ICCT: incremental technology can cut vehicle CO2 by half and increase fuel economy >60% through 2030 with ~5% increase in price

22 March 2017

With the EPA re-opening its Mid-Term Review of GHG standards for 2022-2025 for light-duty vehicles (earlier post), and with NHTSA yet to weigh in on its Mid-Term evaluation of fuel economy standards for the same period, a team from the International Council on Clean Transportation (ICCT) has published a report analyzing emerging vehicle efficiency technologies; their ability to achieve lower emission levels; and their costs in the 2025–2030 timeframe.

Starting from a baseline 26 mpg (9.04 l/100 km) in 2016, the The ICCT team assessed increased consumer label fuel economy (as opposed to the regulatory test fuel economy) to 35 mpg (6.71 l/100 km) in 2025 and to 42–46 mpg (5.6-5.11 l/100 km) (under three scenarios) by 2030. These fuel economy levels are achieved based on a sustained 4%–6% annual reduction of fuel use per mile with incremental technology additions that do not compromise vehicle size or utility at an incremental cost of $800–$1,300 from 2025 to 2030. The resulting trajectory would reduce CO2 emissions by half and increase fuel economy by more than 60% from 2016 through 2030. Based on a detailed analysis of the efficiency technologies used to achieve these lower CO2 emission levels, the ICCT study concludes that vehicle prices would increase by about 5% by 2030.

 Vehicle price increases from using increased vehicle efficiency technology to achieve lower CO2 emission levels. Source: The ICCT. Click to enlarge.

Our research casts fresh doubt on automakers’ claims that the standards are too difficult and costly to meet. And we find that technology and cost trends make setting even more stringent targets out to 2030 not only feasible but desirable, because they would produce fuel cost savings to consumers two or even three times the technology costs per vehicle.

—Nic Lutsey, ICCT program director and the lead author of the paper

ICCT’s paper builds on the modeling and peer-reviewed research underlying the Technical Assessment Report produced by the EPA and the National Highway Traffic Safety Administration (NHTSA) as part of a midterm review of the fuel-economy regulation. It incorporates subsequent industry research and new modeling of advanced vehicle technologies. On that expanded evidence base, it updates the EPA’s and NHTSA’s technology and cost assessments for 2025, and projects those cost and innovation trends out to 2030.

Among the high-level findings of the report:

• Conventional vehicles could dominate in the near term. The analysis indicates 8%–10% greater efficiency improvement is available and cost effective for vehicles by 2025, compared to the latest US regulatory analysis. Continually improving technologies such as cylinder deactivation, high compression Atkinson cycle engines, lightweighting, and 48V mild hybridization will allow internal combustion to dominate automakers’ strategies to comply with adopted 2025 standards.

• Previous costs of compliance have been greatly overestimated. Engineering studies and emerging supplier technology developments indicate that costs for lightweighting, direct injection, and cooled exhaust gas recirculation will be reduced by hundreds of dollars, and electric vehicle costs will drop by thousands of dollars per vehicle by 2025. Including these latest efficiency developments, compliance costs for the adopted 2025 standards will be 34%–40% lower than projected in the latest US midterm evaluation regulatory analysis.

 Lowest cost efficiency technology progression for CO2 reduction in model year 2025 for passenger cars and crossover vehicles. Source: The ICCT. Click to enlarge.
• Progress can continue at the same rate out to 2030. Standards that get progressively more stringent, at 4%–6% lower fuel use per mile annually from 2025 to 2030, can be achieved cost-effectively. Such standards would result in modest, gradual vehicle price increases through 2030, and with two to three times greater consumer fuel savings than costs. Such 2030 standards could be achieved mostly with advanced combustion technology, while also initiating the wider launch of plug-in electric vehicles to 13%–23% of the new vehicle fleet. Such standards would shift the new vehicle fleet from 26 miles per gallon in 2016 up to 42–46 miles per gallon by 2030.

This analysis affirms just how reasonable the 2025 standards are. The bottom line for consumers is that this technology literally pays for itself—with thousands of dollars of fuel savings per vehicle, even if gas prices stay low. Incrementally pushing the standards further through 2030 is eminently feasible from a technology and manufacturing cost point of view. If the US wants to be a global leader, and remain a stable market for vehicle technology investments here, they will stick with the standards. Our research certainly shows what is possible if we stick with a steady progression toward more advanced fuel-efficiency technologies.

—Nic Lutsey

Advanced engines. The ICCT team found that numerous engine technology developments allow for greater efficiency at a lower cost than indicated in US EPA’s proposed determination analysis for 2025. Some specific examples include:

• EPA estimated direct manufacturing costs for direct injection technology at $196–$356 per vehicle, ranging from inline 3-cylinder to V8 engines. Based on updated engineering teardown analysis by FEV, ICCT reduced these costs to $91–$185.

• EPA estimated the associated costs of cooled exhaust gas recirculation at approximately $216 per vehicle. Again based on FEV analysis, ICCT reduced the costs to$95 for inline engines and $114 for V con guration engines. • EPA found cylinder deactivation CO2 benefits of 3.5%–5.8% across vehicle types, at a cost of$75–$149 for various engine sizes. ICCT noted that in the 2025 and beyond time frame, dynamic cylinder deactivation—which EPA did not consider—will be deployable with greater ability to control each cylinder with variable valve lift, allowing a 6.5%–8.3% benefit at a$54–$107 increase in cost over the agency cost estimate. • EPA analysis suggested that high compression ratio Atkinson cycle engines would have a 3%-8% (6% across class average) CO2 reduction benefit; however recent analysis suggests the benefit is likely to be 10%-15%. The ICCT thus applied a 10%–14% (12.5% across class average) CO2 reduction benefit to this technology at the same cost. • Electrically boosted turbocharging—not considered by EPA—can increase turbocharging benefits by 5% at an additional cost of$338.

• EPA pegged the CO2 reduction benefits of mild hybrid vehicles from 7.0-9.5%; the ICCT analysis suggested a 12.5% reduction for passenger cars and 9.1% for SUVs.

Lightweighting. According to the ICCT, the US agencies tend to underestimate the extent to which lightweighting technology is available and could penetrate the fleet.

Electric vehicles. While the ICCT used EPA EV costs structure, the organization reduced several component costs. For example, EPA used a battery pack cost of $180 to$200/kWh; the ICCT leaned on other analysis that suggested a $140/kWh cost in that timeframe. In the analysis the ICCT used$140/kWh for BEV battery cost and \$200/kWh for 40-mile range PHEVs for 2025.

 Battery electric vehicle cost in 2025 for low, mid, and high electric range vehicles based on US EPA and ICCT data. Source: ICCT. Click to enlarge.

In addition, the ICCT used a 2% improvement per year in kWh/mile efficiency over 10 years to yield 18% more efficient electric vehicles—reducing costs further.

In its analysis, the ICCT used 100-, 125- and 200-mile BEV electric ranges rather than the 75-, 100- and 200-mile ranges used by EPA.

The ICCT also made several changes in nonbattery pack assumptions, such as the cost of charging equipment.

The International Council on Clean Transportation is an independent nonprofit research organization, staffed by experts in light-duty and heavy-duty vehicles, transportation fuels, shipping, aviation, climate science, and health. It is funded primarily by foundations, with additional support from government contracts and international bodies. Major support comes from the ClimateWorks Foundation, the William and Flora Hewlett Foundation, the David & Lucile Packard Foundation, the European Climate Foundation, the Energy Foundation, and the Climate and Clean Air Coalition to Reduce Short-Lived Climate Pollutants.

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