Policy update

U.S. EPA Light-Duty Vehicle GHG and CAFE Standards for 2012–2016

On April 1, 2010, the U.S. Environmental Protection Agency and Department of Transportation finalized a new joint regulation for greenhouse gas (GHG) emissions and fuel economy for model year 2012–16 light duty vehicles.

The final rule provisions are largely unchanged from the proposed rule issued on September 15, 2009.

Key Elements

Pollutants. The EPA will regulate GHG emissions from passenger vehicles up to 8,500 lbs. gross vehicle weight rating (plus medium-duty SUVs and passenger vans up to 10,000 pounds). The program sets standards for CO2 emissions on the U.S. federal test procedure. Equivalent Corporate Average Fuel Economy (CAFE) regulations, measured in miles per gallon of fuel consumed, are simultaneously established by the DOT National Highway Traffic and Safety Administration (NHTSA). There are additional provisions for the non-CO2 GHG emissions of hydrofluorocarbons (HFCs) from vehicle air conditioning systems and per-vehicle emission caps set for nitrous oxide (N2O) and methane (CH4) emissions. EPA did not consider the global warming potential of other emissions (e.g., black carbon).

Stringency. The average light duty vehicle GHG emission rate would be reduced from the average model year 2009 level of 337 gCO2e/mile to 250 gCO2e/mile for model year 2016, a 26% reduction. The estimated improvement in fuel economy by model year 2016 is 29%, from an average 2009 level of 26.4 mpg to 34.1 mpg. Annually, this would be a 4.2% reduction per model year in the average GHG emissions, and 3.7% increase per model year in miles-per-gallon fuel economy.

Regulatory design. The standards use a vehicle size-based standard for two vehicle categories, following the current NHTSA fuel economy standard framework. The program sets separate numerical standards for vehicle size or “footprint” (i.e., the area defined by the wheelbase and average track width) for passenger cars and for light trucks. In contrast to previous federal regulation, which employ an S-shaped constrained logistical curve, the new system uses “piecewise linear” functions between vehicle footprint and the test-cycle GHG emission rate. This general shape allows for different-size vehicles to have different standards in the sloped portion, but constrains the largest vehicles at the upper bend and incentivizes vehicles below the lower bend. The changes in the final rule from the proposal are slight.

Because there are two categories, car and truck, and the standards are based on the footprint attributes of future year vehicle sales, the exact GHG and fuel economy outcomes are unknown and subject to the sales mix of vehicles sold in 2016.

The footprint-based system means that selling more small vehicles does not necessarily help manufacturers meet the standards. Smaller vehicles are subject to more stringent requirements, such that a manufacturer of smaller vehicles has a lower CO2 standard while a manufacturer of larger vehicles has a higher CO2 standard. Footprint systems encourage improvements in efficiency, regardless of vehicles size, and have relatively little impact on vehicle size mix. Unlike a weight-based standard, a footprint-based standard encourages use of lightweight materials while maintaining the vehicle size, without subjecting the manufacturers to a higher CO2 requirement.

Each auto manufacturer will ultimately have a different footprint-based standard for 2012 to 2016 based on its sales mix of vehicles at each vehicle size.