Office of air quality management

Obviously these results will vary by manufacturer and vehicle fleet. However, since manufacturers have a lot of flexibility in deciding how to group vehicles into test groups for the purpose of certification, it is important to remove any incentive to “game the system,” by hiding vehicle configurations with high greenhouse gas emissions within test groups that also contain a low greenhouse gas configuration with a higher sales volume. Otherwise, we will not achieve the greenhouse gas emission reductions required from this regulation.

535. Comment: The proposed test procedures in Part 1 section G of the draft regulations in the ARB proposal do not parallel the current applicable EPA test procedures for fuel economy testing. The Staff Report does not explain why a different test procedure is appropriate. While AIAM understands ARB’s proposal is stated in terms of greenhouse gas emissions standards (i.e., carbon dioxide) rather than as fuel economy standards, from a practical testing perspective it is impossible to separate the two. While EPA’s fuel economy testing procedures have been in place for many years and all auto manufacturers are thoroughly familiar with them, the EPA procedures have evolved over the years to improve accuracy and prevent manufacturers from gaming the system. It would be burdensome on manufacturers and serve no environmental purpose for ARB to adopt a completely new testing approach. (Statement of John Cabaniss, Association of International Automobile Manufacturers, and American Honda Motor Co.)

Agency Response: The proposed test procedures in Part 1 section G of the draft regulations in the ARB proposal do not parallel the current applicable EPA test procedures for fuel economy testing because the greenhouse gas regulations are not fuel economy regulations. Rather the purpose of the greenhouse gas regulations is to reduce the impact of California’s vehicle fleet on global warming. Manufacturers may submit test data from programs such as the federal Tier 2 program or from CAFÉ testing. However, (as discussed in the response to comment 534) using the CAFÉ program as the basis for the greenhouse gas regulation would not achieve the emissions reductions of the California greenhouse gas program.
536. Comment: The ARB has proposed an approach for selecting test vehicles for determining the CO2 equivalent emissions (CO2E) fleet average that is based on testing worst-case vehicle configurations. As a result, a manufacturer’s CO2E fleet average will be over-estimated by a wide margin. To achieve a CO2E fleet average representative of the true average, a manufacturer would need to test all vehicle configurations. ARB should use vehicles tested for CAFÉ to determine the CO2E fleet average. The ARB should also allow analytical techniques, data substitutions and data equivalencies that are permitted under the CAFÉ program. These provisions help manufacturers to manage their test loads while maintaining focus on high volume, representative testing. This will result in fleet averages that are representative of the true average while keeping the test load at a reasonable level by focusing testing on the highest volume configurations. (General Motors)

Agency Response: See response to Comments 532 and 535.

537. Comment: Data generated via analytical techniques, data substitutions, and data equivalencies, as provided for under the Federal CAFÉ program, should be allowed under the greenhouse gas data requirements. (Appendix A to letter from Alliance of Automobile Manufacturers)

Agency Response: Unlike the federal CAFÉ program, the greenhouse gas regulations are an emission control program. Therefore, the certification procedures are structured to assure accurate reporting of all vehicular greenhouse gas emissions, including CO2. .

538. Comment: AB1493 only applies to vehicles “whose primary purpose is noncommercial personal transportation”. In contradiction of this legal requirement, the ARB makes no provision in its standard setting analysis or in compliance provisions for identifying and removing commercial vehicles from the regulated fleets. The ARB justifies this omission with the claim that sales of commercial vehicles are “a small portion of the fleet”. California’s Department of Motor Vehicles defines commercial vehicles as including all vehicles for “transportation of property” as well as vehicles for “transportation of persons for hire, compensation or profit”. These vehicles are registered as commercial vehicles and should be easily identifiable as such by California government agencies. ARB should adjust its calculation of the benefits of the proposed standards and should examine revisions to the standards based on removal of commercial vehicles. In addition, it should create compliance provisions that provide manufacturers with data on which vehicles are considered as commercial vehicles so that these vehicles can be removed from manufacturers’ compliance reporting. (General Motors)

Agency Response: The greenhouse gas regulations comply with the requirement to exempt commercial vehicles as they are defined in AB 1493. See responses to comments 270 and 572.

539. Comment: The data used by the ARB for establishing baseline emission levels that were the basis for the proposed CO2E fleet average standards were derived from the NHTSA CAFÉ database. The data from this database were generated based on CAFÉ procedures that require manufacturers to focus testing on high volume configurations. Therefore, the ARB proposed “worst case” procedures are inconsistent with the approach used to set the standards, effectively increasing the stringency of the standards. Therefore, if the ARB maintains its “worst case” procedures, it must adjust the standards based on using these “worst case” procedures. (General Motors)

540. Comment: Exempt federal vehicles from the calculation of fleet average greenhouse gas emissions. Because these products are Federal products sold throughout the United States, ARB’s proposed regulations regulate CO2E and fuel economy of Federal vehicles sold outside California, which is clearly beyond ARB’s authority. (Appendix A to letter from Alliance of Automobile Manufacturers)

Agency Response: The greenhouse gas regulations adopted by the ARB do not contain standards for individual vehicles or vehicle types. Rather they establish increasingly stringent fleet average emissions requirements each year, which each manufacturer must meet. As with the LEV II regulations, a manufacturer may sell vehicles with higher emission levels than the fleet average limits, provided emissions from the dirtier vehicle are offset by cleaner vehicles, with emission levels that are lower than the fleet average limits. A manufacturer will, therefore, not be required to make any changes to federal vehicle for the purpose of this regulation, but rather to offset those emissions with the sale of California certified vehicles. Consequently, the commenter’s claim that these regulations “regulate CO2E and fuel economy of Federal vehicles sold outside California” is unfounded.

541. Comment: There are two provisions under which manufacturers sell federally certified vehicles in California. One is commonly referred to as the “Cleaner Federal Vehicle Program,” while the other is commonly referred to as the “Federal Offset Program”. The ARB proposed greenhouse gas regulations require that the CO2E of vehicles produced and delivered for sale in California under both these programs be included in the CO2E fleet average calculation and subject to the CO2E fleet average requirements. Because these products are federal products that are sold throughout the United States, the ARB proposed regulations will have the effect of regulating CO2E and fuel economy of Federal vehicles sold outside California. To avoid this type of extraterritorial impact, MDPVs and other vehicles sold under the Cleaner Federal Vehicle Program as well as vehicles sold under the Federal Offset Program should be exempt from the greenhouse gas regulations. (General Motors)

Agency Response: See the response to Comment 540, above.

542. Comment: Allow five years for automakers to make-up debits and carry-over credits without penalty for debits or degradation of credits. (Appendix A to letter from Alliance of Automobile Manufacturers)

Agency Response: We agree with the commenter, and accordingly have extended the life of credits earned to five years and increased the number of years manufacturers are given to make up emission debits also to five years.

543. Comment: BMW believes incentives should be provided for air conditioner compressor downsizing. It should also be recognized that the refrigerant CO2 requires less displacement in a relation of about 5:1 compared to HFC-134a. (BMW Group)

Agency Response: We agree with this statement. On October 19, 2004, ARB released for public comment proposed modifications to the text of the regulations. Included in the proposed modifications are revisions to the crediting structure that address expected compressor downsizing for CO2 systems.

544. Comment: The global warming potential for HFC-152a is 140 per DIN EN 378-1 rather than 120. (BMW Group)

545. Comment: The proposed calculation of CO2-equivalent emissions for hydrogen vehicles, including both fuel cell and ICE, has been written such that these vehicles cannot meet the proposed greenhouse gas emissions standards when they are fully phased in by MY 2016. This oversight is counterproductive in terms of achieving the goals of California’s Hydrogen Highway Initiative. (BMW Group)

546. Comment The proposed regulatory terms in Section 1961.1 pertaining to the noncompliance penalty should be modified as follows:

(1) The penalty should be based on an emissions price per g/mi debt, rather than $5,000 per noncompliant vehicle. (The proposed terms actually are based on an emissions price, but this is obfuscated by regulatory language that implicitly redefines “number of noncompliant vehicles” to mean an emissions-related quantity that is unrelated to the actual number of noncompliant vehicles.)

(2) The emissions price should be the same for all vehicles. (Under the proposed terms, the emissions price would be $24.39 per g/mi for PC/LDT1 and $15.06 per g/mi for LDT2.)

(3) The emissions price should be sufficient to adequately deter noncompliance. (It would ideally be indexed to vehicle and/or fuel prices to accommodate inflation.) (The noncompliance cost under the proposed terms would be fairly low and would not be inflation-indexed, so it may have little or no deterrent value, especially for LDT2.)

(4) The proceeds from penalty charges levied on noncompliant manufacturers should be used to purchase excess emission credits from other manufacturers in order to offset the excess debits represented by noncompliance. (Under the proposed terms, the penalty charges would all go into the General Fund, and associated emission debits would be liquidated.) (Kenneth Johnson)

Agency Response: The proposed regulatory language in Section 1961.1 pertaining to the noncompliance penalty is based on the language used to apply Section 43211 of the California Health and Safety Code to California’s LEV II program. Section 43211 of the California Health and Safety Code allows penalties to be imposed on new motor vehicles that do not meet applicable California emission standards. However, under the LEV II program a manufacturer may certify vehicles to a number of different emission standards, provided that each year a progressively more stringent fleet average NMOG requirement is met. Because there are multiple sets of emission standards to which a manufacturer may certify its vehicles, it was not practical to base noncompliance penalties on compliance with actual emission standards. Rather, it was more appropriate to base noncompliance penalties on manufacturers’ compliance with the fleet average requirement.

The greenhouse gas regulations are similar in structure to the LEV II regulations, in that each manufacturer must demonstrate compliance with a progressively more stringent fleet average requirement, rather than individual vehicle emission standards. Consequently, the methodology used to calculate noncompliance penalties for the greenhouse regulations is the same as that used for LEV II. In preliminary assessments of the possible penalties that could be assessed under the program, staff determined that the penalties faced by manufacturers could run into the millions of dollars.

While the commenter claims that this methodology is insufficient to deter noncompliance and that noncompliance penalties should “ideally be indexed to vehicle and/or fuel prices to accommodate inflation,” he did not suggest a practical alternative methodology that would address his concerns. It is, therefore, not possible to evaluate the appropriateness or feasibility of this suggestion.

Finally, as mentioned in the commenter’s letter, Section 43211 of the California Health and Safety Code stipulates, “Any penalty recovered pursuant to this section shall be deposited in the General Fund.” The specificity of this language clearly precludes the Air Resources Board from using these penalty charges for other purposes.

547. Comment: All the staff's work is based on the assumption that the fuel economy benefits result from people driving just like the CAFE test procedures. And your staff knows from work we've done for the staff in the past that is not the way people drive in California. They drive much more aggressively, much harder acceleration rates, much higher speeds. And the benefits of many of these technologies are much less in real driving.

There's another problem related to benefits that are calculated for the regulation that comes from the fact that all of the staff's calculations are based on modeling that was done using the official test procedures for the corporate average fuel economy testing, the EPA city cycle and the EPA highway cycle. The problem with using those cycles is that they no longer represent the way people are driving in California. They were developed, in the case of a city cycle, over 30 years ago, in the case of the highway cycle, 30 years ago. And that's not the way people are driving these days.

Average California driving is different. But more importantly, the fuel economy improvement associated with many of the technologies that the staff evaluated is different on the actual driving patterns than on these official test procedures.

The EPA city cycle or the LA-4 cycle by some people does not reflect the way people are really driving in California urban areas today. This is based on an enormous amount of data collection that we have done since the early 1990's. We developed cycles for your staff back in 1992 that better represents the way people were driving in the early 1990's. We've updated it with this analysis to represent the way people are driving now with a higher speed limit. The last time we did this it was before the change in the 55-mile an hour speed limit. And what it shows is that the speeds that people are driving at and the acceleration rates that they're using are substantially higher than on the official test procedure.

