Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles

Federal RegisterMay 5, 2023

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85, 86, 600, 1036, 1037, and 1066

[EPA-HQ-OAR-2022-0829; FRL 8953-03-OAR]

RIN 2060-AV49

Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Proposed rule.

SUMMARY:

Under its Clean Air Act authority, the Environmental Protection Agency (EPA) is proposing new, more stringent emissions standards for criteria pollutants and greenhouse gases (GHG) for light-duty vehicles and Class 2b and 3 (“medium-duty”) vehicles that would phase-in over model years 2027 through 2032. In addition, EPA is proposing GHG program revisions in several areas, including off-cycle and air conditioning credits, the treatment of upstream emissions associated with zero-emission vehicles and plug-in hybrid electric vehicles in compliance calculations, medium-duty vehicle incentive multipliers, and vehicle certification and compliance. EPA is also proposing new standards to control refueling emissions from incomplete medium-duty vehicles, and battery durability and warranty requirements for light-duty and medium-duty plug-in vehicles. EPA is also proposing minor amendments to update program requirements related to aftermarket fuel conversions, importing vehicles and engines, evaporative emission test procedures, and test fuel specifications for measuring fuel economy.

DATES:

Comments:

Written comments must be received on or before July 5, 2023.

Comments on the information collection provisions submitted to the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA) are best assured of consideration by OMB if OMB receives a copy of your comments on or before June 5, 2023.

Public Hearing:

EPA will announce information regarding the public hearing for this proposal in a supplemental

Federal Register

document.

ADDRESSES:

You may send comments, identified by Docket ID No. EPA-HQ-OAR-2022-0829, by any of the following methods:

•

Federal eRulemaking Portal:

https://www.regulations.gov/

(our preferred method). Follow the online instructions for submitting comments.

•

Email:

a-and-r-Docket@epa.gov

. Include Docket ID No. EPA-HQ-OAR-2022-0829 in the subject line of the message.

•

Mail:

U.S. Environmental Protection Agency, EPA Docket Center, OAR, Docket EPA-HQ-OAR-2022-0829, Mail Code 28221T, 1200 Pennsylvania Avenue NW, Washington, DC 20460.

•

Hand Delivery or Courier (by scheduled appointment only):

EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC 20004. The Docket Center's hours of operations are 8:30 a.m.-4:30 p.m., Monday-Friday (except Federal Holidays).

Instructions:

All submissions received must include the Docket ID No. for this rulemaking. Comments received may be posted without change to

https://www.regulations.gov/

, including any personal information provided. For detailed instructions on sending comments and additional information on the rulemaking process, see the “Public Participation” heading of the

SUPPLEMENTARY INFORMATION

section of this document.

FOR FURTHER INFORMATION CONTACT:

Michael Safoutin, Office of Transportation and Air Quality, Assessment and Standards Division (ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: (734) 214-4348; email address:

Safoutin.Mike@epa.gov

SUPPLEMENTARY INFORMATION:

A. Public Participation

Written Comments

EPA will keep the comment period open until July 5, 2023. All information will be available for inspection at the EPA Air Docket No. EPA-HQ-OAR-2022-0829. Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2022-0829, at

https://www.regulations.gov

(our preferred method), or the other methods identified in the

ADDRESSES

section. Once submitted, comments cannot be edited or removed from the docket. EPA may publish any comment received to its public docket. Do not submit to EPA's docket at

https://www.regulations.gov

any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission (

i.e.,

on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit

https://www.epa.gov/dockets/commenting-epa-dockets

Public Hearing

Please refer to the separate

Federal Register

notice issued by EPA for public hearing details. The hearing notice is available at

https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-multi-pollutant-emissions-standards-model

. Please also refer to this website for any updates regarding the hearings. EPA does not intend to publish additional documents in the

Federal Register

announcing updates.

B. Does this action apply to me?

Entities potentially affected by this proposed rule include light-duty vehicle manufacturers, independent commercial importers, alternative fuel converters, and manufacturers and converters of medium-duty vehicles (

i.e.,

vehicles between 8,501 and 14,000 pounds gross vehicle weight rating (GVWR)). Potentially affected categories and entities include:

Category

NAICS codes

Examples of potentially affected entities

Industry

336111

336112

Motor Vehicle Manufacturers.

Industry

811111

811112

811198

423110

Commercial Importers of Vehicles and Vehicle Components.

Industry

335312

811198

Alternative Fuel Vehicle Converters.

Industry

333618

336120

336211

336312

On-highway medium-duty engine & vehicle (8,501-14,000 pounds GVWR) manufacturers.

North American Industry Classification System (NAICS).

This list is not intended to be exhaustive, but rather provides a guide regarding entities potentially affected by this action. To determine whether particular activities may be regulated by this action, you should carefully examine the regulations. You may direct questions regarding the applicability of this action to the person listed in

FOR FURTHER INFORMATION CONTACT

C. Did EPA conduct a peer review before issuing this proposed action?

This proposed regulatory action was supported by influential scientific information. EPA therefore conducted peer review in accordance with OMB's Final Information Quality Bulletin for Peer Review. Specifically, we conducted peer review on five analyses: (1) Optimization Model for reducing Emissions of Greenhouse gases from Automobiles (OMEGA 2.0), (2) Advanced Light-duty Powertrain and Hybrid Analysis (ALPHA3), (3) Motor Vehicle Emission Simulator (MOVES), (4) The Effects of New-Vehicle Price Changes on New- and Used-Vehicle Markets and Scrappage; (5) Literature Review on U.S. Consumer Acceptance of New Personally Owned Light-Duty Plug-in Electric Vehicles. All peer review was in the form of letter reviews conducted by a contractor. The peer review reports for each analysis are in the docket for this action and at EPA's Science Inventory (

https://cfpub.epa.gov/si/

Table of Contents

I. Executive Summary

A. Purpose of This Proposed Rule and Legal Authority

B. Summary of Proposed Light- and Medium-Duty Vehicle Emissions Programs

C. Summary of Emission Reductions, Costs, and Benefits

D. What are the alternatives that EPA is considering?

II. Public Health and Welfare Need for Emission Reductions

A. Climate Change From GHG Emissions

B. Background on Criteria and Air Toxics Pollutants Impacted by This Proposal

C. Health Effects Associated With Exposure to Criteria and Air Toxics Pollutants

D. Welfare Effects Associated With Exposure to Criteria and Air Toxics Pollutants Impacted by the Proposed Standards

III. EPA Proposal for Light- and Medium-Duty Vehicle Standards for Model Years 2027 and Later

A. Introduction and Background

B. Proposed GHG Standards for Model Years 2027 and Later

C. Proposed Criteria and Toxic Pollutant Emissions Standards for Model Years 2027-2032

D. Proposed Modifications to the Medium-Duty Passenger Vehicle Definition

E. What alternatives did EPA consider?

F. Proposed Certification, Compliance, and Enforcement Provisions

G. Proposed On-Board Diagnostics Program Updates

H. Coordination With Federal and State Partners

I. Stakeholder Engagement

IV. Technical Assessment of the Proposed Standards

A. What approach did EPA use in analyzing potential standards?

B. EPA's Approach to Considering the No Action Case and Sensitivities

C. How did EPA consider technology feasibility and related issues?

D. Projected Compliance Costs and Technology Penetrations

E. Sensitivities—LD GHG Compliance Modeling

F. Sensitivities—MD GHG Compliance Modeling

V. EPA's Basis That the Proposed Standards Are Feasible and Appropriate Under the Clean Air Act

A. Overview

B. Consideration of Technological Feasibility, Compliance Costs and Lead Time

C. Consideration of Emissions of GHGs and Criteria Air Pollutants

D. Consideration of Impacts on Consumers, Energy, Safety and Other Factors

E. Selection of Proposed Standards Under CAA 202(a)

VI. How would this proposal reduce GHG emissions and their associated effects?

A. Estimating Emission Inventories in OMEGA

B. Impact on GHG Emissions

C. Global Climate Impacts Associated With the Proposal's GHG Emissions Reductions

VII. How would the proposal impact criteria and air toxics emissions and their associated effects?

A. Impact on Emissions of Criteria and Air Toxics Pollutants

B. How would the proposal affect air quality?

VIII. Estimated Costs and Benefits and Associated Considerations

A. Summary of Costs and Benefits

B. Vehicle Cost and Fueling Impacts

C. U.S. Vehicle Sales Impacts

D. Greenhouse Gas Emission Reduction Benefits

E. Criteria Pollutant Health and Environmental Benefits

F. Other Impacts Including Maintenance and Repair

G. Energy Security Impacts

H. Employment Impacts

I. Environmental Justice

J. Additional Non-Monetized Considerations Associated With Benefits and Costs: Energy Efficiency Gap

IX. Consideration of Potential Fuels Controls for a Future Rulemaking

A. Impacts of High-Boiling Components on Emissions

B. Survey of High-Boiling Materials in Market Gasoline

C. Sources of High-Boiling Compounds in Gasoline Production and How Reductions Might Occur

D. Methods of Compliance Determination

E. Structure and Costs of Standards

F. Estimated Emissions and Air Quality Impacts

X. Statutory and Executive Order Reviews

A. Executive Order 12866: “Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review”

B. Paperwork Reduction Act

C. Regulatory Flexibility Act

D. Unfunded Mandates Reform Act

E. Executive Order 13132: “Federalism”

F. Executive Order 13175: “Consultation and Coordination With Indian Tribal Governments”

G. Executive Order 13045: “Protection of Children From Environmental Health Risks and Safety Risks”

H. Executive Order 13211: “Energy Effects”

I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR Part 51

J. Executive Order 12898: “Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations”

XI. Statutory Provisions and Legal Authority

I. Executive Summary

A. Purpose of This Proposed Rule and Legal Authority

1. Proposal for Light- and Medium-Duty Multipollutant Standards for Model Years 2027 and Later

The Environmental Protection Agency (EPA) is proposing multipollutant emissions standards for light-duty passenger cars and light trucks and Class 2b and 3 vehicles (“medium-duty vehicles” or MDVs) under its authority in section 202(a) of the Clean Air Act (CAA), 42 U.S.C. 7521(a). The proposed program would establish new, more stringent vehicle emissions standards for criteria pollutant and greenhouse gas (GHG) emissions from motor vehicles for model years (MYs) 2027 through 2032.

Section 202(a) requires EPA to establish standards for emissions of air pollutants from new motor vehicles which, in the Administrator's judgment, cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare. Standards under section 202(a) take effect “after such period as the Administrator finds necessary to permit the development and application of the requisite technology, giving appropriate consideration to the cost of compliance within such period.” Thus, in establishing or revising section 202(a) standards designed to reduce air pollution that endangers public health and welfare, EPA also must consider issues of technological feasibility, the cost of compliance, and lead time. EPA also may consider other factors, and in previous vehicle standards rulemakings, as well as in this proposal, has considered the impacts of potential standards on emissions of air pollutants and associated public health and welfare effects, impacts on the automotive industry, impacts on the vehicle purchasers/consumers, oil conservation, energy security and other energy impacts, safety, and other relevant considerations.

EPA has conducted outreach with a wide range of interested stakeholders to gather input which we have considered in developing this proposal, and we will continue to engage with the public and all interested stakeholders as part of our regulatory development process.

2. Why does EPA believe the proposed standards are appropriate under the CAA?

i. Need for Continued Emissions Reductions Under 202(a) of the Clean Air Act

In 2014, EPA finalized criteria pollutant standards for light-duty vehicles (“Tier 3”) that were designed to be implemented alongside the GHG standards for light-duty vehicles that EPA had adopted in 2012 for model years 2017-2025.

In 2020, EPA revised the GHG standards that had previously been adopted for model years 2021-2026,

and in 2021, EPA proposed and finalized a rulemaking (the “2021 rulemaking”)

that again revised GHG standards for light-duty passenger cars and light trucks for MYs 2023 through 2026, setting significantly more stringent standards for those MYs than had been set by the 2020 rulemaking, and somewhat more stringent than the standards adopted in 2012.

79 FR 23414, April 28, 2014, “Control of Air Pollution From Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards.

85 FR 24174, April 30, 2020, “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks.”

86 FR 74434, December 30, 2021, “Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards.”

Despite the significant emissions reductions achieved by these and other rulemakings, air pollution from motor vehicles continues to impact public health, welfare, and the environment. On August 5, 2021, Executive Order 14037, “Strengthening American Leadership in Clean Cars and Trucks,” directed the Administrator to consider beginning work on a rulemaking to establish new multi-pollutant emissions standards, including both criteria pollutant and GHG emissions, for light- and medium-duty vehicles beginning with MY 2027 and extending through and including at least MY 2030. The Administrator determined that there was a need to begin work on such a rulemaking and accordingly is issuing this proposal.

Motor vehicle emissions contribute to ozone, particulate matter (PM), and air toxics, which are linked with premature death and other serious health impacts, including respiratory illness, cardiovascular problems, and cancer. This air pollution affects people nationwide, as well as those who live or work near transportation corridors. In addition, there is consensus that the effects of climate change represent a rapidly growing threat to human health and the environment, and are caused by GHG emissions from human activity, including motor vehicle transportation. Recent trends and developments in emissions control technology, including vehicle electrification and other advanced vehicle technologies, indicate that more stringent emissions standards are feasible at reasonable cost and would achieve significant improvements in public health and welfare. Addressing these public health and welfare needs will require substantial additional reductions in criteria pollutants and GHG emissions from the transportation sector.

Addressing the public health impacts of criteria pollutants (including particulate matter (PM), ozone, nitrogen oxides (NO

), and carbon monoxide (CO)) will require continued reductions in these pollutants from the transportation sector. In 2023, mobile sources will account for approximately 54 percent of anthropogenic NO

emissions, 5 percent of anthropogenic direct PM

2.5

emissions, and 19 percent of anthropogenic volatile organic compound (VOC) emissions.

4 5 6

Light- and medium-duty-vehicles will account for approximately 20 percent, 19 percent, and 41 percent of 2023 mobile source NO

, PM

2.5

, and VOC emissions, respectively.

4 5 6

The benefits of reductions in criteria pollutant emissions accrue broadly across many populations and communities. There are currently 15 PM

2.5

nonattainment areas with a population of more than 32 million people

and 57 ozone nonattainment areas with a population of more than 130 million people. The importance of continued reductions in these emissions is detailed at length in Section II.

U.S. Environmental Protection Agency (2021). 2016v1 Platform (

https://www.epa.gov/air-emissions-modeling/2016v1-platform

U.S. Environmental Protection Agency (2021). 2017 National Emissions Inventory (NEI) Data.

https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-data

U.S. Environmental Protection Agency (2021). MOVES 3.0.1.

https://www.epa.gov/moves

The population total is calculated by summing, without double counting, the 1997, 2006 and 2012 PM

2.5

nonattainment populations contained in the Criteria Pollutant Nonattainment Summary report (

https://www.epa.gov/green-book/green-book-data-download

The transportation sector is the largest U.S. source of GHG emissions, representing 27.2 percent of total GHG emissions.

Within the transportation sector, light-duty vehicles are the largest contributor, at 57.1 percent, and thus comprise 15.5 percent of total U.S. GHG emissions,

even before considering the contribution of medium-duty Class 2b

and 3 vehicles which are also included under this rule. GHG emissions have significant impacts on public health and welfare as evidenced by the well-documented scientific record and as set forth in EPA's Endangerment and Cause or Contribute Findings under section 202(a) of the CAA.

Additionally, major scientific assessments continue to be released that further advance our understanding of the climate system and the impacts that GHGs have on public health and welfare both for current and future generations, as discussed in Section II.A, making it clear that continued GHG emission reductions in the motor vehicle sector are needed to protect public health and welfare.

Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2020 (EPA-430-R-22-003, published April 2022).

Ibid.

74 FR 66496, December 15, 2009; 81 FR 54422, August 15, 2016.

In addition to and separate from this proposal, the Administration has recognized the need for action to address climate change. Executive Order 14008 (“Tackling the Climate Crisis at Home and Abroad,” January 27, 2021) recognizes the need for a government-wide approach to addressing the climate crisis, directing Federal departments and agencies to facilitate the organization and deployment of such an effort. On April 22, 2021, the Administration announced a new target for the United States to achieve a 50 to 52 percent reduction from 2005 levels in economy-wide net greenhouse gas pollution in 2030, consistent with the goal of limiting global warming to no more than 1.5 degrees Celsius by 2050 and representing the U.S. Nationally Determined Contribution (NDC) under the Paris Agreement. These actions, while they do not inform the standards proposed here, serve to underscore the importance of the EPA's Clean Air Act authority to address pollution from motor vehicles.

Also separately from this proposal, the Administration has recognized the recent industry advancements in zero-emission vehicle technologies and their potential to bring about dramatic reductions in emissions. Executive Order 14037 (“Strengthening American Leadership in Clean Cars and Trucks,” August 5, 2021) identified a goal for 50 percent of U.S. new vehicle sales to be zero-emission vehicles by 2030. Congress passed the Bipartisan Infrastructure Law (BIL)

in 2021, and the Inflation Reduction Act (IRA)

in 2022, which together provide further support for a government-wide approach to reducing emissions by providing significant funding and support for air pollution and GHG reductions across the economy, including specifically, for the component technology and infrastructure for the manufacture, sales, and use of electric vehicles.

Public Law 117-58, November 15, 2021.

Public Law 117-169, August 16, 2022.

These industry advancements in the production and sales of zero- and near-zero emission vehicles are already occurring both domestically and globally, due to significant investments from automakers, greatly increased acceptance by consumers, and added support from Congress, state governments, the European Union and other countries. EPA recognizes that these industry advancements, along with the additional support provided by the BIL and the IRA, represent an important opportunity for achieving the public health goals of the Clean Air Act. As the term “zero-emission vehicle” suggests, these cars and trucks have zero GHG and criteria pollutant emissions from their tailpipes, which can represent significant reductions over current emissions (particularly for GHG). In part because this technology reduces both GHG and criteria pollutant emissions, EPA finds it appropriate to set new standards for model years after 2026 for both criteria pollutants and GHG at this time, rather than continuing its prior approach of coordinating the standards but setting them in separate regulatory actions. Although EPA is proposing to set GHG and criteria pollutant standards in a single rulemaking, these standards are being proposed to meet distinct needs for control of distinct pollutants based on EPA's assessment of the available control technologies for those pollutants, recognizing that some of the available control technologies may overlap.

Likewise, it is important to recognize that, despite this anticipated growth in zero-emission vehicles, many internal combustion engine (ICE) vehicles will continue to be sold during the time frame of the rule and will remain on the road for many years afterward. In addition, some vehicle manufacturers have made public statements

that some portion of their light-duty sales will remain ICE-based for the foreseeable future, predominantly in large SUVs and pickup trucks. EPA anticipates that a compliant fleet under the proposed standards will include a diverse range of technologies, including higher penetrations of advanced gasoline technologies as well as zero-emission vehicles. It is therefore important to consider the environmental and other implications of the ICE portion of the fleet.

Gastelu, G., “General Motors President says ‘the ICE age is not over' amid shift to EVs,” Fox Business, November 17, 2022. Accessed on November 29, 2022 at

https://www.foxbusiness.com/lifestyle/general-motors-president-ice-age-evs

The Administrator finds that the standards proposed herein are consistent with EPA's responsibilities under the CAA and appropriate under CAA section 202(a). EPA has carefully considered the statutory factors, including technological feasibility and cost of the proposed standards and the available lead time for manufacturers to comply with them. Based on our analysis, it is our assessment that the proposed standards are appropriate and justified under section 202(a) of the CAA. Our analysis for this proposal supports the preliminary conclusion that the proposed standards are technologically feasible and that the costs of compliance for manufacturers would be reasonable. The proposed standards would result in significant reductions in emissions of criteria pollutants, GHGs, and air toxics, resulting in significant benefits for public health and welfare. We also estimate that the proposal would result in reduced vehicle operating costs for consumers and that the benefits of the proposed program would significantly exceed the costs.

ii. Recent and Ongoing Advancements in Technology Enable Further Emissions Reductions

In designing the scope, structure, and stringency of the proposed standards, the Administrator considered previous rulemakings, as well as the increasing availability of vehicle technologies that can be utilized by manufacturers to further reduce emissions. This proposal continues EPA's longstanding approach of establishing an appropriate and achievable trajectory of emissions reductions by means of performance-based standards, for both criteria pollutant and GHG emissions, that can be achieved by employing feasible and available emissions-reducing vehicle technologies for the model years for which the standard will apply.

CAA section 202(a) directs EPA to regulate emissions of air pollutants from new motor vehicles and engines, which in the Administrator's judgment cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. While standards promulgated pursuant to CAA section 202(a) are based on application of technology, the statute does not specify a particular technology or technologies that must be used to set such standards; rather, Congress has authorized and directed EPA to adapt its standards to emerging technologies.

Thus, as with prior rules, EPA is assessing the feasibility of new standards in light of current and anticipated progress by automakers in developing and deploying new technologies. The levels of stringency in this proposal continue the trend of increased emissions reductions which have been adopted by prior EPA rules. The Tier 3 standards achieved reductions of up to 80 percent in tailpipe criteria pollutant emissions by treating the engine and fuel as an integrated system and requiring cleaner fuel as well as improved catalytic emissions control systems. Compliance with the EPA GHG standards over the past decade has been achieved predominantly through the application of advanced technologies to internal-combustion engine (ICE) vehicles. In that same time frame, as the EPA GHG standards have increased in stringency, automakers have relied to a greater degree on a range of electrification technologies, including hybrid electric vehicles (HEVs) and, in recent years, plug-in electric vehicles (PEVs) which include plug-in hybrid electric vehicles (PHEVs) and battery-electric vehicles (BEVs). As these technologies have been advancing rapidly in just the past several years, and battery costs have continued to decline, automakers have begun to include BEVs and PHEVs as an integral and growing part of their current and future product lines, leading to an increasing diversity of these clean vehicles planned for high-volume production. As a result, zero- and near-zero emission technologies are more feasible and cost-effective now than at the time of prior rulemakings.

These industry developments in vehicle electrification are driven by a number of factors, including the need to compete in a diverse market, as zero-emission transportation policies continue to be implemented across the world. An increasing number of U.S. states have taken actions to shift the light-duty fleet toward zero-emissions technology. In 2022, California finalized the Advanced Clean Cars II rule

that will require, by 2035, all new light-duty vehicles sold in the state to be zero-emission vehicles,

with New York,

16 17

Massachusetts,

18 19

and Washington state

following suit, likely to be followed by Oregon and Vermont as well.

Several other states may adopt similar provisions as members of the International Zero-Emission Vehicle Alliance.

In addition to the U.S., auto manufacturers also compete in a global market that is becoming increasingly electrified. Globally, at least 20 countries, as well as numerous local jurisdictions, have announced targets for shifting all new passenger car sales to zero-emission vehicles in the coming years, including Norway (2025); Austria, the Netherlands, Denmark, Iceland, India, Ireland, Israel, Scotland, Singapore, Sweden, and Slovenia (2030); Canada, Chile, Germany, Thailand, and the United Kingdom (2035); and France, Spain, and Sri Lanka (2040).

23 24 25 26

Many of these announcements extend to light commercial vehicles as well, and several also target a shift to 100 percent all-electric medium- and heavy-duty vehicle sales (Norway targeting 2030, Austria 2035, and Canada and the United Kingdom 2040).

California Air Resources Board, “California moves to accelerate to 100% new zero-emission vehicle sales by 2035,” Press Release, August 25, 2022. Accessed on Nov. 3, 2022 at

https://ww2.arb.ca.gov/news/california-moves-accelerate-100-new-zero-emission-vehicle-sales-2035

State of California Office of the Governor, “Governor Newsom Announces California Will Phase Out Gasoline-Powered Cars & Drastically Reduce Demand for Fossil Fuel in California's Fight Against Climate Change,” Press Release, September 23, 2020.

New York State Senate, Senate Bill S2758, 2021-2022 Legislative Session. January 25, 2021.

Governor of New York Press Office, “In Advance of Climate Week 2021, Governor Hochul Announces New Actions to Make New York's Transportation Sector Greener, Reduce Climate-Altering Emissions,” September 8, 2021. Accessed on September 16, 2021

https://www.governor.ny.gov/news/advance-climate-week-2021-governor-hochul-announces-new-actions-make-new-yorks-transportation

Boston.com

, “Following California's lead, state will likely ban all sales of new gas-powered cars by 2035,” August 27, 2022. Accessed November 3, 2022 at

https://www.boston.com/news/local-news/2022/08/27/following-californias-lead-state-will-likely-ban-all-sales-of-new-gas-powered-cars-by-2035/

Commonwealth of Massachusetts, “Request for Comment on Clean Energy and Climate Plan for 2030,” December 30, 2020.

Washington Department of Ecology, “Washington sets path to phase out gas vehicles by 2035,” Press Release, Sept. 7, 2022. Accessed on Nov. 3, 2022 at

https://ecology.wa.gov/About-us/Who-we-are/News/2022/Sept-7-Clean-Vehicles-Public-Comment

Associated Press, “17 states weigh adopting California's electric car mandate,” September 3, 2022. Accessed on November 4, 2022 at

https://apnews.com/article/technology-california-clean-air-act-vehicle-emissions-standards-eebb48c13e24835f2c5b9cb56796182a

ZEV Alliance, “International ZEV Alliance Announcement,” Dec. 3, 2015. Accessed on July 16, 2021 at

http://www.zevalliance.org/international-zev-alliance-announcement/

Environment and Climate Change Canada, “Achieving a Zero-Emission Future for Light-Duty Vehicles: Stakeholder Engagement Discussion Document December 17,” EC21255, December 17, 2021. Accessed on February 13, 2023 at

https://www.canada.ca/content/dam/eccc/documents/pdf/cepa/achieving-zero-emission-future-light-duty-vehicles.pdf

International Council on Clean Transportation, “Update on the global transition to electric vehicles through 2019,” July 2020.

International Council on Clean Transportation, “Growing momentum: Global overview of government targets for phasing out new internal combustion engine vehicles,” posted 11 November 2020, accessed April 28, 2021 at

https://theicct.org/blog/staff/global-ice-phaseout-nov2020

Reuters, “Canada to ban sale of new fuel-powered cars and light trucks from 2035,” June 29, 2021. Accessed July 1, 2021 from

https://www.reuters.com/world/americas/canada-ban-sale-new-fuel-powered-cars-light-trucks-2035-2021-06-29/

Together, the countries that through mid-2022 had set a target of 100 percent light-duty zero-emission vehicle sales by 2035 represented at least 25 percent of today's global light-duty vehicle market.

In addition, in February 2023 the European Union gave preliminary approval to a measure to phase out sales of ICE passenger vehicles in its 27 member countries by 2035.

28 29

In 2021, BEVs and PHEVs together already comprised about 18 percent of the new vehicle market in Western Europe,

led by Norway which reached 64.5 percent BEV and 86.2 percent combined BEV and PHEV sales in 2021, increasing to 79.3 percent BEV and 87.8 percent combined BEV and PHEV sales in 2022.

31 32 33

International Energy Agency, “Global EV Outlook 2022,” p. 57, May 2022. Accessed on November 18, 2022 at

https://iea.blob.core.windows.net/assets/e0d2081d-487d-4818-8c59-69b638969f9e/GlobalElectricVehicleOutlook2022.pdf

Reuters, “EU approves effective ban on new fossil fuel cars from 2035,” October 28, 2022. Accessed on Nov. 2, 2022 at

https://www.reuters.com/markets/europe/eu-approves-effective-ban-new-fossil-fuel-cars-2035-2022-10-27/

Reuters, “EU lawmakers approve effective 2035 ban on new fossil fuel cars,” February 14, 2023. Accessed on February 26, 2023 at

https://www.reuters.com/business/autos-transportation/eu-lawmakers-approve-effective-2035-ban-new-fossil-fuel-cars-2023-02-14/

Ewing, J., “China's Popular Electric Vehicles Have Put Europe's Automakers on Notice,” New York Times, accessed on November 1, 2021 at

https://www.nytimes.com/2021/10/31/business/electric-cars-china-europe.html

Klesty, V., “With help from Tesla, nearly 80% of Norway's new car sales are electric,” Reuters, accessed on November 1, 2021 at

https://www.reuters.com/business/autos-transportation/tesla-pushes-norways-ev-sales-new-record-2021-10-01/

Norwegian Information Council for Road Traffic (OFV), “New car boom and electric car record in September,” October 1, 2021, accessed on November 1, 2021 at

https://ofv.no/aktuelt/2021/nybil-boom-og-elbilrekord-i-september

Holland, M., ” Norway's EV Sales Explode Ahead Of Policy Changes,” CleanTechnica, January 4, 2023. Accessed on February 22, 2023 at

https://cleantechnica.com/2023/01/04/norways-ev-sales-explode-ahead-of-policy-changes/

Recent trends in market penetration of zero and near-zero emission vehicles suggest that demand for these vehicles in the U.S. is rapidly increasing. Even under current standards, the production of new PEVs (including both BEVs and PHEVs) is growing rapidly and roughly doubling every year, projected to be 8.4 percent of U.S. light-duty vehicle production in MY 2022, up from 4.4 percent in MY 2021 and 2.2 percent in MY 2020.

In 2022, BEVs alone accounted for about 807,000 U.S. new car sales, or about 5.8 percent of the new light-duty passenger vehicle market, up from 3.2 percent BEVs the year before.

In California, new light-duty zero-emission vehicle (ZEV) sales in 2022 reached 18.8 percent of all new cars, up from 12.4 percent in 2021 and more than twice the share from 2020.

Environmental Protection Agency, “The 2022 EPA Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy, and Technology since 1975,” EPA-420-R-22-029, December 2022.

Colias, M., “U.S. EV Sales Jolted Higher in 2022 as Newcomers Target Tesla,” Wall Street Journal, January 6, 2023.

California Energy Commission, “New ZEV Sales in California” online dashboard, viewed on February 13, 2023 at

https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics/new-zev-sales

Before the Inflation Reduction Act (IRA) became law, analysts were already projecting that significantly increased penetration of plug-in electric vehicles would occur in the United States and in global markets. For example, in 2021, IHS Markit predicted a nearly 40 percent U.S. PEV share by 2030.

More recent projections by Bloomberg New Energy Finance suggest that under current policy and market conditions, and prior to the IRA, the U.S. was on pace to reach 40 to 50 percent PEVs by 2030.

When adjusted for the effects of the Inflation Reduction Act, this estimate increases to 52 percent.

Another study by the International Council on Clean Transportation (ICCT) and Energy Innovation that includes the effect of the IRA estimates that the share of BEVs will increase to 56 to 67 percent by 2032.

These projections typically are based on assessment of a range of existing and developing factors, including state policies (such as the California Advanced Clean Cars II program and its adoption by Section 177 states); although the assumptions and other inputs to these forecasts vary, they point to greatly increased penetration of electrification across the U.S. light-duty fleet in the coming years, without specifically considering the effect of increased emission standards under this proposed rule.

IHS Markit, “US EPA Proposed Greenhouse Gas Emissions Standards for Model Years 2023-2026; What to Expect,” August 9, 2021. Accessed on March 9, 2023 at

https://www.spglobal.com/mobility/en/research-analysis/us-epa-proposed-greenhouse-gas-emissions-standards-my2023-26.html

. The table indicates 32.3% BEVs and combined 39.7% BEV, PHEV, and range-extended electric vehicle (REX) in 2030.

Bloomberg New Energy Finance (BNEF), “Electric Vehicle Outlook 2022,” Long term outlook economic transition scenario.

Tucker, S., “Study: More Than Half of Car Sales Could Be Electric By 2030,” Kelley Blue Book, October 4, 2022. Accessed on February 24, 2023 at

https://www.kbb.com/car-news/study-more-than-half-of-car-sales-could-be-electric-by-2030/

International Council on Clean Transportation, “Analyzing the Impact of the Inflation Reduction Act on Electric Vehicle Uptake in the US,” ICCT White Paper, January 2023. Available at

https://theicct.org/wp-content/uploads/2023/01/ira-impact-evs-us-jan23.pdf

These trends echo an ongoing global shift toward electrification. Global light-duty passenger PEV sales (including BEVs and PHEVs) reached 6.6 million in 2021, bringing the total number of PEVs on the road to more than 16.5 million globally.

For fully-electric BEVs, global sales rose to 7.8 million in 2022, an increase of about 68 percent from the previous year and representing about 10 percent of the new global light-duty passenger vehicle market.

42 43

Leading sales forecasts predict that BEV sales will continue to accelerate globally in the years to come. For example, in June 2022, Bloomberg New Energy Finance predicted that global sales will rise to 21 million in 2025 (implying an annual growth rate of about 39 percent from 2022), with total global vehicle stock reaching 77 million BEVs by 2025 and 229 million BEVs by 2030.

International Energy Agency, “Global EV Outlook 2022,” p. 107, May 2022. Accessed on November 18, 2022 at

https://iea.blob.core.windows.net/assets/e0d2081d-487d-4818-8c59-69b638969f9e/GlobalElectricVehicleOutlook2022.pdf

Boston, W., “EVs Made Up 10% of All New Cars Sold Last Year,” Wall Street Journal, January 16, 2023.

Colias, M., “U.S. EV Sales Jolted Higher in 2022 as Newcomers Target Tesla,” Wall Street Journal, January 6, 2023.

Bloomberg NEF, “Net-Zero Road Transport By 2050 Still Possible, As Electric Vehicles Set To Quintuple By 2025,” June 1, 2022. Accessed on February 21, 2023 at

https://about.bnef.com/blog/net-zero-road-transport-by-2050-still-possible-as-electric-vehicles-set-to-quintuple-by-2025/.

The year-over-year growth in U.S. PEV sales suggests that an increasing share of new vehicle buyers are concluding that a PEV is the best vehicle to meet their needs. Many of the zero-emission vehicles already on the market today cost less to operate than ICE vehicles, offer improved performance and handling, have a driving range similar to that of ICE vehicles, and can be charged at a growing network of public chargers as well as at home.

45 46 47 48 49 50

PEV owners often describe these advantages as key factors motivating their purchase.

A 2022 survey by Consumer Reports shows that more than one third of Americans would either seriously consider or definitely buy or lease a BEV today, if they were in the market for a vehicle.

Given that most consumers are currently much less familiar with BEVs than with ICE vehicles, this share is likely to rapidly grow as familiarity increases in response to increasing numbers of BEVs on the road and growing visibility of charging infrastructure. Most PEV owners who purchase a subsequent vehicle choose another PEV, and often express resistance to returning to an ICE vehicle after experiencing PEV ownership.

53 54

Department of Energy Vehicle Technologies Office, Transportation Office, Transportation Analysis Fact of the Week #1186, “The National Average Cost of Fuel for an Eletric Vehicle is about 60% Less than for a Gasoline Vehicle,” May 17, 2021.

Department of Energy Vehicle Technologies Office, Transportation Office, Transportation Analysis Fact of the Week #1190, “Battery-Electric Vehicles Have Lower Scheduled Maintenance Costs than Other Light-Duty Vehicles,” June 14, 2021.

International Council on Clean Transportation, “Assessment of Light-Duty Electric Vehicle Costs and Consumer Benefits in the United States in the 2022-2035 Time Frame,” October 2022.

Consumer Reports, “Electric Cars 101: The Answers to All Your EV Questions,” November 5, 2020. Accessed June 8, 2021 at

https://www.consumerreports.org/hybrids-evs/electric-cars-101-the-answers-to-all-your-ev-questions/.

Department of Energy Vehicle Technologies Office, Transportation Analysis Fact of the Week #1253, “Fourteen Model Year 2022 Light-Duty Electric Vehicle Models Have a Driving Range of 300 Miles or Greater,” August 29, 2022.

Department of Energy Alternative Fuels Data Center, Electric Vehicle Charging Station Locations. Accessed on May 19, 2021 at

https://afdc.energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC.

Hardman, S., and Tal, G., “Understanding discontinuance among California's electric vehicle owners,” Nature Energy, v.538 n.6, May 2021 (pp. 538-545).

Consumer Reports, “More Americans Would Buy an Electric Vehicle, and Some Consumers Would Use Low-Carbon Fuels, Survey Shows,” July 7, 2022. Accessed on March 8, 2023 at

https://www.consumerreports.org/hybrids-evs/interest-in-electric-vehicles-and-low-carbon-fuels-survey-a8457332578/.

Muller, J., “Most electric car buyers don't switch back to gas,”

Axios.com.

Accessed on February 24, 2023 at

https://www.axios.com/2022/10/05/ev-adoption-loyalty-electric-cars.

Hardman, S., and Tal, G., “Understanding discontinuance among California's electric vehicle owners,” Nature Energy, v.538 n.6, May 2021 (pp. 538-545).

Recent literature indicates that consumer affinity for PEVs is strong. A recent study utilizing data from all new light-duty vehicles sold in the U.S. between 2014 and 2020, focused on comparisons of BEVs with their closest ICE counterparts, found that BEVs are

preferred to the ICE counterpart in some segments.

In addition, when comparing all BEV sales with sales of the closest ICE counterparts, BEVs attain a market share of over 30 percent, which is significantly greater than the BEV market share among all vehicles.

This suggests that the share of PEVs in the marketplace is, at least partially, constrained due to the lack of offerings needed to convert existing demand into market share.

However, the number and diversity of electrified vehicle models is rapidly increasing.

For example, the number of PEV models available for sale in the U.S. has more than doubled from about 24 in MY 2015 to about 60 in MY 2021, with offerings in a growing range of vehicle segments.

Recent announcements indicate that this number will increase to more than 80 models by MY 2023,

and more than 180 models by 2025.

Gillingham, K., van Benthem, A., Weber, S., Saafi, D., He, X. “Has Consumer Acceptance of Electric Vehicles Been Increasing: Evidence from Microdata on Every New Vehicle Sale in the United States.” American Economic Association: Papers & Proceedings, 2023, forthcoming.

https://resources.environment.yale.edu/gillingham/GBWSH_ConsumerAcceptanceEVs.pdf.

Muratori et al., “The rise of electric vehicles—2020 status and future expectations,” Progress in Energy v3n2 (2021), March 25, 2021. Accessed July 15, 2021 at

https://iopscience.iop.org/article/10.1088/2516-1083/abe0ad.

Fueleconomy.gov,

2015 Fuel Economy Guide and 2021 Fuel Economy Guide.

Environmental Defense Fund and M.J. Bradley & Associates, “Electric Vehicle Market Status—Update, Manufacturer Commitments to Future Electric Mobility in the U.S. and Worldwide,” April 2021.

Environmental Defense Fund and ERM, “Electric Vehicle Market Update: Manufacturer Commitments and Public Policy Initiatives Supporting Electric Mobility in the U.S. and Worldwide,” September 2022.

According to the U.S. Bureau of Labor Statistics, growth in PEV sales is driven in part by growing consumer demand and growing automaker commitments to electrification and will be further supported by policy measures including the Bipartisan Infrastructure Law and the Inflation Reduction Act.

As the presence of PEVs in the fleet increases, consumers are encountering PEVs more often in their daily experience. Many analysts believe that as PEVs continue to increase their market share, PEV ownership will continue to broaden its appeal as consumers gain more exposure and experience with the technology and with the benefits of PEV ownership,

with some analysts suggesting that a “tipping point” for PEV adoption may then result.

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U.S. Bureau of Labor Statistics, “Charging into the future: the transition to electric vehicles,” Beyond the Numbers v12 n4, February 2023. Available at:

https://www.bls.gov/opub/btn/volume-12/charging-into-the-future-the-transition-to-electric-vehicles.htm.

Jackman, D.K., K.S. Fujita (LBNL), H.C. Yang (LBNL), and M. Taylor (LBNL). Literature Review of U.S. Consumer Acceptance of New Personally Owned Light-Duty (LD) Plug-in Electric Vehicles (PEVs). U.S. Environmental Protection Agency, Washington, DC Available at:

https://cfpub.epa.gov/si/si_public_record_report.cfm?dirEntryId=353465

Car and Driver, “Electric Cars' Turning Point May Be Happening as U.S. Sales Numbers Start Climb,” August 8, 2022. Accessed on February 24, 2023 at

https://www.caranddriver.com/news/a39998609/electric-car-sales-usa/.

Randall, T., “US Crosses the Electric-Car Tipping Point for Mass Adoption,”

Bloomberg.com

, July 9, 2022. Accessed on February 24, 2023 at

https://www.bloomberg.com/news/articles/2022-07-09/us-electric-car-sales-reach-key-milestone.

Romano, P., “EV adoption has reached a tipping point. Here's how today's electric fleets will shape the future of mobility,” Fortune, October 11, 2022. Accessed on February 24, 2023 at

https://fortune.com/2022/10/11/ev-adoption-tesla-semi-tipping-point-electric-fleets-future-mobility-pasquale-romano/

While the retail price of PEVs is typically higher than for comparable ICE vehicles at this time, the price difference is widely expected to narrow or disappear, particularly for BEVs, as the cost of batteries and other components fall in the coming years.

Among the many studies that address cost parity of BEVs vs. ICE vehicles, an emerging consensus suggests that purchase price parity is likely to occur by the mid-2020s for some vehicle segments and models, and for a broader segment of the market on a total cost of ownership (TCO) basis.

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By some accounts, a compact car with a relatively small battery (for example, a 40 kWh battery and approximately 150 miles of range) may already be possible to produce and sell for the same price as a compact ICE vehicle.

For larger vehicles and/or those with a longer range (either of which call for a larger battery), many analysts expect examples of price parity to increasingly appear over the mid- to late-2020s. Assessments of price parity often do not include the effect of various state and Federal purchase incentives. For example, the Clean Vehicle Credit provides up to $7,500, under the Inflation Reduction Act, effectively making some BEVs more affordable to buy and operate today than comparable ICE vehicles. Many expect TCO parity to precede price parity by several years, as it accounts for the reduced cost of operation and maintenance for BEVs.

69 70

For example, Kelley Blue Book already estimates that the vehicle with lowest TCO in both the full-size pickup and luxury car classes of vehicle is a BEV.

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TCO parity is of particular interest to commercial and fleet operators, for whom lower TCO is a compelling business consideration.

International Council on Clean Transportation, “Assessment of Light-Duty Electric Vehicle Costs and Consumer Benefits in the United States in the 2022-2035 Time Frame,” October 2022.

Walton, R., “Electric vehicle models expected to triple in 4 years as declining battery costs boost adoption,”

UtilityDive.com,

December 14, 2020.

International Council on Clean Transportation, “Assessment of Light-Duty Electric Vehicle Costs and Consumer Benefits in the United States in the 2022-2035 Time Frame,” October 2022.

Kelley Blue Book, “What is 5-Year Cost to Own?”, Full-size Pickup Truck selected (Ford F-150 Lighting is lowest TCO). Accessed on February 28, 2023 at

https://www.kbb.com/new-cars/total-cost-of-ownership/

Kelley Blue Book, “What is 5-Year Cost to Own?”, Luxury Car selected (Polestar 2 and Tesla Model 3 are lowest TCO). Accessed on February 28, 2023 at

https://www.kbb.com/new-cars/total-cost-of-ownership/

A proliferation of announcements by automakers in the past two years signals a rapidly growing shift in product development focus among automakers away from internal-combustion technologies and toward electrification. For example, in January 2021, General Motors announced plans to become carbon neutral by 2040, including an effort to shift its light-duty vehicles entirely to zero-emissions by 2035.

In March 2021, Volvo announced plans to make only electric cars by 2030,

and Volkswagen announced that it expects half of its U.S. sales will be all-electric by 2030.

In April 2021, Honda announced a full electrification plan to take effect by 2040, with 40 percent of North American sales expected to be fully electric or fuel cell vehicles by 2030, 80 percent by 2035 and 100 percent by 2040.

In May 2021, Ford announced that they expect 40 percent of their global sales will be all-electric by 2030.

In June 2021, Fiat announced

a move to all electric vehicles by 2030, and in July 2021 its parent corporation Stellantis announced an intensified focus on electrification across all of its brands.

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Also in July 2021, Mercedes-Benz announced that all of its new architectures would be electric-only from 2025, with plans to become ready to go all-electric by 2030 where possible.

In December 2021, Toyota announced plans to introduce 30 BEV models by 2030.

Figure 1, taken from work by the Environmental Defense Fund and ERM, illustrates how these and other announcements mean that virtually every major manufacturer of light-duty vehicles is already planning to introduce widespread electrification across their global fleets in the coming years.

General Motors, “General Motors, the Largest U.S. Automaker, Plans to be Carbon Neutral by 2040,” Press Release, January 28, 2021.

Volvo Car Group, “Volvo Cars to be fully electric by 2030,” Press Release, March 2, 2021.

Volkswagen Newsroom, “Strategy update at Volkswagen: The transformation to electromobility was only the beginning,” March 5, 2021. Accessed June 15, 2021 at

https://www.volkswagen-newsroom.com/en/stories/strategy-update-at-volkswagen-the-transformation-to-electromobility-was-only-the-beginning-6875

Honda News Room, “Summary of Honda Global CEO Inaugural Press Conference,” April 23, 2021. Accessed June 15, 2021 at

https://global.honda/newsroom/news/2021/c210423eng.html.

Ford Motor Company, “Superior Value From EVs, Commercial Business, Connected Services is

Strategic Focus of Today's `Delivering Ford+' Capital Markets Day,” Press Release, May 26, 2021.

Stellantis, “World Environment Day 2021—Comparing Visions: Olivier Francois and Stefano Boeri, in Conversation to Rewrite the Future of Cities,” Press Release, June 4, 2021.

Stellantis, “Stellantis Intensifies Electrification While Targeting Sustainable Double-Digit Adjusted Operating Income Margins in the Mid-Term,” Press Release, July 8, 2021.

Mercedes-Benz, “Mercedes-Benz prepares to go all-electric,” Press Release, July 22, 2021.

Toyota Motor Corporation, “Video: Media Briefing on Battery EV Strategies,” Press Release, December 14, 2021. Accessed on December 14, 2021 at

https://global.toyota/en/newsroom/corporate/36428993.html.

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Accompanying this global-market focus on electrification, as shown in Figure 2, the number of PHEV and BEV models available in the U.S. has steadily grown, and a large number of public model announcements by manufacturers indicate further steep growth will occur in the years to come.

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Globally and domestically, these ongoing announcements indicate a strong industry momentum toward electrification that is common to every major manufacturer. Given the breadth of these announcements, it is instructive to consider the penetrations of PEVs that they imply when taken collectively.

Table 1 compiles public announcements of U.S. and global electrification targets to date by major manufacturers. Assuming that the MY 2022 U.S. sales shares for each manufacturer were to persist in 2030, these targets would collectively imply a U.S. PEV sales share approaching 50 percent in 2030 (48.6 percent), consisting primarily of BEVs.

Table 1—Example of U.S. Electrified New Sales Percentages Implied by OEM Announcements for 2030 or Before

2022 U.S. sales rank

OEM

Share of

total 2022

U.S. sales

(%)

Stated EV

in 2030

(%)

Powertrain

Implied OEM

contribution to

2030 total PEV

market share

(%)

General Motors

16.4

PEV

8.2

Toyota

15.4

BEV

5.1

Ford

13.1

BEV

6.5

Stellantis

11.2

BEV

5.6

Honda

7.2

BEV

2.9

Hyundai

5.7

BEV

2.8

Nissan

5.3

BEV

2.1

Kia

5.0

BEV

2.3

Subaru

4.1

BEV

1.6

Volkswagen, Audi

3.6

BEV

1.8

Tesla

3.4

100

BEV

3.4

Mercedes-Benz

2.6

100

BEV

2.6

BMW

2.6

BEV

1.3

Mazda

2.1

BEV

0.5

Volvo

0.8

100

BEV

0.8

Mitsubishi

0.6

PEV

0.3

Porsche

0.5

BEV

0.4

Land Rover

0.4

BEV

0.3

Jaguar

0.07

100

BEV

0.7

Lucid

0.02

100

BEV

0.02

Total

100.0

48.6

Notes:

2022 U.S. sales shares based on data from Ward's Automotive Intelligence.

Where a U.S. target was not specified, the global target was assumed for the U.S.

PEV = combination of BEV and PHEV. PEV and BEV may include fuel cell electric vehicles (FCEV).

Based on announced goal of 3.5 million BEVs globally in 2030, divided by 10.5 million vehicles sold in 2022.

Announcement includes unspecified amount of HEVs.

A version of this table with supporting citations for each automaker announcement, and the raw data with additional tabulations, are available in the Docket.

While

manufacturer announcements such as these are not binding, and often are conditioned as forward-looking and subject to uncertainty, they indicate that manufacturers are confident in the suitability of PEV technology as an effective and attractive option that can serve the functional needs of a large portion of light-duty vehicle buyers.

See Memo to Docket ID No. EPA-HQ-OAR-2022-0829 titled “Electrification Announcements and Implied PEV Penetration by 2030.”

As seen in Figure 3, an analysis by the International Energy Agency similarly concludes that the 2030 U.S. zero-emission vehicle sales share collectively implied by such announcements (“range of OEM declarations”) would amount to nearly 50 percent if not more, far exceeding the 20 percent that IEA considers sufficient to meet existing U.S. policies and regulations (“Stated Policies” scenario).

International Energy Agency, “Global EV Outlook 2022,” p. 107, May 2022. Accessed on November 18, 2022 at

https://iea.blob.core.windows.net/assets/e0d2081d-487d-4818-8c59-69b638969f9e/GlobalElectricVehicleOutlook2022.pdf.

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Fleet electrification plans are not limited to light-duty vehicles. Numerous commitments to purchase all-electric medium-duty delivery vans have been announced by large fleet owners including FedEx,

Amazon,

and Walmart,

in partnerships with various OEMs. For example, Amazon has deployed thousands of electric delivery vans in over 100 cities, with the goal of 100,000 vans by 2030. Many other fleet electrification commitments that include large numbers of medium-duty and heavier vehicles have been announced by large corporations in many sectors of the economy, including not only retailers like Amazon and Walmart but also consumer product manufacturers with large delivery fleets (

e.g.

IKEA, Unilever), large delivery firms (

e.g.

DHL, FedEx, USPS), and numerous firms in many other sectors including power and utilities, biotech, public transportation, and municipal fleets across the country.

As another example, Daimler Trucks North America announced in 2021 that it expected 60 percent of its sales in 2030 and 100 percent of its sales by 2039 would be zero-emission.

BrightDrop, “BrightDrop Accelerates EV Production with First 150 Electric Delivery Vans Integrated into FedEx Fleet,” Press Release, June 21, 2022.

Amazon Corporation, “Amazon's Custom Electric Delivery Vehicles from Rivian Start Rolling Out Across the U.S.,” Press Release, July 21, 2022.

Walmart, “Walmart To Purchase 4,500 Canoo Electric Delivery Vehicles To Be Used for Last Mile Deliveries in Support of Its Growing eCommerce Business,” Press Release, July 12, 2022.

Carey, N., “Daimler Truck `all in' on green energy as it targets costs,” May 20, 2021.

These announcements and others like them continue a pattern over the past several years in which most major manufacturers have taken steps to aggressively invest in zero-emission technologies and reduce their reliance on the internal-combustion engine in various markets around the globe.

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According to one analysis, 37 of the world's automakers are planning to invest a total of almost $1.2 trillion by 2030 toward electrification,

a large

portion of which will be used for construction of manufacturing facilities for vehicles, battery cells and packs, and materials, supporting up to 5.8 terawatt-hours of battery production and 54 million BEVs per year globally.

Similarly, an analysis by the Center for Automotive Research shows that a significant shift in North American investment is occurring toward electrification technologies, with $36 billion of about $38 billion in total automaker manufacturing facility investments announced in 2021 being slated for electrification-related manufacturing in North America, with a similar proportion and amount on track for 2022.

For example, in September 2021, Toyota announced large new investments in battery production and development to support an increasing focus on electrification,

and in December 2021, announced plans to increase this investment.

In December 2021, Hyundai closed its engine development division at its research and development center in Namyang, South Korea in order to refocus on BEV development.

In summer 2022, Hyundai invested $5.5 billion to fund new battery and electric vehicle manufacturing facilities in Georgia, and recently announced a $1.9 billion joint venture with SK to fund additional battery manufacturing in the U.S.

98 99

Environmental Defense Fund and M.J. Bradley & Associates, “Electric Vehicle Market Status—Update, Manufacturer Commitments to Future Electric Mobility in the U.S. and Worldwide,” April 2021.

International Council on Clean Transportation, “The end of the road? An overview of combustion-engine car phase-out announcements across Europe,” May 10, 2020.

Reuters, “A Reuters analysis of 37 global automakers found that they plan to invest nearly $1.2 trillion in electric vehicles and batteries through 2030,” October 21, 2022. Accessed on November 4, 2022 at

https://graphics.reuters.com/AUTOS-INVESTMENT/ELECTRIC/akpeqgzqypr/.

Reuters, “Exclusive: Automakers to double spending on EVs, batteries to $1.2 trillion by 2030,” October 25, 2022. Accessed on November 4, 2022 at

https://www.reuters.com/technology/exclusive-automakers-double-spending-evs-batteries-12-trillion-by-2030-2022-10-21/.

Center for Automotive Research, “Automakers Invest Billions in North American EV and Battery Manufacturing Facilities,” July 21, 2022. Retrieved on November 10, 2022 at

https://www.cargroup.org/automakers-invest-billions-in-north-american-ev-and-battery-manufacturing-facilities/.

Toyota Motor Corporation, “Video: Media briefing & Investors briefing on batteries and carbon neutrality” (transcript), September 7, 2021. Accessed on September 16, 2021 at

https://global.toyota/en/newsroom/corporate/35971839.html#presentation.

Toyota Motor Corporation, “Video: Media Briefing on Battery EV Strategies,” Press Release, December 14, 2021. Accessed on December 14, 2021 at

https://global.toyota/en/newsroom/corporate/36428993.html.

Do, Byung-Uk, Kim, Il-Gue, “Hyundai Motor closes engine development division”, The Korea Economic Daily, December 23, 2021. Accessed on November 29, 2022 at

https://www.kedglobal.com/electric-vehicles/newsView/ked202112230013.

Velez, C. “Hyundai and SK On to bring even more EV battery plants to U.S.” CBT News, November 29, 2022. Accessed on November 29, 2022 at

https://www.cbtnews.com/hyundai-and-sk-on-to-bring-even-more-ev-battery-plants-to-u-s/.

Lee, J., Yang, H. “Hyundai Motor, SK On sign EV battery supply pact for N. America”, Reuters, November 29, 2022. Accessed on November 29, 2022 at

https://www.reuters.com/business/autos-transportation/hyundai-motor-group-sk-ev-battery-supply-pact-n-america-2022-11-29/.

On August 5, 2021, many of these automakers, as well as the Alliance for Automotive Innovation, expressed continued commitment to their announcements of a shift to electrification, and expressed their support for the goal of achieving 40 to 50 percent sales of zero-emission vehicles by 2030.

100

In September 2022, jointly with the Environmental Defense Fund, General Motors announced a set of recommendations that “seek to accelerate a zero-emissions, all-electric future for passenger vehicles in model year 2027 and beyond,” including a recommendation that EPA establish standards to achieve at least a 60 percent reduction in GHG emissions (compared to MY 2021) and 50 percent zero-emitting vehicles by MY 2030, and that standards be consistent with eliminating tailpipe pollution from new passenger vehicles by 2035. GM and EDF further recommended that the EPA standards extend at least through MY 2032, and that EPA should consider adoption through 2035.

101

100

The White House, “Statements on the Biden Administration's Steps to Strengthen American Leadership on Clean Cars and Trucks,” August 5, 2021. Accessed on October 19, 2021 at

https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/05/statements-on-the-biden-administrations-steps-to-strengthen-american-leadership-on-clean-cars-and-trucks/.

101

Environmental Defense Fund, “GM and EDF Announce Recommended Principles on EPA Emissions Standards for Model Year 2027 and Beyond,” Press Release, September 20, 2022.

Investments in PEV charging infrastructure have grown rapidly in recent years and are expected to continue to climb. According to BloombergNEF, annual global investment was $62 billion in 2022, nearly twice that of the prior year, and while about 10 years was needed for cumulative investment to total $100 billion, a total of $200 billion could be reached in just three more years.

102

U.S. infrastructure spending has also grown quickly. Combined investments in hardware and installation for U.S. home and public charging ports was over $1.2 billion in 2021, nearly a three-fold increase from 2017.

103

102

BloombergNEF, “Next $100 Billion EV-Charger Spend to be Super Fast,” January 20, 2023. Accessed March 6, 2023, at

https://about.bnef.com/blog/next-100-billion-ev-charger-spend-to-be-super-fast/.

103

BloombergNEF, “Zero-Emission Vehicles Factbook A BloombergNEF special report prepared for COP27,” November 2022. Accessed March 4, 2023, at

https://www.bloomberg.com/professional/download/2022-zero-emissions-vehicle-factbook/.

The U.S. government is making large investments in infrastructure through the Bipartisan Infrastructure Law

104

and the Inflation Reduction Act.

105

However, we expect that private investments will also play a critical role in meeting future infrastructure needs. Private charging companies have already attracted billions globally in venture capital and mergers and acquisitions.

106

In the United States, there was $200 million or more in mergers and acquisition activity in 2022

107

indicating strong interest in the future of the charging industry. And Bain projects that by 2030, the U.S. market for electric vehicle charging will be “large and profitable” with both revenue and profits estimated to grow by a factor of twenty relative to 2021.

108

Automakers, electric companies, charging network providers, and retailers are among those who have made significant commitments to expand charging infrastructure in the coming years.

109

See Section IV.C.4 of this document and DRIA Chapter 5 for a discussion of public and private infrastructure investments.

104

https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf.

105

https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf.

106

Hampleton, “Autotech & Mobility M&A market report 1H2023”. Accessed March 4, 2023, at

https://www.hampletonpartners.com/fileadmin/user_upload/Report_PDFs/Hampleton-Partners-Autotech-Mobility-Report-1H2023-FINAL.pdf.

107

St. John, A. et al., “Automakers need way more plug-in stations to make their EV plans work. That has sparked a buying frenzy as big charging players gobble up smaller ones,” Insider, November 4, 2022. Accessed March 4, 2023, at

https://www.businessinsider.com/ev-charging-industry-merger-acquisition-meet-electric-vehicle-demand-2022-11.

108

Zayer, E. et al., “EV Charging Shifts into High Gear,” Bain & Company, June 20, 2022. Accessed March 4, 2023, at

https://www.bain.com/insights/electric-vehicle-charging-shifts-into-high-gear/.

109

Joint Office of Energy and Transportation, “Private Sector Continues to Play Key Part in Accelerating Buildout of EV Charging Networks,” February 15, 2023. Accessed March 6, 2023, at

https://driveelectric.gov/news/#private-investment.

Taken together, these developments indicate that proven, zero-emissions technologies such as BEVs, PHEVs, and FCEVs are already poised to become a rapidly growing segment of the U.S. fleet, as manufacturers continue to invest in these technologies and integrate them into their product plans, and infrastructure continues to be developed. Accordingly, EPA considers these technologies to be an available and feasible way to greatly reduce emissions, and expects that these technologies will likely play a significant role in meeting the proposed standards for both criteria pollutants and GHGs.

At the same time, EPA anticipates that a compliant fleet under the proposed standards would include a diverse range of technologies. The advanced gasoline technologies that have played a

fundamental role in meeting previous standards will continue to play an important role going forward as they remain key to reducing the criteria and GHG emissions of ICE, mild hybrid (MHEV), and strong HEV powertrains as well as PHEVs. The proposed standards will also provide regulatory certainty to support the many private automaker announcements and investments in zero-emission vehicles that have been outlined in the preceding paragraphs. In developing the proposed standards, EPA has also considered many of the key issues associated with growth in penetration of zero-emission vehicles, including charging infrastructure, consumer acceptance, critical minerals and mineral security, and others, as well as the need to consider emissions from the many ICE vehicles that will enter the fleet during this time. We discuss each of these issues in more detail in respective sections of the Preamble and Draft Regulatory Impact Analysis (DRIA).

iii. The Bipartisan Infrastructure Law and Inflation Reduction Act

A particular consideration with regard to the increased penetration of zero-emission vehicle technology is Congress' recent passage of the Bipartisan Infrastructure Law (BIL)

110

and the Inflation Reduction Act (IRA).

111

These measures represent significant Congressional support for investment in expanding the manufacture, sale, and use of zero-emission vehicles by addressing elements critical to the advancement of clean transportation and clean electricity generation in ways that will facilitate and accelerate the development, production and adoption of zero-emission technology during the time frame of the rule.

110

https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf.

111

https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf.

The BIL became law in November 2021 and includes a wide range of programs and significant funding for infrastructure investments, many of which are oriented toward reducing GHG emissions across the U.S. transportation network, upgrading power generation infrastructure, and making the transportation infrastructure resilient to climate impacts such as extreme weather. Notably, in support of light-duty zero-emissions transportation the BIL included $7.5 billion in funding for installation of public charging and other alternative fueling infrastructure. This will have a major impact on feasibility of PEVs across the U.S. by improving access to charging and other infrastructure, and it will further support the Administration's goal of deploying 500,000 PEV chargers by 2030. It also includes $5 billion for electrification of school buses through the Clean School Bus Program, providing for further reductions in emissions from the heavy-duty sector.

112 113

To help ensure that clean vehicles are powered by clean energy, it also includes $65 billion to upgrade the power infrastructure to facilitate increased use of renewables and clean energy.

112

https://www.epa.gov/cleanschoolbus.

Accessed February 14, 2023.

113

U.S. EPA, “EPA Clean School Bus Program Second Report to Congress,” EPA 420-R-23-002, February 2023.

The IRA became law in August 2022, bringing significant new momentum to clean vehicles (PEVs and FCEVs) through measures that reduce the cost to purchase and manufacture them, incentivize the growth of manufacturing capacity and onshore sourcing of critical minerals needed for their manufacture, incentivize buildout of public charging infrastructure for PEVs, and promote modernization of the electrical grid that will power them. It includes significant purchase incentives of up to $7,500 for new clean vehicles (Clean Vehicle Credit, IRS 30D) and up to $4,000 for used vehicles (IRS 25E), which will have a strong impact on affordability of these vehicles for a wide range of customers. These incentives extend not only to light-duty vehicles but also to commercial purchase of light- and medium-duty vehicles, with a credit of up to $40,000 for the latter (Commercial Clean Vehicle Credit, IRS 45W). Manufacturer production tax incentives of $35 per kilowatt-hour (kWh) for U.S. production of battery cells, $10 per kWh for U.S. production of modules, and 10 percent of production cost for U.S.-made critical minerals and battery active materials (Production Tax Credit, IRS 45X), will significantly reduce the manufacturing cost of these components, further reducing PEV and FCEV cost for consumers. In addition, the IRA includes significant tax credits for certain charging infrastructure equipment, and sizeable incentives for investment in and production of clean electricity.

With respect to sourcing of critical minerals and building a secure supply chain for clean vehicles, the IRA also includes provisions that will greatly reduce reliance on foreign imports by strongly supporting the continued development of a domestic or North American supply chain for these critical products. Manufacturers who want their customers to take advantage of the Clean Vehicle Credit must meet a gradually increasing requirement for sourcing of critical minerals and battery components from U.S. or free-trade countries, and cannot utilize content acquired from foreign entities of concern. Manufacturer eligibility for the Production Tax Credit for cells and modules is conditioned on their manufacture in the U.S., as is eligibility for the 10 percent credit on the cost of producing critical minerals and battery active materials. Manufacturers are already taking advantage of these opportunities to improve their sales and reduce their production costs by securing eligible sources of critical mineral content and siting new production facilities in the U.S.

114 115 116 117 118 119 120 121 122

There is a coordinated effort by Executive Branch agencies, including the Department of Energy and the National Laboratories, to provide guidance and resources and to administer funding to support this collective effort to further develop a robust supply chain for clean vehicles and the infrastructure that will support them.

123 124 125

Section IV.C.6 of this

Preamble and Chapters 3.1.3.2 and 3.1.3.3 of the DRIA discuss these provisions and measures in more detail.

114

Green Car Congress, “Ford sources battery capacity and raw materials for 600K EV annual run rate by late 2023, 2M by end of 2026; adding LFP,” July 22, 2022.

115

Ford Motor Company, “Ford Releases New Battery Capacity Plan, Raw Materials Details to Scale EVs; On Track to Ramp to 600K Run Rate by '23 and 2M+ by '26, Leveraging Global Relationships,” Press Release, July 21, 2022.

