U.S. States & Regions
States and regions across the country are adopting climate policies, including the development of regional greenhouse gas reduction markets, the creation of state and local climate action and adaptation plans, and increasing renewable energy generation. Read More
Top: Siemens 2.3 MW Offshore Wind Turbines, courtesy Siemens Press.
Bottom: The ADA-ES 1 MWe pilot unit, courtesy US Department of Energy.
This fall, America’s first offshore wind farm will come online off the coast of Rhode Island, launching a new industry with the potential to create clean energy jobs in manufacturing and in the marine trades, attract private investment to New England, and reduce carbon emissions.
New energy technologies often need both state and federal support to be deployed commercially. Rhode Island has been a leader in supporting offshore wind. In 2010, its legislature authorized a state utility to enter into an offtake agreement for offshore wind power. This year, Massachusetts did the same, and New York announced a new Offshore Wind blueprint.
Rhode Island also brought stakeholders together to create an Oceanic Special Area Management Plan outlining multiple uses for the marine environment. These efforts laid the groundwork for Deepwater Wind to develop the Block Island Wind Farm, a 30 MW, five-turbine project that can provide power for most of Block Island’s 1,051 residents.
Similar state policies could help deploy more carbon capture technology as well. A handful of states have clean energy standards that include carbon capture technology, including Illinois, Massachusetts, Michigan, Ohio and Utah. This year, Montana Gov. Steve Bullock highlighted carbon capture in his state’s Energy Future Blueprint. Other states could follow this model.
Both the Western Governors’ Association and the Southern States Energy Board have issued resolutions supporting carbon capture technology as did the National Association of Regulatory Utility Commissioners.
National policies and early financing support played a role in the success of offshore wind projects in Europe. A report by the Global Carbon Capture and Storage Institute noted that European nations included offshore wind in national energy policies and established feed-in tariffs to provide incentives for deployment.
Multilateral development banks like the European Investment Bank played a leadership role by lending to early offshore wind projects, paving the way for commercial banks to follow. Once these major factors were in place, then technology development, the establishment of standardized contract structures, and maintaining a certain level of deal flow helped drive efficiencies that brought down costs.
When it comes to financing carbon capture, use and storage (CCUS) in the U.S., we have some pieces of the puzzle in place. There is already a basic federal and state regulatory framework for underground storage of CO2, for example.
Still, financing policies are needed to enable investment in carbon capture projects. We should extend and expand commercial deployment incentives like tax credits and open up the use of master limited partnerships and private activity bonds to carbon capture, among other things.
A third lesson to draw from offshore wind is that to create new domestic industries, it helps to take a regional approach. Last year, the U.S. Department of Energy (DOE) announced funding for a multi-state effort for offshore wind in the Northeast to develop a regional supply chain.
DOE is taking a similar approach with CCUS and launched seven Regional Carbon Sequestration Partnerships to characterize CO2 storage potential in the U.S. and to conduct small and large-scale CO2 storage injection tests. Millions of tons of CO2 have already been stored for decades in West Texas as part of enhanced oil recovery operations. The regional partnerships characterized the potential for more CO2 storage in deep oil-, gas-, coal-, and saline-bearing formations as illustrated in the Carbon Storage Atlas. To date, the partnerships have safely and permanently injected more than 10 million metric tons of CO2 in these types of formations.
Investing seriously in carbon capture technology has economic benefits including for electrical workers, boilermakers, the building trades, and steelworkers. A new CO2 commodity industry could be created to reuse CO2 to make other products.
Carbon capture also has environmental benefits, helping us address emissions from industrial plants, which are the source of 21 percent of U.S. greenhouse gas emissions, and from coal and natural gas power plants, which currently supply two-thirds of U.S. electricity.
This fall, as we celebrate the beginning of the new offshore wind industry in the U.S., let’s keep thinking big about what is possible with carbon capture technology. With sufficient financial and policy support, we can create skilled jobs, attract private investment, and lower CO2 emissions.
|L to R: Tom Cochran, CEO and Executive Director, The U.S. Conference of Mayors; Daniel A Zarrilli, Senior Director, Climate Policy and Programs, Chief Resilience Officer, New York City Office of the Mayor; Josh Sawislak, Global Director of Resilience, AECOM; Mayor Chris Bollwage, Elizabeth, NJ, Mayor Javier Gonzales, Santa Fe, NM; Mayor Stephanie Rawlings-Blake, Baltimore, MD; Bob Perciasepe, President, C2ES.|
Mayors know what’s going on in their communities. Businesses know how to get a good return on investment. So it seems like a natural fit to have them work together on innovative ways to finance clean energy, strengthen resilience to climate impacts, and reduce greenhouse gas emissions.
