Federal

The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More
 

Insights from a Comparative Analysis of Clean Power Plan Modeling

Insights from a Comparative Analysis
of Clean Power Plan Modeling

September 2016

By Charles Fiertz and Ashley Lawson

Download the Brief (PDF)

An updated context, including falling natural gas prices and the extension of federal tax credits, have prompted new modeling of the likely impacts of the Clean Power Plan. Five studies have recently been released analyzing the projected effects of the Clean Power Plan on outcomes including carbon dioxide emissions, the electricity generation mix, and electricity prices. These studies have also examined the probable impacts of different policy choices available to states in implementing the Clean Power Plan. This brief undertakes a comparative analysis of these studies, identifying results that are common across multiple studies and summarizing a few additional analyses of specific policy decisions.

Ashley Lawson
Charles Fiertz
0

Models tell us Clean Power Plan will cut emissions at low cost

In the year since the Clean Power Plan was finalized, natural gas prices have dropped and federal tax incentives for renewables have been extended. Both developments make it cheaper to generate lower- emitting electricity.

C2ES compared five economic modeling studies released this spring and summer to get an updated look at the Clean Power Plan’s expected impact on carbon emissions, the U.S. power mix, and electricity prices. Each study included several scenarios and made slightly different assumptions, so we focused on observations found in multiple studies. Three key findings were:

1. The Clean Power Plan reduces total power sector emissions compared to business-as-usual scenarios in every study.

Market forces alone, such as lower costs for renewables and natural gas-fired generation, do not achieve the same reductions, even with federal tax credit extensions for wind and solar. On average, the scenarios project total emissions in 2030 will be 18 percent lower with the Clean Power Plan than what they’d be in a business-as-usual scenario.

2. Renewable energy increases and coal decreases compared to business-as-usual generation levels across all five studies.

In each study, power sector emissions decline under the Clean Power Plan because of changes in the electricity generation mix. The models are clear that the Clean Power Plan will cause an increase in renewables and a decrease in coal. The models are less clear on the impact the rule will have on natural gas and nuclear generation, though they suggest that these technologies will benefit from Clean Power Plan implementation. In all studies, the diversity of power generation is maintained.

3. The Clean Power Plan will have minimal impact on U.S. national average retail electricity rates.

Two of the five studies examined the plan’s likely impact on rates. In most scenarios, rate changes range from a 2 percent decrease to a 5 percent increase, depending on how the Clean Power Plan is implemented in each state. A 5 percent increase translates to $4.65 per month, or about 15 cents a day, for the average household.

The chart shows the projected CO2 emissions in 2030 from the studies we examined for three scenarios: business as usual (BAU), mass-based Clean Power Plan implementation, and rate-based Clean Power Plan implementation. One studied modeled a mixed, or “patchwork” implementation scenario. The five studies are:  MJ Bradley & Associates (MJB)U.S. Energy Information Administration (EIA)Bipartisan Policy Center (BPC)Center for Strategic and International Studies partnering with Rhodium Group (CSIS/Rhg), and the Nicholas Institute for Environmental Policy Solutions, Duke University.

Another key finding is that cumulative carbon dioxide emissions are very similar under rate-based and mass-based compliance plans (See Figure 1). In other words, the choice of implementation approach doesn’t seem to affect the overall reductions — at least, not when every state makes the same choice.

The Clean Power Plan gives each state an emissions target and leaves it up to the state to determine the best path forward. This gives states maximum choice, even though it could lead to fewer reductions than a comprehensive national approach.

Many states are weighing whether to use a mass-based approach, similar to what California and the nine Northeast states in the Regional Greenhouse Gas Initiative use that limits the total amount of carbon emissions, or a rate-based approach that limits emissions per unit of electricity produced.

What’s clear from the models is that if states choose to go different directions, a patchwork of mass- and rate-based implementation, emissions are likely higher than if they all choose a similar path.

From these studies, we can be confident the Clean Power Plan will reduce power sector emissions compared with business as usual. Now it’s up to states to choose how they will implement the plan to best serve the needs of consumers and reduce the emissions that are causing damaging and costly climate impacts to our communities.

 

Achieving the United States' Intended Nationally Determined Contribution

Achieving the United States' Intended Nationally Determined Contribution

Last updated: November 2016

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More than 180 nations representing more than 95 percent of global greenhouse gas emissions offered “intended nationally determined contributions” (INDCs) to the Paris Agreement reached in December 2015. The United States’ INDC is an economy-wide target to reduce net greenhouse gas emissions 26 to 28 percent below 2005 levels by 2025. Available analyses suggest that the United States could reduce emissions by more than 22 percent with policies either already in place or soon anticipated. Options for achieving further reductions to meet the 2025 target may include additional policies, technological advances, and stronger action by cities and companies. Concerted efforts across multiple fronts could reasonably produce the reductions needed to meet the goal. Specifically, this paper looks at the progress that has been achieved since 2005, the effect existing and proposed policies will have by 2025 as well plausible steps to fill the gap.

Doug Vine
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Federal Vehicle Standards

Light-Duty Vehicle Standards Timeline (1975-2012)

Recent Legal History

Light-Duty Vehicle Standards (Model Years 2012 to 2025)

Medium and Heavy-Duty Standards

Why Consumers Undervalue Fuel Economy 

Calculating Light-Duty Vehicle CAFE Then and Now

Light-Duty Vehicle Program Flexibilities 

For more information

Overview

The transportation sector is one of the largest sources of U.S. carbon dioxide emissions. Cars and light-duty trucks are responsible for 60 percent of transportation emissions. Medium- and heavy-duty vehicles, which include tractor-trailers, large pickups and vans, delivery trucks, buses, and garbage trucks, produce 23 percent of transportation emissions.

The federal government has regulated the fuel economy of cars and light-duty trucks for decades, with the latest rules in 2012 dramatically increasing fuel economy and decreasing greenhouse gas emissions. A 2010 rule raised the average fuel economy of new passenger vehicles to 34.1 miles per gallon (mpg) for model year 2016, a nearly 15 percent increase from 2011. A second rule, finalized in 2012, will raise average fuel economy to up to 54.5 mpg for model year 2025, for a combined increase of more than 90 percent over 2011 levels. The standards also will reduce the carbon intensity of these vehicles by 40 percent from 2012 to 2025.

The standards were adopted by the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) with the cooperation of major automakers and the state of California. Together, the standards represent the largest step taken by the federal government directed at climate change.

Other benefits include improving U.S. energy security and saving drivers money. The car rule for model years 2017 to 2025 is projected to cut annual U.S. oil imports by an additional 6 percent by 2025 from what would happen otherwise, or 400,000 barrels per day. When combined with the rule for model years 2012 to 2016, U.S. oil imports are expected to decline by more than 2 million barrels per day by 2025, equivalent to one-half of the oil the U.S. imports from OPEC countries each day, according to EPA. 

Higher vehicle costs for fuel efficiency improvements will be far outweighed by fuel savings, with the average driver saving about $8,000 net over the lifetime of a model year 2025 car compared to a model year 2010 car.

Fuel economy and greenhouse gas standards were first established for medium- and heavy-duty vehicles in 2011. These standards are projected to save a combined $50 billion in fuel costs, 530 million barrels of oil, and 270 million metric tons of carbon emissions over the lifetime of vehicles for model years 2014 to 2018. EPA and the Department of Transportation proposed new rules in June 2015 for model years after 2018. 

Figure 1: 2013 U.S. carbon dioxide emission, by sector and transportation source

The transportation sector is responsible for more than one-third of U.S. carbon dioxide emissions. Light-duty vehicles account for almost two-thirds of transportation sector emissions; medium- and heavy-duty vehicles account for almost a quarter.

Source: U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2013 (Washington, DC: U.S. Environmental Protection Agency, 2015), http://www.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2015-Main-Text.pdf.

Light-Duty Vehicle Standards Timeline (1975-2012)

The federal government has regulated fuel economy through standards for cars and light-duty trucks for decades. The 1973 Arab oil embargo prompted Congress to pass legislation in 1975 that introduced Corporate Average Fuel Economy (CAFE) standards for new passenger vehicles only. The purpose was to improve the fuel economy of the passenger vehicle fleet to reduce oil imports.

NHTSA, an agency within the U.S. Department of Transportation (DOT), administered the original CAFE program while EPA was responsible for establishing the testing and evaluation protocol for assessing compliance and calculating the fuel economy for each manufacturer. These responsibilities are the same today.

CAFE is the sales-weighted average fuel economy (in mpg) of the passenger cars or light-duty trucks for a manufacturer's fleet. See Calculating Light-Duty Vehicle CAFE Then and Now below for details of how EPA determines compliance. NHTSA fines manufacturers that are out of compliance. NHTSA has so far collected almost $819 million in fines over the life of the CAFE program.

Since 1975, a number of changes have been made to the standards. Figure 1 provides an annotated history of the U.S. CAFE standards. A number of other countries have also instituted fuel economy standards, with most establishing more aggressive targets than the United States. See here for more details.

FIGURE 1: Fuel economy standard for passenger vehicles from MY1978-2025.


Source: NHTSA Summary of Fuel Economy Performance, NHTSA MY2017-2025 Factsheet

1.     1978-1985: Congress sets car standard (1978-1985)
2.     DOT sets truck standard to max feasible (1979-1996)
3.     DOT decreased car standard (1986-1989)
4.     DOT sets car standard to 27.5 mpg (1990-2010)
5.     Congress freezes truck standards at 20.7 mpg (1997-2001)

6.     Bush Admin issues new truck targets (2005-2007)
7.     EISA changes CAFE to footprint standard (2008-present)
8.     Obama Admin issues new car & truck standards (2012-2016)
9.     Obama Admin issues new car & truck standards (2017-2025)

Recent Legal History

Under the federal Clean Air Act, California is the only state with the ability to set air emission standards for motor vehicles, as long as these standards are as stringent as the federal standards and the state receives a waiver from EPA. Once California receives an EPA waiver, other states can adopt California's standards.

In 2002, California enacted the Clean Cars Law (AB 1493) to set vehicle emissions standards for greenhouse gases. In April 2007, the Supreme Court ruled that EPA has the authority to regulate greenhouse gas emissions from the transportation sector under the Clean Air Act. In December 2007, a judge threw out a lawsuit by automakers attempting to block California from implementing AB 1493. The intersection of fuel economy standards and greenhouse gas emission standards was beginning to become clear (see here for more on California vehicle standards).

Back in December 2005, California had applied for an EPA waiver to implement its greenhouse gas standards. In March 2008, EPA denied California's waiver request. Upon taking office in January 2009, President Barack Obama ordered EPA to reconsider that denial.