116

Green Car Congress, “GM signs major Li-ion supply chain agreements: CAM with LG Chem and lithium hydroxide with Livent,” July 26, 2022.

117

Grzelewski, J., “GM says it has enough EV battery raw materials to hit 2025 production target,” The Detroit News, July 26, 2022.

118

Hall, K., “GM announces new partnership for EV battery supply,” The Detroit News, April 12, 2022.

119

Hawkins, A., “General Motors makes moves to source rare earth metals for EV motors in North America,” TheVerge, December 9, 2021.

120

Piedmont Lithium, “Piedmont Lithium Signs Sales Agreement With Tesla,” Press Release, September 28, 2020.

121

Subramanian, P., “Why Honda's EV battery plant likely wouldn't happen without new climate credits,” Yahoo Finance, August 29, 2022.

122

LG Chem, “LG Chem to Establish Largest Cathode Plant in US for EV Batteries,” Press Release, November 22, 2022.

123

Executive Order 14017, Securing America's Supply Chains, February 24, 2021.

https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/24/executive-order-on-americas-supply-chains/.

124

The White House, “FACT SHEET: Biden-Harris Administration Driving U.S. Battery Manufacturing and Good-Paying Jobs,” October 19, 2022. Available at:

https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/19/fact-sheet-biden-harris-administration-driving-u-s-battery-manufacturing-and-good-paying-jobs/.

125

Department of Energy, “Biden Administration, DOE to Invest $3 Billion to Strengthen U.S. Supply

Chain for Advanced Batteries for Vehicles and Energy Storage,” February 11, 2022. Available at:

https://www.energy.gov/articles/biden-administration-doe-invest-3-billion-strengthen-us-supply-chain-advanced-batteries.

Congressional passage of the BIL and IRA represent pivotal milestones in the creation of a broad-based infrastructure instrumental to the expansion of clean transportation, including light- and medium-duty zero-emission vehicles, and we have taken these developments into account in our assessment of the feasibility of the proposed standards.

B. Summary of Proposed Light- and Medium-Duty Vehicle Emissions Programs

EPA is proposing emissions standards for both light-duty and medium-duty vehicles. The light-duty vehicle category includes passenger cars and light trucks consistent with previous EPA criteria pollutant and GHG rules. In this rule, heavy-duty Class 2b and 3 vehicles are referred to as “medium-duty vehicles” (MDVs) to distinguish them from Class 4 and higher vehicles that remain under the heavy-duty program. EPA has not previously used the MDV nomenclature, referring to these larger vehicles in prior rules as light-heavy-duty vehicles,

126

heavy-duty Class 2b and 3 vehicles,

127

or heavy-duty pickups and vans.

128

In the context of this rule, the MDV category includes primarily large pickups and vans with a gross vehicle weight rating (GVWR) of between 8,501 and 14,000 pounds and excludes vehicles used primarily as passenger vehicles (medium-duty passenger vehicles, or MDPVs).

126

66 FR 5002, January 18, 2001.

127

79 FR 23414, April 28, 2014.

128

76 FR 57106, September 15, 2011.

The proposed program consists of several key elements: More stringent emissions standards for criteria pollutants, more stringent emissions standards for GHGs, changes to certain optional credit programs, durability provisions for light-duty electrified vehicle batteries and warranty provisions for both electrified vehicles and diesel engine-equipped vehicles, and various improvements to several elements of the existing light-duty program that will also apply to the proposed program.

The levels of stringency proposed in this rule for both light- and medium-duty vehicles continue the trend over the past fifty years for criteria pollutants, and over the past decade for GHGs, of EPA establishing numerically lower emissions standards based on continued advancements in emissions control technology that make it possible to achieve important emissions reductions at a reasonable cost. While EPA's feasibility assessments in past rulemakings were predominantly based on advancements in ICE technologies that provided incremental emissions reductions, in this proposal EPA's technology feasibility assessment includes the increasing availability of zero and near-zero tailpipe emissions technologies, including PEVs, as a cost-effective compliance technology. The technological feasibility of PEVs is further bolstered by the economic incentives provided in the IRA and the auto manufacturers' stated plans for producing significant volumes of zero and near-zero emission vehicles in the timeframe of this rule. Because of this increased feasibility of zero and near-zero tailpipe emissions technologies, EPA believes it is appropriate to propose over the six-year timeframe of these standards even lower emissions standards than has been possible in past rulemakings.

1. GHG Emissions Standards

EPA is proposing more stringent GHG standards for both light-duty vehicles and medium-duty vehicles for MYs 2027 through 2032. EPA also seeks comment on whether the standards should continue to increase in stringency for future years, such as through MY 2035. For light-duty vehicles, EPA is proposing standards that would increase in stringency each year over a six-year period, from MYs 2027-2032. The proposed standards are projected to result in an industry-wide average target for the light-duty fleet of 82 grams/mile (g/mile) of CO

in MY 2032, representing a 56 percent reduction in projected fleet average GHG emissions target levels from the existing MY 2026 standards.

For medium-duty vehicles, EPA is proposing to revise the existing standard for MY 2027 given the increased feasibility of GHG emissions reducing technologies in this sector in this time frame. EPA's proposed standards for MDVs would increase in stringency year over year from MY 2027 through MY 2032. When phased in, the MDV standards are projected to result in an average target of 275 grams/mile of CO

by MY 2032, which would represent a reduction of 44 percent compared to the current MY 2026 standards.

The light-duty CO

standards continue to be footprint-based, with separate standards curves for cars and light trucks. EPA has updated its assessment of the footprint standards curves to reflect anticipated changes in the vehicle technologies that we project will be used to meet the standards. EPA also has assessed ways to ensure future fleet mix changes do not inadvertently provide an incentive for manufacturers to change the size or regulatory class of vehicles as a compliance strategy. EPA is proposing to revise the footprint standards curves to flatten the slope of each curve and to narrow the numerical stringency difference between the car and truck curves. The medium-duty vehicle standards continue to be based on a work-factor metric designed for commercially-oriented vehicles, which reflects a combination of payload, towing and 4-wheel drive equipment.

EPA has reassessed certain credit programs available under the existing GHG programs in light of experience with the program implementation to date, trends in technology development, recent related statutory provisions, and other factors. EPA is proposing to revise the air conditioning (AC) credits program in two ways. First, for AC system efficiency credits under the light-duty GHG program, EPA is proposing to limit the eligibility for these voluntary credits for tailpipe CO

emissions control to ICE vehicles starting in MY 2027 (

i.e.,

BEVs would not earn AC efficiency credits because even without such credits they would be counted as zero g/mi CO

emissions for compliance calculations). Second, EPA is proposing to remove refrigerant-based AC provisions for both light- and medium-duty vehicles because, under a separate rulemaking, EPA has proposed to disallow the use of high global warming potential refrigerants under the American Innovation and Manufacturing (AIM) Act of 2020.

EPA is also proposing to sunset the off-cycle credits program for both light and medium-duty vehicles as follows. First, EPA proposes to phase out menu-based credits by reducing the menu credit cap year-over-year until it is fully phased out in MY 2031. Specifically, EPA is proposing a declining menu cap of 10/8/6/3/0 g/mile over MYs 2027-2031 such that MY 2030 would be the last year manufacturers could generate optional off-cycle credits. Second, EPA proposes to eliminate the 5-cycle and public process pathways starting in MY 2027. Third, EPA proposes to limit eligibility for off-cycle credits only to vehicles with tailpipe emissions greater than zero (

i.e.,

vehicle equipped with IC engines) starting in MY 2027.

EPA is not reopening its averaging, banking, and trading provisions, which continue to be a central part of its fleet average standards compliance program and which help manufacturers to employ a wide range of compliance

paths. EPA is also not proposing to restore multiplier incentives for BEVs, PHEVs and fuel cell vehicles, which currently end after MY 2024 under existing regulations. EPA is proposing to revise multiplier incentives currently in place for MDVs through MY 2027, established in the heavy-duty Phase 2 rule, to end the multipliers a model year earlier, in MY 2026. EPA is also proposing that the requirement for upstream emissions accounting for BEVs and PHEVs as part of a manufacturer's compliance calculation, which under the current regulations would begin in MY 2027, would be removed under the proposed program; thus, BEVs would continue to be counted as zero grams/mile in a manufacturer's compliance calculation as has been the case since the beginning of the light-duty GHG program in MY 2012.

Finally, EPA also is proposing changes to the provisions for small volume manufacturers (

i.e.,

production of less than 5,000 vehicles per year) to transition them from the existing approach of unique case-by-case alternative standards to the primary program standards by MY 2032, recognizing that additional lead time is appropriate given their challenges in averaging across limited product lines.

2. Criteria Pollutant Standards

EPA is proposing more stringent emissions standards for criteria pollutants for both light-duty and medium-duty vehicles for MYs 2027-2032. For light-duty vehicles, EPA is proposing non-methane organic gases (NMOG) plus nitrogen oxides (NO

) standards that would phase-down to a fleet average level of 12 mg/mi by MY 2032, representing a 60 percent reduction from the existing 30 mg/mi standards for MY 2025 established in the Tier 3 rule in 2014. For medium-duty vehicles, EPA is proposing NMOG+NO

standards that would require a fleet average level of 60 mg/mi by MY 2032, representing a 66 percent to 76 percent reduction from the Tier 3 standards of 178 mg/mi for Class 2b vehicles and 247 mg/mi for Class 3 vehicles. EPA is proposing cold temperature (−7 °C) NMOG+NO

standards for light- and medium-duty vehicles to ensure robust emissions control over a broad range of operating conditions.

For both light-duty and all medium-duty vehicles, EPA is proposing a particulate matter (PM) standard of 0.5 mg/mi and a requirement that the standard be met across three test cycles, including a cold temperature (−7 °C) test. This proposed standard would revise the existing PM standards established in the 2014 Tier 3 rule. Through the application of readily available emissions control technology and requiring compliance across the broad range of driving conditions represented by the three test cycles, EPA projects the standards will reduce tailpipe PM emissions from ICE vehicles by over 95 percent. In addition to reducing PM emissions, the proposed standards would reduce emissions of mobile source air toxics.

EPA is also proposing requirements to certify compliance with criteria pollutants standards for medium-duty vehicles with high gross combined weight rating (GCWR) under the heavy-duty engine program, changes to medium-duty vehicle refueling emissions requirements for incomplete vehicles, and several NMOG+NO

provisions aligned with the CARB Advanced Clean Cars II program for light-duty vehicles. EPA is proposing changes to the carbon monoxide and formaldehyde standards for light- and medium-duty vehicles, including at −7 °C. EPA is also proposing to eliminate commanded enrichment for ICE-powered vehicles for power and component protection. Averaging, banking, and trading provisions may be employed within the new program, and with certain limitations, credits may be transferred from the Tier 3 program to provide manufacturers with flexibilities in developing compliance strategies.

In addition to these proposals, EPA is seeking comment on potential future gasoline fuel property standards aimed at further reducing PM emissions, for consideration in a possible subsequent rulemaking, which could provide an important complement to the vehicle standards being proposed in the current action. The proposed emissions standards for new vehicles in model years 2027 and later would achieve significant air quality benefits. However, there is an opportunity to further reduce PM emissions from the existing vehicle fleet, the millions of vehicles that will be produced during the phase-in period of the proposed vehicle standards, as well as millions of nonroad gasoline engines, through changes in market fuel composition. Although EPA has not undertaken sufficient analysis to propose changes to fuel requirements under CAA section 211(c) in this rulemaking and considers such changes beyond the scope of this rulemaking, EPA has begun to consider the possibility of such changes and, in Section IX, EPA describes and requests comment on various aspects of a possible future rulemaking aimed at further PM reductions from these sources via gasoline fuel property standards.

3. Electrified Vehicle Battery Durability and Warranty Provisions

As described in more detail in Section III.F.2, the importance of battery durability in the context of BEVs and PHEVs as an emission control technology is well documented and has been cited by several authorities in recent years. Recognizing that electrified vehicles are playing an increasing role in automakers' compliance strategies, that their durability and reliability are important to achieving the emissions reductions projected by this proposed program, and that emissions credit calculations are based on mileage over a vehicle's full useful life, EPA is proposing new battery durability requirements for light-duty and medium-duty BEVs and PHEVs. In addition, the agency is proposing revised regulations which would include BEV and PHEV batteries and associated electric powertrain components under existing emission warranty provisions. Relatedly, EPA is also proposing the addition of two new grouping definitions for BEVs and PHEVs (monitor family and battery durability family), new reporting requirements, and a new calculation for the PHEV charge depletion test to support the battery durability requirements. The background and content of the proposed battery durability and warranty provisions are outlined in Section III.F.2 of this Preamble and are detailed in the regulatory text.

4. Light-Duty Vehicle Certification and Testing Program Improvements

EPA is proposing various improvements to the current light-duty program in order to clarify, simplify, streamline and update the certification and testing provisions for manufacturers. These proposed improvements include: Clarification of the certification compliance and enforcement requirements for CO

exhaust emission standards found in 40 CFR 86.1865-12 to more accurately reflect the intention of the 2010 light-duty vehicle GHG rule; a revision to the In Use Confirmatory Program (IUCP) threshold criteria; changes to the Part 2 application; updating the On Board Diagnostics (OBD) program to the latest version of the CARB OBD regulation and the removal of any conflicting or redundant text from EPA's OBD requirements; streamlining the test procedures for Fuel Economy Data Vehicles (FEDVs); streamlining the manufacturer conducted confirmatory

testing requirements; updating the emissions warranty for diesel powered vehicles (including Class 2b and 3 vehicles) by designating major emissions components subject to the 8 year/80,000 mile warranty period; making the definition of light-duty truck consistent between programs; and miscellaneous other amendments. EPA is also proposing to add a new monitoring and warranty requirement for gasoline particulate filters (GPFs). These improvements and changes are described in more detail in Sections III.F and III.G.

C. Summary of Emission Reductions, Costs, and Benefits

This section summarizes our analysis of the proposal's estimated emission impacts, costs, and monetized benefits, which is described in more detail in Sections V through VIII of this preamble. EPA notes that, consistent with CAA section 202, in evaluating potential standards we carefully weigh the statutory factors, including the emissions impacts of the standards, and the feasibility of the standards (including cost of compliance in light of available lead time). We monetize benefits of the proposed standards and evaluate other costs in part to enable a comparison of costs and benefits pursuant to E.O. 12866, but we recognize there are benefits that we are currently unable to fully quantify. EPA's practice has been to set standards to achieve improved air quality consistent with CAA section 202, and not to rely on cost-benefit calculations, with their uncertainties and limitations, as identifying the appropriate standards. Nonetheless, our conclusion that the estimated benefits considerably exceed the estimated costs of the proposed program reinforces our view that the proposed standards are appropriate under section 202(a).

The proposed standards would result in net reductions of emissions of GHGs and criteria air pollutants in 2055, considering the impacts from light- and medium-duty vehicles, power plants (

i.e.,

electric generating units (EGUs)), and refineries. Table 2 shows the GHG emission impacts in 2055 while Table 3 shows the cumulative impacts for the years 2027 through 2055. We show cumulative impacts for GHGs as elevated concentrations of GHGs in the atmosphere are resulting in warming and changes in the Earth's climate. Table 4 shows the criteria pollutant emissions impacts in 2055. As shown in Table 5, we also predict reductions in air toxic emissions from light-and medium-duty vehicles. We project that GHG and criteria pollutant emissions from EGUs would increase as a result of the increased demand for electricity associated with the proposal, although those projected impacts decrease over time because of projected increases in renewables in the future power generation mix. We also project that GHG and criteria pollutant emissions from refineries would decrease as a result of the lower demand for liquid fuel associated with the proposed GHG standards. Sections VI and VII of this preamble and Chapter 9 of the DRIA provide more information on the projected emission reductions for the proposed standards and alternatives.

Table 2—Projected GHG Emission Impacts in 2055 From the Proposed Rule, Light-Duty and Medium-Duty

[Million metric tons]

Pollutant

Vehicle

EGU

Refinery *

Net impact

Net impact (%)

−440

−420

−47

−0.0088

0.00038

−0.0084

−45

−0.0077

0.00003

−0.0077

−41

* GHG emission rates were not available for calculating GHG inventories from refineries.

Table 3—Projected Cumulative GHG Emission Impacts Through 2055 From the Proposed Rule, Light-Duty and Medium-Duty

[Million metric tons]

Pollutant

Vehicle

EGU

Refinery *

Net impact

(%)

−8,000

710

−7,300

−26

−0.16

0.035

−0.12

−17

−0.14

0.0045

−0.13

−25

Table 4—Projected Criteria Air Pollutant Impacts in 2055 From the Proposed Rule, Light-Duty and Medium-Duty

[U.S. tons]

Pollutant

Vehicle

EGU

Refinery

Net impact

(%)

2.5

−9,800

1,500

−6,900

−15,000

−35

−44,000

2,600

−25,000

−66,000

−41

VOC

−200,000

1,000

−21,000

−220,000

−50

−2,800

1,600

−11,000

−12,000

−42

CO *

−1,800,000

−49

* EPA did not have data available to calculate CO impacts from EGUs or refineries.

Table 5—Projected Air Toxic Impacts From Vehicles in 2055 From the Proposed Rule, Light-Duty and Medium-Duty

[U.S. tons]

Pollutant

Vehicle

(%)

Acetaldehyde

−840

−49

Acrolein

−55

−48

Benzene

−2,900

−51

Ethylbenzene

−3,400

−50

Formaldehyde

−510

−49

Naphthalene

−100

−51

1,3-Butadiene

−340

−51

15 Polyaromatic Hydrocarbons

−5

−78

The GHG emission reductions would contribute toward the goal of holding the increase in the global average temperature to well below 2 °C above pre-industrial levels, and subsequently reduce the probability of severe climate change related impacts including heat waves, drought, sea level rise, extreme climate and weather events, coastal flooding, and wildfires. People of color, low-income populations and/or indigenous peoples may be especially vulnerable to the impacts of climate change (see Section VIII.I.2).

The decreases in vehicle emissions would reduce traffic-related pollution in close proximity to roadways. As discussed in Section II.C.8, concentrations of many air pollutants are elevated near high-traffic roadways, and populations who live, work, or go to school near high-traffic roadways experience higher rates of numerous adverse health effects, compared to populations far away from major roads. An EPA study estimated that 72 million people live near truck freight routes, which includes many large highways and other routes where light- and medium-duty vehicles operate.

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Our consideration of environmental justice literature indicates that people of color and people with low income are disproportionately exposed to elevated concentrations of many pollutants in close proximity to major roadways (see Section VIII.I.3.i).

129

U.S. EPA (2021). Estimation of Population Size and Demographic Characteristics among People Living Near Truck Routes in the Conterminous United States. Memorandum to the Docket.

We expect that increases in criteria and toxic pollutant emissions from EGUs and reductions in petroleum-sector emissions could lead to changes in exposure to these pollutants for people living in the communities near these facilities. Analyses of communities in close proximity to these sources (such as EGUs and refineries) have found that a higher percentage of communities of color and low-income communities live near these sources when compared to national averages (see Section VIII.1.3.ii).

The changes in emissions of criteria and toxic pollutants from vehicles, EGUs, and refineries would also impact ambient levels of ozone, PM

2.5

, NO

, SO

, CO, and air toxics over a larger geographic scale. As discussed in Section VII.B, we expect that in 2055 the proposal would result in widespread decreases in ozone, PM

2.5

, NO

, CO, and some air toxics, even when accounting for the impacts of increased electricity generation. We expect that in some areas, increased electricity generation would increase ambient SO

, PM

2.5

, ozone, or some air toxics. However, as the power sector becomes cleaner over time, these impacts would decrease. Although the specific locations of increased air pollution are uncertain, we expect them to be in more limited geographic areas, compared to the widespread decreases that we predict to result from the reductions in vehicle emissions.

EPA estimates that the total benefits of this proposal far exceed the total costs. The present value of monetized benefits range from $350 billion to $590 billion, with pre-tax fuel savings providing another $450 billion to $890 billion. The present value of vehicle technology costs range from $180 billion to $280 billion, while the present value of repair and maintenance savings are estimated at $280 billion to $580 billion. The results presented here project the monetized environmental and economic impacts associated with the proposed program during each calendar year through 2055. Table 6 summarizes EPA's estimates of total costs, savings, and benefits. Note EPA projects lower maintenance and repair costs for several advanced technologies (

e.g.,

battery electric vehicles) and those societal maintenance and repair savings grow significantly over time, and by 2040 and later are larger than our projected new vehicle technology costs.

The benefits include climate-related economic benefits from reducing emissions of GHGs that contribute to climate change, reductions in energy security externalities caused by U.S. petroleum consumption and imports, the value of certain particulate matter-related health benefits, the value of additional driving attributed to the rebound effect, and the value of reduced refueling time needed to refuel vehicles. Between $63 and $280 billion of the present value of total monetized benefits through 2055 (assuming a 7 percent and 3 percent discount rate, respectively, as well as different long-term PM-related mortality risk studies) are attributable to reduced emissions of criteria pollutants that contribute to ambient concentrations of smaller particulate matter (PM

2.5

). PM

2.5

is associated with premature death and serious health effects such as hospital admissions due to respiratory and cardiovascular illnesses, nonfatal heart attacks, aggravated asthma, and decreased lung function. The proposed program would also have other significant social benefits including $330 billion in climate benefits (with the average SC-GHGs at a 3 percent discount rate which is the rate used in past GHG rules when we speak of a single value for simplicity in presentation).

130

Climate benefits are monetized using estimates of the social cost of greenhouse gases (SC-GHG), which in principle includes the value of all climate change impacts (both negative and positive), however in practice, data and modeling limitations naturally restrain the ability of SC-GHG estimates to include all the important physical, ecological, and economic impacts of climate change, such that the estimates are a partial accounting of climate change impacts and will therefore, tend to be underestimates of the marginal benefits of abatement. See Chapter 10 of the DRIA for a full discussion of the SC-GHG estimates and the important considerations and limitations associated with its use.

The analysis also includes estimates of economic impacts stemming from additional vehicle use from increased

rebound driving, such as the economic damages caused by crashes, congestion, and noise. See Chapter 10 of the DRIA for more information regarding these estimates.

Note that some non-emission costs are shown as negative values in Table 6. Those entries represent savings but are included as costs because, traditionally, categories such as repair and maintenance have been viewed as costs of vehicle operation. Where negative values are shown, we are estimating that those costs are lower in the proposal than in the no-action case. Congestion and noise costs are attributable to increased congestion and roadway noise resulting our assumption that drivers choose to drive more under the proposal versus the No Action case. Those increased miles are known as rebound miles and are discussed in Section VIII.

Similarly, some of the traditional benefits of rulemakings that result in lower fuel consumption by the transportation fleet,

i.e.,

the non-emission benefits, are shown as negative values. Our past GHG rules have estimated that time spent refueling vehicles would be reduced due to the lower fuel consumption of new vehicles; hence, a benefit. However, in this analysis, we are estimating that refueling time would increase somewhat due to our assumptions for mid-trip recharging events for electric vehicles. Therefore, the increased refueling time represents a disbenefit (a negative benefit) as shown. As noted in Section VIII and in DRIA Chapter 4, we consider our refueling time estimate to be dated considering the rapid changes taking place in electric vehicle charging infrastructure driven largely by the Bipartisan Infrastructure Law and the Inflation Reduction Act, and we request comment and data on how our estimates could be improved.

Table 6—Monetized Discounted Costs, Benefits, and Net Benefits of the Proposed Program for Calendar Years 2027 Through 2055, Light-Duty and Medium-Duty

[Billions of 2020 dollars]

CY 2055

PV, 3%

PV, 7%

EAV, 3%

EAV, 7%

Non-Emission Costs

Vehicle Technology Costs

280

180

Repair Costs

−24

−170

−79

−8.9

−6.5

Maintenance Costs

−51

−410

−200

−21

−16

Congestion Costs

0.16

2.3

1.3

0.12

0.11

Noise Costs

0.0025

0.037

0.021

0.0019

0.0017

Sum of Non-Emission Costs

−65

−290

−96

−15

−7.8

Fueling Impacts

Pre-tax Fuel Savings

890

450

EVSE Port Costs

7.1

120

6.2

5.6

Sum of Fuel Savings less EVSE Port Costs

770

380

Non-Emission Benefits

Drive Value Benefits

0.31

4.8

2.7

0.25

0.22

Refueling Time Benefits

−8.2

−85

−45

−4.4

−3.6

Energy Security Benefits

4.4

2.2

1.7

Sum of Non-Emission Benefits

−3.6

−39

−21

−2

−1.7

Climate Benefits

5% Average

5.4

3% Average

330

2.5% Average

500

3% 95th Percentile

110

1,000

Criteria Air Pollutant Benefits

2.5

Health Benefits—Wu et al., 2020

16-18

140

7.5

5.1

2.5

Health Benefits—Pope III et al., 2019

31-34

280

130

Net Benefits

With Climate 5% Average

180-200

1,400

610

With Climate 3% Average

200-220

1,600

850

With Climate 2.5% Average

210-230

1,800

1,000

With Climate 3% 95th Percentile

280-290

2,300

1,500

120

The same discount rate used to discount the value of damages from future emissions (SC-GHG at 5, 3, 2.5 percent) is used to calculate present and equivalent annualized values of SC-GHGs for internal consistency, while all other costs and benefits are discounted at either 3 percent or 7 percent.

2.5

-related health benefits are presented based on two different long-term exposure studies of mortality risk: a Medicare study (Wu et al., 2020) and a National Health Interview Survey study (Pope III et al., 2019). The criteria pollutant benefits associated with the standards presented here do not include the full complement of health and environmental benefits that, if quantified and monetized, would increase the total monetized benefits.

For net benefits, the range in 2055 uses the low end of the Wu range and the high end of the Pope III et al. range. The present and equivalent annualized value of net benefits for a 3 percent discount rate reflect benefits based on the Pope III et al. study while the present and equivalent annualized values of net benefits for a 7 percent discount rate reflect benefits based on the Wu et al. study.

EPA estimates the average upfront per-vehicle cost to meet the proposed standards to be approximately $1,200 in MY 2032, as shown in Table 7.

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We discuss per-vehicle cost in more detail in Section IV.C and DRIA Chapter 13. While the average purchase price of vehicles is estimated to be higher, this is attributable to the larger share of BEVs relative to ICE vehicles. However, after considering purchase incentives and their lower operating costs relative to ICE vehicles, BEVs are estimated to save vehicle owners money over time. For example, a BEV owner of a model year 2032 sedan, wagon, crossover or SUV would save more than $9,000 on average on fuel, maintenance, and repair costs over an eight-year period (the average period of first ownership) compared to a gasoline vehicle. A BEV pickup truck owner would save even more—about $13,000. We discuss ownership savings and expenses in more detail in DRIA Chapter 4.

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Unless otherwise specified, all monetized values are expressed in 2020 dollars.

Table 7—Average Incremental Vehicle Cost by Reg Class, Relative to the No Action Scenario

[2020 Dollars]

2027

2028

2029

2030

2031

2032

Cars

$249

$102

$32

$100

$527

$844

Trucks

891

767

653

821

1,100

1,385

Total

633

497

401

526

866

1,164

In addition, the proposal would result in significant savings for consumers from fuel savings and reduced vehicle repair and maintenance. These lower operating costs would offset the upfront vehicle costs. Total retail fuel savings for consumers through 2055 are estimated at $560 billion to $1.1 trillion (7 percent and 3 percent discount rates, see Section VIII.B.2). Also, reduced maintenance and repair costs through 2055 are estimated at $280 billion to $580 billion (7 percent and 3 percent discount rates, see Section VIII of this preamble and Chapter 10 of the DRIA).

D. What are the alternatives that EPA is considering?

1. Description of the Alternatives

EPA is seeking comment on three alternatives to its proposed standards. Alternative 1 is more stringent than the proposal across the MY 2027-2032 time period, and Alternative 2 is less stringent. The proposal as well as Alternatives 1 and 2 all have a similar proportional ramp rate of year over year stringency, which includes a higher rate of stringency increase in the earlier years (MYs 2027-2029) than in the later years. Alternative 3 achieves the same stringency as the proposed standards in MY 2032 but provides for a more consistent rate of stringency increase for MY 2027-2031.

The Alternative 1 projected fleet-wide CO

targets are 10 g/mi lower on average than the proposed targets; Alternative 2 projected fleet-wide CO

targets averaged 10 g/mi higher than the proposed targets.

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While the 20 g/mi range of stringency options may appear fairly narrow, for the MY 2032 standards the alternatives capture a range of 12 percent higher and lower than the proposed standards in the final year. Our goal in selecting the alternatives was to identify a range of stringencies that we believe are appropriate to consider for the final standards because they represent a range of standards that are anticipated to be feasible and are highly protective of human health and the environment.

132

For reference, the targets at a footprint of 50 square feet were exactly 10 g/mi lower and greater for the alternatives.

While the proposed standards, Alternative 1 and Alternative 2 all have a larger increase in stringency between MY 2026 and MY 2027, Alternative 3 was constructed with the goal of evaluating roughly equal reductions in absolute g/mi targets over the duration of the program while achieving the same overall targets by MY 2032. This has the effect of less stringent year-over-year increases in the early years of the program.

EPA is soliciting comment on all of the model year standards of Alternatives 1, 2, and 3, and standards generally represented by the range across those alternatives. EPA anticipates that the appropriate choice of final standards within this range will reflect the Administrator's judgments about the uncertainties in EPA's analyses as well as consideration of public comment and updated information where available. However, EPA proposes to find that standards substantially more stringent than Alternative 1 would not be appropriate because of uncertainties concerning the cost and feasibility of such standards. EPA proposes to find that standards substantially less stringent than Alternative 2 or 3 would not be appropriate because they would forgo feasible emissions reductions that would improve the protection of public health and welfare.

Table 8, Table 9 and Table 10 compare the projected fleet average targets for cars, trucks, and the combined fleet, respectively, across the proposed standards and the three alternatives for model years 2027-2032.

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Table 11 compares the relative percentage year-over-year reductions of the proposed standards and the three alternatives.

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In these tables, and throughout this proposal, the MY 2026 targets have been adjusted to reflect differences in off-cycle and AC credits between the 2021 Rule and this proposal. This is explained in greater detail in III.B.2.iv.

Table 8—Comparison of Proposed Car Standards to Alternatives

Model year

Proposed stds

(g/mile)

Alternative 1

(g/mile)

Alternative 2

(g/mile)

Alternative 3

(g/mile)

2026 adjusted

152

2027

134

124

144

139

2028

116

106

126

2029

108

112

2030

100

2031

2032 and later

% reduction vs. 2026

52%

59%

46%

52%

Table 9—Comparison of Proposed Truck Standards to Alternatives

Model year

Proposed stds

(g/mile)

Alternative 1

(g/mile)

Alternative 2

(g/mile)

Alternative 3

(g/mile)

2026 adjusted

207

2027

163

153

173

183

2028

142

131

152

163

2029

120

110

130

144

2030

110

100

121

126

2031

100

111

107

2032 and later

% reduction vs. 2026

57%

62%

52%

57%

Table 10—Comparison of Proposed Combined Fleet Standards to Alternatives

Model year

Proposed stds

(g/mile)

Alternative 1

(g/mile)

Alternative 2

(g/mile)

Alternative 3

(g/mile)

2026 adjusted

186

2027

152

141

162

165

2028

131

121

141

148

2029

111

101

122

132

2030

102

112

115

2031

103

2032 and later

% reduction vs. 2026

56%

61%

50%

56%

Table 11—Combined Fleet Year-Over-Year Decreases for Proposed Standards and Alternatives

Model year

Proposed Stds

(g/mile)

(%)

Alternative 1

(g/mile)

(%)

Alternative 2

(g/mile)

(%)

Alternative 3

(g/mile)

(%)

2027

−18

−24

−13

−11

2028

−13

−14

−13

−10

2029

−15

−16

−14

−11

2030

−8

−9

−8

−12

2031

−9

−10

−8

−15

2032

−11

−13

−10

−17

Average YoY

−13

−15

−11

−13

The proposed standards will result in industry-wide average GHG emissions target for the light-duty fleet of 82 g/mi in MY 2032, representing a 56 percent reduction in average emission target levels from the existing MY 2026 standards established in 2021. Alternative 1 is projected to result in an industry-wide average target of 72 grams/mile (g/mile) of CO

in MY 2032, representing a 61 percent reduction in projected fleet average GHG emissions target levels from the existing MY 2026 standards. Alternative 2 is projected to result in an industry-wide average target of 92 g/mile of CO

in MY 2032, which corresponds to a 50 percent reduction in projected fleet average GHG emissions target levels from the existing MY 2026 standards. Like the proposed standards, Alternative 3 is projected to result in an industry-wide average target of 82 g/mile of CO

in MY 2032, which corresponds to a 56 percent reduction in projected fleet average GHG emissions target levels from the existing MY 2026 standards.

Table 12 gives a comparison of average incremental per-vehicle costs for the proposed standards and the alternatives. As shown, the 2032 MY industry average vehicle cost increase (compared to the No Action case) ranges from approximately $1,000 to $1,800 per vehicle for the alternatives, compared to $1,200 per vehicle for the proposed standards. These projections represent compliance costs to the industry and are not the same as the costs experienced by the consumer when purchasing a new vehicle. For

example, the costs presented here do not include any state and Federal purchase incentives that are available to consumers. Also, the manufacturer decisions for the pricing of individual vehicles may not align exactly with the cost impacts for that particular vehicle. After considering purchase incentives and their lower operating costs relative to ICE vehicles, BEVs are estimated to save vehicle owners money over time. For example, under the proposed standards, a BEV owner of a model year 2032 sedan, wagon, crossover or SUV would save more than $9,000 on average on fuel, maintenance, and repair costs over an eight-year period (the average period of first ownership) compared to a gasoline vehicle. A BEV pickup truck owner would save even more—about $13,000. Consumer savings would be similar to those of the proposal under Alternative 3, somewhat higher under Alternative 1, and somewhat lower under Alternative 2. We discuss ownership savings and expenses under the proposed standards in more detail in DRIA Chapter 4.

Table 12—Comparison of Projected Incremental Per-Vehicle Costs Relative to the No Action Scenario

[2020 Dollars]

Model year

Proposed stds

$/vehicle

Alternative 1

$/vehicle

Alternative 2

$/vehicle

Alternative 3

$/vehicle

2027

$633

$668

$462

$189

2028

497

804

355

125

2029

401

1,120

353

2030

526

1,262

337

250

2031

866

1,565

718

800

2032

1,164

1,775

1,041

1,256

2. Projected Emission Reductions From the Alternatives

Table 13—Projected GHG Emission Impacts in 2055 From the Proposed Rule, Light-Duty and Medium-Duty

[Million metric tons]

Pollutant

Vehicle

EGU

Refinery *

Net impact

(%)

Alternative 1

−480

−460

−52

−0.0096

0.00043

−0.0092

−49

−0.0084

0.000034

−0.0083

−44

Alternative 2

−400

−380

−43

−0.0081

0.00035

−0.0078

−42

−0.0072

0.000027

−0.0072

−38

Alternative 3

−440

−420

−47

−0.0088

0.00039

−0.0084

−45

−0.0078

0.00003

−0.0077

−41

* GHG emission rates were not available for calculating GHG inventories from refineries.

Table 14—Projected Cumulative GHG Emission Impacts Through 2055 From the Proposed Rule, Light-Duty and Medium-Duty

[Million metric tons]

Pollutant

Vehicle

EGU

Refinery

Net impact

(%)

Alternative 1

−8,900

780

−8,100

−29

−0.17

0.039

−0.13

−18

−0.15

0.005

−0.14

−27

Alternative 2

−7,200

630

−6,600

−23

−0.14

0.032

−0.11

−15

−0.13

0.004

−0.12

−23

Alternative 3

−7,800

670

−7,100

−25

−0.15

0.033

−0.12

−16

−0.13

0.0042

−0.13

−24

* GHG emission rates were not available for calculating GHG inventories from refineries.

Table 15—Projected Criteria Air Pollutant Impacts in 2055 From the Proposed Rule, Light-Duty and Medium-Duty

[U.S. tons]

Pollutant

Vehicle

EGU

Refinery

Net impact

(%)

Alternative 1

2.5

−9,800

1,700

−7,600

−16,000

−37

−47,000

2,800

−27,000

−71,000

−44

VOC

−230,000

1,100

−23,000

−250,000

−55

−3,000

1,900

−12,000

−13,000

−46

CO *

−2,000,000

−55

Alternative 2

2.5

−9,800

1,400

−6,200

−15,000

−34

−41,000

2,400

−22,000

−61,000

−38

VOC

−190,000

950

−19,000

−200,000

−45

−2,500

1,500

−9,500

−11,000

−38

CO *

−1,600,000

−45

Alternative 3

2.5

−9,800

1,500

−6,900

−15,000

−35

−44,000

2,600

−25,000

−66,000

−41

VOC

−200,000

1,000

−21,000

−220,000

−50

−2,800

1,700

−11,000

−12,000

−42

CO *

−1,800,000

−50

* EPA did not have data available to calculate CO impacts from EGUs or refineries.

Table 16—Projected Air Toxic Impacts From Vehicles in 2055 From the Proposed Rule, Light-Duty and Medium-Duty

[U.S. tons]

Pollutant

Vehicle

(%)

Alternative 1

Acetaldehyde

−920

−53

Acrolein

−60

−52

Benzene

−3,200

−56

Ethylbenzene

−3,700

−55

Formaldehyde

−550

−53

Naphthalene

−110

−56

1,3-Butadiene

−370

−56

15 Polyaromatic Hydrocarbons

−5

−80

Alternative 2

Acetaldehyde

−780

−45

Acrolein

−51

−44

Benzene

−2,600

−47

Ethylbenzene

−3,100

−46

Formaldehyde

−470

−45

Naphthalene

−95

−47

1,3-Butadiene

−310

−47

15 Polyaromatic Hydrocarbons

−5

−77

Alternative 3

Acetaldehyde

−850

−49

Acrolein

−55

−48

Benzene

−2,900

−51

Ethylbenzene

−3,400

−50

Formaldehyde

−510

−49

Naphthalene

−100

−51

1,3-Butadiene

−340

−51

15 Polyaromatic Hydrocarbons

−5

−78

3. Summary of Costs and Benefits of the Alternatives

Table 17, Table 18., and Table 19 show the summary of costs, savings and benefits under alternatives 1, 2 and 3, respectively.

Table 17—Monetized Discounted Costs, Benefits, and Net Benefits of Alternative 1 for Calendar Years 2027 through 2055, Light-Duty and Medium-Duty

[Billions of 2020 dollars]

CY 2055

PV, 3%

PV, 7%

EAV, 3%

EAV, 7%

Non-Emission Costs

Vehicle Technology Costs

330

220

Repair Costs

−26

−180

−82

−9.3

−6.7

Maintenance Costs

−57

−450

−220

−24

−18

Congestion Costs

0.11

3.5

2.2

0.18

Noise Costs

0.0017

0.055

0.034

0.0028

0.0027

Sum of Non-Emission Costs

−71

−300

−82

−15

−6.7

Fueling Impacts

Pre-tax Fuel Savings

100

990

510

EVSE Port Costs

7.1

120

6.2

5.6

Sum of Fuel Savings less EVSE Port Costs

870

440

Non-Emission Benefits

Drive Value Benefits

0.22

6.5

3.9

0.34

0.32

Refueling Time Benefits

−8.8

−90

−47

−4.7

−3.8

Energy Security Benefits

4.8

2.4

1.9

Sum of Non-Emission Benefits

−3.8

−38

−20

−2

−1.6

Climate Benefits

5% Average

3% Average

360

2.5% Average

560

3% 95th Percentile

120

1,100

Criteria Air Pollutant Benefits

2.5

Health Benefits—Wu et al., 2020

16-18

150

7.7

5.3

2.5

Health Benefits—Pope III et al., 2019

32-35

290

130

Net Benefits

With Climate 5% Average

200-210

1,500

660

With Climate 3% Average

220-240

1,800

930

With Climate 2.5% Average

240-260

2,000

1,100

100

With Climate 3% 95th Percentile

300-320

2,500

1,700

130

100

2.5

For net benefits, the range in 2055 uses the low end of the Wu range and the high end of the Pope III et al. range. The present and equivalent annualized values for 3 percent use the Pope III et al. values while the 7 percent values use the Wu values.

Table 18—Monetized Discounted Costs, Benefits, and Net Benefits of Alternative 2 for Calendar Years 2027 Through 2055, Light-Duty and Medium-Duty

[Billions of 2020 dollars]

CY 2055

PV, 3%

PV, 7%

EAV, 3%

EAV, 7%

Non-Emission Costs

Vehicle Technology Costs

8.8

230

140

Repair Costs

−22

−160

−74

−8.3

−6

Maintenance Costs

−47

−370

−180

−19

−14

Congestion Costs

0.064

0.74

0.48

0.039

Noise Costs

0.001

0.012

0.0078

0.00064

Sum of Non-Emission Costs

−60

−300

−110

−16

−8.7

Fueling Impacts

Pre-tax Fuel Savings

790

400

EVSE Port Costs

7.1

120

6.2

5.6

Sum of Fuel Savings less EVSE Port Costs

680

330

Non-Emission Benefits

Drive Value Benefits

0.17

2.4

1.5

0.12

Refueling Time Benefits

−7.6

−79

−41

−4.1

−3.3

Energy Security Benefits

3.9

1.9

1.5

Sum of Non-Emission Benefits

−3.5

−39

−21

−2

−1.7

Climate Benefits

5% Average

4.9

3% Average

290

2.5% Average

450

3% 95th Percentile

100

900

Criteria Air Pollutant Benefits

2.5

Health Benefits—Wu et al., 2020

15-17

140

7.2

4.9

2.5

Health Benefits—Pope III et al., 2019

30-33

270

120

Net Benefits

With Climate 5% Average

160-180

1,300

550

With Climate 3% Average

180-200

1,500

780

With Climate 2.5% Average

200-210

1,700

930

With Climate 3% 95th Percentile

250-270

2,100

1,400

110

2.5

Table 19—Monetized Discounted Costs, Benefits, and Net Benefits of Alternative 3 for Calendar Years 2027 Through 2055, Light-Duty and Medium-Duty

[Billions of 2020 dollars]

CY 2055

PV, 3%

PV, 7%

EAV, 3%

EAV, 7%

Non-Emission Costs

Vehicle Technology Costs

270

170

Repair Costs

−24

−170

−77

−8.6

−6.3

Maintenance Costs

−51

−390

−190

−20

−15

Congestion Costs

0.11

1.5

0.82

0.078

0.066

Noise Costs

0.0016

0.024

0.013

0.0012

0.0011

Sum of Non-Emission Costs

−64

−290

−95

−15

−7.8

Fueling Impacts

Pre-tax Fuel Savings

850

430

EVSE Port Costs

7.1

120

6.2

5.6

Sum of Fuel Savings less EVSE Port Costs

740

360

Non-Emission Benefits

Drive Value Benefits

0.21

3.2

1.8

0.17

0.15

Refueling Time Benefits

−8.2

−83

−43

−4.3

−3.5

Energy Security Benefits

4.4

2.1

1.6

Sum of Non-Emission Benefits

−3.6

−39

−21

−2.1

−1.7

Climate Benefits

5% Average

5.3

3% Average

320

2.5% Average

490

3% 95th Percentile

110

970

Criteria Air Pollutant Benefits

2.5

Health Benefits—Wu et al., 2020

16-18

140

7.3

5.0

2.5

Health Benefits—Pope III et al., 2019

31-34

280

120

Net Benefits

With Climate 5% Average

180-190

1,300

580

With Climate 3% Average

200-220

1,600

820

With Climate 2.5% Average

210-230

1,800

990

With Climate 3% 95th Percentile

270-290

2,200

1,500

120

2.5

II. Public Health and Welfare Need for Emission Reductions

A. Climate Change From GHG Emissions

Elevated concentrations of GHGs have been warming the planet, leading to changes in the Earth's climate including changes in the frequency and intensity of heat waves, precipitation, and extreme weather events, rising seas, and retreating snow and ice. The changes taking place in the atmosphere as a result of the well-documented buildup of GHGs due to human activities are changing the climate at a pace and in a way that threatens human health, society, and the natural environment. While EPA is not making any new scientific or factual findings with regard to the well-documented impact of GHG emissions on public health and welfare in support of this rule, EPA is providing some scientific background on climate change to offer additional context for this rulemaking and to increase the public's understanding of the environmental impacts of GHGs.

Extensive additional information on climate change is available in the scientific assessments and the EPA documents that are briefly described in this section, as well as in the technical and scientific information supporting them. One of those documents is EPA's 2009 Endangerment and Cause or Contribute Findings for Greenhouse Gases Under section 202(a) of the CAA (74 FR 66496, December 15, 2009). In the 2009 Endangerment Finding, the Administrator found under section 202(a) of the CAA that elevated atmospheric concentrations of six key well-mixed GHGs—CO

, methane (CH4), nitrous oxide (N2O), HFCs, perfluorocarbons (PFCs), and sulfur hexafluoride (SF6)—“may reasonably be anticipated to endanger the public health and welfare of current and future generations” (74 FR 66523). The 2009 Endangerment Finding, together with

the extensive scientific and technical evidence in the supporting record, documented that climate change caused by human emissions of GHGs threatens the public health of the U.S. population. It explained that by raising average temperatures, climate change increases the likelihood of heat waves, which are associated with increased deaths and illnesses (74 FR 66497). While climate change also increases the likelihood of reductions in cold-related mortality, evidence indicates that the increases in heat mortality will be larger than the decreases in cold mortality in the U.S. (74 FR 66525). The 2009 Endangerment Finding further explained that compared with a future without climate change, climate change is expected to increase tropospheric ozone pollution over broad areas of the U.S., including in the largest metropolitan areas with the worst tropospheric ozone problems, and thereby increase the risk of adverse effects on public health (74 FR 66525). Climate change is also expected to cause more intense hurricanes and more frequent and intense storms of other types and heavy precipitation, with impacts on other areas of public health, such as the potential for increased deaths, injuries, infectious and waterborne diseases, and stress-related disorders (74 FR 66525). Children, the elderly, and the poor are among the most vulnerable to these climate-related health effects (74 FR 66498).

The 2009 Endangerment Finding also documented, together with the extensive scientific and technical evidence in the supporting record, that climate change touches nearly every aspect of public welfare

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in the U.S., including: Changes in water supply and quality due to changes in drought and extreme rainfall events; increased risk of storm surge and flooding in coastal areas and land loss due to inundation; increases in peak electricity demand and risks to electricity infrastructure; and the potential for significant agricultural disruptions and crop failures (though offset to some extent by carbon fertilization). These impacts are also global and may exacerbate problems outside the U.S. that raise humanitarian, trade, and national security issues for the U.S. (74 FR 66530).

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The CAA states in section 302(h) that “[a]ll language referring to effects on welfare includes, but is not limited to, effects on soils, water, crops, vegetation, manmade materials, animals, wildlife, weather, visibility, and climate, damage to and deterioration of property, and hazards to transportation, as well as effects on economic values and on personal comfort and well-being, whether caused by transformation, conversion, or combination with other air pollutants.” 42 U.S.C. 7602(h).

In 2016, the Administrator issued a similar finding for GHG emissions from aircraft under section 231(a)(2)(A) of the CAA.

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In the 2016 Endangerment Finding, the Administrator found that the body of scientific evidence amassed in the record for the 2009 Endangerment Finding compellingly supported a similar endangerment finding under CAA section 231(a)(2)(A), and also found that the science assessments released between the 2009 and the 2016 Findings “strengthen and further support the judgment that GHGs in the atmosphere may reasonably be anticipated to endanger the public health and welfare of current and future generations” (81 FR 54424).

135

“Finding that Greenhouse Gas Emissions From Aircraft Cause or Contribute to Air Pollution That May Reasonably Be Anticipated To Endanger Public Health and Welfare.” 81 FR 54422, August 15, 2016. (“2016 Endangerment Finding”).

Since the 2016 Endangerment Finding, the climate has continued to change, with new observational records being set for several climate indicators such as global average surface temperatures, GHG concentrations, and sea level rise. Additionally, major scientific assessments continue to be released that further advance our understanding of the climate system and the impacts that GHGs have on public health and welfare both for current and future generations. These updated observations and projections document the rapid rate of current and future climate change both globally and in the U.S.

