Working Paper

Cost-Benefit Analysis of Mexico’s Heavy-duty Emission Standards (NOM 044)

Mexico is planning to revise its existing emissions standards for diesel heavy-duty vehicles (HDVs). The existing regulation, Norma Oficial Mexicana 044 (NOM 044), requires new vehicles to meet either U.S. Environmental Protection Agency (EPA) 2004 or Euro IV standards. Revisions to NOM 044 standards will require manufacturers of new heavy-duty vehicles to move directly to either EPA 2010 or Euro VI standards, skipping over any interim steps. The implementation of these vehicle standards will be coordinated with the nationwide availability of ultralow-sulfur diesel (ULSD), which is anticipated to be achieved under a separate regulation by October 2017.

This paper reports on the results, methods, and underlying assumptions of a cost-benefit analysis that the ICCT conducted to support the decision-making process for updating NOM 044. The results of this analysis, as well as other technical considerations (e.g., equivalency of EPA 2010 and Euro VI standards) are summarized in the ICCT working paper Revising Mexico’s NOM 044 standards: Considerations for decision-making (Actualización de la NOM 044. Información para la toma de decisiones).

This study demonstrates that updating NOM 044 emission standards to match EPA 2010 or Euro VI requirements is a highly cost-effective means of reducing the environmental impacts of diesel heavy-duty vehicles in Mexico. Among the key findings:

  • In 2037, the annual combined operating and technology costs of the regulation are projected to be $1.8 billion, while estimated health benefits alone are projected to be $22 billion to $30 billion.
  • Costs include additional operating costs to end-users of 3.5 cents per liter of diesel consumed. This includes an incremental cost of 2.5 cents per liter for ULSD and direct costs for diesel exhaust fluid. Incremental vehicle technology costs are estimated to average $5,300 per vehicle.

The benefits include prevention in the year 2037 of an estimated:

  • 6,800 premature deaths from exposure to PM2.5 emissions in urban areas
  • 24,000 tons of PM2.5 and 410,000 tons of NOX
  • 54 million tons of CO2-equivalent (MtCO2e) using GWP-20, and 15 MtCO2e using GWP-100

Discounted annual costs and benefits can be summed over the period of 2018-2037 to assess the total net benefits of implementing the regulation over this period. The estimated benefits of the regulation (134 billion USD) are eleven times the total direct and indirect costs (12 billion USD). Subtracting costs from benefits yields estimated net benefits of 123 billion USD. Most of this value is the result of premature mortalities avoided due to significant reductions in PM2.5 emissions.