A policy decision was made back in 1974 when this test procedure was developed at EPA to only collect data on the way people were driving in areas where the 55-mile-an-hour speed limit was being vigorously enforced. And so all of the freeway driving came from the State of Ohio, which for the last 30 years has still been enforcing speed limits more aggressively than most other states. And as a result, we have a relatively low speed/highway cycle that's the basis for all the fuel economy testing. Looking at a composite cycle developed from non-urban driving throughout California, for both northern California and southern California, using data that we've collected for ARB and CalTrans since 1997, there are dramatic differences between the way people are really driving and the kind of cycles that were used to model the benefits of the technologies that the staff looked at. The current cycles, the official cycles, they do a very good job of ranking vehicles in terms of their fuel economy, with few exceptions. If you go to the showroom and you see a vehicle that gets 20 percent better fuel economy based on what's on the window sticker, you can be pretty confident that that vehicle is really going to deliver better fuel economy than the vehicle with the lower rating. But when you start talking about some of the more advanced technologies, the degree of benefit associated with implementing that technology is quite a bit different the way people are actually driving in California these days than what you end up seeing on the cycles that were used by the staff. (Tom Austin, Sierra Research)

Agency Response: As noted in the response to Comment 252, to be consistent with current practice staff relied on the test cycles used to determine compliance with California and federal emission standards. These are the best available source of the needed information.

Staff recognizes that USEPA is currently evaluating changes to the federal test procedures so that they more accurately reflect real world vehicle fuel usage. Preliminary discussions with USEPA indicate that any proposed revisions to the procedures will not result in a significant decrease in calculated fuel usage such that the regulations would not be cost-effective to the consumer.

548. Comment: The California Electric Transportation Coalition (CalETC) supports the Proposed Regulations to Control Greenhouse Gas Emissions from Motor Vehicles, which will be considered by the Board on September 23, 2004.

However, we want to bring to your attention one aspect of the Proposed Regulations that act as a strong disincentive for automakers to bring to market an extremely promising and beneficial technology: grid-connect hybrid electric vehicles (aka, “plug-in” hybrid electric vehicles, or PHEVs).

Under the Proposed Regulation’s credit scheme, an automaker gets no credit in the first year of introduction of a grid-connect hybrid vehicle model for the amount of time that the vehicle is running on the clean electric power. In other words, the assumption in this first year of operation is that these vehicles are run on gasoline alone and never plug into the grid. This assumption makes little sense, because consumers will have paid more for this vehicle just because of this “plug-in” feature, and because it is cheaper to use electricity than gasoline. So why has staff proposed to treat these vehicles in this manner? The rationale is that since we have little experience with these grid-connect vehicles and how frequently consumers will plug-in, the first year will be used to measure how much the vehicles are operated on electricity alone, and then this information will be used to give them appropriate credit in the second and subsequent years. But not crediting them for their actual electricity use in the first year is not right or fair, and is a disincentive to bringing this technology to market.

We understand staff’s concern about the need to accurately measure the electric fraction of vehicle operation for these grid-connect vehicles. We do not object to the data gathering phase in the first year of introduction. But we do think that once this electric fraction is determined from this first year of data, then automakers should get credit for that first year.

CalETC offers three possible alternative solutions to this issue:

1. In the second year of operation, after the data from the first year of operation has been evaluated, automakers should get credit for the measured electric fraction of driving for the second year and an additional amount equal to the fraction from the first year. So the automaker still gets no credit in the first year, but gets credit in the second year of operation for the first and second year combined.

2. Use the best available technical information to estimate the electric fraction in the first year; make it a conservative value if necessary. A 2001 report from the Electric Power Research Institute cites a Society of Automotive Engineers analysis using the 1995 National Personal Transportation Survey that calculated the percentage of time that a grid-connect hybrid with 20 miles of all-electric range would be operated on electricity: 39%. This figure, or a more conservative one, could be estimated for the first year of operation and then adjusted based upon the actual data evaluated in the second year.

3. Retroactively re-calculate an automaker’s fleet average for the first year based on the information evaluated in the second year.

