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State and Federal Standards for Mobile-Source Emissions 6 Light-Duty-Vehicle Emissions Standards On-road light-duty vehicles (LDVs), such as cars, vans, pickup trucks, and sport utility vehicles (SUVs), have the longest history of mobile-source emissions regulation in the United States. Because of their numbers and activity, these vehicles have historically contributed the most to total mobile-source emissions. As discussed in earlier chapters, California’s low-emission-vehicle (LEV) program, introduced in 1990, was an important milestone that helped define today’s California and federal on-road emissions standards. The LEV program is the primary California mobile-source emissions standard adopted by other states. This case-study chapter presents an overview of the LEV program and compares the standard-setting practices of the California Resources Board (CARB) and the U.S. Environmental Protection Agency (EPA), including the practices used to develop the California LEV II and federal Tier 2 standards now in place. The chapter also discusses the practices used by other states in adopting California’s LEV emissions standards. THE LOW-EMISSION-VEHICLE PROGRAM The California legislature enacted the California Clean Air Act of 1988, which instructed CARB to “achieve the maximum degree of emission reduction possible from vehicular and other mobile sources” (Cal. Health & Safety Code § 43018(a)). In response to this new legislative mandate, CARB approved an ambitious new rule-making in 1990 to regulate vehicle emissions. The LEV program consisted of several regu-
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State and Federal Standards for Mobile-Source Emissions lations to reduce emissions substantially from light- and medium-duty vehicles beginning in model-year 1994. These regulations included stringent new exhaust emissions standards for nonmethane organic gas (NMOG), nitrogen oxides (NOx), carbon monoxide (CO), particulate matter (PM), and formaldehyde. Rather than requiring every vehicle to meet the same emission standard, the LEV program featured a fleet-based approach, which allows manufacturers the flexibility to meet new emissions standards averaged across their entire product line. This format of the standard, which reduces overall compliance costs, allowed manufacturers a longer development time for vehicles that are the most difficult to control. For LDVs, CARB defined a set of four categories of emissions standards and allowed each manufacturer to certify its vehicle models to any mix of the available standards, provided that the sales-weighted fleet of the manufacturer met the applicable average emission level for that model year. The four available emissions standards in order of increasing stringency were for the transitional low-emission vehicle (TLEV), low-emission vehicle (LEV), ultra-low-emission vehicle (ULEV), and zero-emission vehicle (ZEV). The fleet-average requirement was based on NMOG emissions, and this average became progressively more stringent each model year from 1994 through 2003 (see Table 6-1). A second feature of the LEV program is that it sought to regulate the vehicle and its fuel as an integrated system. CARB determined that the proposed regulations would encourage vehicle and fuel manufactures to work together to develop LEVs and clean fuels (CARB 1990). In addition to California’s ultra-clean reformulated gasoline, the slate of clean fuels a manufacturer could choose from included methanol, ethanol, liquified petroleum gas (LPG), and compressed natural gas (CNG). Under the regulations, vehicle manufacturers were required to notify CARB 2 years in advance if they intended to certify a LEV vehicle using such an alternative fuel (13 California Code of Regulations [CCR] § 2303). If vehicle manufacturers announced an intention to market a combined total of at least 20,000 vehicles operating on a given clean fuel, then CARB would mandate the availability of such a fuel at California service stations (CARB 1990). A third feature of the LEV program is that it included a mandate for ZEVs. CARB defined ZEVs as vehicles that have no exhaust or evaporative emissions of any regulated pollutant (CARB 1990). As initially adopted, this ZEV sales mandate required 2% of the passenger cars and light-duty trucks produced and delivered for sale in California by each
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State and Federal Standards for Mobile-Source Emissions TABLE 6-1 LEV Fleet Average NMOG Standard in Grams per Mile 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 PC, LDT, 0-3,750 lb 0.250 0.231 0.225 0.202 0.157 0.113 0.073 0.070 0.068 0.062 LDT, 3,751-5,750 lb 0.320 0.295 0.287 0.260 0.205 0.150 0.099 0.098 0.095 0.093 Abbreviations: PC, passenger car; LDT, light-duty truck. Source: CARB 1998a.
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State and Federal Standards for Mobile-Source Emissions large-volume1 manufacturer to be ZEVs in the 1998 model year. This requirement increased to 5% in 2001 and 10% in 2003. Although the ZEV mandate was technologically neutral in that it did not specify the technology required to meet the ZEV standard, CARB noted that, at the time, only battery-powered electric vehicles were candidates to be ZEVs. CARB also stated that other technologies (such as fuel cells) could be developed in the future to meet the standard (CARB 1990). The ZEV mandate was a notable departure of the LEV program from the flexibility of allowing manufacturers to choose how to comply with the NMOG fleet-average requirement. Nevertheless, CARB concluded that such a mandate was necessary because a “significant penetration of ZEVs is crucial to long-term attainment of the ambient standards in the South Coast, and there is no assurance that ZEVs will be developed without the limited, measured ZEV sales requirements in the regulations” (CARB 1991). An important aspect of a ZEV is the additional emissions benefits that are gained because there is no deterioration of emissions-control equipment over time. Although the primary objective of the ZEV mandate was to reduce vehicle emissions, CARB identified secondary benefits, including the investment by industry and communities in batteries and infrastructure for ZEVs (CARB 1991), the potential to “contribute to national and state energy diversity and security,” and the potential “to revitalize California’s economy through job creation and growth in an emerging industry” (CARB 1994a). (Although ZEVs have no emissions, electricity produced from fossil fuels to charge ZEVs results in air pollutant emissions, and these emissions, either inside or outside of California, affect air quality.) The LEV program included a credit program to give manufacturers additional flexibility to meet the standards. Manufacturers could earn NMOG fleet-average credits in any model year by achieving a sales-weighted fleet-average emissions level lower than the applicable fleet-average standard for that model year. The credits could be sold to other manufacturers or applied to help the manufacturer achieve compliance in future model years, although the credits are substantially discounted with time. A second credit program pertaining to the ZEV mandate allowed manufacturers to obtain credits for complying with the ZEV mandate 1 Generally, small-volume manufacturers in California sell fewer than 4,500 vehicles and engines per year, intermediate-volume manufacturers sell 4,501-60,000 per year, and large-volume manufacturers sell the remainder of the vehicles sold in California. See Title 13, California Code of Regulations, Section 1900 for exact definitions.