Baltimore Mayor Stephanie Rawlings-Blake, past president of the conference, told the gathering that cities are where the work is getting done when it comes to addressing climate change. “Nations talk about energy efficiency and climate action, but mayors are doing it every day,” she said.
At the same time, she noted, mayors need tools to get the job done. “We have to do more with less resources. We’re all in this together.”
That’s where business comes into the picture.
Josh Sawislak, global director of resilience for AECOM, a global engineering, consulting and project management company, said businesses want to get involved in building resilience, and they can do more on the local level.
He noted, however, that there needs to be a sound business case for clean energy investments, and for small businesses, the return on investment needs to be immediate.
“Climate change is costing us money. Not investing in these things is costing us money. We’re not doing the math right,” he said.
Some cities are already taking an innovative approach to bridging the gap between the two interests.
Santa Fe, NM, Mayor Javier Gonzales, the alliance’s chairman, explained how his city’s new Verde Fund taps into community needs and business expertise to help low-income residents access clean energy. “More well-to-do people can navigate complicated systems to get rooftop solar on your house,” he said. “The Verde Fund helps disadvantaged residents do the same.”
When low-income residents can save money on their electricity bills by going solar, he said, they have more money to spend on food, clothing and other essentials. The jobs created by these projects benefit the community as well.
Elizabeth, NJ, Mayor Chris Bollwage, whose city’s vulnerability to climate impacts was exposed during Hurricane Sandy in 2012, said some visionary leadership is also needed to imagine today what will be needed tomorrow.
“When we built Elizabeth’s midtown parking garage, we put in five spaces for electric vehicle charging,” he said. “No one used them the first two years, but now three cars are charging there every day.”
In New York City, officials are being proactive in other ways, like working through the city’s OneNYC plan to reduce energy use in buildings, the source of 70 percent of the city’s emissions. Daniel Zarelli, Mayor Bill de Blasio's senior director of climate and sustainability policies and chief resilience officer, said the city’s goal is to reduce greenhouse gas emissions from buildings by 30 percent by 2025 and to retrofit one million buildings so they’re energy efficient.
All the panelists agreed that federal, state, and local policy must become aligned to move in the right direction. One way to do that is by citizens letting both their government and business leaders know that they value sustainability.
How does a city become resilient? With more communities facing climate impacts, including more severe storms, heat waves, and sea level rise, it’s a question many city planners are struggling with. And it’s a question best answered through collaborative efforts.
To move its resilience planning forward, the City of Providence brought together state officials, city departments, local businesses, universities, hospitals, utilities, and others for a two-day workshop facilitated by C2ES. At the workshop, AECOM and IBM led city and community officials through the Disaster Response Scorecard where participants discussed the risks they face, strategies in place or needed to lessen those risks, and how they can respond now and in the future to minimize loss of life and damage to critical infrastructure.
Providence has already seen rising sea levels and increased flooding. In Rhode Island, sea level could rise as much as 2 feet by 2050 and 7 feet by 2100. The Third National Climate Assessment says the region will experience heat waves, more heavy downpours, and more coastal flooding.
With its extensive waterfront, Providence is on the frontlines of climate change. As Mayor Jorge Elorza told the Providence Journal, “We simply can’t afford to kick the can down the road. By planning ahead we can make wiser investments … to minimize our risk and enhance resilience.”
Cities like Providence are one of many working to strengthen their resilience to climate change now, rather than waiting for a disaster to occur. C2ES held a similar exercise with the City of Anchorage, and will soon hold resilience workshops with Kansas City, MO, Miami Beach, FL, and Phoenix, AZ.
Cities across the U.S. are looking to change how they prepare for and respond to extreme weather and climate change impacts. Strategies to improve resilience include:
- Working with community leaders. Cities are working together with diverse community groups to raise citizens’ awareness of climate change and extreme weather. For example, Providence recently held a workshop with faith-based organizations on hurricane preparedness.
- Partnering to pool resources. The adage “There’s strength in numbers” holds true. Through memorandums of understanding, cities are partnering with their local businesses and non-profits to prepare for and respond to extreme weather. Some businesses are funding collaborative resilience efforts. PG&E will award $1 million to local governments in their utility territory that propose resilient solutions, focused on disadvantaged communities, that others can replicate.
- Visualizing and combining information and data. Mapping of climate change risks can help people understand vulnerabilities. The Rhode Island Coastal Resources Management Council has mapped sea level rise, storm surge, and other risks to coastal communities in the state.