In June 2009, EPA granted a waiver allowing California to regulate greenhouse gas emissions from vehicles within the state beginning with model year 2009. On September 15, 2009, EPA and NHTSA issued a joint proposal to establish new vehicle standards for fuel economy and greenhouse gas emissions for model years 2012 to 2016, which were finalized on April 1, 2010. The joint proposal reflected an agreement among EPA, NHTSA, California, and most major automakers. California promptly agreed to adopt the federal standards in lieu of its own separate standard; and did so again with the latest standards covering model years 2017 to 2025.

Light-Duty Vehicle Standards (Model Years 2012 to 2025)

The latest passenger vehicle standards, finalized in August 2012, cover passenger cars, light-duty trucks, and medium-duty passenger vehicles, from model year 2017 to 2025. The standards build off those set in April 2010 for model years 2012 to 2016. The standards are based on the vehicle's footprint, which is a measure of vehicle size (see Calculating Light-Duty Vehicle CAFE Then and Now). 

Because NHTSA cannot set standards beyond model year 2021 due to statutory obligations and because of the rules' long time frame, a mid-term evaluation is included in the rule. Thus, standards for model years 2022 through 2025 are considered "augural" by NHTSA. The comprehensive evaluation by both EPA and NHTSA will allow for any compliance changes if necessary for the later years covered by the rule.

As seen in Table 1, the greenhouse gas standard from EPA requires vehicles to meet a target of 163 grams of carbon dioxide equivalent (CO2e) per mile in model year 2025, equivalent to 54.5 mpg if the automotive industry meets the target through only fuel economy improvements.

TABLE 1: Projected Emissions Targets under the Greenhouse Gas Standards (g CO2e/mi)

 

2012

2013

2014

2015

2016

2017

2018

Passenger Cars

261

253

246

235

225

212

202

Light Trucks

352

341

332

317

298

295

285

Combined Cars & Light Trucks

295

286

276

263

250

243

232


 

2019

2020

2021

2022

2023

2024

2025

Passenger Cars

191

182

172

164

157

150

143

Light Trucks

277

269

249

237

225

214

203

Combined Cars & Light Trucks

222

213

199

190

180

171

163

As seen in Table 2, the fuel economy standard from NHTSA requires vehicles to meet an estimated combined average of up to 48.7 mpg in 2025. This estimate is lower than the mpg-equivalent of the EPA target for 2025 mentioned above (54.5 mpg) , because it assumes that manufacturers will take advantage of flexibility available under the law designed to reduce the cost of compliance. See Light-Duty Vehicle Program Flexibilities for more information.

TABLE 2: Projected Fuel Economy Standard (mpg).

 

2012

2013

2014

2015

2016

2017

2018

Passenger Cars

33.6

34.4

35.2

36.4

38.2

39.6

41.1

Light Trucks

25

25.6

26.2

27.1

28.9

29.1

29.6

Combined Cars & Trucks

29.8

30.6

31.4

32.6

34.3

35.1

36.1


 

2019

2020

2021

2022

2023

2024

2025

Passenger Cars

42.5

44.2

46.1

48.2

50.5

52.9

55.3 

Light Trucks

30.0

30.6

32.6

34.2

35.8

37.5

39.3

Combined Cars & Trucks

37.1

38.3

40.3

42.3

44.3

46.5

48.7

 

This table is based on CAFE certification data from model year 2010, a car-truck sales split from the Energy Information Administration's Annual Energy Outlook for 2012, and future sales forecasts by JD Powers.

Medium- and Heavy-Duty Vehicle Standards

Medium- and heavy-duty trucks make up only 5 percent of vehicles on the road but account for about a fifth of U.S transportation emissions. This category includes tractor-trailers, large pickups and vans, delivery trucks, buses, and garbage trucks.

In August 2016, EPA and NHTSA finalized new fuel economy standards for model years 2021-2027, building on earlier standards put in place in 2011 that were the first of their kind in the world.

The earlier standards, for model years 2014 to 2018, are cumulatively projected to save a combined $50 billion in fuel costs, 530 million barrels of oil, and 270 million metric tons of carbon emissions over the lifetime of the heavy-duty vehicles.

EPA estimates the new phase 2 standards for model years 2021-2027 will cut greenhouse gas emissions 25 percent from the final Phase 1 emissions standards, reducing greenhouse gas emissions by about 1.1 billion metric tons. EPA estimates the rules will also reduce oil consumption by nearly 2 billion barrels, and lower fuel expenditures by $170 billion over the life of vehicles sold under this standard. 

In model year 2027, the buyer of a new vehicle would recoup the extra cost of technology used to achieve the standard within:

•    2 years for tractor/trailer combos

•    3 years for pick-ups and vans

•    4 years for vocational vehicles

EPA’s proposed Phase 2 standards would be phased in from model years 2021 to 2027, though proposed standards for some categories of box trailers begin in model year 2018. All proposed CO2 and petroleum use reductions are relative to the final Phase 1 standards, which are being implemented through 2017, with the exception of trailers, which had not previously been regulated. Notably, Phase 2 standards use different methodologies and test procedures, and should not be construed as directly comparable to Phase 1 standards. Trailer emissions can be reduced with the following technologies:

•    Aerodynamic Technologies (different standards apply to Box and Non-Box Trailers)

•    Tire Rolling Resistance

•   Tire Pressure Systems

•    Weight Reduction

Table 3 defines the breakdown for medium- and heavy-duty vehicles by weight.