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State and Federal Standards for Mobile-Source Emissions early. Like the NMOG credits, ZEV credits could be banked internally for future use or sold to other manufacturers. CARB initially rejected suggestions that hybrid electric vehicles (HEVs) should be eligible for partial credits under the ZEV mandate (CARB 1991) but provided some additional NMOG credits for HEVs that achieved certain performance goals. A final feature of the California LEV program is its built-in process for periodic review of the program and revision, if necessary. Because of the far-reaching and long-term nature of the LEV program, CARB committed to a biennial review of its LEV program to monitor manufacturer compliance plans and to identify any problems with the feasibility of its demanding program. In response to this mandate, CARB has produced several reviews (CARB 1994b, 2000a,b). The Zero-Emission-Vehicle Mandate Although the overall LEV program was widely considered successful at reducing vehicle emissions and promoting advanced emissions-control technologies, the ZEV experiment has fallen short of its original expectations to promote the widespread use of electric vehicles. This requirement, which was premised on the availability of electric vehicles by model-year 1998, is an example of misjudgment by CARB that the required and expected ZEV technology would be feasible. CARB has revised its original ZEV mandate with four sets of successive revisions, resulting in a much diluted requirement today that no longer emphasizes electric vehicles and affecting CARB’s credibility in the program itself. General Motors invested an estimated $1 billion over several years to develop ZEVs, which now do not appear to be headed for widespread use in society (GM 2005). To put this number in context, General Motors spent approximately 6.5 billion on total research and development in 2004 (Hira and Goldstein 2005). The problems of the ZEV mandate are reflected in CARB’s shifting estimates on the feasibility and costs of using electric vehicles. CARB initially thought in 1990 that, by 2000, electric vehicles would be comparable in cost to conventional vehicles plus an estimated $1,350 per vehicle cost for the batteries (CARB 1990). In 1994, CARB increased its estimate of the incremental additional costs of an electric vehicle to $5,000-$10,000 more than a conventional gasoline-fueled vehicle (CARB 1994b). In its 2000 review of the ZEV mandate, CARB staff es-
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State and Federal Standards for Mobile-Source Emissions timated that the incremental cost of a freeway-capable ZEV would be approximately $20,000 more than a conventional vehicle (CARB 2000a). The biennial reviews of the LEV program that CARB promised in adopting the program have largely focused on the ZEV mandate from the second biennial review in 1994. In the 1994 review, vehicle manufacturers emphasized concerns about the feasibility of the ZEV mandate and requested that CARB relax the ZEV mandate to permit ZEV credits for such vehicles as HEVs with extremely low emissions (CARB 1994b). CARB concluded at the end of a 2-day public hearing on the subject that the ZEV mandate was an important part of the LEV program, and no revisions were necessary at that time. CARB also instructed the staff to reconsider the role of HEVs within the framework of the ZEV mandate. In preparation for the biennial review in 1996, CARB established an independent panel of experts to evaluate the readiness of electric vehicle battery technology to meet the ZEV mandate in the 1998 model year. The expert panel report concluded that even under “a complete success scenario,” with no delays or unforeseen obstacles, “electric vehicles with commercial-production advanced batteries could become available in 2000 or 2001” at the earliest (Kalhammer et al. 1995). The panel also found that lead-acid batteries limited electric vehicles using such batteries to a small “niche” market. Based on the basis of the expert panel’s recommendations, CARB voted to repeal the California ZEV mandate for model-years 1998 through 2002 to provide “time necessary for advanced technology battery developers to achieve commercialization” (CARB 1996). In 1996, CARB also negotiated separate memoranda of agreement (MOA) with each of the seven manufacturers initially subject to the ZEV mandate. The MOAs required the manufacturers to place over 1,800 advanced-battery electric vehicles into operation in demonstration programs in California between 1998 and 2000. Manufacturers were also required to offset the emissions benefits that would have been achieved by the ZEV mandate from 1998 through 2002 by agreeing to the nationwide introduction of LEVs several years before such vehicles could be mandated under the federal CAA (CAA). (This manufacturer obligation was implemented through the National Low Emission Vehicle [NLEV] Program described below in the section Influences of the LEV Program on National Mobile-Source Emissions Standards.) The MOAs also obligated CARB to work with state and local governments to help develop ZEV infrastructure and remove other barriers to ZEV implementation. Following the biennial review in 1998, CARB further relaxed the 2003 mandate in its LEV II rule-making (see below) by allowing ZEV