- Developing innovative solutions. The City of Hoboken, N.J., which experienced devastating flooding during Hurricane Sandy, is partnering with BASF to build a park and parking garage that can double as floodwater storage. Once finished, it could hold at least 1 million gallons of excess water.
Innovative solutions like these could help communities improve their resilience to climate change and extreme weather events, and C2ES will continue to share new approaches and best practices
With up to 70 percent of total global emissions originating within the boundaries of cities, local governments are at the center of the fight against climate change.
One area where local governments are stepping up to meet this challenge is the building sector, which offers a variety of opportunities to reduce energy demand. Local governments have long sought to improve energy performance among new buildings, however, new buildings aren’t replacing older ones at a fast enough rate to put a noticeable dent in commercial building energy use. In response, cities are working to improve the performance of the existing commercial building stock.
The new C2ES brief, Local Climate Action: Cities Tackle Emissions of Commercial Buildings, explores four commercial building policy strategies that leading cities are adopting: energy use benchmarking and disclosure mandates, retro-commissioning, retrofitting, and requirements for building upgrades to meet current codes. The brief offers examples of how these policies are developed, structured, and implemented. We looked at several examples in an earlier blog post.
These policies are showing promise for reducing emissions in cities that adopt them. For example, New York City is pursuing a suite of building actions, including a local law that requires buildings greater than 50,000 square feet to ensure all lighting systems meet current city standards in common areas and non-residential tenant spaces greater than 10,000 square feet by 2025. Those non-residential spaces must also be sub-metered, and energy use disclosed to tenants. The city intends to extend the policy to include buildings between 25,000 and 50,000 square feet. The move is expected to reduce annual emissions by about 60,000 metric tons of carbon dioxide (MtCO2e) and cut energy costs by $35 million annually.
As we reviewed these four policy categories, two conclusions became clear:
- Although policies like New York’s retrofitting requirement are not common in U.S. cities, replicating them broadly could provide widespread co-benefits in our communities and possibly contribute measurable greenhouse gas reductions at the national level.
- A larger energy transformation is needed to achieve the aggressive community emissions targets cities have set, and that won't happen without stronger collaboration.
While a number of federal programs provide cities with technical assistance and funding, additional support could be provided by U.S. states and businesses in the form of complementary programs, private investment, and active engagement in policy development. We’ve already seen more of this kind of collaboration through initiatives like the City Energy Project. The increasing number of businesses publicly committing to climate goals indicates there are many more opportunities.
In addition, the Clean Power Plan requires states to meaningfully reduce emissions from the power sector. Properly designed, state implementation plans for the Clean Power Plan could incentivize utilities and commercial building operators to improve the performance of the building stock.
If the actions of New York City, Seattle, and others are any indication, local governments have the potential to enact policies that foster climate action. These key players must continue taking bold actions to help create a policy environment across the country that promotes high-performing buildings, no matter when they were built.
Local Climate Action:
By Todd McGarvey and Amy Morsch
The Growing Urgency of Climate Change:
How Cities and Businesses Build a Sustainable Future
Wednesday, September 21, 2016
1:30 PM - 3:00 PM
295 Lafayette Street, Second Floor
New York, NY 10012-9604
As nations move forward with the landmark Paris Agreement, cities and business are playing a vital and growing role in building a more sustainable, low-carbon future.
In a new partnership, The U.S. Conference of Mayors and C2ES have jointly launched the Alliance for a Sustainable Future to strengthen cooperation between cities and businesses committed to meeting our climate and clean energy challenges.
Please join Alliance leaders as we examine ways cities and the business community can work together to reduce carbon emissions and meet state and national climate and energy goals.
CEO and Executive Director, The U.S. Conference of Mayors
Daniel A. Zarrilli, PE
Senior Director, Climate Policy and Programs, Chief Resilience Officer
New York City Office of the Mayor
Mayor Stephanie Rawlings-Blake
Mayor Javier Gonzales
Santa Fe, New Mexico
Mayor Chris Bollwage
Elizabeth, New Jersey
Global Director of Resilience, AECOM
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.
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.
1. 1978-1985: Congress sets car standard (1978-1985)
6. Bush Admin issues new truck targets (2005-2007)
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.
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)
Combined Cars & Light Trucks
Combined Cars & Light Trucks
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).
Combined Cars & Trucks
Combined Cars & Trucks
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 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.
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
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
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.
- 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.
- 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.
- 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.
