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Obama Announces New National Fuel Policy; Two Harmonized Standards, with Fleet Average of 35.5 mpg, 250 gCO2/mile by 2016

US President Barack Obama today announced a new harmonized national policy intended to reduce fuel consumption and greenhouse gas (GHG) emissions for all new cars and trucks sold in the US. The resulting new standards will cover model years 2012-2016, and will require an average fuel economy standard of 35.5 mpg in 2016 (39 mpg for cars, 30 mpg for trucks), or approximately 250 grams CO2/mile. The CAFE program established by the EISA 2007 legislation specified a minimum 35 mpg in 2020.

However, there will not be an exact one-to-one correspondence between the two standards—GHG and fuel economy—which will be the foundation of the national program.

The Environmental Protection Agency(EPA) and the Department of Transportation, through are jointly developing the proposed rulemaking. EPA is proposing GHG emissions standards under the Clean Air Act (CAA), and NHTSA is proposing Corporate Average Fuel Economy (CAFE) standards under EPCA, as amended by the Energy Independence and Security Act of 2007 (EISA). The two issued a Notice of Upcoming Joint Rulemaking to Establish Vehicle GHG Emissions and CAFE Standards today.

If proposed and finalized, the new standards would apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles. These vehicle categories are responsible for almost 60% of all US transportation-related greenhouse gas emissions.

If ultimately adopted, these standards would represent a harmonized and consistent national policy pursuant to the separate statutory frameworks under which EPA and DOT operate.

—Notice of Upcoming Joint Rulemaking

In addition to the EPA and DOT, California—and states adopting California emissions standards—represent a third policy interest in the area. Under the scope the new proposal, according to a senior Obama administration official in a backgrounder on Monday night, if the EPA does grant the waiver allowing California to implement the Pavley greenhouse gas standards for vehicles, the state has agreed to defer to the proposed national standard through model year 2016.

The 2016 endpoint of the two standards—Pavley I and the new national standard—are essentially the same, although the national standard is using an attribute-based approach (consistent with the new CAFE), while California’s standard used the older approach of vehicle type. The national program ramps up slightly more slowly than the California program envisioned, but does get to the same fleet average endpoint.

The national program also results in a greater total amount of greenhouse gas reductions than what a California program would have delivered, even with the 14 states who they said they would join the California program, according to the official.

Automakers and the UAW embraced the national program because it provides certainty and predictability to 2016 and includes flexibilities that will significantly reduce the cost of compliance. The collaboration of federal agencies also allows for clearer rules for all automakers, instead of three standards (DOT, EPA and a state standard).

With respect to technological feasibility, during MYs 2012-2016 manufacturers are expected to go through the normal automotive business cycle of redesigning and upgrading their light-duty vehicle products (and in some cases introducing entirely new vehicles not on the market today). The proposal under consideration is expected to allow manufacturers the time needed to incorporate technology to achieve GHG reductions and improve fuel economy during the vehicle redesign process This is an important aspect of the proposal under consideration, as it would avoid the much higher costs that would occur if manufacturers needed to add or change technology at times other than these scheduled redesigns. This time period would also provide manufacturers the opportunity to plan for compliance using a multi-year time frame, again in accord with normal business practice.

—Notice of Upcoming Joint Rulemaking

Key Elements of the National Program:

  • EPA and NHTSA will propose two separate sets of standards, each under their respective statutory authorities. EPA expects to propose a national CO2 vehicle emissions standard under section 202 (a) of the Clean Air Act. EPA currently is considering proposing standards that would, if made final, achieve on average 250 grams/mile of CO2 in model year 2016. The standards for earlier years would begin with the 2012 model year, with a generally linear phase-in from MY 2012 through to model year 2016.

  • NHTSA expects to propose appropriate related CAFE standards. The proposal under consideration would also include a harmonized CAFE standard for MY 2016. Compatible GHG and CAFE standards for earlier model years would increase from the MY 2011 CAFE standard to the MY 2016 level of the National Program.

  • There will be some important differences in the development of the proposals. For example, under a GHG standard, EPA would expect manufacturers to take advantage of the option to generate credits by reducing emissions of HFCs and CO2 through upgrades to their air conditioner systems. EPA plans to take these reductions into account in developing a proposed GHG standard. However, EPCA does not permit NHTSA to consider air conditioning credits in developing a proposed CAFE standard for passenger cars. As a result, improvements in the efficiency of passenger car air conditioners would not be considered as a possible control technology for purposes of CAFE.

  • In addition EPA would take into consideration all of the compliance flexibilities discussed below, such as averaging, banking, and trading of credits, while NHTSA is prohibited by statute from taking such flexibilities into account.

  • As a result of those and other factors, As a result, the agencies do not anticipate a one-to-one correspondence between the level of EPA’s proposed GHG standards and NHTSA’s proposed CAFE standards. Instead the CAFE standards under consideration for proposal would be somewhat lower than the mile per gallon equivalent of the corresponding GHG standard. This reflects both the specific differences in standard setting criteria, as well as the general attempt by each agency to harmonize its proposed standards in a way that allows them to achieve their respective statutory and regulatory goals.

Form of the standards:

  • Both EPA and NHTSA currently intend to propose attribute-based standards for passenger cars and light-trucks. The agencies currently intend to propose vehicle footprint as the attribute for the GHG and CAFE standards, with footprint defined as a vehicle’s wheelbase multiplied by its track width.

  • Under a footprint-based standard, each manufacturer would have a GHG and CAFE standard unique to its fleet, with a separate standard for passenger cars and light-trucks, depending on the footprints of the vehicle models produced by that manufacturer. Generally, manufacturers of larger vehicles (i.e. vehicles with larger footprints) would face less stringent standards (i.e., higher CO2 grams/mile standards and lower CAFE standards) than manufacturers of smaller vehicles.

  • While a manufacturer’s fleet average standard could be estimated throughout the model year based on projected sales volume of its vehicle fleet, the standard of compliance would be based on the final model year sales figures. A manufacturer’s calculation of fleet average emissions at the end of the model year would be based on the sales-weighted average emissions of each model in its fleet.

  • EPA and NHTSA currently intend to propose separate footprint-based standards, or curves, for passenger cars and light-trucks. In designing the footprint-based standards, EPA and NHTSA intend to work together to build upon the footprint standard curves used in the CAFE rule for MY 2011,12 and to consider proposing changes to the shape of the curve based on, among other things, concerns about the steepness of the slope. EPA and NHTSA intend to consider, among other things, an approach that would generally flatten the passenger car curve, more in line with the shape of the truck curve for the MY 2011 CAFE standard.

Program flexibilities for achieving compliance:

  • CO2/CAFE Credits earned based on fleet average performance. Fleet average standards would be based on the applicable attribute-based curves. At the end of each model year, when sales of the model year are complete, a sales-weighted fleet average would be calculated for each averaging set (cars and trucks). Under this approach, a manufacturer’s car and/or truck fleet that achieves a fleet average CO2/CAFE level better than the standard would earn credits. Conversely, if the fleet average CO2/CAFE level does not meet the standard the fleet would generate debits (also referred to as a deficit or negative credits).

  • Air conditioning credits. EPA is considering an approach that would enable manufacturers to earn credits by reducing GHG emissions related to air conditioning systems.

  • Flex-fuel and alternative fuel vehicle credits. EPCA authorizes an incentive under the CAFE program for production of dual-fueled or flexible-fuel vehicles (FFV) and dedicated alternative fuel vehicles. For the GHG program, EPA contemplates proposing to allow FFV credits in line with EISA limits only during the period from MYs 2012 to 2015. EPA will also consider allowing FFV credits beyond MY 2015 if manufacturers are able to demonstrate that the alternative fuel is actually being used in the vehicles. EPA is also considering how that demonstration could be made.