TABLE 3: Vehicle class breakdown for medium- and heavy-duty vehicles

Class

2b

3

4

5

6

7

8

Gross Vehicle Weight Rating (lb)

8,501 – 10,000

10,001 – 14,000

14,001 – 16,000

16,001 – 19,500

19,501 – 26,000

26,001 – 33,000

>33,000

 

The proposed standards described below represent Alternative 3 of the proposed standards, which would take effect in 2021 and would provide a full 10 years of lead time. Standards are divided into four segments.

  1. Combination Tractors, which are responsible for almost two-thirds of fuel consumption from medium- and heavy-duty trucks, would achieve a 24 percent reduction in fuel consumption by model year 2027.
  2. Trailers Pulled by Combination Tractors, which were not included under Phase 1 standards, would achieve a 9 percent reduction in fuel consumption by model year 2027.
  3. Heavy-Duty Pickup Trucks and Vans would have to improve fuel economy by 16 percent by model year 2027. The standards rely on a "work" factor, which considers the vehicle's cargo capacity, towing capabilities, and whether it has 4-wheel drive. Similar to the light-duty standards, the standards are based on the manufacturer's sales mix.
  4. Vocational Vehicles (delivery trucks, buses, garbage trucks) would achieve a 24 percent reduction in fuel consumption by model year 2027.

TABLE 4: Fuel Consumption Standards for Tractor-Trailers for Phase 1, Model Years 2014-2018

 

Day cab

Sleeper cab

 

Class 7

Class 8

Class 8

2014–2016 Model Year Gallons of Fuel per 1,000 Ton-Mile

Low Roof

10.5

8.0

6.7

Mid Roof

11.7

8.7

7.4

High Roof

12.2

9.0

7.3

2017 Model Year and Later Gallons of Fuel per 1,000 Ton-Mile

Low Roof

10.2

7.8

6.5

Mid Roof

11.3

8.4

7.2

High Roof

11.8

8.7

7.1

 

TABLE 5: Fuel Consumption Standards for Combination Tractors for Phase 2, Model Years 2021-2027

 

 

Day cab

Sleeper cab

 

Class 7

Class 8

Class 8

2021 Model Year Gallons of Fuel per 1,000 Ton-Mile

Low Roof

10.36

7.91

7.1

Mid Roof

11.12

8.39

7.66

High Roof

11.15

8.41

7.44

2024 Model Year Gallons of Fuel per 1,000 Ton-Mile

Low Roof

9.8

7.49

6.68

Mid Roof

10.52

7.95

7.22

High Roof

10.47

7.9

6.94

2027 Model Year Gallons of Fuel per 1,000 Ton-Mile

Low Roof

9.45

7.21

6.3

Mid Roof

10.16

7.66

6.84

High Roof

9.82

7.44

6.32

 

TABLE 6: Fuel Consumption Standards for Vocational Vehicles for Phase 1, Model Years 2014-2018

Regulatory subcategories

Light Heavy-Duty Class 2b-5

Medium Heavy-Duty Class 6-7

Heavy Heavy-Duty Class 8

Fuel Consumption Mandatory Standards (gallons per 1,000 ton-miles) Effective for Model Years 2017 and later

Fuel Consumption Standard

36.7

22.1

21.8

Effective for Model Years 2016

Fuel Consumption Standard

38.1

23.0

22.2

Fuel Consumption Voluntary Standards (gallons per 1,000 ton-miles) Effective for Model Years 2013 to 2015

Fuel Consumption Standard

38.1

23.0

22.2

 

TABLE 7: Fuel Consumption Standards for Vocational Vehicles, for Phase 2, Model Years 2021-2027

Regulatory subcategories

Light Heavy-Duty Class 2b-5  (CI/SI)

Medium Heavy-Duty Class 6-7 (CI/SI)

Heavy Heavy-Duty Class 8 (CI)

Fuel Consumption Standards  (gallons per 1,000 ton-miles) for Model Year 2021

Urban (CI/SI)

29.1 / 36

18.5 / 22.8

19.4 / 24.1

Multi-Purpose

30 / 37

18.7 / 23.1

19.6 / 24.3

Regional

31.2 / 38.6

18.3 / 22.6

18.6 / 23

Fuel Consumption Standards (gallons per 1,000 ton-miles) for Model Year 2021

Urban (CI/SI)

27.9 / 35.1

17.6 / 22.2

18.7 / 12.4

Multi-Purpose

28.7 / 36.1

17.8 / 22.4

18.9 / 23.6

Regional

29.9 / 37.6

17.5 / 22.1

17.9 / 22.4

Fuel Consumption Standards (gallons per 1,000 ton-miles) for Model Year 2027

Urban (CI/SI)

26.7 / 33.6

16.9 / 21.3

17.9 / 22.1

Multi-Purpose

27.5 / 34.7

17.1 / 21.5

18 / 22.3

Regional

28.7 / 36.1

16.7 / 21

17.1 / 21.2

NHTSA and EPA designed the standards based on the kind of work the vehicles undertake. Heavy-duty pickup trucks and vans must meet a standard specified similarly to passenger vehicles, gallons of fuel per mile and grams of CO2e per mile. The other two categories must meet a standard based on the amount of weight being hauled (fuel consumed or grams of CO2e emitted per ton of freight hauled a defined distance). Vocational vehicles are separated by two classes of engine: Compression-Ignition (CI) and Small-Spark Ignition (SI).

