Home/Federal/Federal Register/2021-16582

Proposed Rule2021-16582

Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

August 10, 2021

Issuing agencies

Environmental Protection Agency

Abstract

The Environmental Protection Agency (EPA) is proposing to revise the greenhouse gas (GHG) emissions standards for light-duty vehicles for 2023 and later model years to make the standards more stringent. On January 20, 2021, President Biden issued Executive Order 13990 "Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis" directing EPA to consider whether to propose suspending, revising, or rescinding the standards previously revised under the "The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks," promulgated in April 2020. The SAFE rule significantly weakened the standards established in 2012, which in part set GHG standards for model years 2021-25. EPA believes that in light of the significant contribution of light-duty vehicles to transportation sector GHG emissions, standards more stringent than those relaxed in the SAFE rule are appropriate under the Clean Air Act. EPA is proposing to revise the GHG standards to be more stringent than the SAFE rule standards in each model year from 2023 through 2026. EPA is also proposing to include several flexibilities to incentivize the production and sale of vehicles with zero and near-zero emissions technology to reduce compliance costs and to address the lead time of the proposed standards. In addition, EPA is proposing some technical amendments to clarify and streamline our regulations. Compliance with the proposed standards would be feasible at reasonable costs to manufacturers. The proposed revised standards would result in significant benefits for public health and welfare, primarily through substantial reductions in both GHG emissions and fuel consumption and associated fuel costs paid by drivers, and the benefits of the proposed standards would be far in excess of costs.

Full Text

<html>
<head>
<title>Federal Register, Volume 86 Issue 151 (Tuesday, August 10, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 151 (Tuesday, August 10, 2021)]
[Proposed Rules]
[Pages 43726-43811]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-16582]

[[Page 43725]]

Vol. 86

Tuesday,

No. 151

August 10, 2021

Part II

Environmental Protection Agency

-----------------------------------------------------------------------

40 CFR Parts 86 and 600

Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse Gas
Emissions Standards; Proposed Rule

Federal Register / Vol. 86 , No. 151 / Tuesday, August 10, 2021 /
Proposed Rules

[[Page 43726]]

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 86 and 600

[EPA-HQ-OAR-2021-0208; FRL 8469-02-OAR]
RIN 2060-AV13

Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse
Gas Emissions Standards

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency (EPA) is proposing to
revise the greenhouse gas (GHG) emissions standards for light-duty
vehicles for 2023 and later model years to make the standards more
stringent. On January 20, 2021, President Biden issued Executive Order
13990 ``Protecting Public Health and the Environment and Restoring
Science To Tackle the Climate Crisis'' directing EPA to consider
whether to propose suspending, revising, or rescinding the standards
previously revised under the ``The Safer Affordable Fuel-Efficient
(SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light
Trucks,'' promulgated in April 2020. The SAFE rule significantly
weakened the standards established in 2012, which in part set GHG
standards for model years 2021-25. EPA believes that in light of the
significant contribution of light-duty vehicles to transportation
sector GHG emissions, standards more stringent than those relaxed in
the SAFE rule are appropriate under the Clean Air Act. EPA is proposing
to revise the GHG standards to be more stringent than the SAFE rule
standards in each model year from 2023 through 2026. EPA is also
proposing to include several flexibilities to incentivize the
production and sale of vehicles with zero and near-zero emissions
technology to reduce compliance costs and to address the lead time of
the proposed standards. In addition, EPA is proposing some technical
amendments to clarify and streamline our regulations. Compliance with
the proposed standards would be feasible at reasonable costs to
manufacturers. The proposed revised standards would result in
significant benefits for public health and welfare, primarily through
substantial reductions in both GHG emissions and fuel consumption and
associated fuel costs paid by drivers, and the benefits of the proposed
standards would be far in excess of costs.

DATES:
Comments: Written comments must be received on or before September
27, 2021.
Public Hearing: EPA plans to hold a virtual public hearing on
August 25, 2021. An additional session may be held on August 26th if
necessary to accommodate the number of testifiers that sign-up to
testify. Please refer to the separate Federal Register notice issued by
EPA for public hearing details. The hearing notice is available at
<a href="https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-revise-existing-national-ghg-emissions">https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-revise-existing-national-ghg-emissions</a>.

ADDRESSES: You may send comments, identified by Docket ID No. EPA-HQ-
OAR-2021-0208, by any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>
(our preferred method). Follow the online instructions for submitting
comments.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#76175b1718125b045b3219151d13023613061758111900">[email&#160;protected]</a>. Include Docket ID No. EPA-
HQ-OAR-2021-0208 in the subject line of the message.
<bullet> Mail: U.S. Environmental Protection Agency, EPA Docket
Center, OAR, Docket EPA-HQ-OAR-2021-0208, Mail Code 28221T, 1200
Pennsylvania Avenue NW, Washington, DC 20460.
<bullet> 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. EPA-HQ-OAR-2021-0208 for this rulemaking. Comments received may be
posted without change to <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>, 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. Out of an abundance of caution for members of
the public and our staff, the EPA Docket Center and Reading Room are
closed to the public, with limited exceptions, to reduce the risk of
transmitting COVID-19. Our Docket Center staff will continue to provide
remote customer service via email, phone, and webform. We encourage the
public to submit comments via <a href="https://www.regulations.gov/">https://www.regulations.gov/</a> or email, as
there may be a delay in processing mail. Hand deliveries and couriers
may be received by scheduled appointment only. For further information
on EPA Docket Center services and the current status, please visit us
online at <a href="https://www.epa.gov/dockets">https://www.epa.gov/dockets</a>.
EPA plans to hold a virtual public hearing for this rulemaking.
Please refer to the separate Federal Register notice issued by EPA for
public hearing details. The hearing notice is available at <a href="https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-revise-existing-national-ghg-emissions">https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-revise-existing-national-ghg-emissions</a>.

FOR FURTHER INFORMATION CONTACT: Tad Wysor, Office of Transportation
and Air Quality, Assessment and Standards Division (ASD), Environmental
Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105;
telephone number: (734) 214-4332; email address: <a href="/cdn-cgi/l/email-protection#1f68666c706d316b7e7b5f7a6f7e31787069">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

A. Public Participation

Written Comments

EPA will keep the comment period open until September 27, 2021. All
information will be available for inspection at the EPA Air Docket No.
EPA-HQ-OAR-2021-0208. Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2021-0208, at <a href="https://www.regulations.gov">https://www.regulations.gov</a> (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 <a href="https://www.regulations.gov">https://www.regulations.gov</a> 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 <a href="https://www.epa.gov/dockets/commenting-epa-dockets">https://www.epa.gov/dockets/commenting-epa-dockets</a>.
EPA is temporarily suspending its Docket Center and Reading Room
for public visitors, with limited exceptions, to reduce the risk of
transmitting COVID-19. Our Docket Center staff will continue to provide
remote customer

[[Page 43727]]

service via email, phone, and webform. We encourage the public to
submit comments via <a href="https://www.regulations.gov/">https://www.regulations.gov/</a> as there may be a
delay in processing mail. Hand deliveries or couriers will be received
by scheduled appointment only. For further information and updates on
EPA Docket Center services, please visit us online at <a href="https://www.epa.gov/dockets">https://www.epa.gov/dockets</a>.
EPA continues to carefully and continuously monitor information
from the Centers for Disease Control and Prevention (CDC), local area
health departments, and our Federal partners so that we can respond
rapidly as conditions change regarding COVID-19.

Virtual Public Hearing

EPA plans to hold a virtual public hearing on August 25, 2021. An
additional session will be held on August 26th if necessary, to
accommodate the number of testifiers that sign-up to testify. Please
refer to the separate Federal Register notice issued by EPA for public
hearing details. The hearing notice is available at <a href="https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-revise-existing-national-ghg-emissions">https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-revise-existing-national-ghg-emissions</a>. 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?

This action affects companies that manufacture or sell passenger
automobiles (passenger cars) and non-passenger automobiles (light
trucks) as defined in 49 CFR part 523. Regulated categories and
entities include:

------------------------------------------------------------------------
NAICS Examples of potentially
Category codes \A\ regulated entities
------------------------------------------------------------------------
Industry.......................... 336111 Motor Vehicle
336112 Manufacturers.
Industry.......................... 811111 Commercial Importers of
811112 Vehicles and Vehicle
Components.
811198
423110
Industry.......................... 335312 Alternative Fuel Vehicle
811198 Converters.
------------------------------------------------------------------------
\A\ North American Industry Classification System (NAICS).

This list is not intended to be exhaustive, but rather provides a
guide regarding entities likely to be regulated 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.

Table of Contents

I. Executive Summary
A. Purpose of This Proposed Rule and Legal Authority
1. Proposal for Near-Term Standards Through Model Year 2026
2. Why does EPA believe the proposed standards are appropriate
under the CAA?
3. Future Longer-Term Action to Further Reduce Light-Duty
Vehicle Emissions in 2027 and Beyond
B. Summary of Proposed Light-Duty Vehicle GHG Program
1. Proposed Revised GHG Emissions Standards
2. Proposed Compliance Incentives and Flexibilities
C. Analytical Support for the Proposed Revised Standards
1. Summary of Analyses for This Proposed Rule
2. History of Similar Analyses
D. Summary of Costs and Benefits of the Proposed Program
E. How has EPA considered environmental justice in this
proposal?
F. Affordability and Equity
G. What alternatives is EPA considering?
1. Description of the Alternatives
2. Summary of Costs and Benefits of the Alternatives
3. Summary of the Proposal's Costs and Benefits Compared to the
Alternatives
II. EPA Proposal for MY 2023-2026 Light-Duty Vehicle GHG Standards
A. Proposed Model Year 2023-2026 GHG Standards for Light-Duty
Vehicles, Light-Duty Trucks, and Medium Duty Passenger Vehicles
1. What fleet-wide emissions levels correspond to the
CO<INF>2</INF> standards?
2. What are the proposed CO<INF>2</INF> attribute-based
standards?
3. EPA's Statutory Authority Under the CAA
4. Averaging, Banking, and Trading Provisions for CO<INF>2</INF>
Standards
5. Certification, Compliance, and Enforcement
6. On-Board Diagnostics Program Updates
7. Stakeholder Engagement
8. How do EPA's proposed standards relate to NHTSA's CAFE
proposal and to California's GHG program?
B. Additional Manufacturer Compliance Flexibilities
1. Multiplier Incentives for Advanced Technology Vehicles
2. Advanced Technology Incentives for Full-Size Pickups
3. Off-Cycle Technology Credits
4. Air Conditioning System Credits
5. Natural Gas Vehicles Technical Correction
C. What alternatives is EPA considering?
III. Technical Assessment of the Proposed CO<INF>2</INF> Standards
A. What approach did EPA use in analyzing potential standards?
B. Projected Compliance Costs and Technology Penetrations
1. GHG Targets and Compliance Levels
2. Projected Compliance Costs per Vehicle
3. Technology Penetration Rates
C. Are the proposed standards feasible?
D. How did EPA consider the two alternatives in choosing the
proposed program?
IV. How would this proposal reduce GHG emissions and their
associated effects?
A. Impact on GHG Emissions
B. Climate Change Impacts From GHG Emissions
C. Global Climate Impacts and Benefits Associated With the
Proposal's GHG Emissions Reductions
V. How would the proposal impact non-GHG emissions and their
associated effects?
A. Impact on Non-GHG Emissions
B. Health and Environmental Effects Associated With Exposure to
Non-GHG Pollutants Impacted by the Proposed Standards
C. Air Quality Impacts of Non-GHG Pollutants
VI. Basis for the Proposed GHG Standards Under CAA Section 202(a)
A. Consideration of Technological Feasibility and Lead Time
1. Technological Readiness of the Auto Industry in Meeting
Revised GHG Standards
2. Opportunities Provided Through Credits and Incentives
Provisions
B. Consideration of Vehicle Costs of Compliance
C. Consideration of Impacts on Consumers
D. Consideration of Emissions of GHGs and Other Air Pollutants
E. Consideration of Energy, Safety and Other Factors
F. Balancing of Factors Under CAA 202(a)
VII. What are the estimated cost, economic, and other impacts of the
proposal?
A. Conceptual Framework for Evaluating Consumer Impacts
B. Vehicle Sales Impacts
C. Changes in Fuel Consumption

[[Page 43728]]

D. Greenhouse Gas Emission Reduction Benefits
E. Non-Greenhouse Gas Health Impacts
F. Energy Security Impacts
G. Impacts of Additional Driving
H. Safety Considerations in Establishing GHG Standards
I. Summary of Costs and Benefits
J. Impacts on Consumers of Vehicle Costs and Fuel Savings
K. Employment Impacts
L. Environmental Justice
1. GHG Impacts
2. Non-GHG Impacts
M. Affordability and Equity Impacts
VIII. 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
J. Executive Order 12898: ``Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations''
IX. Statutory Provisions and Legal Authority

I. Executive Summary

A. Purpose of This Proposed Rule and Legal Authority

1. Proposal for Near-Term Standards Through Model Year 2026
The Environmental Protection Agency (EPA) is proposing to revise
existing national greenhouse gas (GHG) emissions standards for
passenger cars and light trucks under section 202(a) of the Clean Air
Act (CAA), 42 U.S.C. 7521(a). 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.
This proposal also responds to Executive Order (E.O.) 13990,
``Protecting Public Health and the Environment and Restoring Science To
Tackle the Climate Crisis'' (Jan. 20, 2021), which directs EPA to
consider taking the action proposed in this notice: \1\
---------------------------------------------------------------------------

\1\ 86 FR 7037, January 25, 2021.

``[T]he head of the relevant agency, as appropriate and
consistent with applicable law, shall consider publishing for notice
and comment a proposed rule suspending, revising, or rescinding the
agency action[s set forth below] within the time frame specified.''
``Establishing Ambitious, Job-Creating Fuel Economy Standards: .
. . `The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for
Model Years 2021-2026 Passenger Cars and Light Trucks,' 85 FR 24174
(April 30, 2020), by July 2021. . . . In considering whether to
propose suspending, revising, or rescinding the latter rule, the
agency should consider the views of representatives from labor
unions, States, and industry.''