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State and Federal Standards for Mobile-Source Emissions credits to be earned by vehicles with near-zero emissions, referred to as partial ZEVs (PZEVs). Intermediate-volume manufacturers were permitted to meet their ZEV mandate requirements entirely with PZEV credits, and large-volume manufacturers were permitted to meet up to 60% of their ZEV mandate requirements with PZEV credits. A manufacturer could obtain from 0.2 to 1.0 ZEV credit for each PZEV sold, depending on the vehicle’s characteristics. In the 2000 biennial review, CARB again appointed an advisory panel of battery experts to evaluate the availability and cost of electric vehicle batteries. The expert panel concluded that advanced technology batteries with reasonable cost and performance characteristics would not be available in time to meet the 2003 mandate. The panel found that the most promising advanced battery was a nickel-metal hydride battery but that production of such batteries in quantities to meet the 2003 ZEV mandate would be $9,500 to $13,000 per battery, many thousands of dollars above the cost that could be commercially viable. Moreover, such batteries would produce a range of only 70-100 miles, which was below the expectations of most potential customers. The battery panel concurred with the manufacturers “that EVs with the battery costs and limitations anticipated for the foreseeable future will find only very limited markets, well below the numbers of vehicles called for by the ZEV regulatory provisions beginning in 2003” (Anderman et al. 2000). Moreover, as part of its analysis for the 2000 biennial review, CARB determined that the PZEV standard would be “extremely challenging” for many vehicles to meet and that most manufacturers would not be capable of complying with the ZEV mandate in 2003 by using PZEV credits (CARB 2000a). CARB also recognized that in the initial years of the ZEV mandate, manufacturers would not be able to recover the full cost of ZEV production by using only price. Unless the state and local air districts could provide the substantial funds that would be needed to subsidize these vehicles, manufacturers would have to either absorb the economic losses internally or pass on the costs to purchasers of other vehicles (CARB 2000a). Despite those findings, CARB voted unanimously at its September 2000 meeting to affirm the mandate as an essential component of California’s long-term air quality strategy and to retain the basic ZEV requirements (CARB 2000c). CARB nevertheless instructed staff to develop some regulatory fine-tuning to address the challenges associated with the successful long-term implementation of the ZEV program. A month later, CARB staff expressed concern that the biennial review process and resulting revisions to the ZEV mandate “has interfered with
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State and Federal Standards for Mobile-Source Emissions the orderly growth of the ZEV market, because of the uncertainty it introduces into planning and implementation activities on the part of manufacturers, government agencies, and other parties” (CARB 2000d).2 At its next meeting to review the ZEV mandate in January 2001, CARB further relaxed the ZEV mandate. The 2001 amendment allowed large-volume manufacturers to meet another 20% of their ZEV obligation with partial credits from advanced-technology vehicles known as AT-PZEVs. AT-PZEVs include gasoline HEVs that meet specific criteria. Several other refinements and additions to the ZEV credit structure were enacted in this same rule-making. In June 2002, a California federal judge issued a preliminary injunction against implementation of the ZEV mandate in a lawsuit brought by vehicle manufacturers and dealers. The lawsuit contended that the ZEV mandate as modified in 2001 was preempted by the federal fuel economy standards (Central Valley Chrysler-Plymouth, Inc., et al. v. Witherspoon, Case No. CIV F-02-05017 REC SMS [E.D. Cal.]). As part of a settlement of that litigation in April 2003, CARB amended the ZEV mandate to provide an Alternative Compliance Plan (ACP) option in which large-volume manufacturers could meet much of their ZEV requirement by producing their sales-weighted share of approximately 250 fuel-cell vehicles by 2008. The required number of fuel-cell vehicles would increase to 2,500 from 2009 to 2011, 25,000 from 2012 to 2014, and 50,000 from 2015 to 2017. CARB recognized that other states might adopt the California ZEV program and ACP under section 177 of the federal 1990 CAA and might require production of their own fuel-cell vehicles, which would require manufacturers to produce more fuel-cell vehicles (CARB 2004b). To address that problem, CARB allowed a fuel-cell vehicle placed in any state that had adopted the California ZEV program to count toward California’s ZEV requirement and conversely allowed any fuel-cell vehicle placed in California to count toward another state’s ZEV requirement. The start date for those requirements was delayed from 2003 to 2005. The 2003 amendments to the ZEV mandate are the most important yet, and they strongly signaled CARB’s recognition that electric vehicles are not a promising technology to achieve the zero-emission goal to which the agency still strongly adheres (CARB 2004b). As part of this 2 Public Workshop to Discuss Issues Related to the Zero Emission Vehicle Regulations: Agenda and Background Material, Oct. 16, 2000.