Why Consumers Undervalue Fuel Economy

U.S. fuel economy and greenhouse gas standards exist because individual drivers tend to value savings from fuel economy much less than society as a whole, which leads to more oil consumption than would occur if societal benefits were taken into account. The benefits to society of higher fuel economy include, but are not limited to, reduced impacts on global climate, improved energy security, and overall consumer savings. But those benefits are not top of mind when a consumer buys a car.

In addition, when making purchasing decisions, most people assume a dollar today is worth more than a dollar in the future since the dollar today can be invested and grow in value over time. The value people assign to a dollar in the future compared to a dollar today is known as the discount rate, or the interest rate they would expect on a dollar invested today. For example, a discount rate of 20 percent means consumers assume they will make 20 percent interest annually on money invested today, which is unlikely. Thus, the higher the discount rate a consumer uses, the more likely a consumer is to invest that money instead of spending it on a product. 

David Greene from Oak Ridge National Laboratory found that the value consumers place on fuel economy savings for cars varies widely, but empirical research reveals a discount rate between 4 and 40 percent. The discount rate that society puts on fuel savings is much closer to 4 percent, meaning consumers often substantially undervalue fuel economy.

Calculating Light-Duty Vehicle CAFE Then and Now

Each automaker's fleet-wide average fuel economy consists of three potential fleets: domestic passenger cars, imported passenger cars, and light-duty trucks. (The split between domestic and imported cars exists to support domestic automobile production.) With its focus on fuel efficiency, the standard must capture the fuel economy of each vehicle traveling the same number of miles. The harmonic mean of the fleet accomplishes this task (versus the simpler arithmetic mean). That is, instead of dividing the sum of the fuel economy rates in mpg for each vehicle by the total number of vehicles (the arithmetic mean), the reciprocal of the arithmetic mean is used as follows:

 

Where Production is the number of vehicles produced for sale for each model and TARGET is the fuel economy target for the vehicle.

Before 2008, the target fuel economy was the same for all vehicles. In 2008, NHTSA changed the target to a bottom-up one based on attributes of each vehicle instead of a top-down uniform target across an entire automaker's fleet. The vehicle footprint target for light-duty trucks through model year 2016 and for automobiles through model year 2025 is determined as follows:

 

where FOOTPRINT is the product of the vehicle's wheelbase and average track width in square feet, a and b are high and low fuel economy targets that increase from 2012 to 2025 and are constant for all vehicles, and c and d are adjustment factors. Parameter c is measured in gallons per mile per foot-squared, and parameter d is measured in gallons per mile.

For light-duty trucks beginning in model year 2017, an additional variation of the TARGET calculation is considered. This additional variation establishes a "floor" term, which prevents any footprint target from declining between model years. The definitions of parameters a, b, c, and d correspond to e, f, g, h, accordingly. However, the values of these parameters are different.

 

The idea behind an attribute-based standard is that the level of difficulty of meeting the standards is the same for smaller and larger vehicles. A uniform standard, on the other hand, is easier to meet for smaller vehicles (i.e., those with a smaller footprint) than for larger vehicles.

Light-Duty Vehicle Program Flexibilities

The EPA and NHTSA programs have a number of features to make compliance for manufacturers more cost-effective, while also encouraging technological innovation like plug-in electric vehicles. Since there are two programs to comply with, the details of both programs are stipulated below.

  • Credit Trading System: Both programs include a credit system allowing manufacturers to carry efficiency and greenhouse gas credits forward by up to five years and backward up to three years to achieve compliance and avoid fines. Manufacturers can also transfer credits between cars and trucks of their fleet and trade credits with other manufacturers. Additionally, CO2 credits generated for EPA compliance from model year 2010 to 2016 can be carried forward as far as model year 2021.
  • Air Conditioning Improvements: Both programs allow manufacturers to use air conditioning (A/C) system efficiency improvements toward compliance. For the NHTSA program, credits will depend on fuel consumption reductions. The EPA program allows credits for reductions in fuel use and refrigerant leakage, as well as the use of alternative refrigerants with lower global warming potential.
  • Off-Cycle Credits: Current test procedures do not capture all fuel efficiency and greenhouse gas improvements available. Technologies that qualify for additional credit might include solar panels on hybrid vehicles, active aerodynamics, or adaptive cruise control. In addition, manufacturers can apply for credit for newer technologies not yet considered if they can provide sufficient data to EPA.
  • Zero Emission, Plug-in Hybrid, and Compressed Natural Gas Vehicle Incentives: To encourage plug-in electric vehicles, fuel cell vehicles, and compressed natural gas (CNG) vehicles, EPA has included a credit multiplier in the rule for model years 2017 to 2021. In the compliance calculation for GHG Emissions, all-electric and fuel cell vehicles count as two vehicles beginning with model year 2017 and phasing down to 1.7 by model year 2021. Plug-in hybrid electric vehicles begin with a multiplier of 1.6 in model year 2017 and phase down to a value of 1.3 by model year 2021. Electric and fuel cell vehicles sold during this period will count as emitting 0 grams of CO2e per mile. There is no multiplier for model years 2021 to 2025 and EPA limits the zero-grams credit based on vehicle sales during this period. The cap for model years 2021 to 2025 is 600,000 for companies that sell 300,000 of these vehicles from model year 2019 to 2021 and at 200,000 otherwise. Beyond that number, manufacturers of electric and fuel cell vehicles will need to account for their upstream emissions (i.e., electricity generation or hydrogen production) using accounting methodologies defined in the rule.

