Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to
Further Policy Review

1 Below is a summary of interagency comments r eceived during EO 12866 review of the draft rule “Revisions to Motor Vehicle Fuel Economy Label. ” They are for your consideration and subject to further policy review.

Draft Preamble Section II.B.4.a

a. Upstream Emissions

This section discusses how th e agencies plan to address the issue of greenhouse gas
emissions associated with the use of motor vehi cles, in the context of a program specifically designed to provide consumers with information th at will be useful when purchasing a vehicle. The agencies’ approach takes into account (1) the statutory langua ge, (2) the fact that the law requires a great deal of information to be presented on the label, (3) the limited amount of information that can be provided on a label, (4 ) the importance of simplicity, clarity, accuracy, and intelligibility on the label, and (5) the ability to provide the public with additional and comprehensive information in a consumer-friendly format on a website. 1 This discussion focuses on, but is not limited to, the advanced te chnology vehicles that use electricity from the grid to power vehicles, such as the electric vehicl es and plug-in hybrids that are expected to enter the market in larger numbers in the coming year s; the discussion also refers to the use of renewable fuels in gasoline-powered vehicles.

For reasons outlined below, our proposed appro ach would limit the label to tailpipe-only emissions while providing much fuller information on a website. But we also identify, and seek comments on, an alternative approach, using the la bel as well as the website to account for the greenhouse gas emissions associated with electric utilities, refineries, and other upstream inputs
to motor vehicle fuels.

The agencies believe that the proposed appro ach follows from a r easonable interpretation of the Energy Policy and Conservation Act (EPCA), as amended by the Energy Independence and Security Act (EISA) of 2007. The statute states that NHTSA must require vehicles to be labeled with information “reflecting an au tomobile’s performance ... [with respect to] greenhouse gas ... emissions ... of the automobile.” 2 This information is to be based on criteria developed by EPA. NHTSA believes that a reasona ble interpretation of this provision is that only GHG emissions directly from the vehicle itsel f are required for the label. On that interpretation, the information on performance and the rating of the vehicles would both be based on the emissions of the vehicle itself. This interpre tation is also consistent with the history of the

1 On the relationship between summary disclosure, as on the label, and full disclosure, as on the website, see [OIRA guidance document].

2 49 U.S.C. 32908(g)(1)(A)(i). 49 U.S.C.32908(g)(1)(A)(ii) also refers to GHG “emi ssions of automobiles,” and further requires a designation of automobiles “with the lowest greenhouse gas emi ssions over the useful life of the vehicles.”Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to
Further Policy Review

2 EPA labeling program and its focus on the vehicle itself. NHTSA believes that it would also be reasonable to interpret the statutory language such that the required label information on GHG
emissions would include additional information on the upstream GHG emissions associated with electricity or other fuels used by the vehicle. This additi onal information could provide a broader context for reflecting the automobile’s performance with respect to GHG emissions.

The agencies recognize that “lifecycle” GHG emissions are associated with the production and distribution of all automotive fu els used by motor vehicles. Lifecycle GHG emissions are associated with gasoline, diesel, and other fuels such as natural gas, electricity, and renewable biofuels. The agencies also rec ognize that while tailpipe- only emissions provide important information, a significant number of consumers may want, or benefit from, access to information on the total upstream GHG emissions asso ciated with the operation of their vehicles. For example, electric vehicles do not have any ta ilpipe emissions since their motors do not burn fuel, but producing the electric ity used to power such vehicles most likely emits greenhouse gases. Consumers might seek, or benefit from, a label that allows for simple and accurate comparisons across vehicles on the total upstr eam GHG emissions, in addition to tailpipe emissions. However, the agencies emphasize that developing the relevant information, and providing it to consumers in a manner that is accurate and meaningful , raises a number of challenging issues, particularly in the context of the label.