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State and Federal Standards for Mobile-Source Emissions rule-making, CARB undertook another evaluation of the feasibility of battery electric vehicles and concluded that “the cost and performance characteristics of advanced batteries have not meaningfully changed” since the 2000 battery panel report, and that “even at substantially increased production levels full function EVs would not be cost competitive with conventional vehicles, and that there does not appear to be a viable path that will result in commercialization for general markets.” (CARB 2004b). In contrast, “manufacturers appear to believe there is a business case for fuel cell development. Staff concurs that the technology shows great promise and fully expects fuel cell development to proceed to commercialization” (CARB 2004b). CARB estimated that vehicle manufacturers had already invested “several billion dollars to date in developing fuel cell technology and have publicly stated plans to continue heavy investment in the next decade” (CARB 2004b). CARB concluded that despite this effort, “fuel-cell ZEVs are clearly not ready for volume production” at this time (CARB 2004b). In the meantime, there have been “rapid advances” in HEVs and similar extremely clean vehicles certified according to the PZEV and AT-PZEV standards (CARB 2004b). “Under these circumstances, CARB has concluded that the best course of action is to take full advantage of the near-term possibilities afforded by PZEVs and AT-PZEVs, and adopt a stepwise approach toward pure ZEV commercialization that takes into account the desire of vehicle manufacturers to devote their entire ‘gold’ vehicle [pure ZEVs] focus to fuel cell ZEVs” (CARB 2004b). Despite the numerous revisions and delays in implementing the ZEV mandate, CARB claims that its ZEV mandate has been “instrumental in promoting battery, fuel cell, component and vehicle research and development” (CARB 2000b). A study commissioned by CARB found that the California ZEV mandate had produced important secondary benefits in such categories as new economic development in California, advanced vehicle development, vehicle emissions reductions outside of California, and nonelectric vehicle applications of advanced batteries (Burke et al. 2000). Similarly, the 2000 CARB battery panel (Anderman et al. 2000) found that the battery research motivated by the California ZEV mandate undoubtedly benefited the development of better batteries for use in HEVs. These batteries have much less stringent technical requirements than do totally electric vehicle batteries. Although the ZEV mandate has had some indirect beneficial impacts in motivating research into hybrid electric and fuel-cell vehicles, these benefits cannot obscure the fact that the ZEV mandate forced manufacturers to devote consider-
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State and Federal Standards for Mobile-Source Emissions able resources to develop electric vehicles, which appear at the present to be economically unviable. CARB’s chairman was quoted in the press, “We have put a lot of faith in battery electric vehicles to meet the [zero-emission vehicle] mandate, but in spite of significant efforts batteries have inherent limitations. We’re not giving up on the goal of the zero-emission vehicle, but we have to be realistic. No matter how you cut it, it is disappointing” (Polakovic 2002). This history of the LEV and ZEV demonstrates the benefits of using California as a laboratory to experiment with aggressive, high-risk strategies. The technology-forcing requirements that CARB imposes can result in major breakthroughs in emissions controls. When CARB adopted its LEV standards, vehicle manufacturers claimed that the standards were not technologically feasible within the available lead time (CARB 1991). Under the pressure of the LEV regulations, vehicle manufacturers were able to exceed expectations in reducing emissions from gasoline-powered vehicles to near-zero levels. As discussed below, the success of the LEV program in California benefited emissions-control strategies across the nation and was primarily responsible for making the new federal standards for model-year 2004 more stringent than they otherwise would have been. An inevitable consequence of a high-risk strategy is the likelihood that some policies will fail, and the electric vehicles envisioned under the California ZEV mandate appear to have failed. Manufacturers had a good record of complying with performance-based emissions standards. In contrast, the ZEV mandate was a technology-specific regulation in its early stages and proved to be too challenging. Although the costs and disruptions of the electric vehicle mandate were substantial, they were limited to a relatively small segment of the national market. The results of the CARB ZEV experiment support the idea of having one state (California) serve as a laboratory for experimentation in emissions control. Impacts of LEV Program on LDV Emissions-Control Technologies The LEV program provides a good example of California’s role as a laboratory for innovation and technology to reduce mobile-source emissions. The primary success of the LEV program has been in achieving near-zero levels of tailpipe emissions from gasoline-fueled vehicles, exceeding the expectations of experts in both industry and government. One of the reasons that CARB initiated the low-emission vehicle/clean
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State and Federal Standards for Mobile-Source Emissions fuels program was that it thought that alternative fuels were likely to be needed to get vehicle emissions down to the ULEV standard or lower. In fact, because of the combination of technology-forcing and flexibility in the LEV program, manufacturers have achieved much greater progress in reducing emissions from conventional vehicles than was believed possible in 1990. In the words of CARB’s chairman, Dr. Alan Lloyd, under the LEV program, “We’ve seen the near impossible accomplished with gasoline vehicles: zero evaporative emissions, exceedingly clean exhaust—cleaner, in some cases, than the outside air entering the cabin for ventilation purposes and emission control systems that are twice as durable as their conventional forebearers, forecasted to last an astonishing 150,000 miles” (CARB 2003b). The technologies that enabled this enormous progress are a combination of improved catalyst technology, better on-board diagnostic systems, and cleaner reformulated gasoline (Ehlmann and Wolff 2005). For example, in adopting the LEV program, CARB expected that manufacturers would comply with the LEV and ULEV standards primarily by installing electrically heated catalysts. Electrically heated catalysts reduce cold-start emissions, which account for a large majority of the remaining emissions from modern motor vehicles (CARB 1991). However, manufacturers achieved the ULEV standard and beyond in gasoline-fueled vehicles through improved materials that allowed the catalyst to be more heat resistant, resulting in faster warm-up by allowing them to be placed much closer to the engine. The elimination of the electrically heated catalysts to comply with the LEV standards reduced the cost and simplified integration into the vehicle design. Indeed, compliance with California standards creates its own subset of automobile engineering research featured in such journals as Topics in Catalysts and Applied Catalysis and publications of the Society for Automotive Engineers. Examples of such research for the LEV program are Summers et al. (1993), Smaling et al. (1996), and Truex (1998). More recent examples include technologies to comply with aspects of the LEV II program, such as McKinnon et al. (1999), Heck and Farrauto (2001), and Kim et al. (2001). The impact of California standards is characterized several times in this report as either a success due to CARB’s role in looking at fuels and engines as an integrated unit or as a failure due to its inability to bring about widespread use of electric vehicle technology. In reality, it is too simplistic to characterize the outcomes as simple successes and failures. For example, the impact of the ZEV on the introduction of popular hy-
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State and Federal Standards for Mobile-Source Emissions State Practices in Adopting California Standards There are no federal requirements regarding state adoption of California emissions standards beyond the specifications in the CAA section 177. Adopting California mobile-source emissions standards is one of several options available to states to reach the air quality goals embodied in the NAAQS. States generally support their adoption of California standards with a state- or region-specific modeling analysis of emissions benefits. Emissions modeling also serve to quantify the LEV and LEV II program’s emissions credits that are included in the state’s SIP, and this modeling is usually a required part of the SIP analysis. Air quality modeling—for example, to assess the impact of a new regulation on ozone concentrations—is also a part of the SIP analysis. The committee did not find evidence that states analyze in-state air quality impacts or health impacts of adopting California standards (in isolation from other SIP measures). Furthermore, states typically quote and defer to the technical-feasibility and cost-analysis determination conducted by California when adopting LEV II (NYDEC 2000; MA DEP 1999). A quantification of any improvements in ozone or PM concentrations and health impacts, for example, would be useful support for adopting LEV II because they are the criteria pollutants of most concern in many nonattainment areas. The committee found one example of a nongovernmental organization that included ozone in an assessment of the health impacts of adopting LEV II standards in Connecticut (CFE 2003). Assessment of emissions benefits is the significant technical practice carried out by states when adopting California standards. The following section discusses these assessments by northeastern states for adoption of California LEV and LEV II emissions standards. Because of the regional nature of air pollution in the Northeast, the states have a history of cooperative analysis of emissions and air quality, such as that by the Ozone Transport Commission (OTC) established by the CAA. A regional air pollution agency, Northeast States for Coordinated Air Use Management (NESCAUM), is directed by the air directors of Maine, Rhode Island, Connecticut, Vermont, New Hampshire, New York, New Jersey, and Massachusetts. NESCAUM promotes cooperation and coordination of technical and policy issues regarding air quality control among the member states. NESCAUM has assessed emissions benefits of adopting California emissions standards in support of its member states.
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State and Federal Standards for Mobile-Source Emissions Comparing the Emissions Benefits of California Versus Federal On-Road Emissions Standards in the Northeast The northeastern states that have adopted LEV II have supported their rule-making by estimating future emissions using various generations of EPA’s MOBILE model. Table 6-14 summarizes the expected emissions benefits found by some of these analyses. The committee did not attempt to analyze the modeling practices and assumptions underlying these analyses. As discussed in Chapter 2, these models are subject to a degree of uncertainty (NRC 2000); however, they are the best tools available to regulatory agencies for assessing emissions benefits. Furthermore, many assumptions are needed to model future mobile-source emissions; for example, sales, fleet mix in future years, types of fuels, and the evolution of vehicle technology and emissions levels. The data presented in Table 6-14 and in the following comparisons serve to show the range of estimates of the emissions benefits of California over federal emissions standards. Most likely, there are significant differences between the models and assumptions used in each study; therefore, caution is needed in comparing these estimates. The expected emissions benefits of LEV II over Tier 2 in particular have proved to be controversial. In 2003, NESCAUM estimated a 15%-HC mobile-source emission benefit in 2020 in the Northeast based on MOBILE modeling of New York, Massachusetts, and Vermont. The study also included an estimated benefit in mobile-source toxic emissions of 23%. This analysis was used by Connecticut and Rhode Island to support adopting California standards for the first time (CTDEP 2004; RIDEM 2004). Nongovernmental organizations have also used modeling in their analyses in support of state adoption of California emissions standards. The Connecticut Fund for Environment (CFE) estimated a 20%-VOC and a 11%-NOx benefit in 2025 in that state and a 33%-benefit in HAP emissions (CFE 2003). The Maryland Public Interest Research Group (PIRG) estimated a 13%-VOC benefit, a 11%-NOx benefit, and a 12-15%-HAP benefit emissions in Maryland in 2025, if the state would adopt LEV II in 2008. The Maryland Department of the Environment estimated a 5%-VOC and a 6%-NOx benefit of LEV II over Tier 2 in 2020 in Maryland (Snyder 2005). Manufacturers argue that complying with California standards in a greater number of states comes at a greater cost, and that this cost is not outweighed by the emission benefits of LEV II over Tier 2. The Alliance
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State and Federal Standards for Mobile-Source Emissions TABLE 6-14 Summary of Various Estimates of Emission Reductions Analyses of Adopting California Mobile-Source Emissions Standards in the Northeasta Analysis Comparison Area (Year of Benefit) Emission Reduction Over Federal Standards (%) HC NOx CO Sierra Research, Inc. 1989 California proposed program and pre-Tier 1 federal program Typical NESCAUM state (2010) 16.2 27.2 38.7 Pechan/EEA, Inc. 1991 LEV and Tier 1b NESCAUM region (2015) 23-61 26-41 10-33 MA DEP 1999 LEV II (with intermediate CA MDV standards) and Tier 2 Massachusetts (2020) 20 19 17 NY DEC 2000 LEV II and Tier 2c New York 2020 8 0 NA NESCAUM 2003 LEV II and Tier 2d Average between NY, MA, VT (2020) 15.3 NA NA NESCAUM 2005; update to 2003 data LEV II and Tier 2d Average between MA, NY, VT, ME (2020) 7.6 14.7 NA Average between CT,RI, NJ (2020) 4.8 10.8 NA aThe emissions reduction is the difference in mobile- source emissions between California and federal standards, expressed as a percentage of the federal total. bOnly LDV <6, 000 lb of GVW; exhaust only. cUnclear whether ZEV mandate or evaporative emissions included. dOnly LDV <6,000 lb of GVW.