    EPA has also included credit multipliers for CNG equivalent to plug-in hybrid electric vehicles: 1.6 in model year 2017 and a phase down to 1.3 by model year 2021. Unlike electric and fuel cell vehicles, GHG emissions from CNG vehicles will be measured by EPA.

    In contrast, NHTSA does not believe it has the legal authority to offer credit multipliers. Existing legal authority does allow NHTSA to incentivize alternative fuels, like natural gas, however, by dividing vehicle fuel economy by 0.15; in other words, an electric, fuel cell, or CNG vehicle that has a fuel economy of 15 mpg-equivalent will be treated as a 100 mpg-equivalent vehicle.

  • Truck Hybridization: Both programs offer incentives to add battery-electric hybrid support to full-size trucks. Mild hybrid pickup trucks (15-65 percent of braking energy is recaptured) would be eligible for a per vehicle credit of 10 grams of CO2e per mile during model years 2017 to 2025 so long as the technology is incorporated into 20 percent or more of the company's model year 2017 full-size pickup production, ramping up to at least 80 percent by model year 2021. Strong hybrid pickup trucks (at least 65 percent of braking energy is recaptured) would be eligible for a credit of 20 grams of CO2e per mile per vehicle during model years 2017 to 2025 as long as the technology is used in at least 10 percent of the company's full-size pickup trucks.

For more information

Bob Perciasepe statement on new truck standards

Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions

August 16, 2016

On the U.S. Environmental Protection Agency and U.S. Department of Transportation finalizing new standards to reduce carbon emissions from tractor-trailers and other long-haul trucks:

The new standards announced today will ensure that America’s trucks keep pace with our cars in the race to cut fuel use and carbon emissions.

Transportation is now the largest source of greenhouse gas emissions in the United States, with a fifth of that coming from medium- and heavy-duty vehicles. Trucks meeting the new standards will consume nearly 2 billion fewer barrels of oil, saving $170 billion in fuel costs and cutting carbon emissions by a billion tons.

As the U.S. power sector continues to rely less on fossil fuels, it’s critical that we make stronger progress on transportation emissions to help meet the goal the United States pledged in the Paris Agreement.

Tighter standards are already reducing emissions from new cars and SUVs. Today’s action for trucks and trailers ensures that the latest fuel-saving technology will help efficiently power the next generation of American trucks.

--

To speak to a C2ES expert, contact Laura Rehrmann at rehmannl@c2es.org

About C2ES: The Center for Climate and Energy Solutions is an independent, nonpartisan, nonprofit organization advancing strong policy and action to address climate change. Learn more at www.c2es.org.

One year later, Clean Power Plan having impact despite stay

A year after the Clean Power Plan was finalized, on August 3, 2015, it is already having a tangible impact on how states are thinking about carbon emissions from power plants - and even other sources - and are working to confront the climate challenge.

Before the Supreme Court temporarily halted the plan in February, most states had launched the required public stakeholder outreach.

As we’ve learned from our engagement with states through the C2ES Solutions Forum, even after the stay, many of those conversations have continued, and they’ll affect how states approach climate change regardless of the outcome of the Clean Power Plan’s judicial review.

A few states, like West Virginia, have stopped all Clean Power Plan conversations. Others, like Washington and California, are moving forward to reduce emissions beyond what the Clean Power Plan would require.

The vast majority, including states as diverse as Virginia and Wyoming, fall somewhere in the middle – thinking about, discussing, or working on potential implementation options.

Many states, like South Carolina, are talking about cleaner power because of the forces already affecting the sector today. Consider:

  • Between 2005 and 2015, U.S. power sector emissions fell 20 percent as a result of a shift from coal to natural gas, increased renewable energy, and level electricity demand.
  • Last year, nearly two-thirds of new electric capacity added to the grid was renewables.
  • Some states are grappling with how to help the No. 1 source of zero-emission power, nuclear, remain competitive in a changing marketplace.
  • Utility regulators are trying to determine how to integrate rooftop solar panels, which are surging in popularity, into the system.

For most programs under the Clean Air Act, the Environmental Protection Agency (EPA) sets emission targets, and the states determine how to reach them. The Clean Power Plan is no different. But as states began thinking through how to develop an implementation plan, they found themselves having new and different conversations with new and different colleagues.

For some state environmental officials, Clean Power Plan outreach was the first time they had spoken with their public utility regulators about electric reliability and with other stakeholders about the effects of electricity rates and energy efficiency programs on low-income communities.

State energy offices, city governments, state legislatures, utilities, clean power providers, and energy users of all kinds have been brought into the discussions, deepening relationships and broadening understanding. For example, Arizona started a robust public input process, including everyone from utilities to civic groups, that is continuing after the stay with three more meetings in 2016.

The energy sector is changing rapidly, and the Clean Air Act requires action to bend the curve toward even lower emissions. These stakeholders will have to work together to reduce greenhouse gas emissions in a meaningful and economically efficient way, and these new relationships will help make that happen.

The Clean Power Plan also prompted some states to examine potential implementation pathways. They often found they could reduce emissions with less expense and policy push than they had assumed. Most modeling efforts (see the Rhodium Group, MJ Bradley and Associates, and the Bipartisan Policy Center) have found even lower compliance costs when regional or national cooperation (e.g. interstate trading) is factored in, with some costs approaching zero.