The proposed program would revise the light-duty vehicle GHG
standards previously revised by the SAFE rule and would build upon
earlier EPA actions and supporting analyses that established or
maintained stringent light-duty vehicle GHG emissions standards. For
example, in 2012, EPA issued a final rule establishing light-duty
vehicle GHG standards for model years (MYs) 2017-2025,\2\ which were
supported in analyses accounting for compliance costs, lead time and
other relevant factors.\3\ That rule and its analyses also accounted
for the development and availability of advanced GHG emission-reducing
technologies for gasoline-fueled vehicles, which demonstrated that the
standards were appropriate under section 202(a) of the CAA.\4\ This
proposed rule provides additional analysis that takes into
consideration updated data and recent developments. Auto manufacturers
are currently implementing an increasing array of advanced gasoline
vehicle GHG emission-reducing technologies at a rapid pace throughout
their vehicle fleets. Vehicle electrification technologies are also
advancing rapidly, as battery costs have continued to decline, and
automakers have announced an increasing diversity and volume of zero-
emission vehicle models. Meanwhile, in 2019, several auto manufacturers
voluntarily entered into agreements with the State of California to
comply with GHG emission reduction targets through MY 2026 across their
national vehicle fleets (the ``California Framework Agreements'') that
are more stringent than the EPA standards as revised by the SAFE rule.
These developments further support EPA's decision to reconsider and
propose revising the existing EPA standards to be more stringent,
particularly in light of factors indicating that more stringent near-
term standards are feasible at reasonable cost and would achieve
significantly greater GHG emissions reductions and public health and
welfare benefits than the existing program. In developing this
proposal, EPA has conducted outreach with a wide range of interested
stakeholders, including labor unions, States, and industry as provided
in E.O. 13990, and we will continue to engage with these and other
stakeholders as part of our regulatory development process.
---------------------------------------------------------------------------

\2\ EPA's model year emission standards also apply in subsequent
model years, unless revised, e.g., MY 2025 standards issued in the
2012 rule also applied to MY 2026 and beyond.
\3\ 77 FR 62624, October 15, 2012.
\4\ Id.
---------------------------------------------------------------------------

This proposal is limited to MYs 2023-2026, given lead time
considerations under the CAA, which is consistent with E.O. 13990's
direction to review the SAFE rule standards. We have designed the
proposed program based on our assessment that the proposed standards
are reasonable and appropriate and will achieve a significant level of
GHG reductions for MYs 2023-2026 vehicles, with the expectation that a
future, longer-term program for MYs 2027 and later will build upon
these near-term standards.
EPA has set previous light-duty vehicle GHG emission standards in
joint rulemakings where NHTSA also established CAFE standards. EPA has
concluded that it is not necessary at this time for this EPA proposal
to be done in a joint action with NHTSA. EPA has coordinated with
NHTSA, both on a bilateral level as well as through the interagency
review of the EPA proposal led by the Office of Management and Budget.
2. Why does EPA believe the proposed standards are appropriate under
the CAA?
EPA is proposing to revise GHG emissions standards for passenger
cars and light trucks under its authority in section 202(a) of the CAA.
Section 202(a) requires EPA to establish standards for emissions of
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, compliance cost, and lead time. EPA also may
consider other factors and in previous light-duty vehicle GHG standards
rulemakings has considered the impacts of potential GHG standards

[[Page 43729]]

on the auto industry, fuel savings by consumers, oil conservation,
energy security and other energy impacts, as well as other relevant
considerations such as safety.
As we describe in greater detail below, EPA has carefully
considered the technological feasibility and cost of the proposed
standards and the available lead time for manufacturers to comply with
them, including existing and proposed flexibilities designed to
facilitate compliance during the MYs 2023-2026 timeframe. Based on our
analysis, we believe that the proposed standards, combined with
proposed flexibilities that address lead time considerations resulting
from relaxations in standards revised in the SAFE rule, are appropriate
and justified under section 202(a) of the CAA. Our updated analysis for
this proposal, as well as our earlier analyses of similar standards,
supports the conclusion that the proposed standards are technologically
feasible for the model years covered (MYs 2023-2026) and that the costs
of compliance for manufacturers would be reasonable. The proposed
standards would result in greater reductions in GHG emissions, as well
as reductions in emissions of some criteria pollutants and air toxics,
resulting in significant benefits for public health and welfare. We
also show 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.
EPA has significantly updated its analysis for this rule. As
discussed further below, we have updated a number of key inputs, such
as, for example, certain technology costs and penetrations, to ensure
they are up to date. Notably, the results of this updated analysis are
generally in agreement with prior analyses, including those conducted
for the SAFE rule. In particular, the costs that have been estimated
for manufacturers to meet standards of a similar stringency to the
proposed standards have been roughly consistent since EPA first
estimated them in 2012. That is, although manufacturers have less lead
time before these standards would be implemented than with previous
rulemakings, the significant progress that has been made in
implementing advanced gasoline technologies in the fleet (as well as
advances in electric and hybrid vehicle technology) since 2012 means
the proposed standards can be achieved at roughly the same cost as
previous estimates, and additional lead time is unnecessary.
When considering similar cost estimates in the SAFE rule, EPA
identified some factors, primarily costs to manufacturers and upfront
costs to consumers, as favoring reductions in stringency of the then-
existing standards, and other factors, such as reduced emissions that
endanger public health and welfare and reduced operating costs for
consumers, as favoring increased stringency (or a lower degree of
reduced stringency). In balancing these factors in the SAFE rule, EPA
placed greater weight on the former factors, and thereby decided to
make EPA's GHG standards significantly less stringent. But the purpose
of adopting standards under CAA section 202 is to address air pollution
that may reasonably be anticipated to endanger public health and
welfare. Indeed, reducing air pollution has traditionally been the
focus of such standards. EPA has reconsidered how costs, lead time and
other factors were weighed in the SAFE rule and is reaching a different
conclusion as to the appropriate stringency of GHG standards. In light
of the statutory purpose of section 202, the Administrator is placing
greater weight on the emission reductions and resulting public health
and welfare benefits, as well as the savings in vehicle operating costs
for consumers, and proposing significantly more stringent standards for
MYs 2023-2026 compared to the standards established by the SAFE rule.
As discussed in Section III.A, the proposed standards take into
consideration both the updated analysis for this rule and past EPA
analyses conducted for similar GHG standards. We are revising decisions
made in the SAFE final rule in accordance with Supreme Court decisions
affirming that agencies are free to reconsider and revise their prior
decisions where they provide a reasonable explanation for their revised
decisions.\5\ In this rulemaking, the agency is changing its 2020
position and restoring its previous approach by proposing to find, in
light of the statutory purposes of the Clean Air Act and in particular
of section 202(a), that it is more appropriate to place greater weight
on the magnitude and benefits of reducing emissions that endanger
public health and welfare, while continuing to consider compliance
costs, lead time and other relevant factors.
---------------------------------------------------------------------------

\5\ See, e.g., Encino Motorcars, LLC v. Navarro, 136 S. Ct.
2117, 2125 (2016); FCC v. Fox Television Stations, Inc., 556 U.S.
502, 515 (2009).
---------------------------------------------------------------------------

3. Future Longer-Term Action To Further Reduce Light-Duty Vehicle
Emissions in 2027 and Beyond
Addressing the climate crisis will require substantial reductions
in GHG emissions from the transportation sector. The transportation
sector is the largest U.S. source of GHG emissions, representing 29
percent of total GHG emissions.\6\ Within the transportation sector,
light-duty vehicles are the largest contributor, at 58 percent, and
thus comprise 17 percent of total U.S. GHG emissions.\7\ 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.\8\ 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 IV.B, making it
clear that continued emission reductions in the light-duty vehicle
sector are needed beyond the model years covered by the standards
proposed today.
---------------------------------------------------------------------------

\6\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2019 (EPA-430-R-21-005, published April 2021).
\7\ 7 Ibid.
\8\ 74 FR 66496, December 15, 2009; 81 FR 54422, August 15,
2016.
---------------------------------------------------------------------------

This proposed action therefore serves as a critical building block
for a comprehensive, multipollutant longer-term regulatory program
implementing EPA's statutory authority under the CAA. We are at a
pivotal moment in the history of the light-duty transportation sector--
a shift to zero-emission vehicle technologies is already underway, and
it presents a strong potential for dramatic reductions in GHG and
criteria pollutant emissions over the longer term. Major automakers as
well as many global jurisdictions and U.S. states have announced plans
to shift the light-duty fleet toward zero-emissions technology, as
detailed below. EPA anticipates that the design of a future, longer-
term program beyond 2026 will incorporate accelerating advances in
zero-emission technologies.
A proliferation of recent announcements from automakers signals a
rapidly growing shift in investment away from internal-combustion
technologies and toward high levels of electrification. These automaker
announcements are supported by continued advances in automotive
electrification technologies, and further driven by the need to

[[Page 43730]]

compete in a global market as other countries implement aggressive
zero-emission transportation policies. 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.\9\ In March 2021, Volvo announced plans to make only
electric cars by 2030,\10\ and Volkswagen announced that it expects
half of its U.S. sales will be all-electric by 2030.\11\ 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.\12\ In May 2021, Ford announced that they expect 40 percent of
their global sales will be all-electric by 2030.\13\ 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.14 15 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.\16\
---------------------------------------------------------------------------

\9\ General Motors, ``General Motors, the Largest U.S.
Automaker, Plans to be Carbon Neutral by 2040,'' Press Release,
January 28, 2021.
\10\ Volvo Car Group, ``Volvo Cars to be fully electric by
2030,'' Press Release, March 2, 2021.
\11\ Volkswagen Newsroom, ``Strategy update at Volkswagen: The
transformation to electromobility was only the beginning,'' March 5,
2021. Accessed June 15, 2021 at <a href="https://www.volkswagen-newsroom.com/en/stories/strategy-update-at-volkswagen-the-transformation-to-electromobility-was-only-the-beginning-6875">https://www.volkswagen-newsroom.com/en/stories/strategy-update-at-volkswagen-the-transformation-to-electromobility-was-only-the-beginning-6875</a>.
\12\ Honda News Room, ``Summary of Honda Global CEO Inaugural
Press Conference,'' April 23, 2021. Accessed June 15, 2021 at
<a href="https://global.honda/newsroom/news/2021/c210423eng.html">https://global.honda/newsroom/news/2021/c210423eng.html</a>.
\13\ 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.
\14\ 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.
\15\ Stellantis, ``Stellantis Intensifies Electrification While
Targeting Sustainable Double-Digit Adjusted Operating Income Margins
in the Mid-Term,'' Press Release, July 8, 2021.
\16\ Mercedes-Benz, ``Mercedes-Benz prepares to go all-
electric,'' Press Release, July 22, 2021.
---------------------------------------------------------------------------

These announcements and others like them continue a pattern over
the past several years of many manufacturers taking steps to
aggressively pursue zero-emission technologies, introduce a wide range
of zero-emission vehicle models, and reduce their reliance on the
internal-combustion engine in various markets around the
globe.17 18 These goals and investments have been coupled
with a rapidly increasing availability of plug-in vehicle models in the
U.S.\19\ For example, the number of all-electric vehicle (EV) and plug-
in hybrid electric vehicle (PHEV) models available for sale in the U.S.
more than doubled from about 24 in MY 2015 to about 60 in MY 2021, with
offerings in a growing range of vehicle segments.\20\ Recent model
announcements indicate that this number will increase to more than 80
models by MY 2023, with many more expected to reach production before
the end of the decade.\21\ Many of the zero-emission vehicles already
on the market today cost less to drive than conventional
vehicles,22 23 offer improved performance and handling,\24\
and can be charged at a growing network of public chargers \25\ as well
as at home.
---------------------------------------------------------------------------

\17\ 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.
\18\ International Council on Clean Transportation, ``The end of
the road? An overview of combustion-engine car phase-out
announcements across Europe,'' May 10, 2020.
\19\ 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 <a href="https://iopscience.iop.org/article/10.1088/2516-1083/abe0ad">https://iopscience.iop.org/article/10.1088/2516-1083/abe0ad</a>.
\20\ <a href="http://Fueleconomy.gov">Fueleconomy.gov</a>, 2015 Fuel Economy Guide and 2021 Fuel
Economy Guide.
\21\ 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.
\22\ Department of Energy Vehicle Technologies Office,
Transportation Analysis Fact of the Week #1186, ``The National
Average Cost of Fuel for an Electric Vehicle is about 60% Less than
for a Gasoline Vehicle,'' May 17, 2021.
\23\ Department of Energy Vehicle Technologies Office,
Transportation Analysis Fact of the Week #1190, ``Battery-Electric
Vehicles Have Lower Scheduled Maintenance Costs than Other Light-
Duty Vehicles,'' June 14, 2021.
\24\ Consumer Reports, ``Electric Cars 101: The Answers to All
Your EV Questions,'' November 5, 2020. Accessed June 8, 2021 at
<a href="https://www.consumerreports.org/hybrids-evs/electric-cars-101-the-answers-to-all-your-ev-questions/">https://www.consumerreports.org/hybrids-evs/electric-cars-101-the-answers-to-all-your-ev-questions/</a>.
\25\ Department of Energy Alternative Fuels Data Center,
Electric Vehicle Charging Station Locations. Accessed on May 19,
2021 at <a href="https://afdc.energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC">https://afdc.energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC</a>.
---------------------------------------------------------------------------

At the same time, an increasing number of global jurisdictions and
U.S. states plan to take actions to shift the light-duty fleet toward
zero-emissions technology. In 2020, California announced an intention
to require increasing volumes of zero-emission vehicles to meet the
goal that, by 2035, all new light-duty vehicles sold in the state be
zero-emission vehicles.\26\ Massachusetts \27\ and New York \28\ are
also poised to adopt similar targets and requirements to take effect by
2035. Several other states may adopt similar provisions by 2050 as
members of the International Zero-Emission Vehicle Alliance.\29\
Globally, at least 12 countries, as well as numerous local
jurisdictions, have announced similar goals to shift all new passenger
car sales to zero-emission vehicles in the coming years, including
Norway (2025); the Netherlands, Denmark, Iceland, Ireland, Sweden, and
Slovenia (2030); Canada and the United Kingdom (2035); France and Spain
(2040); and Costa Rica (2050).30 31 Together, these
countries represent approximately 13 percent of the global market for
passenger cars,\32\ in addition to that represented by the
aforementioned U.S. states and other global jurisdictions.
---------------------------------------------------------------------------

\26\ 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.
\27\ Commonwealth of Massachusetts, ``Request for Comment on
Clean Energy and Climate Plan for 2030,'' December 30, 2020.
\28\ New York State Senate, Senate Bill S2758, 2021-2022
Legislative Session. January 25, 2021.
\29\ ZEV Alliance, ``International ZEV Alliance Announcement,''
Dec. 3, 2015. Accessed on July 16, 2021 at <a href="http://www.zevalliance.org/international-zev-alliance-announcement/">http://www.zevalliance.org/international-zev-alliance-announcement/</a>.
\30\ International Council on Clean Transportation, ``Update on
the global transition to electric vehicles through 2019,'' July
2020.
\31\ Reuters, ``Canada to ban sale of new fuel-powered cars and
light trucks from 2035,'' June 29, 2021. Accessed July 1, 2021 from
<a href="https://www.reuters.com/world/americas/canada-ban-sale-new-fuel-powered-cars-light-trucks-2035-2021-06-29/">https://www.reuters.com/world/americas/canada-ban-sale-new-fuel-powered-cars-light-trucks-2035-2021-06-29/</a>.
\32\ 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 <a href="https://theicct.org/blog/staff/global-ice-phaseout-nov2020">https://theicct.org/blog/staff/global-ice-phaseout-nov2020</a>.
---------------------------------------------------------------------------

EPA recognizes that in addition to substantially reducing GHG
emissions, a longer-term rulemaking could also address criteria
pollutant and air toxics emissions from the new light-duty vehicle
fleet--especially important considerations during the transition to
zero-emission vehicles. EPA expects that a future longer-term
rulemaking will take critical steps to continue the trajectory of
transportation emission reductions needed to protect public health and
welfare. Achieving this trajectory with the help of increased fleet
penetration of zero-emission vehicles would bring with it other
advantages as well, such as potentially large reductions in roadway
pollution and noise in overburdened communities, and potentially
support for the future development of vehicle-to-grid services that
could become a key enabler for increased utilization of

[[Page 43731]]

variable renewable energy sources, such as wind and solar, across the
grid.\33\
---------------------------------------------------------------------------

\33\ Department of Energy Electricity Advisory Committee,
``Enhancing Grid Resilience with Integrated Storage from Electric
Vehicles: Recommendations for the U.S. Department of Energy,'' June
25, 2018.
---------------------------------------------------------------------------

