Both EPA and NHTSA programs are footprint-based—i.e., each vehicle has a different CO₂ emissions compliance target depending on its footprint value (related to the size of the vehicle). Generally, the larger the vehicle footprint, the higher the corresponding vehicle CO₂ emissions target, in the case of the GHG regulations. Each manufacturer will have its own fleet-wide standard which reflects the vehicles it chooses it produce.

EPA is allowing auto manufacturers to earn credits toward the fleet-wide average CO₂ standards for improving air conditioning systems, such as reducing both hydrofluorocarbon (HFC) refrigerant losses (i.e. system leakage) and indirect CO₂ emissions related to the increased load on the engine. Earning credits for these types of greenhouse gas reductions is conditioned on demonstrated improvements in vehicle air conditioner systems, including both efficiency and refrigerant leakage improvement.

EPA’s and NHTSA’s technology assessment indicates there is a wide range of technologies available for manufacturers to use when upgrading vehicles to reduce greenhouse gas emissions and improve fuel economy, including:

• Engine improvements, such as use of gasoline direct injection and downsized engines that use turbochargers to provide performance similar to that of larger engines;
• Advanced transmissions;
• Increased use of start-stop technology;
• Improvements in tire performance;
• Reductions in vehicle weight;
• Increased use of hybrid and other advanced technologies; and
• Initial commercialization of electric vehicles and plug-in hybrids.

EPA is also projecting improvements in vehicle air conditioners including more efficient as well as low leak systems.

EPA is also setting standards to cap tailpipe nitrous oxide (N₂O) and methane (CH₄) emissions at 0.010 and 0.030 grams per mile, respectively. Even after adjusting for the higher relative global warming potencies of these two compounds, nitrous oxide and methane emissions represent less than one percent of overall vehicle greenhouse gas emissions from new vehicles.

Program flexibilities. EPA is establishing a system of averaging, banking, and trading (ABT) of credits, based on a manufacturer’s fleet average CO₂ performance. This approach would allow credit trading among all vehicles a manufacturer produces, both cars and light trucks, as well as between companies. EPA is also including credits for improved air conditioning performance (both reduced leakage of refrigerant and improved air conditioner efficiency).

Additional credit provisions will be based on the use of advanced technologies, and generation of credits for superior greenhouse gas emission reduction performance prior to model year 2012. Both NHTSA and EPA are continuing to offer credits for vehicles designed to operate on alternative fuels, although these credits will no longer be available after model year 2015 under the EPA greenhouse gas program.

• Advanced Technology Credits. EPA is finalizing a temporary incentive program to encourage the early commercialization of advanced greenhouse gas/fuel economy control technologies, such as electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles.

  In this program, manufacturers who produce advanced technology vehicles will be able to assign a 0 gram per mile CO₂ emissions value to the first 200,000 vehicles sold in model years 2012-2016 (for PHEVs, the zero gram per mile value applies only to the percentage of miles driven on grid electricity), or 300,000 vehicles for manufacturers that sell 25,000 vehicles or more in model year 2012.

  The CO₂ emissions compliance levels for advanced technology vehicles sold beyond these cumulative vehicle production caps will reflect the net increase in upstream CO₂ emissions relative to a comparable gasoline vehicle. EPA will reassess the issue of how to address advanced technology vehicle emissions in future rulemakings for MY2017 and beyond, based on the status of their commercialization, upstream GHG control programs, and other factors.

The purpose of these provisions is to provide a temporary incentive to promote technologies which have the potential to produce very large GHG reductions in the future. The tailpipe GHG emissions from EVs, FCVs, and PHEVs operated on grid electricity are zero, and traditionally the emissions of the vehicle itself are all that EPA takes into account for purposes of compliance with standards set under section 202(a). This has not raised any issues for criteria pollutants, as upstream emissions associated with production and distribution of the fuel are addressed by comprehensive regulatory programs focused on the upstream sources of those emissions.

At this time, however, there is no such comprehensive program addressing upstream emissions of GHGs, and the upstream GHG emissions associated with production and distribution of electricity are higher than the corresponding upstream GHG emissions of gasoline or other petroleum based fuels. In the future, vehicle fleet electrification combined with advances in low-carbon technology in the electricity sector have the potential to transform the transportation sector’s contribution to the country’s GHG emissions.

—Final rule, I.B.4.e

• Off-Cycle Innovative Technology Credits. EPA is finalizing a credit opportunity for new and innovative technologies that reduce vehicle CO₂ emissions, but whose CO₂ reduction benefits are not captured over the 2-cycle test procedure used to determine compliance with the fleet average standards (i.e., “off-cycle”).

  Eligible innovative technologies include those that are used in one or more current vehicle models, but that are not yet in widespread use in the light-duty fleet. Further, any credits for these off-cycle technologies must be based on real-world greenhouse gas emission reductions not captured on the current 2-cycle tests and verified by test methods that represent average US driving conditions.

• Early Credits. EPA is finalizing a program to allow manufacturers to generate early credits in model years 2009-2011. Credits may be generated through early additional fleet average CO₂ reductions, early A/C system improvements, early advanced technology vehicle credits, and early off-cycle credits. As with other credits, early credits are subject to a five year carry-forward limit based on the model year in which they are generated.

  Manufacturers may transfer early credits between vehicle categories (e.g., between the car and truck fleet). With the exception of model year 2009 early program credits, a manufacturer may trade other early credits to other manufacturers without limits. CAFE credits earned in model years prior to model year 2011 will still be available to manufacturers for use in the CAFE program in accordance with applicable regulations.

• Flex-fuel and Alternative Fuel Vehicle Credits. EPA is allowing Flex-Fuel Vehicle (FFV) credits in line with limits established under the Energy Independence and Security Act of 2007 during model years 2012 to 2015. After model year 2015, EPA will determine alternative fuel vehicle emission values based on a vehicle’s actual emissions while operating on gasoline as well as on the alternative fuel and a demonstration of actual alternative fuel use.

• Optional Temporary Lead-time Allowance Alternative Standards (TLAAS). Manufacturers with limited product lines that have traditionally paid fines to NHTSA in lieu of meeting Corporate Average Fuel Economy (CAFE) standards may find it challenging to comply with the greenhouse gas emission standards. Under the Clean Air Act, manufacturers of light duty motor vehicles cannot pay fines in lieu of complying with motor vehicle emissions standards. However, EPA is finalizing a less stringent, optional, temporary alternative standard provision to provide these manufacturers sufficient lead time to meet the tougher model year 2016 greenhouse gas standards, while preserving consumer choice of vehicles during this time.

Resources

• Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule