From: William Charmley/AA/USEPA/US 

To: "Achanta, Chandana L." <Chandana_L._Achanta@omb.eop.gov> 

Cc: james.tamm@dot.gov, Maureen Delaney/DC/USEPA/US@EPA, rebecca.yoon@dot.gov, Robin 

Moran/AA/USEPA/US@EPA, Steve.Wood@dot.gov 

Date: 03/30/2010 12:55 PM 

Subject:Final versions of EPA high-level cost/benefits/net benefit table from preamble and RIA Exec. 

Summary 

Chandana - 

On the phone earlier today you asked to see the final version of the tables which we have added 

to Section I.C.2 of the preamble and the new Table 1 of the Executive Summary of the final EPA 

RIA. 

They are attached. 

thanks 

Bill 

[attachment "First few pages of RIA Exec Summary with Table 1.doc" deleted by Tad 

Wysor/AA/USEPA/US] 

[attachment "Beginning of Preamble Section I.C.2 with Table I.C.2-1.doc" deleted by Tad 

Wysor/AA/USEPA/US] 
2. Summary of Costs and Benefits of EPA's GHG Standards

 EPA has analyzed in detail the costs and benefits of the final GHG standards. Table 

I.C.2-1 shows EPA’s estimated lifetime discounted cost, benefits and net benefits for all vehicles 

projected to be sold in model years 2012-2016. It is important to note that there is significant 

overlap in costs and benefits for NHTSA’s CAFE program and EPA’s GHG program and 

therefore combined program costs and benefits are not a sum of the individual programs. 

Table I.C.2-1 EPA’s Estimated 2012-2016 Model Year Lifetime Discounted Costs, Benefits, and 

Net Benefits assuming the $21/ton SCC Valuea,b,c,d (2007 dollars) 

3% Discount Rate $billions 

Costs $51.5 

Benefits $240 

Net Benefits $189 

7% Discount Rate 

Costs $51.5 

Benefits $192 

Net Benefits $140 a

 Although EPA estimated the benefits associated with four different values of a one ton GHG reduction 

($5, $21, $35, $65), for the purposes of this overview presentation of estimated costs and benefits EPA is 

showing the benefits associated with the marginal value deemed to be central by the interagency working 

group on this topic: $21 per ton of CO2e, in 2007 dollars and 2010 emissions. The $21/ton value applies 

to 2010 CO2 emissions and grows over time.

b

 As noted in Section III.H, SCC increases over time. The $21/ton value applies to 2010 CO2

emissions and grows larger over time. 

c

 Note that net present value of reduced GHG emissions is calculated differently than other 

benefits. The same discount rate used to discount the value of damages from future emissions 

(SCC at 5, 3, and 2.5 percent) is used to calculate net present value of SCC for internal 

consistency. Refer to Section III.H for more detail. 

d Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, 

CH4 and N2O) expected under this final rule. Although EPA has not monetized the benefits 

of reductions in these non-CO2 emissions, the value of these reductions should not be 

interpreted as zero. Rather, the reductions in non-CO2 GHGs will contribute to this rule’s 

climate benefits, as explained in Section III.F.2. The SCC TSD notes the difference between 

the social cost of non-CO2 emissions and CO2 emissions, and specifies a goal to develop 

methods to value non-CO2 emissions in future analyses.
Executive Summary 

The Environmental Protection Agency (EPA) and the National Highway Traffic Safety 

Administration (NHTSA) are issuing a joint final rulemaking to establish new standards for 

light-duty highway vehicles that will reduce greenhouse gas emissions (GHG) and improve fuel 

economy. The joint rulemaking is consistent with the National Fuel Efficiency Policy 

announced by President Obama on May 19, 2009, responding to the country’s critical need to 

address global climate change and to reduce oil consumption. EPA is finalizing greenhouse gas 

emissions standards under the Clean Air Act, and NHTSA is finalizing Corporate Average Fuel 