B. Summary of Proposed Light-Duty Vehicle GHG Program

EPA is proposing revised GHG standards that would begin in MY 2023
and increase in stringency year over year through MY 2026. EPA proposes
to increase the stringency of the standards from the average roughly
1.5 percent year-over-year stringency increase of the relaxed SAFE
standards to a nearly 10 percent proposed stringency increase in MY
2023, followed by a nearly 5 percent proposed stringency increase in
each MY from 2024 through 2026. EPA believes the 10 percent proposed
increase in stringency in MY 2023 is appropriate given the
technological investments industry has continued to make beyond what
would be required to meet the SAFE rule revised standards, such as
improvements being made in response to the California Framework
Agreements, as well as the compliance flexibilities built into the
program. Also, as discussed in Section I.G below, EPA requests comment
on standards for MY 2026 that would result in fleet average target
levels that are in the range of 5-10 g/mile lower (i.e., more
stringent) than the levels proposed. This request for comments is in
keeping with the additional lead time available for this out-year
compared to MYs 2023-2025, and because EPA may determine that it is
appropriate, particularly in light of the accelerating transition to
electrified vehicles, to require additional reductions in this time
frame. The proposed standards would achieve significant GHG and other
emission reductions and related public health and welfare benefits,
while providing consumers with lower operating costs resulting from
significant fuel savings. Our analysis described in this notice
demonstrates that the proposed standards are appropriate under section
202(a) of the CAA, considering costs, technological feasibility,
available lead time, and other factors. The proposed trajectory of
increasing stringency from MYs 2023 to 2026 takes into account the
credit-based emissions averaging, banking and trading flexibilities of
the current program as well as additional flexibility provisions that
we are proposing to ease the transition to more stringent standards.
EPA also took into account manufacturers' ability to generate credits
against the existing standards relaxed in the SAFE rule for MYs 2021
and 2022, which we are not proposing to revise.
In our design and analyses of the proposed program and our overall
updated assessment of feasibility, EPA also took into account the
decade-long light-duty vehicle GHG emission reduction program in which
the auto industry has introduced a wide lineup of ever more fuel-
efficient, GHG-reducing technologies. The technological achievements
already developed and applied to vehicles within the current new
vehicle fleet will enable the industry to achieve the proposed
standards even without the development of new technologies beyond those
already widely available. Furthermore, in light of the design cycle
timing for vehicles, EPA has basis to expect that the vehicles that
automakers will be selling during the first years of the proposed MY
2023-26 program were already designed before the less stringent SAFE
standards were recently adopted. Further support that the technologies
needed to meet the proposed standards do not need to be developed, but
are already widely available and in use on vehicles, can be found in
the fact that five vehicle manufacturers, representing about a third of
U.S. auto sales, agreed in 2019 with the State of California that their
nationwide fleets would meet GHG emission reduction targets more
stringent than the applicable EPA standards beginning in model year
2021. The fact that five automakers voluntarily entered into the
California Framework Agreements also supports the feasibility of
meeting standards at least as stringent as the emission reduction
targets under the California Framework, which we describe in detail
later in this preamble. We describe additional details of the proposal
below and in later sections of the preamble as well as in the Draft
Regulatory Impact Analysis (DRIA). We also describe and analyze both
less stringent and more stringent alternatives, consistent with OMB
Circular A-4.
Although most automakers have launched ambitious plans to develop
and produce increasing numbers of zero- and near-zero-emission
vehicles, EPA recognizes that during the near-term timeframe of the
proposed standards through MY 2026, the new vehicle fleet likely will
continue to consist primarily of gasoline-fueled vehicles. In this
preamble and in the DRIA, we provide our analyses supporting our
assessment that the proposed standards for MYs 2023 through 2026 would
be achievable primarily through the application of advanced gasoline
vehicle technologies. We project that during the four-year ramping up
of the stringency of the CO<INF>2</INF> standards, the proposed
standards could be met with gradually increasing sales of plug-in
electric vehicles in the U.S., up to about 8 percent market share
(including both electric vehicles (EVs) and plug-in hybrid electric
vehicles (PHEVs)) by MY 2026. Given that EVs and PHEVs represented
about 2 percent of the new vehicle market in MY 2019,\34\ this would
represent a significant increase in penetration of these vehicles but
one that we believe is reasonable given automaker announcements on
increasing EV and PHEV production. We note later in this preamble in
the discussion of the alternative levels of stringency that EPA is
considering, that there may be the potential for higher levels of EV
penetration by MY 2026, which could enable EPA to consider a more
stringent standard for MY 2026. As described elsewhere in this
preamble, we believe that, in conjunction with the proposed standards,
the limited but focused incentives and flexibilities that we are
proposing would support automakers' acceleration of their introduction
and sales of advanced technologies, including zero and near-zero-
emission technologies.
---------------------------------------------------------------------------

\34\ ``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-21-
003, January 2021, p. 52.
---------------------------------------------------------------------------

1. Proposed Revised GHG Emissions Standards
i. Proposed Revised CO<INF>2</INF> Targets
As with EPA's previous light-duty GHG programs, EPA is proposing
footprint-based standards curves for both passenger cars and trucks.
Each manufacturer would have a unique standard for the passenger cars
category and another for the truck category \35\ for each MY based on
the sales-weighted footprint-based CO<INF>2</INF> targets \36\ of the
vehicles produced in that MY. Figure 1 shows EPA's proposed standards,
expressed as average fleetwide GHG emissions targets (cars and trucks
combined), projected through MY 2026. For comparison, the figure also
shows the corresponding targets for the SAFE final rulemaking (FRM) and
the 2012 FRM. The projected fleet targets for this proposed rule
increase in stringency in

[[Page 43732]]

MY 2023 by about 10 percent (from the existing SAFE rule standards in
MY 2022), followed by stringency increases thereafter of nearly 5
percent year over year from MY 2024 through MY 2026. Also, as discussed
in Section I.G, EPA requests comment on standards for MY 2026 that
would result in fleet average target levels that are in the range of 5-
10 g/mile lower (i.e., more stringent) than the levels proposed. As
with all EPA vehicle emissions standards, the proposed MY 2026
standards would then remain in place for all subsequent MYs, unless and
until they are revised in a subsequent rulemaking. Table 1 presents the
estimates of EPA's proposed standards presented in Figure 1, again in
terms of the projected overall industry fleetwide CO<INF>2</INF>-
equivalent emission compliance target levels. The industry fleet-wide
estimates in Table 1 are projections based on modeling that EPA
conducted for the proposed rule, taking into consideration projected
fleet mix and footprints for each manufacturer's fleet in each model
year. Table 2 presents projected industry fleet average year-over-year
percent reductions comparing the existing standards under the SAFE rule
and the proposed revised standards. See Section II.A below for a full
discussion of the proposed standards and presentations of the footprint
standards curves.
---------------------------------------------------------------------------

\35\ Passenger cars include cars and smaller cross-overs and
SUVs, while the truck category includes larger cross-overs and SUVs,
minivans, and pickup trucks.
\36\ Because compliance is based on the full range of vehicles
in a manufacturer's car and truck fleets, with lower-emitting
vehicles compensating for higher-emitting vehicles, the emission
levels of specific vehicles within the fleet are referred to as
targets, rather than standards.
---------------------------------------------------------------------------

BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TP10AU21.000

BILLING CODE 6560-50-C

Table 1--Projected Industry Fleet-Wide CO2 Compliance Targets for MYs 2023-2026
[grams/mi]
----------------------------------------------------------------------------------------------------------------
2022 * 2023 2024 2025 2026 **
----------------------------------------------------------------------------------------------------------------
Cars............................ 180 165 157 149 142
Trucks.......................... 260 232 221 210 199
Combined Cars and Trucks........ 220 199 189 180 171
----------------------------------------------------------------------------------------------------------------
* SAFE rule targets included for reference.
** EPA is also requesting comment on MY 2026 standards that would result in fleet average levels that are 5-10 g/
mile more stringent than the levels shown.
The combined car/truck CO2 targets are a function of assumed car/truck shares. For this illustration, we assume
an approximately 50/50% split in MYs 2023-2026. See DRIA Chapter 2 for detail.

[[Page 43733]]

Table 2--Projected Industry Fleet Average Target Year-Over-Year Percent Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
SAFE rule Proposal
-----------------------------------------------------------------------------------------------
Cars % Trucks % Combined % Cars % Trucks % Combined %
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.................................................... 1.7 1.5 1.6 8.3 10.8 9.8
2024.................................................... 1.1 1.2 1.2 4.8 4.7 4.7
2025.................................................... 2.3 2.0 2.2 5.1 5.0 4.9
2026 *.................................................. 1.8 1.6 1.7 4.7 5.2 5.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The percentages shown do not include EPA's request for comments on MY 2026 standards that are 5-10 g/mile more stringent than proposed.

2. Proposed Compliance Incentives and Flexibilities
The existing GHG program established in the 2010 and 2012 rules
included several key flexibilities, such as credit programs and
technology incentives that are discussed further in this proposal where
EPA is requesting comment or proposing modifications.\37\ These
include:
---------------------------------------------------------------------------

\37\ See 75 FR 25324, May 7, 2010 and 77 FR 62624, Oct. 15,
2012.

<bullet> Credit Averaging, Banking, and Trading (ABT) including credit
carry-forward, credit carry-back, transferring credits between a
manufacturer's car and truck fleets, and credit trading between
manufacturers (MY 2012 and later)
<bullet> Off-cycle credits for GHG emissions reductions not captured on
the test procedures used for fleet average compliance with the
footprint-based standards (MY 2012 and later)
<bullet> Air conditioning credits for system efficiency improvements
and reduced refrigerant leakage or use of low global warming potential
refrigerants (MY 2012 and later)
<bullet> Multiplier incentives for advanced technology vehicles
including electric vehicles, fuel cell vehicles, plug-in hybrids
(ending after MY 2021)
<bullet> Multiplier incentives for natural gas fueled vehicles (MY
2021-2026)
<bullet> Full-size pick-up incentives for hybridization or performance
improvements equivalent to hybridization (ending after MY 2021)

EPA is proposing a targeted set of extended or additional
compliance flexibilities and incentives that we believe are appropriate
given the stringency and lead time of the proposed standards. We are
proposing four types of flexibilities/incentives, in addition to
flexibilities/incentives that already will be available for these MYs
under EPA's existing regulations: (1) A limited extension of carry-
forward credits generated in MYs 2016 through 2020; (2) an extension of
the advanced technology vehicle multiplier credits for MYs 2022 through
2025 with a cumulative credit cap; (3) restoration of the 2012 rule's
full-size pickup truck incentives for strong hybrids or similar
performance-based credit for MYs 2022 through 2025 (provisions which
were removed in the SAFE rule); and (4) an increase of the off-cycle
credits menu cap from 10 g/mile to 15 g/mile. EPA is also proposing to
remove the multiplier incentives for natural gas fueled vehicles for
MYs 2023-2026. We summarize these proposals below and provide details
in Sections II.B and II.C below.
The GHG program includes existing provisions initially established
in the 2010 rule, which set the MY 2012-2016 GHG standards, for how
credits may be used within the program. These averaging, banking, and
trading (ABT) provisions include credit carry-forward, credit carry-
back (also called deficit carry-forward), credit transfers (within a
manufacturer), and credit trading (across manufacturers). These ABT
provisions define how credits may be used and are integral to the
program. The current program limits credit carry-forward to 5 years.
EPA is proposing a limited extension of credit carry-forward for
credits generated in MYs 2016 through 2020. The proposal would change
the credit carry-forward time limitation for MY 2016 credits from five
to seven years and the carry-forward limit for MYs 2017-2020 from 5 to
6 years, as shown in Table 3 below.

Table 3--EPA Proposed Extension of Credit Carry-Forward Provisions
--------------------------------------------------------------------------------------------------------------------------------------------------------
MYs credits are valid under EPA's proposed extension
MY credits are banked -------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
2016...................................... ........ x x x x x + + ........ ........ ........
2017...................................... ........ ........ x x x x x + ........ ........ ........
2018...................................... ........ ........ ........ x x x x x + ........ ........
2019...................................... ........ ........ ........ ........ x x x x x + ........
2020...................................... ........ ........ ........ ........ ........ x x x x x +
2021...................................... ........ ........ ........ ........ ........ ........ x x x x x
--------------------------------------------------------------------------------------------------------------------------------------------------------
x = Current program. + = Proposed additional years.

The existing GHG program also includes temporary incentives through
MY 2021 that encourage the use of advanced technologies such as
electric, hybrid, and fuel cell vehicles, as well as incentives for
full-size pickups using strong hybridization or technologies providing
similar emissions reductions to hybrid technology. The full-size pickup
incentives originally were available through MY 2025, but the SAFE rule
removed these incentives for MYs 2022 through 2025. When EPA
established these incentives in the 2012 rule, EPA recognized that they
would reduce the effective stringency of the standards, but believed
that it was worthwhile to have a limited near-term

[[Page 43734]]

loss of emissions reduction benefits to increase the potential for far
greater emissions reduction and technology diffusion benefits in the
longer term.\38\ EPA believed that the temporary regulatory incentives
would help bring low emission technologies to market more quickly than
in the absence of incentives.\39\ With these same goals in mind for
this program, EPA is proposing multiplier incentives from MY 2022
though MY 2025 with a cap on multiplier credits and to reinstate the
full-size pickup incentives removed from the program by the SAFE rule.
These proposed incentives are intended as a temporary measure
supporting the transition to zero-emission vehicles and to provide
additional flexibility in meeting the MY 2023-2026 proposed standards,
as further discussed in Section II.B.1.
---------------------------------------------------------------------------

\38\ See Tables III-2 and III-3, 77 FR 62772, October 15, 2012.
\39\ 77 FR 62812, October 15, 2012.
---------------------------------------------------------------------------

EPA is also proposing to remove the extended multiplier incentives
added by the SAFE rule from the GHG program after MY 2022. EPA is
proposing to end multipliers for NGVs in this manner because NGVs are
not a near-zero emissions technology and EPA believes multipliers are
no longer necessary or appropriate for these vehicles. Any NGV
multiplier credits generated in MY 2022 would be included under the
proposed multiplier cap.
The current program also includes credits for real-world emissions
reductions not reflected on the test cycles used for measuring
CO<INF>2</INF> emissions for compliance with the fleet average
standards. There are credits for using technologies that reduce GHG
emissions that aren't captured on EPA tests (``off-cycle''
technologies) and improvements to air conditioning systems that
increase efficiency and reduce refrigerant leakage. These credit
opportunities do not sunset under the existing regulations, remaining a
part of the program through MY 2026 and beyond unless the program is
changed by regulatory action. EPA is proposing to modify an aspect of
the off-cycle credits program to provide additional opportunities for
manufacturers to generate credits by increasing the pre-defined menu
credit cap from 10 to 15 g/mile. EPA is also proposing to modify some
of the regulatory definitions that are used to determine whether a
technology is eligible for the menu credits. EPA is not proposing
changes to the air conditioning credits elements of the program.