Agency Response: Staff agrees with the commenter, and the staff proposal has been modified accordingly to allow a manufacturer to earn credit for the first model year in which a grid-connected hybrid (i.e., plug-in hybrid) is produced and sold in California. Specifically, a manufacturer will be allowed to estimate the sales and percentage of total vehicle miles traveled at the time of certification in lieu of providing actual data. The manufacturer will then be required to provide to ARB final sales data and data demonstrating the percentage of total vehicle miles traveled using electricity by no later than March 1 of the calendar year following the close of the applicable model year. The March 1 date was chosen to be consistent with the date when manufacturers are required to provide to ARB final vehicle sales data for a model year.

549. Comment: There is one small aspect of existing regulations that we would urge you to correct. Existing regulations contain a disincentive for what we think is an extremely promising new vehicle technology – plug-in hybrids. The disincentive in the regulation is that in the first year of model introduction the vehicle --or the automaker, gets no credit for the actual amount of time that the vehicle's operated on the grid-supplied electric power. We agree with a need to accurately determine the percentage of time the vehicle is actually operated on electricity. We have no objection to that. And we don't object to using the first year of that model introduction to actually collect the --collect the data. But once that data is collected and evaluated, in the second year we believe that auto makers should be credited with this amount of time for the first year operation of that vehicle on the grid-supplied electricity. (Dave Modisette, Executive Director, California Electric Transportation Coalition)

Agency Response: See response to comment 548.

550. Comment: Given the tremendous potential of this technology, we are very concerned about several barriers included in the proposed regulatory language. First, it does not guarantee that an automaker will ever receive credit for the electricity use in a plug-in hybrid, even after submission of verifying data. As written, the regulation only says that an automaker may receive credit for use of alternative fuels in dual fuel vehicles, but leaves this determination up to the Executive Officer.

Bluewater Network’s attorney has determined that this is a critical barrier to implementation of these vehicles. Before investing millions of dollars into a new technology, automakers must have certainty that they will receive appropriate credit.

The other critical barrier is the act that plug-in hybrids will receive no credit for emissions reductions as a result of electricity use until model year 2010—the second year of the program. In year one, automakers would only get credit for gasoline, the more polluting fuel. This is a further disincentive to the production of plug-in hybrids.

We also believe that there is inadequate justification for requiring manufacturers to employ the alternative compliance pathway for plug-in hybrid technology instead of the main compliance pathway that is afforded other vehicles whose actual use of alternative fuels is unquestioned, such as dedicated LPG and CNG vehicles. Unlike other flexible or dual-fuel vehicles, where fueling behavior is hard to predict or monitor, we believe it is possible to determine with sufficient accuracy the percentage of time that consumers would plug these vehicles into the electricity grid. Providing a direct compliance credit in the main pathway for this electricity use would give automakers much more incentive to build these vehicles. An additional suggestion is that if automakers are able to prove electricity use beyond the automatic credit, they could apply for additional credit through the alternative compliance pathway. (Elisa Lynch, Bluewater Network)

Agency Response: See response to comment 548. Regarding the use of “may” versus “shall,” staff agrees with this comment. The regulation was modified accordingly in the first 15-day notice of modified text.
551. Comment: I'm concerned that PHEVs may continue to be overlooked. Over a car's lifetime PHEVs save money. PHEV area highly effective solution for global warming and people will buy these much better cars. (Felix Kramer, California Cars Initiative)

I wanted just to echo the comments made on plug-in hybrids that were made by two of the previous speakers. (Dr. Russell Long, Executive Director, Bluewater Network)

Agency Response: ARB recognizes that grid-connected hybrids (or plug-in hybrids (PHEVs)) can provide worthwhile greenhouse emission benefits. So the regulations include two provisions to encourage the sale of these vehicles in California. A manufacturer may earn credit for the first year in which a grid-connected hybrid is sold (See response to comment 548). In addition, another change to the originally proposed regulations will allow a manufacturer to use a lower upstream emission factor for the electric portion of the vehicle miles traveled than the factor included in the regulations if the manufacturer demonstrates that a lower number is warranted.

552. Comment: Additional emphasis in incentives could also be provided for more aggressive introduction of lower emitting greenhouse gas vehicles such as the plug-in hybrids that have already been mentioned. (Larry Allen, Air Pollution Control Officer for San Luis Obispo County, representing the California Air Pollution Control Officers Association)

Agency Response: See response to comment 551.

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