- 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
2014–2016 Model Year Gallons of Fuel per 1,000 Ton-Mile
2017 Model Year and Later Gallons of Fuel per 1,000 Ton-Mile
TABLE 5: Fuel Consumption Standards for Combination Tractors for Phase 2, Model Years 2021-2027
2021 Model Year Gallons of Fuel per 1,000 Ton-Mile
2024 Model Year Gallons of Fuel per 1,000 Ton-Mile
2027 Model Year Gallons of Fuel per 1,000 Ton-Mile
TABLE 6: Fuel Consumption Standards for Vocational Vehicles for Phase 1, Model Years 2014-2018
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
Effective for Model Years 2016
Fuel Consumption Standard
Fuel Consumption Voluntary Standards (gallons per 1,000 ton-miles) Effective for Model Years 2013 to 2015
Fuel Consumption Standard
TABLE 7: Fuel Consumption Standards for Vocational Vehicles, for Phase 2, Model Years 2021-2027
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
29.1 / 36
18.5 / 22.8
19.4 / 24.1
30 / 37
18.7 / 23.1
19.6 / 24.3
31.2 / 38.6
18.3 / 22.6
18.6 / 23
Fuel Consumption Standards (gallons per 1,000 ton-miles) for Model Year 2021
27.9 / 35.1
17.6 / 22.2
18.7 / 12.4
28.7 / 36.1
17.8 / 22.4
18.9 / 23.6
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
26.7 / 33.6
16.9 / 21.3
17.9 / 22.1
27.5 / 34.7
17.1 / 21.5
18 / 22.3
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).
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.
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.
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.
- Transportation Sector Emissions Overview
- Comparison of Actual and Projected Fuel Economy for New Passenger Vehicles
- EPA Office of Transportation and Air Quality Regulations and Standards
- NHTSA CAFE Program
- Greene, D. (2010, February 9-10). Why the Market for New Passenger Cars Generally Undervalues Fuel Economy. Retrieved August 5, 2011, from International Transport Forum.
California and New York are leaders in setting ambitious climate goals. Both have committed to producing half their electricity from renewable sources by 2030. Both have set identical goals of reducing greenhouse gas emissions 40 percent below 1990 levels by 2030.
Where they part ways, however, is on nuclear power, which supplies the majority of zero-emission electricity in the United States. California is letting its nuclear plants ride off into the sunset while New York, which just approved a Clean Energy Standard that specifically includes nuclear power, is actively trying to preserve them.
This summer, Pacific Gas & Electric Company (PG&E) announced it will close its Diablo Canyon nuclear plant – the last one in the state of California – by 2025. After striking an agreement with environmental and labor groups, PG&E said it will seek to replace Diablo Canyon’s roughly 18,000 GWh of annual electricity – almost 10 percent of California’s in-state electricity – through improved energy efficiency, which will decrease demand, and renewable energy.
Many experts think it will be a stretch to reach that goal, especially by 2025, and that natural gas will have to fill the gap, as it has where nuclear plants have closed elsewhere in California, Vermont and Wisconsin. In New England, emissions increased 5 percent in 2015 after the Vermont Yankee nuclear plant shut down and was largely replaced by natural gas-fired electricity.
Diablo Canyon might have kept going if PG&E had gotten its way in negotiations with the state last year to include nuclear power in California’s renewable portfolio standard (RPS). That standard requires utilities to produce a certain amount of electricity from renewable sources like wind, solar, geothermal and hydropower. Including nuclear would have helped it compete economically with other low-carbon energy.
New York’s path
That’s exactly the path being taken in New York, which gets a third of its in-state electricity from nuclear power. To preserve the low-carbon benefits of its economically troubled upstate reactors and ensure its electricity mix becomes increasingly clean – with no backsliding – New York’s Public Service Commission has approved a clean energy standard (CES), which is essentially an RPS that includes nuclear.
New York’s CES mandate, which will take effect in 2017, is a novel approach that incorporates best practices from other states. It’s designed to incentivize new renewables deployment while also preserving existing clean electricity generation.
New York’s CES has three tiers, each with its own supply-demand dynamics. Tier 1 will incentivize new renewable development. Tier 2 is designed to provide sufficient revenue for existing renewable electricity supply. Tier 3 is designed to properly value the emission-free power from the state’s at-risk nuclear power plants.
Nuclear plant operators have long sought to correct what they perceive as a market failure to compensate nuclear power for its low-carbon benefits. If the at-risk reactors were replaced by an equivalent amount of fossil generation, emissions would increase by 14 million metric tons – increasing the state’s carbon dioxide emissions nearly 10 percent.
New York’s plan isn’t without controversy. There’s concern that it’s too costly. However, an associated cost study by the PSC found that the state could “meet its clean energy targets with less than a 1 percent impact on electricity bills.”
Most U.S. states have a renewable portfolio standard or alternative energy standard. Only Ohio allows new nuclear to qualify. Only New York has provisions for existing nuclear power plants.
Illinois is working to expand its RPS to include nuclear into a low-carbon portfolio standard, similar to New York’s CES, but efforts have stalled in the state legislature. Exelon has announced plans to close two nuclear power plants in the state in 2017 and 2018, which could lead to an additional 13 million metric tons of carbon dioxide emissions for the state.
Across the U.S., nine reactors are scheduled to close by 2025, which could increase carbon emissions by about 32 million metric tons, or 1.7 percent of the current total U.S. carbon emissions from the power sector.
New York’s approach to reducing its emissions is a practical, well-considered model that many other states could be following (Arguably, a national price on carbon would be more efficient, though more challenging to enact.)
New York’s four upstate reactors provide significant environmental and economic benefits. From a climate perspective, it doesn’t make sense to prematurely close these facilities when, in the short- and medium-term, they cannot realistically be replaced by alternative zero-emission power sources. Keeping these reactors operational also buys us additional time to address energy storage and transmission challenges to support more renewable generation.
With reasonable policies in place to support the existing U.S. reactor fleet, it will be easier for the U.S. to reduce its emissions and achieve its climate goals.
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.
The world is increasingly looking to cities to deliver transformative change toward a low-carbon future. Recent studies point to the great carbon reduction potential resting within city limits by cutting building energy use and improving transportation systems. But very real barriers, especially finance, are hindering progress.
Cities need access to dollars to finance both tried-and-true and innovative pilot projects. Nearly 90 percent of local governments consider lack of funding a significant barrier to sustainability efforts in their community, according to a recent survey.
Initiatives are emerging to improve the financial environment. A C40 Cities Climate Leadership Group report released this month characterizes six ways local governments can access dollars: green bonds, city-backed funds, financial institutions/agency finance, equity capital, emissions trading programs, and climate funds.
The first two financing mechanisms are likely familiar to city leaders. Bonds are common tools to catalyze major projects and more local governments are establishing revolving loan funds to promote certain investments. Some of the others may be less understood, and here we take a closer look at two.
Climate funds are buckets of money to finance clean energy and resilience action. Although commonly used in developing countries, there are a few examples in the United States. The most prominent type are state climate funds that use revenue from programs such as the Regional Greenhouse Gas Initiative (RGGI) in the Northeast and California’s cap-and-trade program to support programs like energy efficiency initiatives run by local governments.
A C2ES webinar on financing resilience featured another type of climate fund in the New Jersey Energy Resilience Bank (ERB). The ERB described its work to enhance distributed energy projects for critical facilities like hospitals and utilities by providing low-interest loans drawn from a $200 million federal disaster recovery fund made available after Hurricane Sandy. For example, the ERB is providing a $4.4 million grant and a $3.1 million loan to finance a 2 MW combined heat and power natural gas system at Saint Peter’s University Hospital. The investment will ensure the hospital maintains power – and continues providing life-saving services – even if the surrounding electric grid shuts down in future storms.
Emissions Trading Programs
Emissions trading programs are typically created for major emitters and implemented by state and national governments. So how would a city participate here? Well, emissions trading programs accomplish a unique thing, which is to create new monetary value, in the form of credits, for clean energy projects. This would involve projects like solar installations; energy efficiency programs for neighborhoods, commercial buildings, and even water treatment facilities; methane capture projects at landfills; basically, the kinds of projects cities facilitate or even spearhead. The credits awarded to such projects can be sold to the polluters who have to meet certain quotas.
Outside of municipal utilities in California and RGGI states, there are currently no local governments participating in emissions trading programs in the United States. An interesting opportunity on the horizon is the Environmental Protection Agency’s (EPA) proposed Clean Energy Incentive Program (CEIP), which is nestled within the currently stayed Clean Power Plan.
The CEIP is meant to incentivize renewable energy projects and energy efficiency investments in low-income communities by offering tradable credits to project developers. This program could establish a financial incentive that local governments can benefit from directly or indirectly by drawing development dollars and jobs to cities, but whether that happens is up to each state (more on that process here).
Ultimately, for the CEIP to become a funding source that appeals to local governments, a number of challenges will have to addressed. There will need to be:
- Certainty around Clean Power Plan and the value of credits to minimize the risk associated with the post-project financial incentive,
- A clear definition of "low-income community,"
- Certainty around available credits, and
- Guidance on attracting CEIP projects.
Besides the six types of finance discussed by the C40 report, there are other financing mechanisms available to cities that intrepid leaders have used to overcome this barrier to action. However, given the competition for government attention and resources, it is no surprise that lack of access to finance results in lower prioritizing of sustainability projects. This is an outcome we cannot afford.