C. Analytical Support for the Proposed Revised Standards

1. Summary of Analyses for This Proposed Rule
All of EPA's analyses of the national light-duty vehicle GHG
program over the past decade have been built on the same overall
framework and produce the same types of results. Section III.A below
explains this common EPA framework in more detail. In summary, it
includes the following primary elements:
i. Analyzing Issues of Feasibility, Costs, and Lead Time
As with our earlier analyses, EPA used a model to simulate the
decision process of auto manufacturers in choosing among the emission
reduction technologies available to incorporate in vehicles across
their fleets. The models take into account both the projected costs of
established and newer technologies and the relative ability of each of
these technologies to reduce GHG emissions. This process identifies
potential pathways for manufacturers to comply with a given set of GHG
standards. EPA then estimates projected average and total costs for
manufacturers to produce these vehicles to meet the standards under
evaluation during the model years covered by the analysis.
In addition to projecting the technological capabilities of the
industry and estimating compliance costs for each of the four affected
model years (MYs 2023-2026), EPA has considered the role of the
averaging, banking, and trading system that has been available and
extensively used by the industry since the beginning of the light-duty
vehicle GHG program in model year 2012. Our analysis of the current and
anticipated near-future usage of the GHG credit mechanisms (III.B.2
below) reinforces the trends we identified in our other analyses
showing widespread technological advancement in the industry at
reasonable per-vehicle costs. Together, these analyses support EPA's
conclusion under section 202(a) of the CAA that technologically
feasible pathways are available at reasonable costs for automakers to
comply with the proposed standards during each of the four model years.
We discuss these analyses and their results further in Section III
below.
ii. Analyzing the Projected Impacts of the Proposed Program
We also estimate the GHG and non-GHG emission impacts (tailpipe and
upstream) of the proposed standards. EPA then builds on the estimated
changes in emissions and fuel consumption to calculate expected net
economic impacts from these changes. Key economic inputs include: The
social costs of GHGs; measures of health impacts from changes in
criteria pollutant emissions; a value for the vehicle miles traveled
``rebound effect;'' estimates of energy security impacts of changes in
fuel consumption; and costs associated with crashes, noise, and
congestion from additional rebound driving.
Our overall analytical approach generates key results for the
following metrics: Incremental costs per vehicle (industry-wide
averages and by manufacturer); total vehicle technology costs for the
auto industry; GHG emissions reductions and criteria pollutant
emissions reductions; penetration of key GHG-reducing technologies
across the fleet; consumer fuel savings; oil reductions; and net
societal costs and benefits. We discuss these analyses in Sections III,
IV, V, and VII below as well as in the DRIA.
2. History of Similar Analyses
At several points during the past decade, EPA has performed
detailed analyses to evaluate the technological feasibility, as well as
to project program costs and benefits, of the national light-duty
vehicle GHG emissions control program. Although the purposes of these
analyses varied, and EPA used somewhat different modeling approaches
and tools, in each case these analyses included assessments of the
program in the later years of the standards, i.e., MYs 2022 through
2025 or 2026. As we describe in more detail in Chapter 1 of the DRIA,
EPA performed similar analyses in support of the 2011 proposal and 2012
final rule establishing the original MY 2017-2025 light-duty vehicle
GHG standards; in 2016-January 2017 in support of the Midterm
Evaluation process and Determination concerning the MY 2022-2025
standards; and in 2018 during the development of the SAFE proposed
rule.
It is notable that, although each analysis is based on projections
from the then-available fleet data forward to model years 2025 or 2026,
the results of each of these earlier analyses, as well as the updated
analysis we have performed for our proposed standards, have all
produced very similar results in several key metrics. For example, the
estimated projected cost to manufacturers to implement similar
standards in 2025-2026 has remained fairly consistent since 2012. Thus,
while we believe the updated analysis presented in the DRIA provides
strong support for the

[[Page 43735]]

feasibility and appropriateness of the proposed program, the consistent
results from the earlier analyses further reinforce the robustness of
our conclusions.

D. Summary of Costs and Benefits of the Proposed Program

EPA estimates that this proposal would result in significant
present-value net benefits of $86 billion to $140 billion (annualized
net benefits of $4.2 billion to $7.3 billion)--that is, the total
benefits far exceed the total costs of the program. Table 4 below
summarizes EPA's estimates of total discounted costs, fuel savings, and
benefits. The results presented here project the monetized
environmental and economic impacts associated with the proposed
standards during each calendar year through 2050. The proposal also
would have significant benefits for consumers, as the fuel savings for
American drivers would total $120 to $250 billion through 2050. With
these fuel savings, consumers would benefit from reduced operating
costs over the vehicle lifetime.
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 (including premature mortality), the value of
additional driving attributed to the rebound effect, and the value of
reduced refueling time needed to fill a more fuel-efficient vehicle.
The analysis also includes estimates of economic impacts stemming from
additional vehicle use, such as the economic damages caused by crashes,
congestion, and noise (from increased rebound driving). See the DRIA
for more information regarding these estimates.

Table 4--Monetized Discounted Costs, Benefits, and Net Benefits of the Proposed Program for Calendar Years
Through 2050
[Billions of 2018 dollars] a b c d e
----------------------------------------------------------------------------------------------------------------
Present value Annualized value
---------------------------------------------------------------------------
3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate
----------------------------------------------------------------------------------------------------------------
Costs............................... $240 $150 $12 $12
Fuel Savings........................ 250 120 13 9.9
Benefits............................ 130 110 6.9 6.3
Net Benefits........................ 140 86 7.3 4.2
----------------------------------------------------------------------------------------------------------------
Notes:
a Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values
are based on the stream of annual calendar year costs and benefits included in the analysis (2021-2050) and
discounted back to year 2021.
b Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different
estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates;
95th percentile at 3% discount rate), which each increase over time. In this table, we show the benefits
associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single central SC-GHG
point estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-
GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the DRIA, a
consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent and
lower, is also warranted when discounting intergenerational impacts.
c The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and
2.5 percent) is used to calculate the present and annualized values of climate benefits for internal
consistency, while all other costs and benefits are discounted at either 3% or 7%.
d Net benefits reflect the fuel savings plus benefits minus costs.
e Non-GHG impacts associated with the standards presented here do not include the full complement of health and
environmental effects that, if quantified and monetized, would increase the total monetized benefits. Instead,
the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts associated
with reductions in PM2.5 exposure.

A second way to present the net benefits of the proposal is using a
vehicle MY lifetime basis. Table 5 and Table 6 summarize EPA's
estimates of total discounted costs, fuel savings, and benefits through
the full lifetime of vehicles projected to be sold in MYs 2023-2026.
The estimated results presented here project the monetized
environmental and economic impacts associated with the proposed
standards. Note that standards continue at their MY2026 levels beyond
MY2026 in any scenario. At both a 3% and 7% discount rate all model
years show substantial fuel savings and net benefits.

Table 5--GHG Analysis of Lifetime Costs & Benefits To Meet the Proposed MYs 2023-2026 GHG Standards, 3% Discount
Rate
[For vehicles produced in MY 2023-2026]a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $4.8 $3.6 $1.9 $0.68
2024............................................ 5.9 7 3.6 4.7
2025............................................ 6.7 8.6 4.4 6.2
2026............................................ 8.1 13 7.2 12
---------------------------------------------------------------
Sum......................................... 26 33 17 24
----------------------------------------------------------------------------------------------------------------

[[Page 43736]]

Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.21 0.16 0.08 0.029
2024............................................ 0.26 0.3 0.16 0.2
2025............................................ 0.29 0.37 0.19 0.27
2026............................................ 0.35 0.58 0.31 0.54
---------------------------------------------------------------
Sum......................................... 1.1 1.4 0.74 1
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 3% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.

Table 6--GHG Analysis of Lifetime Costs & Benefits To Meet the Proposed MYs 2023-2026 GHG Standards, 7% Discount
Rate
[For vehicles produced in MY 2023-2026]a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $4.4 $2.6 $1.7 -$0.14
2024............................................ 5.5 4.7 3.3 2.4
2025............................................ 6.1 5.5 3.9 3.4
2026............................................ 7.3 8.2 6.2 7.2
---------------------------------------------------------------
Sum......................................... 23 21 15 13
----------------------------------------------------------------------------------------------------------------
Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.33 0.19 0.085 -0.053
2024............................................ 0.41 0.35 0.16 0.1
2025............................................ 0.45 0.41 0.19 0.15
2026............................................ 0.55 0.62 0.31 0.38
---------------------------------------------------------------
Sum......................................... 1.7 1.6 0.75 0.58
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 7% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.

E. How has EPA considered environmental justice in this proposal?

Executive Orders 12898 (59 FR 7629, February 16, 1994) and 14008
(86 FR 7619, February 1, 2021) direct federal agencies, to the greatest
extent practicable and permitted by law, to make achieving
environmental justice (EJ) part of their mission by identifying and
addressing, as appropriate, disproportionately high and adverse human
health or environmental effects of their programs, policies, and
activities on minority populations and low-income populations in the
United States. Chapter 8.3 discusses the potential environmental
justice concerns associated with this proposal. EPA defines
environmental justice as the fair treatment and meaningful

[[Page 43737]]

involvement of all people regardless of race, color, national origin,
or income with respect to the development, implementation, and
enforcement of environmental laws, regulations, and policies. Executive
Order 14008 also calls on federal agencies to make achieving
environmental justice part of their missions ``by developing programs,
policies, and activities to address the disproportionately high and
adverse human health, environmental, climate-related and other
cumulative impacts on disadvantaged communities, as well as the
accompanying economic challenges of such impacts.'' It declares a
policy ``to secure environmental justice and spur economic opportunity
for disadvantaged communities that have been historically marginalized
and overburdened by pollution and under-investment in housing,
transportation, water and wastewater infrastructure and health care.''
Under Executive Order 13563 (76 FR 3821), federal agencies may consider
equity, human dignity, fairness, and distributional considerations,
where appropriate and permitted by law.
EPA's 2016 ``Technical Guidance for Assessing Environmental Justice
in Regulatory Analysis'' provides recommendations on conducting the
highest quality analysis feasible, recognizing that data limitations,
time and resource constraints, and analytic challenges will vary by
media and regulatory context. \40\
---------------------------------------------------------------------------

\40\ ``Technical Guidance for Assessing Environmental Justice in
Regulatory Analysis.'' <a href="http://Epa.gov">Epa.gov</a>, Environmental Protection Agency,
<a href="https://www.epa.gov/sites/production/files/2016-06/documents/ejtg_5_6_16_v5.1.pdf">https://www.epa.gov/sites/production/files/2016-06/documents/ejtg_5_6_16_v5.1.pdf</a>. (June 2016).
---------------------------------------------------------------------------

EPA's mobile source regulatory program has historically reduced
significant amounts of both GHG and non-GHG pollutants to the benefit
of all U.S. residents, including populations that live near roads and
in communities with EJ concerns. EJ concerns may arise in the context
of this rulemaking in two key areas.
First, minority populations and low-income populations may be
especially vulnerable to the impacts of climate change. As discussed in
Section IV.C, this proposed rulemaking would mitigate the impacts of
climate change by achieving significant GHG emission reductions, which
would benefit populations that may be especially vulnerable to various
forms of damages associated with climate change.
Second, in addition to significant climate-change benefits, the
proposed standards would also impact non-GHG emissions. As discussed in
Section VII.L.2, numerous studies have found that environmental hazards
such as air pollution are more prevalent in areas where minority
populations and low-income populations represent a higher fraction of
the population compared with the general population. There is
substantial evidence, for example, that people who live or attend
school near major roadways are more likely to be of a racial minority,
Hispanic ethnicity, and/or low socioeconomic status (see Section
VII.L.2).
We expect this proposed rule would result in both small reductions
and small increases of non-GHG emissions. These effects could
potentially impact communities with EJ concerns, though not necessarily
immediately and not equally in all locations. For this proposal, the
air quality information needed to perform a quantified analysis of the
distribution of such impacts was not available. We therefore recommend
caution when interpreting these broad, qualitative observations.
We note that EPA intends to develop a future rule to control
emissions of GHGs as well as criteria and air toxic pollutants from
light-duty vehicles for MYs beyond 2026. We are considering how to
project air quality impacts from the changes in non-GHG emissions for
that future rulemaking (see Section V.C).

F. Affordability and Equity

In addition to considering environmental justice impacts, we have
examined the effects of the proposed standards on affordability of
vehicles and transportation services for low-income households in
Section VII.L of this Preamble and Chapter 8.4 of the DRIA. As with the
effects of the proposed standards on vehicle sales discussed in Section
VII.B, the effects of the proposed standards on affordability and
equity depend in part on two countervailing effects: The increase in
the up-front costs of new vehicles subject to more stringent standards,
and the decrease in operating costs from reduced fuel consumption over
time. The increase in up-front new vehicle costs has the potential to
increase the prices of used vehicles, to make credit more difficult to
obtain, and to make the least expensive new vehicles less desirable
compared to used vehicles. The reduction in operating costs over time
has the potential to mitigate or reverse all these effects. Lower
operating costs on their own increase mobility (see DRIA Chapter 3.1
for a discussion of rebound driving).
While social equity involves issues beyond income and
affordability, including race, ethnicity, gender, gender
identification, and residential location, the potential effects of the
proposed standards on lower-income households are of great importance
for social equity and reflect these contrasting forces. The overall
effects on vehicle ownership, including for lower-income households,
depend heavily on the role of fuel consumption in vehicle sales
decisions, as discussed in Section VII.M. At the same time, lower-
income households own fewer vehicles per household, are more likely to
buy used vehicles than new, and spend more on fuel than on vehicles on
an annual basis than higher-income households. In addition, for lower-
income households, fuel expenditures are a larger portion of household
income, so the fuel savings that would result from this proposal may be
more impactful to these consumers. Thus, the benefits of this proposal
may be stronger for lower-income households even if they buy used
vehicles: As vehicles meeting the proposed standards enter the used
vehicle market, they will retain the fuel economy/GHG-reduction
benefits, and associated fuel savings, while facing a smaller portion
of the upfront vehicle costs. The reduction in operating costs may also
increase access to transportation services, such as ride-hailing and
ride-sharing, where the lower per-mile costs may play a larger role
than up-front costs in pricing. As a result, lower-income consumers may
be affected more from the reduction in operating costs than the
increase in up-front costs.
New electric vehicles currently have higher up-front costs and
lower operating costs than gasoline vehicles and require access to
charging infrastructure that may not be readily available to many. EPA
has heard from some environmental justice groups and Tribes that
limited access to electric vehicles and charging infrastructure can be
a barrier for purchasing EVs. This proposal projects that the vast
majority of vehicles produced in the time frame of the proposed
standards will be gasoline-fueled vehicles (with EVs and PHEVs
gradually increasing to about 8 percent total market share by MY 2026
compared to about 4 percent in the No Action scenario, see DRIA Chapter
4.1.3, Table 4-30). However, EPA will monitor and study affordability
issues related to electric vehicles as their prevalence in the vehicle
fleet increases.

G. What alternatives is EPA considering?

1. Description of the Alternatives
Along with the proposed standards, EPA analyzed both a more
stringent and a less stringent alternative. For the less stringent
alternative, Alternative 1, EPA used the coefficients in the California

[[Page 43738]]

Framework for the 2.7 percent effective stringency level (as described
in Section II.B.1) as the basis for the MY 2023 stringency level and
the 2012 rule's MY 2025 standards as the basis for the MY 2026
stringency level, with linear year-over-year reductions between the two
points for MYs 2024 and 2025. EPA views the California Framework as a
reasonable basis for the least stringent alternative that EPA would
consider finalizing, since it represents a level of stringency that
five manufacturers have already committed to achieving. EPA did not
include incentive multipliers for Alternative 1, as doing so would only
further reduce the effective stringency of this Alternative, and EPA
views Alternative 1 as the lower end of stringency that it believes is
appropriate through 2026.
For the more stringent alternative, Alternative 2, EPA used the
2012 rule standards as the basis for MY 2023-2025 targets, with the
standards continuing to increase in stringency in a linear fashion for
MY 2026. Alternative 2 adopts the 2012 rule stringency levels in MY
2023 and follows the 2012 rule standard target levels through MY 2025.
EPA extended the same linear average year-over-year trajectory for MYs
2023-2025 to MY 2026 for the final standards under Alternative 2. As
noted in Section II.A.1, EPA believes that it is important to continue
to make progress in MY 2026 beyond the MY 2025 standard levels in the
2012 rule. As with the proposal, Alternative 2 meets this objective.
EPA did not include in Alternative 2 the proposed incentive multipliers
with the proposed cumulative credit cap in MYs 2022-2025, which would
have the effect of making Alternative 2 less stringent. As discussed in
Section II.B.1, EPA is requesting comment on whether or not to include
the proposed multipliers, and our request for comments extends to
whether to include multipliers both for the proposal and for
Alternative 2.\41\
---------------------------------------------------------------------------

\41\ 41 See ``Benefits and Costs of the EPA Light-duty Vehicle
GHG Proposal with and without Advanced Technology Multipliers,''
memorandum to Docket.
---------------------------------------------------------------------------

As previously noted in Section I.B.2, EPA is proposing several
modifications to program flexibilities. These proposed program changes,
except for the advanced technology multipliers, would also apply to the
alternatives. Table 7 below provides a list of the proposed
flexibilities and their applicability to the proposed and alternative
standards.