  • Temporary lead-time allowance alternative standards. EPA is considering a temporary lead-time allowance for manufacturers whose sale of vehicles in the US in a specified time period is below a specified cut-off, such as sales of 400,000 vehicles or less during a specified year, such as MY 2009 or 2010. EPA is considering a less stringent GHG standard that would be 125% of the vehicle’s otherwise applicable foot-print target level. EPA envisions that this allowance would be available only during the MY 2012-2015 phase-in years of the program.

  • Additional potential credit opportunities. EPA is considering opportunities for early credits in MYs 2009-2011 through over-compliance with a baseline standard that EPA is considering. The baseline would be set to be equivalent, on a national level, to the California standards.

    EPA is currently considering proposing additional credit opportunities to encourage the commercialization of advanced GHG/fuel economy control technology such as electric vehicles and plug-in hybrid electric vehicles. These “super credits” could take the form of a multiplier that would be applied to the number of vehicles sold such that they would count as more than one vehicle in the manufacturer’s fleet average. EPA is also considering allowing such credits to be generated for years prior to MY 2012.

    EPA is also considering an option for generation of credits for employing technologies that achieve GHG reductions that are not reflected on current test procedures. Examples of technologies that EPA could consider include technologies such as solar panels on hybrids, adaptive cruise control, and active aerodynamics, among other things.

Resources

Comments

jimfromthefoothills

toppatom, blaming the worker's union for the manufacturers problems is nonsense. Go to you local community college and take a business course. I know that Rush blames the unions but think about it... do unions design products? The problem with our economy is not that union workers make too much money. This is easy for Rush Limbaugh and Goldman Sachs executives to say but it is not true.

Remember, we have had this discussion before. It takes less than 20 man hours to build a car. Less than $1,000. Actually, less than $500 goes to labour (and don't start repeating lies about retiree health benefits, this is the marginal cost of labour).

If you seriously think that the US can afford to lose the largest industrial component of the economy and replace it with VCR (hello 1980) and the TV (hello 1950) production then forget community college it is to advanced.

Zhukova

If you're stopped at a left-turn light (in USA) and a metro bus collides with you from the rear at 40 mph, would you rather be in a Mini Cooper or an Escalade? The mini cooper will experience more crushing damage and higher acceleration because of it's lower mass. It will be propelled farther into the intersection and maybe into the opposite lanes, crashing again into larger vehicles like a big truck or another bus. Size matters because it's about physics and this is true for a collision in any situation.

Large delivery and construction trucks, passenger buses, and gasoline tankers will not get smaller. They also contribute a much higher proportion of collision fatalities than passenger cars. The following articles show, based on congressional hearings on CAFE and statistical data from insurance company, whose interest in safety is absolute, that large cars are in safer for the reasons I described.

http://cei.org/pdf/2353.pdf
http://online.wsj.com/article/SB121095568704998989.html?mod=rss_Eyes_on_the_Road

Another issue is that large cars have longer stopping distance. Physics doesn't support this myth. Large cheap cars and small cheap cars have long stopping distances, presumably because their brakes are also cheap. Finally, because of physics, large cars have a smoother ride than small cars.

I have a 3,900 lb 1994 Mercury Cougar with a V8 that gives good low-end torque (I hope to electrify soon). I feel much safer in it than when I go in my friends Mini Cooper. I use mass transit and drive it only 10 miles a day. Nevertheless, global warming, water-shortage, ocean acidification, deforestation, wildlife mass extinction, and other global problems are caused because the world and USA is overpopulated with people, not because we drive big cars.

SJC

The Ford Fusion hybrid already gets more than 35 mpg combined. If they do a Chevy Malibu dual mode, it could too. Cars may not be smaller, but lighter. Designers can create light cars that have good crash ratings. Maybe if we get some of the 5000+ pound SUVs off the road the next 7 years, they will not be such a hazard to the drivers of the lighter more efficient cars.

wintermane2000

Jim you have to know the cost for making cars in the us is alot more then 1000 bucks labor wise. Thats why even under democrats the car makers had to drasticaly reduce thier LABOR costs to prove viability. Its also why they as of yet cant do so.

It was a combo of too powerful unions and a congress completely dependant on votes and MONEY from that union and many others that caused the entire debacle.

And like it or not gm elsewhere sells exactly the kinds of cars you wish they sold here and has tried to sell many of them here but costs and american car driving habbits get in the way. Far too many young car drivers drive ONLY foreign cars and its mostly the young who can fit into smaller cars.

Treehugger

Alex

It is true that this new regulation that requires to double the roof strength is just ridiculous (that is still struggling to pass because it obliges to increase the weight of the roof so making the car more prone to tip over) but designing cars low enough (like honda) light enough (like the Mazda 2) will not only prevent roll over risk but also will require less strength from the roof to prevent crushing the passengers. Again our civilisation don't need elevated truck that weight 2.5 tones to carry a family of 4 person with their luggages : problem solved

jimfromthefoothills

Winter you are incorrect in blaming unions for lousy automobiles. Germany and France's workers make more money, have higher security and more power than US workers, yet their auto companies are not going bust (yet). While we can design cars that need minimal human touching, somebody will always be needed to fasten something on a car.

The reports about $100 per hour workers or $2,500 of labour per car reflect retiree benefits that the company owes whether it makes another car or not. The MARGINAL cost of labour per US car is between $500 to $1,000.

The worker haters are going to have their wishes come true. Private sector workers who were promised pensions and retiree health benefits are about to get screwed.

Winter, do you really think that the unions were too powerful? It looks to me that they were not powerful enough to protect their rank and file. In fact some would say they sold out the rank and file.

jimfromthefoothills

Hey Winter, sorry i just reread your post. Congress and the unions are to blame for GM and Chrysler going bankrupt? How exactly is our democracy to blame?

if only GW Bush had abolished congress and unions we would all be ok... is this your point?

SJC

Gee, it sounds like we will all be driving 45 mph cars that are too heavy because of roof strength regulations. I will admit that I have seen government do some dumb stuff, but when it comes to highway safety, they are usually on the right track.

sulleny

Raising CAFE is a positive achievement. The reason to do it is NOT to mitigate CO2 and the sooner the wee wizards get this into their wee heads the better for everyone. Except, to acknowledge the truth about CO2 would kill the CapN Tirade tax revenue the Administration is banking their entire political career on.

According to an analysis by climatologist Chip Knappenberger utilizing the EPA funded MAGICC: Model for the Assessment of Greenhouse-gas Induced Climate Change, developed by Dr. Tom Wigley and scientists at the National Center for Atmospheric Research – IF the Waxman/Markey bill were implemented and achieved a 80% reduction in CO2 by 2050 – it would result in a “savings” of only 0.05C!

http://masterresource.org/?p=2355

“By the year 2050, the Waxman-Markey Climate Bill would result in a global temperature “savings” of about 0.05ºC regardless of the IPCC scenario used—this is equivalent to about 2 years’ worth of warming. By the year 2100, the emissions pathways become clearly distinguishable, and so to do the impacts of Waxman-Markey. Assuming the IPCC mid-range scenario (A1B) Waxman-Markey would result in a projected temperature rise of 2.847ºC, instead of 2.959ºC rise— a mere 0.112ºC temperature “savings.”

In other words, mitigating CO2 emissions even at the draconian levels currently demanded – will have a negligible effect on warming, if any.

ToppaTom

Jim - you seem to be struggling with a simple concept when you say “ Less than $1,000. Actually, less than $500 goes to labour “ then you say “The MARGINAL cost of labour per US car is between $500 to $1,000.”

Do you think the unions are a BENEFIT?
That GM just doesn't realize it?

Of course the unions $1000+ per car has been a huge factor in the death of the US auto industry.
Call it only $500 to $1000 for the unions if you want to pretend.
Either way it is value that will not be in the car. It might be missing quality or poor materials or fewer features – these do not come for free.

And it is due to the union contracts protected by the state labor laws and the democrats that want the union workers votes.
The unions were and still are too powerful and may not be smart enough to save themselves or they may be saved by government handouts.

The following data should be reasonably good - it is from 2005, before all the upheaval.

Number of Plants in North America
- - GM: 77, all unionized. - - Toyota: 9 non- union, 3 unionized.

Average Labor Cost per U.S. Hourly Worker
- - GM: $73.73 - - Toyota: $48

Production Time per Vehicle
- - GM: 34.3 hours. - - Toyota: 27.9 hours.
[Want new labor saving automation at QM? Good luck with that; It is probably illegal without UAW approval, and if not, it comes with a crippling strike ]

Health Care Costs per Vehicle in 2004
- - GM: $1,525 - - Toyota: $201

North American Workforce
- - GM: Production: 106,000. Retirees: 460,000
- - Toyota: Production: 21,000 Retirees: 1,600
Source
http://www.npr.org/news/specials/gmvstoyota/

RaymondC

If the Obama Administration supports selling turbodiesel vehicles that meet the CARB Super Ultra-Low Emissions Vehicle (essentially EPA Tier 2 Bin 3) standard, we could see by 2011 a LOT of new cars with these new ultra-clean diesel engines installed.

And it's not an impossible goal, either--Ricardo UK recently demonstrated a turbodiesel engine that already meets the EPA Tier 2 Bin 5 standard with only just a standard diesel exhaust catalytic converter. Improvements in converter technology--especially with the use of nanotechnology--could make this engine easily meet SULEV standards, essentially making diesel engines just as clean as a conventional hybrid electric vehicle! :-)

Ford should license this technology right now and put it in their Duratorq line of automotive turbodiesel engines. Imagine a Ford Fiesta with the 1.6-liter Duratorq TDCi engine with the Powershift dual-clutch transmission getting over 50 mpg according to the EPA 2008 fuel economy test.

Will S

Ziv wrote;

"CAFE mileage is calculated using the old cycle, and the current mileage numbers are calculated using the newer, stricter, faster driving speed, AC using, 2008 cycle. So add 15-20% to the EPA mileage for a 2009 car to get the CAFE mileage."

This is not how the NHTSA/EPA arrangement works; from their website;
http://www.nhtsa.dot.gov/portal/site/nhtsa/menuitem.d0b5a45b55bfbe582f57529cdba046a0/

First enacted by Congress in 1975, the purpose of CAFE is to reduce energy consumption by increasing the fuel economy of cars and light trucks. Regulating CAFE is the responsibility of NHTSA and the Environmental Protection Agency (EPA). NHTSA sets fuel economy standards for cars and light trucks sold in the U.S.; EPA calculates the average fuel economy for each manufacturer. This site contains an immense amount of information about the CAFE program, including a program overview, related rulemaking activities, research, fleet characteristics and summaries of manufacturers’ fuel economy performance since 1978.
feature arrow icon
http://www.nhtsa.dot.gov/nhtsa/Cfc_title49/ACTchap321-331.html
Automotive Fuel Economy: Title 49 U.S. Code, Chapter 329

Will S

I'm very pleased with this announcement, with one following exception;

"...manufacturers of larger vehicles (i.e. vehicles with larger footprints) would face less stringent standards (i.e., higher CO2 grams/mile standards and lower CAFE standards) than manufacturers of smaller vehicles."

So if a company wants to produce lots of SUVs, they get a free pass to do so? This doesn't make sense.

SJC

It makes no sense, because Bush came up with it. He wanted the good ol' boys in Texas to still be able to drive their gas guzzlin' pickups...that is true American freedom. It is like he said, "they hate us for our way of life"...well duh!

wintermane2000

Because sjc in order to get the average of ALL light duty vehicles up as high as they want they must chop the entire market into sections and set each one on a sliding scale.. because oddly enough we dont have dozens of exactly the same car companies selling exactly the same kinds of cars and the old method got bogged down because of it.

Account Deleted

I think the so called "New Program" that Mr. Obama announced on May 19 is the typical example of two seperate sets of the same requirement because there is a direct connection between fuel economy and carbon dioxide emissions.

Once the proposal is finalized, the auto industry will have to meet duplicative and overlapping regulations - both fuel economy standards(CAFE) and CO2 emissions standards.

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