California committed to accept national program compliance for model years 2017 through 2025 (as it did for MYs 2012 through 2016) with the understanding that it would provide equivalent or better overall greenhouse gas reductions nationwide than California’s program. EPA projects that its standards will require, on an average industry fleet-wide basis, 163 grams/mile of carbon dioxide in model year 2025. The California LEV III GHG standards pull GHG emissions down to a fleet average of approximately 166 g/mile.

ARB has continued to work with EPA to ensure that the final federal rule—issued in August—and California’s regulations are harmonized to the extent that they meet both agencies’ air quality and greenhouse gas reduction needs.

In its review of the final federal program, ARB staff determined that the final rulemaking adopts greenhouse gas standards substantially as proposed in the earlier Notice of Proposed Rulemaking (NPRM). As a result, staff recommended that the Board fulfill its first commitment by not contesting the federal standards. The current proposed amendments to California’s passenger motor vehicle regulations fulfill the second commitment made by California and the direction of the Board to enable accepting manufacturer-demonstrated compliance with the federal regulations for the 2017 through 2025 model years.

The national greenhouse gas program for the 2017 through 2025 model years is marginally less stringent than California’s program due to differences between the two programs in their treatment of advanced technology vehicles and the application and calculation of credits for improved air conditioning systems, off-cycle technologies and hybridization of full-size trucks, ARB staff notes.

• Treatment of Advanced Technology Vehicles. Since California requires the production of zero emission vehicles (e.g. plug-in hybrid electric vehicles, battery electric vehicles, and fuel cell vehicles), LEV III provides a performance-based, technology neutral approach for these ultra-low greenhouse gas technologies by assigning upstream emissions to these technologies when demonstrating compliance to the greenhouse gas requirements. However, the federal program, which does not require the production of these zero emission technologies, provides a temporary incentive for their production by assigning an upstream emission factor of zero.

  Specifically, for the 2017 through 2022 model years, an upstream emission factor of zero applies to all qualifying vehicles. For the 2022 through 2025 model years, the use of zero grams per mile CO₂ is limited to the first 600,000 combined plug-in hybrid electric vehicles, battery electric vehicles and fuel cell vehicles for a manufacturer that sold 300,000 or more plug-in hybrid electric vehicles, battery electric vehicles and fuel cell vehicles combined in the 2019 through 2021 model years, and 200,000 for all other manufacturers. Net upstream emissions would be accounted for vehicles exceeding these caps.

  In addition to the zero upstream emission provision, the federal program provides an additional incentive to advanced technology vehicles such as plug-in hybrid electric vehicles, battery electric vehicles, and fuel cell vehicles, dedicated natural gas and dual fuel natural gas vehicles in the form of a vehicle multiplier (i.e., each vehicle would count as more than one vehicle when determining compliance with the greenhouse gas requirements). These vehicle multipliers apply to model years 2017 through 2022 with higher values assigned to plug-in hybrid electric vehicles, battery electric vehicles and fuel cell vehicles and lower values assigned to natural gas vehicles. These vehicle multipliers decrease over time.

• Indirect Air Conditioning Credits. Manufacturers may receive credits for improving the efficiency of vehicle air conditioning (A/C) systems. The amount of credit available for different efficiency technologies is listed in a credit menu and manufacturers may claim up to a 5.0 grams carbon dioxide-equivalent per mile (gCO₂e/mile) for cars and 7.2 gCO₂e/mile for trucks. The LEV III rule, as approved 26 January 2012, contains the same credit structure as the final rule for the 2017 through 2025 model year national greenhouse gas program.

  However, based on further testing and comments from manufacturers on the NPRM, EPA made minor modifications to the process by which manufacturers qualify for indirect A/C credits. The primary change made by EPA was to allow manufacturers to test only those vehicles for which they are seeking indirect A/C credits, with no requirement to compare those vehicles with improved A/C systems to baseline vehicles through model year 2019.

