## Proposed Changes to California ZEV Program Emphasize Plug-in Hybrids at the Expense of Full ZEVs in the Near- and Medium-Term

##### 15 February 2008

Changes proposed by the ARB staff to the California Zero Emission Vehicle (ZEV) program would encourage the production and deployment of plug-in hybrids (PHEVs) by allowing a new class of vehicle (which includes PHEVs and hydrogen ICE) to meet up to 90% of the ZEV requirement in the near term and up to 50% in the medium term. However, this will result in lower near- and medium-term production of pure Zero Emission Vehicles—battery electric vehicles and fuel cell vehicles—according to the staff.

The California Air Resources Board (ARB) will meet on 27 March in Sacramento to consider adopting the proposals. Adoption would conclude a process begun in 2006 to examine the need for modification to the current ZEV program. (Earlier post.)

The ZEV program was last modified in 2003 to resolve legal challenges and to better address the state of technology. At that time, the Board directed that an independent panel of experts convened to report on the status of ZEV technologies and their readiness for commercialization. The panel presented its findings to the Board in May 2007. (Earlier post.)

The Board directed ARB staff to return to the Board with proposed changes that address the state of technologies needed to meet the regulation. In directing that changes were needed, the Board affirmed its support for the program and emphasized that any changes should strengthen the overall objectives of the program.

The resulting amendments proposed by ARB staff are intended, according to the Initial Statement of Reasons (ISOR) document published in preparation for the March meeting, “to better reflect the state of technology and create incentives for new vehicle designs.

The most significant proposed amendments affect the mid-term Phase III and Phase IV (2012–2017) requirements, while Phase II (2009 – 2011) requirements remain largely unchanged.

The key elements of staff’s proposal are the following:

1. Creation of the “New Path” for 2012. In 2003, the Board amended the ZEV program to define an alternative path for automaker compliance with the ZEV regulation that was solely designed to advance the commercialization of fuel-cell vehicles. At the same time, the credit system was adjusted so that one fuel cell vehicle garnered the same credits as 10 battery-electric vehicles.

The currently proposed amendments merges the base and alternative paths into a “New Path” in which the ZEV obligation and the options to use other vehicle types are expressed as annual percentage requirements. The pure ZEV (i.e., battery electric vehicle or hydrogen fuel cell vehicle) requirement may be offset by up to 90% “Enhanced” Advanced Technology Partial ZEVs (Enhanced AT PZEV), a new classification of vehicle in Phase III (2012– 2014). Examples of Enhanced AT PZEVs are plug-in hybrid electric vehicles (PHEVs) and hydrogen internal combustion engine vehicles.

In Phase IV (2015 – 2017), 50% of the ZEV target requirement could be met with Enhanced AT PZEVs. The amendments also establish a new Type IV category to recognize longer range ZEVs and adjust ZEV credits such that Type III ZEVs earn 4 credits and Type IV ZEVs earn 5 credits through 2017.

The Type IV ZEV is a ZEV with at least 200 miles range that is fast refuel capable (e.g, a fuel-cell vehicle such as the Honda FCX Clarity).

Currently, Type III ZEVs are defined as ZEVs with range greater than 100 miles and fast refueling capabilities. Staff is proposing to broaden that definition to allow ZEVs with range greater than 200 miles, but not fast refuel capable to be Type III ZEVs. This would mean that a battery EV with range greater than 200 miles would earn the same credit as a fuel cell vehicle with range less than 200 miles; the differentiation being the fast refueling capability.

Proposed Credits for ZEVs (Battery-Electric and Fuel Cell Vehicles) 2009-2017
Type Technology Range Existing Proposed
I BEV 50-74 miles 2 2
I.5 (new) BEV 75-99 miles NA 2.5
II BEV >100 miles 3 3
III FCV
BEV
FCV: 100-199 miles
BEV: >200 miles
4 4
IV (new) FCV >200 miles NA 5
2. Establish carry-forward and carry-back provisions for ZEV credits. Modify the credit provisions under the proposed “New Path” to be consistent with the existing provisions contained in the Alternative Path which allow compliance over a three year window. Additionally, modify the way credits may be used after a specified time to limit the possibility that amassed credits could cause a black out of ZEV production for an extended period of time and to make the regulatory requirements better reflect the expected outcome in terms of vehicles produced.

3. Eliminate the cap on the use of full-function and city battery electric vehicles (EV) within the Alternative Compliance Path. Change the ratio for substitution for each vehicle type to be consistent with the credits earned by the vehicle rather than a separate ratio established only for pure ZEV obligation compliance. Create a new Type I.5 to recognize opportunity for a marketable longer range city EV.

4. Adjust credits for AT PZEVs. Modify the AT PZEV requirements, primarily to address PHEVs. The proposed amendments include addressing deployment of “blended” HEVs through an equivalent all electric range (EAER) credit, adjusting the credits for advanced componentry and fuel cycle emissions, and other conforming changes.

5. Double the credit for NEVs. Double the existing credit for neighborhood electric vehicles (NEV) to 0.3 credits per vehicle to reflect the vehicle’s positive environmental benefits but limited functionality compared with full function battery or fuel cell EVs.

6. Extend “Travel” provision. Extend the provision that allows Type III ZEVs placed in any state that has adopted California’s ZEV program to count towards California’s ZEV requirement through 2017, and include Type IV ZEVs. Include battery EVs within the provision but sunset the application of this provision for these vehicles in 2014.

7. Modify transition for intermediate automakers. Create a ramp-up period of six years for intermediate volume manufacturers (IVM) who are transitioning to large volume status. During this time, an automaker would be allowed to meet its ZEV requirements with increasing numbers of partial ZEV allowance (PZEV) of which a percentage must be AT PZEVs.

8. Public availability of ZEV credit data. Require that all production data be publicly available starting with the 2009 model year and release ZEV credit bank balance information for the 2010 model year and beyond.

Anticipated Effect of the Amendments. In the near-term (2009-2011), ARB staff expects that the proposal will not change the number of pure ZEVs, although the changes made do allow additional flexibility for the use of battery EVs.

ARB staff expects that most automakers will aggressively use their banked credits to meet the requirements in this timeframe “since ZEV technologies remain very expensive.” ARB staff expects that the actual number of new ZEVs produced is expected to be lower than the 2,500 commonly referred to for this time period.

In the medium term (2012-2017), ARB staff expects the proposal to decrease the number of pure ZEVs (e.g. fuel cell and battery EVs) introduced during this timeframe relative to the existing program.

Where the existing program would call for 75,000 ZEVs between 2012 and 2017, the staff proposal could result in as few as 27,500 ZEVs if manufacturers comply using the highest credit earning ZEVs. A mix of ZEV types used for compliance in this time period, including fuel cell vehicles and a range of battery EVs, would result in a higher number of ZEVs.

The overall number of advanced technology vehicles should increase as manufacturers are allowed to meet a part of the requirements with a new class of vehicle, referred to as Enhanced AT PZEVs. More than 150,000 Enhanced AT PZEVs could result in the 2012–2017 timeframe.

In the long term (2018 -), there are no changes proposed; the current 16% requirement beginning in 2018 remains in place. ARB staff expects the program will be revisited prior to the implementation of this portion of the regulation to determine if the pace of vehicle introduction is correct or if it can be accelerated.

The proposal is expected to reduce the cost of compliance by reducing the number of vehicles incorporating the most expensive technologies (fuel cell and battery EVs) needed during the 2012–2017 timeframe. The estimated annual savings averages $1.3 billion in 2012–2014 and nearly$0.9 billion in 2015 – 2017.

The changes proposed by staff significantly reduce an automaker’s cost of compliance, but still provide increased air quality benefits primarily because they rely upon the proven emissions benefits of commercially viable and increasingly available AT PZEVs. Staff believes that a reduction in the near term production volume of ZEVs is warranted because technological and cost hurdles remain that are best solved through continued lower volume demonstrations of the technologies...The proposed changes further encourage AT PZEV technologies as well as Enhanced AT PZEV technologies, both of which enable pure ZEV technology.

Resources

This program has had a big problem in the past by overemphasizing hydrogen fuel cells instead of battery electric vehicles. Sounds like they are trying to fix that, which is good. At the same time we should keep in mind that California gets about half its electricity from natural gas, which is going to be in increasingly short supply, especially with resistance to new LNG terminals.

California electricity rates are already among the highest in the nation - I pay over 25 cents per marginal kWh. Right now EVs get subsidized low rates, but we won't be able to afford that if everyone has one. Chances are that electricity rates will continue to rise due to natural gas shortages and coal carbon taxes, making BEVs quite costly to operate.

Costly compared to what? Even at 25cents/kwhr(I pay less than 1/2 that) my math says EVs are cheaper to fuel than a Prius, and that's assuming gas stays around $3/gal.(not likely!) I expect nighttime charging rates to stay low and even spread to other states as this load leveling is very beneficial to the utilities. Power cost has never been a problem for EVs, it's battery cost and performance that's an issue. Costly compared to what? Even at 25cents/kwhr(I pay less than 1/2 that) my math says EVs are cheaper to fuel than a Prius, and that's assuming gas stays around$3/gal.(not likely!) I expect nighttime charging rates to stay low and even spread to other states as this load leveling is very beneficial to the utilities.
Power cost has never been a problem for EVs, it's battery cost and performance that's an issue.

As I read this, it sounds like the new regs give a huge boost to fuel cells and other hydrogen cars, while penalizing BEV systems due to longer refueling times.
This is totally a crock!

Since when is it a real problem to wait a bit? After driving for 2 or 3 hours I am ready for a rest stop.

All we need to see is BEV plug in opportunities standardized and made available at all major shopping plazas. Try making "pay for plugs" 100 Amp 3 ph power available for all different brands of cars to use the same power sources.

As for those who claim there is not enough Electric power, please note all the alternate ways of making power, and insist on some being built.

Changes proposed by the ARB staff to the California Zero Emission Vehicle (ZEV) program would encourage the production and deployment of plug-in hybrids (PHEVs)
So CARB is now adopting measures I proposed (quite publicly)... in 1991.

Better than never, but is it too late already?

The problem with the ZEV mandate is that no vehicle can ever deliver true zero emissions. Electricity needs to be produced somewhere, as does hydrogen - this invariably entails environmental degradation of one sort or another. Also, all vehicles emit PM from their brakes and tires. The interiors of new vehicles emit HC from solvents - is the health of Californians no longer worth protecting once they sit down in a vehicle? Perhaps CARB should 'fess up and rename its program ZTEV to reflect zero *tailpipe* emissions, a much less grandiose objective.

Semantics aside, CARB is charged with implementing the Clean Air Act, which is ultimately supposed to improve indicators of respiratory and general population health. Requiring that a small number of new vehicles feature zero tailpipe emissions while the rest continue to pollute may not be a terribly effective strategy to achieve this.

As part of every review cycle (aka desperate attempt to somehow keep ZEV alive), CARB ought to consider if the Clean Air Act would be better served by simply tightening the maximum emissions rates permitted for new vehicles, as well as the gross polluter threshold. A complementary - if draconian - measure would be to deny CA registration to vehicles with more than 150,000 miles on the odometer, plus those that have been identified as gross polluters twice in their lifetime.

Moreover, the bias in favor of specific technologies such as batteries or fuel cells should be eliminated. A regulatory agency should specify the desired outcome in terms of its remit (e.g. air quality), not the means by which it is achieved. It is not CARB's job to formulate industrial policy.

To set intelligent targets, the agency does need to understand what may and what will not be technologically and economically possible by a certain date - but that knowledge should not then be codified into law because that skews the market. Indeed, it may well hinder the innovation and market entry of cheaper yet sufficiently effective alternatives . For example, would PHEV/E-REVs be on the market already if CARB hadn't introduced a strong bias in favor of fuel cells? Would supercapacitor-based hybrids be available today had CARB not introduced a strong bias in favor of high all-electric range?