States have also been learning from one another. Over the past 18 months, C2ES has helped convene stakeholders in conversations across the country to look at common themes and examine how market-based strategies can help states create plans that businesses can support and cities can help implement.

Through the Clean Power Plan process, business leaders and state and city officials across the country have learned about the opportunities and challenges of reducing greenhouse gas emissions.

Continuing to analyze options, do modeling and conduct stakeholder outreach, even if it falls short of writing a state plan, will have tremendous value as states consider their energy futures and when judicial review of the Clean Power Plan is complete. Evolving toward a cleaner energy system has both environmental and economic benefits, so we encourage states to continue exploring pragmatic, common-sense approaches to reach that goal.

 

Bob Perciasepe on EPA aviation emissions finding

Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions

July 25, 2016

On the U.S. Environmental Protection Agency (EPA) finalizing two Clean Air Act findings on greenhouse gas emissions from aviation:

EPA’s endangerment finding today on greenhouse gas emissions from aircraft is a sensible step toward a fair, global approach to reducing the climate impact of airline travel. 

In initiating a process to establish domestic standards, the United States is showing the leadership needed to reach an agreement on a market-based system to cost-effectively limit airline emissions when the International Civil Aviation Organization meets in September.

Together, an ICAO climate agreement and steps later this year to reduce HFCs under the Montreal Protocol would build very substantially on the Paris Agreement, and would demonstrate strong cooperation between the public and private sectors in meeting our climate challenge.

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To speak to a C2ES expert, contact Laura Rehrmann at rehmannl@c2es.org

About C2ES: The Center for Climate and Energy Solutions is an independent, nonpartisan, nonprofit organization advancing strong policy and action to address climate change. Learn more at www.c2es.org.

Positive steps on the road to more EV charging

Last year, I spoke to a Slate reporter who asked why the Obama Administration had not invested more in electric vehicle (EV) charging infrastructure. Last night, the administration took steps to reduce transportation emissions by making charging easier and more affordable and by leading the way through a unified, national effort.

The administration announced several initiatives to promote EV adoption. Notably, $4.5 billion in funding has been designated to support guaranteed loans for the installation of new EV charging stations. The administration also plans to develop a guide for federal funding, financial, and technical assistance for EVs and EV charging infrastructure, as well as invest in research and partnerships that will expand EVs’ consumer appeal.

More funding

Range anxiety, or a simple lack of available charging options, continues to impede the growth of the EV market. The administration announced $4.5 billion in guaranteed loans through the U.S. Department of Energy’s (DOE) Loan Program Office to install EV charging stations. Expanding federal loans to include EV charging stations may help remove a major impediment to investing public charging by reducing the cost of capital.

A 2015 C2ES report recommended government loans in the short term to help stimulate the growth of public charging infrastructure and create a sustainable charging network. The report found that charging service providers face difficulties earning a return on investments for public charging projects, but could develop profitable business models with government financial support.

Federal standards

The administration is proposing to develop federal standards to assist with developing networks of DC fast charging stations, which can charge an EV in 30 minutes or less. The U.S. Departments of Energy and Transportation will produce a guide to federal funding programs, financing incentives, and technical assistance for EVs and charging stations. The intervention of the federal government may help create some more consistency between charging networks with varying standards and processes, and the guide may establish an authoritative and inclusive resource for all stakeholders to turn to for a better understanding of EVs.

The proposal leverages existing programs, such as the congressionally approved 2015 FAST Act designating travel corridors for alternative fueling stations, to help expand DC fast charging networks.

This figure illustrates the business challenge facing charging service providers.

This figure illustrates the business challenge facing charging service providers. Over the expected life of the charging equipment, the direct revenue for the provision of charging services is less than the cost of owning and operating the charging station.

Consumer appeal

The White House’s announcement also includes new funding for research to cut EV charging time down to 10 minutes, which would appeal to consumers used to fueling gasoline-powered cars. Consumers may find charging easier with the inclusion of new companies in DOE’s workplace charging program and utility commitments to deploying new EV infrastructure.

There may be some criticism about why the federal government is investing this funding in EVs, and not other clean transportation technologies such as natural gas or hydrogen. EVs currently hit the sweet spot of offering greater carbon reduction potential than natural gas vehicles, with the capacity to get even cleaner as the electric grid decarbonizes, while attracting greater support from automakers and consumers than hydrogen fuel cell vehicles. Twenty-six EV models were sold in the United States last month, with automakers pledging many more models in the coming year.

Now that the transportation sector has become the largest U.S. greenhouse gas-producing sector, these initiatives will help bring clean transportation to consumers by making EV adoption easier and more enjoyable.

Bob Perciasepe statement on North American Climate Partnership

Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions

June 29, 2016

On the North American Climate, Clean Energy, and Environment Partnership Action Plan:

By pledging to power their economies with more clean energy, the leaders of Canada, Mexico and the United States are showing the way toward a more sustainable future. 

Generating half of North American electricity from non-emitting sources by 2025 is ambitious but it’s achievable.

By developing goals and strategies for 2050 and beyond, the three countries also will be charting a clearer course toward achieving the aims of the Paris Agreement, and setting a strong example for other countries.

Canada, Mexico and the United States have connected economies. Working together can make all three economies stronger and more sustainable, and reduce the costly risks of climate change.

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To speak to a C2ES expert, contact Laura Rehrmann at rehmannl@c2es.org

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address the challenges of energy and climate change. Learn more at www.c2es.org.