A full lifecycle evaluation would include an evaluation of a comprehensive set of GHG and energy impacts associated with both the vehi cle (extraction and processing of materials, energy used in assembly, distribut ion, use, and disposal, etc.), and the fuel (feedstock extraction, feedstock transport, fuel processing, fuel transport, etc.). In practice, however, offering even the more limited accounting for GHG emissions from production and distribution of the fuel, including electricity, presents complex challe nges. EPA currently does not measure fuel combustion/electricity generation GHG emissions in its vehicle testing. The agencies recognize that modeling can be performed to assist in estimating these emissions. But in developing upstream GHG emissions values, modeling would need to be done carefully to avoid inaccuracy and consumer confusion, especially in light of variations across time and across regions. For example, GHG emissions from electricity generation will vary significantly in the future, based on the different fuels used at generating stations -- perhaps by as much as an order of magnitude
between coal and non-fossil feedstocks.

It is true that the EPA has undertaken exte nsive lifecycle modeling of biofuels for the Renewable Fuel Standard rulemaking in re sponse to the requirem ents of the Energy Independence and Security Act. But that assessm ent was done in the cont ext of the particular mix of biofuels required nati onally in 2022 by the Act, with a series of assumptions and estimates that may not be accurate today.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to
Further Policy Review

3 One overriding issue is whether the agencies could reasonably provi de a single, national value for GHG emissions from electricity generati on or could provide inst ead different values customized for various regions of the country. 3 There are data sources upon which a single national number could be derive d. For individual owners, howeve r, a single national value would generally not be accurate, and the individual would need access to additional information, such as regional values, to evaluate the impact of a specific vehicle. 4 In addition, the agencies would have to decide (1) whether to use average or ma rginal (i.e., reflecting the fact that increased vehicle demand might change the overall mix of electricity sources) GHG emissions factors, and (2) if the marginal approach is used, whethe r to assume all nighttime charging or a mix of daytime and nighttime charging. Another major c onsideration is whether to base electricity generation GHG emissions values on today's electricity markets or on projected changes in electricity markets that might o ccur by 2020 or some other year (n ote that vehicles produced in the next few years will remain in the fleet for 15 or 20 years or more).

Some states have already passed legislati on that could require major changes in how electricity is produced in thos e states in the future, and C ongress has considered landmark legislation as well. It is clear th at the question of how electricity wi ll be produced in the future is very fluid. As a result of the Energy Inde pendence and Security Act biofuel mandates, for example, the agencies expect the amount of biofue l in the transportation fuel market to increase significantly over time, and the cont ribution of feedstocks to cha nge over that time as well. Information that addresses lifecycle emissions of biofuels would need to take these considerations into account.

The agencies believe that all of these comp lex factors can be best addressed by providing a great deal of relevant information on a website , which can go into considerable detail and be changed and updated as appropriate . We currently do not have a full lifecycle analysis from which to draw for labeling purposes across the full range of vehicles and fuels. The information reported to EPA on emissions from fuel production varies across fuel types and is much more detailed for gasoline production. At the present time, it would be difficult to represent emissions from energy generation on a national label in a way that is both useful and accurate for consumers, given regional variations, how genera tion within regions is dispatched, and access to green power purchases.

Therefore, EPA and NHTSA are proposing that the label should limit itself to tailpipe only emissions (clearly identified as such) and include a more complete discussion on energy generation and lifecycle an alysis on the webpage. We believe that this approach will prove sufficiently informative to consumers. It also allows us the opportunity to provide a fuller

3 See http://www.eia.doe.gov/energyexpl ained/index.cfm?page=elect ricity_in_the_united_states for an overview of the national U.S. electric power industry net generation by fuel type.

4 Regional values could be provide d on a web site. EPA has a website ( http://www.epa.gov/cleanenergy/ene rgy-and-you/how-clean.html ) on which consumers can enter their zip code and find out what fuel mix is used to produce the electricity they use.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to
Further Policy Review

4 discussion of GHG emissions associ ated with energy generation for alternative vehicles, as well as emissions from fuel production (gasoline and bi ofuels). For example, a website could provide
calculator tools that could refl ect regional variations in the GHG emissions associated with electricity generation as well as use national averages. A website could also provide information on the projected fuel lifecycle impacts associated with biofuels. The website could be updated over time as the mix of electricity fuel sources and biofuels changes. This approach could help
the consumer understand over the lifetime of their vehicles ho w their electricity generation emissions impacts might be changing.

At this point in time, any effort to provide complete lifecycle information for fuels on the label could well produce undue confusion. A label that clearly presents tailpipe emissions appears to be the best available way to comb ine accuracy and disclosure, so long as fuller information is available on the website. The ag encies believe that ev en though many consumers will not visit the website, it will be used by ma ny groups and organizations, and as a result, the information that it provides will be made availa ble and used in the marketplace. We also note that in a separate rulemaking, we will develop information to be provided in the owner’s manual, per the requirements of EISA, for alternative fuel vehicles, which will describe the capability and benefits of using alternative fu els, including the renewable nature and environmental benefits of such fuels (see 49 USC 32908(g)). We seek comme nt on our current view that the web is the better place, compared to the label, to addre ss the complex issues associated with emissions associated with electricity generation and lifecycle emissions more generally.

We invite both general and particular commen ts on the proposed approach. For example, we encourage commenters to be as specific as possible with any recommendations on how to address fuel combustion/electric ity generation GHG emissions on th e website. If information on these emissions is to be provided on a website, exactly what information? The agencies specifically invite comment on how to address fuel combustion emissions associated with the electricity used to power the advanced technolog y vehicles starting to enter commerce, such as electric vehicles (EVs) and plug-in hybrid vehicles (PHEVs). The agencies also invite comment on how to address full GHG emissions from biof uels on a website. Should emissions be identified specifically for the emissions associ ated with the combustion of fuel to produce electricity? Should such emissi ons be determined on a regional or a national basis? Should these emissions be provided as a relative compar ison to a gasoline or diesel fuel, the current predominant fuels?

For the convenience of commenters, we have prepared the table below as an illustrative example of one simplified way that some lifecycl e emissions information related to electricitySummary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to
Further Policy Review

5 o production could be accounted for on a website, based on certain assumptions. 5 It is important to note that for comparison purposes, the agenci es would need to develop methodologies t compare upstream emissions impacts from all othe r fuels as well, including diesel, renewable fuels, and natural gas. Consistent with the di scussion above, it is important to emphasize that the tailpipe + lifecycle values in the table below are based on 2005 national average electricity GHG emissions, and could be very diffe rent for certain regions of the country today and for the nation in the future if there are major changes in the mix of methods used to generate electricity or in the GHG emissions associated with its generation.

Proposal--TailpipeOnly Tailpipe + Upstream

Vehicle CO2/mile CO2/mile

Example EV 0 197

Example PHEV 1 89 210

Example PHEV2 133 217

Toyota Prius HEV 178 224

Honda Civic HEV 212 266

Honda Insight HEV 217 273

Ford Fusion HEV 228 287

In general, for purposes of providing in formation on the web, the agencies invite comment on the appropriate metrics to use and the specific suggestions for content and format, if appropriate. The agencies also request comment on which web resources it should prioritize for development that would provide the most useful information to consumers.

5 The key assumptions underlying the illustrativ e numbers in the right-hand column are th at:EV and PHEVs all assumed to use 200 W att-hours per mile when operating on electricity over the EPA test and assuming a 30% range (43% electricity consumption) shortfall from test to road.

• PHEV 1 assumed to operate on electricity 50% of the time.

• PHEV 2 assumed to operate on electricity 25% of the time.

• Uses 2005 nationwide average value of 0.642 grams of GHG per Watt-hour at powerplant (adjusted to include GHG emissions from feedstock extraction, transportation, and processing as well) from MY2012-2016 light-duty vehicl e GHG final rule (75 Federal Register 25437).

• Assumes typical 7% electricity grid transmission losses.

• Uses 2250 grams GHG per gallon of gasoline.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to
Further Policy Review

6 The agencies acknowledge that more consumers will look at the label than at the website, and that a “0” figure for GHG em issions might prove confusing to some consumers. While accurate and more complete information will be provided on the website, putting 0 grams CO2/mile on the label may lead some consumers to perceive that driving their EV does not contribute to GHG emissions. With respect to the label itself, the agencies are also requesting comment on alternative options for the label that , in addition to presenting tailpipe emissions, refer to or identify in some manner the emissions a ssociated with the lifecyc le of the fuel. Under
one version of this alternative that is under serious considerati on, similar to a co-proposal, the
EV label would continue to reflect the "0" CO2g/mile nu mber currently displayed on the coproposed labels (Figures III-2, III-10), but the labe l would be modified by adding either a symbol or an asterisk and explanatory text which states, "The only C02 emissions are from electricity generation." Likewise, the agencies would modify the co-proposed PHEV labels (Figures III-3, III-6, III-1, III-12) inserting either a symbol or asterisk next to the current CO2g/mile number displayed with the following explanatory text , “Does not include CO 2 from electricity generation.”

This alternative approach might provide mo re accuracy and clarity for purchasers by more explicitly indicating that the CO2 emissions from generation of electri city are not reflected
in the CO2 numbers on the label. Under this a lternative, FFV labels (for FFV vehicles only) would continue to reflect the gasoline only CO 2g/mile number currently displayed on the coproposed labels (Figures III-8 and III-14), but th e label (for FFVs only) would be modified by adding either a symbol or an asterisk and explan atory text that might st ate, “The CO2 emissions listed here are from gasoline combustion only. They do not reflect the use of renewable biofuels.” The agencies request comment on this alternative option.

The agencies are also giving consideration to an approach that in addi tion to the tailpipe emissions, includes information on upstream emissions on the label for the va rious fuels. For electric vehicles, for example, GHG emissions ar e (on an average basis) a function of KwH per mile, and thus could in principl e be calculated, and if a full or nearly full accounting could be provided in a clear and intelligible form, there would be advantages to providing it on the label to consumers, in addition to the ta ilpipe emissions data. Therefore, the agencies invite comment on the feasibility and usefulness of an alternative approach that in addition to identifying tailpipe emissions, would include a separate value for upstream emissions on the label as well as on the
website.

In particular, the agencies invite commen t on what type of information should be considered as “upstream,” and whether a label including the upstream emi ssions could be based on national averages. The agencies might cons ider making reasonable assumptions to develop national averages.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to
Further Policy Review

7 Note, however, that agencies would need to ma ke a substantial number of assumptions to develop such averages. 6 These include assumptions about the overall impact on electric car recharging on the grid mix, which would include making assumptions about (1) the time-of-day distribution of recharging and (2 ) the subsequent impacts on the ba se and peak load electricity generation as well as (3) the nature of regiona l variability and (4) potential changes in the electricity generation fleet. A relevant source for this type of information may be the Energy Information Administration (EIA), which provides estimates of the future electricity generation mix, so there may be some basis for estimating future GHG emissions based on current state and federal policies; but these estimates will also rest on some uncertain assumptions. The same type of analysis (national averages for feedstocks and fuel production) would need to be developed and equivalent assumptions made related to upstream emissions from gasoline and diesel production as well as renewable fuels, natural gas, and hydrogen over th e useful life of the
vehicle.

The agencies invite comments on whether and how the possible inclusion of upstream emissions information on the label might affect other elements of the label such as design, format, presentation of the vari ous ratings and other informati on as well as the ranking of vehicles on the label. It is possible that inclusion of upstream emissions would have impacts on vehicle ratings and rankings, for ex ample by virtue of the effects on electric vehicles. Comments are invited on how this possibility might be incorporated in both of the co-proposals.

The agencies also recognize that notwithstanding the many challenges, a potential advantage of including upstream emissions on th e label is that consumers may be able to compare different EVs with respect to their upstream emissions, as some will require more energy per mile which would likely result in di fferent upstream emissions impacts. Consumers may be able to make similar comparisons am ong EVs, PHEVs, gasolin e and diesel powered vehicles as well as other fueled vehicles on the basis of upstream emissions. Regardless of what would be presented on the label, the agencies will continue to provide de tailed information about the lifecycle GHG impacts of differe nt vehicles on the website in a way that may provide a better way for individuals to take their region, driving ha bits, and other specific factors into account in their purchase decisions.

In view of the many assumptions the agencies would need to make to include upstream emissions on the label, we emphasize that this alternative would have to overcome several

6 The agencies note that some national averages are alread y used on the label to calcu late fuel costs for electric vehicles (12 cents per KW hour), fuel price on the label ($2.80), and the number of vehicle miles travelled (15,000). The agencies also believe, however, that the number of assumptions needed wo uld be much greater in instance of GHG emissions, and that the variability in upstream or lif ecycle emissions is greater than the current information provided on the table. We specifically request comment on this issue.Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to
Further Policy Review

8 serious challenges. We ask for comment on whet her and how each of those challenges, outlined above, could be addressed.