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State and Federal Standards for Mobile-Source Emissions of Automobile Manufacturers (AAM) presented its own estimates of emissions benefits and a critique of methods used by NESCAUM and other groups (Air, Inc. 2004a,b). In an evaluation of the Connecticut CFE (2003) study, an AAM contractor reported benefits of 7% for VOC, 14% for NOx and 14% for HAPs in 2025 when modeling Connecticut mobile-source emissions according to EPA guidelines (Air, Inc. 2004b). EPA has also addressed the modeling methodologies and the benefits estimation of LEV II over Tier 2 in the Northeast. EPA addressed NESCAUM’s 2003 modeling estimates in a letter stating that NESCAUM did not follow EPA guidelines for modeling Tier 2 emissions, and this led to overstatements of the benefits of LEV II over Tier 2 (EPA 2004f). EPA stated that emissions benefits of LEV II and Tier 2 should be compared with a non-LEV II and non-Tier 2 baseline, respectively, for a realistic comparison between the two programs. Using these guidelines, EPA estimated that LEV II will provide about a 1% additional reduction in mobile-source HC over Tier 2 in 2020 (EPA 2004f; 70 Fed. Reg. 21959). NESCAUM (2004) responded to EPA concerns and performed an updated analysis of emissions benefits in the Northeast, including a separate analysis for states that only recently adopted LEV II standards. The revised emissions-benefits estimates are provided in Table 6-14. In responding to EPA, NESCAUM noted that its analysis is intended to support the conclusion that the LEV program provides additional air quality benefits and is not intended to be portrayed as a SIP analysis (NESCAUM 2004). SIP credits, including the numerical value of emissions reductions of the LEV II program, must be evaluated by each state separately in coordination with EPA. States and NESCAUM have generally documented their analyses well, as evidenced by the ability of outside stakeholders to review and critique their practices. Although the numerical value of the emissions benefits is ultimately important in determining SIP credits, there is no required level of emissions benefits that must be met to adopt the LEV program, and adoption and SIP regulatory processes are usually separate. All of these analyses are presented in terms of additional percentage reductions. Emissions reductions apparently were not translated into estimates of health or environmental benefits. This committee makes no judgment on an appropriate level of emissions benefits (over a similar federal program) to support adoption of a California emission standard. A comparison of benefits and costs for such a decision is in the realm of policy and outside this committee’s charge.
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State and Federal Standards for Mobile-Source Emissions Economic Impact Assessment by Opt-in States Each state is subject to certain requirements for each rule-making. New York, for example, prepared a regulatory impact statement and a job impact statement for adoption of California regulations. The majority of these requirements concern economic impacts. The states that are adopting the California LEV II standards rely for the most part on CARB’s ex ante cost estimates as the measure of projected costs of the program. They do not attempt to measure any costs beyond the consumer costs estimated by CARB. For example, states do not appear to measure the cost of program administration, the distribution or dealer costs, or the costs of enforcement of the program. States do not discuss the potential infrastructure costs that might be needed for the ZEV component of the LEV II program. Massachusetts, for example, stated that there will be no significant economic effects on dealers. It suggested, however, that dealers will need to incur more training costs for mechanics because of additional types of vehicles, but these costs are assumed to be recouped through increased sales of vehicles, such as the PZEVs and the ATPZEVs (MADEP 1999). In an analysis by New York, the state argued that the ZEV requirements are not expected to have any effect on dealers and that any change in required paperwork will not be substantial. Using the same argument as Massachusetts, New York stated that there must be additional mechanic training but that this will generate new jobs for the region. However, fewer vehicles of other types will be sold, and the mix of services needed will change for mechanics. The costs of retraining represents costs to dealers or car buyers, depending on how the costs are distributed. On the ZEV mandate, Maryland, one of the states that decided against adopting the LEV II standards, stated that it had identified substantial infrastructure costs associated with the ZEV component of LEV II (Snyder 2005). There is little discussion from the states or in the NESCAUM analysis of the LEV II program about the potential distribution issues or pricing policies for LEVs. The auto companies argue that there are sales issues, especially at the border of the LEV II states. Often, dealers near state borders swap vehicles over state lines, potentially complicating compliance with the standards for the automakers. For that reason, at least one automaker (J. German, Honda, personal commun., May 18, 2005) argued that it designs vehicles to meet both Tier 2 and LEV II standards when possible. As noted in Chapter 5, however, cost data are