  The primary differences between the ARB and EPA programs are largely limited to the first three years of the program, with the ARB program requiring a slightly higher bar for credit qualification during that period. The total number of indirect A/C credits available to manufacturers through each program remains equivalent.

• Off Cycle Credits. Similar to the A/C provisions, off-cycle credits can be used by manufacturers to offset some tailpipe emissions and thus provide additional flexibility for achieving compliance with the CO₂ standards. In their final rulemaking for the 2017-2025 model year national greenhouse gas program, EPA refined the off-cycle credit program based on additional testing and simulations. These refinements did not change the overall structure of the off-cycle credit program nor the total number of credits available, but did change how the credits are calculated for several technologies and the amount of credits available for a small number of individual technologies.

  The two off-cycle credit programs are largely identical given that the structure of the two programs has not changed and manufacturers may only claim a maximum of 10 gCO₂e/mile off-cycle credits regardless of which accounting mechanism is used.

• Full-Size Truck Credits. The full-size truck provisions provide special emission-reduction credit for the use of mild- and strong-hybrid technology in order to incentivize the widespread adoption of these technologies. Because full-size pick-up truck hybrid technologies are still in their infancy, in their final rulemaking for the 2017 through 2025 model year national greenhouse gas program EPA slightly loosened the qualification requirements for hybrid truck credits, primarily by decreasing the minimum percentage penetration requirements for mild hybrids by 10% for each of the first two years of their program, model years 2017 and 2018. Because full-size hybrid truck technologies are not in widespread use and the loosening of the penetration requirements applies for only the first two years of the federal program, the final federal full-size truck provisions can be considered sufficiently equivalent to those in LEV III.

• Motor Vehicle High Leak Disincentive. Both the ARB and the USEPA programs include credits and disincentives that encourage manufacturers to employ A/C systems having low refrigerant leak rates. The effect of those differences is that under the ARB program, A/C systems must have lower leak rates than required under the EPA program in order to avoid the high leak disincentive or to minimize it to a given level.

  Although ARB’s program is more stringent, staff believes that inclusion of high leak disincentives provided by the EPA program offers substantial benefits compared to having no high leak disincentive. For this reason, staff believes the lesser stringency of the federal requirement compared to California’s requirement does not negate the substantial benefits and advantages of having a single unified program.

Staff determined that the differences in the federal credit scheme for select technologies are largely limited to the early years of the program and will have a minimal impact on greenhouse gas emission reductions from the light-duty fleet. ARB staff estimated that the combined impact of these federal provisions would result in a 4.5% loss of accumulated CO₂ emission reductions in California in 2025.

The proposal makes minor changes to ARB’s regulations. In general these proposed changes correct errors, and update procedures to reflect information received since adoption of the regulations in January, 2012.

ARB staff is not proposing to amend the regulations to be identical to the final National Program. For example, ARB’s regulation would continue to treat upstream emissions differently than the final National Program.

In practice, most if not all manufacturers are expected to use compliance with the national rule to satisfy California requirements. However a manufacturer may choose to comply with the ARB requirements, and the ARB regulation would remain in place in the event the National Program ceases.

Adoption of the proposal would not eliminate the reporting requirements for California. Specifically, a manufacturer will still be required to submit emission testing data and sales data for California and each of the Section 177 states (states adopting California emissions standards) in sufficient detail to allow staff to verify the manufacturer’s average greenhouse gas levels for each model year. In addition, staff is also proposing minor revisions to the LEV III criteria pollutant regulations and the ZEV regulations to correct errors and to clarify the regulations.

Resources

• Staff Report: Initial Statement of Reasons

• “LEV III” Amendments To The California Greenhouse Gas And Criteria Pollutant Exhaust And Evaporative Emission Standards And Test Procedures And To The On-Board Diagnostic System Requirements For Passenger Cars, Light-duty Trucks, And Medium-Duty Vehicles, And To The Evaporative Emission Requirements For Heavy-Duty Vehicles (August 2012)