## NHTSA Introduces Proposed Fuel Economy Targets for MY 2011-2015; 31.6 MPG Fleet Average

##### 22 April 2008
 Proposed increases in new vehicle fuel economy, MY 2011-2015. Click to enlarge.

The US Department of Transportation’s (DOT) National Highway Traffic Safety Administration (NHTSA) has issued a Notice of Proposed Rulemaking for new vehicle fuel economy standards that would bring the US average to about 31.6 miles per gallon in 2015 (35.7 mpg cars, 28.6 mpg trucks).

The Energy Independence and Security Act of 2007 (EISA), passed in December 2007 (earlier post), mandates the setting of separate attribute-based maximum feasible standards for passenger cars and for light trucks at levels sufficient to ensure that the average fuel economy of the combined fleet of all passenger cars and light trucks sold by all manufacturers in the US in model year (MY) 2020 equals or exceeds 35 mpg.

Under EISA, NHTSA, the agency that “owns” fuel economy regulations, can establish standards for a maximum of five model years at one time. Hence, the initial proposed rulemaking covers model years 2011-2015.

The 35 mpg target for 2020 represents a 31% increase above the 2007 new fleet average of 26.7 mpg. NHTSA is front-end loading the fuel economy increases—achieving the 31.6 mpg combined average represents about 60% of the total increase from current levels pushed into the first half of the plan.

The new proposal sets a required level of corporate average fuel economy (CAFE) for each vehicle manufacturer based on target levels of average fuel economy set for vehicles of different sizes and on the distribution of that manufacturer’s vehicles among those sizes. Size would be defined by vehicle footprint.

The target for each footprint would be the same for all manufacturers, regardless of differences in their overall fleet mix. Compliance would be determined by comparing a manufacturer’s harmonically averaged fleet fuel economy levels in a model year with a required fuel economy level calculated using the manufacturer’s actual production levels and the targets for each footprint of the vehicles that it produces.

To develop the targets, NHTSA used a computer model (the “Volpe Model”) that, for any given model year, applies technologies to a manufacturer’s fleet until the manufacturer reaches compliance with the standard under consideration. The process recognizes that the relevance of costs in achieving benefits, and uses benefit figures that include the value of reducing the negative externalities (economic and environmental) from producing and consuming fuel. These environmental externalities include, among other things, reducing tailpipe emissions of CO2. In view of the process used to develop the proposed standards, they are also referred to as “optimized standards.”

Compared to the 2006 rulemaking that established the MY 2008-11 CAFE standards for light trucks, this rulemaking much more fully captures the value of the costs and benefits of setting CAFE standards. This is important because assumptions regarding gasoline price projections, along with assumptions for externalities, are based on changed economic and environmental and energy security conditions and play a big role in the agency’s balancing of the statutory considerations in arriving at a determination of maximum feasible.

In light of EISA and the need to balance the statutory considerations in a way that reflects the current need of the nation to conserve energy, including the current assessment of the climate change problem, the agency revisited the various assumptions used in the Volpe Model to determine the level of the standards. Specifically, in running the Volpe Model and stopping at a point where marginal costs equaled marginal benefits or where net benefits to society are maximized, the agency used higher gasoline prices and higher estimates for energy security values ($0.29 per gallon instead of$0.09 per gallon). The agency also monetized carbon dioxide (at $7.00/ton), which it did not do in the previous rulemaking, and expanded its technology list. NHTSA cannot specify the exact level of CAFE that each manufacturer will be required to meet for each model year under the proposed passenger car or light truck standards since the levels will depend on information that will not be available until final actual production figures are available the end of each of the model years. The agency can, however, project what the industry wide level of average fuel economy would be for passenger cars and for light trucks if each manufacturer produced its expected mix of automobiles and just met its obligations under the proposed “optimized” standards for each model year. Adjacent to each average fuel economy figure is the estimated associated level of tailpipe emissions of CO2 that would be achieved. NHTSA Proposed Average Optimized Fuel Economy Targets, MY 2011-2015 (CO2 rates based on gasoline characteristics) MY Cars Trucks Combined mpg gCO2/mi mpg gCO2/mi mpg gCO2/mi 2011 31.2 285 25.0 355 27.8 320 2012 32.8 271 26.4 337 29.2 304 2013 34.0 261 27.8 320 30.5 291 2014 34.8 255 28.2 315 31.0 287 2015 35.7 249 28.6 310 31.6 281 EISA also requires that each manufacturer’s domestic passenger fleet each model year achieve 27.5 mpg or 92 percent of the CAFE of the industry-wide combined fleet of domestic and non-domestic passenger cars for that model year, whichever is higher. This requirement results in the an alternative minimum standard (not attribute-based) for domestic passenger cars of 32.9 mpg by 2015. NHTSA also issued, along with the proposed rule, a notice requesting updated product plan information and other data from automakers to assist in developing a final rule. The agency estimates that the proposed standards would save approximately 18.7 billion gallons of fuel and avoid tailpipe CO2 emissions by 178 billion metric tons over the lifetime of the passenger cars sold during those model years; would save approximately 36 billion gallons of fuel and prevent the tailpipe emission of 343 million metric tons of CO2 over the lifetime of the light trucks sold during those model years; and deliver a total benefit of$88 billion over the lifetime of the vehicles, compared to what would occur if the standards remained at the adjusted baseline (i.e., the higher of manufacturer’s plans and the manufacturer’s required level of average fuel economy for MY 2010).

The agency estimates that compliance will cost the automakers approximately $16 billion for passenger cars and approximately$31 billion for light trucks, for a combined $47 billion. Resources ### Comments My worries about these fuel economy demands are twofold: One, if we demand greater fuel economy without also squeezing the automakers on safety, we will see more people killed or injured in traffic accidents. And if we do squeeze automakers harder and harder on both fuel economy and safety, we are likely to end up with cars that can only sustain 40 miles per hour or so. 2008 marks the 100th anniversary of the introduction of the Ford Model T. Said car had a top speed of ~45 miles per hour. So we may be coming full circle, if you know what I mean. Alex: You can't reduce traffic fatalities to zero. At some point you reach diminishing returns. We need to decide where to put our priorities. At this point we have lots and lots of safety equipment that we can shift focus to fuel efficiency without losing much safety. And again this reasoning that more weight means more safety is a fraud organized by the big 3 to promote their truck not based on facts. Think of formula 1, they crash at 200MPH in cars that weight 1000pounds with no major injuries. More weight means more energy to dissipate in a crash then more impact. We might need to switch to new material like composite or Aluminum. Also active (radar or vision) system that can detect iminent collision can improve safety a lot with no weigth penalty. ==we will see more people killed or injured in traffic accidents.== Bigger vehicles always cause injury to the person in the Smaller vehicle. If you drive a Hummer-H3 and collide with a Hummer-H2, you are sure to suffer more injuries. So bigger is not safer. Anyway, whether Government set 30 MPG or 40 MPG, its ultimately the Gas Prices and Disposable Income that is going to decide what vehicle a person is going to buy. Of late, sales of Big SUV's, Pickups, Minivans have taken a drastic hit, down 17 % in March. In April it will be even lesser since gas prices have gone past$ 3.5 / gallon mark and Oil prices are racing towards $120 / barrel mark. Alex, I don't see a link between fuel efficiency and safety. How do you figure that more fuel efficient vehicles are less safe? Besides, the current CAFE standards are STILL WEAK. How about 40MPG by 2011? Gerald: It takes more than three years to develop that kind of technology and deploy it across an entire vehicle line. If you really want that kind of MPG, go buy a Prius. But you have to balance desired efficiency gains with the ability for auto companies to meet them at a reasonable cost. You don't want said advances to push vehicle prices so high that people can't afford them. Some of the traffic related fatalities are due to bicycle-vehicle crashes and pedestrian-vehicle crashes. Changes in fuel economy or safety equipment is unlikely to have much impact on these deaths. Overall, the standards look reasonably achievable and a step in the right direction. If it just based on Fuel Efficiency in terms of MPG, then all they need to do is start putting more Diesel Engines in thier cars and trucks and they will be at these numbers in no time. If GM Dropped a small 6 Cyl. Diesel in their 1/2 ton pickups and SUVs, along with some very mild hybrid technology, then 28 MPG is very obtainable. If you need a real world example - take a look at a 2005 Dodge Sprinter full size van - Real world testing is showing 22 to 27 MPG on that unit. As far as cars go, VW has been getting above 35MPG with the 1.9L TDI in the Jetta, Golf and Passat since about 1997 (10 years) and it was an "old" design when they brough it to the USA. Fairly soon VW will likely bring 60+ mpg Diesel hybrids Stateside - Just watch them. It used to take 5 years to develop a new model, they got it down to 4 and some 3 years now. You can say that they should have been working on it the last 7 years, but when you have high margin trucks and SUVs rolling off the lots most of those years...why worry? WaltD: So, what diesels out there are Tier 2 bin 5/Lev II compliant that aren't being put in a BMW or Mercedes? Note that there are no VW diesels on sale this year for that reason. We've basically put ourselves completely out of the diesel passenger car game on the low end because we've decided cleaner air is more important. Ergo, we're left with hybrids. Forget GM. The REAL issue is how companies short on R&D Cash like Ford and Chrysler can meet this. With the spread in diesel prices over gasoline opening up, companies like Ford and Chrysler cannot rely on diesel to make up a larger fraction of sales, and therefore it will be hard for them to meet the standard. I bet this will put Chrysler under, and might well kill off Ford, because their ECOBoost proposal will not get them enough of an MPG boost alone and they lack the cash to really do much else.Forget GM. The REAL issue is how companies short on R&D Cash like Ford and Chrysler can meet this. With the spread in diesel prices over gasoline opening up, companies like Ford and Chrysler cannot rely on diesel to make up a larger fraction of sales--as there will be no economic incentive to buy them--and therefore it will be hard for them to meet the standard. I bet this will put Chrysler under, and might well kill off Ford, because their ECOBoost proposal will not get them enough of an MPG boost alone and they lack the cash to really do much else. We don't need any new technology to get better MPG. Small sedans such as the Honda Civic were getting 40+ mpg in the early eighties. My old 1960 vintage Citroen DSs would routinely get 35+ mpg on the highway. My current car - a gas Citroen CX wagon gets 27+ on the highway and I've been told by CX diesel owners they get 38-40mpg on the highway. This is all old tech and it can be done NOW. Why don't they sell diesels in places like Montana and Nebraska ? I can understand why you might not want LA and NY going diesel, but places like Montana and Nebraska are "underpolluted" and sparsely populated and could take Euro 5 diesel cars. Also the distances are greater. Alternately, if people could be persuaded to give a little on performance, you could achieve the targets with less pain. Or just wait and see what a few years of$120 oil will do.