Table 7--Applicability of Revised Flexibility Provisions to the Proposal and Alternatives
----------------------------------------------------------------------------------------------------------------
Provision Proposal Alternative 1 Alternative 2
----------------------------------------------------------------------------------------------------------------
Extension of credit carry-forward Yes...................... Yes..................... Yes.
for MY 2016-2020 credits.
Advanced technology incentive Yes...................... No...................... No.
multipliers for MYs 2022-2025
with cap.
Increase of off-cycle menu cap Yes...................... Yes..................... Yes.
from 10 to 15 g/mile.
Reinstatement of full-size pickup Yes...................... Yes..................... Yes.
incentives for strong hybrids or
equivalent technologies for MYs
2022-2025.
----------------------------------------------------------------------------------------------------------------
EPA's technical analysis, presented in Section III, consists of model runs using a model capable of reflecting
some but not all of these provisions. The modeling includes consideration of advanced technology incentive
multipliers for the proposal but not for the alternatives. The model runs also include the 15 grams per mile
off-cycle menu cap as appropriate given the standards or targets to which a fleet being modeled is complying.
Not included in the model runs are the full-size pickup truck technology incentive credit or the extension of
the emissions credit carry-forward.

The fleet average targets for the two alternatives compared to the
proposed standards are provided in Table 8 below. EPA also requests
comment on the level of stringency for MY 2026 for the alternatives and
the proposed standards. Specifically, EPA requests comment on standards
for MY 2026 that would result in fleet average target levels that are
in the range of 5-10 g/mile lower (i.e., more stringent) than the
levels shown for MY 2026 in Table 8. EPA is requesting specific comment
on whether the level of stringency for MY 2026 should be greater in
keeping with the additional lead time available for this out-year
compared to MYs 2023-2025, and because EPA may determine that it is
appropriate, particularly in light of the accelerating transition to
electrified vehicles, to require additional reductions in this
timeframe. As discussed in detail in Section A.3 of the Executive
Summary, there has been a proliferation of recent announcements from
automakers signaling a rapidly growing shift in investment away from
internal-combustion technologies and toward high levels of
electrification. EPA has also heard from a wide range of stakeholders
over the past several months, including but not limited to the
automotive manufacturers and the automotive suppliers, that the
significant investments being made now to develop and launch new EV
product offerings and in the expansion of EV charging infrastructure
could enable higher levels of EV penetration to occur in the
marketplace by the MY 2026 time frame than EPA has projected in this
proposal for both the proposed MY 2026 standards and the Alternative 2
MY 2026 standards. The information concerning the investment landscape
potentially accelerating to an even greater extent of market
penetration of EV products helps inform EPA's request for comment on
the potential for a more stringent MY 2026 standard that would reflect
this information and related considerations, including any additional
information provided by commenters. In light of these stakeholder views
and other available information, EPA is soliciting comment on the
appropriateness of more stringent MY 2026 standards.

Table 8--Projected Fleet Average Target Levels for Proposed Standards and Alternatives
[CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
Proposal Alternative 1 Alternative 2
Model year projected projected projected
targets targets targets
----------------------------------------------------------------------------------------------------------------
2021............................................................ * 223 * 223 * 224
2022............................................................ * 220 * 220 * 220

[[Page 43739]]

2023............................................................ 199 203 195
2024............................................................ 189 194 186
2025............................................................ 180 185 177
2026 **......................................................... 171 177 169
----------------------------------------------------------------------------------------------------------------
* SAFE rule standards included here for reference.
** EPA is also requesting comment on MY 2026 standards that would result in fleet average levels that are 5-10 g/
mile more stringent than the levels shown.

[GRAPHIC] [TIFF OMITTED] TP10AU21.001

As shown in Figure 2, the range of alternatives that EPA has
analyzed is fairly narrow, with the proposed standard targets differing
from the alternatives in any given MY in MYs 2023-2026 by 2 to 6 g/
mile, although EPA is requesting comment on a wider range of standards,
particularly for MY 2026 as noted above. EPA believes this approach is
reasonable and appropriate considering the relatively limited lead time
for the proposed standards, especially for MYs 2023-2025, EPA's
assessment of feasibility, the existing automaker commitments to meet
the California Framework (representing about one-third of the auto
market), the standards adopted in the 2012 rule; and the need to reduce
GHG emissions. EPA provides a discussion of the feasibility of the
proposed standard and alternatives and the selection of the proposed
standards in Section III.D. The analysis of costs and benefits of
Alternatives 1 and 2 is shown in the DRIA Chapters 4, 6, and 10. EPA
requests comments on all aspects of Alternatives 1 and 2 or other
alternatives roughly within the stringency range of the proposal and
the Alternatives.
2. Summary of Costs and Benefits of the Alternatives
EPA estimates that Alternative 1 would result in significant
present-value net benefits of $76 billion to $130 billion (annualized
net benefits of $4.1 billion to $6.6 billion)--that is, the total
benefits far exceed the total costs of the program. Table 9 below
summarizes EPA's estimates of total discounted costs, fuel savings, and
benefits for Alternative 1. The results presented here project the
monetized

[[Page 43740]]

environmental and economic impacts associated with the proposed
standards during each calendar year through 2050. Alternative 1 also
would have significant benefits for consumers, as the fuel savings for
American drivers would total $98 billion to $200 billion through 2050.
With these fuel savings, consumers would benefit from reduced operating
costs over the vehicle lifetime.
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 (including premature mortality), the value of
additional driving attributed to the rebound effect, and the value of
reduced refueling time needed to fill a more fuel-efficient vehicle.
The analysis also includes estimates of economic impacts stemming from
additional vehicle use, such as the economic damages caused by crashes,
congestion, and noise (from increased rebound driving). See the DRIA
for more information regarding these estimates.

Table 9--Monetized Discounted Costs, Benefits, and Net Benefits of Alternative 1 for Calendar Years Through 2050
[Billions of 2018 dollars] a b c d e
----------------------------------------------------------------------------------------------------------------
Present value Annualized value
---------------------------------------------------------------------------
3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate
----------------------------------------------------------------------------------------------------------------
Costs............................... $190 $110 $9.5 $9.2
Fuel savings........................ 200 98 10 7.9
Benefits............................ 120 93 6 5.4
Net benefits........................ 130 76 6.6 4.1
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values
are based on the stream of annual calendar year costs and benefits included in the analysis (2021-2050) and
discounted back to year 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and
2.5 percent) is used to calculate the present and annualized values of climate benefits for internal
consistency, while all other costs and benefits are discounted at either 3% or 7%.
\d \ Net benefits reflect the fuel savings plus benefits minus costs.
\e\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.

A second way to present the net benefits of the proposal is using a
vehicle MY lifetime basis. Table 10 and Table 11 summarize EPA's
estimates of total discounted costs, fuel savings, and benefits through
the full lifetime of vehicles projected to be sold in MYs 2023-2026
under Alternative 1. The estimated results presented here project the
monetized environmental and economic impacts associated with the
Alternative 1 standards. Note that standards continue at their MY2026
levels beyond MY2026 in any scenario. At both a 3% and 7% discount rate
all model years show substantial fuel savings and net benefits.

Table 10--GHG Analysis of Lifetime Costs & Benefits To Meet the Alternative 1 MYs 2023-2026 GHG Standards, 3%
Discount Rate
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $3.9 $3.4 $2 $1.5
2024............................................ 4.9 6.5 3.7 5.3
2025............................................ 5.6 7.7 4.5 6.5
2026............................................ 6.4 10 6 9.7
---------------------------------------------------------------
Sum......................................... 21 28 16 23
----------------------------------------------------------------------------------------------------------------
Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.17 0.15 0.085 0.067
2024............................................ 0.21 0.28 0.16 0.23
2025............................................ 0.24 0.33 0.19 0.28
2026............................................ 0.28 0.44 0.26 0.42
---------------------------------------------------------------
Sum......................................... 0.9 1.2 0.7 1
----------------------------------------------------------------------------------------------------------------
Notes:

[[Page 43741]]

\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4, and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 3% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.

Table 11--GHG Analysis of Lifetime Costs & Benefits To Meet the Alternative 1 MYs 2023-2026 GHG Standards, 7%
Discount Rate
[For Vehicles Produced in MY 2023-2026] a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $3.7 $2.4 $1.7 $0.4
2024............................................ 4.7 4.3 3.2 2.8
2025............................................ 5.1 4.9 3.8 3.6
2026............................................ 5.6 6.2 5 5.6
---------------------------------------------------------------
Sum......................................... 19 18 14 12
----------------------------------------------------------------------------------------------------------------
Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.28 0.18 0.091 -0.0084
2024............................................ 0.35 0.32 0.17 0.14
2025............................................ 0.38 0.37 0.2 0.19
2026............................................ 0.42 0.47 0.26 0.31
---------------------------------------------------------------
Sum......................................... 1.4 1.3 0.72 0.63
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 7% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.

EPA estimates that Alternative 2 would result in significant
present value net benefits of $110 billion to $180 billion (annualized
net benefits of $5.7 billion to $9.1 billion)--that is, the total
benefits far exceed the total costs of the program. Table 12 below
summarizes EPA's estimates of total discounted costs, fuel savings, and
benefits for Alternative 2. The results presented here project the
monetized environmental and economic impacts associated with the
proposed standards during each calendar year through 2050. Alternative
2 also would have significant benefits for consumers, as the fuel
savings for American drivers would total $150 billion to $290 billion
through 2050. With these fuel savings, consumers would benefit from
reduced operating costs over the vehicle lifetime.
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 (including premature mortality), the value of
additional driving attributed to the rebound effect, and the value of
reduced time needed to refuel a more fuel efficient vehicle. The
analysis also includes estimates of economic impacts stemming from
additional vehicle use, such as the economic damages caused by crashes,
congestion, and noise (from increased rebound driving). See the DRIA
for more information regarding these estimates.

[[Page 43742]]

Table 12--Monetized Discounted Costs, Benefits, and Net Benefits of Alternative 2 for Calendar Years Through
2050
[Billions of 2018 dollars] a b c d e
----------------------------------------------------------------------------------------------------------------
Present value Annualized value
---------------------------------------------------------------------------
3% Discount rate 7% Discount rate 3% Discount rate 7% Discount rate
----------------------------------------------------------------------------------------------------------------
Costs............................... $290 $180 $15 $14
Fuel Savings........................ 290 150 15 12
Benefits............................ 170 140 8.8 8
Net Benefits........................ 180 110 9.1 5.7
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values
are based on the stream of annual calendar year costs and benefits included in the analysis (2021-2050) and
discounted back to year 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and
2.5 percent) is used to calculate the present and annualized values of climate benefits for internal
consistency, while all other costs and benefits are discounted at either 3% or 7%.
\d\ Net benefits reflect the fuel savings plus benefits minus costs.
\e\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.

A second way to present the net benefits of the proposal is using a
vehicle MY lifetime basis. Table 13 and Table 14 summarize EPA's
estimates of total discounted costs, fuel savings, and benefits through
the full lifetime of vehicles projected to be sold in MYs 2023-2026
under Alternative 2. The estimated results presented here project the
monetized environmental and economic impacts associated with the
proposed standards. Note that standards continue at their MY2026 levels
beyond MY2026 in any scenario. At both a 3% and 7% discount rate all
model years show substantial fuel savings and net benefits.

Table 13--GHG Analysis of Lifetime Costs & Benefits To Meet the Alternative 2 MY 2023-2026 GHG Standards, 3%
Discount Rate
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $6.8 $7.7 $4.6 $5.5
2024............................................ 7.7 9.8 5.7 7.8
2025............................................ 8.4 11 6.5 9.1
2026............................................ 9.2 13 7.8 12
---------------------------------------------------------------
Sum......................................... 32 42 25 34
----------------------------------------------------------------------------------------------------------------
Annualized values
----------------------------------------------------------------------------------------------------------------
2023............................................ $0.3 $0.33 $0.2 $0.24
2024............................................ 0.33 0.42 0.25 0.34
2025............................................ 0.37 0.48 0.28 0.39
2026............................................ 0.4 0.57 0.34 0.51
---------------------------------------------------------------
Sum......................................... 1.4 1.8 1.1 1.5
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 3% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.

[[Page 43743]]

Table 14--GHG Analysis of Lifetime Costs & Benefits To Meet the Alternative 2 MY 2023-2026 GHG Standards, 7%
Discount Rate
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
----------------------------------------------------------------------------------------------------------------
MY Costs Fuel savings Benefits Net benefits
----------------------------------------------------------------------------------------------------------------
Present values
----------------------------------------------------------------------------------------------------------------
2023............................................ $6.3 $5.4 $4 $3.1
2024............................................ 7 6.5 5 4.4
2025............................................ 7.4 7.1 5.5 5.2
2026............................................ 7.9 8.2 6.6 6.9
---------------------------------------------------------------
Sum......................................... 29 27 21 20
----------------------------------------------------------------------------------------------------------------
Annualized Values
----------------------------------------------------------------------------------------------------------------
2023............................................ 0.48 0.4 0.21 0.14
2024............................................ 0.53 0.49 0.26 0.22
2025............................................ 0.56 0.54 0.29 0.27
2026............................................ 0.59 0.61 0.34 0.37
---------------------------------------------------------------
Sum......................................... 2.2 2 1.1 1
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four
different estimates of the social cost of each greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5%
discount rates; 95th percentile at 3% discount rate), which each increase over time. In this table, we show
the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single
central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated
using all four SC-GHG estimates and present them later in this preamble. As discussed in Chapter 3.3 of the
DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent
and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate
the present and annualized value of SC-GHGs for internal consistency, while all other costs and benefits are
discounted at 7% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health
and environmental effects that, if quantified and monetized, would increase the total monetized benefits.
Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human health impacts
associated with reductions in PM2.5 exposure.

3. Summary of the Proposal's Costs and Benefits Compared to the
Alternatives
Here we present the proposal's costs and benefits (as summarized
previously in Section I.D) alongside the costs and benefits of the
alternatives (as summarized previously in Section I.G.2).
Table 15 below summarizes EPA's estimates of present value total
discounted costs, fuel savings, and benefits. Table 16 below summarizes
EPA's estimates of annualized values of the total discounted costs,
fuel savings, and benefits. The results presented in these tables
project the monetized environmental and economic impacts associated
with the proposed standards during each calendar year through 2050. 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 (including premature mortality), the value of additional
driving attributed to the rebound effect, and the value of reduced
refueling time needed to fill a more fuel efficient vehicle. The
analysis also includes estimates of economic impacts stemming from
additional vehicle use, such as the economic damages caused by crashes,
congestion, and noise (from increased rebound driving). See the DRIA
for more information regarding these estimates.