136 137 138 139

136

USGCRP, 2018: Impacts, Risks, and Adaptation in the United States: Fourth National Climate Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.

https://nca2018.globalchange.gov

137

Roy, J., P. Tschakert, H. Waisman, S. Abdul Halim, P. Antwi-Agyei, P. Dasgupta, B. Hayward, M. Kanninen, D. Liverman, C. Okereke, P.F. Pinho, K. Riahi, and A.G. Suarez Rodriguez, 2018: Sustainable Development, Poverty Eradication and Reducing Inequalities. In: Global Warming of 1.5 °C. An IPCC Special Report on the impacts of global warming of 1.5 °C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. Waterfield (eds.)]. In Press.

https://www.ipcc.ch/sr15/chapter/chapter-5

138

National Academies of Sciences, Engineering, and Medicine. 2019. Climate Change and Ecosystems. Washington, DC: The National Academies Press.

https://doi.org/10.17226/25504

139

NOAA National Centers for Environmental Information, State of the Climate: Global Climate Report for Annual 2020, published online January 2021, retrieved on February 10, 2021, from

https://www.ncdc.noaa.gov/sotc/global/202013

B. Background on Criteria and Air Toxics Pollutants Impacted by This Proposal

1. Particulate Matter

Particulate matter (PM) is a complex mixture of solid particles and liquid droplets distributed among numerous atmospheric gases which interact with solid and liquid phases. Particles in the atmosphere range in size from less than 0.01 to more than 10 micrometers (μm) in diameter.

140

Atmospheric particles can be grouped into several classes according to their aerodynamic diameter and physical sizes. Generally, the three broad classes of particles include ultrafine particles (UFPs, generally considered as particles with a diameter less than or equal to 0.1 μm [typically based on physical size, thermal diffusivity or electrical mobility]), “fine” particles (PM

2.5

; particles with a nominal mean aerodynamic diameter less than or equal to 2.5 μm), and “thoracic” particles (PM

; particles with a nominal mean aerodynamic diameter less than or equal to 10 μm). Particles that fall within the size range between PM

2.5

and PM

, are referred to as “thoracic coarse particles” (PM

10-2.5

, particles with a nominal mean aerodynamic diameter greater than 2.5 μm and less than or equal to 10 μm). EPA currently has NAAQS for PM

2.5

and PM

141

140

U.S. EPA. Policy Assessment (PA) for the Review of the National Ambient Air Quality Standards for Particulate Matter (Final Report, 2020). U.S. Environmental Protection Agency, Washington, DC, EPA/452/R-20/002, 2020.

141

Regulatory definitions of PM size fractions, and information on reference and equivalent methods for measuring PM in ambient air, are provided in 40 CFR parts 50, 53, and 58. With regard to NAAQS which provide protection against health and welfare effects, the 24-hour PM

standard provides protection against effects associated with short-term exposure to thoracic coarse particles (

i.e.,

10-2.5

Most particles are found in the lower troposphere, where they can have residence times ranging from a few hours to weeks. Particles are removed from the atmosphere by wet deposition, such as when they are carried by rain or snow, or by dry deposition, when particles settle out of suspension due to gravity. Atmospheric lifetimes are generally longest for PM

2.5

, which often remains in the atmosphere for days to weeks before being removed by wet or dry deposition.

142

In contrast, atmospheric lifetimes for UFP and PM

10-2.5

are shorter. Within hours, UFP

can undergo coagulation and condensation that lead to formation of larger particles in the accumulation mode, or can be removed from the atmosphere by evaporation, deposition, or reactions with other atmospheric components. PM

10-2.5

are also generally removed from the atmosphere within hours, through wet or dry deposition.

143

142

U.S. EPA. Integrated Science Assessment (ISA) for Particulate Matter (Final Report, 2019). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R-19/188, 2019. Table 2-1.

143

U.S. EPA. Integrated Science Assessment (ISA) for Particulate Matter (Final Report, 2019). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R-19/188, 2019. Table 2-1.

Particulate matter consists of both primary and secondary particles. Primary particles are emitted directly from sources, such as combustion-related activities (

e.g.,

industrial activities, motor vehicle operation, biomass burning), while secondary particles are formed through atmospheric chemical reactions of gaseous precursors (

e.g.,

sulfur oxides (SO

), nitrogen oxides (NO

) and volatile organic compounds (VOCs)). From 2000 to 2021, national annual average ambient PM

2.5

concentrations have declined by over 35 percent,

144

largely reflecting reductions in emissions of precursor gases.

144

See

https://www.epa.gov/air-trends/particulate-matter-pm25-trends

for more information.

There are two primary NAAQS for PM

2.5

: An annual standard (12.0 micrograms per cubic meter (μg/m

)) and a 24-hour standard (35 μg/m

), and there are two secondary NAAQS for PM

2.5

: An annual standard (15.0 μg/m

) and a 24-hour standard (35 μg/m

). The initial PM

2.5

standards were set in 1997 and revisions to the standards were finalized in 2006 and in December 2012 and then retained in 2020. On January 6, 2023, EPA announced its proposed decision to revise the PM NAAQS.

145

https://www.epa.gov/pm-pollution/national-ambient-air-quality-standards-naaqs-pm

There are many areas of the country that are currently in nonattainment for the annual and 24-hour primary PM

2.5

NAAQS. As of August 31, 2022, more than 19 million people lived in the 4 areas that are designated as nonattainment for the 1997 PM

2.5

NAAQS. Also, as of August 31, 2022, more than 31 million people lived in the 14 areas that are designated as nonattainment for the 2006 PM

2.5

NAAQS and more than 20 million people lived in the 5 areas designated as nonattainment for the 2012 PM

2.5

NAAQS. In total, there are currently 15 PM

2.5

nonattainment areas with a population of more than 32 million people.

146

The proposed standards would take effect beginning in MY 2027 and would assist areas with attaining the NAAQS and may relieve areas with already stringent local regulations from some of the burden associated with adopting additional local controls. The rule would also assist counties with ambient concentrations near the level of the NAAQS who are working to ensure long-term attainment or maintenance of the PM

2.5

NAAQS.

146

The population total is calculated by summing, without double counting, the 1997, 2006 and 2012 PM2.5 nonattainment populations contained in the Criteria Pollutant Nonattainment Summary report (

https://www.epa.gov/green-book/green-book-data-download

2. Ozone

Ground-level ozone pollution forms in areas with high concentrations of ambient NO

and VOCs when solar radiation is strong. Major U.S. sources of NO

are highway and nonroad motor vehicles, engines, power plants and other industrial sources, with natural sources, such as soil, vegetation, and lightning, serving as smaller sources. Vegetation is the dominant source of VOCs in the U.S. Volatile consumer and commercial products, such as propellants and solvents, highway and nonroad vehicles, engines, fires, and industrial sources also contribute to the atmospheric burden of VOCs at ground-level.

The processes underlying ozone formation, transport, and accumulation are complex. Ground-level ozone is produced and destroyed by an interwoven network of free radical reactions involving the hydroxyl radical (OH), NO, NO

, and complex reaction intermediates derived from VOCs. Many of these reactions are sensitive to temperature and available sunlight. High ozone events most often occur when ambient temperatures and sunlight intensities remain high for several days under stagnant conditions. Ozone and its precursors can also be transported hundreds of miles downwind, which can lead to elevated ozone levels in areas with otherwise low VOC or NO

emissions. As an air mass moves and is exposed to changing ambient concentrations of NO

and VOCs, the ozone photochemical regime (relative sensitivity of ozone formation to NO

and VOC emissions) can change.

When ambient VOC concentrations are high, comparatively small amounts of NO

catalyze rapid ozone formation. Without available NO

, ground-level ozone production is severely limited, and VOC reductions would have little impact on ozone concentrations. Photochemistry under these conditions is said to be “NO

-limited.” When NO

levels are sufficiently high, faster NO

oxidation consumes more radicals, dampening ozone production. Under these “VOC-limited” conditions (also referred to as “NO

-saturated” conditions), VOC reductions are effective in reducing ozone, and NO

can react directly with ozone, resulting in suppressed ozone concentrations near NO

emission sources. Under these NO

-saturated conditions, NO

reductions can actually increase local ozone under certain circumstances, but overall ozone production (considering downwind formation) decreases and even in VOC-limited areas, NO

reductions are not expected to increase ozone levels if the NO

reductions are sufficiently large—large enough to become NO

-limited.

The primary NAAQS for ozone, established in 2015 and retained in 2020, is an 8-hour standard with a level of 0.07 ppm.

147

EPA announced that it will reconsider the decision to retain the ozone NAAQS.

148

EPA is also implementing the previous 8-hour ozone primary standard, set in 2008, at a level of 0.075 ppm. As of August 31, 2022, there were 34 ozone nonattainment areas for the 2008 ozone NAAQS, composed of 141 full or partial counties, with a population of more than 90 million, and 49 ozone nonattainment areas for the 2015 ozone NAAQS, composed of 212 full or partial counties, with a population of more than 125 million. In total, there are currently, as of August 31, 2022, 57 ozone nonattainment areas with a population of more than 130 million people.

149

147

https://www.epa.gov/ground-level-ozone-pollution/ozone-national-ambient-air-quality-standards-naaqs

148

https://www.epa.gov/ground-level-ozone-pollution/epa-reconsider-previous-administrations-decision-retain-2015-ozone

149

The population total is calculated by summing, without double counting, the 2008 and 2015 ozone nonattainment populations contained in the Criteria Pollutant Nonattainment Summary report (

https://www.epa.gov/green-book/green-book-data-download

States with ozone nonattainment areas are required to take action to bring those areas into attainment. The attainment date assigned to an ozone nonattainment area is based on the area's classification. The attainment dates for areas designated nonattainment for the 2008 8-hour ozone NAAQS are in the 2015 to 2032 timeframe, depending on the severity of the problem in each area. Attainment dates for areas designated nonattainment for the 2015 ozone NAAQS are in the 2021 to 2038 timeframe, again depending on the severity of the problem in each area.

150

The proposed standards would take effect starting in MY 2027 and would assist areas with attaining the NAAQS and may relieve areas with already stringent local regulations from some of the burden associated with adopting additional local controls. The rule would also provide assistance to counties with ambient concentrations near the level of the NAAQS who are working to ensure long-term attainment or maintenance of the NAAQS.

150

https://www.epa.gov/ground-level-ozone-pollution/ozone-naaqs-timelines

3. Nitrogen Oxides

Oxides of nitrogen (NO

) refers to nitric oxide (NO) and nitrogen dioxide (NO

). Most NO

is formed in the air through the oxidation of nitric oxide (NO) emitted when fuel is burned at a high temperature. NO

is a criteria pollutant, regulated for its adverse effects on public health and the environment, and highway vehicles are an important contributor to NO

emissions. NO

, along with VOCs, are the two major precursors of ozone and NO

is also a major contributor to secondary PM

2.5

formation. There are two primary NAAQS for NO

: An annual standard (53 ppb) and a 1-hour standard (100 ppb).

151

In 2010, EPA established requirements for monitoring NO

near roadways expected to have the highest concentrations within large cities. Monitoring within this near-roadway network began in 2014, with additional sites deployed in the following years. At present, there are no nonattainment areas for NO

151

The statistical form of the 1-hour NAAQS for NO

is the 3-year average of the yearly distribution of 1-hour daily maximum concentrations.

4. Sulfur Oxides

Sulfur dioxide (SO

), a member of the sulfur oxide (SO

) family of gases, is formed from burning fuels containing sulfur (

e.g.,

coal or oil), extracting gasoline from oil, or extracting metals from ore. SO

and its gas phase oxidation products can dissolve in water droplets and further oxidize to form sulfuric acid which reacts with ammonia to form sulfates, which are important components of ambient PM.

EPA most recently completed a review of the primary SO

NAAQS in February 2019 and decided to retain the existing 2010 SO

NAAQS.

152

The current primary NAAQS for SO

is a 1-hour standard of 75 ppb. As of September 30, 2022, more than two million people lived in the 30 areas that are designated as nonattainment for the 2010 SO

NAAQS.

153

152

https://www.epa.gov/so2-pollution/primary-national-ambient-air-quality-standard-naaqs-sulfur-dioxide

153

https://www3.epa.gov/airquality/greenbook/tnsum.html

5. Carbon Monoxide

Carbon monoxide (CO) is a colorless, odorless gas emitted from combustion processes. Nationally, particularly in urban areas, the majority of CO emissions to ambient air come from mobile sources.

154

There are two primary NAAQS for CO: An 8-hour standard (9 ppm) and a 1-hour standard (35 ppm). There are currently no CO nonattainment areas; as of September 27, 2010, all CO nonattainment areas have been redesignated to attainment. The past designations were based on the existing community-wide monitoring network. EPA made an addition to the ambient air monitoring requirements for CO during the 2011 NAAQS review. Those new requirements called for CO monitors to be operated near roads in Core Based Statistical Areas (CBSAs) of 1 million or more persons, in addition to the existing community-based network (76 FR 54294, August 31, 2011).

154

U.S. EPA, (2010). Integrated Science Assessment for Carbon Monoxide (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R-09/019F, 2010.

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686

. See Section 2.1.

6. Diesel Exhaust

Diesel exhaust is a complex mixture composed of particulate matter, carbon dioxide, oxygen, nitrogen, water vapor, carbon monoxide, nitrogen compounds, sulfur compounds and numerous low-molecular-weight hydrocarbons. A number of these gaseous hydrocarbon components are individually known to be toxic, including aldehydes, benzene and 1,3-butadiene. The diesel particulate matter present in diesel exhaust consists mostly of fine particles (<2.5 μm), of which a significant fraction is ultrafine particles (<0.1 μm). These particles have a large surface area which makes them an excellent medium for adsorbing organics and their small size makes them highly respirable. Many of the organic compounds present in the gases and on the particles, such as polycyclic organic matter, are individually known to have mutagenic and carcinogenic properties.

Diesel exhaust varies significantly in chemical composition and particle sizes between different engine types (heavy-duty, light-duty), engine operating conditions (idle, acceleration, deceleration), and fuel formulations (high/low sulfur fuel). Also, there are emissions differences between onroad and nonroad engines because the nonroad engines are generally of older technology. After being emitted in the engine exhaust, diesel exhaust undergoes dilution as well as chemical and physical changes in the atmosphere. The lifetimes of the components present in diesel exhaust range from seconds to days.

7. Air Toxics

The most recent available data indicate that millions of Americans live in areas where air toxics pose potential health concerns.

155 156

The levels of air toxics to which people are exposed vary depending on where people live and work and the kinds of activities in which they engage, as discussed in detail in EPA's 2007 Mobile Source Air Toxics Rule.

157

According to EPA's Air Toxics Screening Assessment (AirToxScreen) for 2018, mobile sources were responsible for 40 percent of outdoor anthropogenic toxic emissions and were the largest contributor to national average cancer and noncancer risk from directly emitted pollutants.

158 159

Mobile sources are also significant contributors to precursor emissions which react to form air toxics.

160

Formaldehyde is the largest contributor to cancer risk of all 71 pollutants quantitatively assessed in the 2018 AirToxScreen. Mobile sources were responsible for 26 percent of primary anthropogenic emissions of this pollutant in 2018 and are significant contributors to formaldehyde precursor emissions. Benzene is also a large contributor to cancer risk, and mobile sources account for about 60 percent of

average exposure to ambient concentrations.

155

Air toxics are pollutants known to cause or suspected of causing cancer or other serious health effects. Air toxics are also known as toxic air pollutants or hazardous air pollutants.

https://www.epa.gov/AirToxScreen/airtoxscreen-glossary-terms#air-toxics

156

U.S. EPA (2022) Technical Support Document EPA Air Toxics Screening Assessment. 2017AirToxScreen TSD.

https://www.epa.gov/system/files/documents/2022-03/airtoxscreen_2017tsd.pdf

157

U.S. Environmental Protection Agency (2007). Control of Hazardous Air Pollutants from Mobile Sources; Final Rule. 72 FR 8434, February 26, 2007.

158

U.S. EPA. (2022) 2018 Air Toxics Screening Assessment.

https://www.epa.gov/AirToxScreen/2018-airtoxscreen-assessment-results

159

AirToxScreen also includes estimates of risk attributable to background concentrations, which includes contributions from long-range transport, persistent air toxics, and natural sources; as well as secondary concentrations, where toxics are formed via secondary formation. Mobile sources substantially contribute to long-range transport and secondarily formed air toxics.

160

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