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EPA, DOE release new emissions, EV efficiency rules

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Announcements | Market Trends
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The U.S. Environmental Protection Agency (EPA) has announced final national pollution standards for passenger cars, light-duty trucks, and medium-duty vehicles for model years 2027-2032.

Meanwhile, the Department of Energy (DOE) has shared its new rule that defines electric vehicle (EV) efficiency as equivalent miles per gallon of gasoline.

EPA’s new standards will avoid 7.2 billion tons of carbon emissions through 2055, roughly equal to four times the emissions of the entire transportation sector in 2021, and provide nearly $100 billion of annual net benefits, EPA said. That includes $13 billion of annual public health benefits due to improved air quality, $62 billion in reduced annual fuel costs, and maintenance and repair costs for drivers, according to the EPA.

EPA noted Wednesday that sales of clean vehicles, including plug-in hybrid and fully electric vehicles, hit record highs last year.

EPA projects an increase in U.S. auto manufacturing employment in response to these final standards, consistent with the broader Biden-Harris Administration commitment to create good-paying, union jobs leading the clean vehicle future.

The standards will also provide greater certainty for the auto industry from spurring private investment and creating good-paying union jobs to strengthening the U.S. auto industry, EPA said.

Once fully phased in, the final standards will lower costs for consumers, up to an estimated $6,000 in fuel and maintenance costs throughout the life of a vehicle, according to the EPA.

The final standards, titled “Multi Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles,” build on EPA’s existing emissions standards for passenger cars and light trucks for model years 2023-2026. The standards continue the technology-neutral and performance-based design of previous EPA standards for cars, pickups, and vans, and leverage advances in clean car technologies to reduce climate pollution and smog- and soot-forming emissions, EPA said.

EPA says it’s finalizing the same standard proposed for MY 2032 while allowing additional time for the auto sector to scale up clean vehicle manufacturing supply chains in the first three years covered by the rule.

Annually, the net benefits to society for the light- and medium-duty final rule is an estimated $99 billion and will reduce fine particulate matter and ozone to prevent up to 2,500 premature deaths as well as reduce heart attacks, respiratory and cardiovascular illnesses, aggravated asthma, and decreased lung function.

EPA said it received feedback on the proposed rule through written comments, testimony at public hearings, and other stakeholder engagements.

The final rule gives manufacturers the flexibility to efficiently reduce emissions and meet performance-based standards through the mix of technologies that they decide is best for them and their customers, according to EPA. EPA projects consumers will continue to have a wide range of vehicle choices under the final rule such as advanced gasoline vehicles, hybrids, plug-in hybrid EVs, and full battery EVs.

Compared to the existing MY 2026 standards, the final MY 2032 standards represent a nearly 50% reduction in projected fleet average greenhouse gas emission levels for light-duty vehicles and a 44% reduction for medium-duty vehicles, EPA said. The standards are expected to reduce emissions of health-harming fine particulate matter from gasoline-powered vehicles by over 95%.

“The EPA has made significant progress on its final greenhouse gas emissions rule for light-duty vehicles,” said the United Automobile Workers, in a written statement. “By taking seriously the concerns of workers and communities, the EPA has come a long way to create a more feasible emissions rule that protects workers building ICE vehicles, while providing a path forward for automakers to implement the full range of automotive technologies to reduce emissions.”

In an EPA news release, Alliance for Automotive Innovation (Auto Innovators) President and CEO John Bozzella noted that the future of vehicles is electric, and automakers are committed to the EV transition through “investing enormous amounts of capital and building cutting edge battery electric vehicles, plug-in hybrids, traditional hybrids, and fuel cell vehicles that drive efficiency and convert petroleum miles to electric miles.”

“Consumers have tons of choices, but pace matters. Moderating the pace of EV adoption in 2027, 2028, 2029 and 2030 was the right call because it prioritizes more reasonable electrification targets in the next few (very critical) years of the EV transition. These adjusted EV targets — still a stretch goal — should give the market and supply chains a chance to catch up. It buys some time for more public charging to come online, and the industrial incentives and policies of the Inflation Reduction Act to do their thing. And the big one? The rules are mindful of the importance of choice to drivers and preserve their ability to choose the vehicle that’s right for them.”

Michigan Sens. Debbie Stabenow and Debbie Dingell praised the final rule.

“I’ve always said Michigan automakers are the best in the world and this is their moment,” she said, in a written statement. “I appreciate EPA’s commitment to engaging with our automakers and autoworkers to develop an ambitious but achievable final rule. It represents an opportunity for union workers to continue to build the vehicles of the future right here in the U.S. and tackle the climate crisis.”

Dingell added, “My priority will always be to protect American jobs and our environment, keep the United States at the forefront of automotive manufacturing, technology and innovation, and keep our domestic industry strong and competitive. The EPA has worked with all stakeholders to reach this final rule that includes hybrid and electric vehicles and ensure these goals are achievable.

“It’s important to protect vehicle choice — the number of available models has doubled in the last three years, and in the last year sticker prices are down 20%. We need to continue to work on making sure that these vehicles are affordable to everyone, and that we have the infrastructure in place to make them accessible and practical for consumers and bring jobs back to the U.S. The bottom line is that the future of the industry must be created in America and driven by American workers, and we are all committed to working together toward that future.”

Also earlier this week, the DOE released its “Petroleum Equivalent Fuel (PEF) Economy Calculation Final Rule.” The rule defines EV efficiency as equivalent miles per gallon of gasoline to meet the EPA’s calculation of light-duty vehicle manufacturers’ compliance with the National Highway Traffic Safety Administration (NHTSA)’s Corporate Average Fuel Economy (CAFE) regulations.

DOE is responsible for establishing the value of the PEF, and the final rule applies to model years beginning with 2027.

In the revised 2023 notice of public rulemaking following public comment, DOE proposed to update the PEF value and revise the methodology used to calculate the PEF including:

    • “Updating the grid mix projection from the 2021 National Renewable Energy Laboratory (NREL) “95 by 2050” Scenario to the more current electricity generation forecast in the 2022 NREL “Standard Scenario Mid-Case,” which accounts for the latest technology and policies;
    • “Changing the method of calculating the PEF value from using an average of annual PEF values between MY 2027 to MY 2031 to calculating a PEF value based on the survivability-weighted lifetime mileage schedule of the fleet of vehicles sold during the regulatory period; and
    • “Phasing-out the use of the fuel content factor between MY 2027 and MY 2030 rather than removing it from the PEF equation as of the effective date of the rule, as proposed in the 2023 NOPR.”

DOE proposed a revised PEF value of 23,160 Watt-hours per gallon.

“Today the PEF formula equates a pure battery electric vehicle (BEV) with a gas-powered car that gets about 300 miles per gallon,” wrote Bozzella, on Auto Innvators’ blog. “That’s really high fuel economy. An EV doesn’t use gas, so that makes sense. (In truth, a BEV’s fuel economy is actually… infinity). But the Energy Department proposed changing the PEF formula, slashing the equivalent fuel economy rating of a BEV by 72% in 2027.

“…changing PEF (we said) will perversely disincentivize the production of battery electric vehicles and further misalign the greenhouse gas and CAFE rules, something that could result in manufacturers paying billions of dollars in CAFE civil penalties — even if they meet EPA’s stricter emissions standards.”

According to Reuters, automakers cited administration estimates that under the 2023 proposals, General Motors would face $6.5 billion in fines, followed by Chrysler parent Stellantis with $3 billion, and Ford with $1 billion through that year. NHTSA is set to propose final revised CAFE rules this spring, according to Reuters.


Featured image credit: milehightraveler/iStock

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