Table 15--Present Value Monetized Discounted Costs, Benefits, and Net Benefits of the Proposed Program and Alternatives for Calendar Years Through 2050
[Billions of 2018 dollars] a b c d e
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate
-----------------------------------------------------------------------------------------------------------------
Proposal Alternative 1 Alternative 2 Proposal Alternative 1 Alternative 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs................................. $240 $190 $290 $150 $110 $180
Fuel Savings.......................... 250 200 290 120 98 150
Benefits.............................. 130 120 170 110 93 140
Net Benefits.......................... 140 130 180 86 76 110
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values are based on the stream of annual
calendar year costs and benefits included in the analysis (2021-2050) and discounted back to year 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different estimates of the social cost of each
greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates; 95th percentile at 3% discount rate), which each increase over time. In this
table, we show the benefits associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single central SC-GHG point
estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-GHG estimates and present them later in this
preamble. As discussed in Chapter 3.3 of the DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2
percent and lower, is also warranted when discounting intergenerational impacts.

[[Page 43744]]

\c\ The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and 2.5 percent) is used to calculate the
present and annualized values of climate benefits for internal consistency, while all other costs and benefits are discounted at either 3% or 7%.
\d\ Net benefits reflect the fuel savings plus benefits minus costs.
\e\ Non-GHG impacts associated with the standards presented here do not include the full complement of health and environmental effects that, if
quantified and monetized, would increase the total monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect
only human health impacts associated with reductions in PM2.5 exposure.

Table 16--Annualized Monetized Discounted Costs, Benefits, and Net Benefits of the Proposed Program and Alternatives for Calendar Years Through 2050
[Billions of 2018 dollars] a b c d e
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate
-----------------------------------------------------------------------------------------------------------------
Proposal Alternative 1 Alternative 2 Proposal Alternative 1 Alternative 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs................................. $12 $9.5 $15 $12 $9.2 $14
Fuel Savings.......................... 13 10 15 9.9 7.9 12
Benefits.............................. 6.9 6 8.8 6.3 5.4 8
Net Benefits.......................... 7.3 6.6 9.1 4.2 4.1 5.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Values rounded to two significant figures; totals may not sum due to rounding. Present and annualized values are based on the stream of annual
calendar year costs and benefits included in the analysis (2021-2050) and discounted back to year 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different estimates of the social cost of each
greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates; 95th percentile at 3% discount rate), which each increase over time. In this
table, we show the benefits associated with the average SC-GHGs at a 3% discount rate but the Agency does not have a single central SC-GHG point
estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-GHG estimates and present them later in this
preamble. As discussed in Chapter 3.3 of the DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2
percent and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions (SC-GHGs at 5, 3, and 2.5 percent) is used to calculate the
present and annualized values of climate benefits for internal consistency, while all other costs and benefits are discounted at either 3% or 7%.
\d\ Net benefits reflect the fuel savings plus benefits minus costs.
\e\ Non-GHG impacts associated with the standards presented here do not include the full complement of health and environmental effects that, if
quantified and monetized, would increase the total monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect
only human health impacts associated with reductions in PM2.5 exposure.

A second way to present the net benefits is using a vehicle MY
lifetime basis. Table 17 and Table 18 summarize EPA's estimates of
total discounted costs, fuel savings, and benefits through the full
lifetime of vehicles projected to be sold in MYs 2023-2026. The
estimated results presented here project the monetized environmental
and economic impacts associated with the proposed standards. Note that
standards continue at their MY2026 levels beyond MY2026 in any
scenario. At both a 3% and 7% discount rate all model years show
substantial fuel savings and net benefits.

Table 17--Present Value GHG Analysis of Lifetime Costs & Benefits for MY 2023-2026 GHG Standards Under the Proposal and Alternatives
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fuel Net Fuel Net
MY Costs savings Benefits benefits Costs savings Benefits benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposal
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023............................................................ $4.8 $3.6 $1.9 $0.68 $4.4 $2.6 $1.7 -$0.14
2024............................................................ 5.9 7 3.6 4.7 5.5 4.7 3.3 2.4
2025............................................................ 6.7 8.6 4.4 6.2 6.1 5.5 3.9 3.4
2026............................................................ 8.1 13 7.2 12 7.3 8.2 6.2 7.2
---------------------------------------------------------------------------------------
Sum......................................................... 26 33 17 24 23 21 15 13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alternative 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023............................................................ $3.9 $3.4 $2 $1.5 $3.7 $2.4 $1.7 $0.4
2024............................................................ 4.9 6.5 3.7 5.3 4.7 4.3 3.2 2.8
2025............................................................ 5.6 7.7 4.5 6.5 5.1 4.9 3.8 3.6
2026............................................................ 6.4 10 6 9.7 5.6 6.2 5 5.6
---------------------------------------------------------------------------------------
Sum......................................................... 21 28 16 23 19 18 14 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alternative 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023............................................................ $6.8 $7.7 $4.6 $5.5 $6.3 $5.4 $4 $3.1

[[Page 43745]]

2024............................................................ 7.7 9.8 5.7 7.8 7 6.5 5 4.4
2025............................................................ 8.4 11 6.5 9.1 7.4 7.1 5.5 5.2
2026............................................................ 9.2 13 7.8 12 7.9 8.2 6.6 6.9
---------------------------------------------------------------------------------------
Sum......................................................... 32 42 25 34 29 27 21 20
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different estimates of the social cost of each
greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates; 95th percentile at 3% discount rate), which each increase over time. In this
table, we show the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a single central SC-GHG point
estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-GHG estimates and present them later in this
preamble. As discussed in Chapter 3.3 of the DRIA, a consideration of climate benefits calculated using discount rates below 3 percent, including 2
percent and lower, is also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate the present and annualized value of SC-
GHGs for internal consistency, while all other costs and benefits are discounted at 3% in this table.
\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health and environmental effects that, if
quantified and monetized, would increase the total monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect
only human health impacts associated with reductions in PM2.5 exposure.

Table 18--Annualized GHG Analysis of Lifetime Costs & Benefits for MY 2023-2026 GHG Standards Under the Proposal and Alternatives
[For vehicles produced in MY 2023-2026] a b c d
[Billions of 2018$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fuel Net Fuel Net
MY Costs savings Benefits benefits Costs savings Benefits benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposal
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.......................................................... $0.21 $0.16 $0.08 $0.029 $0.33 $0.19 $0.085 -$0.053
2024.......................................................... 0.26 0.3 0.16 0.2 0.41 0.35 0.16 0.1
2025.......................................................... 0.29 0.37 0.19 0.27 0.45 0.41 0.19 0.15
2026.......................................................... 0.35 0.58 0.31 0.54 0.55 0.62 0.31 0.38
-----------------------------------------------------------------------------------------
Sum....................................................... 1.1 1.4 0.74 1 1.7 1.6 0.75 0.58
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alternative 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.......................................................... $0.17 $0.15 $0.085 $0.067 $0.28 $0.18 $0.091 -$0.0084
2024.......................................................... 0.21 0.28 0.16 0.23 0.35 0.32 0.17 0.14
2025.......................................................... 0.24 0.33 0.19 0.28 0.38 0.37 0.2 0.19
2026.......................................................... 0.28 0.44 0.26 0.42 0.42 0.47 0.26 0.31
-----------------------------------------------------------------------------------------
Sum....................................................... 0.9 1.2 0.7 1 1.4 1.3 0.72 0.63
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alternative 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.......................................................... $0.3 $0.33 $0.2 $0.24 $0.48 $0.4 $0.21 $0.14
2024.......................................................... 0.33 0.42 0.25 0.34 0.53 0.49 0.26 0.22
2025.......................................................... 0.37 0.48 0.28 0.39 0.56 0.54 0.29 0.27
2026.......................................................... 0.4 0.57 0.34 0.51 0.59 0.61 0.34 0.37
-----------------------------------------------------------------------------------------
Sum....................................................... 1.4 1.8 1.1 1.5 2.2 2 1.1 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ The lifetime costs and benefits of each MY vehicle are discounted back to 2021.
\b\ Climate benefits are based on reductions in CO2, CH4 and N2O emissions and are calculated using four different estimates of the social cost of each
greenhouse gas (SC-GHG model average at 2.5%, 3%, and 5% discount rates; 95th percentile at 3% discount rate), which each increase over time. For the
presentational purposes of this table, we show the benefits associated with the average SC-GHGs at a 3% discount rate, but the Agency does not have a
single central SC-GHG point estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-GHG estimates and
present them later in this preamble. As discussed in Chapter 3.3 of the RIA, a consideration of climate benefits calculated using discount rates below
3 percent, including 2 percent and lower, are also warranted when discounting intergenerational impacts.
\c\ The same discount rate used to discount the value of damages from future GHG emissions is used to calculate the present and annualized value of SC-
GHGs for internal consistency, while all other costs and benefits are discounted at 3% in this table.

[[Page 43746]]

\d\ Non-GHG impacts associated with the standards presented here do not include the full complement of health and environmental effects that, if
quantified and monetized, would increase the total monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect
only human health impacts associated with reductions in PM2.5 exposure.

II. EPA Proposal for MY 2023-2026 Light-Duty Vehicle GHG Standards

A. Proposed Model Year 2023-2026 GHG Standards for Light-Duty Vehicles,
Light-Duty Trucks, and Medium Duty Passenger Vehicles

As noted, the transportation sector is the largest U.S. source of
GHG emissions, making up 29 percent of all emissions.\42\ Within the
transportation sector, light-duty vehicles are the largest contributor,
58 percent, to transportation GHG emissions in the U.S.\43\ EPA has
concluded that more stringent standards are appropriate in light of our
reassessment of the need to reduce GHG emissions, technological
feasibility, costs, lead time, and other factors. The program that EPA
is proposing through MY 2026 in this notice does not represent the
level of GHG reductions that will ultimately be achievable and
appropriate for the light-duty sector, but it does serve as an
important stepping off point for a longer-term program beyond 2026. The
following section provides the details of EPA's proposed standards and
related provisions, followed by a discussion of the alternatives EPA
considered. EPA requests comments on all of the proposed provisions and
alternatives.
---------------------------------------------------------------------------

\42\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2019 (EPA-430-R-21-005, published April 2021).
\43\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2019 (EPA-430-R-21-005, published April 2021).
---------------------------------------------------------------------------

EPA is proposing revised, more stringent standards to control the
emissions of greenhouse gases (GHGs) from MY 2023 and later light-duty
vehicles.\44\ Carbon dioxide (CO<INF>2</INF>) is the primary greenhouse
gas resulting from the combustion of vehicular fuels. The standards
regulate CO<INF>2</INF> on a gram per mile (g/mile) basis, which EPA
defines by separate footprint curves for a manufacturer's car and truck
fleets.\45\ Based on complying with these proposed standards, the
industry-wide average emissions target for new light-duty vehicles is
projected to be 171 g/mile of CO<INF>2</INF> in MY 2026.\46\ Also, as
discussed in Section II.C below, EPA is requesting comment on standards
for MY 2026 that are in the range of 5-10 g/mile lower (i.e., more
stringent) than the levels proposed, resulting in fleet average target
levels that are in the range of 166-161 g/mile. EPA is not proposing to
change existing averaging, banking, and trading program elements,
except for a proposed limited extension of credit carry-forward for one
or two years for credits generated in MYs 2016-2020, as discussed in
Section II.B.4. The proposed standards would apply to passenger cars,
light-duty trucks, and medium-duty passenger vehicles (MDPVs).\47\ As
an overall group, they are referred to in this preamble as light-duty
vehicles or simply as vehicles. In this preamble, passenger cars may be
referred to simply as ``cars,'' and light-duty trucks and MDPVs as
``light trucks'' or ``trucks.''
---------------------------------------------------------------------------

\44\ See Sections III and VI for a discussion of lead time.
\45\ Footprint curves are graphical representations of the
algebraic formulae defining the emission standards in the regulatory
text.
\46\ The reference to CO<INF>2</INF> here refers to
CO<INF>2</INF> equivalent reductions, as this level includes some
reductions in emissions of greenhouse gases other than
CO<INF>2</INF>, from refrigerant leakage, as one part of the A/C
related reductions.
\47\ As with the previous GHG emissions standards, EPA will
continue to use the same vehicle category definitions as in the CAFE
program. MDPVs are grouped with light trucks for fleet average
compliance determinations.
---------------------------------------------------------------------------

As discussed in section II.B, EPA is proposing several revised
provisions that would allow manufacturers to generate credits or that
provide additional incentives for use of advanced emission reduction
technologies. These include ``off-cycle'' credits for technologies that
reduce CO<INF>2</INF> emissions during off-cycle operation that are not
reasonably accounted for by the 2-cycle tests used for compliance
purposes. EPA is proposing to increase the existing credit cap for
menu-based credits from 10 g/mile to 15 g/mile and is proposing a
number of program revisions and clarifications to address issues that
have been identified as EPA has implemented the program. In addition,
EPA is proposing to extend multiplier incentives for EVs, PHEVs, and
FCVs, with a cumulative cap on credits. Multiplier incentives allow
these low-emitting vehicles to count as more than one vehicle in a
manufacturer's compliance calculation. EPA is proposing to eliminate
multiplier incentives for natural gas vehicles adopted in the SAFE rule
after MY 2022. EPA is also proposing to reinstate full size pick-up
truck incentives through MY 2025 for vehicles that meet efficiency
performance criteria or include strong hybrid technology at a minimum
level of production volumes. The SAFE rule removed the full-size pickup
incentives for MYs 2022-2025.
The current program includes several program elements that will
remain in place, without change. EPA is not proposing to change the
fundamental structure of the standards, which are based on the
footprint attribute with separate footprint curves for cars and trucks.
EPA is not proposing to change the existing CH<INF>4</INF> and
N<INF>2</INF>O emissions standards. EPA is not proposing changes to the
program structure in terms of vehicle certification, compliance, and
enforcement. These aspects of the program continue to function as
intended and EPA does not currently believe changes are needed. EPA is
continuing to use tailpipe-only values to determine vehicle GHG
emissions, without accounting for upstream emissions (EVs and PHEVs
will continue to use 0 g/mile through MY 2026). EPA is also not
proposing changes to current program opportunities to earn credits
toward the fleet-wide average CO<INF>2</INF> standards for improvements
to air conditioning systems. The current A/C credits program provides
credits for improvements to address both hydrofluorocarbon (HFC)
refrigerant direct losses (i.e., system ``leakage'') and indirect
CO<INF>2</INF> emissions related to the increased load on the engine
(also referred to as ``A/C efficiency'' related emissions).
1. What fleet-wide emissions levels correspond to the CO<INF>2</INF>
standards?
EPA is proposing revised more stringent standards for MYs 2023-2026
that are projected to result in an industry-wide average target for the
light-duty fleet of 171 g/mile of CO<INF>2</INF> in MY 2026. The
proposed standards are designed to reach the same level of stringency
as the California Framework emission reduction targets in MY 2023, and
then ramp down in a linear fashion with year over year average
stringency increases of 4.7-5.0 percent. For MY 2026, the proposal goes
beyond the 2012 rule level of stringency for MY 2025, by about 3
percent more stringent, making the proposed MY 2026 standard the most
stringent vehicle GHG standard that EPA has proposed to date. EPA
believes that is possible and worthwhile to make additional progress in
MY 2026 by surpassing the level of stringency of the original MY 2025
standards established nine years ago in the 2012 rule. EPA is proposing
an ambitious and reasonable approach that would take the initial steps
towards making needed

[[Page 43747]]

reductions in GHG emissions. EPA does not propose any change to the
approach of having separate standards for cars and light trucks under
existing program definitions.
The industry fleet average and car/truck year-over-year percent
reductions for the proposed standards compared to the existing SAFE
rule standards are provided in Table 19 below. For passenger cars, the
proposed footprint curves call for reducing CO<INF>2</INF> by 8.3
percent in MY 2023 followed by year over year reductions of 4.7 to 5.1
percent from the MY 2023 passenger car standard through MY 2026. For
light-duty trucks, the proposed footprint curves standards would
require reducing CO<INF>2</INF> by 10.8 percent in MY 2023 followed by
year over year reductions of 4.7 to 5.2 percent on average from the MY
2023 light-duty truck standard through MY 2026.

Table 19--Projected Industry Fleet Average Target Year-Over-Year Percent Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
SAFE rule Proposal
-----------------------------------------------------------------------------------------------
Cars (%) Trucks (%) Combined (%) Cars (%) Trucks (%) Combined (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2023.................................................... 1.7 1.5 1.6 8.3 10.8 9.8
2024.................................................... 1.1 1.2 1.2 4.8 4.7 4.7
2025.................................................... 2.3 2.0 2.2 5.1 5.0 4.9
2026.................................................... 1.8 1.6 1.7 * 4.7 * 5.2 * 5.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The percentages shown do not include EPA's request for comments on MY 2026 standards that are 5-10 g/mile more stringent than proposed.

For light-trucks, EPA is proposing to change the upper right
cutpoints of the CO<INF>2</INF>-footprint curves (i.e., the footprint
sizes in sq. ft. at which the CO<INF>2</INF> standards level off as
flat CO<INF>2</INF> target values for larger vehicle footprints. See
Figure 5 below). The SAFE rule altered these cutpoints and EPA is now
proposing to restore them to the original upper right cutpoints
initially established in the 2012 rule, for MYs 2023-2026, essentially
requiring increasingly more stringent CO<INF>2</INF> targets at the
higher footprint range up to the revised cutpoint levels. The shapes of
the curves and the cutpoints are discussed in Section II.A.2.
The 171 g/mile estimated industry-wide target for MY 2026 noted
above is based on EPA's current fleet mix projections for MY 2026
(approximately 50 percent cars and 50 percent trucks, with only slight
variations from MY 2023-2026). As discussed below, the final fleet
average standards for each manufacturer ultimately will depend on each
manufacturer's actual rather than projected production in each MY from
MY 2023 to MY 2026 under the sales-weighted footprint-based standard
curves for the car and truck regulatory classes. In the 2012 rule, EPA
estimated that the fleet average target would be 163 g/mile in MY 2025
based on the projected fleet mix for MY 2025 (67 percent car and 33
percent trucks) based on information available at the time of the 2012
rulemaking. Primarily due to the historical and ongoing shift in fleet
mix that included more crossover and small and mid-size SUVs and fewer
passenger cars, EPA's projection in the Midterm Evaluation (MTE)
January 2017 Final Determination for the original MY 2025 fleet average
target level increased to 173 g/mile.\48\ EPA has again updated its
fleet mix projections and now projects that the original 2012 rule MY
2025 footprint curves standards would result in an industry-wide fleet
average target level of 177 g/mile. The projected fleet average targets
under the 2012 rule, using the updated fleet mix projections and the
projected fleet average targets for the proposal are provided in Table
20 below. Figure 3 below, based on the values in Table 20, shows the
proposed standards target levels along with estimated targets for the
2012 rule, SAFE rule, and California Framework for comparison.\49\
---------------------------------------------------------------------------

\48\ ``Final Determination on the Appropriateness of the Model
Year 2022-2025 Light-Duty Vehicle Greenhouse Gas Emissions Standards
under the Midterm Evaluation,'' EPA-420-R-17-001, January 2017.
\49\ For comparison purposes, the California Framework estimates
are based on a scenario in which all manufacturers meet the
California Framework in MYs 2021-2026 (not only the manufacturers
that agreed to the California Framework).

Table 20--Fleet Average Target Projections for the Proposed Standards Compared to Updated Fleet Average Target
Projections for the 2012 Rule, SAFE Rule and California Framework
[CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
2012 Rule SAFE rule California
Proposal projected projected framework
MY projected targets targets projected
targets (updated) (updated) targets
----------------------------------------------------------------------------------------------------------------
2021............................................ * 223 214 223 214
2022............................................ * 220 205 220 206
2023............................................ 199 195 216 199
2024............................................ 189 186 214 191
2025............................................ 180 177 209 184

[[Page 43748]]

2026............................................ * 171 177 205 177
----------------------------------------------------------------------------------------------------------------
* Projected targets under the SAFE rule standards.
** EPA is also requesting comment on MY 2026 standards that would result in fleet average levels that are 5-10 g/
mile more stringent than the level shown.

[GRAPHIC] [TIFF OMITTED] TP10AU21.002

EPA's standards are based in part on EPA's projection of average
industry wide CO<INF>2</INF>-equivalent emission reductions from A/C
improvements, where the footprint curves are made numerically more
stringent by an amount equivalent to this projection of A/C refrigerant
leakage credits.\50\ Including this projection of A/C credits for
purposes of setting GHG standards levels is consistent with the 2012
rule and the SAFE rule.
---------------------------------------------------------------------------

\50\ The total A/C adjustment is 18.8 g/mile for cars and 24.4
g/mile for trucks.
---------------------------------------------------------------------------

Table 21 below shows overall fleet average target levels for both
cars and light trucks that are projected over the implementation period
of the proposed standards. A more detailed manufacturer by manufacturer
break down of the projected target and achieved levels is provided in
Section III.B.1 below. The actual fleet-wide average g/mile level that
would be achieved in any year for cars and trucks will depend on the
actual production of vehicles for that year, as well as the use of the
various credit and averaging, banking, and trading provisions. For
example, in any year, manufacturers would be able to generate credits
from cars and use them for compliance with the truck standard, or vice
versa. In Section V, EPA discusses the year-by-year estimate of
emissions reductions that are projected to be achieved by the proposed
standards.
In general, the schedule of the proposed standards allows an
incremental phase-in to the MY 2026 level and reflects consideration of
the appropriate lead time for manufacturers to take actions necessary
to meet the

[[Page 43749]]

proposed standards.\51\ The technical feasibility of the standards is
discussed in Section III below and in the DRIA. Note that MY 2026 is
the final MY in which the proposed standards become more stringent. The
MY 2026 CO<INF>2</INF> standards would remain in place for later MYs,
unless and until revised by EPA in a future rulemaking for those MYs.
---------------------------------------------------------------------------

\51\ As discussed in Section III, EPA has used the Corporate
Average Fuel Economy (CAFE) Compliance and Effects Modeling System
(CCEMS) to support the technical assessment. Among the ways EPA has
considered lead time in the proposal is by using the constraints
built into the CCEMS model which are designed to represent lead-time
constraints, including the use of redesign and refresh cycles. See
CCEMS Model Documentation on web page <a href="https://www.nhtsa.gov/corporate-average-fuel-economy/compliance-and-effects-modeling-system">https://www.nhtsa.gov/corporate-average-fuel-economy/compliance-and-effects-modeling-system</a> and contained in the docket for this rule.
---------------------------------------------------------------------------

EPA has estimated the overall fleet-wide CO<INF>2</INF> emission
levels that correspond with the attribute-based footprint standards,
based on projections of the composition of each manufacturer's fleet in
each year of the program. As noted above, EPA estimates that, on a
combined fleet-wide national basis, the 2026 MY standards would result
in a level of 171 g/mile CO<INF>2</INF>. The derivation of the 171 g/
mile estimate is described in Section III.A. EPA aggregated the
estimates for individual manufacturers based on projected production
volumes into the fleet-wide averages for cars, trucks, and the entire
fleet, shown in Table 21.\52\ As discussed above, the combined fleet
estimates are based on projected fleet mix of cars and trucks that
varies over the MY 2023-2026 timeframe. This fleet mix distribution can
also be found in Section III.A.
---------------------------------------------------------------------------

\52\ Due to rounding during calculations, the estimated fleet-
wide CO<INF>2</INF> target levels may vary by plus or minus 1 gram.

Table 21--Estimated Fleet-Wide CO2 Target Levels Corresponding to the Proposed Standards
----------------------------------------------------------------------------------------------------------------
Cars CO2 (g/ Trucks CO2 (g/ Fleet CO2 (g/
Model year mile) mile) mile)
----------------------------------------------------------------------------------------------------------------
2023............................................................ 165 232 199
2024............................................................ 157 221 189
2025............................................................ 149 210 180
2026 and later *................................................ 142 199 171
----------------------------------------------------------------------------------------------------------------
** EPA is also requesting comment on MY 2026 standards that would result in fleet average levels that are 5-10 g/
mile more stringent than the levels shown.

As shown in Table 21, fleet-wide CO<INF>2</INF> emission target
levels for cars under the proposed standards are projected to decrease
from 165 to 142 g/mile between MY 2023 and MY 2026. Similarly, fleet-
wide CO<INF>2</INF> target levels for trucks are projected to decrease
from 232 to 199 g/mile. These numbers do not reflect the effects of
flexibilities and credits in the program.\53\ The estimated fleetwide
achieved values can be found in Section V.
---------------------------------------------------------------------------

\53\ Nor do they reflect flexibilities under the ABT program.
---------------------------------------------------------------------------

As noted above, EPA is proposing standards that set increasingly
stringent levels of CO<INF>2</INF> control from MY 2023 though MY 2026.
Applying the CO<INF>2</INF> footprint curves applicable in each MY to
the vehicles (and their footprint distributions) expected to be sold in
each MY produces progressively more stringent estimates of fleet-wide
CO<INF>2</INF> emission standards. EPA believes manufacturers can
achieve the proposed standards' important CO<INF>2</INF> emissions
reductions through the application of available control technology at
reasonable cost, as well as the use of program flexibilities.
The existing program includes several provisions that we are not
proposing to change and so would continue during the implementation
timeframe of this proposed rule. Consistent with the requirement of CAA
section 202(a)(1) that standards be applicable to vehicles ``for their
useful life,'' the proposed MY 2023-2026 vehicle standards will apply
for the useful life of the vehicle.\54\ Also, EPA is not proposing any
changes to the test procedures over which emissions are measured and
weighted to determine compliance with the GHG standards. These
procedures are the Federal Test Procedure (FTP or ``city'' test) and
the Highway Fuel Economy Test (HFET or ``highway'' test). While EPA may
consider requiring the use of test procedures other than the 2-cycle
test procedures in a future rulemaking, EPA is not considering any test
procedure changes in this rulemaking.
---------------------------------------------------------------------------

\54\ The GHG emission standards apply for a useful life of 10
years or 120,000 miles for LDVs and LLDTs and 11 years or 120,000
miles for HLDTs and MDPVs. See 40 CFR 86.1805-17.
---------------------------------------------------------------------------

EPA has analyzed the feasibility of achieving the proposed
CO<INF>2</INF> standards through the application of currently available
technologies, based on projections of the technology and technology
penetration rates to reduce emissions of CO<INF>2</INF>, during the
normal redesign process for cars and trucks, taking into account the
effectiveness and cost of the technology. The results of the analysis
are discussed in detail in Section III below and in the DRIA. EPA also
presents the overall estimated costs and benefits of the proposed car
and truck CO<INF>2</INF> standards in Section VII.I.
2. What are the proposed CO<INF>2</INF> attribute-based standards?
As with the existing GHG standards, EPA is proposing separate car
and truck standards--that is, vehicles defined as cars would have one
set of footprint-based curves, and vehicles defined as trucks would
have a different set.\55\ In general, for a given footprint, the
CO<INF>2</INF> g/mile target \56\ for trucks is higher than the target
for a car with the same footprint. The curves are described
mathematically in EPA's regulations by a family of piecewise linear
functions (with respect to vehicle footprint) that gradually and
continually ramp down from the MY 2022 curves established in the SAFE
rule. EPA's proposed minimum and maximum footprint targets and the
corresponding cutpoints are provided below in Table 22 for MYs 2023-
2026 along with the slope and intercept defining the linear function
for footprints falling between the minimum and maximum footprint
values. For footprints falling between the minimum and maximum, the
targets are calculated as follows: Slope x Footprint + Intercept =
Target. Figure 4 and Figure 5 provide the existing MY 2021-2022 and
proposed MY 2023-2026 footprint curves graphically for both car and
light trucks, respectively.
---------------------------------------------------------------------------

\55\ See 49 CFR part 523. Generally, passenger cars include cars
and smaller cross-overs and SUVs, while the truck category includes
larger cross-overs and SUVs, minivans, and pickup trucks.
\56\ Because compliance is based on a sales-weighting of the
full range of vehicles in a manufacturer's car and truck fleets, the
foot-print based CO<INF>2</INF> emission levels of specific vehicles
within the fleet are referred to as targets, rather than standards.

[[Page 43750]]

Table 22--Proposed Footprint-Based CO2 Standard Curve Coefficients
--------------------------------------------------------------------------------------------------------------------------------------------------------
Car Truck
---------------------------------------------------------------------------------------
2023 2024 2025 2026 2023 2024 2025 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
MIN CO2 (g/mi).................................................. 145.6 138.6 131.9 125.6 181.1 172.1 163.5 155.4
MAX CO2 (g/mi).................................................. 199.1 189.5 180.3 171.6 312.1 296.5 281.8 267.8
Slope (g/mi/ft2)................................................ 3.56 3.39 3.23 3.07 3.97 3.77 3.58 3.41
Intercept (g/mi)................................................ -0.4 -0.4 -0.3 -0.3 18.4 17.4 16.6 15.8
MIN footprint (ft2)............................................. 41 41 41 41 41 41 41 41
MAX footprint (ft2)............................................. 56 56 56 56 74 74 74 74
--------------------------------------------------------------------------------------------------------------------------------------------------------

BILLING CODE 6560-01-P
[GRAPHIC] [TIFF OMITTED] TP10AU21.003

[[Page 43751]]

[GRAPHIC] [TIFF OMITTED] TP10AU21.004

BILLING CODE 6560-01-C
The shapes of the proposed MY 2023-2026 car curves are similar to
the MY 2022 curve. By contrast, the proposed MY 2023-2026 truck curves
return to the cutpoint of 74.0 sq ft originally established in the 2012
rule, but changed in the SAFE rule.\57\ The gap between the 2022 curves
and the 2023 curves is indicative of the design of the proposed
standards as described earlier, where the gap between the MY 2022 and
MY 2023 curves is roughly double the gap between the curves for MYs
2024-2026.
---------------------------------------------------------------------------

\57\ 77 FR 62781.
---------------------------------------------------------------------------

3. EPA's Statutory Authority Under the CAA
i. Standards-Setting Authority Under CAA Section 202(a)
Title II of the Clean Air Act (CAA) provides for comprehensive
regulation of mobile sources, authorizing EPA to regulate emissions of
air pollutants from all mobile source categories. Pursuant to these
sweeping grants of authority, when setting GHG standards for light-duty
vehicles, EPA considers such issues as technology effectiveness,
technology cost (per vehicle, per manufacturer, and per consumer), the
lead time necessary to implement the technology, and--based on these
considerations--the feasibility and practicability of potential
standards; as weel as the impacts of potential standards on emissions
reductions of both GHGs and non-GHGs; the impacts of standards on oil
conservation and energy security; the impacts of standards on fuel
savings by consumers; the impacts of standards on the auto industry;
other energy impacts; and other relevant factors such as impacts on
safety.
Pursuant to Title II of the Clean Air Act, EPA has taken a
comprehensive, integrated approach to mobile source emission control
that has produced benefits well in excess of the costs of regulation.
In developing the Title II program, the Agency's historic, initial
focus was on personal vehicles since that category represented the
largest source of mobile source emissions.
Title II emission standards have stimulated the development of a
broad set of advanced automotive technologies, such as on-board
computers and fuel injection systems, which have been the building
blocks of automotive designs and have yielded not only lower pollutant
emissions, but improved vehicle performance, reliability, and
durability. In response to EPA's adoption of Title II emission
standards for GHGs from light-duty vehicles in 2010 and later,
manufacturers have continued to significantly ramp up their development
and application of a wide range of new and improved technologies,
including more fuel-efficient engine designs, transmissions,
aerodynamics, and tires, air conditioning systems that contribute to
lower GHG emissions, and various levels of electrified vehicle
technologies.
This proposed rule implements a specific provision from Title II,
section 202(a). Section 202(a)(1) of the CAA, 42 U.S.C. 7521(a)(1),
states that ``the Administrator shall by regulation prescribe (and from
time to time revise) . . . standards applicable to the emission of any
air pollutant from any class or classes of new motor vehicles . . .
which in his judgment cause, or contribute to, air pollution which may
reasonably be anticipated to endanger public health or welfare.'' Once
EPA makes the appropriate endangerment and cause or contribute
findings,\58\ then section 202(a) authorizes EPA to issue standards
applicable to emissions of those pollutants. Indeed, EPA's obligation
to do so is mandatory. See Coalition for Responsible Regulation v.

