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US EPA: Carmakers on track to meet 2025 GHG standards, but the 54.5 mpg target is out of reach

19 July 2016

The US Environmental Protection Agency (EPA), the National Highway Traffic Safety Administration and the California Air Resources Board (ARB) jointly released a draft Technical Assessment Report (TAR) that examines the 2022-2025 GHG and fuel economy standards for light-duty vehicles—cars and light trucks. The report concludes that car manufacturers are on track to meet the model year (MY) 2025 standards, using primarily more efficient gasoline engines. However, the highly publicized fuel economy target of 54.5 mpg appears to be out of reach, as US consumers favor larger size vehicles than it was envisioned by the EPA.

The TAR report is a major step in the mid-term evaluation of the MY 2022-2025 standards. According to the analysis in the TAR report, manufacturers are adopting fuel economy technologies at “unprecedented rates” and are on target to meet the 2025 standards. Therefore, the standards are feasible and there is no need for any adjustments or delay of the regulations. The draft report has been released for a 60 day public comment period, during which vehicle manufacturers and other stakeholders can present their point of view. Following the public comment period, the EPA will issue a Proposed Determination and then Final Determination—the latter due by April 2018—on whether or not the 2022-2025 standards are appropriate.

The draft TAR report shows that the MY 2022-2025 standards can be met largely with more efficient gasoline powered cars—only modest penetration of hybrids and only low levels of electric vehicles are needed to meet the standards. Moreover, manufacturers can meet the standards at similar or lower costs than what was anticipated in the 2012 rulemaking with substantial fuel savings payback to consumers, according to the report. Manufacturers are now employing several technologies that the agencies had not considered in the 2012 final rule, for instance higher compression ratio, naturally aspirated gasoline engines, and greater penetration of continuously variable transmissions (CVT).

Despite the recent EPA and California ARB compliance actions against Volkswagen, diesel engines remain a technology for the reduction of GHG emissions from light-duty vehicles, says the report. Advances in NOx and PM emissions control technology are bringing light-duty diesels into compliance with Federal Tier 3 and California LEV III emissions standards at a cost that is competitive with the cost-effectiveness of other high efficiency, advanced engine technologies.

While emphasizing the progress in engine and vehicle efficiency, the TAR report also revised down the predicted MY 2025 fuel economy target of 54.5 mpg. This target, included in the 2012 final rule, was calculated based on an assumed split between cars and light trucks of 67/33%. Considering the consumers’ preference for larger vehicles, the agencies now believe that a more realistic split would be 52/48%, resulting in a 50.8 mpg target in MY 2025 (and a low-to-high range of 50.0 to 52.6 mpg).

It should be noted that the value of 54.5 mpg—while highly publicized by the government agencies and by the media—has been an abstract or “illustrative” value, not representative of fuel economy in real driving. Expressed as mile per gallon equivalent (MPG-e), it is the corresponding fleet average fuel economy value if the entire fleet were to meet the CO2 standard compliance level through tailpipe CO2 improvements. However, the GHG standards are met not only with fuel efficiency technology, but also using other technologies and flexibilities (e.g., air conditioning credits, other CAFE credits, and CAFE penalties). Furthermore, the EPA uses a number of fuel efficiency test methods—for instance, different values are used for CAFE/GHG compliance and for vehicle labels. Fuel economy figures determined through CAFE testing are generally about 20-30% higher than the fuel efficiency in real world driving.

Source: US EPA