@ Dave K. -

they mean costly to build and own. Look up the concept of "total cost of ownership".

The red flag I see is the inclusion of Hydrogen ICE. Sure its clean (if you produce the H2 cleanly), but what a waste of energy! Then, instead of producing the vehicles we need, the auto manufacturers will meet their credits by producing hydrogen flex fuel vehicles (like the BMW hydrogen 7) that will wind up running on gas all of the time anyway.

@Hal,

Welcome to the wonderful zany land of CARBite wishes and tantrums.

@ John Taylor,

The CARBite idiots are still at it. FCEVs are what they want and they won't change. They are just being dragged kicking and screaming into teh bare edge of reality. It is pure absurdity that ten BEV are only as "good" as 1 FCEV. Who said so, beside these perpetual idiots?

@ Rafael,

Yes once again the CARBites has misplaced the objective, which is Clean Air, substituting their own pet wants with the force of Law. I concur in that performance specifications are what should be created. The technology of how to meet it should be up to the creative genius of the automakers. It is even more bizarre that more and more States are placing their citizens, subject to the bizarre wishes of these clowns.

@ Engineer Poet,

I agree with your position wholeheartedly.

@ Neil,

We are faced with gross stupidity backed up be the power of Law. The efficiency and environmental degradation in making Hydrogen from motivated electrons, (or worse from fossil fuels), only to than physically transport it, and then to oxidize it to re-create motivated electrons is really, really stupid. Whoever said these people have a brain in their heads?

Rafael.

Yes, indeed, this whole scheme seems overly complex. Set maximum and average rates and have them come down over time. To the extent that BEVs lower the average emissions for a particular manufacturer, they will find a place in the market place, or not.

The above assumes that the only objective is air quality and, therefore, emssions. Perhaps there is a hidden objective, however, which might be fuel substitution. More BEVs or PHEVs would tend to favor the substitution of natural gas, solar, wind, and other alternatives.

@Stan,

Thanks for the rant. I agree with you on the hydrogen stupidity. I think it has to do with an old generation that can not let go of certain physical things. Some things are 'meant to be physical', like in this instance the stuff that propels your car. They cling to the idea that energy has to come in the form of a substance that must be put inside a container and dragged along.

Ever wondered why in Star Trek, when someone hands over a report or some other data to another, it is always in the form of a type of 'holographic memory stick'? Why don't they simply say: I emailed the data to you (if e-mail still exists in the 24th century)? It's the same people that can not let go of the idea that data has to be in a physical form to be real.

I like the changes.

They should not just throw money to the open public because then businesses will take money, even for projects that have a low probability of success. (AKA My money)

So when Hydrogen seemed the most promising way, then fund it, when BEV does, fund that and when PHEV does then that should receive the highest benefit.

I think they should fun different paths of technology, but certainly not evenly. The gov't exists to make the decision on where to spend money to best effect.

You can criticize their choice at the voting booths, and you can enlighten them to the facts in correspondence.

It gives me confidence that they're doing their jobs when they adjust the funding.

When you have the air quality problems that L.A. does, you either do something that works or suffer the consequences. ZEV was a way of shocking the automakers into that reality. They had to modify it and then change it again. This is fine. The Southern California auto market is huge and so are their air quality problems. Let's get on with it.

Alan Lloyd should have been jailed for his stupidity. (Metaphorically)

He was the head of CARB when they derailed the EVs in favor of hydrogen and fuel cells, which have gone nowhere and will go nowhere. It's good to see that CARB has finally begun to amend this travesty.

I speculated that members of CARB had been bribed.

Perhaps this should be investigated.  If there is evidence of a quid pro quo, e.g. Alan Lloyd got a fat consulting contract from some XOM think tank, jail might be just the thing.  And imagine what evidence might come out in discovery....

E-P,

Alan Lloyd later chaired the California Fuel Cell Partnership, formed by Gov. Gray Davis. That might be what you are looking for.

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