Reducing Fuel Consumption and Greenhouse Gas Emissions of Medium- and Heavy-Duty Vehicles, Phase Two Final Report (2020) / Chapter Skim
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13 Alternative and Complementary Regulatory Approaches
13 Alternative and Complementary Regulatory Approaches
Pages 323-342
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From page 323... ...
Except for the lightest vehicles in the MHDV spectrum, the regulation is implemented though pre-sale certification of the engine (if made by a company that then sells it to the vehicle assembler) or the vehicle -- the latter being based on a computerized simulation of the vehicle's fuel use and GHG emissions (i.e., the Greenhouse Gas Emissions Model)
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From page 324... ...
any regulatory initiative can have some unintended consequences that diminish its effectiveness or its efficiency but this often comes about because a trade-off has to be made in the choice of a regulatory approach. 13.2.1 The Desirability of a Performance Standard If a regulation takes the form of a performance standard, it specifies a target outcome, but not the method by which that outcome should be attained.
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From page 325... ...
Finding: The current approach to regulating fuel consumption and GHG emissions of MHDVs under the Phase I and Phase II rules is not a performance standard. The policy objective is fuel consumption and/or emissions in the vehicles' use phase.
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From page 326... ...
The Act itself does not define a nonpoint source, but this is usually considered to be pollution "caused by diffuse sources" and associated with rainfall and runoff, including "agricultural, silvicultural and urban runoff, runoff from construction activities, etc."1 The 1972 CWA held back from active federal intervention to control nonpoint sources; section 208 left it to the states to decide whether some action was needed for their nonpoint sources and, if so, what. While some states regulated some forms of nonpoint source pollution, in most cases the 208 effort was left to voluntary action.
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From page 327... ...
Government Accountability Office (GAO) report had warned that, if left uncontrolled, "nonpoint source pollution will prevent attainment of national water quality goals and will continue to grow in significance as point sources of pollution such as factories and municipal waste treatment plants are brought under control" (GAO, 1977, p.
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From page 328... ...
Because of its concern with class shifting, the NRC Phase One Report concluded: "While it may seem expedient to focus initially on those classes of vehicles with the largest fuel consumption (i.e., Class 8, Class 6, and Class 2b, which together account for approximately 90 per cent of fuel consumption of MHDVs) , the committee believes that selectively regulating only certain vehicle classes would lead to very serious unintended consequences and would compromise the intent of the regulation" (NRC, 2010, p.
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From page 329... ...
13.3.3 The Rebound Effect This refers to the phenomenon whereby improved fuel efficiency lowers the cost of operating the vehicle sufficiently that it induces the operator to use the vehicle more (travel more miles) , thereby causing an increase in the amount of fuel consumed.5 The increase in fuel consumption from the extra usage of the vehicle diminishes the saving from its increased fuel efficiency, although it may not eliminate it.
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From page 330... ...
In its first report, Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium- and Heavy-Duty Vehicles, Phase Two: First Report, the committee highlighted the failure to restart VIUS as a significant weakness in the current regulation of truck fuel efficiency and safety (NRC, 2014, p.
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From page 331... ...
? 8 If an MHDV policy is seen as requiring a net benefit test, the question to be addressed is this: What is the economic cost and consequent reduction in social welfare when the price of fuel is used to reduce fuel consumption (i.e., the economic efficiency of a price instrument)
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From page 332... ...
162) suggest that split incentives may be present if the resale market does not value fuel economy features on vehicles, thereby truncating the return on investment for the first owner.12 13.4.1.3 Up-Front Capital Cost Split incentives provide one explanation why what appears to be a profitable investment in fuel efficiency is not undertaken.
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From page 333... ...
In trucking, there appears to be a norm to make the payback period roughly one-half of the vehicle ownership cycle. Thus, large for-hire carriers tend to keep their trucks for 4 to 6 years.13 The trucks average about 120,000 miles per year, and the companies tend to replace them when the maintenance costs reach an unacceptable level at about 500,000 to 700,000 miles.14 The relatively short payback period is a formidable obstacle to investment in improved fuel efficiency.
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From page 334... ...
. In the untidy process of decision making under bounded rationality, the financially optimal choice of fuel technology may not get chosen; in fact, it may not even be considered.20 13.4.1.7 The Economic Efficiency of a Fuel Price Signal The factors listed above provide reasons why decision makers, including firms, may make choices regarding technology adoption that appear to work against their own financial interest.
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From page 335... ...
The ethical objection is along the lines that a regulatory intervention leads actors to make a choice they otherwise would not have made, thereby reducing their well-being.23 We focus here on the economic objection. The economic argument for using a price signal to change behavior rather than any other form of intervention is that, other things being equal, it ensures economic efficiency and minimizes the aggregate cost of whatever reduction in fuel consumption or emissions comes about.
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From page 336... ...
Consequently, telematics might well be in common use in several MHDV sectors, especially Class 8 vehicles, by the time of the Phase III regulations. Where, and when, this type of in-use monitoring is adopted, it might then be possible to develop some form of a performance standard for reduced fuel consumption and CO2 emissions.28 A cap and trade program would be one form of performance standard.
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From page 337... ...
The RFS2 requirement is broken down into individual mandates for four separate categories: total renewable fuels, advanced biofuels, biomass-based diesel, and cellulosic biofuel. Biofuels qualifying under each category must achieve certain minimum thresholds of life-cycle greenhouse gas emissions reduction (i.e., reduction in the emissions associated with the production, transportation, and use of that
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From page 338... ...
It requires them incrementally to reduce the carbon intensity of the fuel mix used in California, starting with a 0.25 percent reduction in 2011 and rising to a 10 percent reduction by 2020. There is an emission factor for each type of fuel, whether a type of fossil fuel or a renewable fuel, accounting for its life-cycle greenhouse gas emissions and including an allowance for the indirect effects on greenhouse gas emissions from changes in land use for some biofuels.
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From page 339... ...
And without such measurement, it will be difficult or impossible to assess whether the Phase III regulations, or regulations by other agencies, are having a meaningful impact on fuel consumption and emissions by MHDVs. If such measurement happens to come into being, it would benefit all efforts to improve fuel efficiency.
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From page 340... ...
2011. Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles; Final Rule.
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From page 341... ...
1996. Agriculture, nonpoint source pollution, and regulatory control: The Clean Water Act's bleak present and future.
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