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State and Federal Standards for Mobile-Source Emissions often difficult to obtain, thus limiting the scope of any state economic impact analysis. An additional problem is that the prices of an entire fleet in a region might require adjustment to sell a vehicle fleet that meets the emissions standards. Pricing this fleet at the cost of the emissions controls might not result in sales. In that case, subsidies of certain vehicles might be necessary, and the costs of bringing the fleet to market might change. There is little discussion of any of these issues in economic impact analyses of LEV standards by California and opt-in states. The committee heard some evidence of a proposed Northeast-wide NMOG fleet average that manufacturers could use to certify vehicles. This proposal might provide more flexibility to the manufacturers in selling vehicles that meet the standard. Such flexibility on sales and distribution might ease the economic burden for manufacturers and dealers and decrease the limitations of consumer choice. The committee encourages such flexibility, provided air quality is not compromised. CALIFORNIA MOTOR VEHICLE GREENHOUSE GAS STANDARDS Legislative Mandate The California legislature in 2002 concluded that the effects of global warming in California would be substantial. The Pavley bill (California AB 1493, Feb. 23, 2001) in particular found that global-warming impacts on the state included: potential reductions in the state’s water supply, adverse health effects from increases in air pollution caused by higher temperatures, adverse impacts on agriculture caused by impacts on water supplies and increases in pestilence outbreaks, increases in wildfires, and potential damage to the state’s coastlines and ocean ecosystems. In response, the legislature passed and Governor Davis signed into law the Pavely bill. This legislation directed CARB to develop and issue greenhouse gas (GHG) emissions standards for LDVs, using its authority to set its own mobile-source emissions standards (CAA section 209). The legislature directed CARB to “develop and adopt regulations that achieved the maximum feasible and cost-effective reduction of greenhouse gases from motor vehicles.” The Pavey bill focuses on LDVs because approximately 40% of GHG emissions in the state are estimated to come from this source.
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State and Federal Standards for Mobile-Source Emissions TABLE 6-15 CO2 Equivalent Emissions Standards for Model-Years 2009 through 2016 Year CO2 Equivalent Emissions Standard by Vehicle Category (g/mi) Passenger Cars and Small Trucks/SUVs Large Trucks/SUVs Near-term 2009 323 439 2010 301 420 2011 267 390 2012 233 361 Mid-term 2013 227 355 2014 222 350 2015 213 341 2016 205 332 Source: CARB 2004d. Proposed Regulation In response, CARB (2004c) proposed a set of standards in its staff report; these standards were approved and adopted by CARB on September 23, 2004. Table 6-15 displays the proposed standards, which are given in grams per mile of CO2 equivalent.11 The proposal recognized four sources of motor vehicle GHG emissions: tailpipe emissions of carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) emissions; CO2 emissions due to operating the vehicle air conditioning system; hydrofluorocarbon (HFC) emissions from the air conditioning system; and upstream GHG emissions associated with the production of fuels. The CO2 equivalent standards are incorporated into the existing LEV program and, like existing LEV II standards, there is a separate fleet average for passenger cars and small trucks/SUVs and large trucks/SUVs. 11 Emissions of other GHGs are translated into estimates of the equivalent amount of CO2 by use of global warming potential (GWP). Because the atmospheric lifetimes of other GHGs are different from CO2, a GWP depends on the time horizon. If a 100-year time horizon is used, CH4 has a GWP of 23, N2O has a GWP of 296, HFC-134a has a GWP of 1,300, HFC-152a (a possible replacement for HFC-134a) has a GWP of 1,300. The 100-year time horizon is recommended by the Intergovernmental Panel of Climate Change and CARB.
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State and Federal Standards for Mobile-Source Emissions Scientific and Technical Analysis The CARB staff report (2004c) includes an assessment of the technology and fuels that could help meet the standards, the level of reductions that could be achieved, and the costs. The CARB assessment was based on vehicle simulation and cost analysis of GHG emissions reductions contained in a report done for the Northeast States Center for a Clean Air Future (NESCCAF 2004). NESCCAF (2004) predicted the GHG emissions impacts of various technology combinations for five types of vehicles (small car, large car, minivan, small truck, and large truck) by using a model that estimates operating characteristics and emissions for different motor vehicle designs. NESCCAF (2004) also provided cost estimates for the various technology combinations, including available technologies and technologies that had been demonstrated in prototype form. CARB (2004d) estimated that the near-term (2009-2012) standards would result in a 22% reduction in GHG emissions compared with the 2002 fleet, and the mid-term (2013-2016) standards would decrease fleet emissions by 30%. These estimates translate into an 88,000 ton/day reduction in CO2-equivalent emissions by 2020 and a 155,000 ton/day reduction by 2030 (CARB 2004d). Table 6-16 shows the estimated fleetwide incremental costs of controls to meet these standards developed by CARB. Some portion of the cost of reductions in CO2 can be recouped in TABLE 6-16 Average Cost of Control Year Average Cost of Control Passenger Cars, Small Trucks, and SUVs Large Trucks and SUVs Near-term 2009 17 36 2010 58 85 2011 230 176 2012 367 277 Mid-term 2013 504 434 2014 609 581 2015 836 804 2016 1,064 1,029 Source: CARB 2004d.
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State and Federal Standards for Mobile-Source Emissions fuel savings over time. CARB asserts that nearly all technology combinations will result in reductions in lifetime operating costs that exceed retail price of the technology, assuming a fuel cost of $1.74 per gallon; cost recovery time would presumably be smaller at higher gasoline prices. For example, CARB (2004d) looked at the potential increase in monthly payments over a 5-year vehicle loan versus the monthly decrease in operating costs and concluded that the proposed standards would result in a monthly savings of $3.50 to $7.00. Manufacturers and others have submitted comments critical of CARB’s analysis (CARB 2005f). CARB’s cost estimates are disputed by an analysis performed by Sierra Research for the Alliance of Automobile Manufacturers (Sierra Research 2004), which concluded that average compliance costs would be approximately $3,000 per vehicle, assuming nationwide compliance with the CARB standards, and higher than $3,000 if separate vehicles are produced for states that enforce the California standards. Sierra Research also argued that the increased vehicle prices would decrease the sales of new vehicles, slowing the introduction of cleaner vehicles into the fleet, and that lower operating costs would result in vehicle owners driving more, thus increasing emissions. Another objection to the standards is that California LDV emissions are a small fraction of the global totals and will have no discernable effect on global climate change (CARB 2004c). CARB pointed out, however, that its GHG standards represent a “no regrets” policy (reducing emissions while providing a net cost savings to vehicle owners) and that the state’s action will prompt other states and countries to follow course (CARB 2004c). Opt-in States Recent state actions and statements also reflect a growing desire by states to reduce GHG emissions. Massachusetts, New York, New Jersey, Connecticut, Rhode Island, Vermont, and Maine have amended their prior adoption of the LEV II program to include the California GHG emissions standards. In addition, Washington state recently adopted the LEV II program contingent on Oregon’s adoption. Oregon has adopted temporary rules on the LEV II program and is scheduled to propose permanent rules in the summer of 2006. Neither state has areas in nonattainment of the 1-hr or 8-hr ozone standard. Both states are focusing on the GHG emission-reduction benefits of the California program (Office of the Governor of Washington 2004; State of Oregon 2004).
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State and Federal Standards for Mobile-Source Emissions Legal and Administrative Status of Greenhouse Gas Initiative CARB approved the GHG standards in September 2004, and the final rule-making package was approved by California’s Office of Administrative Law on September 15, 2005. The standards face major challenges in terms of obtaining a waiver from EPA and from lawsuits filed by automakers. A primary objection raised by automakers is that, because most reductions in GHG emissions are from decreases in CO2 emissions due to improved fuel economy, the GHG standards are fuel economy standards, which are preempted by federal laws and regulations mandating uniform, nationwide standards for fuel economy. That objection will be one of the primary arguments made by plaintiffs in the lawsuit, Central Valley Chrysler et al. v. Witherspoon, which is scheduled to begin trial in the Federal District Court in late 2006. CONCLUSIONS The history of LDV regulation provides insights into how EPA and CARB set emissions standards and how other states adopt standards. EPA and CARB’s present-day LDV emissions standards integrate fuel and emissions limits, certification flexibility, and, in CARB’s case, a mandate for promoting advanced-technology vehicles. The following conclusions are drawn from the information presented in this chapter on the practices and issues related to LDV emissions standards. CARB and EPA analyses of their emissions standards are found in CARB’s staff paper and EPA’s regulatory impact analysis, respectively. Both documents include a technical feasibility assessment, emissions impacts analysis, engineering cost assessments, and cost-effectiveness estimates. For major rules, such as the Tier 2 LDV regulations, EPA is required to conduct a health benefits assessment to compare with total costs. CARB does not consider public health benefits directly in its regulatory analysis of emissions standards because it uses its proposed standards to attain health-based NAAQS, which EPA has already assessed for public health benefits. The majority of available cost estimates of emissions standards are for LDVs, but these estimates vary substantially and are uncertain. It is difficult to determine what parties bear what fraction of the costs of emissions standards. Manufacturers closely guard cost and pricing data to avoid placing themselves at a competitive disadvantage.
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State and Federal Standards for Mobile-Source Emissions With the LEV program, California has used its authority as Congress envisioned: to implement more aggressive measures than the rest of the country and to serve as a laboratory for technological innovation. There have been successes, such as CARB’s early recognition of the need to couple fuel composition with emissions control, and failures, such as the promotion of widespread use of electric vehicles. As a rationale for adopting California LDV standards, some states expect that California will continue to reduce standards earlier than the federal program. Some states have also adopted or expressed interest in adopting the California GHG emissions standards. To date, CAA section 177 authority has been used primarily by various northeastern states to adopt California LDV standards. Manufacturers of mobile sources have raised objections to the adoption of California standards by other states. Up to this point, adopting states and manufacturers have turned to the courts to resolve their technical and legal disputes when direct negotiations have failed. Although EPA is an appropriate entity to comment on some of these disputes, it has no authority over states’ adoption decisions.
Representative terms from entire chapter: