal and the percentage change in GDP as a 

result of this proposal from 2016 through 2050. It is important to note that the Reference 

Case used for the economy-wide analysis is based on the AEO 2009 projections, which 

differs slightly from baseline used in other sections of this analysis. In addition, the 

impacts of the proposal were based on preliminary cost data that are slightly different 

than the costs reported in Section III.H.1. Details on these assumptions are included in 

Chapter 8.2 of the RIA. 

Table III.H.5-1 Annual GDP Impacts Associated with this Proposal (billions of 2007$) 

Year Reference Case GDP GDP with this 

Proposal

% Change from 

Reference Case

2016 $17,214 $17,253 0.23% 

2020 $18,920$18,919 $19,0043 0.44% 

2030 $24,315 $24,502 0.77% 

2040 $30,459 $30,716 0.84% 

2050 $37,904 $38,241 0.89% 

In the Reference Case, GDP rises from approximately $17.2 trillion in 2016 to 

$18.9 trillion in 2020, $24.3 trillion in 2030, $30.5 trillion in 2040, and $37.9 trillion in 

2050. With this proposal, GDP rises from approximately $17.2 trillion in 2016 to $19.0 

trillion in 2020, $24.5 trillion in 2030, $30.7 trillion in 2040, and $38.2 trillion in 2050. 

b. Impacts on U.S. Consumption 

In addition to showing the impacts of the GHG vehicle proposal on U.S. GDP, 

EPA also shows the impacts on real U.S. personal consumption expenditures. Table 

III.H.5.a-2 shows the Reference Case Consumption, Consumption with this proposal and 

the percentage change in Consumption as a result of this proposal from 2020 2016

through 20402050. In the Reference Case, Consumption rises from approximately $10.7 

trillion in 2016 to $11.8 trillion in 2020, $14.9 trillion in 2030, $18.8 trillion in 2040, and 

$23.2 trillion in 2050. With this proposal, Consumption rises from approximately $10.7 

trillion in 2016 to approximately $11.8 trillion in 2020, $15.1 trillion in 2030, $19.0 

trillion in 2040, and $23.5 trillion in 2050. 

Table III.H.52 Consumption Impacts of this Proposal (billions of 2007$) 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

207

Year Reference Case 

Consumption

Consumption with 

GHG Vehicle 

Proposal

% Change from 

Reference Case

2016 $10,6698 $10,6898 0.19% 

2020 $11,763$11,764 $11,8087 0.37% 

2030 $14,945 $15,083 0.93% 

2040 $18,8043 $19,0421 1.27% 

2050 $23,165 $23,504 1.46% 

Additional details on the economy-wide analysis can be found in Chapter 8.2 of 

the DRIA. EPA invites comment on this economy-wide analysis.

 6. Benefits of Reducing GHG Emissions

 a. Introduction 

 This proposal is designed to reduce greenhouse gas (GHG) emissions from lightduty vehicles. This section provides monetized estimates of some of the economic 

benefits of this proposal’s projected GHG emissions reductions.219 The total benefit 

estimates were calculated by multiplying a marginal dollar value (i.e., cost per ton) of 

carbon emissions, also referred to as “social cost of carbon” (SCC), by the anticipated 

level of emissions reductions in tons. We request comment on the approach used to 

estimate the set of SCC values used for this coordinated proposal as well as the other 

options considered. 

 The estimates presented here are interim values. EPA and other agencies will 

continue to explore the underlying assumptions and issues. 

As discussed below, the interim dollar estimates of the SCC represent a partial 

accounting of climate change impacts. The quantitative account presented here is 

accompanied by a qualitative appraisal of climate-related impacts presented elsewhere in 

this proposal. For example, Section III.F.2 of the preamble presents a summary of the 

impacts and risks of climate change projected in the absence of actions to mitigate GHG 

emissions. Section III.F.2 is based on EPA documents that The TSD synthesizes major 

findings from the best available scientific assessments of the scientific literature that have 

gone through rigorous and transparent peer review, including the major assessment 

reports of both the Intergovernmental Panel on Climate Change (IPCC) and the U.S. 

Climate Change Science Program (CCSP).

220

 

 

219 The marginal and total benefit estimates presented in this section are limited to the impacts that can be 

monetized. Section III.F.2 of this preamble discusses the physical impacts of climate change, some of

which are not monetized and are therefore omitted from the monetized benefits discussed here. 

220 U.S. Environmental Protection Agency, “Advance Notice of Proposed Rulemaking for Greenhouse 

Gases Under the Clean Air Act, Technical Support Document on Benefits of Reducing GHG Emissions,” 

June 2008. See www.regulations.gov and search for ID “EPA-HQ-OAR-2008-0138-0078.”

Formatted Table

Formatted Table
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208

The rest of this Preamble section will provide the basis for the interim SCC 

values, and the estimates of the total climate-related benefits of the proposed rule that 

follow from these interim values. 

b. Derivation of Interim Social Cost of Carbon Values 

The “social cost of carbon” (SCC) is intended to be a monetary measure of the 

incremental damage resulting from carbon dioxide (CO2) emissions, including (but not 

limited to) net agricultural productivity loss, human health effects, property damages 

from sea level rise, and changes in ecosystem services. Any effort to quantify and to 

monetize the consequences associated with climate change will raise serious questions of 

science, economics, and ethics. But with full regard for the limits of both quantification 

and monetization, the SCC can be used to provide an estimate of the social benefits of 

reductions in GHG emissions. 

 

For at least three reasons, any particular figure will be contestable. First, scientific 

and economic knowledge about the impacts of climate change continues to grow. With 

new and better information about relevant questions, including the cost, burdens, and 

possibility of adaptation, current estimates will inevitably change over time. Second, 

some of the likely and potential damages from climate change—for example, the loss of 

endangered species—are generally not included in current SCC estimates. These 

omissions may turn out to be significant; in the sense that they may mean that the best 

current estimates are too low. As noted by the IPCC Fourth Assessment Report, “It is 

very likely that globally aggregated figures underestimate the damage costs because they 

cannot include many non-quantifiable impacts.”221 Third, when economic efficiency 

criteria, under specific assumptions, are juxtaposed with ethical considerations, the 

outcome may be controversial. These ethical considerations, including those involving 

the treatment of future generations, should and will also play a role in judgments about 

the SCC (see in particular the discussion of the discount rate, below). 

To date, SCC estimates presented in recent regulatory documents have varied 

within and among agencies, including DOT, DOE, and EPA. For example, a regulation 

proposed by DOT in 2008 assumed a value of $7 per metric ton CO2 (2006$) for 2011 

emission reductions (with a range of $0-14 for sensitivity analysis; see EPA Docket, 

EPA-HQ-OAR-2009-0472). 222 A regulation proposed by DOE in 2009 used a range of 

$0-$20 (2007$). Both of these ranges were designed to reflect the value of damages to 

the United States resulting from carbon emissions, or the “domestic” SCC. In the final 

MY2011 CAFE EIS, DOT used both a domestic SCC value of $2/tCO2 and a global SCC 

value of $33/tCO2 (with sensitivity analysis at $80/tCO2) (in 2006 dollars for 2007 

 

221 IPCC WGII. 2007. Climate Change 2007 - Impacts, Adaptation and Vulnerability Contribution of 

Working Group II to the Fourth Assessment Report of the IPCC. See EPA Docket, EPA-HQ-OAR-2009-

0472.

222 For the purposes of this discussion, we present all values of the SCC as the cost per metric ton of CO2

emissions. Some discussions of the SCC in the literature use an alternative presentation of a dollar per 

metric ton of Carbon. The standard adjustment factor is 3.67, which means, for example, that a SCC of $10 

per ton of CO2 would be equivalent to a cost of $36.70 for a ton of carbon emitted. Unless otherwise 

indicated, a “ton” refers to a metric ton. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

209

emissions), increasing at 2.4% per year thereafter. The final MY2011 CAFE rule also 

presented a range from $2 to $80/tCO2. (see EPA Docket, EPA-HQ-OAR-2009-0472, for 

the MY2011 EIS and final rule). EPA’s Advance Notice of Proposed Rulemaking for 

Greenhouse Gases discussed the benefits of reducing GHG emissions and identified what 

it described as “very preliminary” SCC estimates “subject to revision” that spanned three 

orders of magnitude. EPA’s global mean values were $68 and $40/tCO2 for discount 

rates of 2% and 3% respectively (in 2006 real dollars for 2007 emissions).223 

The current Administration has worked to develop a transparent methodology for 

selecting a set of interim SCC estimates to use in regulatory analyses until a more 

comprehensive characterization of the distribution of SCC is developed. This discussion 

proposes a set of values for the interim social cost of carbon resulting from this 

methodology. It should be emphasized that the analysis here is preliminary. This 

proposed joint rulemaking presents SCC estimates that reflect the Administration’s 

current understanding of the relevant literature and will be. These interim estimates are 

being used for the short-term while an interagency group develops a more comprehensive 

characterization of the distribution of SCC values for future economic and regulatory 

analyses. The interim values should not be viewed as an expectation about the results of 

the longer-term process. The Administration is seeking comment in this proposed rule on 

all of the scientific, economic, and ethical issues before establishing improved estimates 

for use in future rulemakings. 

The outcomes of the Administration’s process to develop interim values are 

judgments in favor of a) global rather than domestic values, b) an annual growth rate of 

3%, and c) interim global SCC estimates for 2007 (in 2007 dollars) of $56, $34, $20, $10, 

and $5 per ton of CO2. The proposed figures are based on the following judgments. 

 i. Global and Domestic Measures

 Because of the distinctive nature of the climate change problem, we present both a 

global SCC and a fraction of that value that represents impacts that may occur within the 

borders of the U.S. alone, or a “domestic” SCC, but fix our attention on the global 

measure. This approach represents a departure from past practices, which relied, for the 

most part, on domestic measures. As a matter of law, both global and domestic values are 

permissible; the relevant statutory provisions are ambiguous and allow selection of either 

measure.

224

 

 It is true that under OMB guidance, analysis from the domestic perspective is 

required, while analysis from the international perspective is optional. The domestic 

decisions of one nation are not typically based on a judgment about the effects of those 

 

223 73 FR 44416 (July 30, 2008). EPA, “Advance Notice of Proposed Rulemaking for Greenhouse Gases 

Under the Clean Air Act, Technical Support Document on Benefits of Reducing GHG Emissions,” June 

2008. www.regulations.gov. Search for ID “EPA-HQ-OAR-2008-0318-0078. 

224 It is true that federal statutes are presumed not to have extraterritorial effect, in part to ensure that the 

laws of the United States respect the interests of foreign sovereigns. But use of a global measure for the 

SCC does not give extraterritorial effect to federal law and hence does not intrude on such interests.
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210

decisions on other nations. But the climate change problem is highly unusual in the sense 

that it involves (a) a global public good in which (b) the emissions of one nation may 

inflict significant damages on other nations and (c) the United States is actively engaged 

in promoting an international agreement to reduce worldwide emissions. 

 In these circumstances, we believe the global measure is preferred. Use of a 

global measure reflects the reality of the problem and is consistent with the continuing 

efforts of the United States to ensure that emissions reductions occur in many nations. 

 Domestic SCC values are also presented. The development of a domestic SCC is 

greatly complicated by the relatively few region- or country-specific estimates of the 

SCC in the literature. One potential domestic estimate comes from the Dynamic 

Integrated Model of Climate and the Economy (DICE) models. In an unpublished paper, 

Nordhaus produced disaggregated SCC estimates using a regional version of the DICE 

model. He reported a U.S. estimate of $1/tCO2 (2007 value, 2007$), which is roughly 

11% of the global value.225

 

 An alternative source of estimates comes from EPA’s ANPR Benefits TSD, using 

the Climate Framework for Uncertainty, Negotiation and Distribution (FUND) model.226

 The resulting estimates suggest that the ratio of domestic to global benefits varies with 

key parameter assumptions. With a 3% discount rate, for example, the U.S. benefit is 

about 6% of the global benefit of GHG reductions for the “central” (mean) FUND results, 

while, for the corresponding “high” estimates associated with a higher climate sensitivity 

and lower global economic growth, the U.S. benefit is less than 4% of the global benefit. 

With a 2% discount rate, the U.S. share is about 2-5% of the global estimate Comments 

are requested on whether the share of U.S. SCC is correlated with the discount rate. 

 Based on this available evidence, an interim domestic SCC value equal to 6% of 

the global damages is proposed. This figure is around the middle of the range of available 

estimates cited above. It is recognized that the 6% figure is approximate and highly 

speculative and alternative approaches will be explored before establishing improved 

values for future rulemakings. However, it should be noted that it is difficult to properly 

apportion global benefits to different regions, because not all the damages citizens of one 

country would be willing to pay to avoid will occur only within their own borders. For 

example, impacts outside U.S. border can have significant welfare implications for U.S. 

populations (e.g. tourism, disaster relief) and if not included, these omissions will lead to 

an underestimation of the “domestic” SCC. We request comment on this issue. 

ii. Filtering Existing Analyses 

 There are numerous SCC estimates in the existing literature, and it is reasonable 

to make use of those estimates in order to produce a figure for current use. A starting 

 

225 William Nordhaus, personal communication, 2007. See EPA Docket, EPA-HQ-OAR-2009-0472.

226 73 FR 44416 (July 30, 2008). EPA, “Advance Notice of Proposed Rulemaking for Greenhouse Gases 

Under the Clean Air Act, Technical Support Document on Benefits of Reducing GHG Emissions,” June 

2008. www.regulations.gov. Search for ID “EPA-HQ-OAR-2008-0318-0078.
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211

point is provided by the meta-analysis in Richard Tol, 2008.227 With that starting point, 

the Administration proposes to “filter” existing SCC estimates by using those that (1) are 

derived from peer-reviewed studies; (2) do not weight the monetized damages to one 

country more than those in other countries; (3) use a “business as usual” climate scenario; 

and (4) are based on the most recent published version of each of the three major 

integrated assessment models (IAMs): FUND, Policy Analysis for the Greenhouse Effect 

(PAGE), and DICE. 

 Proposal (1) is based on the view that those studies that have been subject to peer 

review are more likely to be reliable than those that have not. Proposal (2) avoids treating 

the citizens of one nation (or different citizens within the U.S.) differently on the basis of 

income considerations, which some may find controversial and in any event would 

complicate that analysis. Further it is consistent with the potential compensation tests of 

Kaldor (1939) and Hicks (1940), which form the conceptual foundations of benefit-cost 

analysis and use unweighted sums of willingness to pay. Finally, this is the approach 

used in rulemakings across a variety of settings and consequently keeps USG policy 

consistent across contexts. 

 Proposal (3) stems from the judgment that as a general rule, the proper way to 

assess a policy decision is by comparing the implementation of the policy against a 

counterfactual state where the policy is not implemented. In addition, our expectation is 

that most policies to be evaluated using these interim SCC estimates will constitute small 

enough changes to the larger economy to safely assume that the marginal benefits of 

emissions reductions will not change between the baseline and policy scenarios. 

 Proposal (4) is based on four complementary judgments. First, the FUND, PAGE, 

and DICE models now stand as the most comprehensive and reliable efforts to measure 

the economic damages from climate change. Second, the latest versions of the three 

IAMs are likely to reflect the most recent evidence and learning, and hence they are 

presumed to be superior to those that preceded them. However, it is acknowledged that 

the most recently published results do not necessarily repeat prior modeling exercises 

with an updated model, so valuable information may be lost, for instance, estimates of the 

SCC using specific climate sensitivities or economic scenarios. In addition, although 

some older model versions were used to produce estimates between 1996 and 2001, there 

have been no significant modeling paradigm changes since 1996. 

 Third, any effort to choose among them, or to reject one in favor of the others, 

would be difficult to defend at the present time. In the absence of a clear reason to choose 

among them, it is reasonable to base the SCC on all of them. Fourth, in light of the 

uncertainties associated with the SCC, a range of values is more representative and the 

additional information offered by different models is important. 

 

227 Richard Tol, The Social Cost of Carbon: Trends, Outliers, and Catastrophes, Economics: The OpenAccess, Open-Assessment E-Journal, Vol. 2, 2008-25. http://www.economicsejournal.org/economics/journalarticles/2008-25 (2008). See also EPA Docket, EPA-HQ-OAR-2009-0472.
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iii. Use a Model-Weighted Average of the Estimates at Each Discount 

 Rate

 At this time, a strong reason to prefer any of the three major IAMs (FUND, 

PAGE, and DICE) over the others has not been identified. Accordingly, to address the 

concern that certain models not be given unequal weight relative to the other models, the 

estimates are based on an equal weighting of the means of the estimates from each of the 

models. Among estimates that remain after applying the filter, we begin by taking the 

average of all estimates within a model. The estimated SCC is then calculated as the 

average of the three model-specific averages. This approach is used to ensure that 

models with a greater number of published results do not exert unequal weight on the 

interim SCC estimates. However, note that the resulting set of SCC estimates does not 

provide information about variability among or within models except in so far as they 

have different discounting assumptions. Comment is sought on whether modelweighting averaging of published estimates is appropriate for developing interim SCC 

estimates. In the future interagency process to generate a more comprehensive 

distribution of SCC, we expect to exercise the available SCC models in a systematic 

manner such that the resulting distributions of SCC values may incorporate a wider range 

of uncertainties including discount rates, growth rates, climate sensitivities, and other 

important parameters. This may lead to changes in the span of SCC estimates that are 

relevant for policy analyses. . 

iv. Apply a 3% Annual Growth Rate to the Chosen SCC Values 

 SCC is expected to increase over time, because future emissions are expected to 

produce larger incremental damages as physical and economic systems become more 

stressed as the magnitude of climate change increases. Indeed, an implied growth rate in 

the SCC can be produced by most of the models that estimate economic damages caused 

by increased GHG emissions in future years. But neither the rate itself nor the 

information necessary to derive its implied value is commonly reported. In light of the 

limited amount of debate thus far about the appropriate growth rate of the SCC, applying 

a rate of 3% per year seems appropriate at this stage. This value is consistent with the 

range recommended by IPCC (2007) and close to the latest published estimate (Hope 

2008) . (see EPA Docket, EPA-HQ-OAR-2009-0472, for both citations). 

(1) Discount rates 

For estimation of the benefits associated with the mitigation of climate change, 

one of the most complex issues involves the appropriate discount rate. OMB’s current 

guidance offers a detailed discussion of the relevant issues and calls for discount rates of 

3% and 7%. It also permits a sensitivity analysis with low rates (1 – 3%) for 

intergenerational problems: “If your rule will have important intergenerational benefits or 
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213

costs you might consider a further sensitivity analysis using a lower but positive discount 

rate in addition to calculating net benefits using discount rates of 3 and 7 percent.”228

 

The choice of a discount rate, especially over long periods of time, raises highly 

contested and exceedingly difficult questions of science, economics, philosophy, and law. 

See, e.g., William Nordhaus, The Challenge of Global Warming (2008); Nicholas Stern, 

The Economics of Climate Change (2008); Discounting and Intergenerational Equity 

(Paul Portney and John Weyant eds. 1999), in the EPA Docket, EPA-HQ-OAR-2009-

0472. It is not clear that future generations would be willing to trade environmental 

quality for consumption at the same rate as the current generations. Under imaginable 

assumptions, decisions based on cost-benefit analysis with high discount rates might 

harm future generations – at least if investments are not made for the benefit of those 

generations. See Robert Lind, Analysis for Intergenerational Discounting, id. at 173, 176-

177 (1999), in the EPA Docket, EPA-HQ-OAR-2009-0472. It is also possible that the use 

of low discount rates for particular projects might itself harm future generations, by 

diverting resources from private or public sector investments with higher rates of return 

for future generations. In the context of climate change, questions of intergenerational 

equity are especially important. 

Because of the substantial length of time in which CO2 and other GHG emissions 

reside in the atmosphere, choosing a discount rate which is higher than the actual 

discount rate could result in irreversible changes in CO2 concentrations, and possibly 

irreversible climate changes (unless substantial reductions in short-lived climate forcing 

emissions are achieved). Even if these changes are reversible, delaying mitigation efforts 

could result in substantially higher costs of stabilizing CO2 concentrations. On the other 

hand, using too low a discount rate in benefit-cost analysis may recommend some 

potentially economically unwarranted investments in mitigation. In many cases these 

investments could be discontinued with little long term economic disruptions. However, 

it is also possible that the use of low discount rates for particular projects might itself 

harm future generations, by ensuring that resources are not used in a way that would 

greatly benefit them. We invite comment on the methods used to select discount rates for 

application in deriving SCC values, and in particular, application of the Newell and Pizer 

work on uncertainty in discount rates in developing the SCC used in evaluating the 

climate-related benefits of this proposal. Comments are requested on the use of the rates 

discussed in this preamble and on alternative rates. We also invite comment on how to 

best address the ethical and policy concerns in the context of selecting the appropriate 

discount rate. 

Reasonable arguments support the use of a 3% discount rate. First, that rate is 

among the two figures suggested by OMB guidance, and hence it fits with existing 

national policy. Second, it is standard to base the discount rate on the compensation that 

people receive for delaying consumption, and the 3% is close to the risk-free rate of 

return, proxied by the return on long term inflation-adjusted U.S. Treasury Bonds, as of 

 

228 See OMB Circular A-4, pp. 35-36, citing Portney and Weyant, eds. (1999), Discounting and 

Intergenerational Equity, Resources for the Future, Washington, DC. See EPA Docket, EPA-HQ-OAR2009-0472.
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214

this writing. Although these rates are currently closer to 2.5%, the use of 3% provides an 

adjustment for the liquidity premium that is reflected in these bonds’ returns. However, 

this approach does not adjust for the significantly longer time horizon associated with 

climate change impacts. It also could be argued that the appropriate interest rate should 

be lower than 3% if the benefits of climate mitigation policies tend to be higher than 

expected in time periods when the returns to investments in rest of the economy are lower 

than normal. 

At the same time, others would argue that a 5% discount rate can be supported. 

The argument relies on several assumptions. First, this rate can be justified by reference 

to the level of compensation for delaying consumption, because it fits with market 

behavior with respect to individuals’ willingness to trade-off consumption across periods 

as measured by the estimated post-tax average real returns to risky private investments 

(e.g., the S&P 500). In the climate setting, the 5% discount rate may be preferable to the 

riskless rate because the benefits to mitigation are not known with certainty. In principal, 

the correct discount rate would reflect the variance in payoff from climate mitigation 

policy and the correlation between the payoffs of the policy and the broader economy.229

Second, 5%, and not 3%, is roughly consistent with estimates implied by inputs to 

the theoretically derived Ramsey equation presented below, which specifies the optimal 

time path for consumption. That equation specifies the optimal discount rate as the sum 

of two components. The first term (the product of the elasticity of the marginal utility of 

consumption and the growth rate of consumption) reflects the fact that consumption in 

the future is likely to be higher than consumption today, so diminishing marginal utility 

implies that the same monetary damage will cause a smaller reduction of utility in the 

future. Standard estimates of this term from the economics literature are in the range of 

3%-5%.230 The second component reflects the possibility that a lower weight should be 

placed on utility in the future, to account for social impatience or extinction risk, which is 

specified by a pure rate of time preference (PRTP). A common estimate of the PRTP is 

2%, though some observers believe that a principle of intergenerational equity suggests 

that the PRTP should be close to zero. It follows that discount rate of 5% is near the 

middle of the range of values that are able to be derived from the Ramsey equation.231 

 

229 Specifically, if the benefits of the policy are highly correlated with the returns from the broader 

economy, then the market rate should be used to discount the benefits. If the benefits are uncorrelated with 

the broader economy the long term government bond rate should be applied. Furthermore, if the benefits 

are negatively correlated with the broader economy, a rate less than that on long term government bonds 

should be used (Lind, 1982 pp. 89-90). 

230 For example, see: Arrow KJ, Cline WR, Maler K-G, Munasinghe M, Squitieri R, Stiglitz JE. 1996. 

Intertemporal equity, discounting, and economic efficiency. Chapter 4 in Economic and Social Dimensions 

of Climate Change: Contribution of Working Group III to the Second Assessment Report, Summary for 

Policy Makers. Cambridge: Cambridge University Press; Dasgupta P. 2008. Discounting climate change. 

Journal of Risk and Uncertainty 37:141-169; Hoel M, Sterner T. 2007. Discounting and relative prices. 

Climatic Change 84:265-280; Nordhaus WD. 2008. A Question of Balance: Weighing the Options on 

Global Warming Policies. New Haven, CT: Yale University Press; Stern N. 2008. The economics of 

climate change. The American Economic Review 98(2):1-37. See EPA Docket, EPA-HQ-OAR-2009-

0472.Fill in citation.

231Sterner and Persson (2008) note that a consistent treatment of the marginal utility of consumption would 

require that if higher discount rates are justified by the diminishing marginal utility of consumption, e.g., a 
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215

It is recognized that the arguments above – for use of market behavior and the 

Ramsey equation – face objections in the context of climate change, and of course there 

are alternative approaches. In light of climate change, it is possible that consumption in 

the future will not be higher than consumption today, and if so, the Ramsey equation will 

suggest a lower figure. The historical evidence is consistent with rising consumption over 

time. 232

 

Some critics note that using observed interest rates for inter-generational 

decisions imposes current preferences on future generations, which some economists say 

may not be appropriate. For generational equity, they argue that the discount rate should 

be below market rates to correct for market distortions and inefficiencies in 

intergenerational transfers of wealth (which are presumed to compensate future 

generations for damage), and to treat generations equitably based on ethical principles 

(see Broome 2008 in the EPA Docket, EPA-HQ-OAR-2009-0472).233

 

Additionally, some analyses attempt to deal with uncertainty with respect to 

interest rates over time. We explore below how this might be done.234 

(2) Proposed interim estimates 

The application of the methodology outlined above yields interim estimates of the 

SCC that are reported in Table III.H.6-1. These estimates are reported separately using 

3% and 5% discount rates. The cells are empty in rows 10 and 11, because these studies 

did not report estimates of the SCC at a 3% discount rate. The model-weighted means 

are reported in the final or summary row; they are $34 per tCO2 at a 3% discount rate and 

$5 per tCO2 with a 5% discount rate. 

Table III.H.6-1 Global Social Cost of Carbon (SCC) Estimates ($/tCO2 in 2007 (2007$)), 

Based on 3% and 5% Discount Rates a

 Model Studyb Climate Scenario 3% 5% 

 

dollar of damages is worth less to future generations because they have greater income, then so-called

equity weights should be used to account for the higher value that countries with lower income would place 

on a dollar of damages relative to the U.S. This is a consistent and logical outcome of application of the 

Ramsey framework. Because the distribution of climate change related damages is expected to be skewed

towards developing nations with lower incomes, this can have significant implications for estimates of total 

global SCC if the Ramsey framework is used to derive discount rates. See EPA Docket, EPA-HQ-OAR2009-0472 for Sterner and Persson (2008).

232However, because climate change impacts may be outside the bounds of historical evidence, predictions 

about future growth in consumption based on past experience may be inaccurate. 

233 See Arrow, K.J., W.R. Cline, K-G Maler, M. Munasinghe, R. Squiteri, J.E.Stiglitz, 1996. 

"Intertemporal equity, discounting and economic efficiency," in Climate Change 1995: Economic and 

Social Dimensions of Climate Change, Contribution of Working Group III to the Second Assessment 

Report of the Intergovernmental Panel on Climate Change. See also Weitzman, M.L., 1999, in Portney P.R. 

and Weyant J.P. (eds.), Discounting and Intergenerational Equity, Resources for the Future, Washington, 

D.C. See EPA Docket, EPA-HQ-OAR-2009-0472.

234 Richard Newell and William Pizer, Discounting the distant future: how much do uncertain rates increase 

valuations? J. Environ. Econ. Manage. 46 (2003) 52-71. See EPA Docket, EPA-HQ-OAR-2009-0472.
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216

1 FUND Anthoff et al. 2009 FUND default 6 -1 

2 FUND Anthoff et al. 2009 SRES A1b 1 -1 

3 FUND Anthoff et al. 2009 SRES A2 9 -1 

4 FUND Link and Tol 2004 No THC 12 3 

5 FUND Link and Tol 2004 THC continues 12 2 

6 FUND Guo et al. 2006 Constant PRTP 5 -1 

7 FUND Guo et al. 2006 Gollier discount 1 14 0 

8 FUND Guo et al. 2006 Gollier discount 2 7 -1 

 FUND Mean 8.47 0 

9 PAGE Wahba & Hope 2006 A2-scen 59 7 

10 PAGE Hope 2006 7 

11 DICE Nordhaus 2008 8 

Summary Model-weighted Mean 34 5 

a

 The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus

(2008), Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of

FUND, PAGE, or DICE and use business-as-usual climate scenarios.235,236 All values are based on the best 

available information from the underlying studies about the base year and year dollars, rather than the Tol 

(2008) assumption that all estimates included in his review are 1995 values in 1995$. All values were

updated to 2007 using a 3% annual growth rate in the SCC, and adjusted for inflation using GDP deflator. 

b

See EPA Docket, EPA-HQ-OAR-2009-0472, for each study.

In this proposal, benefits of reducing GHG emissions have been estimated using 

global SCC values of $34 and $5 as these represent the estimates associated with the 3% 

and 5% discount rates, respectively.237 The 3% and 5% estimates have independent 

appeal and at this time a clear preference for one over the other is not warranted. Thus, 

 

235 Most of the estimates in Table 1 rely on climate scenarios developed by the Intergovernmental Panel on 

Climate Change (IPCC). The IPCC published a new set of scenarios in 2000 for use in the Third 

Assessment Report (Special Report on Emissions Scenarios - SRES). The SRES scenarios define four 

narrative storylines: A1, A2, B1 and B2, describing the relationships between the forces driving 

greenhouse gas and aerosol emissions and their evolution during the 21st century for large world regions 

and globally. Each storyline represents different demographic, social, economic, technological, and 

environmental developments that diverge in increasingly irreversible ways. The storylines are summarized 

in the SRES report (Nakicenovic et al., 2000; (see also http://sedac.ciesin.columbia.edu/ddc/sres/ ) (see 

EPA Docket, EPA-HQ-OAR-2009-0472). Although they were intended to represent BAU scenarios, at this 

point in time the B1 and B2 storylines are widely viewed as representing policy cases rather than businessas-usual projections, estimates derived from these scenarios to be less appropriate for use in benefit-cost 

analysis. They are therefore excluded.

236 Guo et al. (2006) report estimates based on two Gollier discounting schemes. The Gollier discounting

assumes complex specifications about individual utility functions and risk preferences. After various 

conditions are satisfied, declining social discount rates emerge. Gollier Discounting Scheme 1 employs a 

certainty-equivalent social rate of time preference (SRTP) derived by assuming the regional growth rate is 

equally likely to be 1% above or below the original forecast growth rate. Gollier Discounting Scheme 2 

calculates a certainty-equivalent social rate of time preference (SRTP) using five possible growth rates, and 

applies the new SRTP instead of the original. Hope (2008) conducts Monte Carlo analysis on the PRTP 

component of the discount rate. The PRTP is modeled as a triangular distribution with a min value of 

1%/yr, a most likely value of 2 %/yr, and a max value of 3 %/yr. See EPA Docket, EPA-HQ-OAR-2009-

0472 for the studies.

237 It should be noted that reported discount rates may not be consistently derived across models or specific 

applications of models: while the discount rate may be identical, it may reflect different assumptions about 

the individual components of the Ramsey equation identified earlier. 
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217

we have also included – and centered our current attention on – the average of the 

estimates associated with these discount rates, which is $20. (Based on the $20 global 

value, the approximate domestic fraction of these benefits would be $1.20 per ton of CO2

assuming that domestic benefits are 6% of the global benefits. 

The distinctions between sets of estimates generated using different discount rates 

are due only in part to discount rate differences, because the models and parameters used 

to generate the estimates in the sets associated with different discount rates also vary. 

It is true that there is uncertainty about interest rates over long time horizons. 

Recognizing that point, Newell and Pizer (2003) have made a careful effort to adjust for 

that uncertainty (see EPA Docket, EPA-HQ-OAR-2009-0472). The Newell-Pizer 

approach models discount rate uncertainty as something that evolves over time.238 This is 

a different way to model discount rate uncertainty than the approach outlined above, 

which assumes there is a single discount rate with equal probability of 3% and 5%. Since 

Newell and Pizer (2003) is a relatively recent contribution to the literature, estimates 

based on this method are included with the aim of soliciting comment. 

 

Table III.H.6-2 reports on the application of the Newell-Pizer adjustments. The 

precise numbers depend on the assumptions about the data generating process that 

governs interest rates. Columns (1a) and (1b) assume that “random walk” model best 

describes the data and uses 3% and 5% discount rates, respectively. Columns (2a) and 

(2b) repeat this, except that it assumes a “mean-reverting” process. While the empirical 

evidence does not rule out a mean-reverting model, Newell and Pizer find stronger 

empirical support for the random walk model. EPA solicits comment on these and other 

models for representing the variation in interest rates over time. 

Table III.H.6-2 Global Social Cost of Carbon (SCC) Estimates ($ per metric ton CO2 in 

2007 (2007$))a, Using Newell & Pizer (2003) Adjustment for Future Discount Rate 

Uncertaintyb

 

Random- walk 

model 

Meanreverting 

model 

Model Studyc

Climate 

Scenario 3% 5% 3% 5% 

 (1a) (1b) (2a) (2b) 

1 FUND Anthoff et al. 2009 FUND default 10 0 7 -1

2 FUND Anthoff et al. 2009 SRES A1b 2 0 1 -1

3 FUND Anthoff et al. 2009 SRES A2 15 0 10 -1

4 FUND Link and Tol 2004 No THC 21 6 13 4

5 FUND Link and Tol 2004 THC continues 21 4 13 2

 

238 In contrast, an alternative approach based on Weitzman (2001) would assume that there is a constant 

discount rate that is uncertain and represented by a probability distribution. The Newell and Pizer, and 

Weitzman approaches are relatively recent contributions and we invite comment on the advantages and 

disadvantages of each. See EPA Docket, EPA-HQ-OAR-2009-0472.
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218

6 FUND Guo et al. 2006 Constant PRTP 9 0 6 -1

7 FUND Guo et al. 2006 Gollier discount 1 14 0 14 0

8 FUND Guo et al. 2006 Gollier discount 2 7 -1 7 -1

 FUND Mean 12 1 9 0

9 

PAGE 

Wahba & Hope 

2006 A2-scen 100 13 65 8

10 PAGE Hope 2006 13 8

11 DICE Nordhaus 2008 15 9

Summary 

Model-weighted 

Mean 56 10 37 6

a

 The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus

(2008), Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of

FUND, PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the best 

available information from the underlying studies about the base year and year dollars, rather than the Tol 

(2008) assumption that all estimates included in his review are 1995 values in 1995$. All values were

updated to 2007 using a 3% annual growth rate in the SCC, and adjusted for inflation using GDP deflator. 

See the Notes to Table III.H.6-1 for further details. 

b Assumes a starting discount rate of 3% or 5%. Newell and Pizer (2003) based adjustment factors are not 

applied to estimates from Guo et al. (2006) that use a different approach to account for discount rate

uncertainty (rows 7-8). 

Note that the correction factor from Newell and Pizer is based on the DICE model. The proper adjustment 

may differ for other integrated assessment models that produce different time schedules of marginal 

damages. We would expect this difference to be minor. 

c

See EPA Docket, EPA-HQ-OAR-2009-0472, for each study.

The resulting estimates of the social cost of carbon are necessarily greater. When 

the adjustments from the random walk model are applied, the estimates of the social cost 

of carbon are $10 and $56 per ton of CO2, with the 5% and 3% discount rates, 

respectively. The application of the mean-reverting adjustment yields estimates of $6 

and $37. Relying on the random walk model, analyses are also conducted with the value 

of the SCC set at $10 and $56. 

 

(3) Caveats 

There are at least four caveats to the approach outlined above. 

First, the impacts of climate change are expected to be widespread, diverse, and 

heterogeneous. In addition, the exact magnitude of these impacts is uncertain, because of 

the inherent randomness in the Earth’s atmospheric processes, the U.S. and global 

economies, and the behaviors of current and future populations. The existing IAMs do 

not currently individually account for and assign value to all of the important physical 

and other impacts of climate change that are recognized in the climate change literature.

239 Therefore, as noted by the IPCC, SCC estimates are “very likely” underestimated.240

 

 

239Examples of impacts that are difficult to monetize, and have generally not been included in SCC 

estimates, include risks from extreme weather (death, disease, agricultural damage, and other economic
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219

In addition, the SCC approach also likely underestimates the value of GHG reductions 

because the marginal values apply only to CO2 emissions, which have different impacts 

than non-CO2 emissions because of variances in atmospheric lifetimes and radiative 

forcing.241 Although it is likely that our capability to quantify and monetize impacts will 

improve with time, it is also likely that even in future applications, a number of 

potentially significant benefits categories will remain unmonetized. In order to more fully 

characterize of benefits of mitigation these non-monetized benefits should be discussed 

along with monetized benefits based on the SCC. 

Second, in the opposite direction, it is unlikely that the damage estimates 

adequately account for the directed technological change that climate change will cause. 

In particular, climate change will increase the return on investment to develop 

technologies that allow individuals to better cope with climate change. For example, it is 

likely that scientists will develop crops that are better able to withstand high 

temperatures. In this respect, the current estimates may overstate the likely quantified 

damages, though the costs associated with the investments in adaptive technologies must 

also be considered (technologies must also be included in the calculations, as the benefits 

should reflect net welfare changes to society). 

Third, there has been considerable recent discussion of the risk of catastrophic 

impacts and of how best to account for worst-case scenarios. Recent research by 

Weitzman (2009) specifies some conditions under which the possibility of catastrophe 

would undermine the use of IAMs and conventional cost-benefit analysis. 242 This 

research requires further exploration before its generality is known and the proper way to 

incorporate it into regulatory reviews is understood. We also request comments on 

approaches for measuring the premium associated with reductions in climate-related risks 

such as catastrophic events. 

Fourth, it is also worth noting that the SCC estimates are only relevant for 

incremental policies relative to the projected baselines, which capture business-as-usual 

scenarios. To evaluate non-marginal changes, such as might occur if the U.S. acts in 

tandem with other nations, then it might be necessary to go beyond the simple expedient 

of using the SCC along the BAU path. This would require explicitly calculating the total 

benefits in a move from the BAU scenario to the policy scenario, without imposing the 

restriction that the marginal benefit remains constant over this range. 

 

damage from droughts, floods and wildfires) and possible long-term catastrophic events, such as collapse 

of the West Antarctic ice sheet or the release of large amounts of methane from melting permafrost. 

240 IPCC WGII. 2007. Climate Change 2007 - Impacts, Adaptation and Vulnerability Contribution of 

Working Group II to the Fourth Assessment Report of the IPCC. See EPA Docket, EPA-HQ-OAR-2009-

0472.

241Radiative forcing is the change in the balance between solar radiation entering the atmosphere and the

Earth's radiation going out. On average, a positive radiative forcing tends to warm the surface of the Earth 

while negative forcing tends to cool the surface. Greenhouse gases have a positive radiative forcing 

because they absorb and emit heat. See http://www.epa.gov/climatechange/science/recentac.html for more 

general information about GHGs and climate science. See EPA Docket, EPA-HQ-OAR-2009-0472.

242Weitzman, Martin, 2009. On Modeling and Interpreting the Economics of Catastrophic Climate Change. 

Review of Economics and Statistics 9(1): 1-19. See EPA Docket, EPA-HQ-OAR-2009-0472.
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220

(4) Other options 

The Administration considered other interim SCC options in addition to the 

approach described above; we request comment on each of them. One alternative option 

was to bring in SCC estimates in studies published after 1995, rather than limiting the 

estimates to those in studies relying on the most recent published version of each of the 

three major integrated assessment models: PAGE, FUND, and DICE. Although some 

older model versions (and old versions of other models) were used to produce estimates 

between 1996 and 2001, there have been no significant modeling paradigm changes since 

1996. Rather, improvements to PAGE, FUND, and DICE since 1996 have reflected 

incremental technical enhancements. 

Another option was to select a range of SCC values for separate discount rates. 

For example, sensitivity analysis could be conducted at the lowest and highest SCC 

values reported in the filtered set of estimates for each discount rate considered. If 

considering SCC estimates from studies published after 1995 and a discount rate of 2 

percent, this option would result in a range of SCC values of $5/t-CO2 to $260/t-CO2

(2007 emissions in 2007 dollars); at a 3 percent discount rate, the range would be $0 to 

$58/ t-CO2. 

Finally, we considered that the use of certain key assumptions under the Ramsey 

framework, such as placing approximately equal weight on the welfare of current and 

future generations, would imply use of a 2% discount rate. The Newell and Pizer (2003) 

method applied to recent long-term risk free rates would likewise be approximately 

consistent with a rate of 2%.243

 

(5) Ongoing SCC development 

As noted, this is an emphatically interim SCC value. The judgments herein will 

be subject to further scrutiny and exploration. 

 

c. Application of Interim SCC Estimates to GHG Emissions Reductions 

 From this Proposed Rule 

The strategy underlying these joint proposals—to coordinate federal efforts to 

reduce GHGs—warrants consideration when assessing the benefits. While no single rule 

or action can independently achieve the deep worldwide emissions reductions necessary 

to halt and reverse the growth of GHGs, the combined effects of multiple strategies to 

reduce GHG emissions domestically and abroad could make a major difference in the 

climate change impacts experienced by future generations.244

 

 

243 Specifically, Newell and Pizer (2003) found that modeling of uncertainty in economic growth causes the 

effective discount rate to decline over time. When starting at a 4% discount rate, the effective discount rate 

is 2% at 100 years and 1% at 200 years. See EPA Docket, EPA-HQ-OAR-2009-0472.

244 The Supreme Court recognized in Massachusetts v. EPA that a single action will not on its own achieve 

all needed GHG reductions, noting that “[a]gencies, like legislatures, do not generally resolve massive 
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221

The projected net GHG emissions reductions associated with the proposal reflect 

an incremental change to projected total global emissions. Therefore, as shown in Section 

III.F.3, the projected global climate signal will be small but discernible—an 

incrementally lower projected distribution of global mean surface temperatures. 

Given that the climate response is projected to be a marginal change relative to 

the baseline climate, we estimate the marginal value of changes in climate change 

impacts over time and use this value to measure the monetized marginal benefits of the 

GHG emissions reductions projected for this proposal. 

Accordingly, EPA and NHTSA have used the set of interim, global SCC values 

described above to estimate the benefits of these coordinated proposals. The interim SCC 

values, which reflect the Administration’s interim interpretation of the current literature, 

are $5, $10, $20, $34, and $56, in 2007 dollars, and are based on a CO2 emissions change 

of 1 metric ton in 2007. Table III.H.6-3 presents the interim SCC values in other years in 

2007 dollars. These values are presented as one of many considerations that will inform 

the Administration’s action on this proposed rule. In particular, the Administration’s 

decision regarding the stringency of this proposal is based on factors other than the 

interim set of SCC values. 

Table III.H.6-3 Interim SCC Schedule 

 Interim SCC Schedule (2007$) a

Discount rate 

assumption

2007 2015 2020 2030 2040 2050

5% $5 $7 $8 $10 $14 $18 

5% 

(NewellPizer) b

$10 $13 $15 $20 $27 $37 

Average 

SCC Values 

from 3% and 

5% 

$20 $25 $29 $39 $52 $70 

3% $34 $43 $50 $67 $90 $120 

3% 

(NewellPizer) b

$56 $72 $83 $110 $150 $200 

a

The SCC values are dollar-year and emissions-year specific. These values are presented in 

2007$, for individual year of emissions. To determine values for years not presented in the table, 

use a 3% growth rate. SCC values represent only a partial accounting for climate impacts. See 

Section VIII.F.3c for examples of the uncertainties and omission of non-monetized impacts.

b

SCC values are adjusted based on Newell and Pizer (2003) to account to future uncertainty in 

discount rates. See EPA Docket, EPA-HQ-OAR-2009-0472.

 

problems in one fell regulatory swoop.’’ See Massachusetts v. EPA, 549 U.S. at 524 (2007). See EPA 

Docket, EPA-HQ-OAR-2009-0472.
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Tables III.H.6-4 to III.H.6-65 provide the annual benefits for each year impacted

by the proposed rule. As discussed above, marginal benefits of GHG reductions are 

projected to grow over time. The tables below summarize the total benefits for the 

lifetime of the rule, which are calculated by using the five interim SCC values. 

 Total monetized benefits in each specific year are calculated by multiplying the 

marginal benefits estimates per metric ton of CO2 (the SCC) from Table III.H.6-3 by the 

reductions in CO2 for that year. Table III.H.6-56 approximates the total monetized 

benefits for non-CO2 GHGs by multiplying the SCC value by the reductions in non- CO2

GHGs for that year. Marginal benefit estimates per metric ton of non- CO2 GHGs are 

currently unavailable, but work is on-going to monetize benefits related to the mitigation 

of other non-CO2 GHGs. Inclusion of these benefits is planned for the final rule. 

 

Table III.H.6-4 Monetized GHG Benefits of Vehicle Program, CO2 Emissions (Million 

2007$) 

Discount rate

Year Emissions 

Reduction 

(Million 

Metric 

Tons)

3% 3% (NewellPizer) Average 

SCC from 

3% and 5% 

5% 5% 

(NewellPizer) 

2015 43.2 $1,900 $3,100 $1,100 $280 $560 

2020 146 $7,300 $12,000 $4,200 $1,100 $2,200 

2030 289 $19,000 $32,000 $11,000 $2,900 $5,900 

2040 375 $34,000 $56,000 $19,000 $5,100 $10,000 

2050 470 $57,000 $95,000 $33,000 $8,600 $17,000 

Table III.H.6-5 Monetized GHG Benefits of Vehicle Program, Non-CO2 Emissions in 

CO2-equivalents (Million 2007$) 

Discount rate

Year Emissions 

Reduction 

(Million 

Metric Tons)

3% 3% 

(NewellPizer) 

Average 

SCC from 

3% and 5% 

5% 5% 

(NewellPizer) 

2015 5.86 $250 $400 $150 $38 $76 

2020 17.7 $880 $1,500 $510 $130 $270 

2030 35.3 $2,400 $3,900 $1,400 $360 $700 

2040 42.7 $3,800 $6,400 $2,200 $580 $1,200 

2050 48.2 $5,800 $9,700 $3,400 $880 $1,800 

Table III.H.6-6 Monetized GHG Benefits of Vehicle Program, Total CO2 and Non-CO2

Emissions in CO2-equivalents (Million 2007$) a *

Discount rate

Year Emissions 3% 3% Average 5% 5% (Newell-
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

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Reduction 

(Million 

Metric Tons)

(NewellPizer) SCC from 

3% and 5% 

Pizer)

2015 49.1 $2,100 $3,500 $1,200 $320 $640 

2020 165 $8,200 $14,000 $4,700 $1,200 $2,500 

2030 325 $22,000 $36,000 $12,000 $3,300 $6,600 

2040 417 $38,000 $63,000 $22,000 $5,700 $11,000 

2050 518 $63,000 $100,000 $36,000 $9,500 $19,000 

*

a Numbers may not add exactly from Tables III.H.6-4 and III.H.6-5 due to rounding. 

7. Non-GHG Health and Environmental Impacts 

This section presents EPA’s analysis of the non-GHG health and environmental 

impacts that can be expected to occur as a result of the proposed light-duty vehicle GHG 

rule. GHG emissions are predominantly the byproduct of fossil fuel combustion 

processes that also produce criteria and hazardous air pollutants. The vehicles that are 

subject to the proposed standards are also significant sources of mobile source air 

pollution such as direct PM, NOX, VOCs and air toxics. The proposed standards would 

affect exhaust emissions of these pollutants from vehicles. They would also affect 

emissions from upstream sources related to changes in fuel consumption. Changes in 

ambient ozone, PM2.5, and air toxics that would result from the proposed standards are 

expected to affect human health in the form of premature deaths and other serious human 

health effects, as well as other important public health and welfare effects. 

It is important to quantify the health and environmental impacts associated with 

the proposed standard because a failure to adequately consider these ancillary copollutant impacts could lead to an incorrect assessment of their net costs and benefits. 

Moreover, co-pollutant impacts tend to accrue in the near term, while any effects from 

reduced climate change mostly accrue over a time frame of several decades or longer. 

EPA typically quantifies and monetizes the health and environmental impacts 

related to both PM and ozone in its regulatory impact analyses (RIAs), when possible. 

However, EPA was unable to do so in time for this proposal. EPA attempts to make 

emissions and air quality modeling decisions early in the analytical process so that we 

can complete the photochemical air quality modeling and use that data to inform the 

health and environmental impacts analysis. Resource and time constraints precluded the 

Agency from completing this work in time for the proposal. Instead, EPA is using PMrelated benefits-per-ton values as an interim approach to estimating the PM-related 

benefits of the proposal. EPA also provides a complete characterization of the health and 

environmental impacts that will be quantified and monetized for the final rulemaking. 

This section is split into two sub-sections: the first presents the PM-related 

benefits-per-ton values used to monetize the PM-related co-benefits associated with the 

proposal; the second explains what PM- and ozone-related health and environmental 

impacts EPA will quantify and monetize in the analysis for the final rule. EPA bases its 

analyses on peer-reviewed studies of air quality and health and welfare effects and peerreviewed studies of the monetary values of public health and welfare improvements, and 
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is generally consistent with benefits analyses performed for the analysis of the final 

Ozone National Ambient Air Quality Standard (NAAQS) and the final PM NAAQS 

analysis, as well as the recent Portland Cement National Emissions Standards for 

Hazardous Air Pollutants (NESHAP) RIA (U.S. EPA, 2009a), and NO2 NAAQS (U.S. 

EPA, 2009b).245,246, 247,248

 

Though EPA is characterizing the changes in emissions associated with toxic 

pollutants, we will not be able to quantify or monetize the human health effects 

associated with air toxic pollutants for either the proposal or the final rule analyses. 

Please refer to Section III.G for more information about the air toxics emissions impacts 

associated with the proposed standards. 

a. Economic Value of Reductions in Criteria Pollutants 

As described in Section III.G, the proposed standards would reduce emissions of 

several criteria and toxic pollutants and precursors. In this analysis, EPA estimates the 

economic value of the human health benefits associated with reducing PM2.5 exposure. 

Due to analytical limitations, this analysis does not estimate benefits related to other 

criteria pollutants (such as ozone, NO2 or SO2) or toxics pollutants, nor does it monetize 

all of the potential health and welfare effects associated with PM2.5. 

This analysis uses a “benefit-per-ton” method to estimate a selected suite of 

PM2.5-related health benefits described below. These PM2.5 benefit-per-ton estimates 

provide the total monetized human health benefits (the sum of premature mortality and 

premature morbidity) of reducing one ton of directly emitted PM2.5, or its precursors 

(such as NOX, SOX, and VOCs), from a specified source. Ideally, the human health 

benefits would be estimated based on changes in ambient PM2.5 as determined by fullscale air quality modeling. However, this modeling was not possible in the timeframe for 

this proposal. 

The dollar-per-ton estimates used in this analysis are provided in Table III.H.7-1. 

In the summary of costs and benefits, Section III.H.10 of this preamble, EPA presents the 

monetized value of PM-related improvements associated with the proposal. 

 

245 U.S. Environmental Protection Agency. (2008). Final Ozone NAAQS Regulatory Impact Analysis. 

Prepared by: Office of Air and Radiation, Office of Air Quality Planning and Standards. March. 

246 U.S. Environmental Protection Agency. October 2006. Final Regulatory Impact Analysis (RIA) for the 

Proposed National Ambient Air Quality Standards for Particulate Matter. Prepared by: Office of Air and 

Radiation. 

247 U.S. Environmental Protection Agency (U.S. EPA). 2009a. Regulatory Impact Analysis: National 

Emission Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry. 

Office of Air Quality Planning and Standards, Research Triangle Park, NC. April. Available on the 

Internet at <http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementria_4-20-09.pdf>. 

248 U.S. Environmental Protection Agency (U.S. EPA). 2009b. Proposed NO2 NAAQS Regulatory Impact 

Analysis (RIA). Office of Air Quality Planning and Standards, Research Triangle Park, NC. April. 

Available on the Internet at http://www.epa.gov/ttn/ecas/regdata/RIAs/proposedno2ria.pdf. 
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Table III.H.7-1 Benefits-per-ton Values (2007$) Derived Using the ACS Cohort Study 

for PM-related Premature Mortality (Pope et al., 2002)a

 and a 3% Discount Rateb 

Yearc All SourcesdStationary (Non-EGU) 

Sources 

Mobile Sources 

SOX VOC NOX Direct 

PM2.5 

NOX Direct 

PM2.5 

2015 $28,000 $1,200 $4,700 $220,000 $4,900 $270,000

2020 $31,000 $1,300 $5,100 $240,000 $5,300 $290,000

2030 $36,000 $1,500 $6,100 $280,000 $6,400 $350,000

2040 $43,000 $1,800 $7,200 $330,000 $7,600 $420,000

a The benefit-per-ton estimates presented in this table are based on an estimate of premature mortality 

derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on the Six 

Cities study (Laden et al., 2006), the values would be approximately 145% (nearly two-and-a-half times) 

larger. 

b The benefit-per-ton estimates presented in this table assume a 3% discount rate in the valuation of 

premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate had been 

used, the values would be approximately 9% lower. 

c Benefit-per-ton values were estimated for the years 2015, 2020, and 2030. For 2040, EPA and NHTSA 

extrapolated exponentially based on the growth between 2020 and 2030. 

d Note that the benefit-per-ton value for SOX is based on the value for Stationary (Non-EGU) sources; no 

SOX value was estimated for mobile sources. The benefit-per-ton value for VOCs was estimated across all 

sources. 

The benefit per-ton technique has been used in previous analyses, including 

EPA’s recent Ozone National Ambient Air Quality Standards (NAAQS) RIA (U.S. EPA, 

2008a),249 Portland Cement National Emissions Standards for Hazardous Air Pollutants 

(NESHAP) RIA (U.S. EPA, 2009a),250 and NO2 NAAQS (U.S. EPA, 2009b).251 Table 

III.H.7 -2 shows the quantified and unquantified PM2.5-related co-benefits captured in 

those benefit-per-ton estimates. 

TableIII.H.7-2Human Health and Welfare Effects of PM2.5 

Pollutant / 

Effect 

Quantified and Monetized 

in Primary Estimates 

Unquantified Effects 

Changes in: 

PM2.5 Adult premature mortality 

Bronchitis: chronic and acute 

Hospital admissions: respiratory and 

cardiovascular 

Emergency room visits for asthma 

Nonfatal heart attacks (myocardial infarction) 

Lower and upper respiratory illness 

Minor restricted-activity days 

Subchronic bronchitis cases 

Low birth weight 

Pulmonary function 

Chronic respiratory diseases other than chronic 

bronchitis 

Non-asthma respiratory emergency room visits 

Visibility 

Household soiling 

 

249 U.S. Environmental Protection Agency (U.S. EPA). 2008a. Regulatory Impact Analysis, 2008 National 

Ambient Air Quality Standards for Ground-level Ozone, Chapter 6. Office of Air Quality Planning and 

Standards, Research Triangle Park, NC. March. Available at 

<http://www.epa.gov/ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf>. 

250 U.S. Environmental Protection Agency (U.S. EPA). 2009a. Regulatory Impact Analysis: National 

Emission Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry. 

Office of Air Quality Planning and Standards, Research Triangle Park, NC. April. Available on the 

Internet at <http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementria_4-20-09.pdf>. 

251 U.S. Environmental Protection Agency (U.S. EPA). 2009b. Proposed NO2 NAAQS Regulatory Impact 

Analysis (RIA). Office of Air Quality Planning and Standards, Research Triangle Park, NC. April. 

Available on the Internet at http://www.epa.gov/ttn/ecas/regdata/RIAs/proposedno2ria.pdf. 
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Pollutant / 

Effect 

Quantified and Monetized 

in Primary Estimates 

Unquantified Effects 

Changes in: 

Work loss days 

Asthma exacerbations (asthmatic population) 

Infant mortality 

Consistent with the NO2 NAAQS,252 the benefits estimates utilize the 

concentration-response functions as reported in the epidemiology literature. To calculate 

the total monetized impacts associated with quantified health impacts, EPA applies 

values derived from a number of sources. For premature mortality, EPA applies a value 

of a statistical life (VSL) derived from the mortality valuation literature. For certain 

health impacts, such as chronic bronchitis and a number of respiratory-related ailments, 

EPA applies willingness-to-pay estimates derived from the valuation literature. For the 

remaining health impacts, EPA applies values derived from current cost-of-illness and/or 

wage estimates. 

Readers interested in reviewing the complete methodology for creating the 

benefit-per-ton estimates used in this analysis can consult the Technical Support 

Document (TSD)253 accompanying the recent final ozone NAAQS RIA (U.S. EPA, 

2008a). Readers can also refer to Fann et al. (2009)254 for a detailed description of the 

benefit-per-ton methodology.255 A more detailed description of the benefit-per-ton 

estimates is also provided in the Draft Joint TSD that accompanies this rulemaking. 

As described in the documentation for the benefit per-ton estimates cited above, 

national per-ton estimates were developed for selected pollutant/source category 

combinations. The per-ton values calculated therefore apply only to tons reduced from 

those specific pollutant/source combinations (e.g., NO2 emitted from mobile sources; 

direct PM emitted from stationary sources). Our estimate of PM2.5 benefits is therefore 

based on the total direct PM2.5 and PM-related precursor emissions controlled by sector 

and multiplied by each per-ton value. 

The benefit-per-ton estimates are subject to a number of assumptions and 

uncertainties. 

 

252 Although we summarize the main issues in this chapter, we encourage interested readers to see benefits 

chapter of the NO2 NAAQS for a more detailed description of recent changes to the PM benefits 

presentation and preference for the no-threshold model. 

253 U.S. Environmental Protection Agency (U.S. EPA). 2008b. Technical Support Document: Calculating 

Benefit Per-Ton estimates, Ozone NAAQS Docket #EPA-HQ-OAR-2007-0225-0284. Office of Air 

Quality Planning and Standards, Research Triangle Park, NC. March. Available on the Internet at 

<http://www.regulations.gov>.

254 Fann, N. et al. (2009). The influence of location, source, and emission type in estimates of the human 

health benefits of reducing a ton of air pollution. Air Qual Atmos Health. Published online: 09 June, 2009. 

255 The values included in this report are different from those presented in the article cited above. Benefits 

methods change to reflect new information and evaluation of the science. Since publication of the June 

2009 article, EPA has made two significant changes to its benefits methods: (1) We no longer assume that a 

threshold exists in PM-related models of health impacts; and (2) We have revised the Value of a Statistical 

Life to equal $6.3 million (year 2000$), up from an estimate of $5.5 million (year 2000$) used in the June 

2009 report. Please refer to the following website for updates to the dollar-per-ton estimates: 

http://www.epa.gov/air/benmap/bpt.html 
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• They do not reflect local variability in population density, meteorology, 

exposure, baseline health incidence rates, or other local factors that might 

lead to an overestimate or underestimate of the actual benefits of 

controlling fine particulates. EPA will conduct full-scale air quality 

modeling for the final rulemaking in an effort to capture this variability. 

• This analysis assumes that all fine particles, regardless of their chemical 

composition, are equally potent in causing premature mortality. This is an 

important assumption, because PM2.5 produced via transported precursors 

emitted from stationary sources may differ significantly from direct PM2.5 

released from diesel engines and other industrial sources, but no clear 

scientific grounds exist for supporting differential effects estimates by 

particle type. 

• This analysis assumes that the health impact function for fine particles is 

linear within the range of ambient concentrations under consideration. 

Thus, the estimates include health benefits from reducing fine particles in 

areas with varied concentrations of PM2.5, including both regions that are 

in attainment with fine particle standard and those that do not meet the 

standard down to the lowest modeled concentrations. 

• There are several health benefits categories that EPA was unable to 

quantify due to limitations associated with using benefits-per-ton 

estimates, several of which could be substantial. Because the NOX and 

VOC emission reductions associated with this proposal are also precursors 

to ozone, reductions in NOX and VOC would also reduce ozone formation 

and the health effects associated with ozone exposure. Unfortunately, 

benefits-per-ton estimates do not exist due to issues associated with the 

complexity of the atmospheric air chemistry and nonlinearities associated 

with ozone formation. The PM-related benefits-per-ton estimates also do 

not include any human welfare or ecological benefits. Please refer to 

Chapter 7.3 of the RIA that accompanies this proposal for a description of 

the quantification and monetization of health impact for the FRM and a 

description of the unquantified co-pollutant benefits associated with this 

rulemaking. 

As mentioned above, emissions changes and benefits-per-ton estimates alone are 

not a good indication of local or regional air quality and health impacts, as there may be 

localized impacts associated with the proposed rulemaking. Additionally, the 

atmospheric chemistry related to ambient concentrations of PM2.5, ozone and air toxics is 

very complex. Full-scale photochemical modeling is therefore necessary to provide the 

needed spatial and temporal detail to more completely and accurately estimate the 

changes in ambient levels of these pollutants and their associated health and welfare 

impacts. As discussed above, timing and resource constraints precluded from conducting 

a full-scale photochemical air quality modeling analysis in time for the NPRM. For the 

final rule, however, a national-scale air quality modeling analysis will be performed to 

analyze the impacts of the standards on PM2.5, ozone, and selected air toxics. The 

benefits analysis plan for the final rulemaking is discussed in the next section. 
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b. Human Health and Environmental Benefits for the Final Rule 

i. Human Health and Environmental Impacts 

To model the ozone and PM air quality benefits of the final rule, EPA will use the 

Community Multiscale Air Quality (CMAQ) model (see Section III.G.5.b for a 

description of the CMAQ model). The modeled ambient air quality data will serve as an 

input to the Environmental Benefits Mapping and Analysis Program (BenMAP).256

 

BenMAP is a computer program developed by EPA that integrates a number of the 

modeling elements used in previous RIAs (e.g., interpolation functions, population 

projections, health impact functions, valuation functions, analysis and pooling methods) 

to translate modeled air concentration estimates into health effects incidence estimates 

and monetized benefits estimates. 

Chapter 7.3 in the DRIA that accompanies this proposal lists the co-pollutant 

health effect exposure-response functions EPA will use to quantify the co-pollutant 

incidence impacts associated with the final light-duty vehicles standard. These include 

PM- and ozone-related premature mortality, chronic bronchitis, nonfatal heart attacks, 

hospital admissions (respiratory and cardiovascular), emergency room visits, acute 

bronchitis, minor restricted activity days, and days of work and school lost. 

ii. Monetized Impacts 

 

To calculate the total monetized impacts associated with quantified health 

impacts, EPA applies values derived from a number of sources. For premature mortality, 

EPA applies a value of a statistical life (VSL) derived from the mortality valuation 

literature. For certain health impacts, such as chronic bronchitis and a number of 

respiratory-related ailments, EPA applies willingness-to-pay estimates derived from the 

valuation literature. For the remaining health impacts, EPA applies values derived from 

current cost-of-illness and/or wage estimates. Chapter 7.3 in the DRIA that accompanies 

this proposal presents the monetary values EPA will apply to changes in the incidence of 

health and welfare effects associated with the final standard. 

iii. Other Unquantified Health and Environmental Impacts 

In addition to the co-pollutant health and environmental impacts EPA will 

quantify for the analysis of the final standard, there are a number of other health and 

human welfare endpoints that EPA will not be able to quantify or monetize because of 

current limitations in the methods or available data. These impacts are associated with 

emissions of air toxics (including benzene, 1,3-butadiene, formaldehyde, acetaldehyde, 

acrolein, and ethanol), ambient ozone, and ambient PM2.5 exposures. Chapter 7.3 of the 

DRIA lists these unquantified health and environmental impacts. 

 

256 Information on BenMAP, including downloads of the software, can be found at 

http://www.epa.gov/ttn/ecas/ benmodels.html. 
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While there will be impacts associated with air toxic pollutant emission changes 

that result from the final standard, EPA will not attempt to monetize those impacts. This 

is primarily because currently available tools and methods to assess air toxics risk from 

mobile sources at the national scale are not adequate for extrapolation to incidence 

estimations or benefits assessment. The best suite of tools and methods currently 

available for assessment at the national scale are those used in the National-Scale Air 

Toxics Assessment (NATA). The EPA Science Advisory Board specifically commented 

in their review of the 1996 NATA that these tools were not yet ready for use in a 

national-scale benefits analysis, because they did not consider the full distribution of 

exposure and risk, or address sub-chronic health effects.257 While EPA has since 

improved the tools, there remain critical limitations for estimating incidence and 

assessing benefits of reducing mobile source air toxics. EPA continues to work to 

address these limitations; however, EPA does not anticipate having methods and tools 

available for national-scale application in time for the analysis of the final rules.258

 

8. Energy Security Impacts

 This proposal to reduce GHG emissions in light-duty vehicles results in improved 

fuel efficiency which, in turn, helps to reduce U.S. petroleum imports. A reduction of 

U.S. petroleum imports reduces both financial and strategic risks associated with a 

potential disruption in supply or a spike in cost of a particular energy source. This 

reduction in risk is a measure of improved U.S. energy security. This section summarizes 

our estimate of the monetary value of the energy security benefits of the proposed GHG 

vehicle standards against the reference case by estimating the impact of the expanded use 

of lower-GHG vehicle technologies on U.S. oil imports and avoided U.S. oil import 

expenditures. Additional discussion of this issue can be found in Chapter 5.1 of EPA’s 

RIA Section III.5 of the preamble and Section 4.2.8 of the TSD. 

 a. Implications of Reduced Petroleum Use on U.S. Imports 

In 2008, U.S. petroleum import expenditures represented 21% of total U.S. 

imports of all goods and services.259 In 2008, the U.S. imported 66% of the petroleum it 

consumed, and the transportation sector accounted for 70% of total U.S. petroleum 

consumption. This compares to approximately 37% of petroleum from imports and 55% 

consumption of petroleum in the transportation sector in 1975.260 It is clear that 

 

257 Science Advisory Board. 2001. NATA – Evaluating the National-Scale Air Toxics Assessment for 

1996 – an SAB Advisory. http://www.epa.gov/ttn/atw/sab/sabrev.html. 

258 In April, 2009, EPA hosted a workshop on estimating the benefits of reducing hazardous air pollutants. 

This workshop built upon the work accomplished in the June 2000 Science Advisory Board/EPA 

Workshop on the Benefits of Reductions in Exposure to Hazardous Air Pollutants, which generated 

thoughtful discussion on approaches to estimating human health benefits from reductions in air toxics 

exposure, but no consensus was reached on methods that could be implemented in the near term for a broad 

selection of air toxics. Please visit http://epa.gov/air/toxicair/2009workshop.html for more information 

about the workshop and its associated materials. 

259 Source: U.S. Bureau of Economic Analysis, U.S. International Transactions Accounts Data, as shown on 

June 24, 2009. 

260 Source: U.S. Department of Energy, Annual Energy Review 2008, Report No. DOE/EIA-0384(2008), 

Tables 5.1 and 5.13c, June 26, 2009. 
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230

petroleum imports have a significant impact on the U.S. economy. Requiring lowerGHG vehicle technology in the U.S. is expected to lower U.S. petroleum imports. 

 

b. Energy Security Implications 

 In order to understand the energy security implications of reducing U.S. 

petroleum imports, EPA has worked with Oak Ridge National Laboratory (ORNL), 

which has developed approaches for evaluating the economic costs and energy security 

implications of oil use. The energy security estimates provide below are based upon a 

methodology developed in a peer-reviewed study entitled, "The Energy Security Benefits 

of Reduced Oil Use, 2006-2015," completed in March 2008. This recent study is 

included as part of the docket for this rulemaking.261,262

 When conducting this recent analysis, ORNL considered the full economic cost of 

importing petroleum into the U.S. The full economic cost of importing petroleum into 

the U.S. is defined to include two components in addition to the purchase price of 

petroleum itself. These are: (1) the higher costs for oil imports resulting from the effect 

of increasing U.S. import demand on the world oil price and on OPEC market power (i.e., 

the "demand" or "monopsony" costs); and (2) the risk of reductions in U.S. economic 

output and disruption of the U.S. economy caused by sudden disruptions in the supply of 

imported petroleum to the U.S. (i.e., macroeconomic disruption/adjustment costs). 

Maintaining a U.S. military presence to help secure stable oil supply from potentially 

vulnerable regions of the world was not included in this analysis because its attribution to 

particular missions or activities is difficult. 

 

 For this proposal, ORNL further updated the energy security premium by 

incorporating the most recent oil price forecast in the in the Energy Information 

Administration’s 2009 Annual Energy Outlook into its model. In order for the energy 

security premium estimated to be used in EPA’s OMEGA model, ORNL developed 

energy security estimates for a number of different years; please refer to Table III.H.8-1 

for this information for years 2015, 2020, 2030 and 2040,263 as well as a breakdown of 

the components of the energy security premium for each of these years. The components 

of the energy security premium and their values are discussed in detail in the TSD, 

Section 4.2.8. 

Table III.H.8-1 Energy Security Premium in 2015, 2020, 2030 and 2040 (2007$/Barrel) 

 

261 Leiby, Paul N. "Estimating the Energy Security Benefits of Reduced U.S. Oil Imports," Oak Ridge 

National Laboratory, ORNL/TM-2007/028, Final Report, 2008. (Docket EPA-HQ-OAR-2009-0472)

262 The ORNL study “The Energy Security Benefits of Reduced Oil Use, 2006-2015," completed in March 

2008, is an update version of the approach used for estimating the energy security benefits of U.S. oil 

import reductions developed in an ORNL 1997 Report by Leiby, Paul N., Donald W. Jones, T. Randall 

Curlee, and Russell Lee, entitled “Oil Imports: An Assessment of Benefits and Costs." (Docket EPA-HQOAR-2009-0472)

 

263 AEO 2009 forecasts energy market trends and values only to 2030. The energy security premium 

estimates post-2030 were assumed to be the 2030 estimate. 

Field Code Changed
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231

Year 

(range) 

Monopsony Macroeconomic 

Disruption/Adjustment Costs 

Total Mid-Point 

2015 $11.79 

($4.26 - $21.37) 

$6.70 

($3.11 – $10.67) 

$18.49 

($9.80 - $28.08) 

2020 $12.31 

($4.46 - $22.53) 

$7.62 

($3.77 – $12.46) 

$19.94 

($10.58 - $30.47) 

2030 $10.57 

($3.84 – 18.94)) 

$8.12 

($3.90 – $13.04) 

$18.69 

($10.52 - $27.89) 

2040 $10.57 

($3.84 – $18.94) 

$8.12 

($3.90 - $13.04) 

$18.69 

($10.52 - $27.89) 

 The literature on the energy security for the last two decades has routinely 

combined the monopsony and the macroeconomic disruption components when 

calculating the total value of the energy security premium. However, in the context of 

using a global value for the Social Cost of Carbon (SCC) the question arises: how should 

the energy security premium be used when some benefits from the proposed rule, such as 

the benefits of reducing greenhouse gas emissions, are calculated at a global level? 

Monopsony benefits represent avoided payments by the U.S. to oil producers in foreign 

countries that result from a decrease in the world oil price as the U.S. decreases its 

consumption of imported oil. Although there is clearly a benefit to the U.S. when 

considered from the domestic perspective, the decrease in price due to decreased demand 

in the U.S. also represents a loss of income to oil-producing countries. Given the 

redistributive nature of this effect, do the negative effects on other countries “net out” the 

positive impacts to the U.S.? If this is the case, then, the monopsony portion of the 

energy security premium should be excluded from the net benefits calculation for the 

rule. 

Based on this reasoning, EPA's estimates of net benefits for this proposal exclude 

the portion of energy security benefits stemming from the U.S. exercising its monopsony 

power in oil markets. Thus, EPA only includes the macroeconomic 

disruption/adjustment cost portion of the energy security premium. Although excluded 

from the net benefits calculations, the monopsony benefits, a benefit to the U.S. when oil 

imports are reduced, are presented below in. Table III.H.8-2.

Table III.H.8-2 Total Annual Monopsony Benefits in 2015, 2020, 2030 and 2040

(billions of 2007$)

Year Benefits 

2015 $1.04

2020 $3.72

2030 $6.26

2040 $8.11

 However, EPA invites comments on whether, when the global value for 

greenhouse gas reduction benefits is used, it may still be appropriate to include the 

monopsony benefits in net benefits calculation for the proposed rule. From one 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

232

perspective, the global SCC is used in these calculations, not because the global net 

benefits of the rule are being computed (they are not), but rather because in the context of 

a global public good, the global marginal benefit is the correct domestic benefit against 

which domestic costs are to be compared. Similarly, energy security is inherently a 

domestic benefit. Thus, should the two benefits, if they are both viewed from this 

domestic perspective, be counted in the net benefits estimates for this rulemaking and 

more generally what are the overall implications of this approach to justifying regulation?

However, even when the global value for greenhouse gas reduction benefits is 

used, a strong argument can be made that the monopsony benefits should be included in 

net benefits calculation for the proposed rule. Maintaining the earth’s climate is a global 

public good and as such requires that a global perspective be taken on the benefits of 

GHG mitigation by all nations, including the U.S. The global SCC is used in these 

calculations, not because the global net benefits of the rule are being computed (they are 

not), but rather because in the context of a global public good, the global marginal benefit 

is the correct benefit against which domestic costs are to be compared. In other words, 

using the global SCC does not transform the calculation from a domestic (i.e., U.S.) to a 

global one. Rather, the domestic perspective is maintained while recognizing that the 

impacts from domestic GHG emissions are truly global in nature. 

Energy security, on the other hand, is broadly defined as protecting the U.S. 

economy against circumstances that threaten significant short- and long-term increases in 

energy costs. Energy security is inherently a domestic benefit. However, the use of the 

domestic monopsony benefit is not in conflict with the use of the global SCC, because the 

global SCC represents the benefits against which the costs associated with our (i.e., the 

U.S.’s) domestic mitigation efforts should be judged. In addition, the U.S. values both 

maintaining the earth’s climate and providing for its own energy security. If this 

reasoning holds, the two benefits—the global benefits of reducing greenhouse gas 

emissions and the full energy security premium, including the monopsony benefits—

should be counted in the net benefits estimates of the proposed rule. EPA is taking 

comments on whether the monopsony portion of the energy security should be included 

in net benefits calculations for this rulemaking.

 Total annual energy security benefits are derived from the estimated reductions in 

U.S. imports of finished petroleum products and crude oil using only the macroeconomic 

disruption/adjustment portion of the energy security premium. These values are shown in 

Table III.H.8-32.

264 The total energy security monopsony benefits of reduced U.S. oil 

imports are shown in Table III.H.8-23. The reduced oil estimates were derived from the 

OMEGA model, as explained in Section VI of this preamble. EPA used the same 

assumption that NHTSA used in its Corporate Average Fuel Economy and CAFE Reform 

for MY 2008-2011 Light Trucks proposal, which assumed each gallon of fuel saved 

reduces total U.S. imports of crude oil or refined products by 0.95 gallons.265

 

264 Estimated reductions in U.S. imports of finished petroleum products and crude oil are 95% of 88 million 

barrels (MMB) in 2015, 302 MMB in 2020, 592 MMB in 2030, and 767 MMB in 2040. 

265 Preliminary Regulatory Impacts Analysis, April 2008. Based on a detailed analysis of differences in 

fuel consumption, petroleum imports, and imports of refined petroleum products among the Reference 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

233

Table III.H.8-32 Total Annual Energy Security Benefits Using Only the Macroeconomic 

Disruption/Adjustment Component of the Energy Security Premium in 2015, 2020, 2030 

and 2040 (billions of 2007$) 

Year Benefits 

2015 $0.59 

2020 $2.30 

2030 $4.81 

2040 $6.23 

Table III.H.8-3 Total Annual Monopsony Benefits in 2015, 2020, 2030 and 2040

(billions of 2007$)

Year Benefits 

2015 $1.04

2020 $3.72

2030 $6.26

2040 $8.11

9. Other Impacts

There are other impacts associated with the proposed CO2 emissions standards 

and associated reduced fuel consumption. Lower fuel consumption would, presumably, 

result in fewer trips to the filling station to refuel and, thus, time saved. The rebound 

effect, discussed in detail in Section III.H.3.c, produces additional benefits to vehicle 

owners in the form of consumer surplus from the increase in vehicle-miles driven, but 

may also increase the societal costs associated with traffic congestion, motor vehicle 

crashes, and noise. These effects are likely to be relatively small in comparison to the 

value of fuel saved as a result of the proposed standards, but they are nevertheless 

important to include. Table III.H.9-1 summarizes the other economic impacts. Please 

refer to Preamble Section II.F and the Draft Joint TSD that accompanies this proposal for 

more information about these impacts and how EPA and NHTSA use them in their 

analyses. 

Table III.H.9-1 Estimated Economic Externalities Associated with the Proposed LightDuty Vehicle GHG Program 

 ($Millions of 2007 dollars) 

 

Case, High Economic Growth, and Low Economic Growth Scenarios presented in the Energy Information 

Administration’s Annual Energy Outlook 2007, NHTSA estimated that approximately 50 percent of the 

reduction in fuel consumption is likely to be reflected in reduced U.S. imports of refined fuel, while the 

remaining 50 percent would be expected to be reflected in reduced domestic fuel refining. Of this latter 

figure, 90 percent is anticipated to reduce U.S. imports of crude petroleum for use as a refinery feedstock, 

while the remaining 10 percent is expected to reduce U.S. domestic production of crude petroleum. Thus on 

balance, each gallon of fuel saved is anticipated to reduce total U.S. imports of crude petroleum or refined 

fuel by 0.95 gallons. 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

234

Economic 

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

Value of 

Less 

Frequent 

Refueling 

$2,500 $4,900 $6,400 $8,000 $89,600 $41,000 

Value of 

Increased 

Drivinga

$4,900 $10,000 $13,600 $18,000 $184,700 $82,700 

Accidents, 

Noise, 

Congestion 

-$2,400 -$4,900 -$6,300 -$7,900 -$88,200 -$40,200 

Annual 

Quantified 

Benefits 

$5,000 $10,000 $13,700 $18,100 $186,100 $83,500 

a

Calculated using post-tax fuel prices. 

10. Summary of Costs and Benefits

 In this section EPA presents a summary of costs, benefits, and net benefits of the 

proposal. EPA presents fuel consumption impacts as negative costs of the vehicle 

program. 

 Table III.H.10-1 shows the estimated annual societal costs of the vehicle program 

for the indicated calendar years. The table also shows the net present values of those 

costs for the calendar years 2012-2050 using both a 3 percent and a seven percent 

discount rate. In this table, fuel savings are calculated using pre-tax fuel prices and are 

presented as negative costs associated with the vehicle program (rather than positive 

savings). 

 Consumers are expected to receive the fuel savings presented here. The cost 

estimates for the fuel-saving technology are based on the assumptions that, to comply 

with the rule, no vehicle attributes will change except fuel economy and technology cost; 

that consumers will consider reduced fuel costs as a substitute for increased purchase 

price; and that consumers will not change the vehicles that they purchase. Instead, it is 

possible that automakers may redesign vehicles as part of their compliance strategies. If 

so, the redesigns may make the vehicles either less or more attractive to consumers. In 

addition, consumers may choose to purchase different vehicles than they would in the 

absence of this rule. These changes may affect the satisfaction that consumers receive 

from their vehicles. Because of the unsettled state of the modeling of consumer choices 

(discussed in Section III.H.4.b and in DRIA Section 8.1.2), this analysis does not 

measure these effects. To the extent that consumer satisfaction with vehicles may decline 

due to changes in vehicles other than fuel economy, the fuel savings may overstate the 

benefits of improved fuel economy to consumers. 

Table III.H.10-1 Estimated Societal Costs of the Light-Duty Vehicle GHG Program 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

235

 (Millions of 2007 dollars) 

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

Vehicle 

Compliance 

Costs 

$18,000 $17,900 $19,300 $20,900 $390,000 $216,600 

Fuel Savingsa

-$43,100 -$90,400 -$125,000 -$167,000 -$1,677,600 -$746,100 

Quantified 

Annual Costs 

-$25,100 -$72,500 -$105,700 -$146,100 -$1,287,600 -$529,500 

a

Calculated using pre-tax fuel prices. 

Table III.H.10-2 presents estimated annual societal benefits for the indicated 

calendar years. The table also shows the net present values of those benefits for the 

calendar years 2012-2050 using both a 3 percent and a 7 percent discount rate. The table 

shows the benefits of reduced GHG emissions—and consequently the annual quantified 

benefits (i.e., total benefits)—for each of five interim SCC values considered by EPA. 

As discussed in Section III.H.6, there is a very high probability (very likely according to 

the IPCC) that the benefit estimates from GHG reductions are underestimates. One of the 

primary reasons is that models used to calculate SCC values do not include information 

about impacts that have not been quantified. 

In addition, the total GHG reduction benefits presented below likely 

underestimate the value of GHG reductions because they were calculated using the 

marginal values for CO2 emissions. The impacts of non-CO2 emissions vary from those 

of CO2 emissions because of differences in atmospheric lifetimes and radiative forcing.266

 

As a result, the marginal benefit values of non-CO2 GHG reductions and their growth 

rates over time will not be the same as the marginal benefits measured on a CO2–

equivalent scale.267 Marginal benefit estimates per metric ton of non- CO2 GHGs are 

currently unavailable, but work is on-going to monetize benefits related to the mitigation 

of other non-CO2 GHGs. 

 

266 Radiative forcing is the change in the balance between solar radiation entering the atmosphere and the 

Earth's radiation going out. On average, a positive radiative forcing tends to warm the surface of the Earth 

while negative forcing tends to cool the surface. Greenhouse gases have a positive radiative forcing 

because they absorb and emit heat. See http://www.epa.gov/climatechange/science/recentac.html for more 

general information about GHGs and climate science.

267 See IPCC WGII, 2007 for discussion about implications of different marginal impacts among the GHGs. 

Formatted Table
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236

Table III.H.10-2 Estimated Societal Benefits Associated with the Proposed Light-Duty 

Vehicle GHG Program (Millions of 2007 dollars) 

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

Reduced GHG Emissions at each assumed SCC value 

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

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

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

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

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

PM2.5 Related 

Benefitsa,b,c

$1,400 $3,000 $4,600 $6,700 $59,800 $26,300 

Energy Security Impacts 

(price shock) 

$2,300 $4,800 $6,200 $7,800 $85,800 $38,800 

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

Value of Increased 

Drivingd

$4,900 $10,000 $13,600 $18,000 $184,700 $82,700 

Accidents, Noise, 

Congestion 

-$2,400 -$4,900 -$6,300 -$7,900 -$88,200 -$40,200 

Quantified Annual Benefits at each assumed SCC value 

SCC 5% $9,900 $21,100 $30,200 $42,100 $400,900 $177,200 

SCC 5% Newell-Pizer $11,200 $24,400 $35,500 $51,600 $470,100 $205,700 

SCC from 3% and 5% $13,400 $29,800 $46,500 $68,600 $594,700 $257,100 

SCC 3% $16,900 $39,800 $62,500 $95,600 $788,600 $337,100

SCC 3% Newell-Pizer $22,700 $53,800 $87,500 $132,600 $1,093,100 $462,800 

a

 Note that the co-pollutant impacts associated with the standards presented here do not include the full 

complement of endpoints that, if quantified and monetized, would change the total monetized estimate of 

rule-related impacts. Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only 

human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and 

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

in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the 

final standards. 

b

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an 

estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton 

estimates were based on the Six Cities study (Laden et al., 2006), the values would be approximately 145% 

(nearly two-and-a-half times) larger. 

c

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% 

discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. 

If a 7% discount rate had been used, the values would be approximately 9% lower. 

d

Calculated using pre-tax fuel prices. 

 Table III.H.10-3 presents estimated annual net benefits for the indicated calendar 

years. The table also shows the net present values of those net benefits for the calendar 

years 2012-2050 using both a 3 percent and a 7 percent discount rate. The table includes 

the benefits of reduced GHG emissions—and consequently the annual net benefits—for 

each of five interim SCC values considered by EPA. As noted above, there is a very high 

probability (very likely according to the IPCC) that the benefit estimates from GHG 

Formatted Table
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

237

reductions are underestimates because, in part, models used to calculate SCC values do 

not include information about impacts that have not been quantified. 

Table III.H.10-3 Quantified Net Benefits Associated with the Proposed Light-Duty 

Vehicle GHG Programa, b (Millions of 2007 dollars) 

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

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

Quantified Annual Benefits at each assumed SCC value 

SCC 5% $9,900 $21,100 $30,200 $42,100 $400,900 $177,200 

SCC 5% Newell-Pizer $11,200 $24,400 $35,500 $51,600 $470,100 $205,700 

SCC from 3% and 5% $13,400 $29,800 $46,500 $68,600 $594,700 $257,100 

SCC 3% $16,900 $39,800 $62,500 $95,600 $788,600 $337,100

SCC 3% Newell-Pizer $22,700 $53,800 $87,500 $132,600 $1,093,100 $462,800 

Quantified Net Benefits at each assumed SCC value 

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

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

SCC from 3% and 5% $38,500 $102,300 $152,200 $214,700 $1,882,300 $786,600 

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

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

a

 Note that the co-pollutant impacts associated with the standards presented here do not include the full 

complement of endpoints that, if quantified and monetized, would change the total monetized estimate of 

rule-related impacts. Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only 

human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and 

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

in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the 

final standards. 

b

Fuel impacts were calculated using pre-tax fuel prices. 

 

EPA also conducted a separate analysis of the total benefits over the model year 

lifetimes of the 2012 through 2016 model year vehicles. In contrast to the calendar year 

analysis, the model year lifetime analysis shows the lifetime impacts of the program on 

each of these MY fleets over the course of its lifetime. Full details of the inputs to this 

analysis can be found in DRIA Chapter 5. The societal benefits of the full life of each of 

the five model years from 2012 through 2016 are shown in Tables III.H.10-4 and 

III.H.10-5 at both a 3 percent and a 7 percent discount rate, respectively. The net benefits 

are shown in Tables III.H.10-6 and III.H.10-7 for both a 3 percent and a 7 percent 

discount rate. Note that the quantified annual benefits shown in Table III.H.10-4 and 

Table III.H.10-5 include fuel savings as a positive benefit. As such, the quantified annual 

costs as shown in Table III.H.10-6 and Table III.H.10-7 do not include fuel savings since 

those are included as benefits. Also note that each of the Tables III.H.10-4 through Table 

III.H.10-7 include the benefits of reduced CO2 emissions—and consequently the total 

benefits—for each of five interim SCC values considered by EPA. As noted above, there 

is a very high probability (very likely according to the IPCC) that the benefit estimates 

from GHG reductions are underestimates because, in part, models used to calculate SCC 

values do not include information about impacts that have not been quantified. 

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 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

238

Table III.H.10-4 Estimated Societal Benefits Associated with the Proposed Light-Duty 

Vehicle GHG Program, Model Year Analysis (Millions of 2007 dollars; 3% Discount 

Rate) 

Monetized Values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Cost of Noise, Accident, Congestion ($) -$900 -$1,400 -$1,900 -$2,800 -$3,900 -$11,000 

Pretax Fuel Savings ($) $15,600 $24,400 $34,800 $49,800 $68,500 $193,300 

Energy Security (price shock) ($) $400 $600 $900 $1,200 $1,600 $4,700 

Change in no. of Refuelings (#) 500 700 1,000 1,300 1,800 5,300 

Change in Refueling Time (hours) 0 100 100 100 200 400 

Value of Reduced Refueling time ($) $900 $1,400 $1,900 $2,700 $3,700 $10,500 

Value of Additional Driving ($) $2,000 $3,000 $4,100 $5,700 $7,900 $22,700 

Value of PM2.5-related Health Impacts 

($)a,b,c $600 $900 $1,200 $1,700 $2,200 $6,600 

Social Cost of Carbon (SCC) at each assumed SCC value 

SCC 5% $500 $700 $1,000 $1,400 $1,900 $5,600 

SCC 5% Newell-Pizer $1,000 $1,500 $2,000 $2,900 $3,800 $11,000 

SCC from 3% and 5% $1,800 $2,800 $3,900 $5,400 $7,200 $21,000 

SCC 3% $3,200 $4,800 $6,700 $9,400 $13,000 $37,000 

SCC 3% Newell-Pizer $5,300 $8,100 $11,000 $16,000 $21,000 $61,000 

Total Benefits at each assumed SCC value 

SCC 5% $19,100 $29,600 $42,000 $59,700 $81,900 $232,400 

SCC 5% Newell-Pizer $19,600 $30,400 $43,000 $61,200 $83,800 $237,800 

SCC from 3% and 5% $20,400 $31,700 $44,900 $63,700 $87,200 $247,800 

SCC 3% $21,800 $33,700 $47,700 $67,700 $93,000 $263,800 

SCC 3% Newell-Pizer $23,900 $37,000 $52,000 $74,300 $101,000 $287,800 

 a Note that the co-pollutant impacts associated with the standards presented here do not include the full 

complement of endpoints that, if quantified and monetized, would change the total monetized estimate of 

rule-related impacts. Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only 

human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and 

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

in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the 

final standards. 

b

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an 

estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton 

estimates were based on the Six Cities study (Laden et al., 2006), the values would be approximately 145% 

(nearly two-and-a-half times) larger. 

c

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% 

discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. 

If a 7% discount rate had been used, the values would be approximately 9% lower. 

Table III.H.10-5 Estimated Societal Benefits Associated with the Proposed Light-Duty 

Vehicle GHG Program, Model Year Analysis (Millions of 2007 dollars; 7% Discount 

Rate) 

Monetized Values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Cost of Noise, Accident, Congestion ($) -$700 -$1,100 -$1,500 -$2,200 -$3,100 -$8,700 

Pretax Fuel Savings ($) $12,100 $19,000 $27,200 $39,000 $53,700 $150,900 

Energy Security (price shock) ($) $300 $500 $700 $900 $1,300 $3,700 

Change in no. of Refuelings (#) 400 500 800 1,100 1,500 4,200 

Change in Refueling Time (hours) 0 0 100 100 100 300 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

239

Value of Reduced Refueling time ($) $700 $1,100 $1,500 $2,100 $2,900 $8,300 

Value of Additional Driving ($) $1,500 $2,400 $3,200 $4,500 $6,300 $18,000 

Value of PM2.5-related Health Impacts 

($)a,b,c $500 $700 $1,000 $1,300 $1,800 $5,300 

Social Cost of Carbon (SCC) at each assumed SCC value 

SCC 5% $400 $500 $700 $1,000 $1,300 $3,900 

SCC 5% Newell-Pizer $700 $1,100 $1,500 $2,000 $2,500 $7,700 

SCC from 3% and 5% $1,400 $2,100 $2,800 $3,700 $4,800 $15,000 

SCC 3% $2,400 $3,600 $4,800 $6,500 $8,300 $26,000 

SCC 3% Newell-Pizer $4,000 $6,000 $8,000 $11,000 $14,000 $43,000 

Total Benefits at each assumed SCC value 

SCC 5% $14,800 $23,100 $32,800 $46,600 $64,200 $181,400 

SCC 5% Newell-Pizer $15,100 $23,700 $33,600 $47,600 $65,400 $185,200 

SCC from 3% and 5% $15,800 $24,700 $34,900 $49,300 $67,700 $192,500 

SCC 3% $16,800 $26,200 $36,900 $52,100 $71,200 $203,500 

SCC 3% Newell-Pizer $18,400 $28,600 $40,100 $56,600 $76,900 $220,500 

 a Note that the co-pollutant impacts associated with the standards presented here do not include the full 

complement of endpoints that, if quantified and monetized, would change the total monetized estimate of 

rule-related impacts. Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only 

human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and 

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

in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the 

final standards. 

b

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an 

estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton 

estimates were based on the Six Cities study (Laden et al., 2006), the values would be approximately 145% 

(nearly two-and-a-half times) larger. 

c

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% 

discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. 

If a 7% discount rate had been used, the values would be approximately 9% lower. 

Table III.H.10-6 Quantified Net Benefits Associated with the Proposed Light-Duty 

Vehicle GHG Program, Model Year Analysisa (Millions of 2007 dollars; 3% Discount 

Rate) 

Monetized Values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Quantified Annual Costs (excluding fuel 

savings)b $5,400 $8,400 $10,900 $13,900 $17,500 $56,100 

Quantified Annual Benefits at each assumed SCC value 

SCC 5% $19,100 $29,600 $42,000 $59,700 $81,900 $232,400 

SCC 5% Newell-Pizer $19,600 $30,400 $43,000 $61,200 $83,800 $237,800 

SCC from 3% and 5% $20,400 $31,700 $44,900 $63,700 $87,200 $247,800 

SCC 3% $21,800 $33,700 $47,700 $67,700 $93,000 $263,800 

SCC 3% Newell-Pizer $23,900 $37,000 $52,000 $74,300 $101,000 $287,800 

Quantified Net Benefits at each assumed SCC value 
 Draft Joint EPA/NHTSA Preamble LD GHG/CAFE Standards 9/3/09 

240

SCC 5% $13,700 $21,200 $31,100 $45,800 $64,400 $176,300 

SCC 5% Newell-Pizer $14,200 $22,000 $32,100 $47,300 $66,300 $181,700 

SCC from 3% and 5% $15,000 $23,300 $34,000 $49,800 $69,700 $191,700 

SCC 3% $16,400 $25,300 $36,800 $53,800 $75,500 $207,700 

SCC 3% Newell-Pizer $18,500 $28,600 $41,100 $60,400 $83,500 $231,700 

 a Note that the co-pollutant impacts associated with the standards presented here do not include the full 

complement of endpoints that, if quantified and monetized, would change the total monetized estimate of 

rule-related impacts. Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only 

human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and 

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

in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the 

final standards. 

b

 Quantified annual costs as shown here are the increased costs for new vehicles in each given model year. 

Since those costs are assumed to occur in the given model year (i.e., not over a several year time span), the 

discount rate does not affect the costs. 

Table III.H.10-7 Quantified Net Benefits Associated with the Proposed Light-Duty 

Vehicle GHG Program, Model Year Analysisa (Millions of 2007 dollars; 7% Discount 

Rate) 

Monetized Values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Quantified Annual Costs (excluding fuel 

savings) b $5,400 $8,400 $10,900 $13,900 $17,500 $56,100 

Quantified Annual Benefits at each assumed SCC value 

SCC 5% $14,800 $23,100 $32,800 $46,600 $64,200 $181,400 

SCC 5% Newell-Pizer $15,100 $23,700 $33,600 $47,600 $65,400 $185,200 

SCC from 3% and 5% $15,800 $24,700 $34,900 $49,300 $67,700 $192,500 

SCC 3% $16,800 $26,200 $36,900 $52,100 $71,200 $203,500 

SCC 3% Newell-Pizer $18,400 $28,600 $40,100 $56,600 $76,900 $220,500 

Quantified Net Benefits at each assumed SCC value 

SCC 5% $9,400 $14,700 $21,900 $32,700 $46,700 $125,300 

SCC 5% Newell-Pizer $9,700 $15,300 $22,700 $33,700 $47,900 $129,100 

SCC from 3% and 5% $10,400 $16,300 $24,000 $35,400 $50,200 $136,400 

SCC 3% $11,400 $17,800 $26,000 $38,200 $53,700 $147,400 

SCC 3% Newell-Pizer $13,000 $20,200 $29,200 $42,700 $59,400 $164,400 

 a Note that the co-pollutant impacts associated with the standards presented here do not include the full 

complement of endpoints that, if quantified and monetized, would change the total monetized estimate of 

rule-related impacts. Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only 

human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and 

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

in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the 

final standards. 

b

 Quantified annual costs as shown here are the increased costs for new vehicles in each given model year. 

Since those costs are assumed to occur in the given model year (i.e., not over a several year time span), the 

discount rate does not affect the costs. 

I. Statutory and Executive Order Reviews 

1. Executive Order 12866: Regulatory Planning and Review

 
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241

 Under section 3(f)(1) of Executive Order (EO) 12866 (58 FR 51735, October 4, 

1993), this action is an "economically significant regulatory action” because it is likely to 

have an annual effect on the economy of $100 million or more. Accordingly, EPA 

submitted this action to the Office of Management and Budget (OMB) for review under 

EO 12866 and any changes made in response to OMB recommendations have been 

documented in the docket for this action. 

 In addition, EPA prepared an analysis of the potential costs and benefits 

associated with this action. This analysis is contained in the Draft Regulatory Impact 

Analysis, which is available in the docket for this rulemaking and at the docket internet 

address listed under ADDRESSES above. 

2. Paperwork Reduction Act

The information collection requirements in this proposed rule have been 

submitted for approval to the Office of Management and Budget (OMB) under the 

Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The Information Collection Request 

(ICR) document prepared by EPA has been assigned EPA ICR number 0783.56. 

The Agency proposes to collect information to ensure compliance with the 

provisions in this rule. This includes a variety of requirements for vehicle manufacturers. 

Section 208(a) of the Clean Air Act requires that vehicle manufacturers provide 

information the Administrator may reasonably require to determine compliance with the 

regulations; submission of the information is therefore mandatory. We will consider 

confidential all information meeting the requirements of section 208(c) of the Clean Air 

Act. 

As shown in Table III.J.2-1, the total annual burden associated with this proposal 

is about 39,900 hours and $5 million, based on a projection of 33 respondents. The 

estimated burden for vehicle manufacturers is a total estimate for both new and existing 

reporting requirements. Burden means the total time, effort, or financial resources 

expended by persons to generate, maintain, retain, or disclose or provide information to 

or for a Federal agency. This includes the time needed to review instructions; develop, 

acquire, install, and utilize technology and systems for the purposes of collecting, 

validating, and verifying information, processing and maintaining information, and 

disclosing and providing information; adjust the existing ways to comply with any 

previously applicable instructions and requirements; train personnel to be able to respond 

to a collection of information; search data sources; complete and review the collection of 

information; and transmit or otherwise disclose the information. 

 

Table III.J.2-1 Estimated Burden for Reporting and Recordkeeping Requirements 

Number of 

respondents 

Annual burden 

hours 

Annual 

costs 

33 39,940 $5,001,000 

Field Code Changed

Field Code Changed

Field Code Changed

Formatted Table
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242

 An agency may not conduct or sponsor, and a person is not required to respond to 

a collection of information unless it displays a currently valid OMB control number. The 

OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. 

 To comment on the Agency's need for this information, the accuracy of the 

provided burden estimates, and any suggested methods for minimizing respondent 

burden, including the use of automated collection techniques, EPA has established a 

public docket for this rule, which includes this ICR, under Docket ID number EPA-HQOAR-2007-0491. Submit any comments related to the ICR for this proposed rule to 

EPA and OMB. See ‘Addresses’ section at the beginning of this notice for where to 

submit comments to EPA. Send comments to OMB at the Office of Information and 

Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW, 

Washington, DC 20503, Attention: Desk Office for EPA. Since OMB is required to 

make a decision concerning the ICR between 30 and 60 days after [Insert date of 

publication in the FEDERAL REGISTER], a comment to OMB is best assured of having 

its full effect if OMB receives it by [Insert date 30 days after publication in the 

FEDERAL REGISTER]. The final rule will respond to any OMB or public comments on 

the information collection requirements contained in this proposal. 

3. Regulatory Flexibility Act

a. Overview 

 The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a 

regulatory flexibility analysis of any rule subject to notice and comment rulemaking 

requirements under the Administrative Procedure Act or any other statute unless the 

agency certifies that the rule will not have a significant economic impact on a substantial 

number of small entities. Small entities include small businesses, small organizations, 

and small governmental jurisdictions. 

For purposes of assessing the impacts of this rule on small entities, small entity is 

defined as: (1) a small business as defined by the Small Business Administration’s (SBA) 

regulations at 13 CFR 121.201 (see table below); (2) a small governmental jurisdiction 

that is a government of a city, county, town, school district or special district with a 

population of less than 50,000; and (3) a small organization that is any not-for-profit 

enterprise which is independently owned and operated and is not dominant in its field. 

Table III.J.3-1 provides an overview of the primary SBA small business 

categories included in the light-duty vehicle sector: 

Table III.J.3-1 Primary SBA Small Business Categories in the Light-Duty Vehicle 

Sector 
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Industry a Defined as small 

entity by SBA if less 

than or equal to: 

NAICS Codesb 

Light-duty vehicles: 

- vehicle manufacturers 

(including small volume manufacturers) 

- independent commercial importers 

- alternative fuel vehicle converters 

1,000 employees 

$7 million annual sales 

$23 million annual sales 

100 employees 

750 employees 

1,000 employees 

$7 million annual sales 

336111 

811111, 811112, 811198 

441120 

423110, 424990 

336312, 336322, 336399 

335312 

454312, 485310, 811198 

Notes: 

a Light-duty vehicle entities that qualify as small businesses would not be subject to this proposed rule. We 

are deferring action on small vehicle entities, and we intend to address these entities in a future rule. 

b

 North American Industrial Classification System

b. Summary of Potentially Affected Small Entities 

 

 EPA has not conducted a Regulatory Flexibility Analysis or a SBREFA SBAR 

Panel for the proposed rule because we are proposing to certify that the rule would not 

have a significant economic impact on a substantial number of small entities. EPA is 

proposing to defer standards for manufacturers meeting SBA’s definition of small 

business as described in 13 CFR 121.201 due to the short lead time to develop this 

proposed rule, the extremely small emissions contribution of these entities, and the 

potential need to develop a program that would be structured differently for them (which 

would require more time). EPA would instead consider appropriate GHG standards for 

these entities as part of a future regulatory action. This includes small entities in three 

distinct categories of businesses for light-duty vehicles: small volume manufacturers 

(SVMs), independent commercial importers (ICIs), and alternative fuel vehicle 

converters. Based on preliminary assessment, EPA has identified a total of about 47 

vehicle businesses, about 13 entities (or 28 percent) that fit the Small Business 

Administration (SBA) criterion of a small business. There are about 2 SVMs, 8 ICIs, and 

3 alternative fuel vehicle converters in the light-duty vehicle market which are small 

businesses (no major vehicle manufacturers meet the small-entity criteria as defined by 

SBA). EPA estimates that these small entities comprise about 0.03 percent of the total 

light-duty vehicle sales in the U.S. for the year 2007, and therefore the proposed 

deferment will have a negligible impact on the GHG emissions reductions from the 

proposed standards. 

To ensure that EPA is aware of which companies would be deferred, EPA is 

proposing that such entities submit a declaration to EPA containing a detailed written 

description of how that manufacturer qualifies as a small entity under the provisions of 13 

CFR 121.201. Small entities are currently covered by a number of EPA motor vehicle 

emission regulations, and they routinely submit information and data on an annual basis 

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as part of their compliance responsibilities. Because such entities are not automatically 

exempted from other EPA regulations for light-duty vehicles and light-duty trucks, absent 

such a declaration, EPA would assume that the entity was subject to the greenhouse gas 

control requirements in this GHG proposal. The declaration would need to be submitted 

at time of vehicle emissions certification under the EPA Tier 2 program. EPA expects 

that the additional paperwork burden associated with completing and submitting a small 

entity declaration to gain deferral from the proposed GHG standards would be negligible 

and easily done in the context of other routine submittals to EPA. However, EPA has 

accounted for this cost with a nominal estimate included in the Information Collection 

Request completed under the Paperwork Reduction Act. Additional information can be 

found in the Paperwork Reduction Act discussion in Section III.I.2. Based on this, EPA 

is proposing to certify that the rule would not have a significant economic impact on a 

substantial number of small entities. 

c. Conclusions 

I therefore certify that this proposed rule will not have a significant economic 

impact on a substantial number of small entities. However, EPA recognizes that some 

small entities continue to be concerned about the potential impacts of the statutory 

imposition of PSD requirements that may occur given the various EPA rulemakings 

currently under consideration concerning greenhouse gas emissions. As explained in the 

preamble for the proposed PSD tailoring rule [cite FR for phase-in rule, if possible], 

EPA is using the discretion afforded to it under section 609(c) of the RFA to consult with 

OMB and SBA, with input from outreach to small entities, regarding the potential 

impacts of PSD regulatory requirements as that might occur as EPA considers regulations 

of GHGs. Concerns about the potential impacts of statutorily imposed PSD requirements 

on small entities will be the subject of deliberations in that consultation and outreach. 

Concerned small entities should direct any comments relating to potential adverse 

economic impacts on small entities from PSD requirements for GHG emissions to the 

docket for the PSD tailoring rule. 

 EPA continues to be interested in the potential impacts of the proposed rule on 

small entities and welcome comments on issues related to such impacts. 

 

4. Unfunded Mandates Reform Act

 Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 104-4, 

establishes requirements for Federal agencies to assess the effects of their regulatory 

actions on State, local, and tribal governments and the private sector. Under section 202 

of the UMRA, EPA generally must prepare a written statement, including a cost-benefit 

analysis, for proposed and final rules with "Federal mandates" that may result in 

expenditures to State, local, and tribal governments, in the aggregate, or to the private 

sector, of $100 million or more in any one year. Before promulgating an EPA rule for 

which a written statement is needed, section 205 of the UMRA generally requires EPA to 

identify and consider a reasonable number of regulatory alternatives and adopt the least 

costly, most cost-effective or least burdensome alternative that achieves the objectives of 
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245

the rule. The provisions of section 205 do not apply when they are inconsistent with 

applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the 

least costly, most cost-effective or least burdensome alternative if the Administrator 

publishes with the final rule an explanation why that alternative was not adopted. 

Before EPA establishes any regulatory requirements that may significantly or 

uniquely affect small governments, including tribal governments, it must have developed 

under section 203 of the UMRA a small government agency plan. The plan must provide 

for notifying potentially affected small governments, enabling officials of affected small 

governments to have meaningful and timely input in the development of EPA regulatory 

proposals with significant Federal intergovernmental mandates, and informing, 

educating, and advising small governments on compliance with the regulatory 

requirements. 

This proposal contains no Federal mandates (under the regulatory provisions of 

Title II of the UMRA) for State, local, or tribal governments. The rule imposes no 

enforceable duty on any State, local or tribal governments. EPA has determined that this 

rule contains no regulatory requirements that might significantly or uniquely affect small 

governments. EPA has determined that this proposal contains a Federal mandate that 

may result in expenditures of $100 million or more for the private sector in any one year. 

EPA believes that the proposal represents the least costly, most cost-effective approach to 

achieve the statutory requirements of the rule. The costs and benefits associated with the 

proposal are discussed above and in the Draft Regulatory Impact Analysis, as required by 

the UMRA. 

5. Executive Order 13132 (Federalism)

 This action does not have federalism implications. It will not have substantial 

direct effects on the States, on the relationship between the national government and the 

States, or on the distribution of power and responsibilities among the various levels of 

government, as specified in Executive Order 13132. This rulemaking would apply to 

manufacturers of motor vehicles and not to state or local governments. Thus, Executive 

Order 13132 does not apply to this action. Although section 6 of Executive Order 13132 

does not apply to this action, EPA did consult with representatives of state governments 

in developing this action. 

In the spirit of Executive Order 13132, and consistent with EPA policy to promote 

communications between EPA and State and local governments, EPA specifically solicits 

comment on this proposed action from State and local officials. 

6. Executive Order 13175 (Consultation and Coordination with Indian Tribal 

 Governments)

 This proposed rule does not have tribal implications, as specified in Executive 

Order 13175 (65 FR 67249, November 9, 2000). This rule will be implemented at the 

Federal level and impose compliance costs only on vehicle manufacturers. Tribal 
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246

governments would be affected only to the extent they purchase and use regulated 

vehicles. Thus, Executive Order 13175 does not apply to this rule. EPA specifically 

solicits additional comment on this proposed rule from tribal officials. 

7. Executive Order 13045: “Protection of Children from Environmental 

 Health Risks and Safety Risks”

 This action is subject to EO 13045 (62 FR 19885, April 23, 1997) because it is an 

economically significant regulatory action as defined by EO 12866, and EPA believes 

that the environmental health or safety risk addressed by this action may have a 

disproportionate effect on children. A synthesis of the science and research regarding 

how climate change may affect children and other vulnerable subpopulations is contained 

in the Technical Support Document for Endangerment or Cause or Contribute Findings 

for Greenhouse Gases under Section 202(a) of the Clean Air Act, which can be found in 

the public docket for this proposed rule.268 A summary of the analysis is presented 

below. 

With respect to GHG emissions, the effects of climate change observed to date 

and projected to occur in the future include the increased likelihood of more frequent and 

intense heat waves. Specifically, EPA’s analysis has determined that severe heat waves 

are projected to intensify in magnitude, frequency, and duration over the portions of the 

U.S. where these events already occur, with potential increases in mortality and 

morbidity, especially among the young, elderly, and frail. EPA has estimated reductions 

in projected global mean surface temperatures as a result of reductions in GHG emissions 

associated with the standards proposed in this action (Section III.F). Children may 

receive benefits from reductions in GHG emissions because they are included in the 

segment of the population that is most vulnerable to hot temperatures. 

For non-GHG pollutants, EPA has determined that climate change is expected to 

increase regional ozone pollution, with associated risks in respiratory infection, 

aggravation of asthma, and premature death. The directional effect of climate change on 

ambient PM levels remains uncertain. However, disturbances such as wildfires are 

increasing in the U.S. and are likely to intensify in a warmer future with drier soils and 

longer growing seasons. PM emissions from forest fires can contribute to acute and 

chronic illnesses of the respiratory system, particularly in children, including pneumonia, 

upper respiratory diseases, asthma and chronic obstructive pulmonary diseases. 

The public is invited to submit comments or identify peer-reviewed studies and 

data that assess effects of early life exposure to the pollutants addressed by this proposed 

rule. 

 

268 U.S. EPA. (2009). Technical Support Document for Endangerment or Cause or Contribute Findings for 

Greenhouse Gases under Section 202(a) of the Clean Air Act. Washington, D.C.: U.S. EPA. Retrieved on 

April 21, 2009 from http://epa.gov/climatechange/endangerment/downloads/TSD_Endangerment.pdf. 
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247

8. Executive Order 13211 (Energy Effects)

 This rule is not a “significant energy action” as defined in Executive Order 13211, 

“Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, 

or Use” (66 FR 28355 (May 22, 2001)) because it is not likely to have a significant 

adverse effect on the supply, distribution, or use of energy. In fact, this rule has a 

positive effect on energy supply and use. Because the GHG emission standards proposed 

today result in significant fuel savings, this rule encourages more efficient use of fuels. 

Therefore, we have concluded that this rule is not likely to have any adverse energy 

effects. Our energy effects analysis is described above in Section III.H. 

9. National Technology Transfer Advancement Act

 Section 12(d) of the National Technology Transfer and Advancement Act of 1995 

(“NTTAA”), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use 

voluntary consensus standards in its regulatory activities unless to do so would be 

inconsistent with applicable law or otherwise impractical. Voluntary consensus standards 

are technical standards (e.g., materials, specifications, test methods, sampling procedures, 

and business practices) that are developed or adopted by voluntary consensus standards 

bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the 

Agency decides not to use available and applicable voluntary consensus standards. 

 For CO2, N2O, and CH4 emissions, EPA is proposing to collect data over the same 

tests that are used for the CAFE program. This will minimize the amount of testing done 

by manufacturers, since manufacturers are already required to run these tests. For A/C 

credits, EPA is proposing to use a consensus methodology developed by the Society of 

Automotive Engineers (SAE) and also a new A/C idle test. EPA knows of no consensus 

standard available for the A/C idle test. 

10. Executive Order 12898: Federal Actions to Address Environmental 

Justice in Minority Populations and Low-Income Populations

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal 

executive policy on environmental justice. Its main provision directs federal agencies, to 

the greatest extent practicable and permitted by law, to make environmental justice part 

of their mission by identifying and addressing, as appropriate, disproportionately high 

and adverse human health or environmental effects of their programs, policies, and 

activities on minority populations and low-income populations in the United States. 

With respect to GHG emissions, EPA has determined that this proposed rule will 

not have disproportionately high and adverse human health or environmental effects on 

minority or low-income populations because it increases the level of environmental 

protection for all affected populations without having any disproportionately high and 

adverse human health or environmental effects on any population, including any minority 

or low-income population. The reductions in CO2 and other GHGs associated with the 

proposed standards will affect climate change projections, and EPA has estimated 
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248

reductions in projected global mean surface temperatures (Section III.F.3). Within 

settlements experiencing climate change, certain parts of the population may be 

especially vulnerable; these include the poor, the elderly, those already in poor health, the 

disabled, those living alone, and/or indigenous populations dependent on one or a few 

resources.

 269 Therefore, these populations may receive benefits from reductions in 

GHGs. 

For non-GHG co-pollutants such as ozone, PM2.5, and toxics, EPA has concluded 

that it is not practicable to determine whether there would be disproportionately high and 

adverse human health or environmental effects on minority and/or low income 

populations from this proposed rule. 

J. Statutory Provisions and Legal Authority 

Statutory authority for the vehicle controls proposed today is found in section 202 

(a) (which authorizes standards for emissions of pollutants from new motor vehicles 

which emissions cause or contribute to air pollution which may reasonably be anticipated 

to endanger public health or welfare), 202 (d), 203-209, 216, and 301 of the Clean Air 

Act, 42 U.S.C. 7521 (a), 7521 (d), 7522, 7523, 7524, 7525, 7541, 7542, 7543, 7550, and 

7601. 

 

269 U.S. EPA. (2009). Technical Support Document for Endangerment or Cause or Contribute Findings for 

Greenhouse Gases under Section 202(a) of the Clean Air Act. Washington, D.C.: U.S. EPA. Retrieved on 

April 21, 2009 from http://epa.gov/climatechange/endangerment/downloads/TSD_Endangerment.pdf.