Driving Down GHG Emissions,Driving Up Fuel Efficiency:

Coordinating a GroundbreakingNational Vehicle Policy

Kathryn Thomson

Counselor to the Secretary

US Department of Transportation

US Center Meeting Room

December 15, 2009

US Greenhouse Gas Emissions & Transportation

US Greenhouse Gas Emissions by Source, 2007

Electricity

Industrial Energy

AG,LUCF,Waste

Cars & Trucks

Transportation

Residential & Commercial Energy

Other EnergyProcess & Solvents

Other Transport

•The US is the world’s second largest emitter of greenhouse gases•Emissions have grown more slowly since 2000.•Transportation accounts for about 28 percent of gross emissions.•Cars & light trucks account for almost 60 percent of transport emissions.

GDP Pop VMT Pass-Mile

FreightTon-Mi Gross

NetTrans

LDV

2.9%

1.1%

2.1% 2.1%

1.4%

0.9% 0.9%

1.3%

1.1%

2.3%

0.9%

1.4%

1.8%

0.9%

0.3%

-0.5%

0.5%0.4%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Annual Growth Rates of Economic & Transport Indicators and U.S. Greenhouse Gas Emissions: 2000-2007 and 1990-2007

2000-20071990-2007

SOURCE, EPA Inventory Report, USDOT/BTS NTSGreenhouse Gas Emissions

Indicators

Indicators

US Greenhouse Gas Emissions, 1990-2007

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

6500

7000

7500

1990 1992 1994 1996 1998 2000 2002 2004 2006

Tg

CO

2e

Total Mobile Sources

Total Light Duty Vehicles

Total Emissions

Net Emissions (Sources and Sinks)

Source: EPA Inventory Report, 2009

US Vehicle Fleet• 242 million registered light duty vehicles for a population of 301

million. 87 percent of the driving age population are licensed drivers.

• Average vehicle is 8-10 years old, and driven 11,000-12,000 miles per year (18,000-19,000 km). New vehicles are driven further, circa 15,000 miles/year (24,000 km), while older vehicles driven much less. Newer vehicles account for a large share of total travel.

• Almost all vehicles use gasoline spark ignition engines, few diesels in light duty service.

• Existing fleet has lower fuel economy/emissions than new vehicles.• Though new vehicle regulation affects total fleet profile only

gradually, heavier use of new vehicles accelerates the fuel/emissions impact of regulation.

New Vehicle Fuel Economy/CO2 Emissions Rates Have Begun to Improve in Recent Years

• Light change in vehicle fuel economy 1990-2003—technological improvements used for vehicle size/performance.

• Since 2004, fuel economy of both fleets has increased, and sales have begun to shift back towards cars

• New 2008 vehicle sales-weighted average fuel economy/emissions:

– cars 24.3 mpg (9.7 l/100 km, 227 gCO2/km)– trucks: 18.2 mpg (13 l/100km, 303 gCO2/km)

Light Truck Share in US Light Duty Vehicle Sales, 1990-2009

0%

10%

20%

30%

40%

50%

60%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Pe

rcen

t o

f T

ota

l Sa

les

Source: ORNL, TEDB29 and Edmunds

NOTE: 2009 based on January-November sales

Sales-Weighted In-Service Fuel Economy of New US Passenger Cars and Light Trucks, 1990-2009

14

16

18

20

22

24

26

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Mile

s P

er G

allo

n

Passenger Car Light Truck Combined

SOURCE: EPA, "Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends: 1975 through 2009"Economy Trends: 1975 Through 2009"

Note: 2009 data is preliminary.

Sales-Weighted In-Service Tailpipe Carbon Dioxide Emission Rates of New U.S. Passenger Cars & Light Trucks: 1990-2009

0

50

100

150

200

250

300

350

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

gC

O2

/kil

om

ete

r

Passenger Car

Light Truck

Combined

SOURCE: EPA, "Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends: 1975 through 2009"Economy Trends: 1975 Through 2009"

Note: 2009 data is preliminary.

US Fuel Economy Regulation• Corporate Average Fuel Economy (CAFE) Program

initiated in 1975 by Energy Policy and Conservation Act. US new light vehicle fuel economy increase 50 percent between1976 and 1985.

• Political consensus for more stringent regulation evaporated in early 1990s. Little further progress, until…

• Standard-setting for new light trucks resumed in 2003, with increasing stringency through model year 2010.

• Light truck standards reformed by beginning transition to attribute-based standards in model year 2008.

• Reform extended to car standards by Energy Independence & Security Act of 2007. First standard (for MY 2011 cars and trucks) under new law issued in April 2009.

National Fuel Efficiency Policy

• By 2009, multiple, overlapping legal authorities for light duty vehicle regulation.

• Deepening concern among policymakers about both climate change and petroleum situation.

• President Obama announces new National Fuel Efficiency Policy - May 19, 2009

• Joint Rulemaking by USDOT and EPA, covering tailpipe CO2 and fuel economy proposed September 28, 2009.

Standards Increase 5 percent Per Year: A Break with the Past

• NHTSA is proposing Corporate Average Fuel Economy (CAFE) standards for MY 2012-2016 passenger cars and light trucks, and EPA is proposing national greenhouse gas (GHG) emissions standards to be established under Clean Air Act.

• The standards are closely coordinated. Manufacturers can build a single fleet compliant with both standards.

• Standards rise by 5 percent a year, raising industry-wide average to 35.5 mpg (6.6 L/100km, 154 gCO2/km) by 2016.

• Because of differences in legal authorities, CAFE standard is slightly lower than CAA standard.

Historical and Proposed CAFE Standards, 1990-2016

0

5

10

15

20

25

30

35

40

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Mil

es

Pe

r G

all

on

Passenger Car

Light Truck

Combined

Proposed

Source: USDOT/NHTSA

Historical

Historical and Proposed CAFE Standards, 1990-2016

0

50

100

150

200

250

300

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Em

iss

ion

s:

GC

O2

/km

Passenger Car

Light Truck

Combined

ProposedHistorical

Source: NHTSA 2012-2016 CAFE NPRM

Design Features• Footprint-based standard sets targets proportional to

vehicle size. – Mitigates safety impacts – Preserves consumer choice – Greater regulatory efficiency– Size-based standard preserves incentive for weight reduction (vs.

weight-based standard)– Flat curve for larger vehicles eliminates incentive for upsizing.

• Credits are tradable between manufacturers, and transferable between a manufacturer’s cars and trucks (limited for CAFE, fully for CAA)

• Banking and borrowing• Limited provisions for renewable fuel vehicles per CAFE

law, limited provision for small manufacturers (CAA only).• Non-compliance subject to fines (CAFE) and potential

suspension of authority to sell vehicles (CAA)

Footprint-Based Standard

Final MY 2011 and Proposed MY 2012-2016 Passenger Car Fuel Economy Targets

Final MY 2011 and Proposed MY 2012-2016 Light Truck Fuel Economy Targets

Benefits

• Reduce carbon dioxide emissions by 950 million metric tons (CAA) over the life of the regulated vehicles;

• Save 1.8 billion barrels of petroleum (CAA) over the life of the regulated vehicles;

• Benefits exceed costs by 4:1• Savings to consumer of over $3,000 over life of a 2016

regulated vehicle• Regulatory certainty and harmonized rules for auto

industry.• On track to achieve CAFE statutory requirement of 35.0

mpg industry-wide average by 2020 years early.

Regulatory Innovations

USDOT has an extensive transportation sector regulatory, infrastructure development, and project evaluation activities. Two key regulatory innovations from the CAFE program are being extended to other USDOT activities, which will have significant long-term impacts on the transportation sector:

– Environmental Impact Statement covering climate impacts of the proposed regulation;

– Use of social cost of carbon in evaluating regulatory costs and benefits

Next Steps

• Issuance of Final Environmental Impact Statement (early 2010);

• Final Rule (April 2010)

• Vehicles regulated by rule began to be sold to the public (MY 2012, or September 2011).