Climate Innovation: Imagine how we can beat expectations next

Back in 2005, the U.S. Energy Information Administration projected that, under current policies, U.S. energy-related carbon dioxide emissions would increase nearly 18 percent by 2015.

They did not.

In fact, emissions fell – by more than 12 percent. So we were off by 30 percent.

As Yogi Berra may have said: It's tough to make predictions, especially about the future. We didn’t know then the impact a variety of market and policy factors would have on our energy mix. And we don’t know now all of the factors that could help us meet, or exceed, our Paris Agreement pledge – to reduce our net emissions 26-28 percent below 2005 levels by 2025.

U.S. emissions have fallen over the last 10 years due to factors that include:

  • Growth in renewable energy
  • Level electricity demand
  • Improved vehicle efficiency
  • A shift in electricity generation from coal to natural gas.

An unanticipated abundance of cheap natural gas has transformed the U.S. electricity mix. Coal-fired generation has fallen from 50 to 33 percent of the mix, while less carbon-intensive, natural gas-fired generation has risen from 19 to 33 percent.

The last 10 years also included a major economic downturn, which in 2009 drove electricity sales below 2005 levels. Despite a return to positive economic growth in the following year that continues through today, electricity sales have remained flat. Declines in manufacturing; improvements in energy efficiency, including in buildings, lighting, and appliances; warmer winters; and increased use of on-site generation like rooftop solar panels are the likely drivers.

What will happen in the next 10 years?

Certainly, the electric power sector will continue to decarbonize. It is not unreasonable to assume that natural gas will play an even larger role, while coal will play a substantial albeit diminishing role in the electricity mix.

Here are some other factors that are hard to quantify now, but could affect how quickly we transition to a clean energy future:

More zero-emission electricity

Increased clean and renewable electricity production, spurred by the Environmental Protection Agency’s Clean Power Plan and congressional tax credit extensions for wind and solar, could reduce renewable power costs, which have already been dropping. In other words, economies of scale could lead to higher deployments and lower emissions than currently forecast.

Wind and solar generation have grown nearly twelve-fold since 2005, nearly eight times greater than what was expected back then. In the 2016 Annual Energy Outlook, wind and solar generation are projected to increase 2.5 times by 2025.  Historical precedent would tend to suggest that this is a highly conservative estimate.

However, sustained low prices in wholesale power markets from low natural gas prices and a proliferation of renewable electricity sources could harm another zero-emission source: nuclear. In particular, we could see natural gas continue to replace zero-emission merchant nuclear plants, moving us in the wrong direction, unless remedies are implemented. Also, low wholesale prices would tend to discourage new renewable generation.

More zero-emission vehicles

Electric vehicles (EVs) make up less than 1 percent of new U.S. car sales. But as their prices drop and range expands, the adoption rate could accelerate over the next 10 years, spurring important reductions from what is now the largest emitting sector. In one sign of growing demand, more than 400,000 people have put down a deposit for a Tesla Model 3 EV that won’t even be on the market until 2018.

Advances in battery storage could drive the transformation of the transportation sector and would provide obvious benefits to the electric power sector as well.

Meanwhile, automakers are exploring alternative fuels: natural gas, hydrogen fuel cells, and biofuels. And more than a dozen states and nations have formed a Zero-Emission Vehicle (ZEV) Alliance to encourage ZEV infrastructure and adoption.

City action

Action by cities, the magnitude of which is not easily captured by national macroeconomic models, could lead to greater than anticipated emission reductions. Starting with the groundbreaking Mayors Climate Protection Agreement in 2005, initiatives are evolving to connect cities with each other to exchange knowledge and achieve economies of scale for new technologies.

More cities are exploring ways to generate additional reductions by 2025. These include: more energy-efficient buildings; better tracking of electricity and water use, innovative financing for more efficient generation, appliances and equipment; and improved public transportation and promotion of electric vehicles.

Business action

Last, but not least, steps taken by companies beyond regulatory requirements could produce greater emission reductions than we can foresee. Companies are investing in clean energy projects, reducing emissions throughout the supply chain, establishing internal carbon pricing, and helping customers reduce their carbon footprint. More than 150 companies have signed the American Business Act on Climate Pledge.

C2ES and The U.S. Conference of Mayors are teaming up to encourage city and business leaders to work together to reduce greenhouse gas emissions. Imagine how effective we can be when we coordinate climate action.

2015 UNEP report suggests that beyond each countries’ individual commitments to the Paris Agreement, actions by sub-national actors across the globe can result in net additional contributions of 0.75 to 2 billion metric tons of carbon dioxide emissions in 2020.  

The United States has significantly reduced its greenhouse gases over the past decade, and has put in place policies ensuring continued reductions in the years ahead. With so many resources and tools at our disposal, it is clear that we can meet or exceed our climate goal. The only uncertainty is how we will do it.

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Event: Innovation to Power the Nation

Technology, policy, and business experts discuss how innovative technology and policy can help us reach our climate goals at Innovation to Power the Nation (and World): Reinventing Our Climate Future at 1 p.m. ET on Wednesday, June 29. Watch the livestream.

Speakers include Patent and Trademark Office Director Michelle K. Lee; C2ES President Bob Perciasepe; Dr. Kristina Johnson, CEO of Cube Hydro Partners; Nate Hurst, Chief Sustainability & Social Impact Officer at HP; and Dr. B. Jayant Baliga, inventor and director of the Power Semiconductor Research Center at North Carolina State University.

 

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