[[Page 43752]]

EPA, 684 F.3d 102, 126-27 (D.C. Cir. 2012); Massachusetts v. EPA, 549
U.S. 497, 533 (2007). Moreover, EPA's mandatory legal duty to
promulgate these emission standards derives from ``a statutory
obligation wholly independent of DOT's mandate to promote energy
efficiency.'' Massachusetts, 549 U.S. at 532. Consequently, EPA has no
discretion to decline to issue greenhouse gas standards under section
202(a), or to defer issuing such standards due to NHTSA's regulatory
authority to establish fuel economy standards. Rather, ``[j]ust as EPA
lacks authority to refuse to regulate on the grounds of NHTSA's
regulatory authority, EPA cannot defer regulation on that basis.''
Coalition for Responsible Regulation, 684 F.3d at 127.
---------------------------------------------------------------------------

\58\ EPA did so in 2009 for the group of six well-mixed
greenhouse gases--carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride--which
taken in combination endanger both the public health and the public
welfare of current and future generations. EPA further found that
the combined emissions of these greenhouse gases from new motor
vehicles and new motor vehicle engines contribute to greenhouse gas
air pollution that endangers public health and welfare. 74 FR 66496
(Dec. 15, 2009).
---------------------------------------------------------------------------

Any standards under CAA section 202(a)(1) ``shall be applicable to
such vehicles . . . for their useful life.'' Emission standards set by
EPA under CAA section 202(a)(1) are technology-based, as the levels
chosen must be premised on a finding of technological feasibility.
Thus, standards promulgated under CAA section 202(a) are to take effect
only ``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.'' CAA section 202(a)(2); see also NRDC v. EPA, 655 F. 2d 318,
322 (D.C. Cir. 1981). EPA must consider costs to those entities which
are directly subject to the standards. Motor & Equipment Mfrs. Ass'n
Inc. v. EPA, 627 F. 2d 1095, 1118 (D.C. Cir. 1979). Thus, ``the
[s]ection 202(a)(2) reference to compliance costs encompasses only the
cost to the motor-vehicle industry to come into compliance with the new
emission standards, and does not mandate consideration of costs to
other entities not directly subject to the proposed standards.'' See
Coalition for Responsible Regulation, 684 F.3d at 128.
EPA is afforded considerable discretion under section 202(a) when
assessing issues of technical feasibility and availability of lead time
to implement new technology. Such determinations are ``subject to the
restraints of reasonableness,'' which ``does not open the door to
`crystal ball' inquiry.'' NRDC, 655 F. 2d at 328, quoting International
Harvester Co. v. Ruckelshaus, 478 F. 2d 615, 629 (D.C. Cir. 1973).
However, ``EPA is not obliged to provide detailed solutions to every
engineering problem posed in the perfection of [a particular device].
In the absence of theoretical objections to the technology, the agency
need only identify the major steps necessary for development of the
device, and give plausible reasons for its belief that the industry
will be able to solve those problems in the time remaining. The EPA is
not required to rebut all speculation that unspecified factors may
hinder `real world' emission control.'' NRDC, 655 F. 2d at 333-34. In
developing such technology-based standards, EPA has the discretion to
consider different standards for appropriate groupings of vehicles
(``class or classes of new motor vehicles''), or a single standard for
a larger grouping of motor vehicles. NRDC, 655 F.2d at 338. Finally,
with respect to regulation of vehicular greenhouse gas emissions, EPA
is not ``required to treat NHTSA's . . . regulations as establishing
the baseline for the [section 202(a) standards].'' Coalition for
Responsible Regulation, 684 F.3d at 127 (noting that the section 202(a)
standards provide ``benefits above and beyond those resulting from
NHTSA's fuel-economy standards.'')
Although standards under CAA section 202(a)(1) are technology-
based, they are not based exclusively on technological capability. EPA
has the discretion to consider and weigh various factors along with
technological feasibility, such as the cost of compliance (section
202(a)(2)), lead time necessary for compliance (section 202(a)(2)),
safety (see NRDC, 655 F. 2d at 336 n. 31) \59\ and other impacts on
consumers, and energy impacts associated with use of the technology.
See George E. Warren Corp. v. EPA, 159 F.3d 616, 623-624 (D.C. Cir.
1998) (ordinarily permissible for EPA to consider factors not
specifically enumerated in the Act).
---------------------------------------------------------------------------

\59\ Since its earliest Title II regulations, EPA has considered
the safety of pollution control technologies. See 45 FR 14496, 14503
(1980) (``EPA would not require a particulate control technology
that was known to involve serious safety problems. If during the
development of the trap-oxidizer safety problems are discovered, EPA
would reconsider the control requirements implemented by this
rulemaking'').
---------------------------------------------------------------------------

In addition, EPA has clear authority to set standards under CAA
section 202(a) that are technology-forcing when EPA considers that to
be appropriate, but EPA is not required to do so (as distinguished from
standards under provisions such as section 202(a)(3) and section
213(a)(3)). Section 202(a) of the CAA does not specify the degree of
weight to apply to each factor, and EPA accordingly has discretion in
choosing an appropriate balance among factors. See Sierra Club v. EPA,
325 F.3d 374, 378 (D.C. Cir. 2003) (even where a provision is
technology-forcing, the provision ``does not resolve how the
Administrator should weigh all [the statutory] factors in the process
of finding the `greatest emission reduction achievable' ''); NPRA v.
EPA, 287 F.3d 1130, 1135 (D.C. Cir. 2002) (EPA decisions, under CAA
provision authorizing technology-forcing standards, based on complex
scientific or technical analysis are accorded particularly great
deference); see also Husqvarna AB v. EPA, 254 F. 3d 195, 200 (D.C. Cir.
2001) (great discretion to balance statutory factors in considering
level of technology-based standard, and statutory requirement ``to
[give appropriate] consideration to the cost of applying . . .
technology'' does not mandate a specific method of cost analysis);
Hercules Inc. v. EPA, 598 F. 2d 91, 106 (D.C. Cir. 1978) (``In
reviewing a numerical standard we must ask whether the agency's numbers
are within a zone of reasonableness, not whether its numbers are
precisely right''); Permian Basin Area Rate Cases, 390 U.S. 747, 797
(1968) (same); Federal Power Commission v. Conway Corp., 426 U.S. 271,
278 (1976) (same); Exxon Mobil Gas Marketing Co. v. FERC, 297 F. 3d
1071, 1084 (D.C. Cir. 2002) (same).
ii. Testing Authority
Under section 203 of the CAA, sales of vehicles are prohibited
unless the vehicle is covered by a certificate of conformity. EPA
issues certificates of conformity pursuant to section 206 of the CAA,
based on (necessarily) pre-sale testing conducted either by EPA or by
the manufacturer. The Federal Test Procedure (FTP or ``city'' test) and
the Highway Fuel Economy Test (HFET or ``highway'' test) are used for
this purpose. Compliance with standards is required not only at
certification but throughout a vehicle's useful life, so that testing
requirements may continue post-certification. Useful life standards may
apply an adjustment factor to account for vehicle emission control
deterioration or variability in use (section 206(a)).
EPA establishes the test procedures under which compliance with the
CAA GHG standards is measured. EPA's testing authority under the CAA is
broad and flexible. EPA has also developed tests with additional cycles
(the so-called 5-cycle tests) which are used for purposes of fuel
economy labeling and are also used in the EPA program for extending
off-cycle credits under the light-duty vehicle GHG program.

[[Page 43753]]

iii. Compliance and Enforcement Authority
EPA oversees testing, collects and processes test data, and
performs calculations to determine compliance with CAA standards. CAA
standards apply not only at certification but also throughout the
vehicle's useful life. The CAA provides for penalties should
manufacturers fail to comply with their fleet average standards, and
there is no option for manufacturers to pay fines in lieu of compliance
with the standards. Under the CAA, penalties for violation of a fleet
average standard are typically determined on a vehicle-specific basis
by determining the number of a manufacturer's highest emitting vehicles
that cause the fleet average standard violation. Penalties for
reporting requirements under Title II of the CAA apply per day of
violation, and other violations apply on a per vehicle, or a per part
or component basis. See CAA sections 203(a) and 205(a) and 40 CFR 19.4.
Section 207 of the CAA grants EPA broad authority to require
manufacturers to remedy vehicles if EPA determines there are a
substantial number of noncomplying vehicles. In addition, section 205
of the CAA authorizes EPA to assess penalties of up to $48,762 per
vehicle for violations of various prohibited acts specified in the CAA.
In determining the appropriate penalty, EPA must consider a variety of
factors such as the gravity of the violation, the economic impact of
the violation, the violator's history of compliance, and ``such other
matters as justice may require.'' The CAA does not authorize vehicle
manufacturers to pay fines in lieu of meeting emission standards.
4. Averaging, Banking, and Trading Provisions for CO<INF>2</INF>
Standards
i. Background
Averaging, banking, and trading (ABT) is an important compliance
flexibility and ABT has been built into various highway engine and
vehicle programs (and nonroad engines and equipment programs) to
support emissions standards that through the introduction of new
technologies, result in reductions in air pollution. The light-duty ABT
program for GHG standards includes existing provisions initially
established in the 2010 rule for how credits may be generated and used
within the program.\60\ These provisions include credit carry-forward,
credit carry-back (also called deficit carry-forward), credit transfers
(within a manufacturer), and credit trading (across manufacturers).
---------------------------------------------------------------------------

\60\ 40 CFR 86.1865-12.
---------------------------------------------------------------------------

Credit carry-forward refers to banking (saving) credits for future
use, after satisfying any needs to offset prior MY debits within a
vehicle category (car fleet or truck fleet). Credit carry-back refers
to using credits to offset any deficit in meeting the fleet average
standards that had accrued in a prior MY. A manufacturer may have a
deficit at the end of a MY (after averaging across its fleet using
credit transfers between cars and trucks)--that is, a manufacturer's
fleet average level may fail to meet the required fleet average
standard for the MY. The CAA does not expressly limit the duration of
such credit provisions, and in the MY 2012-2016 and 2017-2025 programs,
EPA chose to adopt 5-year credit carry-forward (generally, with an
exception noted below) and 3-year credit carry-back provisions as a
reasonable approach that maintained consistency between the EPA GHG and
NHTSA's CAFE provisions.\61\ While some stakeholders had suggested that
light-duty GHG credits should have an unlimited credit life, EPA did
not adopt that suggestion for the light-duty GHG program because it
would pose enforcement challenges and could lead to some manufacturers
accumulating large banks of credits that could interfere with the
program's goal to develop and transition to progressively more advanced
emissions control technologies in the future.
---------------------------------------------------------------------------

\61\ The EPCA/EISA statutory framework for the CAFE program
limits credit carry-forward to 5 years and credit carry-back to 3
years.
---------------------------------------------------------------------------

Although the credit carry-forward and carry-back provisions
generally remained in place for MY 2017 and later standards, EPA
finalized provisions allowing all unused (banked) credits generated in
MY 2010-2016 (but not MY 2009 early credits) to be carried forward
through MY 2021. See Sec. 86.1865-12(k)(6)(ii); 77 FR 62788 October
15, 2012. This is the normal 5-year carry-forward for MY 2016 and later
credits but provides additional carry-forward years for credits
generated in MYs 2010-2015. Extending the life of MY 2010-2015 credits
provided greater flexibility for manufacturers in using the credits.
This provision was intended to facilitate the transition to
increasingly stringent standards through MY 2021 by helping
manufacturers resolve lead time issues they might face in the early MYs
of the program. This extension of credit carry-forward also provided
additional incentive for manufacturers to generate credits earlier, for
example in MYs 2014 and 2015, thereby encouraging the earlier use of
additional CO<INF>2</INF> reducing technologies.
Transferring credits in the EPA program refers to exchanging
credits between the two averaging sets--passenger cars and light
trucks--within a manufacturer. For example, credits accrued by
overcompliance with a manufacturer's car fleet average standard can be
used to offset debits accrued due to that manufacturer not meeting the
truck fleet average standard in a given year. (Put another way, a
manufacturer's car and truck fleets are, in essence, a single averaging
set in the EPA program). Finally, accumulated credits may be traded to
another manufacturer. Credit trading has occurred on a regular basis in
EPA's vehicle program.\62\ Manufacturers acquiring credits may offset
credit shortfalls and bank credits for use toward future compliance
within the carry-forward constraints of the program.
---------------------------------------------------------------------------

\62\ EPA provides general information on credit trades annually
as part of its annual Automotive Trends and GHG Compliance Report.
The latest report is available at: <a href="https://www.epa.gov/automotive-trends">https://www.epa.gov/automotive-trends</a> and the docket for this rulemaking.
---------------------------------------------------------------------------

The ABT provisions are an integral part of the vehicle GHG program
and the agency expects that manufacturers will continue to utilize
these provisions into the future. EPA's annual Automotive Trends Report
provides details on the use of these provisions in the GHG program.\63\
ABT allows EPA to consider standards more stringent than we would
otherwise consider by giving manufacturers an important tool to resolve
lead time and feasibility issues. EPA believes the targeted extension
of credit carry-forward that we are proposing, discussed below, is
appropriate considering the stringency and implementation timeframe of
the proposed standards.
---------------------------------------------------------------------------

\63\ ``The 2020 EPA Automotive Trends Report, Greenhouse Gas
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-21-
003 January 2021.
---------------------------------------------------------------------------

ii. Extended Credit Carry-Forward Proposal
As in the transition to more stringent standards under the 2012
rule, EPA recognizes that auto manufacturers are again facing a
transition to more stringent standards with our MY 2023-2026 standards
proposal. We also recognize that the stringency increase from MY 2022
to MY 2023 is the steepest step in our proposed program with relatively
limited lead time. Therefore, we believe it is again appropriate in the
current context to provide a targeted, limited amount of additional
flexibility to carry-forward

[[Page 43754]]

credits into the 2023-2026 MYs, to ease the manufacturers' transition
to these more stringent standards.
EPA is proposing to temporarily increase the number of years that
MY 2016-2020 vintage credits that may be carried-forward to provide
additional flexibility for manufacturers in the transition to more
stringent standards. EPA proposes to increase credit carry-forward for
MY 2016 credits by two years such that they would not expire until
after MY 2023. For MY 2017-2020 credits, EPA proposes to extend the
credit life by one year, so that those banked credits can be used
through MYs 2023-2026, depending on the MY in which the credits are
banked. For MY 2021 and later credits, EPA is not proposing any
modification to credit carry-forward in this notice. Credit carry-
forward would return to the normal 5 years in the existing ABT
regulations. Table 23 below provides an illustration of the proposed
credit carry-forward provisions.

Table 23--Proposed Extension of Credit Carry-Forward for MY 2016-2020 Credits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
MYs credits are valid under EPA's proposed extension
MY credits are banked -----------------------------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2016............................

[…truncated; see source link]

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on August 10, 2021.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.