Ford may do well with a DI turbo I4 hybrid Fusion in the next few years. If they can match or beat Camry and Altima hybrids at performance, mileage, comfort and price, they could have a winner.

Rich:

The problem is that you can't point to a single car and say 'see they can make a high MPG car' The issue is increasing the overall FLEET average. That means making bigger cars (IE minivans, larger sedans, weagons, etc) get a nice MPG boost too. The likehood that you can do that in such short a period of time w/o having to spend a lot on R&D is unlikely.

Rich:

None of that old tech had to contend with modern emissions and safety standards. If that emissions equipment was removed, we would have some big improvments in efficiency. But you couldn't breathe the air.

And I again note that T2B5/Lev II regulations prevent European diesels from being brought here. They can't meet our clean air standards.

1) Ford is actually well-positioned to make it to the 31.5 mpg CAFE standard, thanks to the new Fiesta model and likely working with companies like Cummins to develop US-legal versions of their Duratorq turbodiesel engines. It should be noted that Ford might consider selling the second-generation Ford Ka (which will be unveiled later this year) in the USA in order to meet the new standard, too.

2) Note that with the upcoming Euro 6 emission standard for turbodiesel engines, diesel engines for European cars will probably end up meeting the Tier 2 Bin 5 standard anyway, since Euro 6 requires substantial cuts in particulate and NOx emissions compared to the current standard.

VW will have Tier 2 bin 5/ Level II Complaint cars out by fall of this year. You'll be able to test drive in June/July.

Some of this was the fault of the US Government waiting until last fall to bring bring USLD (15ppm Diesel) to the public. (in other words they waited until the last possible moment). VW is waiting for the ULSD rollout to be more complete before bring cars here that would have emissions system waranty problems from higher sulfer diesel.

As far as the spred between Gas and Diesel prices being so large, I feel part of it is profit taking on the part of the oil companies, but not to worry, I think $4.20 is the breakpoint where biodiesel production will explode. I think the BioDiesel producers can cause enough price pressure on the Oil Companies to stabilize the pump price of Petroleum based diesel. I predict... If biodiesel sells for more than$4 a gallon, you'll see a lot of otherwise unusable soil growing rapeseed crops (mustard seed, canola, etc) for fuel.

I predict BioDiesel production will go through the roof in the next year.

If we want to reduce traffic accidents and fatalities, we neet to spend more time on prevention.

Driver training needs to be a lot more complete and intensive. We need to quit giving out a "license to drive" to people who aren't qualified.

It is a matter of public safety - For example, many states are now limiting teen driving to daylight hours and limiting who can ride in the vehicle with them for the first year or two of thier license. I think we need to go a lot farther -

How about taking your license away for 90 Days if you are caught drinking and driving - mandatory. How about taking your license away for 30 days if you get a wreckless driving ticket?

Walt,

I think most states already have license suspension for 90 days for the first DUI offense. My favorite initiative which was done in El Paso, TX was that the city paid for ALL cab fares on New Year's Eve! It was only one day, but I am willing to be it made a difference in many cases.

Raymond,

When is Euro6 compliance going into effect on European vehicles? Really the blame on ULSD should be on refiners not the government. The government gave a drop dead date for fall 2007 but the coming regulations were well known by ALL refiners well in advance. The US Govt simply set a date they believed would cause the least financial impact. If refiners thought they could make more profit by having ULSD earlier to get Tier2Bin5 diesels from European manufacturers in the US sooner; they could have made those changes on their own.

Looking at this article again, doesn't 35.7 mpg by 2015 pretty closely match what California wanted for CO2 regs by that date? I still think the point is moot, given the reality of constrained oil supplies and a "wild bull" market for oil right now.

I can understand why you might not want LA and NY going diesel, but places like Montana and Nebraska are "underpolluted" and sparsely populated and could take Euro 5 diesel cars. -- mahonj

It may be counterintuitive, but if your main issues are ozone and PM, diesels will be a bigger problem than gassers in Montana and Nebraska and less in LA and NY: LA and NY are largely VOC limited whereas Montana and Nebraska are by and large NOx limited.

Technically ULSD rollout doesn't have to be complete until 2010 so it is little wonder that diesel exhaust treatment has been slow to make inroads -- that and the jump from essentially unregulated to T2B5 was quite sudden. That said, I haven't seen the old LSD diesel in nearly a year.

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