Economy standards under the Energy Policy and Conservation Act (EPCA), as amended. These 

standards apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles, 

covering model years (MY) 2012 through 2016. The standards will require these vehicles to 

meet an estimated combined average emissions level of 250 grams of CO2 per mile in MY 2016 

under EPA’s GHG program, and 34.1 mpg in MY 2016 under NHTSA’s CAFE program and 

represent a harmonized and consistent national program (National Program). These standards are 

designed such that compliance can be achieved with a single national vehicle fleet whose 

emissions and fuel economy performance improves year over year. The National Program will 

result in approximately 960 million metric tons of CO2 emission reductions and approximately 

1.8 billion barrels of oil savings over the lifetime of vehicles sold in model years 2012 through 

2016. 

Mobile sources are significant contributors to air pollutant emissions (both GHG and 

non-GHG) across the country, internationally, and into the future. The Agency has determined 

that these emissions cause or contribute to air pollution which may reasonably be anticipated to 

endanger public health or welfare, and is therefore establishing standards to control these 

emissions as required by section 202 (a) of the Clean Air Act.1 The health- and 

environmentally-related effects associated with these emissions are a classic example of an 

externality-related market failure. An externality occurs when one party's actions impose 

uncompensated costs on another party. EPA’s final rule will deliver additional environmental 

and energy benefits, as well as cost savings, on a nationwide basis that would likely not be 

available if the rule were not in place. 

Table 1 shows EPA’s estimated lifetime discounted cost, benefits and net benefits for all 

vehicles projected to be sold in model years 2012-2016. It is important to note that there is 

significant overlap in costs and benefits for NHTSA’s CAFE program and EPA’s GHG program 

and therefore combined program costs and benefits are not a sum of the individual programs. 

 

1

 “Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases Under 

Section 202(a) of the Clean Air Act” Docket: EPA-HQ-OAR-2009-0472-11292, 

http://epa.gov/climatechange/endangerment.html. See also State of Massachusetts v. EPA, 549 U.S. 497, 533 ("If 

EPA makes a finding of endangerment, the Clean Air Act requires the agency to regulate emissions of the 

deleterious pollutant from new motor vehicles"). 
Table 1 EPA’s Estimated 2012-2016 Model Year Lifetime Discounted Costs, Benefits, and Net Benefits 

assuming the $21/ton SCC Valuea,b,c,d

(Millions of 2007 dollars) 

3% Discount Rate 

Costs $51,500 

Benefits $240,200 

Net Benefits $188,700 

7% Discount Rate 

Costs $51,500 

Benefits $191,700 

Net Benefits $140,200 a

 As noted in Section III.H, SCC increases over time. The $21/ton value applies to 

2010 CO2 emissions and grows larger over time.

b Although EPA estimated the benefits associated with four different values of a one 

ton GHG reduction ($5, $21, $35, $65), for the purposes of this overview presentation 

of estimated costs and benefits EPA is showing the benefits associated with the 

marginal value deemed to be central by the interagency working group on this topic: 

$21 per ton of CO2e, in 2007 dollars and 2010 emissions. The $21/ton value applies 

to 2010 CO2 emissions and grows over time.

c

 Note that net present value of reduced GHG emissions is calculated differently than 

other benefits. The same discount rate used to discount the value of damages from 

future emissions (SCC at 5, 3, and 2.5 percent) is used to calculate net present value of 

SCC for internal consistency. Refer to Section III.H for more detail. 

d

 Monetized GHG benefits exclude the value of reductions in non-CO2 GHG 

emissions (HFC, CH4 and N2O) expected under this final rule. Although EPA has not 

monetized the benefits of reductions in these non-CO2 emissions, the value of these 

reductions should not be interpreted as zero. Rather, the reductions in non-CO2 GHGs 

will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC 

TSD notes the difference between the social cost of non-CO2 emissions and CO2 

emissions, and specifies a goal to develop methods to value non-CO2 emissions in 

future analyses.